Market Update – Potential Long Term Road Block
11:11 UTC 11 Nov 2009 
8 Comments
The uptrend has been our friend lately as we have ridden the daily stochastic up from the pullback. Todays breakout could lead to more highs in this stairstep pattern, but there is some long term resistance ahead to consider. Below is a long term monthly chart of SPY marked up that shows the 25 and 50 moving averages with slow stochastics. This shows the potential crash course around the 111-112 range on the SPY. Also around this same level is a 50% Fibonacci retracement from the March lows… The ETF Corner does a good job showing this chart at ETF Corner Link .
This all may seem like hocus pocus voodoo $@$% to most of you and a lot of times it does to me as well, but you have to consider whose trading out there. Its not people trading out there anymore, the majority is programmed computers. This is not our grandfathers market where people buy a stock because they believe in a company and invest for years and years. You do that these days and you will give it all back and then some. Being a computer programmer definitely has helped my thought process when approaching the markets. Algorithms are unemotional mathematical beings (I say beings because they are there… making the trades) and when certain numbers (triggers) are included in the program and in the back of the minds of millions of human traders things can happen. So technicals as silly and far fetched as they seem do play a role that at least deserve consideration when investing. Thats my 2 cents on it and am curious what your opinions are as well… either way.
Full chart on full post……
Calling a “top” in the S&P appears to be the most popular game on the blogosphere. I can name dozens of sites that parrot similar views. Technicians are looking silly by calling tops that are eradicated with days of their touting.
At the risk of being trollish, what is the point? Is this a public service? Is this a tease to attract eyeballs? Is this to be used for bragging rights in the future? Are you of the opinion that this is the holy grail for investment success?
With all due respect Mr. NHF, what is the track record of your last dozen market calls, and how much have you made in the 60% uptrade? Wouldn’t your readers benefit from full disclosure by posting that along with on your chart?
Maybe just maybe you might focus on what is non-consensus – that this rally is not 1929 or 1937, the crash has happened, and maybe the market is right. If your looking for another crash, maybe you could highlight that it may occur in the inflation adjusted “real” Dow l like it did in 1982, and not in new nominal lows.
This may be a game with no responsibilities orconsequences to you, but anybody who follows your free advice is probably risking real dollars, so be careful about sharing views that are fighting the strongest trend we’ve seen in 80 years. You may very well be right, but unless you are a professional, you’re not supposed to be that way.
Thanks for your comment Sherman.
Agree with you on the technicals. They are only part of the equation when we are considering any moves.
There was no mention of an top or a crash.
Its funny that you question our track record today in that just yesterday right before this post there is a post explaining how we had to take down our “sidebar portfolio” by Stockalicious.com which dynamically showed our performance YTD and our position. The website that furnished this has gone by the wayside. This portfolio was simply a long/short SPY. We are working on a replacement widget.
Also we have been clearing the way for a trading desk to show trades. Once our lawyer is satisfied..ha
There is a lot of information in our Terms of Use. There is a link at the bottom of every page and at the top in the toolbar.
And since you were interested a brief synopsis on performance: this portfolio was more long term in nature and caught most of the rally after being short the first part of the year. We only have 10 trading days on it so far this year where we either went full long or full short. We gave back about 10% in the past couple months with the head fakes to the downside. Currently we are up just over 30% for the year so far, which were happy about, but could be happier…ha. As I mentioned above these trades were all disclosed on the widget the day they were made by simply showing long or short the SPY. If you look back at older post you would also see both long and short commentary. Basically “Trend is our friend”. There is more info on the original post we had when introducing the sidebar portfolio at:
http://www.nakedhedgefund.com/finance/naked-hedge-fund-new-addition/
The tone in your comment seems angry… hopefully this passes in your understanding that we don’t see ourselves as the “holy grail”. Thanks again for the comment!
Don’t let him get you down NHF. There are a lot of people that I know including myself that enjoy having many points of view and your site is one of them.
I like the charts the most myself and you’ve done very well so far this year.. anytime your beating the S&P500 average on minimal trades is good in my book!
By the way “Sherman” I loved you in Bonfire of the Vanities
I agree with Bernie. Its good to have perspectives. Sherman must be new to the site or he would have seen the portfolio on there.
Man someone must have pissed in his cheerios or something… how can anyone complain about free insights about the markets?
Thanks for the post.
And if you show me someone that says they have caught the entire 60% rally I’ll show you a liar.
Thanks for the good insights – as always. I too agree with your analysis. The market direction is determined by the US dollar now. The dollar ‘carry trade’ is driving this bear market rally – the trend is your friend but the volume is your best buddy.