Sunday, September 18, 2011

Quick Thoughts for the Week Ahead - 9/18/11

Hi traders - sorry for the late post and sorry for the lack of a video this weekend.  I was away all weekend for a family outing and didn't get back until about an hour ago.  Needless to say, I have some work to catch up on before tomorrow starts.

After being mostly right the past few weeks with the day to day swings of this choppy market, I was certainly not correct with my mid-week assessment on Wednesday.  The market posted gains both Thursday and Friday and I took a few small losses in some shorts I put on during Thursday's pre-market session.   I still have one of those shorts (LVS) but am in cash otherwise.

Although my outlook has remained bearish over the longer-term for a while now, I will say that this market is putting up a good fight (especially with the Nasdaq getting over 2600) and I am open to changing my outlook if the market tells me to do so.   There are some charts that are acting well, but not enough yet to get me excited.   My main signal did turn back to bullish this week (it's been back and forth all month much like the market) but there has still not be a real breadth thrust that would convince me that we're starting up a meaningful rally here.

As for this week, I see no edge in buying the market after it has been up five days in a row, so I won't even share potential long setups here.   There is only one stock I would consider after last week's market move, and I think a lot of others are watching it too, so I don't know if I would play a breakout or not.   Basically, I am in a wait and see mode.   IF (and that's a big if) the market gets a little pullback over the next two or three days that allows the slight overbought conditions to be worked off a bit, then I would look to buy.   Perhaps a nice little flag can be formed off of last week's move.   For the bulls, this would be the ideal scenario and I will watch for this this week.   I am not expecting it, but will keep my eyes open.

If the market doesn't pullback calmly and instead has another sharp selloff (and as I write this the futures are indicating a bad open on Monday), then I expect just further chop through the rest of this month.   This is the bulls' best opportunity to get something going, and if they can prevent any major selling this week, they have a chance.  

As always, I'm sure it will be an interesting week and it should be an important one for the longer-term direction of this market.   Watch to see if the bulls can keep most of the gains they got last week.   If they can, maybe we can get a bullish move after all.   If they give too much back, then those August lows still loom in my opinion.   Good luck.

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