So, we come into the day after a close 0.11 points higher than the November 20th low in the Dow.
Gut-check time. If it bounces here, is it a double-bottom?
Start with the bad news…
- We’re nowhere nearly oversold yet. It’s not even close to the levels of oversold in January. Maybe 20% of the way as oversold as last November.
- At a very macro level, the transports made a new low. If the Dow also makes a new closing low, that’s a Dow Theory sell signal.
- Ratio of Bank index to S&P has rolled over and died.
- Moving average of volume has been climbing into the decline.
The good news…
- Looking at the Dow between yesterday and November 20th, I see positive divergences in 3 of the 5 indicators (oscillators and trend indicators) I look at. Usually, I don't trade a pattern like this without at least 4 positive divergences.
- The index put/call ratio is above 1 for the first time this year. Today, it sits at 177%, which should be pretty bullish. But the moving average of the put/call ratio is still in its lowest 10% of the last 5 years.
To me, the biggie is:
- From the 13-D filings this morning, Uncle Warren pukes, blowing out franchise positions in UBS, JNJ, COP, PG at multiyear, sometimes multidecade, lows.
TGBBGDDD!
I try hard never to editorialize here, but this pisses me off: taking out full-page ads in major newspapers exhorting us to "Buy America" while at the same time selling his US stock holdings makes Uncle Warren a pump-and-dump scumbag. Instead of a convincing writing style and cross-posting around the internet, he used his bully pulpit and the major newspapers to accomplish the same thing. He really deserves to lose his ass for pretending to wrap himself in the flag when he was really talking his book.
So, gun to head, I’d say: tradeable Dow rally here. It probably takes out the lows mid-morning, just enough to freak everyone out. That retest has to be terrifying. I’d put some stops a little below where it trades to around 10:30-ish this morning. It should be a fairly precise thing.
I plan on putting on a little more than I really want, maybe 500 DDM, with a notion of scalping 200 intraday.
Wednesday, February 18, 2009
Thursday, February 12, 2009
Everything worked today
Really thought the indices were going to blow up today. Dow fell out of that triangle, it looked like a stop at that 7450 intraday support, then into the abyss to 4200.
Nice stick-save by Congress. Of course, the bill is crap, just like everything before it. It just shows you that the sentiment is so bad, even a non-bad news item can move the needle.
There's a t-shirt slogan I love - "Don't believe everything you think." I understand exactly what it means. Over the years, I've learned to read my own mindset as a guide. Whenever things feel blow-uppy is a good time to cover some shorts. Whenever I feel all smug and arrogant about a good position, means it's time to take some of it off, or at least throw a virgin into the volcano.
You can always reload on a position. Mr. Fidelity won't send the Excessive Trading Police after you, and I certainly don't begrudge him the $8. But what you can't always do is get back a profit once it's gone to Money Heaven.
So I did some selling on my own terms. I never know if this is good timing or not, this is just my small means of exercising a measure of control. I aim never to be greedy and to have the humility to accept free money when it's being handed out. Thank you, great nation of America, for the opportunity to pay taxes.
Put out half of the GBG for bid at 1.70, got hit. Put out half the NXG at 1.37, got hit. Again, these gold microcaps are just tiny little trades, maybe a quarter of a normal position, and I'll never let them get bigger, but the important thing is to trade them well. Free double-digit percentages in a week is a good thing. It's time to move up the stop on the rest.
Put out half the SRS at 70, got hit. Moving the stop there, as well.
I figure, keep on hammering out 10%, 20% trades, it's hard to help making some money.
I predict I'll be unemployed in 6 months. Trading as though my life depended on it is about to become a very real exercise.
Nice stick-save by Congress. Of course, the bill is crap, just like everything before it. It just shows you that the sentiment is so bad, even a non-bad news item can move the needle.
There's a t-shirt slogan I love - "Don't believe everything you think." I understand exactly what it means. Over the years, I've learned to read my own mindset as a guide. Whenever things feel blow-uppy is a good time to cover some shorts. Whenever I feel all smug and arrogant about a good position, means it's time to take some of it off, or at least throw a virgin into the volcano.
You can always reload on a position. Mr. Fidelity won't send the Excessive Trading Police after you, and I certainly don't begrudge him the $8. But what you can't always do is get back a profit once it's gone to Money Heaven.
So I did some selling on my own terms. I never know if this is good timing or not, this is just my small means of exercising a measure of control. I aim never to be greedy and to have the humility to accept free money when it's being handed out. Thank you, great nation of America, for the opportunity to pay taxes.
Put out half of the GBG for bid at 1.70, got hit. Put out half the NXG at 1.37, got hit. Again, these gold microcaps are just tiny little trades, maybe a quarter of a normal position, and I'll never let them get bigger, but the important thing is to trade them well. Free double-digit percentages in a week is a good thing. It's time to move up the stop on the rest.
Put out half the SRS at 70, got hit. Moving the stop there, as well.
I figure, keep on hammering out 10%, 20% trades, it's hard to help making some money.
I predict I'll be unemployed in 6 months. Trading as though my life depended on it is about to become a very real exercise.
Wednesday, February 11, 2009
Watching the fireworks display yesterday
Just a quick note this morning.
Got stopped on another 100 TBT. Tightened my stops some more on another chunk. Reading from Miller-Tabak that the big note auction was well-received yesterday. Geithner didn't inspire a lot of confidence either. Yields on most of the notes are in a triangle here.
I keep trying to pay my price on some gold. Got hit on some NXG, put in an outrageous bid at 1.24 and got hit on another 1500. Also got hit on another round of GBG at 1.41. Gold looks strong into the open here, so maybe flipping some of that.
Triangle in the Dow looking ominous and it's the most bullish index. It measures to 4200 by my read. Got a bid out on some DXD into what looks like some opening strength.
So, position is basically long gold over short commercial real estate, long bonds and the Dow. Bonds are probably going to kill me today, gold looks like it's going to work.
Got stopped on another 100 TBT. Tightened my stops some more on another chunk. Reading from Miller-Tabak that the big note auction was well-received yesterday. Geithner didn't inspire a lot of confidence either. Yields on most of the notes are in a triangle here.
I keep trying to pay my price on some gold. Got hit on some NXG, put in an outrageous bid at 1.24 and got hit on another 1500. Also got hit on another round of GBG at 1.41. Gold looks strong into the open here, so maybe flipping some of that.
Triangle in the Dow looking ominous and it's the most bullish index. It measures to 4200 by my read. Got a bid out on some DXD into what looks like some opening strength.
So, position is basically long gold over short commercial real estate, long bonds and the Dow. Bonds are probably going to kill me today, gold looks like it's going to work.
Tuesday, February 10, 2009
Fulcrum
S&P 875 is resistance here. Breakout, and it could measure to 940, breakdown and we could be back in the low 800s.
We're well into overbought range and the put/call is about 0.67, lowest since January, 2007. Not enough bears, not enough by half. That would be my bearish argument.
The only bull argument I could muster would be "Look, chart!" on a breakout, plus a desire to want to lean against everyone who wants to sell the Geithner announcement.
Dollar/yen bouncing off an uptrend line that's run since September. Could interpret it as a double-top, too, when it hits that 105 level. S&P has been tradeable by the dollar/yen for a long time. Someone, somewhere, really really wants the carry trade going again.
Reading back over these thoughts, I see a good argument for getting flat and delta-neutral.
Yesterday's action - got hit on another 2000 GBG yesterday at 1.45 near the open when he traded down.
We're well into overbought range and the put/call is about 0.67, lowest since January, 2007. Not enough bears, not enough by half. That would be my bearish argument.
The only bull argument I could muster would be "Look, chart!" on a breakout, plus a desire to want to lean against everyone who wants to sell the Geithner announcement.
Dollar/yen bouncing off an uptrend line that's run since September. Could interpret it as a double-top, too, when it hits that 105 level. S&P has been tradeable by the dollar/yen for a long time. Someone, somewhere, really really wants the carry trade going again.
Reading back over these thoughts, I see a good argument for getting flat and delta-neutral.
Yesterday's action - got hit on another 2000 GBG yesterday at 1.45 near the open when he traded down.
Saturday, February 7, 2009
Didn't get hit on anything
I missed on everything I bid on last week. Still liking some transports.
China hit a trailing stop, sold the last 150 of the FXP last week around 44. China is running hard, as is the Baltic Dry index, a lot of the materials companies.
Half the SRS went at 64 in that big-spiky day on Thursday. Bottom fell out of that, I'm down on the other 200 now.
My inclination, and I guess everyone else's, is that TARP 2.0 on Monday at noon will be a sell-the-news event. Maybe worth it to add some long exposure just to be contrary.
My look at the S&P, we're either:
a) At the top of a trading range
b) At resistance that measures to the 940s on a breakout.
We're a little bit overbought, not too badly, though. That's multiple defenses of the Dow 7900/S&P 800 level, with divergences. I would be inclined to add long exposure here.
Haven't had time to look at too many charts this weekend. Went over the golds pretty carefully for something buyable. Many of them look like something you'd hold if you already owned, but I was looking for ripe charts.
One microcap that I've traded successfully a few times in the past looks pretty ripe here: GBG. If it breaks above that triple-top at 1.50-ish, it could have a full buck to run.
Barrick (ABX) has important resistance at 40.
China hit a trailing stop, sold the last 150 of the FXP last week around 44. China is running hard, as is the Baltic Dry index, a lot of the materials companies.
Half the SRS went at 64 in that big-spiky day on Thursday. Bottom fell out of that, I'm down on the other 200 now.
My inclination, and I guess everyone else's, is that TARP 2.0 on Monday at noon will be a sell-the-news event. Maybe worth it to add some long exposure just to be contrary.
My look at the S&P, we're either:
a) At the top of a trading range
b) At resistance that measures to the 940s on a breakout.
We're a little bit overbought, not too badly, though. That's multiple defenses of the Dow 7900/S&P 800 level, with divergences. I would be inclined to add long exposure here.
Haven't had time to look at too many charts this weekend. Went over the golds pretty carefully for something buyable. Many of them look like something you'd hold if you already owned, but I was looking for ripe charts.
One microcap that I've traded successfully a few times in the past looks pretty ripe here: GBG. If it breaks above that triple-top at 1.50-ish, it could have a full buck to run.
Barrick (ABX) has important resistance at 40.
Saturday, January 31, 2009
Triangles, triangles everywhere
And not a thing to buy.
Just to be contrarian, I have to ask where there are *any* good long-side trades out there? Emphasis on "trade." Everything is a batch of green bananas in this market.
Here's my best idea: UGA, the gasoline ETF. Breakout above that neckline at 23-ish measures to 30. Want to see him a little lower, but that looks like a 1-down/6-up situation.
Physical gold chart looks OK. Give it a chance to pull back to that neckline. I don't care much for any individual miner chart, though. GDX looks kinda toppy, not confirming gold's move. It could pull back 10% easily before any support.
I always start with the indices/ETFs and work down.
Almost all the broad indices and larger industry sectors look like triangles to me. S&P is a good example, lower highs and lower lows. If it breaks down, it targets to around 250, and we're not even remotely oversold here.
On the long side, Dow Transports look like a promising double-bottom around the 2920 level. RSI and Money Flow divergence but nothing else confirms. None of its individual component charts confirm the pattern either.
A couple of its components are truckers. If we look among those, we find maybe 2 out of 10 that look like this. Watching CNW, maybe HTLD around 13. Not very excited about these, though.
Dow Utes, until Wednesday, were the only group up for the year. I see a triangle with higher lows since October. Breakdown would give you a target of about 230. Breakout above that multitop, 390-ish, would be very bullish. Call this level 30.50 on the XLU. UPW about 37.50. SDP the other way.
XLP around 21.40 could be a good entry point. I don't like any of his components except, maybe PEP at 50. Setting up a trend indicator, oscillator and RSI divergence at that level.
Just to be contrarian, I have to ask where there are *any* good long-side trades out there? Emphasis on "trade." Everything is a batch of green bananas in this market.
Here's my best idea: UGA, the gasoline ETF. Breakout above that neckline at 23-ish measures to 30. Want to see him a little lower, but that looks like a 1-down/6-up situation.
Physical gold chart looks OK. Give it a chance to pull back to that neckline. I don't care much for any individual miner chart, though. GDX looks kinda toppy, not confirming gold's move. It could pull back 10% easily before any support.
I always start with the indices/ETFs and work down.
Almost all the broad indices and larger industry sectors look like triangles to me. S&P is a good example, lower highs and lower lows. If it breaks down, it targets to around 250, and we're not even remotely oversold here.
On the long side, Dow Transports look like a promising double-bottom around the 2920 level. RSI and Money Flow divergence but nothing else confirms. None of its individual component charts confirm the pattern either.
A couple of its components are truckers. If we look among those, we find maybe 2 out of 10 that look like this. Watching CNW, maybe HTLD around 13. Not very excited about these, though.
Dow Utes, until Wednesday, were the only group up for the year. I see a triangle with higher lows since October. Breakdown would give you a target of about 230. Breakout above that multitop, 390-ish, would be very bullish. Call this level 30.50 on the XLU. UPW about 37.50. SDP the other way.
XLP around 21.40 could be a good entry point. I don't like any of his components except, maybe PEP at 50. Setting up a trend indicator, oscillator and RSI divergence at that level.
Friday, January 30, 2009
Not seeing much on the long side
Seeing Dow, S&P, Naz just above midline overbought. No compelling reason I can see to be long the indices this particular day. On a very short-term chart, S&P failed resistance at 875. You could make the case for being a bit short based on that, but I'm not playing indices today.
The thing that caught my eye this morning is gold. I see him quoted 921 as I write this. About 916 would be the right neckline of that squint-y H&S pattern. This would target to 1200.
The amazing thing is, this is happening in the context of a rising dollar. I think the dollar strength is an artifact of euro/GBP weakness and gold is acting as a reserve currency . CEO of Barrick talked about the possibility that China would divest its dollar holdings and convert to physical gold. Rumors of a bank holiday in Britain. Rumblings about problems with physical delivery from Comex - the usual stuff that outsiders like me can never really pin down.
Scanning the groups, not seeing anything to excite me on the long side.
Where I sit right now: Over half cash, biggest position is still TBT, DGP, SRS, a little FXP left. DDM on the long side as a balance. Hard to characterize in terms of long/short exposure... perhaps a better way to put it is "long nominal rates and panic."
The last week or so has sure had a melt-downy feel to it, like something big could blow up any second and the world would change forever. This has been disconcerting to watch for a couple of years now.
The thing that caught my eye this morning is gold. I see him quoted 921 as I write this. About 916 would be the right neckline of that squint-y H&S pattern. This would target to 1200.
The amazing thing is, this is happening in the context of a rising dollar. I think the dollar strength is an artifact of euro/GBP weakness and gold is acting as a reserve currency . CEO of Barrick talked about the possibility that China would divest its dollar holdings and convert to physical gold. Rumors of a bank holiday in Britain. Rumblings about problems with physical delivery from Comex - the usual stuff that outsiders like me can never really pin down.
Scanning the groups, not seeing anything to excite me on the long side.
Where I sit right now: Over half cash, biggest position is still TBT, DGP, SRS, a little FXP left. DDM on the long side as a balance. Hard to characterize in terms of long/short exposure... perhaps a better way to put it is "long nominal rates and panic."
The last week or so has sure had a melt-downy feel to it, like something big could blow up any second and the world would change forever. This has been disconcerting to watch for a couple of years now.
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