Dec 8

Weekend Outlook for 10th December 2012 – Healthy pullback before rally higher !

Wow – what an amazing week we had in our room – with many stocks still going higher!

I took rest of my 3 x long ETFs off with big profits which I held since mid November and took it off on Friday with dow jones making new WEEKLY highs.

There is a lot of reasons why I did this, but here is what I see.

1. Markets is VERY overbought (looking at daily chart) and short term charts – which suggest to me – that a pullback is VERY possible – before we should rally higher.

2. The dollar (UUP) looks like it might spike higher early this week , suggesting too – that with dollar higher , mkts should go lower.

3. I’m seeing a POSSIBLE TOP hs pattern on NDX (which suggest short term downside) coming – in a much BIGGER IHS pattern which is bullish – so this tells me , that early downside might come – before we see a HUGE rally underway (after a possible pullback)

4. TZA forming a 2 day IHS pattern – suggest to me that very possible early this week , TZA could go sharp higher for a fast little pullback. I would like to see a FAST and furious pullback – so lots of bulls will stop out , before we rally higher again – markets had a BIG move from SPX 1340 to 1420-1430 , and a PULLBACK is only healthy for markets.

5. If I had to give a target on the pullback – would be MA200 at 1386 – so I believe its possible we test this level before we shoot higher !

All in all – I got a position in TZA at 14.95$ for a HEDGE to my small cap longs. I took off all my 3 x long ETFs with big profits this week and I will buy them back again , but for now I think its more safe to have a hedge position in shorts , and then keep holding small caps.

So I still remain BULLISH yes – but very very short term , I think a pullback is HEALTHY before we go higher , so I’m just trying to hedge my long positions in case we get a pullback.

So my theme for this week is a possible pullback coming (which should get more bears into trade and scream (crash crash,, hindenburg omen bla bla..) before we are going to see higher levels. Overall the dollar looks bearish and I think dollar will eventually head lower after a mini bounce which also suggest higher in mkts.

The target I got on NDX is 2900 = new highs coming – but after a pullback first.

 

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