Tuesday, January 6, 2009

Update going into the close…

Interesting market today, to say the least. I am picking up a negative divergence on the RSI mainly on the 20 minute timeframe of all the indices, especially the NDX. Here’s a chart of the SPX, blue arrows showing this:

Short term oscillators are once again approaching overbought levels… I still see a mixed picture, however. I do see some formations that look outright bullish and if the VIX breaks down to the next lower level, we could see more upside despite the divergences I'm now seeing. I also am seeing a volume pattern that does not support this afternoon's advance.

I did short HOG this morning and it ran higher, up to $20 and I added a little to it there (very small play) based on the candlestick it is producing. If it closes here or higher it will be a clear air hammer above the upper Bollinger – sorry, the odds don’t favor that continuing, despite the momentum that has shot this hog up over 80% since the end of November.

A lot of hubbub at HOG today, they announced their CEO is leaving and they also announced that they are “standing behind” their low end product by “guaranteeing” that you can trade it UP within one year for what you paid for it.

That should tell you what concerns them, it’s falling prices for their used HOGS (overproduced). That’s DEFLATION at work and they are trying to resist. They will lose that battle as the demographics and collapsing shadow banking system will ensure it.

This is an ad released today: