understanding the psychology of behavior

I covered my SPY short the other day.  During the intraday the CCI hit red, and I covered. (I will be looking to short again, as I think the markets will drift until March.)  I held on to the QQQQ short though… curious to see what develops after the CES.

The only worry about the QQQQ short I have is whether or not Vista will be a driver of Tech.  I have a hard time believing it will.  Do companies need it? maybe. Have the PC manufactures been preparing for it… yes, hence the good anticipated quarter from INTC and a strong move within NVDA. (But, imo, the goodness is priced into those stocks.)

The best play w/the vista release maybe HPQ, but i’m still waiting.

I will cover my QQQQ short (on the up side) if the Topline resistance gets broken (look at the naz link in my previous post) or if the naz drifts to the 62SMA.

Here are the links to the Nasdaq, SP 500 and ADRE that I pointed out last week.

NAZ

SP 500

ADRE

I plan on covering the shorts when the CCI sees red. (Keep in mind while the moves may be relatively small, PUTS provide a larger % gain from the smaller move. And while the markets may very well keep correcting until March/April, that is what i established the trade to be. If weakness persists, I’ll short again when things look overbought.)

The linked articled from SeekingAlpha.com reminded me why i’m not a fan of emerging markets right now, and the fundamental reasoning behind the reversal I pointed out the other day. Most of the Emerging Markets (EMs) are supported by commodities. (article)

So the question becomes… when? When will the markets of the commodity related EMs reflect the actual breakdown in commodities? In turn, taking our market down too.

This could be, what most people are not expecting, to cause our next correction.

Albeit, in the very short-term, BBY reported strong numbers which should be good for INTC, AAPL. But is the goodness already baked into the stocks? As for BBY being a gauge for retail in general… do not count on it. The retail numbers published the other day were not that good.

And they have every reason to be. A rally (within a bullish market) usually last for about 6months (give or take a month or 2) before a relatively major correction. The markets have been rallying since late August and we have yet to see a little correction. The type of corrections we have seen are indicative of a move coming off of a recession. The markets were punished in the summer of 2006, and I very accurately called the market bottom, as well as the catalyst and start of the rally. The markets were (and in some ways) are still undervalued, however we need a healthy consolidation. Nothing was more indicative of this than todays market movement.

The markets were pushing upward strongly, albeit on lighter volume, then as soon as the Fed minutes came out (indicating nothing new) the markets plumeted on high volume. They recovered on light volume. (This was most likely the new money rotation. Realizing conditions did not change and started buying.)

Here is what I see via the charts, and the charts are telling me the markets will trend down. I was hoping for a sharp decline, but that may not happen. A catalyst may not be present for such things. (Although new housing info from the housing sector that was released via Lennar was not good. The housing sector is sooo not out of the clear yet, but it is ‘okay’ thanks to the low mortgage rates.)

The Nasdaq:

The SP 500

Emerging Markets:

Happy belated New Years and Holidays to all.  Hope u had a good one, and will have a great New Year!