Thursday, February 2, 2012

Nothing Happened In No Volume Day.

You can call it waste of a day or choppy trading. But the Boyz have to hold the market up at least for the first few days of new month, till all asset allocation is complete. I think this hold up game will continue till Monday next. Whatever happens in-between is inconsequential. So nothing much to say either.

The market price action is indicating that 1333 in SPX will be broken and a new top will be in place by March. But to reach the upper price level we need at least a 5% correction in the immediate term. For now, the momentum is waning and everything is over stretched and divergences everywhere. Like an elastic band the market will snap back in position before any upward journey.

Conspiracy theorists have it that the market is being propped up for the Facebook IPO. While it is unlikely the reason, the no volume market is being held up by the powers that be to create the “greed factor”. As always, retail will buy at the top and sell at the bottom. And it takes time to convert non-believers to believers.

Coming back to Facebook, the fate of other social networking companies who have done IPO recently have not been that great. And as a fad, how long they survive is a question mark. Like linkedin or Groupon, the business model is suspect. Just having a huge user base and that too in places like India, does not guarantee any revenue. I would love to short all these companies in June of 2013.

In terms of market technicals, NYMO is still below the trend line which it broke before.
Tomorrow is NFP day. The last NFP day was red and we expected it to be a turning point which did not happen. So I am going to treat it as any other day, may be with higher level of volatility than today. But the situation today remains the same as yesterday. So we just wait for another day. And just before I sign off, let me show you the latest of the analog of Eric Swarts;