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.