Monday, July 13, 2009

Monday Outlook

This is a continuation of last week's Time Perspective post.
In today's case I'm looking at the disparity of the daily and weekly bar signals.
Above is the VIX and, depending on whether you believe the daily or weekly signals, the odds favor a bull run (daily) or a really scary bear run (weekly).

This same daily/weekly disparity applies to each component of my little ETF basket.
To add a little spice to the sauce, some big names are reporting earnings this week, and likely to spike volatility.
I typically lighten up longer term positions on expiration week when earnings season is in full bloom, or fully hedge those positions to protect against those gut wrenching implosions that often follow negative earning surprises and guidance lower.
A successful trader and hedge fund manager once offered me a little nugget of insight that has served me well over the years: If you wouldn't buy a stock/ETF/future at its current chart position, why would you continue to hold it long? While this attitude is clearly reflective of an active trading approach to the markets, it's a perspective that works for me.
That being said, after an initial pop at the open momentum going into expiration week remains negative and with earnings season cautions and spiked volatility, I'm looking for the Qs to take a another hit this week with 34 as the first downside target.

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