Daily Comment for August 5, 2009

Here is the quotes of the day:

I was engaged in my daily morning lengthy routine of news escapades when I received this email from my buddy (click here) ---> "SAUROS".


"The S&P went to 1009.05 at the highest, soooooo far from the 1010 you called ... :P"


He was obviously talking about this (click here) ==> "July 31, 2009 Post"

Please note his sarcasm in the above sentence. Though it was unfortunate to find out later in his next email.

"Actually I saw the 1009.05 on the rolling S&P (it means the S&P computed with its futures while it was closed). The "official" one shows 1007.12 at the highest... pffffff"

D*mn! .003% off! I should have realized that prices never really reach real resistance and support levels.



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S&P500

Ok well enough with the joking. The big question at hand is where will the S&P500 go from here and in what time frame. Definitely into Friday all technical indicators are telling me further price increase. However, intuitively it feels so wrong being a bull with such extended prices.

However as last week showed I made a completely wrong call on a big retracement of 3-4% as prices only corrected about 1%.

I will maintain discipline inline with technical readings and say prices will end up higher by the close of Friday. ( will double check my charts tomorrow for a price target).

If the bears take over tomorrow I would only expect a 1 - 1.5% continued retracement.

A lot of this depends on expectation and unemployment numbers. Its a good possibly that these numbers are priced in already, though with recent positive economic news this may not be the case anymore.

If the technicals are correct I would expect numbers to be inline or better than expected.



Currencies

What the heck happened with the pound!? It was perhaps the only major pair that continued to climb despite the dollar gaining against other major pairs such as the EUR, CAD, and AUD. I think my choice to exit my trades was the right moves as yesterdays gains were minimal and wouldn't have mattered with today's retracement (I haven't had time to watch the pairs like a madman, as I explained in my last post).

To be honest I think currencies are leading the game, Im waiting for a larger retracement in currencies before I consider and new trades.

But Currently the pairs are showing more upward momentum.

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Oil

With the expected dollar weakness to continue I expect oil to climb further up. And the technicals confirm this scenario. Pat has a price target of 75 by the end of this week. We will see soon enough.

If technicals are correct I don't expect tomorrows supply numbers to affect prices too much.


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If you are trading this environment I would suggest reducing your positions or finding appropriate intermarket hedges or make use of some options. The risk is getting greater and need to minimize possible adverse affects especially if you have been long.