S&P 500 update midday: Well, things are starting to get interesting. This is why it is so important as a trader or investor to be agnostic (literally: not knowing) rather than wedded to one position all the time (long or short). The market has now broken its downtrend line after looking like it was going to make another leg down last week. This could represent a change in trend, but for confirmation, I would like to see the 20 day trailing high taken out (currently at 150.59 on the SPY).
Negatives remain. No pronouncements by the Feds or by Bush about bailing out some homeowners at the margin changes the macroeconomic uncertainty or the overall credit crunch. Nevertheless, the idea of not fighting the Fed remains in place.
Volume is low on up days, the market's action has been distorted by light pre- and post-Labor Day trading (when dramatic moves, usually to the upside, are not uncommon), and if you are bullish, this would be an over-extended entry point. A pullback to at least 144-145 if not the 138-139 range would be a normal and orderly development.
More later. Watch closely. September is a horrible month, but maybe we got some of the carnage out of the way in August... I'm still flat to short the S&P 500 (via puts).
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