Jared's Market Commentary - The Final Destination

Last weekend I watched The Final Destination, which is the fourth movie in a series based on some guy sees all these clues about how a bunch of people are going to die. He tries to change fate, tries to warn people, but in the end everybody dies. That's how this market looks, feels, and is starting to act. While we moved higher throughout the week (sans the drop on Tuesday), both Wednesday and Thursday showed that there was trouble ahead, yet nobody paid attention. All I hear on TV is how everything is going to be great, we will grow slower but still grow, problems are behind us, etc. Nobody watched the two intra-day reversals and said "hmm, maybe we're topping out." I predict that tomorrow (Friday) is a down day (please let me be wrong, see below), which will be the setup for the sharp move lower we see in the next week or two. Last week I mentioned Apple AAPL (moving to 260) and Goldman GS (to 150) as tells to the market. Both moved up to their targets and then reversed down from there. If these fail, there is no way we continue to rally. In fact, Apple will single-handedly drag the NASDAQ down, which has really just been held-up by the merger frenzy that has recently taken place. Since I don't use the NASDAQ as my personal roulette wheel, I see no reason to buy certain small tech stocks in case they become the next 3Par PAR. Anyway, assuming I'm right and the market goes down on Friday (or even stays flat or drifts up a touch), this market is about to get smacked hard. I can't name the specific catalyst, but it will show it's face by Wednesday I'm sure. As I mentioned before, we could see more head fakes like we did on Tuesday, but this week feels more toppy than it did before, so I'm inclined to believe this one if it happens. In case you want one more tell from the market, look at Mastercard MA and Visa V, which have not been able to hold their levels at all. They repeatedly hit resistance in the same range and fail, which means it's about time they just fail for good. Eventually those stocks will be great buys, since they will move up and through that resistance...but that trade is way into the future, so for now focus on the fact that they can't move up at all...yes they have some industry-specific things going on, but more importantly they are a sign that the consumer is not as strong as people expect. I actually played the long side early in the week, buying into a couple names on Tuesday and then exiting on Wednesday...I will admit, I was torn about selling, but with my availability limited today and tomorrow, I figured it was better to get flat and wait. I will not make any trades into the weekend, no matter how good the short setup looks (due to unavailability, not belief). My biggest fear is we reverse tomorrow and it continues on Monday, since it would be a much more difficult entry point. My hope and plan is that the market hangs in place until Tuesday, at which point I will be looking at AAPL, S&P 500 SPX, and PowerShares QQQ QQQQ as shorts. As I've said before, for me the best strategy is making directional calls, so the SPX or QQQQ are the best way for me to ensure that if I'm right, I make money, and don't end up owning the one stock being taken over that week. I would play AAPL, however, since there is no takeover threat and if the market goes down, they will as well, but more severely. I would fully expect the QQQQ to move more than the SPX in this down move. I hope everybody has a good end of the week and weekend...and a happy Rosh Hashana to all of my Jewish friends out there! Jared