Monday, January 25, 2010
Weekly Outlook 1/25
I am thinking that what we saw last week is a mild correction that was overdue for us to see. I think we can ultimately correct 8-10% from the high. Short term this week indicators are already oversold so I think we have a chance at seeing a weak bounce back into mid week that could be a nice shorting opportunity because I do think we see 1070 as a next leg down.
The currencies had a bearish week as the dollar rallied into Friday where it finally pulled back a bit and the euro found support near 1.4050. It does look like to me that the euro is still going lower and could see 1.39 quickly.
The other big story was the move int he VIX. Up from 18 to 28 in three days. Wowza. That was a quick swing from complacency to fear. People were obviously unhedged last week and rushed for put protection when the market started to tumble. Friday's VIX move was even more fierce and I think was a bit overdone and should come in a bit early this week even with a flat market.
Overall, its tough to make much of a good watchlist with these current market conditions but I would be more of the opinion that you want to be shorting rallies for the next few weeks until the market tells you that its recent swoon is reversing back higher on the daily charts.
Buy the dips>> DECK, MGM, EOG
Sell the rips>> GS, FCX, AMZN, HES