Market Alert: Cashing Out, Taking Profits, Going Flat - SPY @ 123.22 intraday
Wed 11/2/11 6:00 pm Swiss time (GMT+1)
In a market like this, you have to be nimble. I do not understand what is happening, but will not wait around to find out. I can always re-enter later if I am premature, but I just cashed out, locking in profits on all positions (I closed my Euro position the day prior to the Greek referndum announcement).
Normally, I would wait for more confirmation of a change in trend, but the market's action is simply not healthy:
- After a very healthy, robust, good volume advance last week, the S&P 500 not only stalled, but sold off just as sharply on even higher volume. A failed signal (failure to follow through in this case on a breakout) is one of the most reliable fo all signals - although it's a little early to call this breakout a failure, we don't need to wait for the rocket to completely fall back to Earth before ejecting;
- Downside gap was not even close to filled; volume so far today is unimpressive; this is a snapback rally, often the best chance to get out at a good price;
- Never let a profit turn into a loss; green ink was showing on all positions before I pulled the trigger today; I would rather take a short, sweet profit than wait around and wonder what hit me;
- Although I tend to ignore fundamentals as a rule, the Greek action is concerning (from a financial point of view); I actually agree with the protestors filling the streets of most countries that imposing austerity on the many to pay for the transgressions of a privileged, reckless few is immoral and unlikely to change the behavior of those who got us into this financial mess. Nevertheless, it will take the financial markets a bit of time to get used to this new paradigm - expect referenda in other countries facing austerity measures. The IMF model - punishing countries essentially for being poor and in debt by slashing their public services to the poor and retired so that wealth bankers can be made whole again - is deeply flawed but until this point has never been so bluntly challenged. I will wait on the sidelines until this sorts itself out. The United States was hurt not so much by a weak economy as by its complete political paralysis, held hostage by zealots who believe that slashing taxes and imposing austerity in a time of crisis is a great idea. Now the same thing might occur in Europe with fissures between the other EU members, duct-taped over with the latest bailout package to Greece, at high risk of leading to absolutely no net effective action. While the doctors are arguing (and some are arguing for bleeding the bad humors out of the patient and in the United States and the UK have gotten their way), the patient has hardly begun to recover. This is not good.
In a market like this, you have to be nimble. I do not understand what is happening, but will not wait around to find out. I can always re-enter later if I am premature, but I just cashed out, locking in profits on all positions (I closed my Euro position the day prior to the Greek referndum announcement).
Normally, I would wait for more confirmation of a change in trend, but the market's action is simply not healthy:
- After a very healthy, robust, good volume advance last week, the S&P 500 not only stalled, but sold off just as sharply on even higher volume. A failed signal (failure to follow through in this case on a breakout) is one of the most reliable fo all signals - although it's a little early to call this breakout a failure, we don't need to wait for the rocket to completely fall back to Earth before ejecting;
- Downside gap was not even close to filled; volume so far today is unimpressive; this is a snapback rally, often the best chance to get out at a good price;
- Never let a profit turn into a loss; green ink was showing on all positions before I pulled the trigger today; I would rather take a short, sweet profit than wait around and wonder what hit me;
- Although I tend to ignore fundamentals as a rule, the Greek action is concerning (from a financial point of view); I actually agree with the protestors filling the streets of most countries that imposing austerity on the many to pay for the transgressions of a privileged, reckless few is immoral and unlikely to change the behavior of those who got us into this financial mess. Nevertheless, it will take the financial markets a bit of time to get used to this new paradigm - expect referenda in other countries facing austerity measures. The IMF model - punishing countries essentially for being poor and in debt by slashing their public services to the poor and retired so that wealth bankers can be made whole again - is deeply flawed but until this point has never been so bluntly challenged. I will wait on the sidelines until this sorts itself out. The United States was hurt not so much by a weak economy as by its complete political paralysis, held hostage by zealots who believe that slashing taxes and imposing austerity in a time of crisis is a great idea. Now the same thing might occur in Europe with fissures between the other EU members, duct-taped over with the latest bailout package to Greece, at high risk of leading to absolutely no net effective action. While the doctors are arguing (and some are arguing for bleeding the bad humors out of the patient and in the United States and the UK have gotten their way), the patient has hardly begun to recover. This is not good.
No comments:
Post a Comment