My name is Ivan Mutaftchiev. I have been professionally involved in the stock market since 2002 in various roles. I have worked as a stockbroker, high frequency trader and portfolio manager. My articles on technical analysis of stocks, commodities and the general direction of markets have been published in many leading online financial publications. Currently, in addition to being Chief Technical Strategist for BigBoxBreakouts.com, I manage an Investment Limited Partnership, utilizing virtually the same strategy as the one I use to generate the alerts you receive here on this site.
Hello Mr. “I.M.” & I certainly enjoy reading your article on BIGBOXBreakouts.com ! I believe this Market is about to be Severly PUNISHED & Bears will Mull Bulls Soon ! Is that what you see in the next 90 days ? Notice how an earlier jump http://finance.yahoo.com/q/bc?s=^IXIC&t=3m&l=on&z=l&q=l&c= in prices for leading stocks ended the day well above the recent trading ranges and strongly putting the Nasdaq index toward a “New Bullish Trend”
I DON’T Believe This will last Do you ? But will this developing bottom stay put ? Will this bullish trend do much more than reach the 50-day moving averages ? Well Now we know it did on LOW Volume ? Will the end of June ’11 ( & QE2) and likely Terrible Q2 earnings reports Dampen any revived buying interest here at the end of the month and quarter and QE2 ? I think we Will be in a LONG TERM “secular” Bear Market Soon ! The bulls should do nothing more than breathe a sigh of relief . . . that supports have held last week .
There is a lot of work to do ( & Dreaming too !) if the “Bullish Trend” is going to be repaired. These people who think “Earnings” will be Strong ? Those “BULLS” have been drinking KOOL Aid laced w/ LSD lolol ! I don’t see it. I think we will CRASH BURN & SOON maybe by 7/14/11 or so….??? RIGHT ! Nice (LOW VOLUME ?) end of the day rally late Fri – but wasn’t that just “Shorts Covering” ?? I’d like to SHORT the Emini S & P 500 or NASDAQ ! BUT, It might be a bit too “Early” Right now ? What do You think ? So, maybe I should Stay on the Sidelines until I see a Stronger DownWard Trend ???? Good Trading to You & Thanks Again ! TakeCare,Dave
Hello Dave,
First, thank you for your kind words ! Yes, after this Monday July 11th, I do believe the markets have a definite bear bias. I wrote an article for Seeking Alpha making that point, that you can find here http://bit.ly/oPbgMo . I actually expect corporate Q2 earnings to be reported in July to be generally good, however the markets have a forward looking perspective and reflect expectations for the economy 3 to 6 months from now. And with the global banks stressed by potential European sovereign defaults and increased bank reserve requirements; ECB and China raising interest rates and the end of QE2 here in the US – a tightening of credit is a certainty (and a consequent global economic slowdown).
As far as what instrument we should short, I generally avoid shorting indexes and ETFs, because I inspect volume for my analysis, and volume data is not reliable for ETFs. For example, if a down leg of the SPY happens on smaller volume, is it because the uptrend is still alive or is it because investors are so bearish that they now buy heavily into the S&P 500 Ultra Short ETF (Symbol: SDS) ?
As you have seen, the bias in my trades has changed this week. All my trades in stocks, since Monday July 11th have been to the short side. Individual stocks are a better risk/reward play than ETFs, since a weak stock can decline 20-30% during a 5% down leg on the market, and at the same time a weak stock will not bounce as much when the market has an up day.