Tuesday, August 10, 2010

Doves v Hawks. Tue Aug 10

I read a newspaper article (taken from the UK Daily Telegraph) this morning suggesting that the US senate has held up the appointment to the Fed board of three dovish new members. There's still a consensus that we'll get QE2 but maybe it won't be very comprehensive. The US indices rallied in quiet trading last night and we've retraced a third of yesterday's rise as 11 am approaches.
The DJIA chart looks unconvincing to me and my aim today is to sell out more stock. Here's a 60 minute chart which is pretty similar in recent days to the Xjo chart.

It could be that we're climbing a wall of worry and I'm still not seeing opportunities on the short side, but I'd rather be safe than sorry.

12.05 Sold out the last of my Awe at 171.5 and Lnc at 193. The market has now retraced yesterday's gains.
Challenger has failed to kick on and is back at 364, although I'm willing to hold that for a little longer. Mmx is below my stop but is jumping around on light volume so I might get a change to exit at better levels later on today.

12.47 With regards to Linc, I was hopeful yesterday that it could kick through 200 but it opened just shy and sold off. Once this double top/failure came through I should have sold out straight away but I held in hope for an hour or two. It's not all over, it's possible that the mid 180s holds and it has another go at 200 but in the short term, I'm less confident now.

2.32 The hawks are winning today. The Xjo index is down 48 points at 4547, just above support at 4540. I think it's unlikely that support will break in any significant way today. My scenario is that we've probably topped but we might bounce off support for a day or so before another leg down.
If we get a rebound tomorrow it could be time to put on a short position or two.

4.13 Xjo closed at 4541, down 54 and on support. I think we might have topped with the minor new high yesterday and my inclination is to sell out any balances of long positions if we get a small bounce in the morning. We've built in a bad night in the US and while I think that's plausible, it hasn't happened yet.

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