How was your ride? Thank goodness we are cash and cushy and out of the harm’s way. This market is a recipe for disaster and perfect for losing money. This is what I meant when I said that the direction is not clear. However, those who were screaming the death of Euro and Eurozone in the morning hours fell silent by mid-day when the index has covered most of its early day loss. Surprise, surprise!
Yesterday I said that we might see another attempt to breach 1284 (http://bbfinance.blogspot.com/2012/01/official-end-of-santa-rally.html) and hey presto, here we have it. But the rally today was fake, fake, fake.
Need proof? See the overlay of SPX on AUD on a 5 minute chart. Till 11 AM they were moving tick for tick. Then the algos took over and drove SPX higher on helium, rather hopeium.
Also look at the US $ index. It made a new high while equity and gold gained. So what gives? Which one is lying? Gold has now reached $1620 level and is due for correction with the equities. Oil has started the journey south as I said yesterday.
A look at the hourly SPX chart shows the formation of a topping pattern. It is yet to break 1284 with any confidence and now it is time out. Looks like a double top to me.
Why this desperate attempt at the manipulation? It is called January effect. You might want to read this article; http://finance.yahoo.com/news/election-january-even-more-crucial-135338067.html . Basically the BOYZ will not let the market fall much in the 1st five trading days of January. And you want to trade in this market based on fundamentals? Good luck trying!
Of all the indexes, DOW is down and Nasdaq is up huge. Again, DOW leads in the sense that there are only 30 stocks in that index and it is easy to manipulate 30 stocks than 300. So the BOYZ may be getting ready to exit.
I was to stay away from the market today but seeing the amount of stick job being done, I could not resist taking a small short position. I twitted around 3.45 PM Eastern Time that I plan to take up a short and by close I twitted the trading journal for the day. Let us see what happens in the next few days. Most likely I will add some Nasdaq short tomorrow. The only problem is I am not getting a clear picture as to how far and how long the prices will fall but the correction may not be very deep in this cycle. We will see how things go.
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