Before the Open (May 26)

Posted on by Jason Leavitt

Good morning. Happy Thursday.
The Asian/Pacific markets closed mostly up. Australia, India, Japan and S. Korea posted solid gains. Europe is currently mixed with a bullish slant; there are no standout winners or losers. Futures here in the States point towards a positive open for the cash market, but this could easily change at 8:30 EST when a ton of economic data is released.
The dollar is down. Gold, silver and oil are down too.
On Tuesday the market took out its low, but that didn’t induce selling. Then yesterday the market again took out its low, but that too didn’t induce selling. If the shorts are hoping the crossing of a threshold will suddenly induce lots of selling pressure, despite the 1-month trend down, we’re not there yet. Dips continue to get bought, so unless the bears shorted a couple weeks ago and used wide stops, they’ve been frustrated.
I’m still of the opinion the short and intermediate term trends (the ones I trade) are down, and a mundane, light-volume drift up into the holiday weekend will be a gift. I’m not ready to short yet (actually buy those inverse ETFs), but I’m watching closely.
Here’s the 30-min S&P chart. I have not changed the trendlines since the beginning of last week. The mid April gap up has been filled, and price continues to be contained. It’s entirely possible this falling rectangle pattern resolves up, but for now, my preference is to short a bounce. If shorting turns out to be a bad idea, no biggie. I switch gears and go long.

When the market drifts around on light volume right before a holiday, you can’t expect much follow through on stock trades. Keep that in mind the next two days. More after the open.
headlines at Yahoo Finance
today’s upgrades/downgrades
yesterday’s sector performance
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (May 26)”

  1. Yesterday:
    VIX: Spiked on the open then fell asleep. At 3pm it went into REM SLEEP. Is the market becoming complacent?
    CAT: Stretched all day, but didn’t get out of bet to make a higher-high. If it makes a HH today I’ll be encouraged the economy is moving forward.
    EUR/USD: I’m guessing it’ll range between 1.40 and 1.43. If it stays below 1.42 I think it’ll be more downside for the EUR and up for the USD.
    IBM: There’s volume at 167 if it falls below that you’ll be happy you bought that PUT.
    IWM: Had a volume spike. Maybe hope for the SPY.
    UUP & UDN: More of a volume spike on UDN than UUP. I guess they’re betting against the USD.
    SLV: My 36.50 short is loosing money.

  3. Oh yeah, I did buy some calls on UUP yesterday, but I guess
    if it’s starts moving against me I can always cancel and
    reverse and go with the UDN. 2) Somebody explore the buzz
    going around now with IBM. I would like to hear some additional
    commentary if they have the inside track on IBM info etc. HW

  5. Howard,
    Agree with your comment about Jason.
    And thanks to you and RichE for posting in a format that an amateur such as I can understand……….W

  7. Wainsta: if you are posting to this blog you
    probably know more that you think. Actually,
    Wainsta is Jason using a pseudonym. HW

  15. Howard,
    I’m a retired engineer just trying to keep what little I have. My house value is down, thanks to the mortgage disaster perpetrated by Wall Street bankers and I value the advice and insight on this site by Jason and others like you.
    RichE, thanks for your common sense remarks.

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