Wednesday, November 19, 2008

11.19.08 - Resistance Too Strong


For those who want to know what the impact of technical and algorithmic trading is on the indices, look no further than last session's overnight trade. See how closely price traces along the five-day moving average (the cyan dotted line) within the orange outlined box? This is a common sell parameter for these models.

Unfortunately, the same impact was felt this morning, and we simply could not string together a follow-on rally. We are now at S1 for the S&P 500 (SPY $83.64). We may see short-term support there -- and I'll be thrilled if it holds for the day -- but the repeated tests of this level don't bode well, in my view.

Also, on a longer-term basis traditional MACD is once again rolling over. I usually don't give that much weight, but trends have been so enduring this year, it has proven worthy of tracking. Lastly, this Auto testimony is out-right depressing to listen to, isn't it? No wonder the market is trading down.


Microsoft - Ticked all these years that you missed out on MSFT? Today you can buy it for $19.00, same as 1998. See -- patience does pay! Cash per share is reported at $2.20. Yahoo! has added a feature, I see, where Market Cap is posted intraday. It actually updates every few seconds -- now that's what I call entertainment! You do see the irony embedded in this paragraph, don't you (lol)?



9:30AM PST: S1 breached. Ground Hog Day (so far...) or complete break down ahead? Think I'll hold onto my cash for now.

10:40AM PST: We have broken yesterday's lows. Low for the year, put in just last week, was SPY $82.09. After that it's make or break time and SPX 750-775 could easily come into play. VIX is back to a whopping 73. Treasuries are catching a strong bid, significantly reducing yield.

[FOMC Minutes]

12:35PM PST: XLF/ Financials are down almost 8% nearing the close.

Close: Loss for words. I'll play long side moves on the overnight as long as I'm awake (Add: won't hold overnight)... though I doubt we'll gap down after such a fugly day (sorry, but hey) -- and who knows -- remember early October? Gotta keep it small. New lows on the year; I show a VIX high of 75. See you tomorrow.

Reading:

o Calculated Risk/ Comparing Crashes
o VIX & More/ Third Highest VIX?

1 comment:

Anonymous said...

A most excellent blog. I'm glad I followed the link via Quantifiable Edges. Thanks so much for that nugget about the 5 day ma being a line in the sand for those damned bots.

Jason