Friday, January 2, 2009

01.02.09 - Sideways Trade After Morning Run

Don't be fooled though, the Cumulative Tick is marching steadily higher and there is always a trend-day risk to shorts of a second leg higher into the close. The Trader/Investor dilemma is that we have a bullish day internally in a bullish time of year after a 20-day/ 50-day moving average breakout to the upside even as short-term oscillators are increasingly overbought.

We do seem to be finding a bit of resistance at the top of the recent trading range here, however. The only answer I have is to stay away from the net fade trade until we have clearer evidence of a breakdown, but consider increasing hedge positions as we move higher.

In intermarket news, oil is up sharply (USO +7.15%) and bond rates are finally catching a bid (TNX +1.92%). The dollar is up (UUP +0.40%) and gold, not surprisingly, is down (GLD -0.25%). The VIX has amazingly broken 40, at 37.66.

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