Surprising earning results from Apple and Yahoo yesterday. Yahoo’s profits fell YOY but the stock headed up 5%. Apple did not meet forecast but profits were up %50+ and the stock took a tumble…..hum. With Apple accounting for 14% of the QQQ as this is market cap weighted we should see a fall. So I expect the market to relax a bit and give up from the big run. I’m bearing the next few days and bought QID and TWM.

I also shorted NOV and POT.

The SPY is a little long with 6 new high days in a row. Yesterday we tested a high of 122.14, eased and came down today a little. I’d love to test 114 again and enter long. To play the downside I bought the QID which is the short of the QQQ ETF.

Long plays

• CREE @ 29.46 (stop 28)
• RAX @ 39.60 which broke out of resistance of 38 (stop 38)
• QID @46.47 (stop under 45)

Short plays

• POT 49.44 (just above 50) with target of 44 to cover.

Below is a chart of the SPY weekly chart and I drew a channel connecting the highs and lows over 3 years. As you can see there is a pattern that can be seen.  The first circle on March 2009 was the bottom of that bear market decline and we had a big run for almost 2 years. The next circle is where we are today also touching the lower trending channel. Plus one bonus the green moving average is showing support and were turning from flat to up.

So are we at the bottom of the current decline? I think we might be and a good time to take some long positions. Remember to place stops just in case.