Monday, September 14, 2009

Overnight woes ....

Well yet again the market is showing us that any correction to the downside happens in non-tradable hours. Of course this could all reverse back by the time our cash hours open but as I am writting this futures are down 8+ points. The biggest correction we have had since our tests at the 991 range and only if you assume the risk to hold a position overnight will you be able to have the promise of profits on the short side.

Last week was quite odd in terms of technicals, we had great strength in price, new closing highs for the year for many indexes, new intraday highs and price above key support ranges not just on a one time basis but consistent closes higher. As you remember a few weeks ago I had mentioned that the breach of the 1014 is the door to higher prices. What has me really puzzled from last week is the fact that prices showed such immense strength but volume was non-existant. Considering we had such a strong sell off as we came out of the 1018-103X range at the end of august we have not offset with an equally strong accumulation day (buying day). Now of course this does not have to happen right away but as we are making new highs we need to come in with new buyers. I dare to say that the rally over the past week has been primarily fueled by short sellers that went short after we had our one time wonder sell off and had no choice but to cover as we made yet again another higher low.

From here - I have to be honest, I do not know what to expect and would rather not try to make any longer term directional calls. I will continue to look at the market on a daily basis and try to profit from short term moves. I do have a small percentage of my cash in IT positions but those can be closed out without much pain. Its OPEX week so lets see what they have in store for us. Regardless of price, even if we drop 50 points from here I will not use this week for any IT position changes or additions. No matter what price action we see, I will wait till after opex to get a confirmation of such moves and follow through on whatever happens this week.

I wanted to apologize for being away a bit during the past few days and weeks. But I think I can speak for all of us that this market has been exhausting for any bear. I will put up more info as I see the morning action unfold to figure out where it may take us for the next 2 days.


  1. Hello Chris; I'm in Japan for a couple weeks so get to monitor things through the night (could kep me awake...or put me to sleep..).

    I enjoy reading your take on things...I'm way down but hanging in for now. It seems like the market is a house of cards once again...just waiting for the last support card to be removed. I was wondering what would happen to oil and oil stocks if the dollar picks up a bit more, and there's a significant gain in inventory this week.

    Anyway...good to have your blog active nice and early.


  2. heya steve, yeap being outside of the US further out in the time zones makes it much easier to follow the markets since a lot happens overnight.

    Regarding the big fall, I wanted to quote something that was posted over at slope of hope ....

  3. "Waiting for Godot"

    Posted by PRSGuitards (smart dude and only 23 years old !!!)

    Cheap cliffs notes:
    Godot is like God. We all expect the next big thing to be right around the corner, but what is life for different people but dying at different speeds? Whether you're living for God, salvation, mercy, success, whatever -- it's the anticipation that IS life. Ever heard "life's a journey, not a destination" or something like that?

    Tim suggests we might be waiting for the next big bear episode that may never arrive. We could legitimately all be lusting after this messianic event that simply won't occur -- it's like how when nobody believed in God, he appeared and performed miracles (yes, i know, not technically -- no religious say one way or another here, just being vague and swift) to show his truth, but now that everyone claims to have religion and believe in God, where is he?

    Things are manifest from belief, not believed because they are manifest. They are what they are -- what is believed is perceived to be there whether it is or is not. God (Godot) or this bear downturn P3 huge drop whatever is perceived to be RIGHT AROUND THE CORNER!!! (and thus it may never come), whereas the reality IS, quite obviously, what the reality IS -- thus, accept the tangible elements of life . . . the things you can really grasp . . . and leave the expectations to those who want to be disappointed. The anticipation is both the experience itself and the letdown of realizing it's not going to be there when you want it.

    My take on Beckett is that life is the experience of anticipation for what we want. The getting is overrated. Do you think you'll be able to enjoy heaven by the time you get there, for example? Is sex as emotionally tantalizing as the anticipation of it and the courtship that precedes it? Is seeing your child grow up as fulfilling as your expectations for him or her? (i should hope so! but experience teaches me otherwise... and I'm 23... jeez, bummer, man...)

    Just my tirade (NOT HALF AS GOOD AS LUCKY'S TIRADE LATER IN 'GODOT'! -- incredible, highly recommended).
    Glad you ask, I'm sure others are curious too.

  4. its a very interesting point he is making and something that has been puzzling me for the past few months. What if this big drop we keep on positioning ourselves for will never come? Can it be the case? Yes of course - you all know I have been a believer of SPX 480 since early 2008 (go read my long term reviews on the right hand side).

    Today, September 2009 - we are at the 4 digit range. And trust me, we are closer to the all time high then we are to the abyss I still "believe" will occur. 1042 to 1500+ - thats only 450 points away. 1042 to 480 - well thats even further away from the all time high. Can it be that beliefs of our economy doing better take over those realities I think we need to face eventually? And will this "eventuality" be much further away time wise then we are currently playing?

    People say "its different this time" - others say "nothing is different and it has always been as it has been" - Who knows, in 2 years we may look back and say "no it was not different, it was a start of a new bull cycle that will play itself out all the way to 2014 before any major correction or realization to the opposite comes to mind.

    In a year from now, whatever will happen, new bull market or resumption of the biggest bear in its lifetime, we will be able to justify it and argue why it occurred and why we should have realized that it will happen.

    Lets talk about probabilities - in history, markets have gone up, its that simple. What is the most probable answer? that markets will continue going up as they have done for MANY decades with their in between mini bears OR that here, today, during this time cycle we are witnessing the BIGGEST decline of market value we have ever seen, or will see for many decades to come?

    I continue to question myself left and right - and when looking at the most simple and most obvious answer - well, we had an 18 months bear market that has resolved itself (just like any other bear market before) and we are now on the edge of starting over, fresh, clean slate after we hit our 666 lows.

    You tell me ...

    (yeap sorry for all this philosophical talk but it has its place here for us today)

  5. That's a lot to think about, and certainly we must keep ourselves open to different possibilities....I have found my read on the market is getting better, but synchronizing my trades seems to be out of whack.

    I really don't think things are getting better, at least not at the rate the market is are people overly optomistic, or are we in a correction because we got too pessimistic? This recession has evaporated a lot of wealth, and things are still getting worse, just not at such a great rate.

    So, your point is well taken, regardless of my read on the economy, I must not fight the trends; but I believe the time is near for the majority to realize things are not as rosy as we are being led to believe.


  6. it seems take your money and run is the way to go in this market. I had initiated a short on Friday with an average of 1039.75. When I woke up this morning I was excited seeing my position up a mere 14.50 points.

    Did I close out? nope, was this greed for not closing out? You tell me, I think I was looking for a trade to finally play out for more then just a handful of points.

    At the moment my position is up a mere 3 points. Sigh - I know I told myself from no on short term trading but there is a difference between short term trading and scalping. It seems the ONLY way to make money as a bear here is just focus on day trade scalping strategies and forget any type of bearish swing trades.

    I have to admit, whenever I try to do a long swing trade I either miss the entry, or if I do get an entry with a tiny position I close it out too soon.

    Really considering takeing whatever small gains I have now and running for the hills for a while before I attempt a new position yet again. I have said it before, and never really stuck with taking a "real" break. Maybe its finally time.

  7. Like I did not cover with all of the potential profit but got out with couple of points of profit. Now spx cash at 1047 what do you think here? Hihger high or this is it?