Monday, July 24, 2006

Another Chance to Short?

The comment boards have been full of people begging for Dow 11,000 again so they could enter more shorts. Well, folks, here's your opportunity!

For myself:

+ I'm easing out of some of the transportation shorts/puts, since I think this one's kind of done for now

+ The gold shorts still look good

+ The oil service sector is sporting a fantastic head & shoulder formation, but I am keeping VERY tight stops on these positions, since they've come down so far, so fast

+ I think today's 155 point rise on the Dow (as of this writing) does represent a good short opportunity, but only with tight, intelligent stop prices.........it could easily be argued that last week was the start of a new (short-term) leg-up in the market.....

More later. Just wanted to say a few words since the market was up so much this morning.

23 comments:

Anonymous said...

The volume on the DOW is pathetic......

Just a quick note, this is another suckers rally.

The action in GOOG is getting annoying as well......

Anonymous said...

I agree 100% with "anonymous". The volume is absolutely RIDICULOUSLY LOW.

I really don't think this is the type of strength that would be indicative of an upleg rally. This appears to be simply a matter of the sellers sitting on the sidelines after 2 significant days of heavy selling.

There is nothing, of course, that says that the indices WON'T continue higher, but as soon as another bellwether stock either warns or misses earnings, the next huge wave of selling will begin.

I don't think that's far off.

-Tony

bsi87 said...

1)Trade what you see, not what you believe.

2)Don't anticipate how the situation will resolve itself.

Bought some more USO at 69.15. Glad I closed the OIH short Friday.

Anonymous said...

i am down on puts that i purchased last week, although most have expirations in october or later so I am not worrying (yet). barrons had a big headline this weekend, "time to buy." boy, thought that was a signal -- for time to sell!

but, the google action is driving me crazy. bought some cheap 450 calls right before earnings expecting a big jump in price. they are august calls so no doubt i will have to eat them for lunch next week.

question:
given the sine wave volatility in the market, do those that purchase options typically use stop losses? and how does one price those stops?

thanks.

bsi87 said...

DJIA now trading above last Wednesday's high.

bsi87 said...

anon,

I saw that Barron's cover too and thought it might be a top indicator. I think Paul Montgomery sez it takes about 30 days from the cover and generally it's a general interest publication, Newsweek/Time, etc that is more indicative.

Anonymous said...

bsi what does this signify

DJIA now trading above last Wednesday's high.

12:30 PM

Anonymous said...

this rally is ticking me off. will be buying sds and dxd at dow 11250!!!

Anonymous said...

I'm negative on Google. They cooked the books... sold the BIDU shares/GOOG stock offering... that isn' growth to me. They might as well have a daytrading division as well.

Buying interest in GOOG is waning.

I'm really annoyed because premium got shattered on my Sept puts... happened to calls as well. Smelled kind of funny.

Right now I've got puts on SBUX and AMZN...

Anonymous said...

Looks like the surge in short interest these last few months was a good contrary indicator.

What a fantastic day!

bsi87 said...

That 50 DEMA is looming overhead for DJIA.

Closing all QQQQ/DJIA long positions. Not going short at this time.

bsi87 said...

anon,

when you see averages trading above what many thought was THE top AND it is the late PM, it could very well mean buying interest.

When I can bank 3-4% in a choppy market in 5 trading days, I'm gonna. Hence my reluctance to stay long.

Anonymous said...

Legitimate buying interest sure...but not on anemic volume. Right now Volume on the DOW is 50% of Friday's volume.

Check it out....

Anonymous said...

Tim must be having a tough day today if he did not unload his puts and shorts last week. I know I am.

Who is shorting and buying puts today?

I have a feeling that this last rally is a snowjob of some kind. Really I feel like I'm in one of those experiments where they use a herd of bulls to convince a single bear that everything is wonderful.

Everyone shouts "look, the economy is great, buy, buy, buy! 200 points up, fifth best day of the year. buy, buy, buy!" And I'll be damned! I am nearly convinced.

Almost, but not quite!

Kapil Khanna said...

We have a double bottom on the dow as well as on the Nasdaq. The market at this stage is undecided on its downtrend.
Breach of 10700 or 11260 will provide the market it's trend. Recent put's have not provided me good winners in the last downturn (the one that started on 6th July).

bsi87 said...

The time to buy was last Tuesday afternoon when the mkts reversed to the upside after testing support and it held. Some indicators I'm using show most of the indices are non trending so they hit support/resistance and reverse.


VIX is at 15. Watching the 12-13 area to see what it does.

mike said...

Todays rally seemed different then some of the other big one day rallys we've had. The others were triggered by fed news and shot up quickly; today churned up most of the day. I just don't think the market will collapse tomorrow like it did last Thursday after the big rally. I'm guessing we have a few day rally in store for end of month but we are getting very close to trend line resistance on the S&P and DOW so not sure how much. Watch those lines because if they get broken we could have a nice rally. I'd love to be heavily short right now but I don't have the guts to do so. I'm somewhat neutral in terms of positions at this point and in a wait and see mode right now for the next few days.

Anonymous said...

It is days like today that everyone thinks there could be no negative tones to the market. I disagree. I think we get a few more up days followed by more down days. This market is quite confusing. The volatility will continue into much of the rest of the year. The next big day for the markets is August 8th, IFFFFF the fed pauses the markets will easily put in a 2-4% rally, if they do not pause expect another huge sell-off.

Anonymous said...

To many people change sides in matter of days. This past weekend everything i read was negative negative negative.....then monday comes and everything goes up up up just like nothing is wrong. Amazing.....truly amazing. I think these rallies continue to be headfakes and that the dow will break support around 10660 like tim said. DOW 10500 nasdaq 1950

Sanjay Sola said...

today is day 1 of the rally attempt. we got 1.7% in an index with some good volume. end of the month buying will push this market up more. i'm in the neutral camp now, until i see a follow through on the rally.

market was oversold and it's the end of the month.
I'm still unclear about market leadership right now.

Texan said...

Rice trip to ease ME tentions was one of the major catalists for today's run IMO. Waitaing for
$IND=11150 to close my longs..

downosedive said...

Noone really knows for certain where the market is going. We all changes our views each time there is a substantial rally or fall. We can all speculate on where the restance points are and often they are fairly clear. However whether the market actually reaches a resistance point is a difficult enough thing to speculate on, but whether it will be breached is impossible to say - its all personal opion and pure speculation. The traders that wholesale the shares on the stock exchange are ultimatley the ones who run the direction, based on supply and demand when the trading day is in full flow, but at other times especially at the start of each day, they drive the market up or down according to how they think sentiment is at that time (based on economical factors, media comments, bid rumours, profit warning rumour etc etc). Todays volume was 20% below average, yes only average, but look how high the index went. It started plus 56ish, the traders set that price themselves. In the UK these wholesale traders are known as market makers and all are strictly regulated and are major finacial entities. They are the pits, they are vile. They will move prices based on nothing at all if they decide it may generate a profit. They are allowed to do that. I guess its the same Stateside? This is the real enemy, because the consequences of their actions affect all, but can and often are based in turn on their interpretation of which direction they think the price may go. The sum total of all the share values within the top one 100 by value determines the total index price ie the FTSE100, and followed by other indices for the lesser capitalised companys. I dont suppose anyone has read this, so I'll stop now. It just a further link to try and account for the manic chenges in direction and sentiment on the NYSE

bsi87 said...

Nosey,

You sound like a guy who has given up on TA. If you truly believe you can't ascertain resistance/support, you should probably buy some index ETFs and some bonds and just sell when the ETF or bond has a 10% profit on an annual basis and forgettabout trading.

re:Mkt makers. One can decide not trade at all or wait until conditions are favorable and put a trade then. No one puts a gun to a trader's head and sez he HAS to trade. You can also trade in smaller sizes. Lotta opportunity for a small trader.

re: volatility. Mkt is trying to make up its mind.

Be nimble.