Weekly Update

By: Angelo Campione | Mon, Jan 18, 2010
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1/17/2010 10:46:00 PM

Current Positioning:

SPY: Long 50%

General Commentary:

The system for the SPY is on a Buy signal __ __ __ __

Well the week didn't quite pan out as anticipated, while we got the expected pop up on Monday, the weakness expected for the rest of the week didn't happen.

This stock market game is a funny one, while the universal truth is that we don't know what tomorrow brings, we try to work out some semblance of order through a given system to give us the best chances of positioning for success.

To me, the best way to approach the market is with humbleness, respecting the fact that I have no real knowledge of the future, but that I feel good and can trust the steps I take in this moment. If, when tomorrow comes, it turns out that the steps I took are taking me somewhere that no longer feels right, I can accept what is and simply change direction without guilt or blame

Just something to think about.

So back to the task at hand, the market was choppy last week as expected, we're now approaching a key crossroad point. 1150 kept a ceiling on prices last week and we have support at around 1130, one of these points will have to give in the near term.

Our system has shifted into buy, and so the potential for a continued rise into March is increasing. A potential scenario is that we get a quick drop to around 1110 to shake things up a little, and then continue higher into March.

Let's see what the coming week brings.

SPX Chart - Bigger Picture

The bigger picture shows the market clearly continuing to trace the rising bearish wedge.

At this point, if we get a break to the downside, we'll probably find support around the 1070-1080 level. On the other hand, a break to the upside will go to the 1200 level before meeting more resistance.

The feint lines show the potential paths we're looking at for the next break.

SPX Chart - Shorter Picture

The shorter term shows the leeway we have within the rising bearish wedge and so potentially the week ahead could see a range between here and 1160.

The MACD is giving the potential for a turn lower here, but this has not been so reliable lately.

For the week ahead, support on the SPX is 1115 - 1130 and resistance is 1150 - 1160.

The VIX Picture

The VIX continues to show that the market is getting quite comfortable with higher prices, i.e. complacency.

Positive divergence is still present on the MACD histogram and the linear MACD also has potential to turn higher here. There's a reasonable chance for a pop higher during the week and therefore a drop in the markets but whether it's sustained is another question.

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. It tends to move inversely with the markets.

Performance

We're using a starting capital of $5,000 and allocations are based on 25% of this or the remaining balance.

SPY
Entered L/S Price Qty Value Closed Price P/L Balance
11 Jun Short 94.05 13 $1223 30 Jun 92.72 $17 $4,976
23 Jun Short 89.47 14 $1246 30 Jun 92.72 $45 $4,931
15 Jul Long 91.81 13 $1194 17 Jul 94.06 $29 $4,960
31 Jul Short 98.65 13 $1282 24 Aug 103.39 $62 $4,898
12 Aug Short 99.56 12 $1195 09 Dec 109.58 $120 $4,778
01 Sep Short 101.95 12 $1223 09 Dec 109.58 $92 $4,686
23 Oct Short 109.69 12 $1316 19 Jan      
16 Dec Short 111.20 11 $1223 19 Jan      
23 Dec Short 112.00 10 $1120 19 Jan      
19 Jan Long              
                 
                 
                 

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

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Regards,

 


 

Angelo Campione

Author: Angelo Campione

Angelo Campione
"Improved Speculation Through Timing"

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