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.
Wednesday, December 17, 2008
Tuesday, December 16, 2008
Sitting it out again
Yesterday
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.
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.
Today
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 =)
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.
Today
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 ...
Yesterday
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.
Today
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.
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.
Today
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 ...
Yesterday
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.
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.
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