Thursday, February 12, 2009

02.12.09 - Mixed Messages

Today's news featuring both the likely passage of the economic stimulus package and higher retail sales plus fewer new jobless claims reminds me of the many academic papers hypothesizing that market cycles are accentuated by government interventions, which are perennially late to the game.

At the mid-day, we are seeing a nice bullish hammer forming just above the prior SPY swing lows ($77.75 bad tick... s/b $81.30, which we are now under!). Indicator-wise, however, it's one of those odd days where we see lack of alignment. The Advance Decline line is rising, Semis are pulling hard and the VIX is falling, but Cumulative Tick remains negative as yet and Down volume continues to outpace Advancing volume. Also, we are seeing some short-term resistance at R (edit: error) S1 ($82.65). So for now I will fade both sides, keeping size small while waiting for a trend to develop.

Reading: MarketSci/ Why Mean Reversion is Strengthening

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