Monday, September 8, 2008

09.08.08 - Systemic not Macro

This weekend's action addressed one element of systemic risk, not global macro risk. Of course one may affect the other over time. Meanwhile, take a look at the Semi's below (SMH) -- apparently no one told them about the (now fading) party. Adjusted Tick is going negative and the AD line has been heading south all morning. I'll be looking for support between SPY $124.80 and $125.50, but these elements need to turn around.

DBC = Commodities; XLF = Financials; SMH = Semiconductors

As an added note, there is generally not much of an edge in fading large gaps -- which tend to signal more of a lasting sea change than a short lived euphoria. Obviously today looks like it is setting up differently.

o Quantifiable Edges - Massive Gaps
o Quantifiable Edges - More on Massive Gaps

Unfortunately these studies did not distinguish bull and bear market periods.

BANKRATE.COM: I'm not sure whether or not these have been reset yet. I'll repost if they change by the close or even early tomorrow morning.

Revised 9/9 - This looks more like it (below).

12:35PM PST UPDATE: Semi's finally turned the corner, but the Q's still trail. Huge range day with support found at the levels indicated earlier (the five day moving averages of the Dow and S&P) above pivot. There go the Q's...

CLOSING UPDATE: Not that we couldn't go higher back into the prior trading range over the next day or two, but we went from oversold to pushing overbought (2-RSI > 88) very fast today...

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