Greed stinks, and FAS, Financials technicals. Buy Low.

The recent optimism in stocks has been refreshing. Just a few days ago, the market seemed to be collapsing. With many bears shouting about the HINDENBERG omen, with CNBC featuring so many bad news, with Daryl Guppy showing that the DEATH CROSS is gonna kill stocks, and that DOW might drop to 8000…. These were fears, unnecessary speculative fear.

Now, fear has changed to GREED.. many carefree investors will be forced to buy high and sell low. It is not wise to buy stock when there is so much greed, and when the VIX is so low.

It is not that safe to go short too. However, now it has become quite clear that the market was overdone. This greed is unsustainable, and the fact that the option pain level is so low shows that market makers are manipulating this. They are selling high and buying low while having tricked investors into doing the opposite.

Investors have to be patient. However, sometimes, being too patient would leave them with no trades. There has to be a compromise. Tradedragon uses support and resistance levels to make trades. And this has allowed disciplined buying and shorting of stocks.

tradedragon has recommended to short LVS as it is at a strong resistance level. So is FCX.

Now we shall focus on FAS and the financials. Surely banks are attractive, now that we know the economy isnt sinking. The housing market may be dipping, but the manufacturing market is going upwards. In the end, the housing market will recover. Enough fundamentals, most analysts say that banks are good buy now. The BASEL thing wasn’t too hush on the banks.

So as usual, tradedragon focuses more on the technicals.

FAS is currently pulling back after hitting a major resistance – a trendline that is drawn from the previous 3 peak beginning May 2010. I am waiting for FAS to correct to its 61.8 FIB level, which is also a support level based on previous troughs. However, I might enter earlier should more economic news prove too good that makes stocks undervalued.

For now, the market seems to want a mini pull back after this strong rally.

Happy trading.

I am long Financials in the long term.