Aug 25

Weekend outlook for 27th August 2012

As many of you know I have been 1 week on vacation in Cyprus and just came back this Thursday. Since I were away markets has really not done that much , more than slowly grind higher to then turn down after we reached a double top at 1425 on SPX.

What is interesting is that the only index which make a new 2012 high is SPX , all other indexes is still below 2012 highs including Europe and Asia.

1. NYA is still below 2012 highs and 2011 highs with dow transports, very negative as ONLY SPX reached new 2012 highs.

2. SPX since June lows from 1266 looks bearish to me, I dont think this is a new “bull market” going on , but I think we are going to take out 1266 next from here still. So I remain bearish at those levels as I were 2 weeks ago when I went long UVXY 5.55 and still holding.

3. Looking at VIX it hit a MAJOR magical trendline from past 5 years, EVERY single time we hit this line, it marked a top in markets. I think this is NO different. 2008 highs, 2010 highs , 2011 highs and 2012 top hit this trendline on VIX and when we got down to 13s we also hit the line and I think that marked another top when SPX reached 13s.

4. Looking at UUP dollar it has been going down lately, helping mkts to go higher , I think as soon dollar starts to turn up which I think it will very soon…. then you are going to see the mkts go further down again and set a pressure on materials and whole mkts.

5. AAPL I think topped out as we made a DARK CLOUD COVER pattern on WEEKLY chart, usually extreme bearish and therefore VERY good chances 675 was a major top. We also got a weekly chart bearish MACD divergence telling us that the last move up on AAPL has been very weak, so as soon we see AAPL start to move down mkts will follow down hard with it ,, another reason to be bearish now.

Conclusion:

So all in all I’m very bearish at those levels , VIX at VERY low levels, SPX pattern which looks bearish since June lows, all other indexes did NOT make new 2012 highs, AAPL had a great run helping mkts up, but looks like topped out or close to it,, if AAPL goes down will pull mkts down with it, dollar looks like it can bounce or rally some,, which will also set a pressure on mkts. Then we come to September/October which is by STATISTICS the worst months of the year holding stocks……..ONLY if we get new QE which I still dont think we get,, then we will move down,, if we get QE3 then the question will be how much already priced into the mkts now.

So all in all , Im staying long shorts and holding tight all the signs and signals telling me to stay short now as the upside looks very limited. For this week we have a possible “light” trading week, but lots of things with Greece could come up,, but overall we got holidays next monday (Labour Day) and usually mkts is trading light until this.

Very short term seeing a pattern targets 1370 on SPX possible this week.

 

Comments (5)

Add a comment

  1. Fatal error: Uncaught Error: Call to undefined function mysql_escape_string() in /home/customer/www/sqwiitrader.com/public_html/wp-content/plugins/mingle/classes/models/MnglUtils.php:9 Stack trace: #0 /home/customer/www/sqwiitrader.com/public_html/wp-content/plugins/mingle/classes/controllers/MnglAppController.php(429): MnglUtils::get_user_id_by_email('a@b.com') #1 /home/customer/www/sqwiitrader.com/public_html/wp-includes/class-wp-hook.php(309): MnglAppController->override_avatar('<img alt='' src...', 'a@b.com', 40, 'mm') #2 /home/customer/www/sqwiitrader.com/public_html/wp-includes/plugin.php(191): WP_Hook->apply_filters('<img alt='' src...', Array) #3 /home/customer/www/sqwiitrader.com/public_html/wp-includes/pluggable.php(2872): apply_filters('get_avatar', '<img alt='' src...', 'a@b.com', 40, 'mm', '', Array) #4 /home/customer/www/sqwiitrader.com/public_html/wp-content/themes/sqwii/library/tfuse_mods/thememodules/theme-comments.php(71): get_avatar('a@b.com', '40') #5 /home/customer/www/sqwiitrader.com/public_html/wp-c in /home/customer/www/sqwiitrader.com/public_html/wp-content/plugins/mingle/classes/models/MnglUtils.php on line 9