Anyone who thought the market would go to da' moon based on yesterday's wide rally needs to think again. Going short, for me, was a little bit of a no-brainer. Very few good rallies take off on a V-bounce. Going short is simply playing the statistics.Monday may have been an S&P double bottom on the January intraday low. I simply don't know at this point. What I do know is that the market did not have any capitulation. The evidence of major fear always gives technicians a little more confidence in a rally attempt after it happens.
What it did have was volume. That was very positive. It was not just the Shorts that were covering; institutions were buying. Will it hold? I am in the "let's wait and see" camp and just playing the statistics and I will take that 50% appreciation in my XLF puts today.
The timing is good for a new uptrend, but new uptrend start out fairly tentative. That is why the rally "event" will be retested. I will be in cash when it retests looking to buy long positions again in AAPL, GRMN, GS, and ANSS.
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