Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Friday, September 9, 2011

The Rocketing Dollar Trade Rules the Day 9/9/11

Stock Market Technical Analysis

Click on above images to enlarge

The rocketing US Dollar trade drained big money out of the stock market today causing the bond trade to finally start.  I'm not expecting a lot out of the bond trade considering how little room it has to its upper blue channel line (shown in the lower cluster TLT chart) and especially since the SPY is holding at its lower blue channel line (shown in the SPY chart in the lower cluster).  Also, the VIX fell late in the day and closed at its low of the day which means that the stock traders probably won't let the bond trade go very far.  The UUP does look maxed out for the time being as it met strong resistance at its upper red channel line shown in the bottom left corner chart.  The GLD gold traders drifted slightly lower during the day in frustration.  There were some powerful undercurrents messing with the markets behind the curtain.

All in all, the bond trade has some room to go higher but the VIX says it had better do it quickly on Monday because odds are it will be a shortlived bond swing trade if the UUP's red channel continues to hold as a short term cap on it.  We are still in a pivotal situation here at the market close today. 


P.S.  I received an email asking why I don't paste my own trades on the lower cluster (active traders charts) so I decided I am going to do that but I must make it very clear to the 401k holders that the stocks and bonds charts in this lower cluster does not show 401k switch entries at all.  401k holders cannot go to cash between the exit for one and entry for the other (they have to immediately enter the opposite side trade at the exit of the first (bond / stock flipping).  So when marking what I believe is the ideal 401k switch point, I have to hold off on marking it, even though the first trade is long over and reversing, until the opposite trade gets its start signal and mark this point as the switch point which is typically a late exit on the first trade but you cannot enter the opposite trade until it is ready to start.  This leaves constant late exits on the first trade because of 401k holders inability to convert to cash for a day or so in between opposite side trades. 

Active traders trading outside of their 401k can exit the moment the first trade is done then stay in cash until the opposite side trade is ready to go which is what I do.  So I will go ahead and post the green and red (entry & exit) hash marks on the lower cluster, which are my personal entries and exits, but these will often differ greatly from the upper chart cluster which is for 401k holders only, as they are restricted by the situation I described above.

Please see my risk disclaimer at bottom

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