Market Update

Depsite a strong rally...people wanted out at the close...even the shorts were not buying. Additionally the spread between leveraged and leveraged inverse ETFs are at nose bleed levels...this usually reverts back to parity with market weakness.

Lastly, the Russell is usually a leader and can give an edge. Theoretically this index should be at 645 to 660ish by now. It got crushed relative to the SP500 which is now very expensive vs the Russell.

Additionally, Goldman Tax said today "Bottom is in". Given the fact that you would have lost 300% of your collateral requirements or more based on their EURO calls over the last 3 months...I would say they bought when they recommended to short...and sold when they recommended to go long. I wonder what their case is with the equity markets? Reason enough to be very careful is the idea that Goldman and friends are selling into it while telling everyone else to buy. 

The ideal setup for the market would be to see mild selling if it were to occur tomorrow...followed by a reasonable close. This could allow us to move up to the 1070 to 1090 area which would likely be shorted by nearly all of the swing systems. Keep in mind that given the weakness under the covers of the rally today, upside follow through from here is optional not necessarily most probable.

SPY getting a substantial bid

Despite the weakness in the market. People are paying up for leveraged long positions. We'll see how this plays out. Usually we would see the reaction sometime tomorrow...should be a several day affair if that happens. However, I will be watching to see if leverages position get thrown out or continue to see demand tomorrow

SPY finally finding a bid

The exit from leverage has been slowing and the cash market is now modestly/relatively discounted...by rights there should be some attempt at rallying somewhere in here.

Market has a deep bid going on

If this is true then my previous right shoulder situation looks probable...given the demand for leveraged risk...this paints an interesting picture...RISK ON looks like its back for a little bit...could be a couple of weeks required to set this right shoulder...from my previous WEDNESDAY, JUNE 9, 2010 post: Click here to refer to it.

The market is not obligated to go up...but until the RVS daily swing systems take shorts...up or sideways is the path of least resistance near-term.

11:30 pm: I wanted to add one thing to this post...and that is  that what bothers me about this is that the buying demand for levered risk was just too strong/extreme. It was really strong and it has me wondering what's or who's motivating this move...though we can probably guess that JP and Goldman tax ad putting some that that fresh Fed/Government money to use. How surprising?

SPY is still expensive...

Risk is being sold...I will post when it changes

SPY and IWM open up slightly expensive

I took this screen shot early...sorry for the late post...but in any case the indexes opened up slightly rich which biased some selling...Yesterday we were edging towards parity though still with a slight bid...today's open was rich and still is. Until we see some bid under leverage the market may have difficulty finding legs.

Russell 2000 and SP500 both still have bids and are discounted vs leverage