My Quick Take On The Markets

by Dan June 3, 2011 9:20 am • Commentary

For the last few weeks I have been scratching my head and wondering when the equity markets would start to recognize that the economy is slowing at around the exact time the fed will be ending their QE?

This entire week, with Tuesday’s rally on what appeared to be inconclusive news regarding Greece’s debt issues, followed by the largest one day sell-off since Aug 2010 on Wednesday just feels like toppy action……the volatility bands in the market have clearly been widened over the past few weeks and I haven’t, and don’t see this as bullish action……

Individual names have gotten very whippy, as mentioned on this site……specialty retail over the last few weeks saw some massive moves in both directions, with names such as GPS, ARO, GES and TIF all having gap moves of 10% plus on the result of news……JNPR a tech high-flier saw its stock drop 10% in a quick the other day on the utterance of sales disruption at a brokerage conference……Investors clearly have their fingers on the trigger.

This leads me to some crowded stories that have held up pretty well…..AAPL, JPM, IBM, XOM QCOM and WYNN……I would much rather take a shot at the strong names if we are going to head into a correction phase…..( Disclosure: I currently own puts/spreads/flys in TIF, QCOM, SPY, IBM, JPM, AAPL, RIMM, AMZN, NKE,GOOG, DELL, EWZ and ADBE)

I remain committed to my near term SPX 1250 target and depending on how we get there, with quick panic or an orderly sell off, I will adjust my thinking……1200 is a huge support resistance level going back 11 years, and it is a level to be feared.

I am expecting the SPX to pause at some familiar support levels 1295 and then 1280ish….this one comes down to the big boys…mutual funds.  My sense is that hedge funds have been playing for this sort of correction for sometime, thus the increased near term volatility….

If you are short, then stay short. The market is not likely to reverse course, barring some sort of govt intervention…QE3??   Is the data so bad that it’s potentially good for the notion of stimulus? I doubt it, but anything is possible. Take profits in names that you think are oversold, but also look to initiate new positions in names that you think could be vulnerable……

Watch Quick Hits during the day for some specifics on what I am doing and what I am watching on a day like today