A JASON VOORHEES MARKET
The month of October is off to an inauspicious start for the portfolios. 2012 has been a year marked with such consistent success that short-term negative fluctuations tend to make me think more than they usually would. It has become difficult to tell, from one day to the next, whether my head will be on the chopping block or if I'll run away with the bikini clad girl as a hero.
The type of uncertainty I am facing recently is part of the reason I have chosen to move to little more than 30% cash position. Where does my uncertainty stem from? Here is what has been running through my mind as of late. I'll have further details, through illustrations of price movement, in the weekly chart review to be posted tomorrow:
- AAPL is bothersome here. The pullback has been somewhat more volatile than I would have liked. Volume has been above average. I won't get really nervous for the market (since AAPL is now like an index unto itself) until 645 is broken to the downside. As a timid bull, I don't want to see that event.
- Financials are being overly-cognizant of their trajectory points. The high for the BKX on Friday was exactly on the nose of its trajectory from the 2011 lows. What followed after hitting this point was a steep reversal, meaning that the trajectory is exerting more influence over this key index than it should. Not an Armageddon type emergency, just a small fire that bears watching.
- The Nasdaq Composite registered an "outside day" on Friday. I don't care how traditional technical analysis interprets this. What I care about is that it is a sign of excessive volatility at a point when the market needs to pipe down and be on its best behavior.
- I watch the Aussie Dollar closely because of its enormous relevance to the commodity market. The fact that the Aussie is now plunging makes me feel like Jason is breathing down the neck of this market, but participants just don't realize it yet. If commodities die, the market rally will follow suit. This is perhaps the most troubling sign of all.
- The NDX stalled right at its trajectory from the 1990 lows, like it has multiple times over the past few years.
I'll have illustrations of what Jason Voorhees looks like posted soon.
