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Resistance Still In Place

The market is going nowhere for a couple of weeks: the strong resistance remains in place on the Sigma Whole Market Index (have a look at the chart below):

Sigma Whole Market Index

How is it possible? Yes, the SPX, NDX, DJI, ... are advancing, but other indexes such as Russell 2000, Small Cap600, Mid Cap400, and DJ Transport are weak. So, at the end of the day, our Sigma Whole Market Index (aggregate of 16 US indexes) is once again below its strong resistance.

Have a look at the relative performance in the chart below, you can notice that the clear market leader is the SP100.

This is pure "index rotation" in favor of large cap (defensive move) but no new money, so the market is stuck within a trading range.

Relative Performance

Looking at our Sigma Trend Index, you can notice it jumped sharply on Friday, moving from '-3' to '18'.

All other indicators are at '4', telling us we are in presence of an impulsive move to the upside:

Sigma Table


Conclusion:

The market remains highly volatile and it made a lot of damages to short term traders.

We were not immune to the situation and thanks to a good trade on Thursday on the CAC40(~=3% gains), we were able to limit the weekly losses.

Current situation is very important because if the market is able to move above the strong resistance, we expect a surge to the upside, in order to retest March's highs.

So, as we still have big medium term short positions in the market, we will open a short term long position in order to hedge 2/3 of our short position (we will do it on all markets) if/when the market breaks up the horizontal resistance.

We will post our order book on our internet site during the week-end

Medium term positions:
- short 2 SPX at 1336.99
- short 1 NDX at 2578.46
- short 1.5 CAC at 3103.87

Short Term positions:
- no more position

 

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