What a crazy week. Honestly, it would have felt much better if we could have simply avoided the trade in USO. It started off great on Wednesday, then you have the ‘out of left field’ news events with the Libya blockade, and more importantly the massive inferno in Canada, affecting 88,000 workers and thereby crippling their oil production in the sands. What are you going to do?
We walked away from the trade with a 2% loss, but in the mean time we were able to close out with decent winners in IBM, IWM, SDS and ORCL. We still have five trades still open, so the success of last week has not quite been defined. We are setup with 3 longs and two shorts and in essence ready to take advantage of the market what ever direction it decides to take.
Last week was frustrating from the standpoint of the bears. Every opportunity was there for SPX to sell off 40-50 points to the downside. Instead it finishes only 8 points lower. Not even a 1/2 percent.
The bounce off of SPX’s 50-day moving average was key to adding the two long positions on Friday and closing out SDS and ORCL short positions. While it spent the morning trading below the MA, the charts will show that the bulls overall put in a good showing at this level and sets us up for the potential to rally next week.
We added AAPL, and while a break below the $91-92 area is bearish for the stock, we saw the bulls step in on the 30 minute chart and stabilize the stock and now sets up for a bounce play next week after finishing lower 14 out of 16 trading sessions. In fact, I think it can bounce next week, even if the market does sell-off again.
So I am leaning towards a short-term bounce next week, and wouldn’t be surprised if over the next two weeks we see the bulls test the 2011 area again before hitting some head winds again.
