Wednesday, April 22, 2009

Yay for stops!

Got nearly all the juice out of that SKF trade before it tanked.

The Geithner speech really juiced things.

Today, looking like the financials will give something back on the horrible COF numbers. YHOO inline, Bartz doing a good spin-job.

Oscillators *way, way* overbought here. S&P oscillator at +9, I would be a seller at +5. No new longs here, peel 'em off if you have 'em.

Looking at SRS just below the all-time low, around 25.50. Again, these instruments are to be held no longer than green bananas.

But the market has a distinct squeeze-y feel. Keep those stops tighter than a fist and positions small.

Tuesday, April 21, 2009

Wedgie in the indices

I took off half the SKF yesterday and moved stops. Because (repeat after me) We Never, Ever Let a 25% Weekend Move Get Away. Plus, the double-short products are just a pure shit ripoff. They're intraday-only.

All three indices look to me to be at the bottom trendline of a wedge. A break of that downtrend line could mean a lot of downside for the markets. A bounce could be a big move up.

I went back to the bible, Edwards & Magee's "Technical Analysis of Stock Trends," and looked up the pattern of a wedge.

Tell me how well their comments have held up:

Rising wedges are common in bear market rallies. Magee says that it is so typical that frequent appearances of wedges after an extensive decline bring about questions as to whether a new bull trend is in place. Does that sound familiar?

Another item of note is that it normally takes more than three weeks to complete. We've got that. And once prices break out of the wedge to the downside they usually waste little time before declining in earnest.

We're still somewhat overbought, not as bad as it was a week ago.

I would lean to the short side here, with the caveat that it's hard to make money during earnings season either way.

Geithner speaks, or rather obfuscates, late morning. Last time, it was worth a 100 point Dow bounce. The plan is to stay neutral until he speaks. If you want to be long, some oil might be good on a reversal.

Monday, April 20, 2009

Fading the rally

Rally looks artificial and long in the tooth by every measure I look at.

Got hit at 56.75 on 400 SKF for a green banana trade. Want to stress, there's no technical reason within the framework of my methods to do this here.

Turned loose half the SU at 25.75, basis was around 18 off that double-bottom. That was a pretty clearly an intraday triple top at 25.90. You really want to be shedding longs here.

Also, half the BHI, again, bought off that double-bottom weeks ago. This has been a very disappointing position.

It's basically been the overlevered junk leading this rally off the bottom.

Actually, I am thinking this will be a buyable pullback. You see this kind of move frequently on the Monday after expiry.

Builders look good on a pullback... XHB at that 12 support, I think, is where you want to enter. I like the composite ETF chart better than any of the individual charts.

As a rough guide, I'm thinking in terms of a 50% retracement of the whole move since early March. This would be, very roughly, S&P 750/Dow 7250. Some reasonable support there as well.

I think very precise technical levels are nonsense to try to trade by. Stocks in the real world come up a little short, or go over just enough to rape you. I think in terms of scaling in, in 2, 3, 4 trades, then put a stop on the whole basis.

Tuesday, April 14, 2009

Couple of moves in the last few weeks

OK, a quick update... the strategy here is short the S&P, long oil, short treasuries on the long end.

Got some oil... full position each in SU and BHI. The former has done fine, the latter is sitting still.

I'd sold gold on that spike above 1000. Bought it back last week as it came down to the bottom of the channel. You could argue it's making a bull flag here. I'd be a buyer close to 850, playing for 10% or so.

Pull out the chart on XLU to any duration you like. Last year, I caught that H&S on the short side, covered it late last year. Now, it's back at resistance, having barely participated in this rally. Bigger resistance at 30.

Nobody's going to bail out ute debt.