Wednesday, January 14, 2009

01.14.09 - Retail Knock Out

After a fairly strong after-session performance through the midnight hour, the S&P500 futures began to tick down and then cascaded lower over -3% on retail sales below expectation by two. In spite of a bearish technical bias last night, I thought we may see a bid today; this type of action reaffirms the need to play it light with counter-trend trades ahead of news risk during a bear market.

Although the SPY has found support just under $84, thus far we have seen a lackluster sideways drift below the VWAP on increasingly negative declining volume and tick action, and the VIX over 50. I have been doing some selective buying, but won't do so in size until intra-day indicators improve. However, I may consider more long exposure overnight on a lower close. Meanwhile here are two studies to review

o Quantifiable Edges - Big Gaps Down
o Market Rewind - Persistently Low RSIs (Now Day-3 <10)

Beige Book

"Overall economic activity continued to weaken across almost all of the Federal Reserve Districts since the previous reporting period. Most Districts noted reduced or low activity across a wide range of industries, although a few Districts noted some exceptions in some sectors..." [LINK]

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