09.10.2008 Market Recap

I was at home today tending to a sick family. I did manage to open a couple of short positions on SPY and DIA, but apart from that I was not able to do much else (hence no thoughts posted).

I have been thinking for a bit now that the story in the media, that is, the financials, is not the real story. The real story is the strengthening dollar and its effect on hedge funds. The price of oil has fallen dramatically and energy and materials stocks are the worst performers since the July bottom. Tech is close behind. The rising dollar causes an unwind of the carry trade which boosts the dollar's rise. Oil is not supported by demand due to global slowdown, and the rising dollar is adding to this effect. Hedge funds have systematically dumped commodity related stocks. The rising dollar is killing the economy. Funny enough, a rise in oil is what would be good for the market, but I do not think it would last because it would be sold into. Anyways, just my musings...

Today was really a little push lower and then a breather as is typical following big days. It is possible that there may be a couple of days like this or even a little pop. Such a pop, however, would be something to sell into. Looking at the volume lately (you can see charts in my StockCharts public list), the downward pressure has simply dwarfed the upward pressure. The VIX is off the chain and going straight to the sky. Who knows how long this all can keep up, but I expect that the markets will see below the July lows before this is over.

I still do not want to short financials as they are one of the leading sectors.

Performance Charts

Since the July low:



Roughly last 20 days:



Last two days:



Floor Pivots

	SPY	QQQQ	IWM	DIA
R2:	126.07	43.54	73.11	114.77
R1:	124.90	43.17	72.29	113.89
PP:	123.72	42.81	71.36	113.11
S1:	122.55	42.44	70.54	112.23
S2:	121.37	42.08	69.61	111.45
	XLB	XLE	XLF
R2:	37.51	67.81	22.43
R1:	36.90	66.78	21.70
PP:	36.22	65.24	21.17
S1:	35.61	64.21	20.44
S2:	34.93	62.67	19.91