Previous Day
Well yet again we are moving as expected. I had called for a 50+ move day, we had 46. Of course the ever so important break of the 865 - as mentioned my expectation was a break of this range once we reached it. There was a bit more hesitation due to the Long weekend ahead of us yet the bulls stepped in and broke with confidence. Closing in the upper range will definitly give us the possibility for the 900.
Unfortunately our gap down in the morning made the long side quite a bit more difficult. Here I said that the trade will become very difficult - you could see that based on the hesitation at the 865 after the market had to rally off the lows - created too much of an overbought condition once we reached the 865.
Today
Short day, people on vacation, and a weekend ahead. My call would be a sideways day today with a small trade range, we have the possibility of touching the 900 - if that is to occur any longs should close out.
How to trade this?
If you are long off my recommendation today is close day. We are right at the 20 day moving average that currently represents 890 - here is where I feel we will top out - do not be fooled by a break and reaching 900, this is not a confirmation but a fake breakout that will reverse.
I expect a change of trend to the downside on Monday. As mentioned if we do get to the 900 today the change of trend can occur here but we should remain above our 865 key range. There may be a chance here to stay short over the weekend and carry the risk that can bring you great rewards - my recommendation - wait till Monday and miss out on the 20-30 points and find a short entry from there.
The next cycle on the downside should resolve itself by December 3rd and find a bottom at the 820 range. As we will continue on the upside and hit the 970-980 eventually we can savely average down from here starting at the 845, next at 830 and final position at 820.
Of course I will post more details for the daily trades but including a bit more short term details so you can understand how to position yourself better.
Friday, November 28, 2008
Wednesday, November 26, 2008
Well we smacked him alright ...
Yesterday
Another great day close to what I was expecting. I said we ran a little too fast too soon and yesterday was the breather day the market needed to be able to sustain this rally. The short end of the trade worked out great as mentioned with the retest of the previous days high at the 865 range and of course the predicted sell off - you could have closed out anywhere on this short run with a few gains.
The long side carried risk just as I said yesterday - 845, 830, 820 (being the perfect entry). Since this was a breather day my expectation was at least hitting the 830 range - low of the day was 834, great call again but unfortunately not easily tradable. We had our battle of bears and bulls and towards the end of the day the bulls won and we extended our distance from the important 845 range. Very bullish sign again.
You can clearly see now that the bottom at least on the short term has formed and we are setting up for a strong rally.
Today
We have a decision day today, expect the move to be a bit strong with probably a 50+ point intraday range. We have to battle the 865 that in my opinion will break on the upside giving me the 900 confirmation I was looking for. We have had 3 good tests of this range, it has to happen on the next attempt.
How to trade this?
We have the luxary today to have a very low risk trade right at our door step. The 865 range is very important and I would expect a final test at this range today. Here we will either break to the upside giving us a great long entry or break to the downside, if we break to the downside we are guarnateed 40 points out of this run to go back to 820 at the minimum.
If we gap open below previous close today scenarios can change a little bit and risk increases dramatically. So lets hope for today being the decision day at our key range we need.
Another great day close to what I was expecting. I said we ran a little too fast too soon and yesterday was the breather day the market needed to be able to sustain this rally. The short end of the trade worked out great as mentioned with the retest of the previous days high at the 865 range and of course the predicted sell off - you could have closed out anywhere on this short run with a few gains.
The long side carried risk just as I said yesterday - 845, 830, 820 (being the perfect entry). Since this was a breather day my expectation was at least hitting the 830 range - low of the day was 834, great call again but unfortunately not easily tradable. We had our battle of bears and bulls and towards the end of the day the bulls won and we extended our distance from the important 845 range. Very bullish sign again.
You can clearly see now that the bottom at least on the short term has formed and we are setting up for a strong rally.
Today
We have a decision day today, expect the move to be a bit strong with probably a 50+ point intraday range. We have to battle the 865 that in my opinion will break on the upside giving me the 900 confirmation I was looking for. We have had 3 good tests of this range, it has to happen on the next attempt.
How to trade this?
We have the luxary today to have a very low risk trade right at our door step. The 865 range is very important and I would expect a final test at this range today. Here we will either break to the upside giving us a great long entry or break to the downside, if we break to the downside we are guarnateed 40 points out of this run to go back to 820 at the minimum.
If we gap open below previous close today scenarios can change a little bit and risk increases dramatically. So lets hope for today being the decision day at our key range we need.
Tuesday, November 25, 2008
Smack da bear in ze face
Yesterday
Well, understandibly I am gloating quite a bit. I am pretty stocked that my predictions for yesterday were dead on the money - probably my most accurate day thus far in terms of price, action and time.
I had entered a long position on Friday just before the close that I closed out yesterday in the morning - I did not listen to my own advise. Thats pretty sad.
Either way lets get to yesterdays review. We had our gap open and sold off back into the 807 range. I said that if we are to get to 806 its very safe to go long. The hesitation at the 845 range was clearly visible with consequitive tests - I hinted at this being a possible short, the only short but only if we lack momentum and as you could see here we were unable to short this run down. However, a short like this can be protected easily as you have no losses with another retest incoming. Having formed an ascending triangle it was very clear we would break the 845 - those are the type of scenarios we have to watch. Volume was just a tad above average, I would have liked to have seen some more but I take what I can get.
To top of the day we closed right at my prediction above the 850 with 851 close price on top of the range - as you know me I normally do not post close prices but for a day like yesterday it was very important to close a bit above our KEY resistance of 845. We had 4 days below the big october triangle and now are back above it. This is a very bullish sign.
Today
We went a little too fast too soon. Today I would expect a bit of a breather, if we are to get a breather or a slight down day we are setting up for a run up to 960, if we try to continue to rally today we will have a change of trend either today or tomorrow at the 900/910 range.
How to trade this?
ok today is going to be a bit more difficult. We have many non-believers out there, you could see this clearly in the last hour yesterday with huge positions being liquidated. FYI shorting is allowed again today but only with care - the trend is your friend and its currently up.
If we get our slight down day today this is a great chance to try to go long, however, it is very difficult entering a save position here. The entry range for a long is anywhere from 845/830/820. As you can see there is little protection you have today to go long. Watch momentum carefully once we get to those numbers so you can see if we will overshoot. Of course perfect entry being 820 but it is my guess we will only see the 830 today.
If we get a rally in the morning hours to reattempt yesterdays upside of course expect it to sell off, 845 seems the way to go for a long. Again, a bit more careful here today. Yesterday was an easy day to trade, today will be much more difficult and you have to be ready to assume more risk with the same reward.
On the short side of course we have a great way to trade retracements especially if we are to reattempt the upside of yesterday. Keep in mind those trades are only for retracements, so get out as soon as you get your 10 point gain. This is not a long term short position.
Shorts represent the least risk today as we will continue to attempt the upside ranges giving you a chance to get our at no loss, however your gains are very limited. Longs are very risky today but could pay out very well if you are to hold for maybe 2-3 days.
Well, understandibly I am gloating quite a bit. I am pretty stocked that my predictions for yesterday were dead on the money - probably my most accurate day thus far in terms of price, action and time.
I had entered a long position on Friday just before the close that I closed out yesterday in the morning - I did not listen to my own advise. Thats pretty sad.
Either way lets get to yesterdays review. We had our gap open and sold off back into the 807 range. I said that if we are to get to 806 its very safe to go long. The hesitation at the 845 range was clearly visible with consequitive tests - I hinted at this being a possible short, the only short but only if we lack momentum and as you could see here we were unable to short this run down. However, a short like this can be protected easily as you have no losses with another retest incoming. Having formed an ascending triangle it was very clear we would break the 845 - those are the type of scenarios we have to watch. Volume was just a tad above average, I would have liked to have seen some more but I take what I can get.
To top of the day we closed right at my prediction above the 850 with 851 close price on top of the range - as you know me I normally do not post close prices but for a day like yesterday it was very important to close a bit above our KEY resistance of 845. We had 4 days below the big october triangle and now are back above it. This is a very bullish sign.
Today
We went a little too fast too soon. Today I would expect a bit of a breather, if we are to get a breather or a slight down day we are setting up for a run up to 960, if we try to continue to rally today we will have a change of trend either today or tomorrow at the 900/910 range.
How to trade this?
ok today is going to be a bit more difficult. We have many non-believers out there, you could see this clearly in the last hour yesterday with huge positions being liquidated. FYI shorting is allowed again today but only with care - the trend is your friend and its currently up.
If we get our slight down day today this is a great chance to try to go long, however, it is very difficult entering a save position here. The entry range for a long is anywhere from 845/830/820. As you can see there is little protection you have today to go long. Watch momentum carefully once we get to those numbers so you can see if we will overshoot. Of course perfect entry being 820 but it is my guess we will only see the 830 today.
If we get a rally in the morning hours to reattempt yesterdays upside of course expect it to sell off, 845 seems the way to go for a long. Again, a bit more careful here today. Yesterday was an easy day to trade, today will be much more difficult and you have to be ready to assume more risk with the same reward.
On the short side of course we have a great way to trade retracements especially if we are to reattempt the upside of yesterday. Keep in mind those trades are only for retracements, so get out as soon as you get your 10 point gain. This is not a long term short position.
Shorts represent the least risk today as we will continue to attempt the upside ranges giving you a chance to get our at no loss, however your gains are very limited. Longs are very risky today but could pay out very well if you are to hold for maybe 2-3 days.
Monday, November 24, 2008
Is this the bottom?
Previous Trade Day
Well guys, after thursday you could see how frustrated I was with the outcome. We had an extremely bearish sign due to our capitulation - my anticipation was further drops to find the low 700s and possibly 650 as the bottom but I think I was wrong and overly frustrated.
Friday setup just as I was anticpating with my bearish sentiment, a quick rally that was sold off instantly to create a new low. We had a quick retracement that was not able to break the next high - however, here is where it started to get interesting. For the remainder of the day we had a very tight trade range of 760-750, something I was very surprised at, to top if off any break out was instantly matched with an equally strong reversal to get back into this range. Normally during option expiration Fridays you see this sideway action but this was occuring on strong volume. The exitement I had the previous day was coming back to me as I let my emotions and anger cool down and rationalized what was going on - it was setting up to be the potential bottom, I started trading the long side of things in the early afternoon but I still had fear in the back of my mind so I was rather careful and had to exit a few positions. With one hour left and on option expiration friday I decided this is it and closed my computer, just to get a text message 20 minutes later from one of you guys to tell me its rallying. Immediately I turned the computer back looked at what was going on and analysed the situation - This could be the turning point for us, finally, too bad I was off by a day but oh well.
Mid Term
Well the market got exactly what it needed. The promise of new leadership and the bailout of Citi over the weekend will give the market the confidence back - yes some will look at the Citi bailout with a negative view but I think rationale is out the window again - I said 2 days ago that investors need an excuse to go long, an excuse to buy - this is it. You can go back to my previous posts that I made back in October stating that we will now have a minimum of a 2 months rally with a top that could lead us back into the 1100's of the S&P. My final targets will be around 1080 or 1160. I will be able to determine the top by the end of this week so bear with me please.
Today
Having given the mid term outlook first you can expect me to look for a strong up day. I would not be surprised at another 6% day today. It is my feel we will be able to hold on to our gains and close of course in the 800 range.
How to trade this?
Well, the first piece of advise I need to give is DO NOT TRY TO SHORT. I know it looks tempting but this could be a bad mistake. I know the past 3 months any short position you entered gave you the results needed. Be careful here when doing this. Some had asked me on Friday if this is a good short at the 770 range and I highly recommended against it.
There are 2 scenarios today, a very likly scenario is a large gap opening and a continuous rally to add another 2-3% on top with a close at the top of the range. We could be closing above the 850 range possibly. We have some resistance to overcome at hte 845 range so watch action carefully here.
Second scenario would be of course the gap open that would retrace back to either 820 (if it opens above), 810 or possibly 806. If we are to get to 806 after a substantial rally we can safely go long here. Entering a long position at this point gives you a great protection mechanism as a break of the 800 on the downside will lead to a potential retest of the 760-770 range. Again this does not mean we can go short. I know I said it above but short positions cannot be protected. The only trade I would potentially engage in short is the 845 range and this only depends on momentum once we get there.
The Long Term Investor
As my readership is growing I am adding a new section for you guys that are in it for the long run. Many of you guys have experienced severe losses with the promise of holding and recovering. You all know what I believe in regards to buy and hold. Give it another read if you want http://chaugner.blogspot.com/2008_10_26_archive.html
The long term investor wanting to stay in this market needs to change his sentiment and become much more active. I am not talking about day trading but at least use the morning of your day to review this blog and some news on CNBC - stay involved and be cautious.
So what to do from here - keep your positions at this point until we have established the first leg of this rally. We should find our top within the next 5-7 trading days and should top out in the 900 range, potentially 980. Here is where you would exit your mutual funds and other long term investments. I would probably go cash 100% at this point. We should retrace back and either retest the lows or retest the 800 range. By now you will have protected some of the gains and have a new chance to go long SSO (the leveraged ETF of the S&P). Holding this towards the end which should be December/January you should be able to recover a lot of your losses.
Of course I am posting this before we have our final confirmation of the rally but I am pretty confident.
Well guys, after thursday you could see how frustrated I was with the outcome. We had an extremely bearish sign due to our capitulation - my anticipation was further drops to find the low 700s and possibly 650 as the bottom but I think I was wrong and overly frustrated.
Friday setup just as I was anticpating with my bearish sentiment, a quick rally that was sold off instantly to create a new low. We had a quick retracement that was not able to break the next high - however, here is where it started to get interesting. For the remainder of the day we had a very tight trade range of 760-750, something I was very surprised at, to top if off any break out was instantly matched with an equally strong reversal to get back into this range. Normally during option expiration Fridays you see this sideway action but this was occuring on strong volume. The exitement I had the previous day was coming back to me as I let my emotions and anger cool down and rationalized what was going on - it was setting up to be the potential bottom, I started trading the long side of things in the early afternoon but I still had fear in the back of my mind so I was rather careful and had to exit a few positions. With one hour left and on option expiration friday I decided this is it and closed my computer, just to get a text message 20 minutes later from one of you guys to tell me its rallying. Immediately I turned the computer back looked at what was going on and analysed the situation - This could be the turning point for us, finally, too bad I was off by a day but oh well.
Mid Term
Well the market got exactly what it needed. The promise of new leadership and the bailout of Citi over the weekend will give the market the confidence back - yes some will look at the Citi bailout with a negative view but I think rationale is out the window again - I said 2 days ago that investors need an excuse to go long, an excuse to buy - this is it. You can go back to my previous posts that I made back in October stating that we will now have a minimum of a 2 months rally with a top that could lead us back into the 1100's of the S&P. My final targets will be around 1080 or 1160. I will be able to determine the top by the end of this week so bear with me please.
Today
Having given the mid term outlook first you can expect me to look for a strong up day. I would not be surprised at another 6% day today. It is my feel we will be able to hold on to our gains and close of course in the 800 range.
How to trade this?
Well, the first piece of advise I need to give is DO NOT TRY TO SHORT. I know it looks tempting but this could be a bad mistake. I know the past 3 months any short position you entered gave you the results needed. Be careful here when doing this. Some had asked me on Friday if this is a good short at the 770 range and I highly recommended against it.
There are 2 scenarios today, a very likly scenario is a large gap opening and a continuous rally to add another 2-3% on top with a close at the top of the range. We could be closing above the 850 range possibly. We have some resistance to overcome at hte 845 range so watch action carefully here.
Second scenario would be of course the gap open that would retrace back to either 820 (if it opens above), 810 or possibly 806. If we are to get to 806 after a substantial rally we can safely go long here. Entering a long position at this point gives you a great protection mechanism as a break of the 800 on the downside will lead to a potential retest of the 760-770 range. Again this does not mean we can go short. I know I said it above but short positions cannot be protected. The only trade I would potentially engage in short is the 845 range and this only depends on momentum once we get there.
The Long Term Investor
As my readership is growing I am adding a new section for you guys that are in it for the long run. Many of you guys have experienced severe losses with the promise of holding and recovering. You all know what I believe in regards to buy and hold. Give it another read if you want http://chaugner.blogspot.com/2008_10_26_archive.html
The long term investor wanting to stay in this market needs to change his sentiment and become much more active. I am not talking about day trading but at least use the morning of your day to review this blog and some news on CNBC - stay involved and be cautious.
So what to do from here - keep your positions at this point until we have established the first leg of this rally. We should find our top within the next 5-7 trading days and should top out in the 900 range, potentially 980. Here is where you would exit your mutual funds and other long term investments. I would probably go cash 100% at this point. We should retrace back and either retest the lows or retest the 800 range. By now you will have protected some of the gains and have a new chance to go long SSO (the leveraged ETF of the S&P). Holding this towards the end which should be December/January you should be able to recover a lot of your losses.
Of course I am posting this before we have our final confirmation of the rally but I am pretty confident.
Friday, November 21, 2008
Hungover after a wild ride ...
I am speechless, honestly, I have been waiting for this number for 2 months now, preparing myself for the proper entry and exit strategy. I missed my entry due to emotional reactions - bought too soon - caught it half way then missed my exit as I was expecting the rally to continue just to have to close a position in the reds. Lucky for me with the proper protection in place and the head/shoulder reversal I had no choice but to abandon my position.
Yesterday was an extremely bearish sign, not holding the 764-770 range and breaking it within the SAME Day on extremly high capitulation like volume is not good for us. I talked about that 1% chance of a capitulation type sell off yesterday - would have never put this into my considerations in a million years.
Any long trades that I thought could be had to maintain the 2 months rally I keep on referring to are too risky to enter. 3 months from 1300 to 750 - in 3 staggering months !!!!! Half way I was trying to find the bottom and go long just to get beaten up, now it seems I am bound to make that same mistake again - at one point yesterday I was up almost 15% of my entire cash capital - its always easy to say in retrospect but at this point the trade is to take any profits as soon as you can and play a maximum of 30 points on the upside of major support points.
At this point I have difficulties trying to determine the next move, of course I think we are overdone on the downside but everyone else believes the same. Previously, government intervention and other efforts have been able to stablize the markets - this is not occuring anymore. From here we have a decent chance to continue on the downside until we see the 650 in the short term.
Today will be a telling day after our captitulation from yesterday - we had no support or any attempts at the upside after our run down. Of course we are moving too fast too low but that is no excuse to go long. From 1007 to 750 in less then 3 weeks. Thats 25% !!!!!!!!!!!!!!
Yesterday was an extremely bearish sign, not holding the 764-770 range and breaking it within the SAME Day on extremly high capitulation like volume is not good for us. I talked about that 1% chance of a capitulation type sell off yesterday - would have never put this into my considerations in a million years.
Any long trades that I thought could be had to maintain the 2 months rally I keep on referring to are too risky to enter. 3 months from 1300 to 750 - in 3 staggering months !!!!! Half way I was trying to find the bottom and go long just to get beaten up, now it seems I am bound to make that same mistake again - at one point yesterday I was up almost 15% of my entire cash capital - its always easy to say in retrospect but at this point the trade is to take any profits as soon as you can and play a maximum of 30 points on the upside of major support points.
At this point I have difficulties trying to determine the next move, of course I think we are overdone on the downside but everyone else believes the same. Previously, government intervention and other efforts have been able to stablize the markets - this is not occuring anymore. From here we have a decent chance to continue on the downside until we see the 650 in the short term.
Today will be a telling day after our captitulation from yesterday - we had no support or any attempts at the upside after our run down. Of course we are moving too fast too low but that is no excuse to go long. From 1007 to 750 in less then 3 weeks. Thats 25% !!!!!!!!!!!!!!
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