The Chicago PMI came in at a better than expected 48.2 this morning. Overall the report was fairly decent given the expectations. I dumped a couple of the Energy puts early on, but kept all the rest of the puts, especially the Gold puts. I watched to see how bold the traders would be with the Chicago PMI, but so far all we've gotten is a bear flag on the 60m charts on the Dow. So I re-entered the Energy puts that I dumped and I'm riding the Gold puts hard. I will look to lock some down in the last hour since a lot of the window dressing will happen in the last 15-30m of the day. So far, a great day to be in Gold puts.
Evening Post:
Well.....it turns out I was off by one point on my Chicago PMI prediction. I thought 46-47 was going to be the sit-and-spin zone and it turns out 46-48 was the magical area. After watching the muted reaction and reading reports that traders liked the number, but would have liked it better if it was closer to 50.....you get the picture. You really can't say much about the Dow, Naz, or SPX as far as the short term swing. We are at one near-term support and not doing much. I think that whether or not we hold support has a good chance of coming down to the bigger, badder, bolder ISM Index number tomorrow. A good reading, which probably means 49-50 or higher, is likely to give us a bounce at this support area in the near-term channel that we are in. A bad reading, which probably means 46-47 or lower, is likely to cause the markets to break this short-term support area.
We just didn't do all that much in the markets today, although the window dressing hit right on cue in the last 30 minutes, and right in the areas you would expect, like Energy. I actually nibbled back in to some Energy puts right before the close since we didn't make a higher high. I took out most of my Gold puts for a great profit before the last hour when I knew the window dressing might hit (that I warned you of in the early-day post). I lost a little on some Energy put stops right out of the gate this morning, but I'm well ahead on the week because of the JCP, MHP, GG, AEM, and ABX puts. I think this is all going to come down to the ISM tomorrow morning. The market wants more of an all clear signal before it bounces short-term. I wanted to pick up NKE, GILD, PRU, and EQR calls today (all gave confirmed bounces), but with the ISM sitting there, I just decided to wait until I see how the market handles things tomorrow. I'm not sure if we get the bounce tomorrow or not until I see the ISM and I see the market react positively. I'm ready to dump what's left of my puts tomorrow morning and go to calls if that's the way it plays out.
We'll see what tomorrow brings.....
Here is a test of our new recorder.
Monday, March 31, 2008
Saturday, March 29, 2008
Bearish Candlestick Patterns
Here is a list of Key Bearish Candlestick Reversal Patterns with Variants:
Bearish Engulfing and Variants
(click on image to enlarge)
Evening Star and Variants (click on image to enlarge)
Shooting Star and Hanging Man
(click on image to enlarge)
Shooting Star and Hanging Man(click on image to enlarge)
Bearish Harami and Variants(click on image to enlarge)
These Candlestick Patterns occur frequently enough to be useful. They also have higher probabilities of success when combined with certain other technical indicators.
Watchlist Saturday
Here is my watchlist for the upcoming week.
Bullish and Semi-Bullish:
Steel: X, STLD, NUE
Metals/Mining: ANR, CLF
Energy: MUR, APA, DVN
Railroads: CSX
Materials/Construction/Manufacturing: MDR, CAT
REIT's: GGP, PSA, PLD
Financials: PRU, MS, FNM, FRE
Tech/Services: RIMM, ERTS, AAPL, FSLR, ADP, IBM
Electronics: TYC
Biotechs: GILD
Retail: NKE, WMT
Food & Beverage: K, GIS, PEP, KO (none of these are very big movers)
Bearish and Semi-Bearish:
Gold: NEM, GDX, ABX, AEM, GG
Energy: VLO, NOV, OXY, SU, DO, MRO, CHK (may be forming H/S), USO (may be forming Double Top), CNQ, APC
Coal: ACI
Retail: JCP, KSS, ANF
Financials: AIG, LEH, LM, MER
HMO's: AET, HUM
Utilities: PEG, NRG
Note: UTX, MCK, NVT, DBA, FCX, PCU
The Market continues to chop and churn as traders battle over whether we are recessionary, inflationary, or just right. If Goldilocks doesn't get a Prince Charming on Monday or Tuesday with the Chicago PMI and the ISM, then the Three Bears may take over. We have some critical divergences happening inside of individual Industry Groups let alone sectors. You will see from the Watchlist that there are bullish and bearish stocks that are living right next door to each other in the exact same neighborhood. The current market conditions may be shoring up a bit from January and February, but we still have enough uncertainty to slosh this thing back and forth until we get to the April Earnings Season.
With the kind of conditions we have experienced since January, and with Mutual Funds on the verge of posting their worst quarter in exactly 5 years, you should take a moment and reflect. For those of you who have been following me over the past several months - and have been making even a little money - think about what you have accomplished! There are a lot, and I mean a lot of trades who have lost money, and even a lot of money in the past 3 months. I have demonstrated to you how to navigate successfully through the choppiest, worst market in 5 years. I have shown my own paper trades to you on a regular basis, and you can see for yourselves my hit rate (wins vs. losses) and profitability. No smoke, no mirrors, no slight of hand, I have put everything right there in front of you. And I have to tell you, I get a tremendous satisfaction when I hear about your profitable trades. But I get even more satisfaction knowing that you're doing it in the absolute worst of times.
Bullish and Semi-Bullish:
Steel: X, STLD, NUE
Metals/Mining: ANR, CLF
Energy: MUR, APA, DVN
Railroads: CSX
Materials/Construction/Manufacturing: MDR, CAT
REIT's: GGP, PSA, PLD
Financials: PRU, MS, FNM, FRE
Tech/Services: RIMM, ERTS, AAPL, FSLR, ADP, IBM
Electronics: TYC
Biotechs: GILD
Retail: NKE, WMT
Food & Beverage: K, GIS, PEP, KO (none of these are very big movers)
Bearish and Semi-Bearish:
Gold: NEM, GDX, ABX, AEM, GG
Energy: VLO, NOV, OXY, SU, DO, MRO, CHK (may be forming H/S), USO (may be forming Double Top), CNQ, APC
Coal: ACI
Retail: JCP, KSS, ANF
Financials: AIG, LEH, LM, MER
HMO's: AET, HUM
Utilities: PEG, NRG
Note: UTX, MCK, NVT, DBA, FCX, PCU
The Market continues to chop and churn as traders battle over whether we are recessionary, inflationary, or just right. If Goldilocks doesn't get a Prince Charming on Monday or Tuesday with the Chicago PMI and the ISM, then the Three Bears may take over. We have some critical divergences happening inside of individual Industry Groups let alone sectors. You will see from the Watchlist that there are bullish and bearish stocks that are living right next door to each other in the exact same neighborhood. The current market conditions may be shoring up a bit from January and February, but we still have enough uncertainty to slosh this thing back and forth until we get to the April Earnings Season.
With the kind of conditions we have experienced since January, and with Mutual Funds on the verge of posting their worst quarter in exactly 5 years, you should take a moment and reflect. For those of you who have been following me over the past several months - and have been making even a little money - think about what you have accomplished! There are a lot, and I mean a lot of trades who have lost money, and even a lot of money in the past 3 months. I have demonstrated to you how to navigate successfully through the choppiest, worst market in 5 years. I have shown my own paper trades to you on a regular basis, and you can see for yourselves my hit rate (wins vs. losses) and profitability. No smoke, no mirrors, no slight of hand, I have put everything right there in front of you. And I have to tell you, I get a tremendous satisfaction when I hear about your profitable trades. But I get even more satisfaction knowing that you're doing it in the absolute worst of times.
Friday, March 28, 2008
Reluctant Market That Might Fade
The market seems to be reluctant to buy or sell. The economic reports this morning were somewhat of a non-issue, just as I thought they would be. Oppenheimer and Meredith Whitney continue to pound on Financials, and JCP pounded on itself - which was great for me since I had puts. As always, I sold half the JCP puts when it was down in the 36.50 area (it did hit 35 out of the gate, but only for a nano-second before it bounced). This is the beginning of earnings warning season, and ORCL and JCP, along with Oppenheimer are setting a tone that earnings won't be spectacularly good. The market isn't ready to throw in the towel just yet and roll over, though, because we have the two biggest economic reports of the month next week and we still have a lot of other companies to get guidance from. The market does look like it's going to fade into the close, so I will ride my puts right into the close before I scale out of any more.
Evening Post: I did sell half the AEM puts for a 1.03 gain as well as half the JCP puts (mentioned above) for a 3.10 gain (78% return in 2 days).
Monday is going to be all about the End of the Quarter and the Chicago PMI and how those two things either harmonize or clash. Normally I don't pay a lot of attention to the Chicago PMI, but because of the current conditions and the timing, it could be a real market mover. A reading of 45 or lower is probably going to start some serious selling early in the day and send the Mutual Fund Managers screaming into the woods to find some hemlock bark to chew on while they mutter and snarl and walk around in circles counter-clockwise. A reading of 48 or higher will give the Fundees a natural high early on that could lead to so much "window dressing" that we might have to duct tape bowling balls to their ankles so they don't float away. I reading between 46-47 and the market probably chops a little and waits on the more important ISM Report on Tuesday. The Chicago PMI come out 15m after the open on Monday. So here's how I'm playing it: 46-47 and I nibble out of 3/4 of my puts, 45 or lower and I ride the puts hard and take out half of everything by the end of the day, and 48 or higher and I probably stop out of just about everything and start nibbling on calls - and load up on more calls if we get a strong ISM on Tuesday.
Here is some interesting reading if your bored:
This is an article on the Fed getting more power to monitor and control outrageous speculation in various industries of the economy. Two things about this.....One is that America continues to be the safest economy in the world to invest in because we have outstanding oversight, while at the same time maintaining a certain amount of restraint to allow capitalism to flourish. Sometimes we go too far, sometimes we're not perfect, but all in all, a darn good system. The second thing is that while it's a noble effort to try and control greed and speculation, it's a little like trying to catch Niagra Falls with a thimble, there's only so much you can do.....Fortunately, market corrections usually do the trick, that's why they are called corrections. So again, the combination of good oversight and allowing free markets to work is what makes American markets the safest in the world. Here is the link:
http://www.nytimes.com/2008/03/29/business/29regulate.html?ei=5065&en=7ba12b1b93b17830&ex=1207368000&partner=MYWAY&pagewanted=print
Remember how I have spoken about the concept of "rumoring the market" and manipulation. Here is an example of how that plays out. Two things about this.....One is that, fortunately this doesn't happen all the time. And because of the way I trade very short term in uncertain market conditions, I usually don't get affected much by this stuff. The second thing is that this is exactly why I tend to stay away from sectors and stocks when they get too "newsy." Here is the link:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPyQ_7G9wJ2M&refer=home
I will continue with a weekend watchlist tomorrow.
Evening Post: I did sell half the AEM puts for a 1.03 gain as well as half the JCP puts (mentioned above) for a 3.10 gain (78% return in 2 days).
Monday is going to be all about the End of the Quarter and the Chicago PMI and how those two things either harmonize or clash. Normally I don't pay a lot of attention to the Chicago PMI, but because of the current conditions and the timing, it could be a real market mover. A reading of 45 or lower is probably going to start some serious selling early in the day and send the Mutual Fund Managers screaming into the woods to find some hemlock bark to chew on while they mutter and snarl and walk around in circles counter-clockwise. A reading of 48 or higher will give the Fundees a natural high early on that could lead to so much "window dressing" that we might have to duct tape bowling balls to their ankles so they don't float away. I reading between 46-47 and the market probably chops a little and waits on the more important ISM Report on Tuesday. The Chicago PMI come out 15m after the open on Monday. So here's how I'm playing it: 46-47 and I nibble out of 3/4 of my puts, 45 or lower and I ride the puts hard and take out half of everything by the end of the day, and 48 or higher and I probably stop out of just about everything and start nibbling on calls - and load up on more calls if we get a strong ISM on Tuesday.
Here is some interesting reading if your bored:
This is an article on the Fed getting more power to monitor and control outrageous speculation in various industries of the economy. Two things about this.....One is that America continues to be the safest economy in the world to invest in because we have outstanding oversight, while at the same time maintaining a certain amount of restraint to allow capitalism to flourish. Sometimes we go too far, sometimes we're not perfect, but all in all, a darn good system. The second thing is that while it's a noble effort to try and control greed and speculation, it's a little like trying to catch Niagra Falls with a thimble, there's only so much you can do.....Fortunately, market corrections usually do the trick, that's why they are called corrections. So again, the combination of good oversight and allowing free markets to work is what makes American markets the safest in the world. Here is the link:
http://www.nytimes.com/2008/03/29/business/29regulate.html?ei=5065&en=7ba12b1b93b17830&ex=1207368000&partner=MYWAY&pagewanted=print
Remember how I have spoken about the concept of "rumoring the market" and manipulation. Here is an example of how that plays out. Two things about this.....One is that, fortunately this doesn't happen all the time. And because of the way I trade very short term in uncertain market conditions, I usually don't get affected much by this stuff. The second thing is that this is exactly why I tend to stay away from sectors and stocks when they get too "newsy." Here is the link:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPyQ_7G9wJ2M&refer=home
I will continue with a weekend watchlist tomorrow.
Thursday, March 27, 2008
Stocks Running Out of Gas
The Energy and Commodities Sectors have had a good deal of short term buying and short covering the past four trading days, but it looks like those sectors are running out of gas. Tech is dropping on the ORCL earnings, and Financials are getting squishy because of the large put positions traders see building in that sector right now - and the continued earnings downgrades hitting the sector.
I added to my paper puts on OXY. I was thinking of doing the same with FCX, but I was already in some puts right close to where we are now anyway. This really looks poised for a pullback in Energy and Commodities. As always, I don't have a crystal ball, so that's why I have stops. But I am very comfortable with my put positions from yesterday, and the added positions from this morning.
I don't know if I will be able to do a follow-up post later today since I work until 9pm, and get home later than that. I'm still trying to figure out how to handle Thursday and Friday nights for now.....until things change.....
Just a quick late day note. The markets finished down, and so did Energy. Now, the Energy thing is significant because oil ran up 1.30+ today to close above 107 - and yet most Energy stocks finished down. So Energy, Gold, Commodities, Financials, Tech, some Retail, and some other areas all went down or are looking to roll over. I'm not looking for a huge downswing, so another drop tomorrow and I will be out of around 1/3 to 1/2 my puts depending on conditions. I liked the Gold puts so much I added to them with an ABX put today. I don't expect a lot of focus on the Economic Reports tomorrow, although the "fad" report will be Consumer Spending (even though I don't think it will mean much unless it comes in way outside the estimates). The big focus is Earnings Warning Season is starting, the ISM on Tuesday, the Jobs Report on Friday, and Earnings Season in the middle of April. The market is looking for clues on a possible "recession." The market is also still trying to decide if we are done with the worst of the Financials mess, which looks like about a 60/40 proposition right now. By that I mean it looks like a 60% chance we are done with the worst of it, and the further along we go without catastrophes, the higher the odds. There are some Financials that are even looking bullish, like FNM, FRE, and MS.
We'll see what tomorrow brings.....
I added to my paper puts on OXY. I was thinking of doing the same with FCX, but I was already in some puts right close to where we are now anyway. This really looks poised for a pullback in Energy and Commodities. As always, I don't have a crystal ball, so that's why I have stops. But I am very comfortable with my put positions from yesterday, and the added positions from this morning.
I don't know if I will be able to do a follow-up post later today since I work until 9pm, and get home later than that. I'm still trying to figure out how to handle Thursday and Friday nights for now.....until things change.....
Just a quick late day note. The markets finished down, and so did Energy. Now, the Energy thing is significant because oil ran up 1.30+ today to close above 107 - and yet most Energy stocks finished down. So Energy, Gold, Commodities, Financials, Tech, some Retail, and some other areas all went down or are looking to roll over. I'm not looking for a huge downswing, so another drop tomorrow and I will be out of around 1/3 to 1/2 my puts depending on conditions. I liked the Gold puts so much I added to them with an ABX put today. I don't expect a lot of focus on the Economic Reports tomorrow, although the "fad" report will be Consumer Spending (even though I don't think it will mean much unless it comes in way outside the estimates). The big focus is Earnings Warning Season is starting, the ISM on Tuesday, the Jobs Report on Friday, and Earnings Season in the middle of April. The market is looking for clues on a possible "recession." The market is also still trying to decide if we are done with the worst of the Financials mess, which looks like about a 60/40 proposition right now. By that I mean it looks like a 60% chance we are done with the worst of it, and the further along we go without catastrophes, the higher the odds. There are some Financials that are even looking bullish, like FNM, FRE, and MS.
We'll see what tomorrow brings.....
Wednesday, March 26, 2008
Evening Star Forming
The economic reports came in mixed today. New Home Sales and the Oil Inventory reports both came in slightly better than expected. Those numbers were offset and then some by the Durable Orders coming in weaker than expected and a downgrade on the banks by Oppenheimer. I speculated that the Durable Orders would trump everything else today, and it did, by a slight margin. Commodities and Energy had a bounce continuation today, with Energy leading the way. Despite the bounce, Gold and other commodity stocks may roll over at a lower high, which is why I'm playing puts on those stocks. Energy may make a little more noise than that, but I'm speculating that a couple of the energy stocks will roll over at lower highs. With Financials (Brokers, Banks, Insurance) tipping over, and Housing rolling over despite the positive New Home Sales report, it was up to Energy and Commodities to hold up the market. If we get a bad Initial Claims report tomorrow then the market could roll down another day. GDP and the Chain Deflator will effect the markets as well, although GDP should be mostly baked in to the market already. We have an Evening Star on the SPY, but all the major indexes basically experienced normal consolidation today. It's still a little iffy on a drop tomorrow, but I'm picking up puts now in case we do roll down tomorrow, especially on stocks that just made lower lows.
I dumped the DIA, SPY, Q's, and IWM calls right out of the gate this morning. They were all half-sized positions so there was very little damage there. I made 11 cents on the Q's, lost 15 cents on the IWM, lost 45 cents on the DIA, and lost 50 cents on the SPY. I also finished off PEP for a small gain of 19 cents ($190), CAH for a gain of 37 cents, and MCK for a gain of $1.07. So a net positive on all the trades in the past few days. That's what I want, even in the choppier times I want to manage as much stuff to profitability as I can, and do it as consistently as possible. I don't want to take a lot of losses in a row, or really big losses. Then when I get the bigger winners it really adds up.
I picked up puts on GG and AEM in Gold, FCX in Copper, OXY and EOG in Energy - although I swapped out the EOG for NOV, which I like a lot better (SU also looks very nice), JCP in Retail, and MHP in Media. A lot of stocks and areas rolled over a bit, like Brokers, Banks, Insurance, Housing, some Retail, and Airlines. Energy and Gas were, by far, the most bullish performers, with other Commodity stocks just behind. It looks like Energy and Chemicals (although DBA in Agriculture looks like a good put) are the strongest sectors right now, so I don't want to get too fancy with my 2 Energy puts, just get a little and get out.
Also noteworthy rollovers: PFG, SYK (although it may only go down $2), BDX, SUN, and AIG.
The most Bullish stocks right now are:
Energy: APA, SLB, DVN, WFT, RRC, MUR, XTO
Metals/Mining: CLF
Steel: MT
Chemicals: MON
Manufacturing/Machinery: CAT
Biotechs: DNA, GILD, CELG
Tech: AAPL, RIMM, ADBE, FSLR, IBM
Electronics: TYC
Retail: TIF, WMT, GME, NKE
Food & Beverage: KO, PEP
Railroads: CSX
REITS: PLD, PSA, AVB, GGP, EQR
Financials: MS
The Bullish list of stocks are what I don't want to be playing puts on. In fact, if the market takes off again in the next couple of days, I will look at calls on some of those stocks.
Tomorrow will bring what it will, so I am ready for both directions, and I'm positioned how I want to be in case we do drop for the day. We shall see.....
I dumped the DIA, SPY, Q's, and IWM calls right out of the gate this morning. They were all half-sized positions so there was very little damage there. I made 11 cents on the Q's, lost 15 cents on the IWM, lost 45 cents on the DIA, and lost 50 cents on the SPY. I also finished off PEP for a small gain of 19 cents ($190), CAH for a gain of 37 cents, and MCK for a gain of $1.07. So a net positive on all the trades in the past few days. That's what I want, even in the choppier times I want to manage as much stuff to profitability as I can, and do it as consistently as possible. I don't want to take a lot of losses in a row, or really big losses. Then when I get the bigger winners it really adds up.
I picked up puts on GG and AEM in Gold, FCX in Copper, OXY and EOG in Energy - although I swapped out the EOG for NOV, which I like a lot better (SU also looks very nice), JCP in Retail, and MHP in Media. A lot of stocks and areas rolled over a bit, like Brokers, Banks, Insurance, Housing, some Retail, and Airlines. Energy and Gas were, by far, the most bullish performers, with other Commodity stocks just behind. It looks like Energy and Chemicals (although DBA in Agriculture looks like a good put) are the strongest sectors right now, so I don't want to get too fancy with my 2 Energy puts, just get a little and get out.
Also noteworthy rollovers: PFG, SYK (although it may only go down $2), BDX, SUN, and AIG.
The most Bullish stocks right now are:
Energy: APA, SLB, DVN, WFT, RRC, MUR, XTO
Metals/Mining: CLF
Steel: MT
Chemicals: MON
Manufacturing/Machinery: CAT
Biotechs: DNA, GILD, CELG
Tech: AAPL, RIMM, ADBE, FSLR, IBM
Electronics: TYC
Retail: TIF, WMT, GME, NKE
Food & Beverage: KO, PEP
Railroads: CSX
REITS: PLD, PSA, AVB, GGP, EQR
Financials: MS
The Bullish list of stocks are what I don't want to be playing puts on. In fact, if the market takes off again in the next couple of days, I will look at calls on some of those stocks.
Tomorrow will bring what it will, so I am ready for both directions, and I'm positioned how I want to be in case we do drop for the day. We shall see.....
Tuesday, March 25, 2008
Mild Day
Today was pretty mild price action, which makes sense with the lack of economic or corporate news. The price range was the narrowest in 15 days, a true consolidation day. We did get a nice intra-day bounce off the 60m Flag into the end of the day, but otherwise it was a quiet trading day. Tomorrow things will probably pick up with the Durable Orders, Crude Inventories, and New Home Sales reports. The greatest focus will most likely be on the business spending component of Durable Orders. With the narrow range day today, and the plethora of economic reports tomorrow, the direction that we go tomorrow - we'll probably go hard, at least for a day.
There really wasn't much to say about today. Chemicals moved on the MON positive guidance, Gas continued its bounce, led by DVN, and Gold bounced pretty good, with AEM getting close to a potentially nice put play.
I'm looking at AEM, GG, GDX, and FCX (copper/gold) for potential put plays depending on how things play out tomorrow. I'm carrying small call positions on the DIA, SPY, Q's, and IWM in case we do carry through and hit the resistance levels I posted yesterday. I will look to take some profits tomorrow on the MCK and CAH puts, with MCK performing very nicely today. I locked down most of my PEP calls today for a small profit as well. So far, a decent week of profitable paper trading both calls and puts. GILD carried through with it's breakout today.
I don't want to spend much more time writing about today because some days it's good to let things settle a bit in your minds. Too much analysis is never good, especially when there isn't much to analyze. I have my positions, I have some others I'm looking at, I'm in a choppy market still - so I have my trading plan, and I'm just going to sit back and let it come to me tomorrow.
There really wasn't much to say about today. Chemicals moved on the MON positive guidance, Gas continued its bounce, led by DVN, and Gold bounced pretty good, with AEM getting close to a potentially nice put play.
I'm looking at AEM, GG, GDX, and FCX (copper/gold) for potential put plays depending on how things play out tomorrow. I'm carrying small call positions on the DIA, SPY, Q's, and IWM in case we do carry through and hit the resistance levels I posted yesterday. I will look to take some profits tomorrow on the MCK and CAH puts, with MCK performing very nicely today. I locked down most of my PEP calls today for a small profit as well. So far, a decent week of profitable paper trading both calls and puts. GILD carried through with it's breakout today.
I don't want to spend much more time writing about today because some days it's good to let things settle a bit in your minds. Too much analysis is never good, especially when there isn't much to analyze. I have my positions, I have some others I'm looking at, I'm in a choppy market still - so I have my trading plan, and I'm just going to sit back and let it come to me tomorrow.
Monday, March 24, 2008
The Swing Continues
The current market upswing continued with a big move today after a better than expected Existing Home Sales report, a better than expected bid for BSC, and a move to increase purchases of agency mortgage backed securities by the Federal Housing Finance Board. Here is a summary of what might happen tomorrow or this week on the major indexes:
Dow may make a run to resistance at 12750
SPX may make a run to resistance at 1375
Nasdaq may make a run to resistance in the 2375-2400 area
Russell may make a run to resistance in the 720 area
I am looking at the end-of-day pullback today, and any early softness tomorrow morning, as an opportunity to take a shot with the DIA, SPY, Q's, and IWM for a swing up to those resistance areas. The swing may not last much longer, so I will go in-the-money with my calls. By the way, I am doing everything on May calls now.
Bullish Watch from today (besides my list from the weekend):
TIF broke out, FSLR and ADBE are ramping up for a possible breakout, WAG broke out, GILD broke out, and UPS broke out.
Bearish Watch (besides my list from the weekend):
Some insurance and other financial stocks had Shooting Stars today: LNC, and AIG
CAH has a Hanging Man forming, and MCK confirmed a rollover.
A lot of stocks made it to resistance and pulled back end-of-day. That's what happens when the market has a more frenetic day like today - everyone tries to get it done right now! We just gapped and ran today. As it is, if the Energies and Commodities (including Gold) will bounce one more day tomorrow, and the Financials, Tech, and Retail play along a bit, then we might have another up day. I will play for that tomorrow, but I will look to lock down some profits by the end of the day ahead of Wednesday's Durable Orders and Oil Inventory Report. I'm not switching out of my Neutral stance until we clear 12750 on the Dow. So for now, I'm still playing my quicker Day Swings and keeping the trades to 1-3 days.
Dow may make a run to resistance at 12750
SPX may make a run to resistance at 1375
Nasdaq may make a run to resistance in the 2375-2400 area
Russell may make a run to resistance in the 720 area
I am looking at the end-of-day pullback today, and any early softness tomorrow morning, as an opportunity to take a shot with the DIA, SPY, Q's, and IWM for a swing up to those resistance areas. The swing may not last much longer, so I will go in-the-money with my calls. By the way, I am doing everything on May calls now.
Bullish Watch from today (besides my list from the weekend):
TIF broke out, FSLR and ADBE are ramping up for a possible breakout, WAG broke out, GILD broke out, and UPS broke out.
Bearish Watch (besides my list from the weekend):
Some insurance and other financial stocks had Shooting Stars today: LNC, and AIG
CAH has a Hanging Man forming, and MCK confirmed a rollover.
A lot of stocks made it to resistance and pulled back end-of-day. That's what happens when the market has a more frenetic day like today - everyone tries to get it done right now! We just gapped and ran today. As it is, if the Energies and Commodities (including Gold) will bounce one more day tomorrow, and the Financials, Tech, and Retail play along a bit, then we might have another up day. I will play for that tomorrow, but I will look to lock down some profits by the end of the day ahead of Wednesday's Durable Orders and Oil Inventory Report. I'm not switching out of my Neutral stance until we clear 12750 on the Dow. So for now, I'm still playing my quicker Day Swings and keeping the trades to 1-3 days.
Saturday, March 22, 2008
Watchlist Saturday
I like to take a good look at my universe of stocks on Saturday and build my watchlist for the week. Then I tweek it throughout the week.
Bullish:
Some Financials, REITS, and Retail are turning around a little, maybe bottoming out. Here are some areas to watch:
Brokers: MS, GS
Banks: BAC, JPM, MTB, ZION, PNC
Services: AXP, KBE, COF, MA
REITS: GGP, PLD, EQR, AVB, PSA
Retail: NKE, SHLD
Commodities and Energy are still hanging in there, but there are a lot of Commodities and Energy stocks I will look to play puts on if they make lower highs. Here are some of the strongest right now:
Metals/Mining: CLF
Steel: STLD, NUE
Energy: (EOG, RIG, XTO, ESV holding up for now)
Also:
Tech: RIMM, IBM
Biotechs: GILD, DNA
Food/Beverage: KO, PEP
Manufacturing/Machinery: CAT
Bearish:
Some Retail, Commodities, Energy, and Financials are Bearish. Some Healthcare and Healthcare related are also Bearish.
Retail: JCP, BBY
Media: MHP
Drugs/Wholesale/Stores: MCK, CAH, MHS
Energy: VLO, NOV, SU, (ECA, DVN, APA, APC starting to go bearish)
Copper: FCX
Steel: SID, MTL
Chemicals/Agriculture: DBA, (CF, MOS starting to go bearish)
Gold: (AEM, GDX, GG, ABX starting to go bearish)
HMO's: HUM
We have some key tipping points in Energy and Commodities. If we bounce up this week in those sectors, will we make lower highs? We have some pockets of strength growing in Financials, Tech, and Retail. But the big question is how much is real buying and how much is short covering? The markets may be starting to shore up a little. But a lower high in Energy and Commodities will offset higher lows in Financials, Tech, and Retail, which will keep the market somewhat choppy. For now, I am looking for an upswing continuation Monday and Tuesday, with Wednesday's Durable Orders and Oil Inventory Report tipping the market up or down based on the numbers. So I'll play out my calls early in the week and then watch for the next move. As always, I don't have a magic future machine, so that's why I have stops.
Bullish:
Some Financials, REITS, and Retail are turning around a little, maybe bottoming out. Here are some areas to watch:
Brokers: MS, GS
Banks: BAC, JPM, MTB, ZION, PNC
Services: AXP, KBE, COF, MA
REITS: GGP, PLD, EQR, AVB, PSA
Retail: NKE, SHLD
Commodities and Energy are still hanging in there, but there are a lot of Commodities and Energy stocks I will look to play puts on if they make lower highs. Here are some of the strongest right now:
Metals/Mining: CLF
Steel: STLD, NUE
Energy: (EOG, RIG, XTO, ESV holding up for now)
Also:
Tech: RIMM, IBM
Biotechs: GILD, DNA
Food/Beverage: KO, PEP
Manufacturing/Machinery: CAT
Bearish:
Some Retail, Commodities, Energy, and Financials are Bearish. Some Healthcare and Healthcare related are also Bearish.
Retail: JCP, BBY
Media: MHP
Drugs/Wholesale/Stores: MCK, CAH, MHS
Energy: VLO, NOV, SU, (ECA, DVN, APA, APC starting to go bearish)
Copper: FCX
Steel: SID, MTL
Chemicals/Agriculture: DBA, (CF, MOS starting to go bearish)
Gold: (AEM, GDX, GG, ABX starting to go bearish)
HMO's: HUM
We have some key tipping points in Energy and Commodities. If we bounce up this week in those sectors, will we make lower highs? We have some pockets of strength growing in Financials, Tech, and Retail. But the big question is how much is real buying and how much is short covering? The markets may be starting to shore up a little. But a lower high in Energy and Commodities will offset higher lows in Financials, Tech, and Retail, which will keep the market somewhat choppy. For now, I am looking for an upswing continuation Monday and Tuesday, with Wednesday's Durable Orders and Oil Inventory Report tipping the market up or down based on the numbers. So I'll play out my calls early in the week and then watch for the next move. As always, I don't have a magic future machine, so that's why I have stops.
Friday, March 21, 2008
Bullish Candlestick Patterns
Here is a list of Key Bullish Candlestick Reversal Patterns with Variants:
Bullish Engulfing and Variants
(click on image to enlarge)
(click on image to enlarge)
Morning Star and Variants (click on image to enlarge)
Hammer and Inverted Hammer
(click on image to enlarge)
Hammer and Inverted Hammer(click on image to enlarge)
Bullish Harami and Variants(click on image to enlarge)
These Candlestick Patterns occur frequently enough to be useful. They also have higher probabilities of success when combined with certain other technical indicators.
Thursday, March 20, 2008
Right Back At You
Energy Compresses Too Fast: (early day post)
This is a quick intra-day note on the market. With Oil dropping $11-12 in 1 1/4 days (or over 10%), and with the big drops in Energy stocks yesterday followed by a gap down today - I am laying off any puts on all Commodity and Energy stocks this afternoon. The play appears to be done. Anyone that hit those sectors with puts this morning should be looking to lock and walk on at least half the positions.
Right Back At You: (after-market post)
Here we go Up the Down Staircase again. Just look at the price action on the Naz for the past 2 weeks, this is about as fun as gum in your hair. I made a little on some day swings today on the DIA and the SPY. But even that was hit by a News Bogey. The game right now in the Financial sector appears to be Bad News Bogey countered by Good News Bogey as the Fed and other organizations try to stop the madness. So we get bad news out of MER then good news out of Fannie and Freddie. Then we get bad news today out of CIT (drawing on its entire $7.3 billion credit line) and then good news out of the NY Fed (modifying its Term Securities Lending Facility). It's no wonder the market charts look the way they do.....
That last news bogey hit 5 minutes after I sold my DIA and SPY calls on a perfect little rollover on the charts (that was probably going to lead to the end-of-the day profit-taking I was expecting). I made money on the trades but I left a few thousand on the table as the Fed once again stepped in to prop up the markets.
Here is a summary of my trades from yesterday into today. I picked up calls on PEP, DIA, and SPY. I added to the DIA and SPY this morning and rode those up for little 15-17 cent gains and sold them when we rolled over later in the day. I wanted more, but I didn't know the Fed was willing to give me more just as soon as the positive news announcement came out 5 minutes after I sold my calls. I am still riding the PEP calls. I picked up half a put position on MCK and CAH and will look to get the other half if the market rallies Monday and Tuesday. If we do rally Monday and Tuesday, I may trade calls on STLD for a quick play ahead of its stock split. GILD looks like it wants to ramp up a bit, I may look for a quick call play there as well. If we roll over the markets around Wednesday, I will look at puts on the Commodity and Energy stocks, including Gold.
I don't know about the rest of you, but I have a little "News" burnout. If we go quieter, then the market may be able to trend a little bit. If we stay newsy, then I will stay with my day swings.
I will post my bullish and bearish watchlist by Saturday. I may be able to figure out how to get the candlestick patterns on here as well. I'll see what I can get done over the weekend.
Wednesday, March 19, 2008
He's Baaaaaack
Just when you thought is was safe to let the children come out to play.......WHAM! Here comes the CDO Monster to shred the markets!
Two things, the first is that I have been warning that if we did see slowing then it was bye bye to the Commodity and Energy stocks. The second thing that I have been warning is that we aren't out of the woods yet with the Financials. Both of these key market fundamentals are contributing heavily to the grinding chop and slop. Hence the continuation of the Day Trader's Market. All of you directional traders will be doing yourselves a huge favor if you trade the 60m swings intra-day to 2 days for now, or the Day Swings as I like to call them.
Back to the two things. Remember, big-time traders don't make money waiting for the actual data to come out. They SPECULATE. So when in speculatorville, do as the Big Money does. It doesn't matter that we haven't gotten really bad economic news yet, it only matters that Big Money thinks we might get bad economic news. Therefore, see-yah later to the Commodity and Energy stocks today.....By the way, the bear gaps down on Monday in those sectors were the huge warning sign, today confirmed it. We are PROBABLY headed for more consolidation in Commodity and Energy stocks, maybe even intermediate term consolidation. And when our current market leadership goes bye bye, and we see the rotation into bonds and not some other sector of the stock market, then you can expect the Grinder Market to continue. We'll be through the grinder when we're through, for now, were not.....
and The other of those two things was MER suing XL Capital Assurance, a bond insurer like AmbacMBIA - heard this before? Seems that MER wants XL to honor $3.1 billion of guarantees on CDO's (by now, this should be all too piercingly familiar to you). Now, MER isn't the liquidity goof that BSC was, but MER was the biggest speculator on CDO's of all the world's major banks and securities firms - to the tune of $24.5 billion in writedowns of the $195 billion total worldwide losses so far. So even though LEH and GS eased our fears yesterday, and MS did even better today. And Freddie and Fannie are being allowed to expand up to $200 billion in funds to the mortgage-backed securities market.....Which is all great news for the Financial Sector.....It all comes back down on the MER news. Uncertainty comes back up like a bad dry heave, and we go right back to our Grinder Market.
I have another interesting thing to yap about commodities. I have been speculating for a little while now that the "forced" corn planting program by the government (ethanol.....) wasn't going to hold up to the free market. When wheat hit an all time high, any farmer with any perspicacity was going to plant - drum roll please - wheat! Here is a nice little blurb from Bloomberg on what could be the beginnings of the commodities compression in any currently expensive crops:
Monsanto Co. (MON), the world's biggest seed producer, fell the most in five years, losing $13.21, or 12 percent, to $98.87. Wheat, corn and soybeans dropped by the maximum permitted by the Chicago Board of Trade as rain improved crop prospects in Australia and farmers worldwide prepared to sow more grain to take advantage of last month's record prices.
And there you have it, the free market, once again, trumps the controlled market.
Here's what I think about tomorrow. The markets got thumped today and Commodities and Energy sold hard right into the close. We are probably due for a bounce in the morning. I played some PEP calls at 71 (half the position). I will add the other half in the morning around 70 and then if we bounce for a couple of hours, take whatever is there and walk. I will play a SPY and DIA bounce in the morning as well. But I'll be exiting half the trades on the 15m charts and the other half on the 30-60m charts. I still think we could sell into the close ahead of a long weekend. So we may be setting up for a bounce in the morning and a fade into the close. Therefore, I will look at some puts on any Bear Flags over the first couple of hours on a couple of the following stocks: Gold like ABX, some Chemicals like MOS, maybe some Steel or Copper, some Mining like POT or CLF, and some Energy stocks like SU, OXY, and MUR, maybe an HMO like CI or HUM, and a Drug Wholesaler like MCK (nice Shooting Star) or CAH. I won't be holding much over the weekend, I want to be out of at least half of each position by the end of the day, probably a lot more than that.
As always, I don't know if this will play out the way I set the table, so I have my stops in place on any trades. We'll see what tomorrow brings.....
Two things, the first is that I have been warning that if we did see slowing then it was bye bye to the Commodity and Energy stocks. The second thing that I have been warning is that we aren't out of the woods yet with the Financials. Both of these key market fundamentals are contributing heavily to the grinding chop and slop. Hence the continuation of the Day Trader's Market. All of you directional traders will be doing yourselves a huge favor if you trade the 60m swings intra-day to 2 days for now, or the Day Swings as I like to call them.
Back to the two things. Remember, big-time traders don't make money waiting for the actual data to come out. They SPECULATE. So when in speculatorville, do as the Big Money does. It doesn't matter that we haven't gotten really bad economic news yet, it only matters that Big Money thinks we might get bad economic news. Therefore, see-yah later to the Commodity and Energy stocks today.....By the way, the bear gaps down on Monday in those sectors were the huge warning sign, today confirmed it. We are PROBABLY headed for more consolidation in Commodity and Energy stocks, maybe even intermediate term consolidation. And when our current market leadership goes bye bye, and we see the rotation into bonds and not some other sector of the stock market, then you can expect the Grinder Market to continue. We'll be through the grinder when we're through, for now, were not.....
and The other of those two things was MER suing XL Capital Assurance, a bond insurer like AmbacMBIA - heard this before? Seems that MER wants XL to honor $3.1 billion of guarantees on CDO's (by now, this should be all too piercingly familiar to you). Now, MER isn't the liquidity goof that BSC was, but MER was the biggest speculator on CDO's of all the world's major banks and securities firms - to the tune of $24.5 billion in writedowns of the $195 billion total worldwide losses so far. So even though LEH and GS eased our fears yesterday, and MS did even better today. And Freddie and Fannie are being allowed to expand up to $200 billion in funds to the mortgage-backed securities market.....Which is all great news for the Financial Sector.....It all comes back down on the MER news. Uncertainty comes back up like a bad dry heave, and we go right back to our Grinder Market.
I have another interesting thing to yap about commodities. I have been speculating for a little while now that the "forced" corn planting program by the government (ethanol.....) wasn't going to hold up to the free market. When wheat hit an all time high, any farmer with any perspicacity was going to plant - drum roll please - wheat! Here is a nice little blurb from Bloomberg on what could be the beginnings of the commodities compression in any currently expensive crops:
Monsanto Co. (MON), the world's biggest seed producer, fell the most in five years, losing $13.21, or 12 percent, to $98.87. Wheat, corn and soybeans dropped by the maximum permitted by the Chicago Board of Trade as rain improved crop prospects in Australia and farmers worldwide prepared to sow more grain to take advantage of last month's record prices.
And there you have it, the free market, once again, trumps the controlled market.
Here's what I think about tomorrow. The markets got thumped today and Commodities and Energy sold hard right into the close. We are probably due for a bounce in the morning. I played some PEP calls at 71 (half the position). I will add the other half in the morning around 70 and then if we bounce for a couple of hours, take whatever is there and walk. I will play a SPY and DIA bounce in the morning as well. But I'll be exiting half the trades on the 15m charts and the other half on the 30-60m charts. I still think we could sell into the close ahead of a long weekend. So we may be setting up for a bounce in the morning and a fade into the close. Therefore, I will look at some puts on any Bear Flags over the first couple of hours on a couple of the following stocks: Gold like ABX, some Chemicals like MOS, maybe some Steel or Copper, some Mining like POT or CLF, and some Energy stocks like SU, OXY, and MUR, maybe an HMO like CI or HUM, and a Drug Wholesaler like MCK (nice Shooting Star) or CAH. I won't be holding much over the weekend, I want to be out of at least half of each position by the end of the day, probably a lot more than that.
As always, I don't know if this will play out the way I set the table, so I have my stops in place on any trades. We'll see what tomorrow brings.....
Tuesday, March 18, 2008
Benny and the Feds
Hey Kids, shake it loose together
The Benny's cutting something
That's been known to change the markets.....Benny and the Fed's.
If you still don't get it, click on the link below and hit play sample:
http://www.eltonography.com/songs/bennie_and_the_jets.html
Benny and the Feds gave us a 75bp cut today, although two of the Fed Governors dissented on this one (Fisher and Plosser compared with just Fisher last time). Well, that's what happens when commodities and energy inflation starts to spiral into the next bubble. Interestingly enough, core PPI came in higher than expected, exactly what I was talking about in the previous posts - CPI is holding because Producers are getting stung by higher prices but they're trying to hold back from passing it along too fast to the Consumers. It's also amazing how quickly we can become conditioned to something because some investors were disappointed that we only got a 75 and not a 100 or 125 basis point cut! Kind of crazy when you think about it.
The real news of the day was LEH and GS posting better than expected results and showing no liquidity concerns. Again, just like the article I linked into yesterday's post on LEH. So the combination of Brokers being allowed to tap into the Discount Window and LEH and GS showing that BSC was the only liquidity fool in the 5 major independent Brokers drastically eased concerns about another failure in the Financial Sector.
What does this all mean? With the Fed stating today that they didn't think inflation was out of control because they anticipated further "easing" in energy and commodity prices, while at the same time dramatically reducing interest rates - which causes energy and commodity prices to go up.....wait a minute! I'm going around in circles, uhh, uhhh? Well.....OK, yes I do know that the Fed thinks that we're going to slow down economically, so it was ok to slash down interest rates because a slowing economy is our inflation buffer, and therefore.....Uhhh, well never mind.....
I do understand that the Fed got caught between a rock and a hard place. The nasty rock was the unbelievably foolish speculation on CDO's by many Financial institutions (BSC, MER, C, BAC, AIG, etc. etc. etc.). The hard place was their tardiness in raising interest rates to stop the real estate bubble. Now they are left with taking drastic, semi-panicked action to save Financial institutions by targeting both the short end and the long end of the yield curve. Lots of fun, lots of circus action. I always say that the Fed's job - and it's not an easy one at all - is to save some people from themselves. When you really think about why we have to regulate the markets and what happened in 1929, you understand why I say that about the Fed's job. Oh, and by the way, they still have the real estate market to deal with.....
The biggest movers today were, by far, the Banks, Brokers, and other Financials. Lots and lots of short covering out there. The wild price action in LEH alone would be hilarious if it wasn't so tragic (almost 800 billion in overall stock market cap was wiped out in just yesterday's big drop, and that was just in the U.S.). Well, alot of that came back today.
Here are some semi bullish to bullish stocks I am keeping an eye on:
Chemicals: CF, MOS, APD, PX (although we may be getting a double-top in DBA)
Steel (strongest group): SID, NUE, STLD, AKS
Metals/Mining: CLF, POT
Manufacturing/Machinery: IR, CAT, TEX
Energy: SWN, ESV, RIG, DO (may be very close to breaking out), DVN, APA, XTO, EOG, ECA
Financials: COF
Tech: RIMM, FSLR, AAPL (turning up), IBM, HPQ
Railroads: CSX, UNP, NSC, BNI
REITS: AVB, EQR, PSA, PLD
The Bearish sectors include Healthcare - especially HMO's, and still some Financials.
I am still playing day swings. I like the DIA and SPY for a possible day swing tomorrow after a consolidation intra-day. I may like some of the stocks on the bullish list as well. Why am I still playing day swings? Because we aren't out of the woods yet. If we do see "slowing" data as the Fed suggests, and we roll over, then I may actually turn around and play puts on the Energy and Commodity groups. Until the market starts trending again - one way or another - I am sticking with my shorter, day swings.
Today I finished out the paper trade on the DIA short swing from yesterday. It was a very nice play that netted me over $2,100 in one day. I'll look there again tomorrow.
The Benny's cutting something
That's been known to change the markets.....Benny and the Fed's.
If you still don't get it, click on the link below and hit play sample:
http://www.eltonography.com/songs/bennie_and_the_jets.html
Benny and the Feds gave us a 75bp cut today, although two of the Fed Governors dissented on this one (Fisher and Plosser compared with just Fisher last time). Well, that's what happens when commodities and energy inflation starts to spiral into the next bubble. Interestingly enough, core PPI came in higher than expected, exactly what I was talking about in the previous posts - CPI is holding because Producers are getting stung by higher prices but they're trying to hold back from passing it along too fast to the Consumers. It's also amazing how quickly we can become conditioned to something because some investors were disappointed that we only got a 75 and not a 100 or 125 basis point cut! Kind of crazy when you think about it.
The real news of the day was LEH and GS posting better than expected results and showing no liquidity concerns. Again, just like the article I linked into yesterday's post on LEH. So the combination of Brokers being allowed to tap into the Discount Window and LEH and GS showing that BSC was the only liquidity fool in the 5 major independent Brokers drastically eased concerns about another failure in the Financial Sector.
What does this all mean? With the Fed stating today that they didn't think inflation was out of control because they anticipated further "easing" in energy and commodity prices, while at the same time dramatically reducing interest rates - which causes energy and commodity prices to go up.....wait a minute! I'm going around in circles, uhh, uhhh? Well.....OK, yes I do know that the Fed thinks that we're going to slow down economically, so it was ok to slash down interest rates because a slowing economy is our inflation buffer, and therefore.....Uhhh, well never mind.....
I do understand that the Fed got caught between a rock and a hard place. The nasty rock was the unbelievably foolish speculation on CDO's by many Financial institutions (BSC, MER, C, BAC, AIG, etc. etc. etc.). The hard place was their tardiness in raising interest rates to stop the real estate bubble. Now they are left with taking drastic, semi-panicked action to save Financial institutions by targeting both the short end and the long end of the yield curve. Lots of fun, lots of circus action. I always say that the Fed's job - and it's not an easy one at all - is to save some people from themselves. When you really think about why we have to regulate the markets and what happened in 1929, you understand why I say that about the Fed's job. Oh, and by the way, they still have the real estate market to deal with.....
The biggest movers today were, by far, the Banks, Brokers, and other Financials. Lots and lots of short covering out there. The wild price action in LEH alone would be hilarious if it wasn't so tragic (almost 800 billion in overall stock market cap was wiped out in just yesterday's big drop, and that was just in the U.S.). Well, alot of that came back today.
Here are some semi bullish to bullish stocks I am keeping an eye on:
Chemicals: CF, MOS, APD, PX (although we may be getting a double-top in DBA)
Steel (strongest group): SID, NUE, STLD, AKS
Metals/Mining: CLF, POT
Manufacturing/Machinery: IR, CAT, TEX
Energy: SWN, ESV, RIG, DO (may be very close to breaking out), DVN, APA, XTO, EOG, ECA
Financials: COF
Tech: RIMM, FSLR, AAPL (turning up), IBM, HPQ
Railroads: CSX, UNP, NSC, BNI
REITS: AVB, EQR, PSA, PLD
The Bearish sectors include Healthcare - especially HMO's, and still some Financials.
I am still playing day swings. I like the DIA and SPY for a possible day swing tomorrow after a consolidation intra-day. I may like some of the stocks on the bullish list as well. Why am I still playing day swings? Because we aren't out of the woods yet. If we do see "slowing" data as the Fed suggests, and we roll over, then I may actually turn around and play puts on the Energy and Commodity groups. Until the market starts trending again - one way or another - I am sticking with my shorter, day swings.
Today I finished out the paper trade on the DIA short swing from yesterday. It was a very nice play that netted me over $2,100 in one day. I'll look there again tomorrow.
Monday, March 17, 2008
A Day Trader's Market
Well, that cold wind came and went with a chill blast.....We still have the Fed Funds Target Rate decision tomorrow, and it could be a doozy. By the way, I will answer some of your comment questions here. The first is that the Fed lowered the Discount Rate yesterday, not the Fed Funds Target Rate. Here is a link to a brief explanation on the Discount Rate:
http://www.federalreserve.gov/monetarypolicy/discountrate.htm
Here is a link to a brief explanation on the Fed Funds Target Rate, you may also find this useful because it gives all the rate cut and rate hike history since 1990:
http://www.federalreserve.gov/fomc/fundsrate.htm
The Fed Funds Futures were predicting a 100% chance of a 100bp cut tomorrow and a 26% chance of a 125bp cut!!!!!!! Like I said, it could be a doozy.
I think some of the worst acid rain has already hit the market - with an 85 year old company that survived the great depression, 5 wars, stagflation, inflation, huge bubbles, and several recessions, only to have a foolish CEO and management team go upside down on their lending after their CDO Hedge Funds collapsed, and then go right down the toilet. The company was once worth over 20 billion dollars and is now worth 236 million (although it wouldn't surprise me if someone else bid $4-$5 per share for the stock in the next couple of days). I've been saying this over and over again the last 2-3 months, the gamesmanship in the Financial Sector can be breathtaking. Especially after the BSC CEO had the audacity to say the stock was worth $85 (book value) four days before it disintegrated.
Now for the next question. Are we at an intermediate term bottom? I don't know, but a 100bp cut and less bad news from the Financials would do it. Here is a nice article on LEH and the other brokers and how they may not be in the same condition as BSC:
http://finance.yahoo.com/tech-ticker/article/7226/Lehman:-Were-Not-Bear,-and-Were-Not-Screwed
Here is what I will say about the market and how to trade it. Buried in the Financial headlines was more recessionary news in the NY Empire State Index reading today. Manufacturing is definitely slowing down. We may see Energy, Commodity, and Agricultural stocks sell off a bit if recession fears grow stronger, although we will have to see how that crosscurrents with the Fed and a potential 100bp cut tomorrow. Now, if those three sectors sell off, then market leadership is gone, and the market sells off a bit as well. If that happens, I will be looking at the 50% Retracement of the Bull Market as the next support, but we will cross that bridge when we get to it. As for right now, we are in a Day Trader's Market. By that I mean, I am trading mostly the 60m swings and using the 15m swings as well, and not holding much overnight. So it is not a true scalping strategy, it just means I am tightened down to the Intra-Day Swings, or Day Swings as I call them (as opposed to the Daily Chart Swings).
I have been beating this drum for over a month now, we are grinding and chopping in a neutral to bearish market. Swings in a trending market are 3-7 days, in a neutral market they drop to 1-3 days and you use the 60m chart swings to guide you. Now we are in a Day Trader's Market. Remember the Accounting Scandal following 9-11 which followed the Tech Bubble Bursting? We got to where you never knew when the next bad news was going to hit, you get ready for bed and BAM! You wake up in the morning and BAM! No one wanted to hold positions very long, and NO ONE WANTED TO HOLD OVER THE WEEKEND. You saw a lot of Friday sell-offs in those days while the scandals worked their way through the market. OK, so now we have the Broker and Lender Liquidity Crisis following the CDO Meltdown which followed the Real Estate Bubble Bursting. Sound familiar? Do you want to be short overnight ahead of the Fed? Do you want to be long after the Fed? Do you think anyone is going to want to hold long positions on Thursday ahead of the Holiday Weekend, especially since the last bit of bad news hit on a Sunday Night?!? So, here's how it might go, barring any news bogeys out of Financials tomorrow morning, look for a bump into the Fed, then if the Fed give us 100, look for a possible bump continuation on Wednesday, but then watch your tail because a lot of traders may sell it into the long weekend on Thursday afternoon, and so on and so on and so on.....As a directional trader I can still trade this, and I did today. I am trading the 60m swings and scaling out on the 15m swings, and I'm not holding a ton of stuff overnight. I will stay in this mode until the mud cleans up a bit.
This morning, when things looked fairly uncertain, I blew out all my calls at the market on the open. I would rather take little .40 and .50 cent hits on several positions then get blasted. As it was, I took small hits on FCX, CRM, and TEX (which was a half size trade). I locked in a big profit on EOG, and I took a 1.94 hit on the SPY (my only bigger hit). I kept the DIA because I thought it would hold and bounce, and I was planning on another Day Swing. I hit the Day Swing on the 60m chart Hammer (on the Dow), although it gave another Morning Star at the same support. Either one was good, I bought the April 119 call and pulled in .84 cents and locked down half the trade, which I will finish on a bump in the morning if I get it. Here is a copy of those recent paper trades:
One quick note on a question, it is OK to let others know about this Family Page when you're at Events, in Groups, talking to others, etc.
For now, the Grinder Market Continues. I will keep to my Day Swings on any directional trades until further clarity. Someday we will trend again, for now, I'll keep hitting the market my way.
http://www.federalreserve.gov/monetarypolicy/discountrate.htm
Here is a link to a brief explanation on the Fed Funds Target Rate, you may also find this useful because it gives all the rate cut and rate hike history since 1990:
http://www.federalreserve.gov/fomc/fundsrate.htm
The Fed Funds Futures were predicting a 100% chance of a 100bp cut tomorrow and a 26% chance of a 125bp cut!!!!!!! Like I said, it could be a doozy.
I think some of the worst acid rain has already hit the market - with an 85 year old company that survived the great depression, 5 wars, stagflation, inflation, huge bubbles, and several recessions, only to have a foolish CEO and management team go upside down on their lending after their CDO Hedge Funds collapsed, and then go right down the toilet. The company was once worth over 20 billion dollars and is now worth 236 million (although it wouldn't surprise me if someone else bid $4-$5 per share for the stock in the next couple of days). I've been saying this over and over again the last 2-3 months, the gamesmanship in the Financial Sector can be breathtaking. Especially after the BSC CEO had the audacity to say the stock was worth $85 (book value) four days before it disintegrated.
Now for the next question. Are we at an intermediate term bottom? I don't know, but a 100bp cut and less bad news from the Financials would do it. Here is a nice article on LEH and the other brokers and how they may not be in the same condition as BSC:
http://finance.yahoo.com/tech-ticker/article/7226/Lehman:-Were-Not-Bear,-and-Were-Not-Screwed
Here is what I will say about the market and how to trade it. Buried in the Financial headlines was more recessionary news in the NY Empire State Index reading today. Manufacturing is definitely slowing down. We may see Energy, Commodity, and Agricultural stocks sell off a bit if recession fears grow stronger, although we will have to see how that crosscurrents with the Fed and a potential 100bp cut tomorrow. Now, if those three sectors sell off, then market leadership is gone, and the market sells off a bit as well. If that happens, I will be looking at the 50% Retracement of the Bull Market as the next support, but we will cross that bridge when we get to it. As for right now, we are in a Day Trader's Market. By that I mean, I am trading mostly the 60m swings and using the 15m swings as well, and not holding much overnight. So it is not a true scalping strategy, it just means I am tightened down to the Intra-Day Swings, or Day Swings as I call them (as opposed to the Daily Chart Swings).
I have been beating this drum for over a month now, we are grinding and chopping in a neutral to bearish market. Swings in a trending market are 3-7 days, in a neutral market they drop to 1-3 days and you use the 60m chart swings to guide you. Now we are in a Day Trader's Market. Remember the Accounting Scandal following 9-11 which followed the Tech Bubble Bursting? We got to where you never knew when the next bad news was going to hit, you get ready for bed and BAM! You wake up in the morning and BAM! No one wanted to hold positions very long, and NO ONE WANTED TO HOLD OVER THE WEEKEND. You saw a lot of Friday sell-offs in those days while the scandals worked their way through the market. OK, so now we have the Broker and Lender Liquidity Crisis following the CDO Meltdown which followed the Real Estate Bubble Bursting. Sound familiar? Do you want to be short overnight ahead of the Fed? Do you want to be long after the Fed? Do you think anyone is going to want to hold long positions on Thursday ahead of the Holiday Weekend, especially since the last bit of bad news hit on a Sunday Night?!? So, here's how it might go, barring any news bogeys out of Financials tomorrow morning, look for a bump into the Fed, then if the Fed give us 100, look for a possible bump continuation on Wednesday, but then watch your tail because a lot of traders may sell it into the long weekend on Thursday afternoon, and so on and so on and so on.....As a directional trader I can still trade this, and I did today. I am trading the 60m swings and scaling out on the 15m swings, and I'm not holding a ton of stuff overnight. I will stay in this mode until the mud cleans up a bit.
This morning, when things looked fairly uncertain, I blew out all my calls at the market on the open. I would rather take little .40 and .50 cent hits on several positions then get blasted. As it was, I took small hits on FCX, CRM, and TEX (which was a half size trade). I locked in a big profit on EOG, and I took a 1.94 hit on the SPY (my only bigger hit). I kept the DIA because I thought it would hold and bounce, and I was planning on another Day Swing. I hit the Day Swing on the 60m chart Hammer (on the Dow), although it gave another Morning Star at the same support. Either one was good, I bought the April 119 call and pulled in .84 cents and locked down half the trade, which I will finish on a bump in the morning if I get it. Here is a copy of those recent paper trades:
(click on image to enlarge)
Here is the 60m chart on the Dow, which guided me on the DIA:
(click on image to enlarge)
(click on image to enlarge)
One quick note on a question, it is OK to let others know about this Family Page when you're at Events, in Groups, talking to others, etc.
For now, the Grinder Market Continues. I will keep to my Day Swings on any directional trades until further clarity. Someday we will trend again, for now, I'll keep hitting the market my way.
Sunday, March 16, 2008
Monday Morning Volatility May Be Coming
I normally don't post on Sundays. But the Fed normally doesn't lower the discount rate from 3.50% to 3.25% on Sunday, and JP Morgan Chase doesn't normally buy Bear Stearns for $2.00 per share!!! on Sunday.....
Wow, BSC was a $170.00 stock just 15 months ago and an $80.00 stock just 15 days ago. Now you can buy the whole company for 236 million dollars. By the way, last year BSC was the first of the Financials to announce a major meltdown in Hedge Funds speculating in CDO's. They lost two multi-billion dollar hedge funds in a blink, and that was the beginning of the death spiral.
The Fed continues to fight the subprime derivative financial collapse the way they think is best. Which now looks more and more like a very good possibility of a 100 basis point cut on Tuesday. One thing that is interesting is that the Asian markets are only down about 2% right now, a lot less than I thought they would be. Still, watch for some volatility in the morning. I will still look at the DIA setup, but I will be keeping a close eye on things.
Wow, BSC was a $170.00 stock just 15 months ago and an $80.00 stock just 15 days ago. Now you can buy the whole company for 236 million dollars. By the way, last year BSC was the first of the Financials to announce a major meltdown in Hedge Funds speculating in CDO's. They lost two multi-billion dollar hedge funds in a blink, and that was the beginning of the death spiral.
The Fed continues to fight the subprime derivative financial collapse the way they think is best. Which now looks more and more like a very good possibility of a 100 basis point cut on Tuesday. One thing that is interesting is that the Asian markets are only down about 2% right now, a lot less than I thought they would be. Still, watch for some volatility in the morning. I will still look at the DIA setup, but I will be keeping a close eye on things.
Saturday, March 15, 2008
Grinder Market Continues
We're up, we're down, no we're up, no wait a minute - we're back down.....So the Grinder Market continues with lots of chop and slop. The Dow is sitting at the halfway point of Tuesday's long candle as the market swirls around with indigestion. The CPI came in with a fairly benign reading on Friday, and the economic numbers really weren't all that bad this week. It appears that producers are still trying to maintain prices to consumers without passing along the inflation that is growing on their end of the food chain. Raw materials, commodities, energy and the like are experiencing more and more inflation, but so far the consumer is not getting hit. The real story continues to be the meltdown in the Financial Sector, specifically Banks, Brokers, Bond Insurers, Private Equity Funds, Insurance Companies, Mortgage Companies, and Homebuilders. The biggest focus is on all the write-downs, defaults, meltdowns, and implosions from Banks, Brokers, and Insurance companies that vastly over-speculated on CDO's and other subprime derivatives. Every time it looks like the uncertainty has cleared up, i.e. Standard & Poor's stating on Thursday that the write-offs will max at 285 billion and we have already taken care of 188 billion, then we get another blast across the bow. Friday it was Bear Stearns turn to churn the market's guts with a huge, huge liquidity crisis. I think my favorite part about all this mess is the gamesmanship of the Financial industry.....Never disclose too much too fast, just bleed it out to the market slowly and hope that it doesn't get noticed with all the rest of the trash flying around.
Well, the bottom line is that the market is trying to focus on the Fed and the potential good news, but the Financial sector just won't allow it. It's like the line from the Godfather III, "just when I thought I was out - they pull me back!" Therefore.....Chop and Slop, a real Grinder Market.
I am still holding some of my calls on energy. There are pockets of strength here and there, especially Energy, Gold, Steel, Mining, Copper, Chemicals, Machinery/Agriculture, and a few other areas. The whole Financial sector, especially Banks, Brokers, and Insurance continues to be bearish, along with HMO's, some big cap Tech, and Casinos and other discretionary spending groups.
If, and it's a big if, we don't get some more acid rain falling from the Financial sector on the market Monday or Tuesday morning, there is the possibility of a nice swing trade on the DIA or the SPY on the 60m charts Monday. The Fed Funds Futures are predicting a 100% chance of a 75bp cut on Tuesday, and even a 52% chance of a 100bp cut. I think it's insane, but it really doesn't matter what I think, it only matters what I think the market is going to do. If, and again it's a big if, the market is allowed to focus on the possible HUGE rate cut coming on Tuesday, then the shorts in Financials might get scared and the longs in Energy and Commodities might get bolder. It really doesn't matter if the Fed actually cuts 100bp, it just matters that the market thinks that they just might do that. So here is the setup. We have a confirmed bounce in a Rectangle on the 60m charts in the last 2 hours of Friday. If the DIA clears 120.70 on Monday then it has a probability of running to 122.00 - 123.00, which would be a nice little 1.50 to 2.00 type move. I will play the swing on the 60m charts and be out of at least 2/3 of the position by the end of the day Monday, and out of almost all the position ahead of the Fed on Tuesday. I will take out 1/3 of the trade at 121.75, 1/3 at 122.30, and see if it will reach 122.50 - 123.00 before the Fed announcement. I don't want to give the trade much room below 119.50 before I stop out because if it goes through 119.50 it's probably headed to 118.50 and maybe even 117.50.
Well, the bottom line is that the market is trying to focus on the Fed and the potential good news, but the Financial sector just won't allow it. It's like the line from the Godfather III, "just when I thought I was out - they pull me back!" Therefore.....Chop and Slop, a real Grinder Market.
I am still holding some of my calls on energy. There are pockets of strength here and there, especially Energy, Gold, Steel, Mining, Copper, Chemicals, Machinery/Agriculture, and a few other areas. The whole Financial sector, especially Banks, Brokers, and Insurance continues to be bearish, along with HMO's, some big cap Tech, and Casinos and other discretionary spending groups.
If, and it's a big if, we don't get some more acid rain falling from the Financial sector on the market Monday or Tuesday morning, there is the possibility of a nice swing trade on the DIA or the SPY on the 60m charts Monday. The Fed Funds Futures are predicting a 100% chance of a 75bp cut on Tuesday, and even a 52% chance of a 100bp cut. I think it's insane, but it really doesn't matter what I think, it only matters what I think the market is going to do. If, and again it's a big if, the market is allowed to focus on the possible HUGE rate cut coming on Tuesday, then the shorts in Financials might get scared and the longs in Energy and Commodities might get bolder. It really doesn't matter if the Fed actually cuts 100bp, it just matters that the market thinks that they just might do that. So here is the setup. We have a confirmed bounce in a Rectangle on the 60m charts in the last 2 hours of Friday. If the DIA clears 120.70 on Monday then it has a probability of running to 122.00 - 123.00, which would be a nice little 1.50 to 2.00 type move. I will play the swing on the 60m charts and be out of at least 2/3 of the position by the end of the day Monday, and out of almost all the position ahead of the Fed on Tuesday. I will take out 1/3 of the trade at 121.75, 1/3 at 122.30, and see if it will reach 122.50 - 123.00 before the Fed announcement. I don't want to give the trade much room below 119.50 before I stop out because if it goes through 119.50 it's probably headed to 118.50 and maybe even 117.50.
Here is the setup on the DIA:
This is what it looks like on the Daily's
(click on chart to enlarge)
Here is the Setup on the 60m charts:
(click on chart to enlarge)
This is what it looks like on the Daily's
(click on chart to enlarge)
Here is the Setup on the 60m charts:
(click on chart to enlarge)
I don't know if the setup will be there on Monday, (or if it will be profitable), but I will look for it, especially if the market holds up early and we don't have any more nukes coming out of Financials. We'll see what happens on Monday.
Wednesday, March 12, 2008
Consolidation Day
Nothing really exciting about the market today. This kind of price action is healthy if we want the current swing to continue and not flame out after one day, especially after a 416 point day on the Dow yesterday. My favorite headline was over at CBSMarketwatch, which was titled "Fed Rally Breaks Apart After One Day." Someone over there must have finally figured out how ridiculous it was to run that kind of headline after a 416 point gain yesterday and a 47 point consolidation today so they changed it to "Investors Feed on Fed Rally." Anyway, I was thinking that things could be a little squishy tomorrow with the Retail Sales and Initial Jobless Claims in the morning. But the ultimate contrarian in me loves those kinds of foolish headlines like CBSMW ran earlier, so I started feeling stronger about tomorrow just on that alone. If we come in decent with the numbers tomorrow, then the swing may continue for another day and I will ride my calls some more while continuing to scale out a little. If we are really strong tomorrow, I will be cautious ahead of the CPI on Friday because we may get some inflationary numbers that attenuate the Fed Funds Futures and rate cut expectations a little.
I took some nice partial profits on the DIA, SPY, STLD, and TEX trades today and I took all of CRM and RIG out for profits. I entered SWN on a split trade, and I intra-day traded EOG and OXY, but nothing special there. I am still in some or all calls on DIA, SPY, STLD, EOG, OXY, SWN, and TEX. I am watching FCX and GENZ for potential channel breaks. And of course, keeping an eye on my watchlist.
Some nice movers today:
Energy: CAM, HES
Copper: FCX
Tech Services: PCLN
Semiconductors: WFR, FSLR
Financial Services: MA, COF
Steel/Metals: STLD, CLF
Machinery/Manufacturing/Agriculture: CAT, CMI, TEX, IR
We will see how this all turns out tomorrow. If the market starts selling off below the 1295-1300 area then I will be stopping out of all my calls. If it goes the other way and it reaches 1335-1340 then I will be take profits on 80% or more of my positions. As always, we shall see...
I took some nice partial profits on the DIA, SPY, STLD, and TEX trades today and I took all of CRM and RIG out for profits. I entered SWN on a split trade, and I intra-day traded EOG and OXY, but nothing special there. I am still in some or all calls on DIA, SPY, STLD, EOG, OXY, SWN, and TEX. I am watching FCX and GENZ for potential channel breaks. And of course, keeping an eye on my watchlist.
Some nice movers today:
Energy: CAM, HES
Copper: FCX
Tech Services: PCLN
Semiconductors: WFR, FSLR
Financial Services: MA, COF
Steel/Metals: STLD, CLF
Machinery/Manufacturing/Agriculture: CAT, CMI, TEX, IR
Here is a look at the nice consolidation today on 2 time frames: Daily and 60m
This is the Daily Chart showing the 1340 area as a solid resistance zone near ter
m.
(click on chart to enlarge)
m.(click on chart to enlarge)
This is the 60m Chart showing the nice Bull Flag consolidation intraday.
(click on chart to enlarge)
(click on chart to enlarge)
We will see how this all turns out tomorrow. If the market starts selling off below the 1295-1300 area then I will be stopping out of all my calls. If it goes the other way and it reaches 1335-1340 then I will be take profits on 80% or more of my positions. As always, we shall see...
Tuesday, March 11, 2008
Fed Bounce Part Deux
I will add to this post later, but for now: I took calls on DIA, SPY, EOG, and STLD today. I started some calls on EOG, TEX, CRM, RIG, and XTO yesterday on the big fade as I was locking in my puts for a gain. If we gap tomorrow morning I will sell half of everything but the gas stocks into the gap at the open. If we flag the open, I will pick up the other half of my STLD trade. I will get back to this later when I have time.
Ok, it's later now and I've had a chance to go through the markets, the news, and over 300 stocks. Let me dive right in with the news that drove the bounce:
Here is the wrap from Briefing.com, this sums it up perfectly, so I will save the typing and just copy in their comments:
Ok, it's later now and I've had a chance to go through the markets, the news, and over 300 stocks. Let me dive right in with the news that drove the bounce:
Here is the wrap from Briefing.com, this sums it up perfectly, so I will save the typing and just copy in their comments:
[BRIEFING.COM] On Tuesday, the Dow, S&P 500 and Nasdaq posted their largest one day percent gain since 2003 on the announcement of a coordinated central bank effort to increase liquidity in the financial markets. The major indices finished the day sharply higher, near their best levels of the session, thanks to broad-based buying interest.
The Federal Reserve announced a new Term Securities Lending Facility (TSFL). The Fed will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight. The borrowers will be able to pledge a variety of collateral ranging from federal agency debt to private AAA rated residential mortgage backed securities (MBS). The auctions will take place on a weekly basis.
Basically, this plan stands to improve liquidity by allowing more thinly traded securities to be used as collateral to borrow highly traded Treasury securities.
The Fed also announced it is increasing its swap lines with the European Central Bank and the Swiss National Bank to $30 billion and $6 billion, respectively. This equates to an increase of $12 billion.
This is a coordinated effort with other central banks, which announced measures of their own. Participating central banks include the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank.
The Banks, Brokers, Insurance, and Housing sectors were the biggest of the big bouncers today (those are the "short covering bounce" sectors). Chemicals, Energy (and especially the Gas stocks I have been highlighting for you the past week), Steel, Copper, the Construction/Machinery/Agriculture stocks, some Tech stocks, and a couple of Gold stocks were areas of big buying interest - especially Chemicals, Energy, and Steel. As you can see from the early post before the close that I was hitting the market ETF's, Energy/Gas, Steel, and Machinery/Agriculture pretty hard. But it was good pickings in a lot of other areas as only 6% of my watchlist universe was down today!
Watchlist (Bullish Short Term):
Energy: OXY, EOG, APA, XTO, DVN, and DO are on my "A" list. HES, RIG, SWN, MRO, RRC, CHK, SU, ESV, MUR, and ECA are also playable (more of a "B" list).
Chemicals: A-List: MOS, B-List: CF, AGU
Steel/Metals/Mining: A-List: CLF, STLD, B-List: POT, NUE, AKS
Machinery/Construction/Agriculture: B-List: FLR, TEX, CAT, IR
Tech: A-List: HPQ, IBM, CRM (services) B-list: RIMM
Gold: B-List: GG, AEM
Biotechs: A-List: GENZ, B-List: DNA, GILD
By the way, although I'm not trading it yet, GENZ is setting up for a classic channel breakout (a setup that I came up with from observing this pattern over and over). MACD-Line is the indicator (besides price and volume) I use to clue me in that momentum is ramping up. A move above 76 could lead to a 3-4 point swing short term and a 10 point trend intermediate term. HPQ is in a mini version of the same type of price behavior (IBM is also similar to HPQ).
As far as the call trades I'm in now, here is how I am playing this bounce going forward. If we gap up on the open tomorrow on the SPX into the 1330+ area I am immediately selling half my SPY and DIA position and 1/4 - 1/3 of my other positions (especially the Energy stocks, which I will lock a little down regardless ahead of the mid-day inventory report). If the gap holds, then I may get back into some more of the ETF positions at a better price. Now, if the market instead Flags at the open on the 15m or the 30m charts (30m would be ideal) and the SPX has a nice little bull flag back into the 1305 area - plus or minus a couple of points - I will add to my positions and maybe pick up one or two more stocks. On the downside, I want to see the 1297 - 1300 area hold on the SPX.
This market could have a decent swing into the Fed meeting next Tuesday on short-covering, and real buying. I would not be surprised to see a little choppiness in the swing just like mid-January after the Fed cuts. The reason is that we still have to get through Retail Sales and CPI on Thursday and Friday this week. So I am keeping things tight as usual, and I am looking to start scaling out of some of these calls as soon as tomorrow. I want to keep enough on the table, though, because this swing smells like it could weather the storm and reach for Tuesday. As always, we shall see...
Monday, March 10, 2008
Soft Market With a Fade
Todays price action played out pretty much how I described it on Friday. We started out soft, got some more bad news in the Financial sector, and faded into the close. We hit new closing lows and we're getting near the January support on the Dow and the SPX. I was busy scaling out of my puts all day. I have about 25% of my put positions left over in case we hit support or even go through. I may create new put positions on the DIA and SPY, and other stocks, if we break support, but I will be very cautious and nimble, and probably take half-profits on those types of plays on an intra-day meltdown. Remember, the Fed can nail us again with an early cut like they did last time, so I don't want to ride new puts for a week, I want to be quicker than that. Incredibly, the Fed Funds Futures are pricing in a 14% chance of a 100bp cut! (I know, insane...). The FFF are also pricing in a 100% chance of a 75bp cut with a 95% probability of success (or happening). This 75bp seems to be in the books and it may happen right about the same price levels on the Dow and the SPX as it did with the 75bp cut in January. This is another reason why I am looking for a Fed speculative rally sometime in the next day or two that carries us into next Monday or Tuesday morning (even on just short covering alone). I could be wrong and support doesn't hold, so I have some puts I can do, but if we do bounce I am still looking at the Gas stocks (APA is hanging really tough, DVN, XTO, and EOG), some Tech (IBM and HPQ), and a smattering of others like CRM, maybe TEX. I'm not as keen on the Commodities stocks (steel, copper, chemicals, etc.) right now, or the Biotech stocks (GILD, DNA). Alot of selling out there, so I want to be just as nimble on the call side if we bounce.
Thursday, March 6, 2008
Five Bullish and Bearish Buy Signals
Bullish Buy Signals:
1. Close above the high of the previous day
2. Close above the high of the low day
3. Close above the short term downtrend line
4. Bullish Candlestick Reversal Pattern
5. Higher low on either side of the low day (excluding inside days)
Bearish Buy Signals:
1. Close below the low of the previous day
2. Close below the low of the high day
3. Close below the short term uptrend line
4. Bearish Candlestick Reversal Pattern
5. Lower high on either side of the high day (excluding inside days)
1. Close above the high of the previous day
2. Close above the high of the low day
3. Close above the short term downtrend line
4. Bullish Candlestick Reversal Pattern
5. Higher low on either side of the low day (excluding inside days)
Bearish Buy Signals:
1. Close below the low of the previous day
2. Close below the low of the high day
3. Close below the short term uptrend line
4. Bearish Candlestick Reversal Pattern
5. Lower high on either side of the high day (excluding inside days)
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