The major stock indexes enjoyed a rally today on rumors of a E.U. bailout of Greece, with modest gains going into the close run on higher volume.
Officially, the Dow Industrials rose 1.5% on NYSE volume of 6.1 billion shares, while the NASDAQ advanced 1.2% on 2.2 billion. The leadership profile remains mildly positive, with 104 stocks making new highs versus 79 making new lows.
The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have new trades below to add to our short positions and inverse ETFs.
The stock market continues to sit in the prime crash position, deciding if it wants to pull-off a short term reprieve by rallying to test the 50 day moving averages (blue lines in charts below,) with any move to new lows likely opening the door to a four day crash run that would have 1987 implications written all over it. Rumors are flying back and forth around Europe over the Greece bailout plan, though it remains a coin toss as to whether such loan guarantees and liquidity will be offered for real.
We are adding to our shorts tomorrow, and we expect further short sales and inverse ETF purchases on any continuation of the rally attempt going forward. Only those investors who understand and accept the additional volatility trading stocks short and buying leveraged ETFs entails should follow these new trades, with cash and money market funds the preferred investment vehicle for more conservative investors.
401K investors should be fully invested in a money market fund.
The Index portfolio is ¼ invested in the inverse ETF QID, which gives us a 50% exposure to the short side. Expect more trades over the next few days.
Kevin Wilde, Chief Trading Strategist AlphaKing.com.
