Market Direction: I Missed Many Longs Because of My Focus on the SP
July 31, 2008 12:00 AM
I have long mentioned that I would rather “swim downstream”. Meaning I would rather make calls to be long a stock - if the overall market is likely to move in the same direction. This is for a variety of reasons, including risk and gains. I watch the SP a lot because I like to look at the futures on it. Therefore, I may have become too preoccupied with the SP direction, and have missed easy calls to be long. it just is surprising that the DOW can lead the SP higher when, in general, it seems to follow the SP. But clearly that has not been the case the last 2 weeks.
On a side note, because of my post yesterday, that “there must be a LOT of people far smarter than I am” and that I would put a picture of a man in a dunce hat for the post, if I had one, my wise arse coworkers had a picture of a man in a dunce hat tapped to my pc screen at work this morning - ha, ha. Was somewhat funny, I admit. Anyhow…. at least they read it. I will admit that I am still a bit aggravated that I didnt see the move coming, but such is life.
For instance, on 07/15, the call should have been long GS, long JPM, long the Dow. The reason I did not make those calls is because the SP never rejected a low of any kind and XLF clearly never rejected a low as a whole. Therefore, I wanted a new low.
The problem appears that the financials have fallen so far, that any move higher in them lifts the market in a huge way, percentage wise, and this makes the moves to “appear” to make no sense. When WM is $3.50 a 20% move higher is not much, 70 cents.
Anyhow, I have no opinion on the market at these levels as these moves still seem like short covering on financials. But maybe I am wrong. I am not certain - so I have no opinion.
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