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Special Monday Morning Update ~ Short term bearish (in the context of longer term bullishness)
On Friday, we neglected to mention, Phil sent out a trading alert that read:
"No change of mind on oil or looking for a short into the weekend. DIA Nov $119 puts are down to $0.98 and that’s one I like for next week but the day is young and maybe you can get that price for the $120 puts on a pop but that’s what I would look for."
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This (Monday) morning, Phil wrote:
We finished the week on a bearish note, shorting oil and the Dow (Nov $120 puts came in at $1.05) on expectations that SOMETHING would go wrong over the weekend. When the entire Global economy is held together by nothing but spit and bailing wire, it only takes just one more loose screw for the wheels to come off these bullish wagons.
This morning it’s one of those "meet the new boss, same as the old boss" things as the European markets realize that Italy may have a new Government this week but that’s sort of like announcing to the passengers on the Titanic that you have elected a new crew AFTER they hit the iceberg – maybe the new guys are REALLY good at bailing out water but you’re still going down eventually…
All right, we’re officially done worrying about Italy now. We worried about it last week and where did it get us? Nowhere! Down 400, up 400 but the bottom line remains that we are still in our trading range and it’s going to take more than a new Italian Government to get us over those 5% lines – as well as the 10% lines that mark the true tops of our range (which were tested in July).
We will still be considering it bullish progress if we can simply hold those Must Hold lines for the week on the Dow, S&P and Nasdaq but it don’t mean a thing if the NYSE and Russell can’t get over their Must Hold lines so we’ll be watching 735 on the Russell (-5%) as the critical indicator that will turn us quickly bearish if it fails.
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