S&P 910 Watch Area……………Update at 1:56 PM
This week’s rally was very impressive to say the least. From a short-term perspective the market is now quite overbought and a back-off to the S&P 910 area will be the place to watch and make decisions. In a sense the market is following an expanding wedge formation which could be quite bullish at a further point. The former bottom side of the wedge at around the S&P 880 area from May 21st 2009 was taken out last week and yet the market only went 10 points down to 870. Now we have the top side of the wedge at 732 from July 1st 2009 being taken out yesterday at 934. To try and get a feel of this current market we will be trying additional short-term short trades today at the S&P 938 to 941 area as the top of the wedge is tested.
Probably the most impressive area of the market at the moment is the technology sector IGW ETF which is making new highs for the year. That happens to be part of the long side of our total long/short portfolio and was chosen back in March because of anticipated demand from the “Green Revolution”. So in total the market is showing signs of a much better feel, but can the banking and technology sectors bail out the consumer? We will let this all unfold and make needed position changes when the scene become clearer.
The EMA ETF Fund Nav dropped 5.5 percent from its all time high last week at 1225 and now sits at 1158.
8:50 AM CDT
UPDATE: We moved our net short position in the EMA ETF Fund to 100 percent from the 70 percent level, S&P at 940.50.