Nov
05
2009

  Neither Short Nor Long

The markets at an interesting point. The rally is technically still in effect, but other indicators are starting to diverge.

I'm now out of all my shorts, I profited from the recent pullback. And now the bias is back up, but I've decided not to go long at this point.

The QQQQ actually finished a buy setup yesterday (the other markets did not), but I looked at the charts today and decided not to get in. The RSI (relative strength index) is on a downward trend even though stock price is on an upward trend. That's a warning signal. If the market thought the price was going to continue up, the RSI would also be trending up.

This doesn't mean the stock price won't go up. It's just that the odds that it will go up a lot are small. If it doesn't take out the most recent highs, it'll just retest that level and go up $1. That's not enough for me to risk getting in. The payoff is not big enough to justify the risk. Yet, I'm not ready to go short on it again. I'll wait for that retest (or possible breakout above prior highs). THEN I'll go short again, at a better price.

I am long commodities. I picked up gold at $101-$102 and it's doing well at $107 right now. The weekly charts show gold is at an exhaustion level, so I think I'll get a chance to buy more at a better price after a correction. But I'll sell what I have when this leg up seems complete.

I bought oil yesterday. It wasn't a stellar time to buy, but it's in day 4 of a 13 day countdown, so I wanted a small position to see if that will complete. I anticipate making some sort of gain on it, but I don't know how much.

I don't have many positions right now, relatively, so I'm looking for something else to get into. But it might be a good time to just sit on cash for a few days. I'll see what the market action is today-- often big moves come on Fridays, and if the technicals set up for that I might get in on anticipation. But right now as far as I can tell, not much will be going on for a few days. At least in the ETFs I chart.

I still have 50 minutes left of my trading time (while Terry watches William) and I think I'll play some facebook games so I don't get ahead of myself and buy something for the sake of buying it just because my portfolio is light today. And I'll repeat to myself, "wait for the market to come to you, wait for the market to come to you. . ."