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Wednesday, May 1, 2013

Winding Top

5/1 - IMAX 25.85 Half pos. It seems to hold 25-26 support level. I sold it on bad reaction to earnings on 4/25 at about same price, and took a loss off  27.74 original purchase price. Same plan as before : Looking to add on strength above 27 and eventually 28.     PFT 33; 37; 43.50

5/1 - SCTY 27.93 Final 1/4 out (+38% on this one!) My target was 28.50, it almost got there today. I don't think its a top, but I wanted to go back into IMAX without increasing invested amount (little less than 50% of account invested atm)

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The S&P futures fell like a winding top about to explode upward!!!
Said  Danny Riley of  MrTopStep

All the talk is about 1600SPX and higher. How high? There are all kind of numbers, even as high as 1750. What happened to downside? Are we ever going to correct again?
       Look at monthly chart. Yes, it can go up more. Is it a low risk entry? NO.
       Sto is pushing overbought, but price can push a bit higher for a month or two. SPY is extended above 10 and 20 months MA almost to extreme degree. I noticed that when its above 20 months MA by about 200SPX points - there is a correction back to aforementioned Moving Averages. It happened without exceptions 5 times in past 10 years. Loss of momentum is evident in MACD, similar to 2007, and volume is relatively stagnant (just like back in late 2006).
       I am not going to look for parallels between then and now. Not only because every top is different, but it just doesn't matter to me. I don't hold positions for years. Having said that, I am not looking to increase my exposure to general stock market at this time, except for occasional "special situation". Aggressive day-trades is a whole different topic.

I made this comment on Fly's blog here (link).  Its not new, I made this observation back in February here (link)  and before in November 2012 here (link)

 Let me drop a scandalous thought in the mix:
           This whole time, while market was rallying, everybody agreed that its a “FED induced rally”, backed by endless liquidity. Even my co-workers know that. Liquidity? Please refer to 4/23 mini flash-crash – they mopped that ‘liquidity’ out in less than 5 minutes.
            As for latest QE, I have a variant perception based on TLT and MBB just now getting back to September levels (when this QE supposedly started). 85bil per month should have done more, methinks. I know, I know…. Keep your quotes from “Economics 101″ to yourself, I read the same books.
           My point simply is this: THERE IS NO QE !!!
           Fed ain’t got your back, PPT is on vacation until next elections and liquidity is an illusion.
           Plan accordingly!

PS. What? NY Fed website?
Please, don’t be a child
PPS. Enjoy your summer

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