The Market

As expected, the stock market is moving higher. It is Monday you know! The only question now is, "will it stay in positive territory?" That's anybody's guess but I do have an opinion (which is worthless). The market is going to respond up and down all day long to any news - whether expected or not - that may have any bearing on stocks.

The pros (and/or the computer systems) will determine the final outcome probably in the last 30 minutes of trading.

At this point, I'm mostly invested in stocks that seem to be moving upward regardless of the "play of the day." But, I'm ready to go into short investments (i.e. TZA, SDS) when the market gives some clear indication that it is ready to pull back. Baring major market news, that signal will probably not come today.

One stock of note: GDP moved above the Trend Line (see AllAllan.blogspot.com) and created a buy signal last Thursday. Today, it appears that others have noticed the trend and are pushing GDP significantly higher.

Improvising

If you don't have scissors you can fold paper and rip it against a corner of a table.

If you don't have a screwdriver you can use a dime or a piece of metal.

If you don't have a flashlight you can redirect light with a mirror.

If you are MacGyver ;-) and need to plug a leak, you can use chewing gum. Didn't he always seem to have chewing gum?

If you don't have another car fuse you can use aluminum foil (don't try this at home).

If you don't have a Q-Tip, what in the world can you use? There just doesn't seem to be a replacement for a Q-Tip in a wet ear!

I'm just sayin'

Stock Market Speculation

This market is very difficult to predict. Every day, the market players react (or overreact) to some news that seems to be already obvious. For example, the news could be that housing sales are up. But, the stimulus plan requires buyers to close prior to June 30. It dictates that sales will be squashed into a shorter time frame than would otherwise be natural. What will happen in August when the news hits that home sales were lower in July than in June? You can bet the market will react as if it didn't know that would be the case.

Today, the market dropped 3-3.6% on disappointing jobless data. My guess is that everyone already knew that would be the case. But, yesterday President Obama guaranteed good numbers. He established a high water line that didn't even come close to being reached.

But, the market doesn't tend to drop two days in a row - especially when the first day's drop was this dramatic. You can't really count on any "normal" action but Mondays have been good for weeks. I'm guessing that Monday will be like a rubber band stretched to far by today's drop. There should be some rebounding.

Jon Markman pointed out that the market (S&P500) is setting up for a head-and-shoulder top which began in January 2010. The right shoulder "bounce" should make it to 1140-1150 if the pattern plays out correctly.

I'm just concerned that people are so disenchanted with the market and it's strong volatility that the right shoulder may not come about. I do believe the movements will continue to be choppy but I'm thinking down is the dominant direction.

I'm going to use SDS (twice the inverse of the SP500) to take advantage of any moves downward. I'll use stops to make sure the radical moves don't do too much damage in case the shoulder does appear. For now, I'm going to wait until some confirmation - probably until Wednesday of next week - before going "short" the market with SDS.

More later...