Friday, October 30, 2009

Index Comparing: Watch the DOW (ndx/tran have passed the torch)

the direction short term is DOWN.
(edit: intermediate term)

I was not expecting a Friday to be like that. I had said I think the GDP will be a sell the news event weeks ago, and elaborated 2 posts ago, in that the euphoric climax celebration will in term cause a great tradable market top.

Of course GS uses its will to make the same trade occur just the way they want it, extracting even more juice...

If you look back since March, you can see for yourself that the few and far between larger down days we have had, they are never on a Friday. (well until now!). I have begin a strong feeling that this is intentional for the "feel-good weekend" comfort to suck more money in the market.

Again, this is my opinion. However, with the exception of today, look back and see what most Friday's looked like for the past 8 months.

Without going too deep, we sold off more "after the event" than we rallied "off the event".
That alone is a pretty strong sign of what the direction is. (and remember, the event was mostly a gs induced short squeeze itself!!)

But does one CHASE this short right here? I had fully expected the market to WANT to go down today, yet i "thought" the ppt would do all they can to keep the "GDP fever" fresh in the mom n pops all weekend long to sip on and celebrate, as their was quite distribution today.

Again, if gs had not set that estimated "fear" number of 2.7, then we probably would of ended the week on about the same level, but the route getting there (ie wed/thurs/friday) would not have appeared as dramatic.

Bottom line is that the "2nd half recovery" that everyone has been talking about for over a YEAR now has occurred, and is now past tense. Earnings are also now getting into 2nd tier stocks.

the dollar, and economic data should rule here. So next week will be very telling w/ FOMC and unemployment.

my hunch is that 9.9 would not cause a sell off
but the psychological 10.0 level would however

FOMC, no clue, but the first reaction (ie 5 min bar) immediate after is usually the direction for the rest of that entire day...almost like an earnings reaction w/o the anemic ah volume to sort through.

technically, we (short term) look like we are due a bounce.

Daneric's last short term chart very feasable to to me. (bouce to 1060ish area, then call the life alert)

I actually bought a few DIA 98 calls at the close, yep diamonds..... (only looking to hold the first few days of next week). And I might be trying to get too cute w/ that. It was only a few. IF we get a bounce early next week, I will then cash out of them and then trade heavily w/ spy puts. But i want to see a bounce first. Just cant chase it short after today.

I really wanted to buy some CLNE calls at the close, I just hate those nickle/dime spreads.
...why CLNE?? Nothing extremely specific about it, however they do not report till 9 Nov, and "MOST" stocks do not crack before earnings. Basically any stock that reports in the next 10 trading days or so. (ideally more like 5) would be a safer long for a short term trade into next week. That way if you do NOT have the market direction correct, you still have the pre-earnings sentiment protection which is rarely more bearish than the broad market itself.

In regards to T/A, I have 1 observation (see chart)
Since the March lows, the NDX, along w/ TRAN have been the strongest indexes.
I mention this several times, that the NDX was also the ONLY index that made a higher low in March 09 (as compared to Nov 08). It is the leader, period. And when the NDX decides to pass off the leader torch, then the rally is likely over.

Do you remember that "Head and Shoulders" a couple months ago, you know the one that people in the barber shop were even talking about. The same one the spy, and especially the weak INDU had signaled. Yet that turned out to be one of the best intermediate term BUY signals in a long long time. ? Just food for thought here, but you can see the NDX actually never signaled, it landed smack dab on support.

The point being, if you LOOK for bullish or bearish signals, you can not use the weakest index only to look for bear signals OR the strongest index only to look for bull signals.

The NDX has been the best performing index since March
The INDU has been the worst performing index since March
....yet just a few days ago, they painted the dow's close, remember?

the INDU lagged the entire move up. Once could of been long the QQQQ and short the DIA as a pair trade and been lovin it since march, with very very little risk.
Now looking back in backazmith, what index is the LEAST off its highs? - the INDU

at any rate, the line in the sand to me is the INDU trend line that it closed immediately above. This looks identical to the NDX scenario head and shoulders trap. (at that time the NDX was the leader). Now, the leader is the INDU!! (well not actually a leader, just the least weak, or most propped. Hey, "dow 10,000 is catchy", ya want the retail to have that vision out there to sucker em in)

Looking for an early week bounce (led by the dow to tease the 10,000 level again)
....then another entry to short the spy (from around 1060). Just how im playing it.

Thursday, October 29, 2009

3rd QTR Recovery "CONFIRMED"

Well its official now, USA is back to growth.

Haven't been posting much, and this will be short as well. Busy in transition.

GS controlled that one as well.
Lowering the bar the day prior, then CNBC announces how "ironic" they have been on point of late and they "better not be" this time.
GS didn't think GDP would be 2.7, GS did that b/c they traded that both ways. (short wed, then switched to long 1 min before the close)...GS made that call b/c they were trading the same news they produced. (imo)

I was actually short spy Mon-Wed, Once I saw they were NOT ramping up the market into the gdp, starting Monday, which i suspected they would I got short. Once i saw gs revise the est down the day PRIOR, after 4 consecitive red days..... it smelled way too fishy, so I went back into cash yesterday, and was wary of the pop today. (didn't play it long)

I had assumed it would be a buy the hype, sell the news. However since the market was in pullback mode, gs just simply extended it into a short the news, cover the event scenario, as they rocked the house both ways on this one. It was beutifull too how they operate. Within 3 minutes after their "revised" numbers, CNBC made sure to broadcast how very accurate they have been with these calls. The market would of probably been GREEN on wed, if gs had said nothing. Just as the market would of been probably flat today, as well. But hey, there is alot more money to be made by whipsawing it and frontrunning the same calls your making.

Will be going back in short Friday (tommorow) at the close, more than likely.
If you look back at the performace of Friday's since March, you can see it has the highest percentage of up days. And of all the larger down days we have had over the past few months, (-2oo) type. I don't believe any have happened on a Friday. (i dont have all this written do your own dd). However, I have noticed that Friday's lean bullish on the most consistant basis.

Next week we have FOMC and unemployment. FOMC's historically are common pivot days, and recall the last FOMC, it was no different. Everyone one and their mother expects rates to stay at zero and it to be assured they will for a long time. Hence anything LESS than this, imo will cause a dollar rally. Again, remember the last FOMC, that's when the dollar started to show life, and the SPX moved from 1080 to 1019.

yea, the DOW is back within an earmark of the 10k level again. (great mom/pop headline catcher)...but look at the RUT and the NDX, they are no where near their tops. The NDX is the major leading index too.

I think Friday will be a small UP day....1080 tops (small: after a large move it then tends to be consolidation and UP b/c of Friday's history), then starting Monday we to resume the larger short term trend back down and revisit 1042 or 1019.

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) 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 ( 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 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.