I often preach about success from failure meaning that the best technical signals are often failed technical signals. In other words, if the market is in a trading range, which it is, then a failure to trade all the way to the top of the range (resistance) is a failure of the bulls. Usually, it portends a trip all the way back down to the bottom of the range, support, if not an outright breakdown.
This week, the stock market opened very strong and I removed some hedges on the idea that stocks were on their way to another 400-point melt-up. That was Monday but by late afternoon the gains were pared a bit and it was all down hill the rest of the week. Prices should (silly word in the market) have paused and then headed toward resistance.
Housing and REITs had breakouts. Financials were still enjoying their dead cat bounce and it looked like there was some more spring in Tabby's flight. But there there wasn't. I put the hedges back on Tuesday.
It's a pretty good bet that even if this market is carving out a bottom that it is going to test the lows one more time. So much for the "double bottom" chatter out there. And boy am I glad to have written Monday's Barron's Online column on funky financials.
I had a pretty good week in the advisory services by going long the double short financials ETF Tuesday and buying the oil ETF at the open Wednesday. That can make a month, for sure.