Tuesday, October 6, 2009

Earnings vrs GDP "hype" magnet. + a look back at the 2007 "top"

seems as if someone has rattled the market's cage here (october)
...as in the moves we are getting here are swing friendly, ie BIG (finally....!)

It was mentioned to me, that in regards to my postings, that I utilize information (perhaps too much) from others free insight.
- well i sure hope that i do! as that is what it is for...if i was better than everyone else at predicting the market, i would not read anyone else. (which is why i do, b/c im not. That's the whole purpose of blogging/message boards, isn't it?)

example, waxie was very emphatic that this post window dressing was a high probability sell off, and I shared that view. Market dropped 240pts the first day of oct. (thank ya $$)

then ya read some retail message boards and some are surprised the market went up even on Monday??? why? we had a huge sell off thurs/fri, that WAS the "post-window dressing" that was it, came and went. it's over. was very nice tho, (even tho it was short lived)...if using front month options. Short bounces / Buy dips (not chase)
that is what blogs are for, (at least to me they are)...after reading enough of them you can notice WHAT certain peoples strengths and weakness are. In regards to if there will or will not be a window dressing pre or post, or a santa rally....waxie is the best for that, hands down. imo

in regards to short term cycles and turning points, to me...inthemoneystocks has been by far the most on point (they are calling for a short term reversal of trend to the down side starting tommorow fyi)

in regards to interpreting news and how it will affect a stock...johnwelschphd is my fav source

in regards to awareness of extrinsic factors that I at times forget about (beyond charts)..i read kliguy38's blog

Tommorow, based on daily CPCE there is a 68% chance the market is RED (ie...read Cobra's blog to the right)

etc, etc...list goes on and on....

all input it compiled and used as adjunts to mine to form a gameplan.

just as important to notice what certain traders SUCK at, hence to not use that information. (again...everyone has strength's and weakness)

at any rate, as far as the market....post window dressing was great thus/fri, got in short wed at close, rang the register mid day friday......

went back short today at the open, (ouch) yet my P/L is actually flat. (great feeling after a big up day)
- short cme and goog (offset each other today)

I think that wed/thurs are down, and friday is flat, and monday is down
yep....that's my call, as deviated from all beneficial sources.

Friday's have not been deep red in a LONG time (market wants people to "feel good" for the weekend to spend more money?)

Monday's have been large moves, both ways, next is due down. (if we do happen to sell off hard to end this week tho, i then wont bet on it though)

my gut is mixed on time intervals, but it tells me:

Short Term: pull back over next 4 trading days (till end of monday only, but spx 1000 will hold short term)

Intermediate term: I have a strange (yet stong) feeling that the "announcement of 3rd qtr GDP" is perhaps "THE" BULLISH magnet that we are being pulled upward by. A major buy the hype, sell the news such event. What phrase have you heard on the financial news media more than "second half recovery", ya haven't. It's been pumped to the hills. I have NO IDEA, nor will i even begin to speculate how it will go down. However, if it goes down in a specific way, just as the close of Sept 30 (window dress final)..i will trade it heavy. That is this.
- imo, we are rallying INTO the announcement of 3rd qtr GDP. It should be positive, and i have a hunch that IF we rally hard the days leading up to it, that it very well might be one of the best "sell the news" short terms trades, since...ohhhh 1 oct. The bulls (bernake, cramer, maybe even Obama)...can then say "see you stupid bears, its confirmed now, we won". Which will then create a sentiment so lopsided that it can not go anymore, b/c its full tilt.
A classic buy the hype, short the news trade set up Oct 29th

- my plan: Sure Not going to put the cart infront of the horse, as it's conditional... IF we rally the preceeding days before GDP, and when it is announced as "positive", IF the market flattens or leans down, immediatly after it's initial impulse on that announcement...I will short it with 2 fists (so its conditional on the set up). And i will likely only play that for 2 days only, but heavy, again IF it sets up.

Long term: bear market

Disclosure: (short till monday's close, stop is if the spx looks like it will CLOSE > 1050)
goog nov 470 puts (11.20)
cme oct 280 puts (5.00)

Note: the reason such a super tight stop, if we do not pull back right here starting Wed,..then to me maybe it's voodoo but this looks alot like the 2007 "top" right before p1, which we had a lower high, lower low, as it looked like trend was reversed, then we had one last large spasm breakout up, before the fat lady sang. (if they do happen to take out spx 1050 on a CLOSE, i think we could and perhaps WILL make new highs in a blow off top). There is No reason it should look like 07, however, I am wary/cautious that it might. Another thing, "time frame" wise, that could very well if the pattern repeats itself be again the 3rd qtr GDP top theory, which preliminary is 29 Oct (bulls cigar smoking party lol), so that coincides also.
I think we pull back here for a few days..........but that's what having plans/stops are for.
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