June 17, 2008

As mentioned yesterday, if we hit the overhead resistance level in the S&P and subsequently sell off, then we could be staring at the next leg down in this volatile market. Today we got just that. From a trading stand point, Inverse ETF’s like SDS (S&P 500) that return 2 for 1 opposite of the index’s direction are great in this market – and that is exactly what we did today by initiating a position in SDS.

Goldman Sachs continues to release dismal reports on the state of the economy, serving their own interests (i.e. short positions on financials), by stating banks will need to raise more capital and that the peak of the credit crisis won’t occur until 2009. Other news makers were worse than expected inflation readings which we will disregard, because they are driven by the rise in oil. If oil comes down, inflation will too. Heck, at the movies the other night, just to see the new Indiana Jones movie, prices went from $7 a ticket to $8.50. That’s a 21% increase for a ticket – and what was their reasoning? Oil! I guess shipping costs for all the corn kernels really dips into the profits.

Here’s the NASDAQ and S&P Charts…