The Wait Worth Waiting For

The Market moved as expected starting a retracement from the last two weeks of October. Based on the price movement of the equities market and the US$, it seemed that the retracement is for real this time. However, the major indices needs to break the following levels to confirm that the uptrend for the equities market is broken:

• Dow Jones 30 index needs to close below 9430 level
• S&P500 index needs to close below 1020 level
• Nasdaq Composite index needs to close below 2041 level

The Nasdaq Composite Index which tends to lead the market is closer to the critical levels than the other 2 major indices.

Once the critical levels are broken, the downtrend could last till Mar to Jun next year.

My position:

I have locked in my profits and open new positions with a set of Jan 2010 104 Put for SPY and a Bear Call spread 104/109 for SPY on last Friday. For SPY, the stock needs to close below 102 to confirm that the uptrend is broken.

With the downtrend in the U.S. equities market, the U.S. $ is expected to strengthen. Some would argue that the strengthening of the US$ leads the downfall in U.S. equities market. It does not matter who leads who for now as long as we know, as the US$ strengthen, the commodities (e.g. metals, oil, coal) prices could fall.

Cheers !

PersianCat (Millionaire-in-progress)