Weekly Update

By: Angelo Campione | Sun, May 24, 2009
Print Email

Current Positioning:

SPY: Short 75%

QQQQ: Short 75%

General Commentary:

The system for the SPY is 75% into a Sell signal __ __ __ __

The system for the QQQQ is 75% into a Sell signal __ __ __ __

This past week was quite interesting, the markets started the week strongly giving the impression that we'd seen another "buy the dip" scenario. However, that all changed by the end of the week and now we have the potential for some more serious downward movement to begin.

If we get a close below 880 on the SPX and 1350 on the NDX, the selling pressure should increase, although at this point the market has been quite resilient and we could simply go sideways for a while here.

On to the analysis..

SPX Chart - Bigger Picture

The bigger picture is starting to confirm that at the very least we'll see a sideways consolidation type pattern between 850 and 950. We do also have the potential for a drop to the 800 level without causing too much damage to the technicals.

The upside seems capped in the near term as the resistance at the 200 DMA and the horizontal resistance overhead seems unlikely to be broken right now.

SPX Chart - Shorter Picture

The shorter term picture now shows the clear break of the up trend channel that happened on Thursday and Friday. This index now only has the horizontal support at 875 to rely on. That doesn't necessarily mean that we're heading south straight away, but it's another blow that the market has taken that weakens the overall outlook.

The MACD is still decisively negative and the RSI is weakening also. This chart seems destined to test the 50 DMA at 850.as a minimum. Personally, I think a dip down to 800 would be healthy for the market in a wider sense.

For this week, support on the SPX is 850 - 875 and resistance 900 - 920.

NDX Chart - Shorter Picture

The Nasdaq is painting an indecisive picture through a symmetrical triangle. This index actually has more potential for an upside break as it's still holding above the 200 DMA, but the jury is still out.

A lift in volume combined with price movement will likely determine the next mid term move.

For the week ahead, support on the NDX is 1300 - 1350 and resistance at 1400 - 1440.

The VIX Picture

The VIX made a new low this past week, showing that the markets' fear is reducing significantly. This didn't last long however, and now it seems that 34 is a key level. If we get a close above 34, this should be the clincher that'll have the markets head south.

Note also how the MACD (both linear and histogram) are setting up for a bullish advance, which confirms our view that more market weakness lies ahead.

The VIX measures the premiums investors are willing to pay for option contracts and is essentially a measure of fear i.e. the higher the VIX, the higher the fear in the market place.

Quote of the Week:

The quote this week is from Indira Gandhi (India's first and only female Prime Minister), "You must learn to be still in the midst of activity and to be vibrantly alive in repose."

Advantage Credit Spreads

In case you haven't heard of our other service - Advantage Credit Spreads, we've been steadily generating a handy return each month. Check out the performance so far this year:

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
6.0% 8.0% 4.0% 2.5% 6.0%              
(Please note, this performance is raw, i.e. without brokerage/commissions taken into account)

When you consider that the SPX started the year at about 900 points and after 5 months is at 887, these are not times for buy and hold strategies. Allocating a portion of your portfolio into a strategy like the Advantage Credit Spreads system can really provide a boost to your portfolio returns. We're not shooting for the moon here, we simply aim to collect between 4 - 8% per month for accepting a level of risk that is considered to be low at the time of entry.

The beauty to this strategy is that it doesn't rely on the market heading in a particular direction - it's considered a non-directional trading system. To learn more about this, please click here.

Also as an added bonus, this service can be auto-traded through Think or Swim for you to turn this into a passive income stream.

Feel free to email me at angelo@stockbarometer.com if you have any questions or comments.

If you are receiving these alerts on a free trial, you have access to all of our previous articles and recommendations by clicking here. If you do not recall your username and/or password, please email us at customersupport@stockbarometer.com. If you are interested in continuing to receive our service after your free trial, please click here.



Angelo Campione

Author: Angelo Campione

Angelo Campione
"Improved Speculation Through Timing"

About The Advantage Report Trader Alert:

The Advantage Report is a timing service that allows you to maximize profit in both bullish and bearish market, we have a proprietary system that issues buy or sell signals based on several algorithms.

The signals we have are:

BUY - This means go long in your desired investment vehicle.
SELL - This means go short in your desired investment vehicle.
PRELIMINARY BUY or SELL - This means be alert to a potential change of signal and be ready to take action shortly but DO NOT take action yet.
STOP - This means close your positions and go to cash

To Learn more about us: Click Here

Not a subscriber yet? Want to be? Click here and sign up for a no cost trial. Sign up for our TRADE TUTOR weekly newsletter at no cost to get a trading education from Pro Traders.

Important Disclosure:

Futures, Options, Mutual Fund, and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

There is a very high degree of risk involved in trading. Past results are not indictive of future returns. Stock Barometer and all individuals affiliated with Stock Barometer assume no responsibility for your trading or investment results.

Copyright © 2007-2010 Angelo Campione

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com