Wednesday, August 02, 2006

Drumming Fingers

My relationship with the market is pretty bad these days. I find it irksome and frustrating. Everyone seems completely obsessed with next Tuesday's Fed announcement. So everything is in kind of a weird holding pattern until then.

Just as yesterdays 100+ point drop got shaved before the close, today's 100+ point gain got shaved too. The Dow 30 is still below (but, again, just barely below) the "safety line" shown here in red. This is an agonizingly tight spot. If the market continues to be strong, it's going to completely screw up mid-term bearish arguments. If the market falls, it will be textbook technical analysis. But if we have strength, it's time to get out and get out fast.


During the peak today, I felt a lot of oil service stocks had really reached their limits, so I bought some more puts there. OIH softened up a bit. I'd still say $152 is a good stop loss point for OIH and, in principal, the component parts of it as well (at different prices, obviously).


The S&P 500 is clinging to that line like there's no tomorrow. Click on the image to see it more clearly. There's an ascending resistance line that the price is just smooching, day after day. It's kind of weird, I must say, but at least it's predictable for the moment.


If the markets move higher, I've got to believe $TRAN will be especially strong. It's had a horrible time recently, losing the equivalent of about 1,800 Dow points from its peak. But it's at two major support zones right now, and it could easily bounce higher from here given any general market strength.

93 comments:

jockgunter said...

Thread on Bill Cara's excellent blog offers one explanation of how these indices refuse to break: in low volume July/Aug, the big banks can afford to prop them up when they're about to fail. Worth considering:

http://www.billcara.com/archives/2006/08/a_last_hour_sav.html#more

jockgunter said...

Oops, blogger wouldnt take the whole url. go to billcara.com and look for yesterday's topic "a last hour save for the NDX" (no registration or payment required).

Anonymous said...

Im watching IYT. Think it may head back to $82+

PB said...

what a beatiful "doube top" on the transports! I'd like to see the DOW do the same "double tity" and then drop to the very low 10,000's. Maybe before next Tuesday's meeting, market bulls will feel emboldened enough to make a run for the hills! Then it will be sweet shorting time once again! The top in the DOW is already known 11,600 - 11,700.

Anonymous said...

Here's a question for everyone:

I have a pretty decent handle on the market. While I'm not right all the time, I make my share of correct calls.

I have about $50k to play with. Do y'all think it's possible to gross $500 per week (1%) on average by trading?

Thanks

Anonymous said...

"I have about $50k to play with. Do y'all think it's possible to gross $500 per week (1%) on average by trading?"

If this is just play money for you, maybe if you're an experienced trader. But if you're depending on the $500/wk to pay the the bills forget about it.

Also, paper trading is completely different from trading with real money(especially money you can't afford to lose).

Anonymous said...

I appreciate your opinion, but don't find it very informative.

Can you be more specific about why I should "forget about it?"

Also, why is paper trading "completely different" than trading real money? I thought the whole purpose of unemotional trading was to make it a numbers game, not an emotional do-or-die situation?

I am completely comfortable with unemotional "trading by numbers." I don't see why it needs to be any more difficult than that.

Thanks.

EddieFl said...

"I'd like to see the DOW do the same "double tity" and then drop to the very low 10,000's"

pb are you expecting 1000 point drop in the Dow? You must be seriously short, basically we need to go into a recession,this country needs to go to shit for your shorts to work. wow, I have heard it all now.

anonymous, 50k may be too small to go full time, even a valid sytem will have draw-downs, where your capital goes down, say 10% of its original value, only to come back and make profits later. Its a bit too hectic to try to pull income from it while this is happening. IMHO...
Either way good luck.

If we go higher tomorrow, probably tighten my stops on the Long positions.

Anonymous said...

any ETFs that track the TRAN$?

darcy said...

eddie fl
I think that pb is probably off in his hope that we will get to DOW 10000, it will be much lower by year end.
And you eddie are probably off on your hope for the DOW. You must be reading different papers than some of us MEGA bears.
recession yes
depression probably
deflation more probable still
country going for shit
ALREADY HAPPENED

read the reports

IMHO

C'MON DOW 8000

Anonymous said...

im looking for some insight on hum. my short pos. stopped out today. Is it crazy to short again and hope for a correction. im also looking at pcu, can this thing keep going to the moon?? Thanks for any help and good luck to all. Former bull , bear wanna be

Volvosan said...

the market seems artificially propped up to me. whether it's banks, hedge funds, or whatever that are doing all this buying (it could just be a short term phenomenon - after all a typical fund manager is required to maintain a fixed percentage of his/her assets under management in equities, and many have been holding excess cash. I can't imagine there are a lot of retail investors opening new long postions - the sting of the recent selloff has left its emotional scars. When you combine this dirth of retail interest with the unbelievably negative reactions recently to GOOD earnings reports (if these earnings are so strong, as CNBC would have us believe, I'd like to see what a BAD earnings season would unleash), this market is clearly headed for more downward correction. Hold onto to your seats, because next Tuesday could start the ball rolling quickly downhill!!

bill said...

Eddie, any insight into the afternoon!

I am still worried about this move and any down day on friday as people state might happen due to the jobs report might be a precursor to what will happen next week. im expecting possible 2%-3% correction into the weekend. could be wrong though.

dont read the rest its has nothing to do with the market.

oh and where is that guy with no name that wanted to ignore the jobs report and the fed decision and the market leadership, and the sector movement, because the market was "rallying" today and that i should just trade what the market is doing and that it was rallying.(where was the follow through of the rally this afternoon?)

Well I thought that the market rally stunk in the morning when i posted, and you said that is should stop "imposing what i think "Should" happen and trade what is happening,and that i was funny and like your singing mother in law that you have to deal with, and that because of some morning markup and a break out of some highs (in only the S&P i might add, the DOW and NAZ kept under fridays highs, but he didnt think that was important by the personal direction of his argument toward me), we have direction.

then the market didn't have any follow through this afternoon (rally = follow through) Not to bad for someone like you mother in law,. Hey post a name and stand behind what you say so we can argue with each other, i can review different markets indications and post what I see minus sarcasm which you take literally, and then you can follow the price "only" and make it personal, it will be fun!

or you can stay "anonymous"

bsi87 said...

These markets remind of playing blackjack and the shoe isn't rich. Just reducing size of my bets, throwing my cards in, waiting for them to turn one way or another.

Anonymous said...

This blog is a real thigh slapper. Someone wrote:

"recession yes
depression probably
deflation more probable still"

We're heading for about 3% growth this year, should slow down more next, but recession? That's a bit premature, and deflation? I thought everyone was now worried about inflation? Depression? Huh? A piece of news for the bears to show how much the market has already discounted bad news:

If the S&P does no better than stay at current levels for the next 3 1/2 years, this decade will be the worst perfomance we've had since the decade of the great depression! That's how much bad news has already been priced in, and if you think this economy is anything like as bad as it was in the 1930s you're in serious denial.

So, what are the chances of another Great Depression? And remember even a flat market from here through 2010 would make for a comparable performance to the worst 10-year period in market history. What are the chances of that?

Irrational pessimism!

bill said...

"im looking for some insight on hum"

dont take my advice: but my opinion is that it is in a damn solid uptrend, coulped with some strong volume pushes over the last three days with follow through. there are a plethera of other stocks which should garner your short position instead. if anything, a low volume pullback after these three days on HUM would confirm the strength that stopped out your short position and may be an entry to go long. remember its a 52 week high Your loss on the short position may have been money paid for information.

jockgunter said...

It's not irrational to protect yourself against extreme market events. Check Mandelbrot's "Misbehaving Markets" (yes the inventor of fractal geometry) who demonstrates that catastrophic events happen MUCH more often than the presumed "normal distribution" would allow.

AND, extreme events wreak havoc on portfolios. Wall St. just calls them "outliers", disregards them, and keeps on selling !

BTW, the "normal distribution" underlies concepts of "standard deviation", "modern portfolio theory" and "value at risk" ....

So, ignore the extreme risks at your PERIL ...

Remember 1974, 1987, 2000, and think of the risks now confronting the markets ...

Bill said...

im also looking at pcu, can this thing keep going to the moon??

interesting chart, may fend off any correction in the overall market, todays action isnt exciting and I wouldnt buy it even if there was no FED or JOBS report looming in the horizon. and any decline in the major averages will take this stock down to 90 at least, whatch that level and any strong volume through that would dictate to me to consider closing the position out. dont take my advice

irrational pessimism said...

"who demonstrates that catastrophic events happen MUCH more often than the presumed "normal distribution" would allow."

Sure, no disagreement there, I'm just saying that if you take the 2000-2010 period and assume the market goes nowhere until 2010 then we would in fact have a catastrophic scenario in terms of market performance over that period.

"So, ignore the extreme risks at your PERIL .."

Erm what are the chances of having a Great Depression-like performance this decade? Sorry but the risk is heavily weighted against the shorts, so they are the ones who ignore it at their peril.

Anonymous said...

Re: PCU -- See my comments from the last blog on the bearish rising wedge currently forming. Unfortunately it is not confirmed by money flow. But it could be a good short if it breaks the wedge anyways.


Anyways, does anyone subscribe to www.stocktiming.com? There's some seriously interesting information there for sure. I find many of the indicators to be pretty good, actually. Suffice it to say that his indicators aren't pointing towards a sustained rally at this time.

I'd be interested to hear from anyone else who uses his service. Thanks.

-Tony

costas1966 said...

This is for anonymous who asked if it is possible to make $500 per week on $50,000. If you ask this question it means that you have minimum experience in trading therefore you will not be able to make that target of 1% per week. If we were in a bull market I would tell you yes it is possible. But in this type of enviroment no you won't make it.
The sad thing is that the only year when we had a real bull market going was 2003 while the rest of the decade sucked, with 3 years in a bear market and 3 years in a sideways market. So don't get your hopes up unless we get in a bull market and that won't happen until we get a decent decline in the markets, 20-30% off the highs.
Also I would tell you don't put all the $50,000 in the market start practicing and learning the game by deploying only $10,000.

Also it is a must that you buy these books
1. Technical analysis of stock trends by Edwards and Magee
(the bible of technical analysis with all the setups that you need to look in a stock)

2. How to make money in stocks by William O neil
A very good book that gets into technicals, fundamentals, the canslim method of screening stocks, how to detrmine general market direction.

3. Trading for a living by Elder.
Technicals and a lot of emphasis on the risk management aspect of the business which to me is the most important aspect.

4. Timing the trade by Tom O Brien
More of a short term oriented book that focuses on abc up and down formations and price and volume analysis.
(this one you need to buy it over his site at www.tfnn.com.)

I you read those books it does not mean that you will become a proffessional trader but at least it is a start. You will know what to look for in a stock and recognize setups. Then it will take you 3-4 years of practicing and I am saying that because you probably need 4 years to get into both cycles of the market, Bull and Bear. After that if you haven't quit by then. I will tell you it is possible to make 50% per year in the market but not every year unless we enter a secular bull market or you get into options which is a different ball game, You need to get just the plain stock trading experience first and then mess with derrivatives.

cristri25 said...

AUG 8th is a crap shot ... long or short. Honestly I feel the FED always makes nice and sends the market up 200 irrational points. It a real bummer being a bear. I am what I am . A bear.

Look, the FED and the PPT are working hard these days. Pleanty of strange 200 plus up days in a short period of time. Low volume high volatility. It either range bound, gonna break higher or just do nothing. Tough tape.

EddieFl said...

Bill, yea some selloff at the end of the day. I'm thinking they are kinda hesitant staying long over night and they are not buying in full force. But the SP500 did have a good voulme day. It's not the perfect rally day with high volume and all, but I'll take it. If we go higher tomorrow, I'll be moving up stops,I really dont try to predict I just watch my indicators and system.

Darcy they just raised interest rates 17 quarter in a row!!, to keep us from inflation, not deflation.... and Depression and DOW 8000, c'mon you cant really believe that or want that either.

Somebody brought up "inventor of fractal geometry" oh man we are getting deep here.

We'll do it again tomorrow.

Mark said...

Wake me up when the market decides to move in a direction. I have no real interest of being a day-trader.

It feels like the market is going to float, bobbing up and down, for a while longer... I mean, I'm cleaning up some trend lines, that is how bored I am...

Oh, thanks Costas for the reading material! :)

I plan on spending at least a year paper-trading. I seem to have a solid grasp of this market, and even pretty good at options with what little I know. But there is only so much that raw talent can do, and only a fool thinks he/she knows everything there is to know about a subject.


I'd like to take another moment to thank all y'all, specifically Costas1966, Tony, Hurricane5, bsi87, pb, cristi25, and others I can't remember off the top of my head, for the insight and putting up with my noob thoughts about the market.

Of course, I must thank Tim for putting up this blog, pulling together the team that created an awesome charting program, and his thoughts too.

Anonymous said...

Tony -

I read the free daily updates for stocktiming.com, I don't get the paid service, but yes the commentary is different then anything else out there.

Like the $TICK for example, it warrants more research to see if it worthy enough to be incorporated into my system. which is generally swing trading 1-5 days moves.

Looking forward to the fireworks in either direction on friday and tuesday, I love FED week it's a free trade everytime.

- Marc in Asheville

Anonymous said...

"I have a pretty decent handle on the market. While I'm not right all the time, I make my share of correct calls.

I have about $50k to play with. Do y'all think it's possible to gross $500 per week (1%) on average by trading?"



I presume you know the technical aspects of entering and exiting trades, since you "have a pretty decent handle on the market." There are different strategies of trading: day, swing, complex options, etc.

What has been working for me is playing verticals or iron condors on SPX. I usually aim for a $2.00 credit on a $10 margin spread, so a 20% on margin, but I use only 50% of my assets. Depends on your broker, I aim for $3.50 total on IC with $10 margin, so 35% return on margin. This then gives me around 17% on total assets: my monthly goal. The other 50% of assets is for defense and other opportunities.

This is more aggressive than most SPX IC players, but I time my entries: OTM Bear Call when reaching over-bought area, and OTM Bull Put at the over-sold. Study the support/resistance lines., fib, etc. Of course SPX can play havoc on your put spreads, so have a good pulse on the sentiment.

Conservatively, if you aim for 5% return a month (just Calls vertical), 50K would give you $2.5K/month, which is roughly $600/week. It is quite achievable. I am doing it at 15+ percent a month, so I am happy.

Before I used think about what I can make in a day, or in a week. This is more manageable for me: my monthly income strategy.

Good Luck!!

PB said...

to anon wanting to make $500 a week with $50K --- if your good you can do that DAILY! (averaged out)
Try your hand at the mini-dow futures ($5) 1 or 2 contracts at a time. With $50k you'll hv plenty of margin to ride out any wrong bets in this sideways market. The upside is capped, so it's the short end that you want to play at this point. Good luck and keep reading anything and everything!

PB said...

eddiefl -- if the slide in the transports was possible, why would you not think that half the magnitude is possible on the DOW? Periods of low volatility lead to periods of high volatility. While it'd be nice to get that 1000 in a day, i'll settle for a week!

P.S. Tide is on sale! You might need the extra-strength to remove those nasty bull-shit stains!

north of 49 said...

XAU..you are my nemisis. The market as a whole seems to be anticpating a Fall season run to Gold. Was hoping for a more perfect head and shoulders, sure looks good on paper.....there is still hope, but the stochs need to run their course. imo

Finish that book Tim!

Anonymous said...

To $50K,

I am new to trading. I signed up with InvesTools' (the people that bought out Tim Knight's Prophet charts--InvesTools.com) education program on Feb 17. I studied hard for a couple months and started trading both Calls and Puts on May 15. The first month I tried all the stuff they tell you NOT to do and lost 20% of my initial account. Since then I have gotten serious about trading--I have clearly defined rules for a trading system. My system is entirely based on intraday technicals (Tim, need anyone to proof your book?--I have experience!) I typically trade deep in the money options that I put about $20k on average into a single trade. I am very particular about which trades I take and let most of them pass by as an observer. My current win rate is over 60% of the time and am netting better than $1,000 per week on average in real not virtual dollars. My average trade is about an hour in duration.

Many who read this will think I am totally off my rocker but I know several people who started learning to trade options at the same time I did who pull in a couple grand a week with smaller positions than I trade.

As for the $50k part, I would personally invest a chuck of that into an education with InvesTools and paper trade until you know that you can consistently make profitable paper trades before trading real cash.

As for paper vs. real - there was definately a difference for me between trading real and virtual. I think that it is worth trading very small postions with real money (5-10 shares or 1-2 options contracts) just because the psychology is so different. Don't worry about making a profit after commissions because the commissions will eat all of the profit on a small position. Just focus on the gross profit/loss of the trade then extrapolate what your NET profit/loss would have been with a larger position. It is better to learn trading small positions and lose small amounts so that you have money to trade another day than to get too agressive and blow the wad on a couple "plays."

Just sign me,

Trader In Training

Anonymous said...

Please, do worry about commissions! Use Interactive Brokers for dirt cheap commish, this is the only place I know of with the breadth of products that will let you 'forget' about commish. By the way paper and REAL trading are quite different. When there is real money on the line, your mind works VERY differently, and bringing your rational mind out to work will be the hardest thing to learn, at least it was for me.

-Frank

Anonymous said...

Tim and readers,

Is the U.S. drowing in debt to the point of bankruptcy? The Federal Reserve seems to think so.... unless drastic changes are made in policy.

http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf

- Marc

PB said...

Hey all you AAPL lovers! This stock has a nice gap to fill down to at least $55. Yes, it might go to $71-$72, but then you can go have a nice bear feast! I wld actually start munching away on some puts right here and add to it if they go on sale.

EddieFl said...

Ok, its a miracle, stop the press, call the papers!! I am actually agreeing with PB.

AAPL, is way over-extended, its gone vetical recently. Its gonna give back some fo the ground,when the market gets weakness. Some shorting here is a low risk trade.

LIke Tim, said the IPODS cant hold that stock up alone. Getting short with stops above 72.5-73.00, Look good. Depending on how we do today, I may get in short.

pb, not sure when this may happen again, that we agree,, hahah,

Anonymous said...

eddie, stops at $73 would be more than a 7% loss. What's the downside from $68, maybe $60? That's not even a 2:1 r/r. Would you really make that trade?

Just curious.

EddieFl said...

Anonymous, if you want 2:1 ratio, move your stop to 72.00. lose 4 points or make 8 if it goes to 60.

2:1 ratio is great, if you can get it these days, like I said wait to see how today pans out.

I thinks its a good short candidate./

marhattan said...

the futures are trading down 6.5 on the S&P. Doesn't look good for the Bulls today. The bank of england raised rates and the world indices are down across the board, generally speaking... FYI. I'll be suprised if it doesn't go down by alot today... Of course, lately, i've been surprised more than once...

Anonymous said...

I wouldn't be surprised if the markets held today. For some reason, the selloff just does not seem to be coming.

Anonymous said...

agreed ... we should at least get a gap close today even if we are getting into a new sell off

Anonymous said...

I'm telling you, the bulls are very very persistent. Every index shows a HUGE pre-market negative bias, yet aside from a sharply lower open, it's been all uphill from there.

I wouldn't be surprised to see the indices in the green today.

This market is starting to act like it did back in May when we were seeing the Dow down 150 points at one point in the day only to close in the GREEN by 10 points.

Very strange.

-Tony

Anonymous said...

Well, just like I said, there goes AAPL up past $69. The markets are going nuts.

AAPL makes a deal with 2 of the world's worst automakers and the stock jumps up over 1% in 30 minutes of trading.

The Dow starts down 50 points and now it's only down 20 points in 30 minutes of trading.

My head hurts.

marhattan said...

it's true... how much of the irrational 'turn arounds' do you think are being artificially created by banks/fed? It's an idea that really intrigues me... I read Bill Cara's bit, he said "I had a sense that the large cap stocks (Dow 30 and S&P 500) were being juiced, let's say by parties acting in concert. But whenever the big Nasdaq stocks looked like they wanted to go into a free-fall, the trading on the NYSE seemed to prop them up"

other than trying to sucker more buying, why would they do this? If they are buying to create the 'rally' don't they eventually have to sell? big? bigger than they would have before 'juicing the markets'? Won't this ultimately lead to their own downfall? Of course, that's been suggested recently too, that the US banks are looking at bankruptcy... lending too much money at/below prime rate.

not to be political, but i get the feeling there's an economic crash coming, is it possible they're trying to postpone the slaughter until a new president steps in? or is that overly cynical? It wouldn't be the first time something like that has happened...

anyone have any insights/ideas?

Sanjay Sola said...

more fundamental events to consider with Bank of England and Japan raising rates. Australia is at 6%. Also Thailand's growth is slowing.

More market leader breakdowns this week: Garmin, Google, Whole Foods, and Starbux. They are going after the high end stocks.

Underneath this trading range is the market machine at work. there's still a correction going on while we're sideways.

CowboyTrader said...

Great call on HANS, just the beginning of a breakdown on this stock. Agree on AAPL with PB, I still think we go to 1293-1296 on the s&p before a breakdown, the problem is when this will happen?

Anonymous said...

Wow, this market is killing me. Got crushed on several shorts today. I had them set up nicely yesterday and was looking at nice pre-market gains on a number of them, but the turnaround today just killed me.

The Dow has basically gone green on the day. Go figure that one out. I wouldn't be surprised if there was a lot of juicing going on by the banking system. And if you bother to watch the news (CNBC, etc.), all you see are the talking heads spouting nonsense about how great the economy is and how the numbers "aren't that bad." They're really trying very, very hard to keep the market up.

Back in May and June, all you saw were talking heads predicting a recession, gold going to $2000, etc. Now they've jumped right back on the bandwagon and are talking about great earnings and solid future growth.

Unreal.

darcy said...

Good morning all
eddie-
before we discuss the rationality of DOW 8000, let's try to agree on a few parameters before we start the ( logic ? ) that I use to get there.

Anybody that can help with charts ( TIM )or other pertinent info is welcome and appreciated

parameters
1) fib retracements work- especially in indexes
2) common fib retracements are 38%, 50%, 62%, and 78%
( but even 30% from the high of 11720 gets us to 8200 DOW )
3) then we must agree the starting point of the bull market ( we already know where the end of it was

I am hoping that this discussion will be joined by people smarter than us ( so we don't digress to ridiculing each other )

seeing as you challanged my DOW 8000 I will start upon our agreement on parameters

let me know
Darcy

this should be fun

Thank you Tim for this blog

Sanjay Sola said...

I finally shorted Hans.

the stock has made its move below the 50 day average and falling on volume now.

it's game over for the market. the big move is about to occur soon. just gotta be patient.

Anonymous said...

i dont get it.

EddieFl said...

oh lord, I must of hit a nerve. Darcy. I feel like i just sat down at the table with my mother-in law, I would love to get into it with you, but I dont use Fibs.

I simplified to momemtum, volume and price action. Sorry cant help you in that regard.

We closed the gap down on the DOW, lets see if we get some follow throuhg.

Anonymous said...

"it's game over for the market. the big move is about to occur soon. just gotta be patient. "

dow just went green. wtf.

Anonymous said...

Honestly, I don't think you'll see clearer evidence of corruption and manipulation in the markets than what we're seeing today.

There is just absolutely no reason for the market to be 20 points in the green after a -52 point start today. Absolutely none.

The liquidity faucet has been turned on full blast. I'm not really sure if we can even expect a serious decline under these circumstances. Maybe the best bet is just to go long and keep buying? Someone has obviously put some "buying insurance" under the market lately.

I think I'll go long today. Hey, it's just likely to make me money as going short in this market.

Total BS.

-Tony

marhattan said...

How can we be going up with this: NASDAQ Dec/Adv/Vol 1730/946/510 mln NYSE Dec/Adv/Vol 1852/1081/502 mln

darcy said...

eddie, You must have a lovely mother-in-law, you refer to her often.
the reason for parameters is to remove OPINION
your momemtum, volume and price action is all relative(no reference to siblings) and they will change to the type of market we are in
to say you don't use fibs is a slur to the fine man that runs this blog.
to believe that the market always goes up is contemptible on so many levels
as referenced earlier,
Remember 1974, 1987, 2000, and think of the risks now confronting the markets ...
1974 42% retracement
1987 38% retracement
2000 37% retracement

Anonymous said...

be patient bears ... there's no need for concern unless the sp500 manage a close above the 100 dma on strong volume

Anonymous said...

Now we get to see if this market is serious about moving higher or if its wad has already been shot just closing the gap this morning

downosedive said...

What we are seeing today is the most extreme degree of isolationism and indeed 'arrogance' when the worlds leadings markets ignore no less than two separate rate increases today in Europe. Basically if the US markets cant see the obvious corrolation between the upwards movements worldwide in rates, then it really will 'be dammed and hanged' at some stage soon and the fall will be that much sharper than if previous adjustment to account for that had already taken place. The fact is very little economic reality is reflected in the DJA at current levels. No matter who or how those bulls try, this rally will end. As to manipulating the markets, that is being led by your share dealers, who are able to drive invidual share spreads up or down as they see fit, based on little or no volume if they so choose. Here in the UK, our equivalents are called 'market makers', they actually wholesale trade the shares and try and pre empt which way they think the prices will go, or actually try and generate busines by deliberately marking share prices up or down as they feel like. Seems your markets are basically operating the same way.

Sanjay Sola said...

it amazes me that Apple has made a 20 point move in a few weeks. I don't believe that it's ever made a 20 point move this quickly in its entire history.

Apple probably added $16 billion in market cap in 2 weeks. if Apple sold 50 million Ipods at $300 in 2 weeks, they would still be a billion shy of that market cap addition.

so i shorted Apple at $69.20. let's see if i'm right and this falls on Monday after their conference.

bsi87 said...

Definitely a tougher market to trade. I added to my OIH short yesterday but it was rallying up to resistance at 150. It didn't feel like that was the trade but the volume was declining as it moved up. Added my gold short as it hit the resistance line from the 720 top. Again, that didn't feel like the right trade but volume was declining. Now the questions are: 1) whether OIH will break and close below the 130 neckline on heavy volume or will it bounce back to the overhead resistance line? and 2) will gold break below support in the symmetrical triangle around 62 bucks? If that happens, it measures way down there.

The Money Honey was on the Today Show this morning. She assured her audience that there would be no recession. LOL.

I find that with the volatility, it's easier to use the Powershares ETF to put on short positions. Each his own.

I think we're seeing that struggle between bulls/bears so we get quick bouts of profit taking at both ends especially since it seems like most stocks are non trending now, using the ADX.

I'm reducing my position sizes.

Anonymous said...

This maket makes me mad.

lol

Anonymous said...

First off, I just want to say:

Dow UP 46 points?!?!?!?! HAHAHAHAAHAHA!!!

Ok, now.

Sanjay, I just saw a pretty huge pump on CNBC for the GM/Ford Apple iPod deal. Looks like AAPL is moving up again as a result.

You might consider covering and waiting for a better price to short. AAPL could see $72 by the time the WWDC comes around on Monday. If the news coming out of WWDC isn't spectacular, you could see a huge selloff.

bsi: let me know when you think it's safe to go back in the water. I took a bit of a beating this morning on some shorts.

-Tony

Anonymous said...

when this baby falls, EVERYONE is going to be surprised by the velocity of the fall

not much higher I would think

11257 - 11300

Anonymous said...

One sick Market

insane

downosedive said...

At 10.32pm yesterday I posted a prediction on yesterdays close, I was exactly correct. At that same time I posted a prediction on todays close, currently I am curently on target with 2.5 hours top go. At that same time I posted a prediction for Fridays trading pattern, but didnt link it to a closing number. I stand by that prediction. If Im correct then.......

EddieFl said...

We are getting some follow through from yesterday on the long side for any of the bulls out there, if there are any on this board.

As we said yesterday if we finish strong, Im going to move up the stops on my longs.

The goal was and is SP500 @ 1300.00, I still think we hit, not much left to get there.

Anonymous said...

Ok I'm 90% cash.... right now. Patience is a virtue for any bears here. THis is a very risky time. I know that the overall direction of the market is going to be down....lets see what happens.... if the market keeps going up today. I will load up the boat later today......

IWM, SPY, DIA, QQQQ Puts.....

I don't understand how everything is flying up....based on data, fundamentals, economy, risks..... this is insane.....

Anonymous said...

There simply is too much money chasing too few opportunies out there. The WORLD is floated with liqudity.

PB said...

who the fukk in their right mind is buying the DOW today?? This bitch just won't give up.

WE NEED A CRASH ASAP!!!

marhattan said...

are we just being stubborn in thinking the markets are going to go down? or has the nation gone crazy buying on the worst economic outlook that I can remember (I'm only 32)?

i think the fact that forces behind the markets are fighting so hard to keep it up gives me a much scarier impression of where the overall economy is going. The scenario makes me ask the question: would they fight so hard against the downturn if it weren't going to be significant?

i'm a physicist and not only do the statistics not add up, I have to believe that the principle of reciprocity will sooner or later come into play... the harder they push to keep it up, the harder it's going to fall.

it may be good for us bears when the market does fall, but if it's too bad, who of us is going to party when the economy is crumbling down around us and people are suffering? i don't like being a doomsdayer, but something doesn't smell right... and it's not just because my puts look like cr@p today...

Anonymous said...

Everyone is front running or covering ahead of the fed meeting. We all know what happened in the last meeting.

Anonymous said...

Once again, my age-old statement still holds true:

The markets are the most efficient vehicles for taking money from the most people and distributing it into the hands of the fewest people.


Today is a prime example of that. Let's face it. We're back in 1995. Liquidity is pushing EVERY market up and up. More pension money, more 401k money, etc. That money MUST be invested into the markets, regardless of future outlook.

The mass media has convinced people that they need to keep pumping money into the markets. If the price drops, buy more! Week after week, month after month, retirement plans continue to receive HUGE inflows of liquidity that needs to be invested. And it will be invested, regardless of the economic or global outlook.

Until the markets get to ridiculous levels (re: 2001), I'm starting to suspect that we won't see a real bear market show up for a long, long time.

costas1966 said...

Market will top when most of the shorts cover. We are almost there.
Now all we need is Tim to start covering some of his positions and we will be ready to go.

Tim just kidding.

bsi87 said...

Man, volume sucks but it looks like they're gunning the buy stops this afternoon.

Like I said, I'm trading smaller positions on the long side.

Anonymous said...

for christ's sake Tim, would you cover and then enter again later,

Anonymous said...

Volume is the highest it's been all week.

Volume on the upside is very high.

I don't see anything bearish about this action whatsoever. Maybe the 1:45 PM action will change things around as some of the margin players are forced. I'm starting to see some volume pick up on the downside, but not a heck of a lot.

bsi87 said...

re: Volume. Nope.

Take the current volume and divide by hours of trading so far and then multiply by 6.5 to get the run rate for the day. Right now the NYSE is showing a run rate 2.080. Yesterday was 2.77. To show a true breakout, you need to see the average close 1% or higher AND volume greater than preceding day. That hasn't happened for some time. And then day 4 thru 10, another similar pattern to confirm that the institutions are playing. Right now we're just playing.

EddieFl said...

Dow and Nasdaq have ripping higher since the open.

bsi87, Hitting Stops on the shorts is right.

I think today we rally into the close, opposite of yesterday. We got people taking long positions now.

This isnt postive for shorts, imho,not being a smart ass, i know we are talking real money in this forum, adhere to your stops. Live to trade another day.

Anonymous said...

I plan to 'Dollar Cost Average' DXD, QID, SDS. Hoping people will come to senses one day!

Anonymous said...

NAZ knocking on 2100!!

Anonymous said...

I agree eddie. You MUST stick to your stops. You cannot afford to simply say, "I'll let my short ride. It just HAS to go down tomorrow!"

If you set your stops correctly (at resistance or support levels with some margin for error), then if the trade goes against you, THEN EXIT! Don't try to "out-think" this whacky market.

This morning, the news was all bad. Futures were down HUGE across the board. Naz futures were down 13.0 fair value. Seemed like a great day to be a bear.

We all know what happened after that.

The market is being manipulated, plain and simple. Trade the swings, use your stops, but don't fight the market. I couldn't even IMAGINE a better opening setup for bears today. Yet the bears got crushed for pretty much no reason at all.

Good luck. Take your lumps if you get on the wrong side of the trade. But don't be stubborn about your losses -- they could wind up to be HUGE before you know it.

-Tony

bsi87 said...

eddie

Yup, I don't know what "they" are trying to do. Cover shorts ahead of the jobs report, go long, not much conviction it doesn't appear. It's one thing to be wrong, another to stay wrong.

Tony: I'm stopped out of all short positions except gold and oil shorts. I'd need to see the VXN around 18-19 and reverse, VIX around 12 and reverse.

My bond long is working.

re: Dollar cost. Good luck. better to average up as the position works with you instead of averaging down.

Anonymous said...

Alrighty... as I said earlier... I'm getting ready to do some put shopping-maybe I will wait until tomorrow morning. QQQQ, DIA, IWM....

EddieFl said...

Tony, so very true, every word just posted.

Every tick that goes against you, account gets smaller and smaller you can rationalize all you want, but your account balance is less and less by the hour. HIT YOUR STOPS AND GET OUT, while your sitting in cash, rationalize and talk geo-economic principles, the banana index,, etc.. all you want.

I only say this becasue I have been there before. The discipline I have now took a long time and cost me serious $$$ by not adhering to stops. That is one road that I wont be going down again.

By the way the Nasdaq is on a tear to the upside, picking up volume.

Anonymous said...

Bsi: I've been stopped out of a few shorts for very small gains, and a few others for moderate losses.

The losses came only because I didn't take my 1-2% gain when I had the chance and it turned into a 0.5-1% loss instead.

Such is life.

-Tony

Anonymous said...

eddie: I entered a short on AAPL yesterday near the high after the double top at $68.68. Wound up NOT taking my gain pre-market at $67.40 (because of the beautiful bearish setup this morning) and watched in horror as it hit my stops above resistance at $68.80 and steamroll all the way to $70.

I'd be sitting on a bigger loss right now and also be quite worried about more momentum tomorrow and possibly even going into the WWDC on Monday if I didn't have the discipline.

Set your stops. Let them get taken out if you have to. But don't be stubborn.

-Tony

call-sign maverick said...

Welcome to the top! Only down from here - go back and look at any dia, spy, qqqq chart around pivotal events (like tomorrow & next Tuesday) and you will see, time & again, these types of sucker/institutionally driven run-ups.

costas1966 said...

Tony is right about keeping stops and keeping losses small.

As for the market they are stretching the limits right now. I see a lot of exitement from the long and a lot of nervousness fro the shorts. We are getting close.

I still think the FOMC will market the top. I have this suspission they will break those upper resistance areas that day and they will top the market the same day with a reversal.

Anonymous said...

The U.S. State Department saying it hopes for a U.N. resolution on ending Mideast violence by Friday

bsi87 said...

Toss a bid in for some SDS. This reversal below 11,245 is too much for me.

costas1966 said...

A Doji today on the S&P 500 right at resistance. That is a bearish candle. The fact that they could not hold the highs is another bearish sign. lers see what happens. I think side ways until Fomc then they top it with a shooting star.

Anonymous said...

WTF. another up day. im gonna barf.

Anonymous said...

Anon at 1:14,

don't barf, load up on DXD, SDS, and QID.

These ass-holes cannot defy logic forever.

Anonymous said...

Oh, My! People sure are using some colorful languages.

bsi87 said...

re: Volume/price.

1) The volumes on the NYSE/Naz were both below yesterday's figures. So the volume didn't meet the criteria for a breakout.
2) Price action. None of the averages were higher than .65% so we didn't get the 1% or better. Didn't meet the criteria either.

Looks like a lotta cross winds and not much direction.