Wednesday, January 28, 2009

Big up day + optimism = another sucker rally

The S&P 500 rose 3.4% today, which is one of the larger 1-day swings in the last several weeks. More importantly, sentiment is returning to the highest levels of optimism in the last two years. I'm going to use this opportunity to put my remaining cash (25%) into the Grizzly Short fund (GRZZX).

Jan. 29 Update: My grand average purchase price for GRZZX is $9.03 per share.

Sunday, January 25, 2009

Two days and two broken trend lines

The S&P 500 index broke through a declining tops trend line one week ago Friday, which is normally a short-term bullish indicator. However, on the next trading day it broke through a longer-term support line at the 816 level, which is a bearish indicator.

All things being equal, the latter bearish break is probably the more important one. Of course, that's a safe call for me to make given that money flow and breadth are mildly bearish, that sentiment is still mildly optimistic (bearish), and that the long-term trend is a bear market.

I remain 75% in GRZZX and 25% cash.

Wednesday, January 14, 2009

Looks like a breakdown

As I write this (10:26 AM) the S&P 500 index is trading at 846, which is its lowest intraday value since early December. I was hoping for some kind of signal at a higher price so that I could take a better position in GRZZX with my remaining cash, but that never happened. So for the time being I'm going to keep my 25% cash position as insurance against any freak rally. If the market keeps falling from here, I'll be perfectly happy to make gains with only 75% of my assets in GRZZX - it's better than no gains at all.

Thursday, January 08, 2009

Still in a rising trend

The stock market rally has slowed, but it hasn't stopped. Recent S&P 500 index closing values have formed an ascending channel pattern.

Short-term sentiment has reached or surpassed the optimistic peaks of October 2007 and December 2006, so I'm convinced that this rising channel will end with a significant retreat. The first signal that the rally has ended will either be a violation of the lower trend line, or perhaps a shift to negative breadth, which has been solidly positive for several weeks now.

When the rally ends I will shift the remaining 25% of my Roth IRA from cash to GRZZX. Since the new tax year has begun, I will also deposit another $5000 to the Roth in stages at opportune times.

In the meantime, my larger but limited-choice 403b (similar to a 401k) remains in short term government treasuries. It's very frustrating to think what I could be doing with that account if I had the freedom to buy GRZZX with it.