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CLETE
Shorting the SPX
posted Aug 14 '12 by clete
Well, not quite yet, actually. But I'm close to pulling the trigger on a short term short trade on the SPX.
The down trend line that connects the all time high with the April 2nd high is what is acting as resistance to this latest upward move. That and the nice even number of 1400. My feeling is that the resistance will hold, at least for now.
The reason I say that is simply because of momentum, or the lack thereof actually. The SPX has been creeping up on this trend line for over a week now with a series of small bodied candles. This happens when there isn't a lot of bullish enthusiasm combined with an obvious resistance point that all the bears are waiting to get to before selling. This situation is what causes major points of support and resistance for act as magnets. Basically everyone is expecting the price to go at least to such and such point and so it does. I love self-fulfilling prophecies.
The lack of enthusiasm on the part of the bulls is further evidenced by the fact that this entire move up since the 1st of June has been accompanied by a steady decrease in volume on the way up. The further up it goes the lower the volume has gotten.
Further still, the VIX has gotten ridiculously low. It dropped below 14, yesterday! That's just stupidly low. The last time it touched that low was last March, the high point of the market since '08.
Today's candle on both the S&P 500 futures and the SPX itself was a doji. Not exactly a sell signal yet but I'm watching it closely and will likely make a trade to the down side in the next few days.
Clete

CLETE
Re: Shorting SPX
posted Aug 16 '12 by clete
Any short play on the SPX is on hold. The SPX broke above the down trend line today. Volume wasn't that great so the break might not hold but wether it holds or not I won't be going short unless today's move is taken completely out tomorrow.
Clete

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