November 16, 2010

Today there is cause for concern. I was hopeful after the S&P closed just above its 20 day SMA yesterday that it would bounce today. Instead it has plunged below. Hopefully the buyers will move in as it nears its 50 day SMA. If not, we might be in for the double dip that some people fear.

As you can see from the chart above the last time the SPY hit resistance at $122.00 on April 26, it dropped 17% over the next 2 months until it finally found support on July 1 at $101.13 . On November 9, it reached a high of $122.95 followed by 6 consecutive down days and is currently trading around $118. So from April 26 to today the S&P is down 3%.



I will now compare those highs and lows of the S&P with Apple and Netflix. Above is the chart for Apple. On April 26 it hit a high of $272.46. On July 1 it hit a low of $243.22. On November 9 it hit a new high of $321.30 followed by 6 down days to around $302. If you were in Apple since April 26, you would be up about 10%.




Above is the chart for NFLX. On April 26 it hit a high of $109.70. On July 1 it was hit $103.27, but it's low point came after an earnings announcement on July 29 at $95.33. On November 9 it hit $174.90 and is now trading around $164. If you were in Netflix since April 26 you would be up 45%.

So what is the play here? I guess I'll wait and see if the SPY, NFLX, and AAPL bounce off their 50 day SMA. If they don't, I'll probably keep NFLX and start shorting the S&P by buying the SDS. We'll see.

After yesterday the scoreboard reads:

Me 10.59%
S&P 7.41%