Another one of those unpredictable moves, while it was assumed to rally off the 808 in pre-market I would have expected a test during trade hours but none occurred and instead we used the pre-market as support to continue higher. As I am witting this we are trading around 836 already - quite a move in a 24 hour period.
However, volume is lower, especially the rally towards the end of the day - yes we did close at the highs of the day but comparing the drop to the rally to follow - its almost an even wash but with a bullish close.
It seems the trendlines we had drawn are still intact and providing perfect support and resistance. We tested the upper range yesterday with the morning peak and were never able to get for another test. Keep in mind even the 60min now has a decision to make. I added the long term bearish trendline I have on the daily here so you can see what the market needs to do here.
Today
Volume should be even lighter and it is my assumption that we may continue trending up towards the 838 level, we may even see the 840 today. Look for a slow low volume crawl today towards the highs.
It seems that we are sheltered from negative news, you remember the bad bank test plan, we know the outcome already but its being held back until after banks earnings next week - I am not sure if they made any mention at all about results but if they are not even giving hints it can't be good. Now GM - I think time is up for them. If we were to gamble here, what are the chances of more push-em up good news to come over the weekend? Not that many, what are the chances of negative news? Quite a bit higher. I know we should never gamble and expose ourselves to this risk here but if we are to get to 838-840 today I may take a larger position over the weekend - even if we GAP up we should retrace lower, if we GAP down we may never see that retracement higher again.
woah did not expect that move there.
ReplyDelete"Wells Fargo Posts 55-cent profit, smashing expectations; Shares up 22% (story developing)"
Big GAP open today.
That's because of the mark-to-market accounting change, isn't it?
ReplyDeleteAlso, I think the markets will see GM failing as positive news. That's one way they can legally break their union contracts and help to reduce costs.
Yeah specific to unions it will be amazing news - finally getting out of all those liabilities will be huge to clean up balance sheet.
ReplyDeleteThe problem is that many vendors and suppliers will get the shaft. Being out of unions means HUGE amount of lay offs and the now large GM will become a MUCH smaller operation. For GM to survive its a good thing, for the dependent players it will be very negative.
Considering we have the WFC news today, I am not quite sure what to make of this for my long term positions. Trade wise, gap open, continuation for about 15 minutes, retrace to mark the low of the day and slowly continue higher.
I do not think we will see a sell off from the open. Keep in mind this break here will break the MAJOR bearish trend line with a possible close above.
Chris,
ReplyDeleteThis is my first real "recession". I was 16 during the 2001 slowdown and all I cared about was making good grades and flipping burgers. How do you know when the fundamentals have changed and everything's taken a turn for the better?
Initial claims are down (but continuing claims still making records), Pulte's buying Centex, Wells Fargo is posting solid numbers, Housing isn't looking that grim anymore, etc. When we fell to 666 on the S&P, I knew we fell too fast and expected a rebound, but I didn't think we'd get all this positive info along with govn't intervention and manipulation (uptick rule/short ban/ "market circuit breaker") to fuel the rally off 666 this much. At what point does your bearish sentiment change and say "maybe we won't reach 480"?
I think things are not getting much worse when I see the news, but when I look around, shops are closing and commercial real-estate is vacant all around the huge city I live in. Not just little mom n' pop shops, but major retailors. There's malls that looks half empty.
Any thoughts? Thanks.
sorry, didn't mean "your bearish sentiment" cuss you're usually neutral. I meant "At what point does the general bearish sentiment change and say "maybe we won't reach 480"?"
ReplyDeleteThanks
heh no problem, and yes I have been a bit too bearish and unfortunately it cost me in March. I usually try my best to remain neutral but as you can sense the bear has taken over. Its a dangerous walk to take as you may not see things clearly. Regarding your question, I will try to write up something over the weekend so you can see where I am coming from.
ReplyDeleteThanks. 'preciate it :-)
ReplyDeleteany thoughts on where this will retrace down to? worth a short??
ReplyDeletenope do not short it ...
ReplyDeletethis may be a very crazy call, but considering all this we may see a 5% day today and a possibility of 868-872. But do not go long either ;p
ReplyDeleteThanks very much Chris :) ....i've stapled my twitchy fingers to the table!! lol :) ...as always appreciate it if you let us know if you see a turn or opportunity.
ReplyDeleteyeap. I have actually been looking at twitter but cannot seem to find a blogger gadget to post whenever I enter/exit positions or see something worth pointing out. Maybe over the long weekend I have some time to mess around with it.
ReplyDeleteregarding today, this may just be a day to sit out all together. It is very possible we can get a 3 wave push here and close towards the highs.
ReplyDeleteSupport and resistance is very weak on a day like today, so its quite hard to make a call. Its just plain old time, price, volume watching today to see what we will do.
I am off to play some pool for 20 min ;p Lets see what develops.
get ready for another push. 5 min max before it happens. Up of course.
ReplyDeleteFYI ... just a different angle from a pretty bearish trader here.
ReplyDeletehttp://xtrends.blogspot.com/2009/04/joke-will-fade-faster-than-you-can-say.html
Great way of looking at it.
I guess the push never came. Its still difficult to make a call here. Normally especially for holidays I would expect quite a bit more buying. Looks like we are slowly selling off but too early to say, we have not yet retested the low of the day.
ReplyDeletejust got back. thanks for the article and comments. twitter idea sounds really good, hope you can figure something out for it.
ReplyDeleteThoughts going into the weekend? My gut feel is that we will end high and open Monday low.
ReplyDeleteyeah, I agree. However, I do feel we will have some surprises ahead of us this weekend. If its a bullish surprise we may jump 20 some points and will retrace, if its a bearish surprise we may change directions right there on monday without retracements to break 800.
ReplyDeleteSo either way, a short is a great way to play this if you want to take a bit of a gamble.
I started to build my long term short position today. I will probably distribute it out over the next 1.5 weeks. My plan is to hold this one into August this year. Lets see how it plays out, I started out with around 30% today. Planning on being fully into the position within 2 weeks.
HI Chaugener, If you do not mind sharing, are you shorting thorugh ETFs or futures. would you tell us what ETFs. I heard that financial ETF may not produce much return as they are already down so much. What about drug, energy or just SP, Transport, small cap?
ReplyDeleteusing SDS on this one, much better expense ratio and valuation compared to the scary FAS/FAZ. I know many who trade those but I would not touch them with a 10 foot pole. While SDS looses value as well its much lower especially if you are in the right direction without many swings.
ReplyDeleteI am using my futures account for shorter term trades as it gives me much better leverage. Also nice to have separate accounts for different strategies.
If I do sector specific trades I normally get into equities directly and use the sector ETFs as hedges.
I meant company stocks directly (not equities lol)
ReplyDeleteThanks I agree. SDS is much better now a days. Thanks for your thoughts.
ReplyDeleteChris,
ReplyDeleteFAZ/FAS are scarey, but you might want to look into SKF.
I may try this one this time around =) thx for the tip.
ReplyDeleteWe should find a top here around the 856-857, not much higher then this.
ReplyDeleteit looks like the last push will be to the target 856 you estimated. very soon
ReplyDeleteCongratulations! Chaugner. what a call. got in at the end SRS and SDS
ReplyDeleteFAS/FAZ 40%
ReplyDeleteSKF -25%
SKF options ...
4900% 55 strike
2800% 60 strike
2000% 65 strike
nuts ....
and yeah close at 856.56 lol quite funny
ReplyDeletesamamehta, great trade on your part. Takes a lot of patience to wait this long before pulling the short trigger =)
ReplyDelete