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MARKET DIRECTION CALLS
August 2 2011 - Selling Intensifies
August 1 2011 - Bear Returns
July 28 2011 - Before The Open
July 27 2011 - Down But Are We Out?
July 20 2011 - Stock Market Volatility
July 18 2011 - Investors' Nervousness
July 15 2011 - Earnings VS Bleak Data
July 14 2011 - Below 1310
July 13 2011 - Ugly Looking Chart
July 12 2011 - Razor's Edge
July 8 2011 - Nasdaq Leads The Way
July 5 2011 - Expected Weakness
July 1 2011 - Overbought
Jun 28 2011 - July Rally?
Jun 27 2011 - Mixed Signals 
Jun 21 2011 - Bottom Or Bounce?
Jun 16 2011 - Raising Cash
Jun 15 2011 - More Downside To Come?
Jun 14 2011 - Bounce or Bottom?
Jun 12 2011 - Batten Down The Hatches
Jun 6 2011 - Bounce Sometime Soon?
Jun 2 2011 - Sell Signals and Warnings Everywhere
Jun 1 2011 - How Bad Could The Selling Get
Jun 1 2011 - Tread Carefully - Markets Remains Overvalued
May 31 2011 - Success - 100 Day Moving Average Tested
May 17 2011 - Be Careful Out There
Apri 18 2011 - Two Bears Compared
Apr 13 2011 - Why I Bought Puts Today
Apr 4 2011 - Breaking The February Highs
Mar 16 2011 - The Art Of Being Wrong
Mar 15 2011 - Market Remains Resilient
Mar 11 2011 - Trend Is Down
Feb 25 2011 - Trend Turning Bearish
Feb 11 2011 - Still Up - But Watch For June
Jan 3 2011 - Trend Remains Positive

 

Market Direction Call S&P 500


July 15 2011 - Earnings VS Bleak Data

 

My Bet Is The Market Sells Lower

I hope I am way off on my market direction call but I  think selling off is a lot easier for stocks than moving higher. The problem I see is that Stock Earnings have been good, but the market is being bombarded with bleak data.

It is always easier for stocks to fall than to rise. This is always the case. When stocks sell, they fall quickly. I was just reading a report on www.bloomberg.com that state governments have laid off almost 600,000 employees since the fall of 2008 and credit crisis.

 

The unemployment picture just cannot improve and housing is truly horrible. The unemployment picture hasn't changed even with QE1, QE2 and I doubt that anyone thinks any QE3 will change that bleak picture. If Governments keep bringing in more austerity measures and cut and slash, there will be more layoffs. I live in Canada and while our unemployment picture is good so far, if the US economy turns down then our unemployment will rise. All the cuts in Europe have not even got started yet. When people lose jobs, they cannot spend. When they do not spend the economy slows. When the economy slows big ticket items like housing pull back in price.

Well US housing is already terrible, so how much lower can it go? Obviously still lower. Earnings have been great but the XLF is still falling. Here it is today around 2:35 PM. The problem is earnings is a PAST indicator and the market is always a FORWARD looking Indicator and all the forward indicators right now are bleak at best.

XLF Chart - July 15 2011

The above chart is why I bought more SPY puts today. Below is the S&P 500 for the past 10 days. A distinct pattern of lower highs and lower lows.

S&P 500 - July 15 2011 chart

Below is the NASDAQ chart for July 15 2011 around 2:30 PM - The exact same pattern and the NASDAQ lead the way higher. It is now leading the way lower.

Nasdaq Chart - July 15 2011

My last chart below is the VIX for today. The entire day has been above 20.00 and this morning it ran quickly up to $21.68.

VIX chart - July 15 2011

The volatility is climbing each day as the 5 minute VIX Chart since July 1 2011 below indicates. The pressure to the downside will continue to build and I believe selling will ensue shortly.

VIX Chart 10 days in July

I believe that the market is signaling that it will correct and easily break the 1300 S&P "line in the sand". I bought more SPY puts today to hedge my portfolio and all my options that expired have been closed and the release capital not put back to work. That capital is going to be needed in the upcoming future as I believe my favorite stock prices will be lower than they are today.

 
 

 
 

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