Summary of the last trade
1. We find out a key level on the major US index:
Posted on March 27, 2008
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The short term rebound develops chaotic waves: SPX have moved back below the 1350 pts target… as well as financials have been stopped at resistance level (JPM is a good example). My odds are still positive & I expect a break of these resistances, but we need confirmation today. If yes, the rebound would find a new strength. Very important: check the 1350 pts level on SPX, this is the key technical number for the following…
2. Sentiment indicators (measured by our own calculations) turn on the positive side
Posted on March 27, 2008
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Looking at short interests on SP500 is always of great interest: the total short interest of all stocks (on SP500) is about 10% (in per cent of the total float of those stocks)… ok, it was 7% at the beginning of the month!
This measure is certainly more complicated to track but also more relevant than the standard Call/Put ratio or VIX (or VXN) sentiment indicators…
As usual, we must focus on the trend: investors are booking short position on the “long” run. OK the stock market is gloomy, but for short term targets, the extremes are more interesting: we have found a decisive increase of the short term interests in only 3 weeks! This is a good contrarian sign that the rebound can take over… see also the previous post today.
3. We follow our analysis && enter into the market
Posted on March 27, 2008
Filed Under French Market, Stock Code Trading, US Market | 1 Comment
See previous posts today: We have a positive bias concerning a continuation of the rebound… Worth playing the upside in case of validation of the break out of the 1350 pts level on the SPX!
We follow this plan with the idea also that consumer staples & health care are outperforming within uncertain periods: Ready to buy SAN & CA & FTE… & watching DG & financial sector for some other picks?! done on SAN & CA (@ the lows of the day)
We get ready for the US opening also => list: WMT, IBM, HP & OMI…
4. Another way to look @ the market confirms our view
Posted on March 27, 2008
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SPX and 10Y yield for the last 6 months: The correlation is perfect. It is quite natural but not always with such a high correlation degree.
You can check the 2 last rebounds of about 1M each… On this picture, the odds are again in favour of a continuation of the upside as long as TNX has not reach a level of about 3.8%… (3.5% today)
It will be chaotic and it is plausible that we stand @ about half the present rebound duration?! Let’s observe the forces in the next days…
5. Trade follow up
Posted on March 28, 2008
Filed Under French Market, Stock Code Trading | 1 Comment
our 2 buys of yesterday:
SAN: already +2% this morning vs our buy level
& CA: at our buy level…
6. The (stock) market mood gives again some positive signs
Posted on March 28, 2008
Filed Under Debrief, Stock Code Trading, US Market | Leave a Comment
As developed in the previous posts, our confidence is improving on the market for the short term, even if it needs to be confirmed.
A key element is the situation on the mortgage business: the credit risk default has decreased the 2 last weeks by 25%. It means that things are evolving in the good direction: the confidence is increasing and then the credit default estimator is decreasing…
If we look at the SPX, we can track its situation with 2 simple numbers:
P/E ratio: 20 & the % of stocks above their 50 days moving average: 44%…
7. We book profits: the end of a safe && fast trade =>
Posted on April 1, 2008
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[…] SAN: +4% && CA: +2%. We book profits today (+3%)… The rebound has already been quite interesting. We need to observe the further developments as outsiders… Status (after +3% on this trade): we have no position neither on the US market nor in French markets. More later…