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.