Things fall down.
People look up.
And when it rains, it pours.
First off, since my blog is suddenly so popular, a public service announcement: buy my book! Honestly, if you like charts, you'll love my book. And if you use the Investor Toolbox, you have got to get it - - it's the only way to become a ProphetCharts expert! Anyway......
Wow, no comments on how obnoxious yesterday's post was! I guess people have come to expect it. But that video was a kick, eh?
I woke up this morning - just like Tuesday morning - to a beautiful site. The GLOBEX totally smashed in by bearish action in China:
It was thrilling for a little while. The Dow plunged another 200 points. I watched my index puts (which I had stupidly sold Tuesday morning) move from $211,000 in "coulda" profit to almost $300,000. Ouch. Always nasty to see what could have been. The indexes were on a wild ride all day, at times even moving into positive territory. In the end, things were generally down a little.
I hate to say it, but I think it's more likely Friday is up than down. There are a couple of reasons. First, today's action was largely a freak-out session based on Tuesday jitters. Second, there are candlesticks all over the place - some of them gigantic. And third, people are talking bear talk now - - - it's best to maul bulls when they are not looking. That isn't the case now. The $VIX has exploded higher. (N00B alert: click on any chart to see a big version.)
A longer term look at the S&P shows how it could easily move back up to the underbelly of that broken trendline. At that point, it would be like shooting fish (or bulls) in a barrel. As it is now, I'm nervous.
It remains to be seen, but if we do sell off tomorrow, the Russell will have already accomplished its mission of pulling back to its own trendline. This is the only index on which I own puts right now. Puts are relatively expensive now, versus last week, because premiums have understandably exploded higher. So I'm afraid buying puts now is much riskier than just a week ago.
Just look at the candlestick on today's $TRAN action (wow, that sounds like something that would happen on a Castro street corner).
If we rally, the $XMI should do well. Look at not only the candlestick but also how nicely the prices have pulled back down to that former major breakout point (the horizontal line).
I bought some more CME puts today. It seems to me it has pulled back to resistance. I'd put a stop of $552 on these.
Here's a longer-term look at the same stock.
PICO, which I only just stumbled across today, has the makings of a good bullish pick.
I was really ticked this morning when I saw the NZD. I was short the currency. And it had plummeted overnight. So why I was upset, then? Because I had been stopped out on a margin requirement. See, this is something I hate about FX trading. It is so highly leveraged, it is very easy to get a margin call, and the broker will sell every single position you've got. So if you have a ten cent margin call, blammo, your entire account is closed out to cash. So I missed out on a huge move.
Just look at QID. Can you believe a security that started off with just over 100,000 shares traded in a day is now trading close to 20 million? What a success story!
RAI has formed a beautiful dome topping pattern.
And old favorite SHLD, my only bullish position, sported a nice candlestick today whose low met resistance. A stop on $172.49 is good for this one.
Friday should be really interesting, particularly since the weekend is upon us. If people are really shell-shocked and nervous, and they don't want to live through a weekend of uncertainty, maybe we'll get some downward pressure. But don't call me permabear if the market rallies tomorrow. I would say it's better than even odds on a good rally, in which case we'll have to sit things out until prices (and premiums) get reasonable again.
Thursday, March 01, 2007
Things fall down.