Are You Ready For This Week’s Potential Violence?

Okay, so the market didn’t end in the red today. That’s okay. This is a good thing. Bernanke accomplished his goal of buoying the markets and we achieved a nice healthy 0.7% up day after a 2% down day.

Many traders are anticipating a gap down tomorrow morning to continue this bear trend. However, durable good orders are released before the open and any news right now is being acted on intensely. Technically, there is room for some upside tomorrow as indicated in the chart below. Today’s hammer is a bullish technical pattern, after all.

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Although it is possible we gap up slightly tomorrow on durable good orders and/or overnight global markets strength…most likely we continue this strong bear trend and end the day in the red (SPY) around the 147 level…especially after today’s healthy/natural bullish price action.(Which was partially driven by AAPL and rumors of a stock split. Otherwise, we would have only a 0.4% day and I would not be so bearish about tomorrow) This inclination for the SPY to continue its bear path could mean some violent downward action tomorrow if we don’t gap down in the morning.

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Bernanke’s testimony included a plea to Washington to not allow the budget cuts to go through because they will surely dent the economic progress of the U.S. THIS IS VERY BEARISH FOR THE WEEK. If Bernanke thinks the sequester is bad, then the markets will too. He is currently running the show. Friday is going to be bloody carnage if a deal is not made (most likely scenario).

VIX falling today means nothing. By the end of the week, this thing could be at 19.50.

I do not think the real money bulls will be back this week at all.

I am long March 1 SPY 149.50 Puts.

Best of luck.

What The Hell Happened Today? Monday – Feb 25 2013

What happened today proved the bulls are sitting on the sidelines praying this correction isn’t 8%. Those who had money to invest in this secular bull market, already have, and so with no one else left to buy, the bears have come to crash the party. The bears today came in numbers (massive selling volume) and said they don’t give one sh*t about Italian elections, they know Euro problems aren’t going away, they finally decided to negatively price in the sequester, and they were sick and tired of seeing this rally ensue without any sort of consolidation…until now.

I no longer believe Bernanke’s testimony tomorrow will be enough to buoy this market. Although there may be some kind of Bernanke bounce once his testimony is released, I think the bears are here to stay. We broke through a number of technical levels on a majority of the indices and this is not something to shrug off.

A closer look at SPY:

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My March 16 VIX call suggestion from The Week Ahead Report (yesterday’s post) is up 155% today. I knew it was a good hedge but even I did not anticipate such a move.

This week is set to be bloody. Be careful out there.