Monday, December 5, 2011

Is A Top Near?

It is never a good idea to front run the market, but of late all the actions have been when the markets are closed. It is the easiest and cheapest way to jack up the market. Push up the futures in pre-market and the retail simply chases the rally.  Only the Banksters and uber rich with high margin future accounts can play this game. You and I will just suck the wind. In such a situation, the only way to profit is to preempt their moves. That is why it becomes so import to find the top and bottom. There are risks associated with such moves and the stops have to be really tight. Calling a top or bottom is against the trend and chances are I am always ahead of time. So be very careful and use your own judgement. Please send your comments if you find something different.

On December 2, I wrote; “According to my calculation, the top is due around December 6. So may be Monday, December 5, we shall see SPX trying to break 1265 again and possibly failing”. It played out exactly as scripted.  SPX went up to 1266, touched the descending resistance line and rolled over.  So when in the morning, SPX was touching the line, I entered a trade on the short side and twitted to my readers.

 I do not think we are looking for a huge drop but NYMO is getting to that reversal zone.

 Nothing alarming yet but getting there.

This short play is just a short term trading and is valid for a week or so.

On December 1, I mentioned that Gold is showing signs of top and now is not the time to get long gold. Sure enough, gold lost over $ 30 today. I think more downside is to come.

If we agree that all risk assets move together, (Risk On, Risk Off) then we will possibly see a “risk off” trade for the next few days, judging by the movement of the currencies. EUR/JPY has broken the channel downward.

 The markets have gone ahead of the pair and will possibly correct to the downside.  

If tomorrow we see the market has pushed up again and SPX is around 1260-65, I will add to my short. 

For now, I do not think there is much more upside.

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