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February 5, 2009


A late-night post today, as is often the case when I decide to gallivant. The elixir of choice this evening was a Tanqueray 10 martini, slightly dirty, lots of olives. Shaken, of course. The administrator was quite proficient. And generous. Well, on with the analysis. There are two items glaring in my mind regarding equity action, best displayed with charts:

stock index chart

stock market indicator

Given the volatile environment and the fact that the put/call ratio is stretched toward excessive optimism, I continue to believe upside will be limited and quickly met with selling pressure. Until I have a safe excuse to get aggressive one way or another, I will continue to sell SPX calls into any rally, as I did late today.

I'm starting to get a sense that all these gyrations are designed to either deprive active traders of their moola or lull patient traders to sleep. When both bulls and bears have forfeited their arguments (and money), the market will either explode higher to complete the mid-term rally or quietly roll over and drift lower sans the snapback rallies everyone has been conditioned to expect. A the moment, I anticipate the latter.

A quick note on gold before I retire. Today's rally threatened a close above the trend line, but failed.

gold chart

Of course, watching every tick around pivot areas is rather inane since TA is an inexact science. We still await something decisive in order to commit to significant trades. Lets see what Friday brings...


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