Skip to main content

S&P 500 gaps down - confirms bearish outlook

Yesterday I wrote a post describing my opinion on the direction of the markets. I focused on the S&P 500 and, after reviewing the chart situation, came to the conclusion that the most likely direction was down.

Today we opened with gap to the downside and the index never recovered. The gap is clearly visible in the chart below which shows what happened to the S&P 500 SPDRS (SPY) ETF.

Chart of SPY. Click to view larger image.Shortly after I saw the gap, I decided it was time to nibble on a few shares of the ProShares UltraShort S&P500 (SDS) ETF. Purchased at $55.13, SDS closed today at $56.08 for a quick little 1.7% gain.

The chart now looks worse than it did Friday. Today's sell-off came on decent volume but not extraordinary volume. This implies we have not yet seen the kind of capitulation that marks a bottom. Note also how the MACD on the chart above is on the verge of confirming the bearish direction. It looks like SPY might have a bit further to fall.

Disclosure: author is long SDS
Labels:

Comments

Anonymous said…
Dear Visitors, This blog is really nice and informative. We are pleased to know this blog is really helping people. Its our pleasure to post informative content on this useful blog created by webmaster.

Dear Visitors, This blog is really nice and informative. We are pleased to know this blog is really helping people. Its our pleasure to post informative content on this useful blog created by webmaster.On 29th Feb 2008 budget was declared. It was expected to be in favor of middle class people . As in budget all loan of farmers were waived off, its a
Positive news for farmer which can give rise to agro based industries too. Overall budget was good for everyone. Now with time USA is coming out of the jinx of sub prime and recession and we have already witnessed some good movement in US market too. Recent fall in Indian stock market was due to Overbought Nifty, USA recession margin pressure and panic. Now Nifty is in consolidation phase. Once consolidation is over we will see major rally in the stock market.Please visit our website www.shareinfoline.com
June 5, 2008 at 12:08:00 AM EDT

Post a Comment

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation ...
4 comments
Read more

Time to be conservative with your 401K

Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...
7 comments
Read more

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.
Post a Comment
Read more