With that said, I thought it would be a smart idea to take on a tiny position in FAS around 3:10pm, holding it over the weekend in order to hedge my rather large FAZ position going into next week. It seems as though the opportunity to short the market is now, however, especially with CEO Ken Lewis now joining partner in crime Vikram Pandit and all of AIG in their anger towards the taxation of bonuses. This debacle is the catalyst the market has been searching for, and I feel you're about to see FAZ and other inverse names go through the roof. Next week should be quite ugly.
On the contrary, if the market sells off, is it due to news or was their a fundamental screw up that shanked the market? In my opinion, the term "systemic risk" comes to mind, all because of the companies that screwed the U.S. over along the path of recessive market behavior. Sadly, the market may not recover until we see that ugly 666 bottom rear its head. Another opinion of mine lies within the Basic Materials sector push. With weak GLD holders/swing traders getting shaken out from Thursday and Friday, the gold industry may be a safe bet in times of financial sector demise:
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GLD 6 Month, Daily
The second GLD scenario played out pretty well, and it all occurred in one day. The push from about $87.50 all the way the that $93ish close was pure craziness. I wish I was home to catch this earlier in the week, but I sadly was not. I was on my phone all day checking out the movement, and I was shocked when I caught a 10 minute glimpse of the ticker action without charts. The next move in GLD will probably be a pullback, especially with the incredible volume accumulation on the 18th. I have been looking for this volume accumulation for what seems like years now, and with that huge amount of volume, I see at the very least sideways consolidation. Watch GLD closely this week, for the action within this ticker during the back end of this past week has shown the general public that people still fear the financial sector.
Along with the financial sector, I'm also concentrating on the energy and basic materials sector (as always). I have a strong feeling that they will continue to pullback as the market consolidates here, and if we have another push higher off of $SPX 752-743, we'll probably see energy names be the largest gainers. This would have to mean that the $SPX breaks down from a wedge that has formed from a descending trend line dating back to January 6th and an ascending trend line that formed on March 13th. As interesting as this wedge is, there are other scenarios to watch for in the $SPX that we as traders can base our trades off of:
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$SPX 30D 60M
The $SPX chart looks a little cramped, but if you pay attention to all of the different things on the chart, this week will be absolutely nuts. I'm looking forward to banking some serious coin this week after losing my toosh Monday, Tuesday, and Wednesday, gaining half of what I lost back on Thursday and Friday.
Going back to the basic materials and energy sector discussion for a second, I will be posting my watch list later today with some noteworthy chartology for some of the tickers within these sectors that I will be watching very, very closely. Stay tuned, and until then, I hope all of you have enjoyed your weekend!
ZM
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