With what's going on on the political landscape with the debt ceiling debate and the sequestration the market once again is in limbo. Fed actions are holding the market up for the most part but there are cracks in the market that should be cause for concern to anyone paying attention.
Below is a daily $NQ_f chart with an Ichimoku on it.
That sky blue line price is right below is the Tenkan line or the Signal line and it's acting as resistance instead of support. Price got below it yesterday in a very sneaky way. The same can be said about a 10 period simple moving average (SMA) on a daily chart. It got above price yesterday also as shown below.
In the chart above notice how the 50 period SMA (red) still hasn't crossed back above the 200 period SMA (purple). And if we keep this move in context, the volume still hasn't picked back up after the holidays. Big money is waiting for a debt ceiling and sequestration resolution before they put their equity money back to work.
With $AAPL wounded the tech heavy $NQ_f short is there for the taking. The big gap from the fiscal cliff resolution between 12-31-12 and 1-2-13 getting filled will coincide with a 200 SMA test.
If you are holding winners this short trade is a great way to hedge for a quick pullback in the market. I'm still holding a some big bank financials and I'm looking to make some money off this short to buy more on a pullback. I feel like every pullback in the financials is a buying opportunity.
If you have good stocks you should feel the same way about them, I think, as the Fed is increasing the money supply hand over fist right now, and has been for some time.
They say an increase in money supply won't show up as inflation until 2 years afterwards, well, according to the M2 FRED chart below the increase has accelerated more than once in the past three years so inflation is due for a spike. Especially if you add a better and better recovery in jobs. That's bullish for stocks.
That said, we are due for a pullback and market participants will scream bloody murder! Just remember: When you see blood in the street it's a buy signal. For now I've built a good short position in $NQ_f with 2719 as my base price (stopped writing this postto make sure i had a good price before I published this post) because you can bet on Congress and the President to rattle this market sooner or later, and judging from today's close it will be sooner than later.
Good luck traders, and happy hunting! Until next time, do some home work and make some money!