Still Bearish, But Watch For The Dead-Cat Bounce
Cam Hui | Jul 31, 2014 03:55PM ET
Despite my recent bearish call (see Despite the oversold readings, the technical picture for the SPX is mixed. The index sliced through the 50 day moving average, which typically acts as a support zone, as if the support level was non-existent. Such episodes of dramatic weakness are indications of severe technical breakdown. Short-term, the SPX is sitting just above a minor support zone at the 1925-1930 level which could serve to arrest any further near-term weakness.
I have no idea what NFP will show tomorrow morning, but US equities are oversold and due for a dead-cat bounce. Intermediate term, however, the crystal ball gets a little cloudy. I would like to look at how the market behaves at the obvious downside targets at the next two Fibonacci retracement levels of about 1900 and 1865 and how the fundamental backdrop is developing before making further calls on market direction.
My inner trader remains bearish intermediate term, but he closed out his shorts and he has taken a modest position on the long side.
Disclosure: Long TNAVIX-VXV
Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. ("Qwest"). This article is prepared by Mr. Hui as an outside business activity. As such, Qwest does not review or approve materials presented herein. The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest.
None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. Either Qwest or Mr. Hui may hold or control long or short positions in the securities or instruments mentioned.
Get The News You Want