Friday

Friday Analysis

We partially (10/point) closed our NIFTY shorts at 4200 - $1420 profit. The mighty Indian have fallen for 3 consecutive days for almost 9%. Although we expect it to go down further, we hope to reshort at higher levels after a bounce. The Dow is currently at 8600 - resistance is at 8650. We will consider shorting the Dow if it gets above 8650. This is the first test of supports, and to be perfectly objective, market could lead higher to challenge the previous highs. The McClellan Oscillator suggests a big move coming Friday/Monday. We will stay sidelines and consider taking a position AFTER the battle between the bulls and bears is over - ie after the move is upon us. And we look to take a contrarion stance. Whilst we hold longs in Gas and Agriculture and a hand-full of stocks, we are net short on India and a few other indices (namely the Dax). This is the first significant pullback after a 8-10 week rally, and if markets were to pull back based on Ellioticians count, the target for the Dow would be about 8000. A break below the 30 day moving average would result it further weakness, but for now we expect an attempt by the bulls to bring the market up as close to the previous high to shake off weaker bears.

General Electric is making headlines - the new Obama reform is (perceived) as a threat to GE Capital, ie it may be cleaved from its parent company. Everyone is entitled to their views, but we feel this is another unfounded fear which has hammered the share price unreasonably. We look to buy more General Electric around the $10 mark.