The Move Up Is Not Over, But…

Home / Leveraged ETFs / The Move Up Is Not Over, But…
February 1, 2010

The bounce move up is not over, but tomorrow may look sketchy. What I’m looking for is a possible gap up and then a selloff.

Often when these oversold bounces occur you get a nice bounce day (today), then you get an equal move or consolidating move of today’s move. However, after either move there is a slight trickle upwards. We didn’t move up enough today and as a collective, many stocks are still in oversold zone. A big “however,” is that there was some major relief to these conditions and if (lets just say) 70% of stocks relieved the condition that sets up this down move day to re-entrench bears and screw over longs that bought today’s close. Easy example:
Market is down tomorrow, and dicks around Wednesday, then roars back upward Thursday when CSCO reports after the bell on Wednesday to new intra-week highs. Disclosure: I am long CSCO calls.

Now what I’m looking for by the close of this week is a “potential” change back to trend up. I think its highly unlikely, but its completely possible. Less people expect it, the fear has shown its hand already. Let me show you in chart form what I mean. See SPX charts..

What I Did Today

I sold my TYH, EWZ 31%/20%, and VALE calls for very nice over the weekend gain of 44% on first half and 50% on the other. I also sold my TYH for gains, and bought intraday on the morning open PCX calls (sold for 18%), and throughout the morning QQQQ calls, IWM calls, DRYS, VLO calls, and PBR calls. I forgot that I sold out of both my PBR and VLO last week. I would have totally forgotten about it if not for a few tweets I noticed of other traders mentioning them talking their book.

What I’m Looking For Tomorrow

I would be a buyer of some of the same sectors if we see red days Tuesday and Wednesday. Mining – steel, gold, silver, coal.

Retail stocks seem to be hanging in there. Oil stocks also play into what I mentioned above. Semiconductors – we may have had a major fakeout to the downside in this sector, its too early to tell, but if this sector starts to rise I would want to be a buyer. Again if this sector starts to tick up, this could be used as the reason we see either a test of or new highs in the market indexes. Something I can’t rule out yet.