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My light short turned into a full short at 1234 and my full short would
have turned into a fuller short at 1244 but I doubt we'll see that now.
When my breadth models are updated tonight I expect they will have rolled over
again. I see first significant support around SPX 1187+-, however I don't expect
it will hold for long.
As mentioned earlier, the technicals have been topping for a good while. I
don't generally put a lot of stock in the fundamentals, however every now and
then I am willing to load the boat on fundamentals when the technicals are in
obvious conflict. This time I have given fundamentals a lot of weight in
deciding to scale up shorts against a market rising on the "good news" that
Katrina and Rita did not wipe half the country off the face of the earth.
Essentially, I would characterize the forthcoming Christmas as cold and
hungry. Energy is now taking a big bite out of consumers and it's going to get
much worse as the heating bills start to roll in. While heating oil may back off
a bit, natural gas is going to remain high for months to come. And of course,
natural gas is used to generate nearly half of our electricity so electric bills
are going up. Then there are the obviously rising costs of almost everything
which requires energy to make or transport. Even the farmer is seeing the cost
of his fertilizer rise out of sight.
Then there are the rising interest rates, especially at the short end of
the curve used for consumer finance and ARMs. Finally, there is the Big Grinch
... minimum credit card payments are doubling (thanks to new bankruptcy law)
from 1/40 of balance to 1/20 of balance for those who ride around on a fist full
of credit cards on which they make minimum payments.
Earl
----- Original Message -----
Sent: Thursday, September 29, 2005 6:17
AM
Subject: Re: [RT] Nyse Daily
NYSE 7700 on Sep 30
NDX 1629 on Sep 30
SPX 1264 on Sep 30
From appearance of price relative to MOB I would rate all of these as
very low probability. Attached is GIF of my NYSE breadth models which do not
show the bullish divergences I want to see to support a strong rally.
In my playbook, I have been shorting ES since July 28 ... putting
limit orders to sell in at 127% and 162% retracements of declines (rally
targets) and taking profits on declines. Topping process can go on for
months so I have not wanted to hold shorts on long term basis. I am now
starting to work on a longer term short position and am currently lightly
short ES mini and watching for opportunities to add to position on rally -or-
break of support.
Earl
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