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Tuesday
Jun102008

..wagging the tail?

Did the market wagging tails like a dog signal anything of significance at the close?.  Did it signal a nod of recognition to get traders back in the game?.   If a tail is truly a communication device , well then we were being told we should think about buying because of the tails forming on many a stock and index end of day.     Did we?..Well, no, not just yet as we know confirmation is needed in this market and we'd rather wait till the next morning because we never know what we may wake up to.     Wakey, wakey!..it looks like Bernanke wagged his tongue late in the night and has sent the dollar higher by hinting more than ever the cuts are done with.   Chances are any late day buyers holding overnight will see there gains flushed away in the morning.  Are Bernanke's comments enough to block any technical momentum formed late in the afternoon?.   The futures suggest such, but we know the futures are the biggest headfake around these days.    Be prepared for anything intraday now as big moves should rule with volatility back in the game.   Buying the fade for a flip may be the flavor making a comeback intraday.

As far as the trading day, besides the "Shales" being the new Solar ;),  it was looking quite pathetic.  Even the CRX was ready to eclipse the previous trading day lows, but then seemingly out of the blue stocks like RIMM started to move, even the commodity index we track closely reversed nicely...  Hmmm, one look at a few things like the NDX, SOX and you understood why.    A reversal was occurring as these hit the 50ema.   Yep, the same 50ema which we just saw balloon a move in the $CRX recently.   But, do we really care about the NDX?.    Yes, we do for the overall health of the market, but the concern here is Bernanke popped the commodity run for today as a higher dollar psychology will hurt our winning plays.    It may hurt more than usual if you haven't been taking profits along the way, but it also should be looked as a possible opp' in the near term.   Any exaggerated drop in our commodity plays is a strong possibility at these lofty heights.    Watch the $CRX early on.   A game of dominos potential is there, never think your hottie stock is immune.     Overall, we'd look at drops as an opportunity to pick up some favorites on the cheap sooner than later.    Dollar or no dollar noise,  strength in these commodity plays is not going away in 2008!.   It may get stalled here and there, but it ain't going away.  

As you are well aware of, we don't look for potential bottoms to squeeze out a play in individual stocks and we're not doing it here on any potential technical reversal signal given along the way.   We always want confirmation on stocks ..a change of pace and we definitely want to see one on the indices before buying back into this game.    The brutal action from Friday is fresh on traders minds, scars were left and they didn't heal overnight.  We are maintaining a very light exposure to stocks...commodities ...widgets.