Top may be in, waiting on confirmation
We have a 66% chance that SPX at 1080.15 we hit on Wednesday is the top. I arrive at this percentage in a straightforward manner, as we have 3 possible scenarios:
1. SPX topped at 1080 and is going to break below 1039.
2. SPX topped at 1080 and is going to find support near 1039, bounce to lower highs and then break 1039.
3. SPX made new high of 1080, is going to find support at 1039, and is then headed for higher highs.
So from that we formulate our game plan. We can wait for a break of 1039 which allows us to have a low risk short, with stops slightly above 1039. If 1039 holds we can go long with stops slightly below 1039. Regardless 1039 is key, just like holding $76 support for $USD is important.
A close below 1039.47 (which was the high on 8/24/09) would signal the top is in and prepare for reversal by either moving to cash or playing the short side. Like I said in earlier post, we don’t need to pick tops other than to wait for market to confirm a top is in.
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Suzanne S. Hamilton is the founder and president of Legacy Asset Management Inc. and hedge fund manager of Legacy Capital Fund LP. Suzanne has been managing portfolios for 11 years and is dedicated to pushing the edge of innovation in her field. Suzanne’s more than eighteen years of experience in computer security and mathematics, have culminated in development of complex algorithms and proprietary software designed to automate the management of risk. After extensive research, Suzanne’s efforts have evolved from one based on a long-only strategy into the integration of numerous independent models supporting both a long and short strategy for global markets, commodities, fixed income, and currencies.
Suzanne often appears as a panelist at financial conferences and is advocating to evolve alternative strategies to be more liquid and transparent. She was a participant in the CalPERS conference of top women in finance, a panelist at the Global ETF 2009 Awards Dinner and Workshop, and was a panelist at the Inside ETF Conference.
Suzanne is the former CEO of SECURIX, Inc. and additionally has provided security services over the years to well-recognized firms and organizations such as Microsoft, IBM, the Pentagon, and JNIDS (Joint National Intelligence Development Staff).
Suzanne received both her BS and MS in Computer Science/Mathematics from The American University. She currently holds a Series 65 license.
Company website: www.legacyfunds.net
A lot of experts agree with the 1039.47 number. But, why couldn’t we have the same situation as in July. Whre it dropped below 930.17, formed a H&S and then rallied hard. So, conceivably we could drop all the way to 1000 and rally hard again?
Obviously anything is possible, but odds are greater now that any correction from here is going to be a larger decline than what we had in July, but again all we can do is play the odds and manage our risk.
well said….learning from you as always
thanks…I am honored… watch China also, been short via FXP at $8.89 on 9/22, leading the market on the downside now
yup, nice. Also watching…waiting for nonfarm payroll number..then may start legging into shorts again. Trying not to be too early this time. Prefer to be late than early or try to catch the top.
Opposite of my usual practice..but got to try to be patient.
Hi there…what’s next…1100? 1120? Internals look weaker and weaker. After today’s 30yr auction, we may see higher rates and eventually a stronger dollar.
Guess the bank earnings next week will be the real tell.
Well, we can double top at 1080 but there is the possibility of 1100/1120. We are getting very close in my opinion.
Yup, but I am not still seeing 3 month LIBOR moving higher, though 2 year swap spreads have been steadily widening. The other possibility is something from the dollar, either a breakdown that leads to countermeasures or strengthening. Perhaps bank earnings next week. Perhaps Helicopter Ben may say something tonight in support of the dollar and actually do something for uncle bucky. Maybe, Obama’s approval rating plummets and the govt and the Fed get some religion.
Just trying to see what is going to turn back this liquidity that is becoming bubilicious once again.