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.
59 comments:
Im watching IYT. Think it may head back to $82+
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
"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 $500/wk to pay the the bills forget about it.
Also, paper trading is completely different from trading with real money(especially money you can't afford to lose).
I appreciate your opinion, but don't find it very informative.
Can you be more specific about why I should "forget about it?"
Also, why is paper trading "completely different" than trading real money? I thought the whole purpose of unemotional trading was to make it a numbers game, not an emotional do-or-die situation?
I am completely comfortable with unemotional "trading by numbers." I don't see why it needs to be any more difficult than that.
Thanks.
any ETFs that track the TRAN$?
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
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
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"
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!
"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.
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
"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.
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
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.
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
"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!!
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!
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
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
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
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.
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...
I wouldn't be surprised if the markets held today. For some reason, the selloff just does not seem to be coming.
agreed ... we should at least get a gap close today even if we are getting into a new sell off
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
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.
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?
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.
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
i dont get it.
"it's game over for the market. the big move is about to occur soon. just gotta be patient. "
dow just went green. wtf.
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
How can we be going up with this: NASDAQ Dec/Adv/Vol 1730/946/510 mln NYSE Dec/Adv/Vol 1852/1081/502 mln
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
be patient bears ... there's no need for concern unless the sp500 manage a close above the 100 dma on strong volume
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
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.
This maket makes me mad.
lol
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
when this baby falls, EVERYONE is going to be surprised by the velocity of the fall
not much higher I would think
11257 - 11300
One sick Market
insane
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.......
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.....
There simply is too much money chasing too few opportunies out there. The WORLD is floated with liqudity.
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...
Everyone is front running or covering ahead of the fed meeting. We all know what happened in the last meeting.
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.
for christ's sake Tim, would you cover and then enter again later,
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.
I plan to 'Dollar Cost Average' DXD, QID, SDS. Hoping people will come to senses one day!
NAZ knocking on 2100!!
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
Alrighty... as I said earlier... I'm getting ready to do some put shopping-maybe I will wait until tomorrow morning. QQQQ, DIA, IWM....
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
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
The U.S. State Department saying it hopes for a U.N. resolution on ending Mideast violence by Friday
WTF. another up day. im gonna barf.
Anon at 1:14,
don't barf, load up on DXD, SDS, and QID.
These ass-holes cannot defy logic forever.
Oh, My! People sure are using some colorful languages.
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