09/15/11 Market Action

Figure 1.


Figure 2.

In the short term this market so far is showing some remarkable strength (See figure 1). If the SPY market can hold above 121 tomorrow, I may consider initiating some small swing trades. The longer term time frame (See figure 2) still does not look that bullish. Perhaps we can make it up to the August highs of 124. Any trades I take will be with smaller than normal position size and I am not expecting to much upside from here. This market has surprised me, so anything is possible, but I still feel the need to be extra defensive. The semiconductors (See figure 3 below) have made a move past the 50 DMA average. With the 50 DMA declining these moves usually fail, so it will be interesting to see how they hold up at this level.

Figure 3.