Saturday, November 13, 2010

Has the trend changed?

Has the trend changed? That is the question on many minds. It almost certainly has for long dated bonds (TLT). I would tend to vote "nay" on stocks (SPY) and gold (GLD) for now, but more evidence, more technical damage can flip those as well.

A market can be trending or in a range, if trending up, it can go to being in a range or trending down. Violent reversals, that look like the letter V or the letter A on the chart tend to be uncommon occurrences.

Sentiment is one of the most valuable indicators for trend changes. Right now, the anecdotal is that gold bulls are relatively complacent despite the violent swings. More downside seems likely, but until that occurs and major support is broken, I would vote that the trend is still up.

For stocks, it will be interesting to see how quickly people turn bearish on this dip. In all three markets (bonds, gold, stocks), it did seem to me that the period right after the election and Fed moves, looked like massive short covering and whipsaw kind of action. That kind of trade often unwinds.

My only Nov short option position that seems to be in real danger for expiration week is TLT, with the strike at 94 and the trade at 95.8. The rest of the chickens are almost certainly going to come in safe for another positive month for these low risk low reward trades. My open Dec positions are slightly in the red overall.

Again, I don't have much time, for trading or blogging with my current schedule, so if there are fewer updates, or late updates, that is the primary reason.

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