Friday, December 21, 2012

Markets implode

Futures are down big due to overnight developments.  

"House Speaker John Boehner's big idea for a backup "Plan B" exploded Thursday night when, after days of wrangling with his own troops, he realized he didn't have enough votes to pass the tax cut part of his plan"

Markets have been rallying on low breadth for quite sometime.  If you read my previous posts, I have been advocating less exposure to the Markets.  This implosion overnight in the futures was an event  waiting to happen.  This is a news driven market.  If you are long, sell on any bounce, go back and enjoy your holidays and assess the situation in 2013.

Tuesday, December 18, 2012

Strong Day

Strong gains on heavier volume than the previous session for all three indexes viz SPY, IWM and QQQ which is encouraging. However, all indexes are closing in on resistance levels.  Breadth continues to lack in this uptrend.  But lack of breadth in terms of number of stocks participating in the move either way has been relatively low this year.  This lack of breadth does not give me enough conviction to get fully invested.  Still this is a headline news driven market.  If a trade is working in your favor, keep the profit target small and cut your losers even faster in this market.

Sunday, December 16, 2012

Market continues to hold on to gains

Markets continue to hold on to the gains.  If you look at SPY, it broke above the trading range last week and quickly fell back to the base.  Breadth remains extremely low and yet this rally remains intact.  The Fed is trying everything it can to prop up the market with the announcement of another round of bond buying last week.  The reaction from the market was 'sell the news'.  But it appears that the bulls are in control so far.  This environment is very hard for small traders as this choppy action creates a lot of whipsaw which is dangerous for ones portfolio.

Monday, December 10, 2012

Markets flat and choppy

Markets are holding their ground last couple of weeks after a rally on weak breadth.  The daily trading action has been choppy and the markets finish flat at the end of the day in the last couple of weeks.  There is clearly a divergence in volume on this rally.  A decisive break above or below the trading range on relatively high breadth would signal the short term direction.  Until then it is better to remain in cash.