Wednesday, December 17, 2008

Vacation =)

Guys, I am taking some time off over the holidays starting tomorrow. Good luck on trading, don;t get caught on the wrong side, stay on the sidelines no matter what ....

FYI we should be breaking down soon so be ready, there may be a chance at the 945 but keep an open mind.

Tuesday, December 16, 2008

Sitting it out again

No clear trade presented yesterday either. I had called for the 890 to short and we stalled at the 885. It was difficult to trade this one as you had to wait for your confirmation and by the time that was in the trade carried quite a bit more risk.

How to trade this?
Again difficult to make a decision here. We have little volume and we are not trading decisivly into any direction. When looking at it from the mid term trend perspective we are creating higher lows - however as our 50dma keeps declining our peaks are declining as well. Looking at the daily chart and plotting the 50dma you can see how we are unable to break this. We started at the 920 and as the ma declines so do our peaks. At the moment the 50dma is at 905. If you see any rally towards this point you definitly have a great short at your door stop.

Again, with volume this low and holidays coming wait with your money and start trading in the new year.

Monday, December 15, 2008

Wrong again ...

Previous Trade Day
Well another day of not having the right call in place. I would have expected a much more negative turn on the markets on Friday as you can imagine. Overall it has been a bad week for me with forecasts with many of my calls lacking the precision I had previously - while the price points worked out (more or less) - the overall decisions and directions I was anticipating did not.

I said on Friday it is best to remain on the sidelines, however I had a strong believe in the market turning to the downside so my shorts on Friday have hurt me quite a bit. I was able to recover but still experienced quite a down day on Friday.

Yes The government mentioned the big three will receive money and the market rallied off this news - something I did not want to understand. With the bailout managed through congress we had protections in place on how to use this money, with the money coming from TARP its just money thrown out the window as we have to rely on GM, Chrysler to make the right decisions on what to do with this money, something that clearly has not worked out, maybe they are using it to pay off their big corporate jets, who knows. Using TAPR for liquidity is one thing, throwing money into a trash can is another - all it will do is pay bills and salaries for a company whose business model is flawed at this point. /end rant

How to trade this?
I am going to take a day off today and remain on the sidelines. The market has started trading a bit irrational again and that is something that has hurt me substantially in October where I had a certain belief that was different then the market place - I want to say I have learned from those mistakes.

If you are to make a trade decision today wait for the 890 and then short from there with decent protection of 895. This is a trade I could justify but remain small. We are nearing the holidays, volume is going to get lower and people are taking a bit of a breather with their primary focus of trying to enjoy the holiday season after a burtal year.

Good luck all today =)

Friday, December 12, 2008

I don't want to look ...

Well, I guess I was right on time. I had stressed the importance and significance of the rising wedge we have formed which is a very very (yes very) bearish sign. Of course this down move is based on fundamentals however you can see how the technical analysis tells you what will happen even before the fundamentals have played out. Its going to be an ugly christmas for many funds and traders that are long this market.

I don't even want to look. Anything possible today, 820 which has provided substantial support could be broken - we can possibly see a 8% down day today, maybe more (yes) - worst day in the market today? Who knows ....

How to trade this?
Well one would say go short off the open and get your 30+ points in. However we are more gambling then trading with proper risk protections. Yes I think the short today will return substantial gains - however, markets that are driven by fear and not rationale can jump into any direction at any point in time without any notice - be careful not to get caught up in this.

While it sounds odd - again my recommendation is to stay out today.

Mid & Long Term
Our rally is over, we will not reach the S&P targets I was referring to and we will create new lows possibly this year - regardless of the holidays. With the Big 3 bailout having failed in congress I anticipate the government will do everything in their power over the weekend to try to get fear out of this market place but I think it will be too late and little will change. They have done everything in their power to improve liquidity, taking measures that are unheard of in comparison to previous recessions. They have done a great job at preventing a substantial fear driven crash - which is ironic since we have had the biggest drop in market history in the last 3 months - but there is not much more left they can do.

I had anticipated a more organized decline towards the 400's but I think we will accelerate susbtiantially and will see this number much sooner then anticipated - it could be 3-4 months for us to get there - yes another 50% drop in 3-4 months.

I hope that many have followed my advise to close out of mutual funds and long positions on the upper end of the range - this turned out to be the right move - you locked in your gains (or losses you had) and protected yourself from further down turns. At this point those traders should remain on the sidelines - do not try to jump in because your favorite stocks seem cheap, they will go down further as well.

Thursday, December 11, 2008

Stop already ...

Well two days this week where I was off on my call. On monday I had called for a change of trend - did not occur, yesterday I called for a decision day - did not happen either. On the positive side both of my trade calls worked out yesterday but as you could see from my advise staying out was the best thing to do as the gains were very limited. Short at the 910 (high of the day 908.27), long at the 890 (low of the day 885.45). The risk-reward ratio for both of these trades did not justify a position for the normal traders. I did end up going short at the 908 and closed out at 889.

Today & Short Term
We are currently going through a very bearish formation, from our rally off the 770 range we have created a bearish rising wedge - and the last 3 days have added small bars - meaning we closed very close to the previous open. The longer we remain in this formation the more drastic the move to the downside will be. Again, from here on out we only have 2 possibilities, another low volume small bar or the start of the downturn.

You all know how bullish I have been in the past 2 weeks but price, time and volume speak for themselves here. My expectation was a run up as part of a ascending triangle with a final break that will bring is into the 900 range with momentum - this has not occured and therefore we have to adjust on how we look at the market going forward. We have the holidays coming so this could work in the markets favor by remaining lower on volume and staying in a tighter trade range until the new year where we would break hard to the downside.

How to trade?
Again I have to advise to remain on the sidelines. From a trade perspective the short would be back at our top in the 917 range, 910 does not represent a good short today so stay away - I would rather be wrong here then carry this much risk into a trade.

On the long end, we have now established the 888-890 range as a strong support. Here is were we could enter a fairly protected position however gains again are limited. Since we are on the upper end of the trade range it is very difficult to justify a long here as well as we have more potential on the lower end as we have on the upper end.

Wednesday, December 10, 2008

Decision Day ....

Well we stalled out at the previous days top and went through a corrective move. I would have expected a move a lot stronger on more volume and that did not occur. This is a fairly bullish sign and any shorts need to be careful here. Yes we moved down but this was occuring on lower volume with smaller price moves. Anyone who closed out yesterday before close did the right thing - unfortunately I was away and held the short overnight. I was protected due to a good entry but after seeing the action would have loved to close out at the end of the day.

The market has been a bit hesitant the past 2 days, considering we broke the important 890 range I would have expected much stronger moves to follow - this could turn out to be a very bearish sign as the market is not pushing higher off this range and we have had 2 days in a fairly narrow trade range.

We should see a decision occur today in the market place. If we are to get back into the 910 range without a break we will head lower and go back into the mid 800's, if we are to break the 910 and are able to break the previous double top at 917/918 we will head for the final edge of our trade range at 928-930 with a potential at the 935.

How to trade this?
Again I have to advise to stay on the sidelines, both long and short do not allow you to enter with the proper protection levels. The short would be in the 910 range but has at least 10 points worth of risk, the long on the 890 sounds a little bit better but carries about a minimum of 10 points risk (probably more).

Give it time, you will get a chance to make money. The important thing to know is that we want to enter trades with the smallest risk possible. Something that had cost me a lot of money in the past by over trading and not properly evaluating risk from entry.

Tuesday, December 9, 2008

Where are the bears?

My initial call was a suckers rally that we did not get. We broke the 900 range and remained about the range all day. However, after our gap open we remained in a very tight trade range throughout the day on average volume - we did not get the momentum we needed to stay above the 900 range on the short term.

As you could see I was hesitant yesterday before the open anticipating that we may hold on to those gains but should still remain with the top of 917 - top of the day was 918.57. Any shorts here had a great entry for the next 2-3 days.

Well today we should be able to hold on above the 900 range in the morning hours. We could see a rally into the 929 with a potential of a 940 stall - if this is to occur we should see volume decreasing sustantially as we increase in price off the 917. Do not be afraid if you are holding short here, if you got some money left over average down as we will be heading lower.

I had called for a chance of trend to occur yesterday that did not happen, we topped out at the anticipated ranges but did not sell off from there. We will have one last push on the up run before we head back down.

How to trade today?
Well, I am a bit frustrated as we had 3 days of unclear trades (though I took friday off). Any shorts yesterday had a great entry at the 917 and will get another chance today potentially in the 930 range. Of course there is the potential to stall out at yesterdays top 918. Pretty much any short position at this point is going to get the gains they are looking for. We rallied 100 points in 2 trade days which is a bit too much again in such a short time frame.

Monday, December 8, 2008

What a way to finsih the week ...

Previous Trade Day
Many of you know how extremely bullish I have been in the short term but even with that bullish feeling I would have never expected a day like Friday. Gap open down, hit the 820 yet again - and we had the buy volume as expected once we reached those levels. For this to run all the way to the upper range is quite impressive. I honestly would have expected the 820 not to hold this time. My call was that we need to get out of the lower range sooner rather then later - for that to occur on a friday and moving 60 point from the low is quite a big statement the market is making.

Well I am getting excited again today - I honestly feel we are setting up for the suckers rally I was referring to last week. I mean both fridays closing the highest point in the week. Again today we will see our change of trend to the downside - though do not think you going to get another day like last week Monday. We should be able to hold on to Fridays gains on the open (need to wait for premarket data as I am posting early every day due to my current location).

If we are to hold on to gains, get your money ready for a great short here - we could be seeing 900's today which gives you an amazing short down - my call would be 915-917 as the top for the day. This short should last all the way to 845 giving you probably 50 points. Watch as we increase in price with volume drying up - make sure to distinguish this from actual break of the 890-900 which could very well occur here. My call would be one more attempt at the 900 with a sell off for a final break towards Wednesday/Thursday.

EDIT: I had posted earlier we have to be mindful of this being a potential break of the 900 - my feel was one more test and a sell off before we break but this could be wrong today. We have a potential from here to top in the 945 range - so be careful on the short side today. I am still confident that the 917 is the top for the day and we will turn lower but again be careful when trading short today.

Friday, December 5, 2008

Day off for me ...

Taking the day off due to some personal items.

Well, we were not able to get to the high I was referring to, we will have to wait for another day to get there. Additionally my recommendation was to stay on the sidelines or trade only on the edge. The lower edge of course was the mid 830 that we hit right before close - however, being so close to the end of day its not the best position to keep overnight. So anyone who stayed on the sidelines yesterday did the right thing.

Also interesting to see that our down day yesterday (one of the few) again occured on lighter volume which is a good sign for the bulls.

As we closed yet again at the 845 we are currently on the edge, we could see the 820's again, if that was to occur my current bullish feels will turn quite a bit more bearish. We need to get out of this range sooner rather than later. Expect buy volume to step in here and bring it back above the 845 - though with it being Friday I would expect a lighter day but most likly a close above the 845.

How to trade?
Well I am not trading today. It will be difficult today as we are back in the middle. Our trend has been higher lows the past few days so we could see the 835 again today, watch momentum there and volume to make sure we do not go back into the 820's. If we do break into 820 do not go long and remain on the sidelines as we could be setting up for a break to the downside there - again volume is important here.

On the other hand we have 865-875 on the upper range. Difficult to short that one down as the range has opened up a bit due to our recent close at the 870. I would wait for the 890 as I mentioned yesterday for the short with least risk and most gains.

All in all, last day of the week and no clear trades available. Staying on sidelines is the best thing to do today yet again.

Good luck to you all today.

Thursday, December 4, 2008

Look at that range ...

Well I expected a bit of a breather day and we went nuts, huge volume and nice gains. We had overshot my 830 target just a little but due to a fairly large gap open down. I said we will not see 820's again but 830 is the likly bottom - we had 827 5 min after the open.

In addition we had our great short opportunity at the 865 on first attempt, we had hit 864.42 and ran down 30 points - nice gains to be had here. A bit surprised we went this low but considering we had a very large trade range yesterday I guess its to be expected.

On top of that we closed the day again with a break of the previous high - more indication of my call for a sustained rally before all this started.

Well after having reach 873 on the intraday we are only 17 points off the 890. I think we have gone a bit too fast again and are risking re-establishing our 890-900 range. However we have one great advantage this time around compared to last week - during last week as prices continued to increase our volume dropped - this week as prices increase our volume keeps on increasing. An extremely bullish sign - anyone who still believes "well this will sell off, its short lived, we need to short this" needs to re-evaluate at least on the short term what will happen. Long term yes we are headed down another 50% but for now .... go with the flow =)

How to trade?
Again, just as before, 890 and we can go short for an easy 15 points, anything above that again icing on the cake.

Depending on open we have our long chance again - I do not believe we will sell off from here, it may look like it but we could expect to hit the mid 830's on this run down. I would normally expect to hold the 845 but with price swings as drastic as yesterday you need to be ready for whiplash.

All trades carry risk today with the only exception of the 890 short. My recommendation would be to stay on the sidelines today as yesterday had too drastic of a price swing to be telling enough of direction - yes we closed high yet again we traded 110 points on a 50 point intraday range. Those violent swings are not tradable with an in between position, you can only get in on the edge and hope to not get whiplashed.

Wednesday, December 3, 2008

There he is ...

Well does not get much better then this. We had moved up our change of trend as anticipated - opened above 820, small pull back to 820 and go long and we closed above the 845 on impressive volume - we had more volume yesterday then we did on our HUGE down day monday - thats what I was referring to yesterday with Monday having happened on low volume as a good reversal sign for the bulls.

After I entered my long position I closed out at the first 845 and went short as I was expecting a pullback after we reached it the first time, this again was a very safe short as a reattempt was incoming so no risk being down on a position and you decide whenever it is you want to close out - anything above 10+ points. I was very surprised seeing this run back down into the 820's - something I would not have expected but it recovered nicely.

Well this looks awefully familiar to last week. We are setup a little better today to continue with another up day though I would not think it will be a strong move today. We have tested the 845 twice now and closed just slightly above it - this price point will be important again today.

How to trade this?
My expectations are we won't see the 820's again today though we have a long chance at the 830 range. Other then that we have a short opportunity, however its almost 20 points away, if we do get to 865 here we can safely enter a short depending on momentum that got us there. That short is only a short term short for 15 points max - small returns but very little risk.

Tuesday, December 2, 2008

Emm where is the bull?

Well I called for the strong down day, but I would have never expected something like this. My anticipation would have been around the 845 maybe even the 835 mark but never back into the 820's this quickly. I said I expect this down cycle to go into the 820's but that call was getting this number on the 3rd of December.

Regarding my short entry, opening so close to the 865 range I was cocerned about a bounce off this range, instead we kept on going lower and by the time we reached the 859 I was only 14 points away from my first exit leaving me little room for gains but a lot of risk. So no trade for me yesterday at all on a day where we could have shorted off the open for huge gains.

Now eventhough we had a rough day, there is some good to it, yesterday occured on very low volume in comparison to price moves we saw. Thats a good sign for the bulls as this will eventually get reversed.

I expected the downcycle to continue through today with a change of trend on Wednesday but I think we are moving this up. We have to watch volume and price action closely today but with a break of the 820 we could see the bottom in the 806-808 range - the market should not trade lower then this during this cycle. It is also possible that we will have our reversal today, less likly but to be considered since we traded into the bottom range yesterday.

How to trade this?
ok, we have a few things working for us here, we have clear signs and limited risk. If we are to open above the 820 today expect some sell off to bring us back into this range, here would be my first small long position depending on volume. There is a potential to go lower which was indicated by the break of 820 yesterday (though it was more crazy selling on low volume that got us there so I am not going to put as much importance on that break for now). If we do break 820 the bottom should be around the 806-808 range. Here we can go long with a fairly large position with great protection to the downside and good gains.

Short Term
I am still a strong believer of the bear market rally, we established our first leg and need to hold today in the 800 range, if that is to occur we will get back to 900 to re-establish the top range. I would not expect a break on the next 900 attempt but eventually it will be broken. This can most likly form into an ascending triangle with 3-4 attempts at the 900 and higher lows on every attempt. The next 2 days will tell the story but yet again I am confident we will see 900's again possibly Friday.

Monday, December 1, 2008

Ok enough is enough

Previous Trade Day
Well light day according to expectations yet again. Small trade range, top out action around the 890-900 range as predicted (high of the day 896). Not much more to say =)

Well I am looking forward to an exciting STRONG day. As mentioned we will have our change of trend to the downside today - market has run out of time to make new highs and has moved higher in price on lower and lower volume.

We have two scenarios today, either a gap open on the downside with a continious trend to the downside with some slight recoverys - or a nice suckers rally where we are moving 20+ points to the upside off the open for a reversal at the 910-918 - heck if we go higher then this just keep on shorting.

How to trade this?
EDIT due to pre-market data

Well today is going to be our down day, we are not getting the suckers rally I was talking about and we are extremly close to the 865. Wait first to see if we have the proper support in this range and if we are selling below the 860 - if we do break go short from here but watch it with a bit of care - my expectations are back to 820 over the next few days but we have to be mindful.

I said on Friday any longs should close out if we are to get a break of the 890 - I hope everyone followed this advise, if you did not today may be your last change to get out though I expect quite a strong down day which will cost you quite a bit.

Friday, November 28, 2008

Gobble Gobble

Previous Day
Well yet again we are moving as expected. I had called for a 50+ move day, we had 46. Of course the ever so important break of the 865 - as mentioned my expectation was a break of this range once we reached it. There was a bit more hesitation due to the Long weekend ahead of us yet the bulls stepped in and broke with confidence. Closing in the upper range will definitly give us the possibility for the 900.

Unfortunately our gap down in the morning made the long side quite a bit more difficult. Here I said that the trade will become very difficult - you could see that based on the hesitation at the 865 after the market had to rally off the lows - created too much of an overbought condition once we reached the 865.

Short day, people on vacation, and a weekend ahead. My call would be a sideways day today with a small trade range, we have the possibility of touching the 900 - if that is to occur any longs should close out.

How to trade this?
If you are long off my recommendation today is close day. We are right at the 20 day moving average that currently represents 890 - here is where I feel we will top out - do not be fooled by a break and reaching 900, this is not a confirmation but a fake breakout that will reverse.

I expect a change of trend to the downside on Monday. As mentioned if we do get to the 900 today the change of trend can occur here but we should remain above our 865 key range. There may be a chance here to stay short over the weekend and carry the risk that can bring you great rewards - my recommendation - wait till Monday and miss out on the 20-30 points and find a short entry from there.

The next cycle on the downside should resolve itself by December 3rd and find a bottom at the 820 range. As we will continue on the upside and hit the 970-980 eventually we can savely average down from here starting at the 845, next at 830 and final position at 820.

Of course I will post more details for the daily trades but including a bit more short term details so you can understand how to position yourself better.

Wednesday, November 26, 2008

Well we smacked him alright ...

Another great day close to what I was expecting. I said we ran a little too fast too soon and yesterday was the breather day the market needed to be able to sustain this rally. The short end of the trade worked out great as mentioned with the retest of the previous days high at the 865 range and of course the predicted sell off - you could have closed out anywhere on this short run with a few gains.

The long side carried risk just as I said yesterday - 845, 830, 820 (being the perfect entry). Since this was a breather day my expectation was at least hitting the 830 range - low of the day was 834, great call again but unfortunately not easily tradable. We had our battle of bears and bulls and towards the end of the day the bulls won and we extended our distance from the important 845 range. Very bullish sign again.

You can clearly see now that the bottom at least on the short term has formed and we are setting up for a strong rally.

We have a decision day today, expect the move to be a bit strong with probably a 50+ point intraday range. We have to battle the 865 that in my opinion will break on the upside giving me the 900 confirmation I was looking for. We have had 3 good tests of this range, it has to happen on the next attempt.

How to trade this?
We have the luxary today to have a very low risk trade right at our door step. The 865 range is very important and I would expect a final test at this range today. Here we will either break to the upside giving us a great long entry or break to the downside, if we break to the downside we are guarnateed 40 points out of this run to go back to 820 at the minimum.

If we gap open below previous close today scenarios can change a little bit and risk increases dramatically. So lets hope for today being the decision day at our key range we need.

Tuesday, November 25, 2008

Smack da bear in ze face

Well, understandibly I am gloating quite a bit. I am pretty stocked that my predictions for yesterday were dead on the money - probably my most accurate day thus far in terms of price, action and time.

I had entered a long position on Friday just before the close that I closed out yesterday in the morning - I did not listen to my own advise. Thats pretty sad.

Either way lets get to yesterdays review. We had our gap open and sold off back into the 807 range. I said that if we are to get to 806 its very safe to go long. The hesitation at the 845 range was clearly visible with consequitive tests - I hinted at this being a possible short, the only short but only if we lack momentum and as you could see here we were unable to short this run down. However, a short like this can be protected easily as you have no losses with another retest incoming. Having formed an ascending triangle it was very clear we would break the 845 - those are the type of scenarios we have to watch. Volume was just a tad above average, I would have liked to have seen some more but I take what I can get.

To top of the day we closed right at my prediction above the 850 with 851 close price on top of the range - as you know me I normally do not post close prices but for a day like yesterday it was very important to close a bit above our KEY resistance of 845. We had 4 days below the big october triangle and now are back above it. This is a very bullish sign.

We went a little too fast too soon. Today I would expect a bit of a breather, if we are to get a breather or a slight down day we are setting up for a run up to 960, if we try to continue to rally today we will have a change of trend either today or tomorrow at the 900/910 range.

How to trade this?
ok today is going to be a bit more difficult. We have many non-believers out there, you could see this clearly in the last hour yesterday with huge positions being liquidated. FYI shorting is allowed again today but only with care - the trend is your friend and its currently up.

If we get our slight down day today this is a great chance to try to go long, however, it is very difficult entering a save position here. The entry range for a long is anywhere from 845/830/820. As you can see there is little protection you have today to go long. Watch momentum carefully once we get to those numbers so you can see if we will overshoot. Of course perfect entry being 820 but it is my guess we will only see the 830 today.

If we get a rally in the morning hours to reattempt yesterdays upside of course expect it to sell off, 845 seems the way to go for a long. Again, a bit more careful here today. Yesterday was an easy day to trade, today will be much more difficult and you have to be ready to assume more risk with the same reward.

On the short side of course we have a great way to trade retracements especially if we are to reattempt the upside of yesterday. Keep in mind those trades are only for retracements, so get out as soon as you get your 10 point gain. This is not a long term short position.

Shorts represent the least risk today as we will continue to attempt the upside ranges giving you a chance to get our at no loss, however your gains are very limited. Longs are very risky today but could pay out very well if you are to hold for maybe 2-3 days.

Monday, November 24, 2008

Is this the bottom?

Previous Trade Day
Well guys, after thursday you could see how frustrated I was with the outcome. We had an extremely bearish sign due to our capitulation - my anticipation was further drops to find the low 700s and possibly 650 as the bottom but I think I was wrong and overly frustrated.

Friday setup just as I was anticpating with my bearish sentiment, a quick rally that was sold off instantly to create a new low. We had a quick retracement that was not able to break the next high - however, here is where it started to get interesting. For the remainder of the day we had a very tight trade range of 760-750, something I was very surprised at, to top if off any break out was instantly matched with an equally strong reversal to get back into this range. Normally during option expiration Fridays you see this sideway action but this was occuring on strong volume. The exitement I had the previous day was coming back to me as I let my emotions and anger cool down and rationalized what was going on - it was setting up to be the potential bottom, I started trading the long side of things in the early afternoon but I still had fear in the back of my mind so I was rather careful and had to exit a few positions. With one hour left and on option expiration friday I decided this is it and closed my computer, just to get a text message 20 minutes later from one of you guys to tell me its rallying. Immediately I turned the computer back looked at what was going on and analysed the situation - This could be the turning point for us, finally, too bad I was off by a day but oh well.

Mid Term
Well the market got exactly what it needed. The promise of new leadership and the bailout of Citi over the weekend will give the market the confidence back - yes some will look at the Citi bailout with a negative view but I think rationale is out the window again - I said 2 days ago that investors need an excuse to go long, an excuse to buy - this is it. You can go back to my previous posts that I made back in October stating that we will now have a minimum of a 2 months rally with a top that could lead us back into the 1100's of the S&P. My final targets will be around 1080 or 1160. I will be able to determine the top by the end of this week so bear with me please.

Having given the mid term outlook first you can expect me to look for a strong up day. I would not be surprised at another 6% day today. It is my feel we will be able to hold on to our gains and close of course in the 800 range.

How to trade this?
Well, the first piece of advise I need to give is DO NOT TRY TO SHORT. I know it looks tempting but this could be a bad mistake. I know the past 3 months any short position you entered gave you the results needed. Be careful here when doing this. Some had asked me on Friday if this is a good short at the 770 range and I highly recommended against it.

There are 2 scenarios today, a very likly scenario is a large gap opening and a continuous rally to add another 2-3% on top with a close at the top of the range. We could be closing above the 850 range possibly. We have some resistance to overcome at hte 845 range so watch action carefully here.

Second scenario would be of course the gap open that would retrace back to either 820 (if it opens above), 810 or possibly 806. If we are to get to 806 after a substantial rally we can safely go long here. Entering a long position at this point gives you a great protection mechanism as a break of the 800 on the downside will lead to a potential retest of the 760-770 range. Again this does not mean we can go short. I know I said it above but short positions cannot be protected. The only trade I would potentially engage in short is the 845 range and this only depends on momentum once we get there.

The Long Term Investor
As my readership is growing I am adding a new section for you guys that are in it for the long run. Many of you guys have experienced severe losses with the promise of holding and recovering. You all know what I believe in regards to buy and hold. Give it another read if you want

The long term investor wanting to stay in this market needs to change his sentiment and become much more active. I am not talking about day trading but at least use the morning of your day to review this blog and some news on CNBC - stay involved and be cautious.

So what to do from here - keep your positions at this point until we have established the first leg of this rally. We should find our top within the next 5-7 trading days and should top out in the 900 range, potentially 980. Here is where you would exit your mutual funds and other long term investments. I would probably go cash 100% at this point. We should retrace back and either retest the lows or retest the 800 range. By now you will have protected some of the gains and have a new chance to go long SSO (the leveraged ETF of the S&P). Holding this towards the end which should be December/January you should be able to recover a lot of your losses.

Of course I am posting this before we have our final confirmation of the rally but I am pretty confident.

Friday, November 21, 2008

Hungover after a wild ride ...

I am speechless, honestly, I have been waiting for this number for 2 months now, preparing myself for the proper entry and exit strategy. I missed my entry due to emotional reactions - bought too soon - caught it half way then missed my exit as I was expecting the rally to continue just to have to close a position in the reds. Lucky for me with the proper protection in place and the head/shoulder reversal I had no choice but to abandon my position.

Yesterday was an extremely bearish sign, not holding the 764-770 range and breaking it within the SAME Day on extremly high capitulation like volume is not good for us. I talked about that 1% chance of a capitulation type sell off yesterday - would have never put this into my considerations in a million years.

Any long trades that I thought could be had to maintain the 2 months rally I keep on referring to are too risky to enter. 3 months from 1300 to 750 - in 3 staggering months !!!!! Half way I was trying to find the bottom and go long just to get beaten up, now it seems I am bound to make that same mistake again - at one point yesterday I was up almost 15% of my entire cash capital - its always easy to say in retrospect but at this point the trade is to take any profits as soon as you can and play a maximum of 30 points on the upside of major support points.

At this point I have difficulties trying to determine the next move, of course I think we are overdone on the downside but everyone else believes the same. Previously, government intervention and other efforts have been able to stablize the markets - this is not occuring anymore. From here we have a decent chance to continue on the downside until we see the 650 in the short term.

Today will be a telling day after our captitulation from yesterday - we had no support or any attempts at the upside after our run down. Of course we are moving too fast too low but that is no excuse to go long. From 1007 to 750 in less then 3 weeks. Thats 25% !!!!!!!!!!!!!!

Thursday, November 20, 2008

Get the Champagne out ... we are almost done

Well I was wrong with my anticipation of holding 845. I really would have thought the market would go through some more distribution before selling off and going into free fall mode. We all know that we are headed lower but breaking the triangle as we did yesterday put our indicators all out of whack again. At least the upper side trade worked out yet again. We had a continuation of our rally that topped out, had a moderate sell off worth 15 points (I said 10 so I was a bit too conservative), then retested the upper range just as forecasted one last time before finally deciding that there is nothing up there.

Now we had a major bearish close yesterday, no rally occured after we had broken the 845. I talked with some of you over MSN explaining what would occur after the 845 break as I did not put that into my post yesterday. I'll try to be more detailed next time =)

Special Event
Well, my heart is beating faster. We are only 40 points away from major support ranges, hitting those ranges will start the 2 months rally I was talking about back in october. I am not going to put any price numbers today, if we are to rally and have an up day in the morning (which I do not think will occur) we will just have 2 days of sideways trading on lower volume.

The most likly scenario is of course the continuation from the freefall, creating the v-bottom and hitting 764 in the smack middle. We should see MAJOR buy volume step in here and a recovery that we have not yet seen during our troubled times. I have been stressing this number over and over again and mentioned to many of you that this is a very very special event.

We are currently setup to have this occuring today, if not today it will be next week tuesday most likly. Of course everything can change, if one of the three auto makers comes out filing for chapter 11 I think even then the 764 will have a hard time finding support - though it should hold. There is always that 1% chance that we will continue a capitulation type sell off event similar or much worse then our october crash. Be mindful, be ready, be careful.

You ask me how the market can rally for 2 months after hitting this low? From a Psychological perspective stocks will be oversold/undervalued with bad news priced in. This is how investors will justify long positons and the market rallying. I honestly feel this could be a 200 maybe even a 250 point run from those levels.

Wednesday, November 19, 2008

On the other side again ...

Well yesterday played out as anticipated, we bounced off our upper trend line and went lower to retest the previous lows - it is very important that we can see our descending triangle being broken now for the second time, we needed to stay above the 846 range to have another chance on the upside and we did not. We have now had 2 spikes below that very important trend line, both of them recovered within hours which is a bit of a bullish sign, the market is trying to avoid the big breakdown to 764 - though there is nothing keeping us from there.

Well both of my trades worked out to perfection yesterday. As I do have a full time job I am not always able to act on those but anyone who read my review clearly saw the test of the upper end. My call was for 868-882 and the high of the day was 865.90. Great short entry here to run down to the next level. Here again my call was for the 820 with the low of the day at 826.84 - closely looking at time/price/volume you would have been able to forsee the early reversal - to top this trade off I called for a 30 point rally ... 826.84 + 30 = 856.85 ... we rallied till 859.12 the close of the day.

Today & Time & Price
The market is going to retest the upper range of the current down trend. This should find its top around the 882 range. We have to be mindful here for a potential retest of this range before the final downturn. If we are to break the 882 which I think will not occur we can see 900's again.

On the lower end I would expect us to stop at the 846 though this may only be a small test. It is my feel that the majority of the time will be spend on the upper ranges today.

How to trade this?
Well today we have to remain a bit more cautious. Of course look for the continuation of the rally with a top anywhere between 871-882. This would be a great short entry but needs to be monitored closely. The important thing to watch for is the sell off from this range and the first peak - if we are to re-test and possibly go all the way to 882 (in case we topped out too soon) the sell off should not exceed 10 points. Do not be scared of this retest. With the proper stop losses right above you minimize your risk exposure by quite a bit.

Tuesday, November 18, 2008

On the edge

Current State
Sorry again for not posting updates ... been slacking. Well Thursday we had our perfect V-bottom, if it would not have been for work related meetings I would have been able to get a nice entry price, instead I had to buy in half way. After our october lows we have created a long term descending triangle, as you all know this is a very bearish pattern that ultimately will result in a continuation of the primary trend. With the new low from Thursday and closing right at the lower horizontal edge of the triangle yesterday we have to brace ourselves for more lows to come. We have gone through the proper distribution and now have seen our shift in trend on thursday last week by creating a new low for the year without being able to sustain a rally. We have nothing to stop us now to hit the 764 which should be the bottom. The upper end of the current narrow downwards trend is right at the 880 range - something to watch out for but this is key resistance that I believe should not be broken.

As you remember back in October I had made the call for two scenarios, either a hit to 764 which seemed difficult due to our heavily oversold condition or the 2-3 month slow rally - with bad news in the market place it has to get worse before it gets better. After hitting 764 we will then hit our 2-3 months rally that should lead us back into 1000's possibly low 1100's on the S&P.

Today & Time & Price
Due to a very bearish close yesterday we have to be mindful of a small rally. Of course those will be sold off as the primary trend is down.

The upper end of the current trend line of course is in the 868-882 range. Watch volume, price and time carefully here to determine if this is going to lead to a break or a fall.

On the lower end of course we have our 820 that we all know will eventually be broken, though I would expect some support here.

How to trade this?
Trading on the short side seems a bit more resonable now, I would wait for the rally that can occur in the morning or afternoon and should top out at 870 or overshoot at 882. If we are to see lower volume as prices increase this is your sign for the incoming reversal.

If we are to get lower in the morning we should see some support off the existing 820 range, however any rallys should be short lived and carry quite a bit of risk - I feel we could get a 30 point bounce if we are to reach 820 but be ready to exit fast in case you go long.

Tuesday, November 11, 2008

Dropping like a rock ...

Past Days
Well my friday trade setup worked out perfectly. We had our short rally, then retest of the 900, then the large rally and the pull back just as anticipated. I traded after my own recommendation and had what looked to be a perfect entry for a nice run. However, after the trade had played out we hesitated and were not able to reattempt a decisive break on the upside. As mentioned you need to be aware for change and this is exactly what occured - the hesitation and narrowing around the 922 range was a clear sign of weakness and increased the risk by a substantial amount. I exited my position with no gains which was a wise move - after my exit we got the whiplash I was talking about and jumped by 20 pts in both directions towards market close.

From our Monday top and last week we are now yet again in another pattern. We have formed a decending triangle that is looking for a break on the downside. Rallies to the upside at this point should be short lived and correct itself within hours with no more then a 20 point move. If we are to violate the pattern we need to see a decisive break of the 930 range, if that were to occur we can move up further.

Time and Price
Of course our ever important 900 range, this could manifest itself anywhere from 907 down to the 895. If we are to reach 895 expect a bit of support there of course.

Next numbers on the downside are 891 and 875.

Mid Term
I am still confident of the lows for the year being in but signs are showing more weakness. We need to evalutate the action in the next few days with great care. If we are to create new lows we will see a fairly strong run down that will find its bottom right at 764 - yes thats a lot of points.

How to trade this?
Today a short term trade on the downside presents less risk as we are in a bearish pattern formation. We have clear upside boundaries to adhere to - those boundaries for the current pattner are around the 930 range, a break here would violate our decending triangle and go higher.

As we are opening low I would hope for a bounce of the 900 range (907-895). This should find its top at 912 or possibly the 922 range. Depending on volume and momentum the 912 would be my first short entry at 50% , expect a small retracement back to 907 and a possible re-attempt at the 912. If we are to break wait for the 917-922 range to enter the other 50% on the short side. Your average price could be at 915-916 depending on entry giving you a great position for a run down to the 895 range.

Friday, November 7, 2008

Long time no talk

Sorry buys, between getting ready for the big move and traveling I did not have time to post any detailed updates. Regardless I have shared some of my thoughts with some of you over the past few days.

Past Days
As you know I had called for the drop we experienced the past 2 days before hand. We had a bearish rising wedge forming that we broke out of 2 days ago. Prices had increased on lighter and lighter volume giving clear signs of a reversal.

Unfortunately due to my travel I had my stop loss set a bit too tight for the short position I had entered around 1000 on the S&P - missed out on all gains of the past 2 days - as I had entered a very large short position I was too concerned on the upside and tried to remove any risk from the trade which ultimately cost me a fairly large amount. I did not follow my own rules of a 1:4 risk/reward ratio. I assumed ZERO risk to be able to make huge gains - does not work, I knew it but for some reason I was too afraid - This has happened to me quite a few times now so this time, I better learn my lesson.

As many remember the lows for the year are in - I know many are saying now we will go lower, and we will but not during this cycle. I expected the downmove to stop at the 922 level, stopping at the 900 (899 low of the day) is a bit more bearish then I like but that can be acceptable considering we had a huge sell off without any upticks. We closed at the 904 level, a bit too low for my taste but I am confident we will hold at least on the short term. The next 2 days will decide if we can sustain the lows. If we are trading below the 890 range for an extended period of time (at least half a day) and close in the 890's we will create new lows. There is a slim chance of this happening.

Time and Price
922 of course my exit number I had anticipated after our 1007 downturn
900 very important support, a bounce here should be expected
~896 this number could come into play as the support. If we are to get a bounce here it has to happen fast and should trade at least 10 points higher within 30 minutes. If we are to get sideways action around this point we have to be very cautious and careful

There will be more numbers coming into play today but those are the important ones to remember. We are oversold now and should not see a 40+ point day on the downside.

How would I trade?
This is a new section I may start to add to give advise on what I am looking for to enter positions. Please keep in mind that anything can change and needs to be monitored closely. There are many type of patterns and signs to look for before entry that are to complex to address here. So I am giving a bit of an idea on what to look for and how to protect your position.

I would expect a retest of the 900 range in the morning hours. As I am posting very early (differnet time zone) I am unable to include the morning pre-market action. My expectation though would be a bit of a rally that would find its top around the 922 or maybe a bit higher. We can either continue from here which makes the long side trade too risky to enter or retest the 900 - here is where we can go long with low risk accompanied with a tight stop loss around the 890 range. If you are to go long start off your position with a smaller amount to be able to average down in case it overshots - I would put my second target at the 894 range with a stop loss at the 885. If we are to rally and bounce right off the 900 wait for the first pull back and then add to your long position at the 912 range (where I would expect the pullback from the previous bounce).

Again I would not try to short at this point as the risks are extreme and stop losses won't help you as you as much on the downside due to the whiplash that can occur.

Wednesday, October 29, 2008

Where are we headed long term?

I am going to change it up a bit today and present some more longer term numbers. Most of my posts have been short term based and focused on the immediate nature of the market. As some of you remember I had posted a fairly negative message last week about the overall outlook so I wanted to elaborate a bit more on direction and challenges we see in the current market place and conditions.

The First Big Crash – ok let’s address the month of September and October. As some of you may remember back in July I had indicated the lows of the year being formed in October – we have a few days left and I think our current down cycle will find its bottom at the 764 level, the level we adjusted down to back in 2001 at the end of the dot com boom. We have been holding up fairly well over the last few days but you can sense the market sentiment not accepting the 839 as the bottom. Our bottom is imminent and will develop over the next few days and I am pretty confident we will find it at the 764 range where we will trade very very short. From here on out the market will rally in a dramatic move on the short term and stabilize in an uptrend that should find the top around the 1040 or the 1100 range – it is possible to hit the 1180 but that I need to determine once we get closer to the range based on momentum. This cycle should find its end towards the end of the year and may reach into January. The overall sentiment of the market, investors and consumers are based on the buy and hold still. In September and October a large amount of the down volume has been caused by the redemptions and de-leveraging in hedge funds. In a down trend environment the first positions to get hit are the higher risk ones and those have come to an end.

The next Big (orderly) Crash – the next big event we have to deal with is the redemptions out of mutual funds and 401k’s. I see huge risks with the average investor being sold on the idea that the bottom is in and we will continue on the upside. Seeing the DOW at the 10K levels again will bring back huge amounts of confidence, investors are more comfortable now that they have recovered some of their losses and greed will step in again with low risk investments being moved into more risky ventures to get in on those “undervalued companies” that are begging to be bought and bring huge returns back how we had them in 2007. After our top around the turn of the year our downtrend will continue in an orderly fashion, nothing like we had seen in the past 2 months. Sense, with a hint of fear, will slowly set in again when we will trade back towards the 700-800 range. Here is where I believe we will start to see a huge change in the market place with more redemptions coming from Mutual funds based on 401K liquidations or moves into bonds and other stable investments. This will be a long process and by the time we are done we will have our 400 mark on the S&P towards 2009/2010. You may call me crazy and yes I agree I am worst case scenario kind of guy but I rather prepare for this event and be called out in 3 years about how wrong I was then to blindly follow a path that has risk and loss written all over it.

Friday, October 24, 2008

WOW ....

Nothing more to say ... if we are to reach 764, get your money ready, your parents money, your grandmas money, ask your neighbor, ask your wife/girl friend, your best friend, your employer. It is possible today if the SEC will allow trading this low - today we could see the first trading halt in a long time. Futures contract are at their maximum permissable level for pre-market.

Thursday, October 23, 2008

Oh we had a decision alright ...

Well the decisions is there, it can;t get any clearer then this. Violent move to the downside and fear setting in again.

Today / Time and Price
Watch the bottom at 839, if we are to break we have one more chance to find support around the 820 range. If we are to get support at the 865 it should be short lived as we are so close from the previous bottom.

Mid & Long Term
We could be on our ways to form a double bottom, however, this is not something I anticipate. During times of a double bottom technicals and fundamentals are more neutral allowing prices to stablize around the previous bottom and gather strength for a rally. At the moment fundamentals are very negative, earnings starting and reports have been very negative, with guidance being adjusted downwards for pretty much any industry.

I am starting to get worried about where we are headed. Looking at it from a big picture of society and the last decade - this could be the big crash, the big adjustment or change that will come. Presidential elections with a fairly left candidate that is most likly going to win, double top from our previous dot com peak, the end of wall street and investment banks. The days of the US being the poster child of capitalism and opportunity could be at an important turning point. The government is doing everything possible in an attempt to fix a problem that is in reality not fixable. Now even more then before I believe that we will be headed for a lot more lows in the next 2 years. We will see the 400 mark on the S&P long term, not this year, maybe not in the next 6-12 months but it will occur.

When looking at the markets and investments from the average consumer - the past 30 years have shown one and only one message - start investing into the market place, 401K's, put your money into companies and you will be able to build your retirement without any worries. What will happen if we drop another 40%? Americans and many others who have relied on this strategy to retire will be left with nothing to retire from. Look at europe and their way of retirements being supported by the government - no one is waiting for this big payout from investments - you work hard you entire life and will be taken care off. This concept does not exist in the US, nor did it need to exist - but what will happen to those, who depend on their 401ks, retirement accounts and other investments when they will have lost 75% in value and nothing else is there to support them?

I am concerned, very concerned ...

I apologize for given such a grim negative message today, I hope I am wrong in many of my points but we have to start to accept the fact that this is possible - the sooner we realize this and do not get caught in denial the more able we are to do something about it for ourselves.

Wednesday, October 22, 2008

Decision day ...

I am still off by a point of two but overall numbers are starting to make sense again. Hit the first high right at the 985. Unfortunately we broke the 970 fairly hard and as mentioned it brought us to the next level at the 952 (first low was off by 2 points). I mentioned I wanted to see at least one test of the 985 and we were able to test it one more time in the afternoon - However we had a fairly large sell off that brought us right back to the 952 which marked the low for the day. This unfortunately was not a good sign and indicates that we will find ourselves on the lower end again.

Unfortunately we are already down premarket so the 940 will be broken on the morning. If we are to continue on the upside we need to try to stay above this number and at least attempt to get back to the 952 range througout the day.

Time and Price

970 - if we can get to this number today we will continue on the upside, though I do not expect to even get a test here
952 - we need at least 2 tests of this number today, if we cannot break this on the upside the market will continue lower
919-921 - expect quite a bit of support here

A break and close below the 940 will send is back into the 800 range and possibly retest the lows.

Tuesday, October 21, 2008

Ohh yeah .... we starting to act normally again

Impressive, we are slowly starting to trade with sense again. Opened in the 948-952 range, hit the first high at 970, hit the low at 940 (off by 3 points) and went to retest the 970 with a final break to close right at the 984 (off by a point). This is what we need here.

After our monday last week we did some attempt to retest the lows and created a fairly wide penant formation which is a fairly bullish sign. We broke the trend line late afternoon in trading and need to ensure to stay above this point today.

Time and Price

984-985 - I would like to see at least a test of this number today.
970 - as you could see yesterday this turned out to be a fairly important point now. This needs to hold today or we will head back to the lower side.

Monday, October 20, 2008

Are we starting to act rationally?

Previous Trade Day
Well, last week we experienced ups and downs but on Friday we showed the first signs of some sense setting in. We still had a fairly crazy day but for half day I finally saw the first signs of technicals and some fundamentals set in.

As many times on options expiration fridays we finsih the day the same way we started. Today I would really like to see more consistency in price points.

Time and Price
As we are slowly getting back to more normal trade enviornments support and resistance are coming back into play. Lets hope we can keep this up. So for the first time in many weeks I finally have some price points to discuss.

Our trade range from last week has narrowed with the top on tuesday and the retest of the lows on Thursday. As mentioned I want to see one more day today with consistency.


As we are up premarket we should open around the 970 and start the trading day from here on out.

Tuesday, October 14, 2008

Well ... we definitly rallied

We can clearly see how our bottom has formed on Friday. V-bottom with the exhaustion gap I was hinting at to finally break the current trend on the short term. The dip in the afternoon provided the traders on the sidelines with a great opportunity and everyone wanted to get in on this rally in the fear of missing it. A lot of money was made yesterday but looking at it from the big picture perspective we are back to where we were mid last week. We need to ensure we continue on the upside with high volume to sustain those gains. We had less volume yesterday then any of our previous days last week so we need to watch it here carefully.

As we are up premarket we have some room left to go on the upside. Yesterday I said we will rally till 1070 and that will be the game today. I expect huge amount of resistance at this level and I believe we will not be able to break this number today. Watch the sell off that will initate at this level.

Time and Price
As the market is still trading irrational numbers again are light. 1070 is what we need to watch today. I would expect a test of this number at least once after we have initially reached it.

Mid Term
1070 represents the 38% retracement from out May top to Fridays bottom. From a big picture perpective every rally we have had from our previous lows has declined in terms of retracements. A break of the 1070 will bring us back to the 1140 levels.

Monday, October 13, 2008

How far will we run?

Well today is going to be a short one. I have been saying since tuesday last week the bottom is in, well it wasn't and we experienced the worst week in the market ever.

Today is the day we need to watch carefully. If we will be able to stick to the gains in the first hour, and remain above our close price on Thursday at 909, V-bottom on Friday coupled with an exhaustion gap are all the signs of a bottom being in.

Time and Price
We need to stay above 909, after the morning sell off we need to stay well above this number. If we are to see a retest I would be concerned.

Mid Term
First stop is 1070, a break here and we will have seen the lows for the year. If we are unable to break this we will continue our primary down trend. Expect at least 2-3 trade days around this number once we get there.

Friday, October 10, 2008

Well no ....

GM is what drove the markets mad yesterday .... do not even know what to say anymore. Worst week since the 1938 or something?

I stick by what I said yesterday that the first signs of a bottom are forming. GE reported inline on both their financial and industrial divisions - that to me is a good sign. GE has been used in the past as a measure against the economy - something that is not aligned now.

We have to be really concerned about continued liquidation. As my broker said yesterday, the consumer is just now getting their september statements in the mail just to see they are down 8% in the entire month of september and in the first 2 weeks in oct already more then that. Those consumers are unable to control their emotions and fear and will definitly push for pulling out their money. Also bush talking at 10:00 today, anytime the government speaks we see the market drop - lets hope it won't be like that today.

I do believe that we are close to the bottom, but I have been saying that since Tuesday when I anticipated the V-bottom on monday.

Time and Price
yeah right lol

Thursday, October 9, 2008

First signs of a bottom ...

Yet another gap open in the morning however this time it was accompanied with a global interest rate cut by pretty much all major banks. Here I thought is were we would take off but this rally did not even last one hour before it sold off again, very clear sign of the confidence for traders being non existant. I would have expected further sell offs but surprisingly, the first time in over 2 weeks, we showed signs of support - we tested the 1020 range three times before finally selling off, however this is the first time having consequitive tests on an the upside. Additionally several stocks have shown prices to find support. AAPL is a great example as the 87-88 range indicates a bottom there. I am not convinced yet of the upside but we should see more companies finding a bottom here.

We have to make sure we keep ourselves on the upside, that does not mean close in the greens but staying above the key range of 990, even if we have a narrow range today or trading sideways I would consider this a victory at this point.

Time and Price
I am hoping that sense is coming slowly into the market. Two numbers to watch today.


Of course a break of the 990 will lead is to the 955 I indicated yesterday.

Wednesday, October 8, 2008

Too much too late ...

Well, as mentioned before I stayed out of trading the past few sessions. Yesterday however I initiated positions after careful analysis on Mondays trade action as we had all technical signs of a v-bottom. I entered quite a few positions of stocks that have been very undervalued and will show huge gains during a bear market rally - however, as you all could see the bottom was not in. I held on to my position anticipating the fed rate cut that did not come. The market was waiting for this sign and the feds/govt have yet again missed the timing window. I applaud the feds, SEC and government of the extraordinary efforts they are putting together, however, timing is the key, and they have failed at that, a rate cut yesterday would have confirmed the monday bottom and initiated the rally.

In further efforts to stabilize the markets the feds and other global institutions have cut interest rates (finally but too late). Additionally the feds will now DIRECTLY lend to corporations and bypass the banks if needed - a measure that was only taken during the great depression. Further breakdowns should occur as the market has no confidence, anyone that has tried to go long (me included) has been slapped in the face over and over again. There is no one left to buy.

When looking at equities at the moment we are at valuation levels that have not been seen in a very long time, yet there is too much risk to the downside, once the bottom is in get ready for a frenzy. Make your list now of what you want to own, I tell you, there is a lot out there.

Time and Price

990 is our 200dma on the monthly chart
955 (I cannot believe I am saying this) could be the bottom today, we should expect quite a bit of support in this area.

Tuesday, October 7, 2008

Lets make the market move ...

Holy Crap, DOW broke 10K, down to 1007 on the S&P, over 8% at one point and a pretty huge recovery rally, considering how the market traded yesterday we can consider our -3.5% a victory.

Technically we are bound for a rally from here and we should be able to fill our gap created yesterday. As mentioned the gap yesterday was a beautfil setup for an exhaustion gap that should be filled today. From here on out we can expect a nice recovery in the short term.

Time and Price
As we are still trading with fear in mind it is difficult to predict price points. As mentioned the 1070 number still applies as an important turning point.

Monday, October 6, 2008

How much further?

Last post was on September 25. The past 2 weeks have been rather chaotic and left little room for fundamentals or technicals as the market is driven by fear. I have incurred quite a few losses and as a result have stopped trading last week. The next few days will be key in determining the direction of the market. As everyone knows our bailout plan was passed on friday and to the surprise of most traders even the pros we turned negative after the approval - something very few expected and something that is difficult to explain. There are a few reasons for this sharp decline after the approval. Lets look back over the past 2 weeks, on Thursday the 18th when a bailout plan was announced we rallied 100 pts in less then 2 trade days, Monday last week we dropped 100 pts after the plan was declined. Many traders have taken this as a base and prepared themselves to sell into the rally upon the approval on Friday - however no one was buying yet the traders and institutions continued liuquidating into the market anticipating strong buy volume that did not occur. The pressure that was put onto this bailout plan made many come out and create even more fear into the market place - I mean the governator stated that California will run out of money by the end of october unless this plan is approved - many skeletons came out of the closet in an attempt to persude polticians to vote yes - but as a result more truths were uncovered about where our economy stands - truths that were answered with more fear. VIX remains at 45 and will continue increasing today, we should see our first 50 on the VIX - levels it has not been at in many decades.

On September 17th I changed my mid term outlook calling for 10xx on the S&P 500 in the beginning of october, well october is here and on Friday we marked our first break into the 10xx range by closing right at our low at 1099.

As global markets are reacting to the crisis more pressure will be put on the US market place. Again we will have a large gap open today - a gap that in my opinion will be filled and will clearly be shown as an exhaustion gap - we have traded on the downside and have had no attempts at any rally. I do feel that we will see a change of trend today, look for confirmation around the 10:00-10:30AM mark, if we are not to see a rally from there we will likly continue our downslide without stops - as we will remain fear based the only stops and rallys are incurred through outside interventions. I do expect the feds to cut rates before their scheduled meeting by the end of this month.

Time and Price
As we are trading on fear and are in an area we have not seen in many years support and resistance points are difficult to forecast. We are currently seeing ourselves in a sharp trend downwards and it is difficult to predict price points.

Watch for our bottom at hte 1070 today as this could be the trend changer.

Mid Term
I believe the current fear based moves will come to an end soon and will mark the lows for the year - I am glad that my call for the lows for October back in July worked out - not glad that nevertheless I lost quite a bit of money =) The key in this market at the moment is surviving the fear and getting back to fundamentals and technicals - until this is taken place I will remain very light and trade with little money. There are many great opportunities out there at prices that are very undervalued, AAPL is a good example, RIMM and many others especially in the financials and services industries - in a few months you will look back at those prices and wish you would have been able to pick some up. When everyone is running for the hills and people are selling the smart investor picks up the strong ones that have been beaten down in price and value.

Thursday, September 25, 2008

Wait and see

Buffets GS investment did not lift the markets as I expected and we seemed to sell off yet again in the last hour of the trading day just to get a huge push in the last minute to bring us right back to where we started the day.

Considering our down run since Friday morning one should expect a bit of a rally. The game at least in the short term is wait for congress to see what will happen with the bill. It seems we are getting a bit closer to an agreement. I do have to admit both paulson and bernake are not looking as strong and confident as they should be - I would have expected more precise and detailed statements and support for their $700 billion dollar bailout. I have yet to see a justification other then "this is the number we feel we need".

Time and Price
Pre-market we are right at the 1200 range today though I would not expect a drastic move as everyone is waiting and watching what is going to happen.

Mid Term
We are right in front of a path that can lead us very strong into one specific direction. We have 2 major components to consider - of course the bailout and the short sell rule. All I can say is get your money ready for next week - whichever way its going to go I would expect at least a 100+ point move over a 2 week time frame. Anyone trading the S&P using options is getting a great starting position on monday as the second september options are expiring this week giving you a better value on the october options as Monday/Tuesday seems to be the day for the move.

Wednesday, September 24, 2008

Are we done? Some think we are ...

Another huge sell off yesterday. Monday and tuesday combined experienced the largest drop on the S&P in 6 years. This is staggering. Considering what happened last week and what we are going through at the moment - speechless. VIX still having a good time above 30.

Anyone that followed the news yesterday would have been able to forsee the drop at the end of the day. Lawmakers were meeting yesterday trying to determine to what extend to implement the Paulson plan and let me tell you - it did not go well. I am sure they will try to do the right thing as the times we are in require drastic measures.

Thanks to Mr Buffett we should see quite an up day today. After pumping $5 billion into Goldman and Goldman offering more shares I assume many other banks will use the short window as well to issue new stock to get better capitalized.

Time and Price
Same as yesterday I am not going to post many ranges today. The low of yesterday happened to be the same 1187 I posted previously - so price points work out but the range is too wide and will continue to be wide.

1213/1221 - break here is needed
1200/1205 - important range in trading yesterday
1187 open/close
previous lows

Today can play out 2 ways. Most likly scenario is a nice rally that will hold on to its gains. If we are to sell off below the 1200 range today the retest of lows will be inevitable. Congress needs to act fast or we could see new lows this week.

Tuesday, September 23, 2008

Lets wait and see

Another huge sell off and we are back to where we were on thursday. Definitly another move I did not expect. Volume was fairly low yesterday (in comparison). VIX is still above the 30 range, the first time in our crisis it has held 30+ for more then 5 days.

We should see a continuation of our strong moves into different directions. Watch the 1200 today for support but overall this entire market is fear driven and any type of news whether its positive or negative will show overreaction.

Time and Price
As you can see my predictions have not been very accurate as of late due to the volatility. Technical analysis is a great tool to be able to forecast direction but due to the current market sentiment forecasts and price points are not inline.

1200 - major support from our july lows should play a role today
<1200 - anything goes here

Thats it for today. I am staying on the sidelines for the next few days. I have incurred quite a few losses the past week. One of the biggest problems is that during times like this I need to be watching the markets every minute and due to work I am unable to do so. Going to wait it out for a bit and leave my cash in the bank.

Monday, September 22, 2008

Where are we headed from here?

Last Trade Day
Well huge gap open on Friday. Interestingly enough we stopped right at the 1260 range in the morning open. As some of you remember this was a very important number in the past and remains a key turning point on this market. As we had option expiration on Friday we moved "fairly" narrow after the peak and bottom had been established.

The market has had the weekend to absorb last weeks historical events. They key remains in trying to break the 1260 range decisivly. A break here will bring us higher but considering we had strong moves in the past few days we have to ensure to break this point after we have absorbed some of the selling pressures - otherwise any attempts will continue to fail and send us lower again.

Time and Price
For today going to keep my price ranges a bit wider without all the small steps in between. Considering we have seperated ourselves with strong moves from previous support and resistance lines I would rather wait for confirmation of all the mid steps.

1st high 1260-1262 - we did hit 1264 for a split second so watch out for this peak to possibly extend itself there. 1266 should be considered for a final break of this number to stay on the safe side
1254 open/close
1st low 1236

Mid Term
I had called for 10xx in the beginning of october. Due to last weeks events I would put my mid term on hold for today and tomorrow until we can determine the direction. Keep in mind the fundamentals have not changed, banks still have the same problems, housing still continues on the down run and overall consumer and unemployment numbers do not show any increase.

Thursday, September 18, 2008

Smoke out the bear den

No comments, I mean holy crap. 1133 as the low, then rally like a mad man.

Gap open at 1250, huge gains in every world market.

None today .. we could be going anywhere.

Mid Term
October lows out the window. My anticipation for this is a pretty strong rally over the next month. First stop at 1310, second stop at 1344.

Done for now at least

Ok, yesterday did not play out the way I anticipated at all. Found myself yet again trying to be a hero and being the first at the bottom for recovery. I indicated that my feel was that the 1175 will hold. In the morning hours we gapped at the open right at my 4th low 1187, one level above my 1175. I traded both lows with the anticipation of going up and had to close each position. Unfortunately I did not believe in my own scenario two. I said that if we are unable to break 1200 we will see new lows. High of the day came in at 1199, we did not break and create new lows - a move I had anticipated before the day started but ignored it througout trading (slap me in the face please)

We have had 3 consequitive days of VIX staying above the 30 range, created 2 new lows in 3 days and lost 8+% on the entire market. Looking at the retracement from previous lows we can say the low is on on this trend.

After such an extensive, volitaile and fear loaded move we are done on the downside in the short term. Thanks for the SEC we now have stricter rules on naked short selling which will help the market. Yesterday was the last day of pushing down those beaten up financials.

Time and Price
We can use yesterdays numbers as nothing has changed. While we had a huge sell off at the end of the day those lows will not be reached today. To avoid confusion I will remove the high/low comments for now as gap openings may confuse people on how to read those numbers.

1200 - a number we need to break on the upside. This can either happen today or tomorrow.
1175 - I would expect this to be a bottom for today after the morning gap/break
1169 - of course the first new low from monday
1161 - what I would consider the low. I know we reached the 1155 but this was quite a fear driven low. In the future the 1155 will play an important role again but not the next few days of trading

Mid Term
Mid term wise what I said yesterday still holds. We should expect a 70-80 point rally from here on out which brings us right at the 1229 mark. This is my first target before we can make further decisions on how far up we can go. The primary trend is still in so be careful on buying and holding as this is not a reversal. My call for the october lows still exists and I feel we will see 10xx soon.

Wednesday, September 17, 2008

Say what? I thought we were done ...

The market got exactly what it needed yesterday with a bailout support for AIG. I was a bit surprised at not getting a rate cut in the afternoon (decision that lost me a bit of money hah) - but I understand the policy and looking back at it now - I feel the feds made the right move there.

Price wise, well, I have to admit I am gloating a bit here. I predicted 3 low points, price ranges we have not traded in for years now - yet the accuracy is as good as it can get. The low of the day ended up being 1169 right at my forecast. The second low represented a significant support range after the fed announcement in the afternoon, the market dropped 20 pts in 1 minute and found its bottom right at the 1174 range. Having prepared myself for this number I was able to enter a position and lock in some gains.

Well the bad news is not over, AIG got bailed out, and housing presented some pretty horrific numbers today. Considering our pre-market behavior I would expect some testing of the lows I presented yesterday.

Time and Price
3rd high 1229
2nd high 1221
1st high 1217
1213 open/close - keep in mind we have another gap opening today so lows will be "highs" as well throughout the trading day
1st low 1211
2nd low 1200
3rd low 1195
4th low 1187
5th low 1175
6th low 1169

I feel we will be holding at the 1175 range today and recovering back into the 1200s. If we are not to see a 1200 we will make new lows this week.

Mid Term
My anticipation is that the low from yesterday will stick for the next 10 trading days and we should see at least an 70-80 point gain from the 1169, market definitly is not looking like it today but the overall trend is positioned for this rally before breaking down again and creating new lows. It is also very possible to continue our slide to the downside but as I said yesterday, there is little room left for more down turn at least in the next few days. If we are to continue on the downside and see new lows the sell off will become more dramatic and the first 10xx will be here by beginning of October.

Tuesday, September 16, 2008

Well holy crap ...

Well guys, its been almost 2 weeks now since my last post. What a mess to come back to.

Well not much more to say, after the gap of gap openings we found a bottom in the morning hours and went for a rally. Mid day we had a perfect head and shoulder form which should have been a great entry point for anyone attempting to go short. Then we did what I would not have expected, make a new low and ending the day in 60 points down.

News Update
Well before posting todays action I wanted to reiterate where we are and maybe rant a little. Normally I only include technicals and not fundamental data but its hard to ignore at this point. Well my first rant, FNM and FRE were taken over - looking at it now what a bunch of bull crap - Paulson whose term ends this year wanted to secure his long term career and decided it was a good idea to screw over FNM shareholders and take control over a company that needed support in terms of credit but not control. And instead they decide to not give ANY support for banks trying to make right out of LEH. I know we all need to live with some victims down the road but it frustrates me when you see that a different approach could have smoothed out what we are going through.

Next on the list AIG - well, we CANNOT allow AIG to fail at least not in the state its in at this point. The exposure outside of the finance credit market is too large to let it go belly up. Here is where I expect either a sell off for specific sectors/divisions or some other mechanism to ensure liquidity.

Who is on my next on my "shit what we gonna do now" watch list? - WAMU, I dare to say that by the end of this week we will know what will happen with WAMU.

What else - can anyone say 0.5% rate cut. What really works for us at the moment is the strong dollar and the fact that inflation is not as bad as we think, since all other currencies experience the same problems - if not worse.

EDIT: Well thanks for more bad news, GS reported this morning and guess what - it was not good. One could argue this is priced into the market but it does not help when reports are worse then expected. This reiterates even more that the markets need help today.

Well, I expect a trend changer to occur today in terms of news announcement. We will continue our down run that started yesterday as more trouble is ahead of us. Get your money ready for a nice recovery once the bottom is found - a piece of advise - don't be a hero and be the first to guess the bottom today - wait for confirmation and then enter the market. From a technical side we are oversold on 60min and 15 min charts - an indicator I normally use to go long. Also VIX being above 30 is another great indicator. It is currently higher then at our July 15th low and will probably be at the peak today for the year.

Time and Price
Well slight format change. I am giving a bit more detail now on highs and lows as its easier for a trader to determine price action around those points to know where we headed throughout the day.

6th high 1236
5th high 1229
4th high 1221
3rd high 1217
2nd high 1211
1st high 1200
1292 open/close
1st low 1187
2nd low 1174-1176
3rd low 1168-1170

There is potential for more lows but lets wait and see. Wait for the bounce and make some nice money on the up run once trend is confirmed. We do not have much more room to go on the downside today and after such a move a recovery is expected.

Watch List
There are quite a few bargains out there at the momemt. WMT has been holding on very nicely to its gains, its trading on the upper end so watch for it to come down before entry - defintly something I may go long with.

Tech wise - open a position consisting of AAPL, RIMM and DELL (yes dell). All 3 of them should give you nice gains - for better protection and more downside protection I would consider MSFT and INTC, HPQ as well. Depending on your trade cost the more you can pool together the better.

Mid Term
Well, our primary bear trend is continuing, more so now then ever. I would expect a continuation of our trend into october where we should see our first 10xx on the S&P and possibly mark the lows for the year. We shall see.

Wednesday, September 3, 2008

Sorry another day off

Yeap another one.

Tuesday, September 2, 2008

No Post today

Sorry guys. No posts today. Will continue tomorrow.

Friday, August 29, 2008

Ouch the water is cold

Well, the market definitly turned yesterday. As you could see I widened my range anticipating a strong day. Have to admit that I am pretty stocked to have hit my 3rd high down to the cent. As I said I had entered a short position on wednesday that I needed to close at market open. I re-entered at the end of the day though. We gap opened which will require a fill, we entered overbought at the end of the day on the 60min chart, traded on very light volume and have very limited upside potential.

We closed above key resistance and technical lines yesterday and have one last leg to go before I am convinced of the upside - and none of this super light volme crap - 2 strong days and I am a bull for the short term. The trade pattern we developed yesterday is almost a replica of our previous top at 1312. Today is going to be interesting as we have a long weekend ahead of us and quite a bit of pressure.

Time and Price
3rd high 1321 - believe it or not this is a possibility today. Watch for stalling half way.
2nd high 1312 - of course our previous top and my magic number =)
1st high 1306
open/close 1300
1st low 1292 - of course expect support here, break will bring us back to 1282
2nd low 1282
3rd low 1276

Time wise we have three scenarios today. It is very likly that we will continue our rally on light volume to hit the 1312 with a potential of topping at the 1321 mark. Second scenario is a sideways day as we have a long weekend ahead. Third one is the sell off I was expecting yesterday though I have to admit it is less likly to happen today. If we are not selling off today we will have a very strong sell off on tuesday.

Trade Watches
This is a new section I am adding to give specific pointers at stocks or sectors that may make some moves.
1. Financials may find a top here as well. Watch the XLF and potentially enter some puts.
2. Retail is currently trading at key resistance lines as well. WMT and HD both need to breakout to continue on the upside. Watch both of them closely for a break or a drop. I anticipate a drop as the steam is out of this run
3. Dell got beat up in earnings but I feel there is a lot of potential. Pool HP, Intel and Dell together into a single position and you should see some gains.

Thursday, August 28, 2008

Jumped in the water

As anticipated we traded towards the top at 1282 and actually gained a few more points as well to a final top of the day at 1285. Here is where I would have expected a much stronger sell off, instead of kept our gains and closed at 1282 and above the 50dma of 1277. We have been trying to break free of the 50dma but have not been able to do so. Having closed this high is a good sign for the bulls and a bad sign for me - I entered quite a large short position yesterday with what I consider a great entry point.

We should sell off stronger today as we are running out of steam. Having closed so high and having reached 1285 brings us ever closer to the 1292 mark that cannot be ignored. From a technical side we are right along the 1x8 Gann Fan taken from 1312 top - a point we have not been able to break decisivly, a break here could lead us higher again.

Time and Price
3rd high 1300-1302
2nd high 1292
1st high 1285
open/close 1282
1st low 1276
2nd low 1266
rd low 1262

I am giving a bit of a wider range today. We are still maintaining ourselves in the same range and will break soon. Watch for action around the top today and watch how strong we sell off.

Wednesday, August 27, 2008

Walking along a narrow line

We traded in a fairly narrow range yesterday - and hit the high/low on the cent. Glad my price points are working out here. We went for the 1276 though I would have expected a final attempt at the 1282. We sold off back into our 1262 range and found some support to close right in the middle.

We are trading between 2 key ranges and the market will make a move soon. As you could see yesterday, the same as last week, we have been hovering at the 1262, a range that will be broken to the downside as the upside momentum seems to be gone. Technically we are in the middle and can head either way though it is my feel we will trade lower. I still feel we will make one last run at the 1282 - I need to make sure I watch action around the top properly (1282 or 1276) so I won't miss my entry for the down run.

Time and Price
Pretty much the same as yesterday
2nd high 1282
1st high 1276
open/close 1271
1st low 1262
2nd low 1252

Tuesday, August 26, 2008

I guess we are ....

Holy cow - 1292/1266, back to where we started on Thursday morning. Definitly a move I would not have expected especially this strong. Here is another one of those "would have, could have, should have" - my bad thursday position would have been in the money now.

I guess we did give up those gains we had built. If I would have been more careful I should have been able to forsee this drop, maybe not as drastic. VIX was bottoming, the standard "oil/dollar/s&p" had divergence and more importantly we had been trading on very light volume on our past up days - all signs of a strong reversal.

Well today is going to be an important day, we have our 1262 right around the corner. I had indicated last week that 1252 is going to be a very important point, based on how we have been trading 1262 has turned into the point I thought 1252 was going to be. So be very careful how we trade around this point.

Time and Price
2nd high 1282
1st high 1276
open/close 1266
1st low 1262
2nd low 1252

Considering the moves we have had last week and Monday we need to find how fast we go into which direction. A break of the 1262 will definitly lead us lower by quite a bit. Watch out for a bounce to the upside from this point. We have established 1262 as a fairly strong support point now so lets be careful and not ignore this.

Monday, August 25, 2008

Back on track?

Previous Trade Day
Being still frustrated from Thursday I am glad fridays call worked out as anticipated. We gapped in the open right at the first high at 1282, then went straight for 1292 where we did not break as anticipated. We held on to gains, said hello to the 1282 one last time and then retested the upper range twice. As mentioned a break here seemed unlikly and 3 tests is quite impressive - closing all the way on the upper band is an even more bullish sign.

We should expect some resistance at this point considering we have had a nice 30 pt run from our lower support ranges. It is important to see how we trade around the 1292 range today - getting back into this area will lead to a break today and hit 1302 - here is where we would see a change of trend.

Time and Price
1nd high 1302 - should be our top today - of course break will bring is back to the 1312
Open/Close 1292
1st low 1282 - we may stop half way to here at the 1286 mark though I do expect 1282 to be hit today though it is my anticipation we will test it only
2nd low 1276

Time wise I feel today will be more of a sideways day. We held on to our gains on Friday and we need to make sure we do not put ourselves into an overbought condition. Hitting 1302 today will be a trend changer as traders will take profits from a 40pt 3 day run. We have the weekend on our side so we may hold on to those gains today but I would not expect it.

Mid Term
Well, as indicated on Friday we still see ourselves in the overall uptrend that started on July 15th. We did have a breakout of the wedge/consolidation though we get ourselves back into that range. At this point its a bit more difficult to forecast price moves - my anticipation of course is seeing ourselves back in the 1312 range - a range I feel that will be broken on the next stronger attempt.

Friday, August 22, 2008

Bear - Say what?

wow was I off on yesterdays action. I was getting to confident in my calls and ignored what I should be doing - evaluating both sides and keep them in mind while analysing the way you trade. Yesterday I made one of the mistakes that I thought I had fixed - finding myself on the wrong side of the trade - I started a short position on our first peak in the morning hours - the market kept on going up and I kept on averaging down on each subsequent peak - it was too late before I realized what happened and had to close out my position with a huge loss by the end of the day - I am very glad I did that instead of doing the wrong and hoping for it to go down - something that I was blindly following (as you can see in yesterdays forecast - very one sided - very wrong - very expensive) - if you read my Tuesday and Wednesday posts you would say "wtf, you don't believe in your own words" - I always try my best to be objective on what the market is doing - something I did not do yesterday.

At least I nailed the high off by less then a point lol (sigh)

Well todays action is going to be trying to see how far we can go. We hit the 1282 mark yesterday and we can anticipate a break here to the upside. This is where we need to figure out what to do - 1292 very possible here. On the low side it is very possible to break down from here very fast - 1274 will tell is what direction we are headed.

Time and Price
2nd high 1292 - we all know this one already, we should expect a test here but no break. A break here and we will see ourselves back in the 1300's and a re-test of our top
1st High 1282 - of course our key point that needs to be broken to continue on the upside
open/close 1277
1st low 1274
2nd low 1266

Today should be a powerful day. I would expect a large trade range on an intraday basis. We need to watch how much we can hold on to gains and how we are selling off - I won't be able to be more accurate on the time component today as its fair game for bear and bull.

Mid Term
Well, here is where we can expect some changes based on todays moves. We are still below the previous trendline - however a rising wedge OR consolidation pattern is followed by a strong move into one direction - a move that did not occur. At this point I am more inclined to a continuation of our trend that started at the 1200's on July 15th. Keep in mind this is a counter trend to the primary bear market we are in - so watch out and do not go crazy thinking the worst is over.