Not a Good Sign
18th July 2010
It is bad enough that the 50 day MA for the SP 500 is already below its 200 day MA, but Friday’s rejection of the 50 day MA on heavy volume completed a lower high an confirms the continuation of this markets downtrend from its peak in mid April. The DJIA was showing a bid more strength over the last couple of months, but that is not looking any better now. The 50 day MA on the Nasdaq is about to cross its 200 day MA to the downside to complete a triple confirmation of a downtrend.
There are a couple of ways you could play this market depending on how aggressive you want to be. For the conservative, the Bear Call Spread above the market would be a good approach. For example, you could sell the August SPY 110 Call and buy the SPY 112 Call. If you are more aggressive, you can go with the Bear Put Spread below the market. In this trade, you could buy the August DIA 100 Put and sell the DIA 98 Put.
JD
