Market Direction Call S&P 500 March 11 2011


	MARKET DIRECTION CALL S&P 500 March 11 2011 - Trend Is Down
The market is having a bounce today, but I believe there is more downside to come. I am buying puts again on the market. MACD has remained bearish since the new 2 year high was set and the market sold off. That is so typical of stocks it's becoming a cliché. On a new high I should just always buy puts. (ha ha) The market broke through the 50 day and that tells me there is more downside to come. I believe we will retest the Feb 18 high, but a few months from now and then there's June to contend with, when the Fed will stop quantitative easing - The Sequel. How many more times the Fed can do this is really doubtful. I am keeping my capital aside and still looking at opportunities for smaller positions in naked puts. When the credit crisis began I indicated I believed the market could go sideways for years. Unemployment in the US is stubbornly high and while many companies are doing well, lots are struggling. The US consumer can only spend so much and with China and Germany showing trade deficits, that tells me that the consumer worldwide is tapped out and the world's economies are only just doing "okay". Okay won't move the market higher. It's increasing earnings and improving world economies that will bring the market higher. With oil above 100.00 or truly even above 90.00 and all the middle east issues, this market has come to the top for now. The strategy of the cautious bull, which you can read in the Top 10 articles, is still my strategy of choice. The volatility is excellent though for option premiums but I would not hold many to expiry but take profits all along the way. I will stay only with the large caps and those stocks that should they get hammered and me with them, I will be happy to hold them, average down and continue my strategy of selling naked puts and covered calls.

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