The Financial Times shows how the US government dishes out our money and where the recipients send it.
Citigroup dished out over 5 billion dollars in bonuses from the 45 billion received. JP Morgan gave out 8.69 billion of 25 billion received. Can we claim JPM as a dependent?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Friday, July 31, 2009
Anatomy of a Chart: The SP500
Click chart to ENLARGE.
Many elements contribute to our success, including:
Here's the SP500 (daily)
The biggest 'concern' I have now is the intersection between "career risk" with underinvested managers needing exposure and technical overvaluation. If you want exposure and controlled risk, then (for me anyway) in a lower volatility environment that means call options. Hedging techniques like buying SPY calls and VIX calls don't excite me because of the high cost on the VIX calls. SPY puts seem better IF one is highly bearish. At least if the position blows up in your face, the losses are "managed".
For example, the SPY closed at 98.91. Let's say you think that the SPY is coming back to 93. If you're wrong and you buy 1000 SPY at 98.91 and the SPY rallies next week to 104 (it could happen, then you are down over 5000 dollars.
The last Sep 98 put price was 3.65. If you bought 10 puts and assume with the price rise and time passage (estimated using an option pricing calculator)...your 3650 turns into 1270, minus 2380, less than half the loss of your outright short.
If price falls to 96, you are ahead 2.81 (2810) and if volatility increased to 27, then your puts increase to about 4.3. The key factor is volatility. If price falls to 95 and volatility is 27, your puts still are only 4.87. But if volatility rises to 30 (probably NOT happening based on recent volatility) the puts go to 5.25. So we really need to think very hard not only about pricing, time decay, and very critically about volatility.
Monitoring the VIX becomes mandatory not optional. We see some "VIX creep" even for a Friday (normally the VIX falls on Friday as weekend time decay comes into play).
So the trader needs peripheral vision, assessing bond prices, the dollar, volatility, breadth, sector action, credit markets, and more.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Many elements contribute to our success, including:
- Proper analysis of market structure
- Adherence to good trading principles
Here's the SP500 (daily)- The 'across the room' view is up...price, upsloping moving averages, new highs
- Support is shown with the green horizontal line
- The longer-term trendline slopes up and price has "thrown back" to that trendline
- The Landry "Bow Tie" cross (modified) is shown...without a pullback. Dave has commented about the 'strength' shown when the 10 period average (black) crosses up sharply through the 50 as shown here.
- Pascal Willain has called the 50 period moving average "value"...I don't know of any average that has remained forever above or below "value".
The biggest 'concern' I have now is the intersection between "career risk" with underinvested managers needing exposure and technical overvaluation. If you want exposure and controlled risk, then (for me anyway) in a lower volatility environment that means call options. Hedging techniques like buying SPY calls and VIX calls don't excite me because of the high cost on the VIX calls. SPY puts seem better IF one is highly bearish. At least if the position blows up in your face, the losses are "managed".
For example, the SPY closed at 98.91. Let's say you think that the SPY is coming back to 93. If you're wrong and you buy 1000 SPY at 98.91 and the SPY rallies next week to 104 (it could happen, then you are down over 5000 dollars.
The last Sep 98 put price was 3.65. If you bought 10 puts and assume with the price rise and time passage (estimated using an option pricing calculator)...your 3650 turns into 1270, minus 2380, less than half the loss of your outright short.
If price falls to 96, you are ahead 2.81 (2810) and if volatility increased to 27, then your puts increase to about 4.3. The key factor is volatility. If price falls to 95 and volatility is 27, your puts still are only 4.87. But if volatility rises to 30 (probably NOT happening based on recent volatility) the puts go to 5.25. So we really need to think very hard not only about pricing, time decay, and very critically about volatility.
Monitoring the VIX becomes mandatory not optional. We see some "VIX creep" even for a Friday (normally the VIX falls on Friday as weekend time decay comes into play).So the trader needs peripheral vision, assessing bond prices, the dollar, volatility, breadth, sector action, credit markets, and more.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Bonus Babies
Click charts to ENLARGE.
How can one not be relieved to know that over 4800 bank executives (from government aid recipients) received bonuses of at least one million dollars? That's fiscal stimulus with a capital '$'.
The final trading day of July went down without a bang or a whimper, which is more often than not the case. And when you figure in the 'first day of the month' factor coming Monday, the bulls leave with smiles on their faces.
The Dow Jones Industrials closed at their high for the year...
____________________________________________________________
Inside the numbers, 17 or 30 DJIA stocks closed above the open...although only 13 (not shown) finished in the top half of their daily range.
______________________________________________________________
Five DJIA stocks gained at least four percent on the week, led by BAC, followed by GE, AA, CAT, and UTX. Summer volume was overall light.
Thirteen stocks on the SP500 had volume increases of greater than or equal to 124 percent. Of these the top five volume leaders all saw declines, PKI, DNB, GENZ, PBI, and BDX.
Dynamics? Although not everyone agrees about the extent of the exuberance, we do see some ongoing bubblicious data, as less than 2 percent of SPX stocks are oversold by stochastics and about 92 percent of SPX stocks exceed their ten period moving average.
Multiple time frame analysis shows DIA above key moving averages (10, 20, 50) on the daily chart and above the 50 period average on the 30 minute chart.
____________________________________________________________
Breadth is overbought but hasn't yielded so far.
_________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
How can one not be relieved to know that over 4800 bank executives (from government aid recipients) received bonuses of at least one million dollars? That's fiscal stimulus with a capital '$'.
The final trading day of July went down without a bang or a whimper, which is more often than not the case. And when you figure in the 'first day of the month' factor coming Monday, the bulls leave with smiles on their faces.
The Dow Jones Industrials closed at their high for the year...____________________________________________________________
Inside the numbers, 17 or 30 DJIA stocks closed above the open...although only 13 (not shown) finished in the top half of their daily range.______________________________________________________________
Five DJIA stocks gained at least four percent on the week, led by BAC, followed by GE, AA, CAT, and UTX. Summer volume was overall light.
Thirteen stocks on the SP500 had volume increases of greater than or equal to 124 percent. Of these the top five volume leaders all saw declines, PKI, DNB, GENZ, PBI, and BDX.
Dynamics? Although not everyone agrees about the extent of the exuberance, we do see some ongoing bubblicious data, as less than 2 percent of SPX stocks are oversold by stochastics and about 92 percent of SPX stocks exceed their ten period moving average.
Multiple time frame analysis shows DIA above key moving averages (10, 20, 50) on the daily chart and above the 50 period average on the 30 minute chart.____________________________________________________________
Breadth is overbought but hasn't yielded so far._________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Bernstein on Bernanke
Can you handle the truth?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Screaming "Bye"
Click charts to ENLARGE.
Traders are dancing in the streets...
How do you use lists? You can use them for quality or quantity. Yesterday, we came in with an astonishing number of Gann "3 plus 2" pullback setups. Evidently that meant something good for the long side (the right stock at the right time). Any stock can be a "good" or a "bad" stock, depending on the relative supply and demand, for a given time.
The Amibroker daily screen for DeMark Sequential (tm) stocks is tiny today. Not helpful, just another data point.
__________________________________________
Al Farley writes about the RSI14 oversold as being a way to look at weekly vehicles that are oversold. Here's the ENTIRE list, which is mostly "invert" stocks. If we think in terms of market "structure" when nothing is oversold (or almost nothing), then one must say "hmm".
________________________________________________________
Michael Kahn says it another way, "When the pros call the public losers then then we've got a good sentiment indicator based on arrogance."
The volume king on the SPX yesterday was Akamai (AKAM)...I guess money flow said something was pending.
_______________________________________________________-
Similarly, I've heard Yahoo (YHOO) called a 'screaming buy". From what I can see, there must have been people screaming "bye".
____________________________________________________________
Last day of the month. The structural 'bias' (price and moving average patterns) is upward. Sentiment Trader chart says 'not so frothy'. The casino opens in less than three hours.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Traders are dancing in the streets...
How do you use lists? You can use them for quality or quantity. Yesterday, we came in with an astonishing number of Gann "3 plus 2" pullback setups. Evidently that meant something good for the long side (the right stock at the right time). Any stock can be a "good" or a "bad" stock, depending on the relative supply and demand, for a given time.
The Amibroker daily screen for DeMark Sequential (tm) stocks is tiny today. Not helpful, just another data point.__________________________________________
Al Farley writes about the RSI14 oversold as being a way to look at weekly vehicles that are oversold. Here's the ENTIRE list, which is mostly "invert" stocks. If we think in terms of market "structure" when nothing is oversold (or almost nothing), then one must say "hmm".________________________________________________________
Michael Kahn says it another way, "When the pros call the public losers then then we've got a good sentiment indicator based on arrogance."
The volume king on the SPX yesterday was Akamai (AKAM)...I guess money flow said something was pending._______________________________________________________-
Similarly, I've heard Yahoo (YHOO) called a 'screaming buy". From what I can see, there must have been people screaming "bye".____________________________________________________________
Last day of the month. The structural 'bias' (price and moving average patterns) is upward. Sentiment Trader chart says 'not so frothy'. The casino opens in less than three hours.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Thursday, July 30, 2009
CME
Click charts to ENLARGE.
Chicago Mercantile Exchange (CME)...the last 3 day chart was down with a "3 plus 2" pullback, but it's also at the point where a trend change can occur. Even Gann can't solve everything.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Chicago Mercantile Exchange (CME)...the last 3 day chart was down with a "3 plus 2" pullback, but it's also at the point where a trend change can occur. Even Gann can't solve everything.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Click charts to ENLARGE.
If nothing else, the market challenges our ability to understand psychology, the interplay among greed, hope, fear, denial, euphoria and more. Traders easily understand where sayings like "if you're crying you should be buying" arise.
Is it real or a chimera? Here's the 10 minute tells...
Top left to right: breadth, Goldman Sachs
Bottom: US dollar, Volatility Index...clearly they were not buying into the close.
_______________________________________________________________
Here's a multiple time frame chart of the SP500, daily (left), 30 minutes (center) and 2 minutes (right)...we see the explosive markup early, an extended distribution and late failure. We don't see this kind of Gap up, spike top, and low range close very often. I'd be lying if I thought this didn't mean a higher probability of gap fillage, with close below the open and low range close.
_________________________________________________________
On your six. Sixty minute time frame, SPDR Sectors
Top from left: XLB, XLE, XLF (will XLF break below the mid-day support?
Bottom from left: XLK, XLV, XLY
___________________________________________________________
It's only one day, but the late action might leave "new bulls" trapped, if continuation occurs. Conversely, others may say "the market 'lets me in'." Bull markets don't let you in, and bear markets don't let you out...
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
If nothing else, the market challenges our ability to understand psychology, the interplay among greed, hope, fear, denial, euphoria and more. Traders easily understand where sayings like "if you're crying you should be buying" arise.
Is it real or a chimera? Here's the 10 minute tells...Top left to right: breadth, Goldman Sachs
Bottom: US dollar, Volatility Index...clearly they were not buying into the close.
_______________________________________________________________
Here's a multiple time frame chart of the SP500, daily (left), 30 minutes (center) and 2 minutes (right)...we see the explosive markup early, an extended distribution and late failure. We don't see this kind of Gap up, spike top, and low range close very often. I'd be lying if I thought this didn't mean a higher probability of gap fillage, with close below the open and low range close._________________________________________________________
On your six. Sixty minute time frame, SPDR SectorsTop from left: XLB, XLE, XLF (will XLF break below the mid-day support?
Bottom from left: XLK, XLV, XLY
___________________________________________________________
It's only one day, but the late action might leave "new bulls" trapped, if continuation occurs. Conversely, others may say "the market 'lets me in'." Bull markets don't let you in, and bear markets don't let you out...
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Blue Bayou
It's all good; or is it?
The markets raced to an early lead, and have come in slightly, but the early animal spirits seem dampened if price...not so much.
I didn't come in short much (except for some TZA call hedges, that I gladly keep). The big boys haven't tired of the game of "what fundamentals?" yet.
- Breadth is solidly up over 3500 to the green
- The US dollar is down, but not out (double bottom support or Fed intervention or both)
- TBT isn't responding as though a bull market is here to stay
- Volatility is down
- Goldman Sachs is up
- In other words, the usual suspects move in the usual direction
In his most private moments, my guess is that Dr. Dollar Deflator would acknowledge that given a doubling of the money supply, that the expected result would be dollar deflation and price increase. But we'll never get that, well, until the memoirs.
My emphasis is on "doing it right" whether that means proper entry and exit or just staying out, and buying in 'mild times' and selling in 'wild times'.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
All About the Dollar
Click charts to ENLARGE.
Colin Twiggs shows us the US dollar channel in his blog.
xtrends gives us a view of Stock/Bond investor preference with a version of this chart.
__________________________________________
Mr. Bear (Tim Knight) pauses between dancing jigs at Slope of Hope. I'm guessing that Mrs. Bear took the photo, unless it was a computer cam.
_____________________________________________________________
Loads and loads of IDNR4 (inside day, narrowest range of four, historical volatility contraction) price expansion setups. We'll see whether the bulls have the juice for a trend day ahead of the end of the quarter (that's the ticket) or whether they take their profits.
___________________________________________________________
Weekly SP500 chart with multiple Fibonacci grids, MACD, and CCI. Key Gann numbers for now remain 980 and one level above and below (950, 1011)
_________________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Colin Twiggs shows us the US dollar channel in his blog.
xtrends gives us a view of Stock/Bond investor preference with a version of this chart.__________________________________________
Mr. Bear (Tim Knight) pauses between dancing jigs at Slope of Hope. I'm guessing that Mrs. Bear took the photo, unless it was a computer cam._____________________________________________________________
Loads and loads of IDNR4 (inside day, narrowest range of four, historical volatility contraction) price expansion setups. We'll see whether the bulls have the juice for a trend day ahead of the end of the quarter (that's the ticket) or whether they take their profits.___________________________________________________________
Weekly SP500 chart with multiple Fibonacci grids, MACD, and CCI. Key Gann numbers for now remain 980 and one level above and below (950, 1011)_________________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Wednesday, July 29, 2009
Foxes Demand No Change in Henhouse Rules
Click charts to ENLARGE.
You need amusement? Well, there's always the discussion between CTFC and Goldman Sachs. "All animals are created equal, but some are more equal than others." Goldman needs special rules because, well they're $&#@ing Goldman Sachs. Got that?
Here's OIH, with a recent up move and now a Gann "3 plus 2" with two lower lows. OIH is coming in after the DeMark '9' perfected a few sessions ago, so which is stronger, the Bernanke hyperinflation trade (the Fed ain't shrinking its balance sheet any time soon, so all those dollars live to fight another day) or the MACD cross. Simply the Fed ate a lot of bad stuff, creates money out of thin air, and temporarily "fixes" the problem...or at least pushes it out onto somebody else's watch.
I guess it depends on the dollar...and maybe whether China is gonna stand by and watch THEIR dollars get devalued (holding an absolutely astonishing amount) or whether the LENDERS dictate some terms to the borrowers.
It shouldn't take long to find out.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
You need amusement? Well, there's always the discussion between CTFC and Goldman Sachs. "All animals are created equal, but some are more equal than others." Goldman needs special rules because, well they're $&#@ing Goldman Sachs. Got that?
July 29 (Bloomberg) -- Goldman Sachs Group Inc., the bank that makes the most money from commodities, fixed-income and currency trading, said attempts to curb speculation may be “disruptive” to energy markets.
“The role that is played by non-traditional participants such as index investors and other financial participants often has been mischaracterized,” Don Casturo, a Goldman Sachs managing director, said today at a Commodity Futures Trading Commission hearing in Washington.
Goldman didn't have ANYTHING with oil getting bid up to 150ish dollars a share, and they certainly won't not do it again. Got that.
Here's OIH, with a recent up move and now a Gann "3 plus 2" with two lower lows. OIH is coming in after the DeMark '9' perfected a few sessions ago, so which is stronger, the Bernanke hyperinflation trade (the Fed ain't shrinking its balance sheet any time soon, so all those dollars live to fight another day) or the MACD cross. Simply the Fed ate a lot of bad stuff, creates money out of thin air, and temporarily "fixes" the problem...or at least pushes it out onto somebody else's watch.I guess it depends on the dollar...and maybe whether China is gonna stand by and watch THEIR dollars get devalued (holding an absolutely astonishing amount) or whether the LENDERS dictate some terms to the borrowers.
It shouldn't take long to find out.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Click charts to ENLARGE.
Some positions actually do grow when nurtured and monitored.
I haven't applied for any TARP, TALF, or other alpha-Ben soup funding, but my potted basil is coming along nicely. You can't see the fox trotting across the backyard...my little greenhouse isn't quite done...
__________________________________________________________
The bears tried today, but couldn't muster a lot of downside juice.
The 6 by 60 minute SHORT PANEL isn't doing much, one way or the other.
Top from left: QID, TZA, BGZ (long TZA calls)
Bottom: SDS, FAZ, SRS
______________________________________________________________
The 6 by 60 minute grid of SPX sectors to watch:
Top from left: XLB, XLE, XLF
Bottom: XLK, XLV, XLY...healthcare stays hotter as Obamacare grows colder?
______________________________________________________________
The "Ten Minute Tells"
Top from left: Breadth and Goldman Sachs
Bottom: The US dollar and the VIX
_______________________________________________________________
The Cooper Stocks list of Gann "Three plus two" advances and pullbacks. Will they come back for them, simply because they can?
______________________________________________________________
Worries? The percentage of oversold stocks on the SPX by stochastics remains at one percent.
The AUD/JPY carry trade (Aussie dollar/Japanese yen) is at a double top and has a sharply rising trendline.
One day at a time? Are you buying stocks or renting them?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Some positions actually do grow when nurtured and monitored.
I haven't applied for any TARP, TALF, or other alpha-Ben soup funding, but my potted basil is coming along nicely. You can't see the fox trotting across the backyard...my little greenhouse isn't quite done...__________________________________________________________
The bears tried today, but couldn't muster a lot of downside juice.
The 6 by 60 minute SHORT PANEL isn't doing much, one way or the other.Top from left: QID, TZA, BGZ (long TZA calls)
Bottom: SDS, FAZ, SRS
______________________________________________________________
The 6 by 60 minute grid of SPX sectors to watch:Top from left: XLB, XLE, XLF
Bottom: XLK, XLV, XLY...healthcare stays hotter as Obamacare grows colder?
______________________________________________________________
The "Ten Minute Tells"Top from left: Breadth and Goldman Sachs
Bottom: The US dollar and the VIX
_______________________________________________________________
The Cooper Stocks list of Gann "Three plus two" advances and pullbacks. Will they come back for them, simply because they can?______________________________________________________________
Worries? The percentage of oversold stocks on the SPX by stochastics remains at one percent.
The AUD/JPY carry trade (Aussie dollar/Japanese yen) is at a double top and has a sharply rising trendline.One day at a time? Are you buying stocks or renting them?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Dollar Flexes Muscles, So...
The US dollar rallies and that means everything priced in dollars, oil, gold, commodities, and of course many other commodities weaken. A trendline break on the daily chart and possible double bottom. What's the magic number for the pain trade?First the Gann number of 68 for oil and now the dollar bouncing...who'd a thunk it?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Half-Empty, Half Full, Half Done
We're at "intermission" and so far, everyone claims victory. Despite the sell-off in China, the US markets have shown only modest declines, with the SP500 locked in the 970-980 range. Whether you call it irrational exuberance, discounting, or defying gravity, it is what it is.
- Breadth is only moderate negative (less than minus 2000)
- The US dollar is solidly up
- Goldman Sachs is off its lows, and pleading NOT to limit commodity trading
- The VXX is up modestly
- Crude futures are beaten like a rented mule
In other words, all the indicators bulls and bears can follow are pointing modestly off re: the bullish case, end of the month notwithstanding. And if you think they don't play games, then you need a checkup from the neck up.
BAC is up over 2 percent with volume at 8% of the 65 day average so far.
FSLR is up over 1.5% with better volume stats.
VLO is losing ground on oil weakness, as are commodities in general, opposite the dollar strength. How sustainable the dollar strength is remains to be seen.
I've had some August 90-94-98 butterflies, buying back the short calls on declines and selling them again on rallies, having moved mostly to a "free trade" position.
I also am looking hard at the pounding that TZA has taken and bought some calls, which are astonishingly cheap.
We've nearly destroyed the US financial system with debt, and how are we going to fix it? With more debt and the financial legerdemain of the Princeton Printsman. That, dear readers, is simply pathetic.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Stoked
Click charts to ENLARGE.
Of these major indexes, all except the VIX exceed 80 on stochastics. 27 of 33 exceed 90. All this coming into the "markup period"
_________________________________________________________________
Volatility constriction, inside day, narrowest range of four.
_____________________________________________________
Relative strength winners with earnings strength
___________________________________________________________
It shouldn't be boring.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Of these major indexes, all except the VIX exceed 80 on stochastics. 27 of 33 exceed 90. All this coming into the "markup period"_________________________________________________________________
Volatility constriction, inside day, narrowest range of four._____________________________________________________
Relative strength winners with earnings strength___________________________________________________________
It shouldn't be boring.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Tuesday, July 28, 2009
Honey I Shrunk Demand
Click charts to ENLARGE
Mike Shedlock gives us the "Honey I Shrunk the Demand" view on the economy. Peter Warburton reminded readers in "Debt and Delusion: Central Bank Follies That Threaten Economic Disaster" that the way for individuals to protect themselves during the downturn was to pay down debt (debt being magnified during deflation) and maintain liquidity. The central planners want EXACTLY THE OPPOSITE. They realize that you can't save your way out of an economic downturn and ergo the "Cash for Clunkers", "Homebuyers Rebate", and GOK what.
If Bernanke actually had to face anything but softballs from journalists, then you'd hear "crickets".
So investors might consider who benefits from so-called "cheap chic". Discounters that can meet the quality/pricing needs of consumers might fill the bill.
Foot fetish? Is DSW with its huge short-interest and huge volume today a breakout or fakeout?
____________________________________________________________
Evil Empire? Walmart (WMT) the emperor of retail shows "kings and queens" at resistance. It's above the middle of the Bollinger Band. You never know.
___________________________________________________________
Don't ask, don't trade. BJ's Wholesale Club (BJ) is above the 200 day moving average, but has traded in a fairly narrow range for quite awhile. BJ's has been growing its grocery share and has a brilliant CEO (okay, she's my little sister)...I don't ask her about business and I don't trade the stock. Can't have the SEC throwing me in jail while they should be watching the Madoffs of the world.
___________________________________
Staycation? Netflix (NFLX) weekly...doesn't look like it's doing anything.
____________________________________________________________
I'd say that Colin Twiggs has the best recommendation in his article today. "Tight stops."
Will they "run it" into the end of the month? My limited work showed the second to last day better than the next to last, in turn better than the (averaged flat) final day. Again, you can't be playing with the SEC. You gotta get up pretty early in the morning to fool them. There are some early risers I guess.
Here's an OLD POST from years ago that I wrote:
Today the subject of end-of-quarter and end-of-month markups came into play. I asked Todd Harrison of www.Minyanville.com how significant he thought they were, and he suspected about 6 on the 10 scale. I suspected more, and my son thought minimal. Perhaps it's an unfair question, because the answer depends on the question.
Jason Goepfert noted that since the low in 2003, the last day of the quarter has been positive 3 of 13 times.
I decided (brutally) to examine the question in a different way, reviewing the TC2000 data with an Excel spreadsheet looking individually at the final three days of the month, figuring that increased SEC scrutiny might move the markup earlier in the end of the month.
1. From January 2003 to today, there were 125 end 0f the month (last 3 days). I'll call them Day 3, Day 2, and Last Day.
2. The average daily return on those 125 days was .114%
3. The average daily return of Day 3 was .226%.
4. The average daily return of Day 2 was .109%
5. The average daily return of Last Day was .003%
6. I then compared each return between 2003-2004 with 2005-2006.
7. Day 3 return was .210 versus .248 in the later period.
8. Day 2 return was .00 versus .25 in the later period.
9. Last Day return was .05 versus -0.06 in the later period.
10.Finally, I looked at the end of the quarter results for the past 13 quarters (tomorrow will be 14)
11.The average return for Day 3 and Day 2 exceeded the average return for Last Day TWELVE of the last THIRTEEN occasions, and is very likely to be 14 tomorrow.
Although I lack either the database manipulation or statistical power to prove this, I believe that increased scrutiny of fund activities and markup have shifted the putative markup earlier in the final week of trading but that it still exists.
Good trading and great risk management to all.
Education use only. Never intended as investment advice.
Mike Shedlock gives us the "Honey I Shrunk the Demand" view on the economy. Peter Warburton reminded readers in "Debt and Delusion: Central Bank Follies That Threaten Economic Disaster" that the way for individuals to protect themselves during the downturn was to pay down debt (debt being magnified during deflation) and maintain liquidity. The central planners want EXACTLY THE OPPOSITE. They realize that you can't save your way out of an economic downturn and ergo the "Cash for Clunkers", "Homebuyers Rebate", and GOK what.
If Bernanke actually had to face anything but softballs from journalists, then you'd hear "crickets".
So investors might consider who benefits from so-called "cheap chic". Discounters that can meet the quality/pricing needs of consumers might fill the bill.
Foot fetish? Is DSW with its huge short-interest and huge volume today a breakout or fakeout?____________________________________________________________
Evil Empire? Walmart (WMT) the emperor of retail shows "kings and queens" at resistance. It's above the middle of the Bollinger Band. You never know.___________________________________________________________
Don't ask, don't trade. BJ's Wholesale Club (BJ) is above the 200 day moving average, but has traded in a fairly narrow range for quite awhile. BJ's has been growing its grocery share and has a brilliant CEO (okay, she's my little sister)...I don't ask her about business and I don't trade the stock. Can't have the SEC throwing me in jail while they should be watching the Madoffs of the world.___________________________________
Staycation? Netflix (NFLX) weekly...doesn't look like it's doing anything.____________________________________________________________
I'd say that Colin Twiggs has the best recommendation in his article today. "Tight stops."
Will they "run it" into the end of the month? My limited work showed the second to last day better than the next to last, in turn better than the (averaged flat) final day. Again, you can't be playing with the SEC. You gotta get up pretty early in the morning to fool them. There are some early risers I guess.
Here's an OLD POST from years ago that I wrote:
Thursday, June 29, 2006
Markup: Fantasy or Reality or A Little of Both?
Educational use only. Never intended as advice.Today the subject of end-of-quarter and end-of-month markups came into play. I asked Todd Harrison of www.Minyanville.com how significant he thought they were, and he suspected about 6 on the 10 scale. I suspected more, and my son thought minimal. Perhaps it's an unfair question, because the answer depends on the question.
Jason Goepfert noted that since the low in 2003, the last day of the quarter has been positive 3 of 13 times.
I decided (brutally) to examine the question in a different way, reviewing the TC2000 data with an Excel spreadsheet looking individually at the final three days of the month, figuring that increased SEC scrutiny might move the markup earlier in the end of the month.
1. From January 2003 to today, there were 125 end 0f the month (last 3 days). I'll call them Day 3, Day 2, and Last Day.
2. The average daily return on those 125 days was .114%
3. The average daily return of Day 3 was .226%.
4. The average daily return of Day 2 was .109%
5. The average daily return of Last Day was .003%
6. I then compared each return between 2003-2004 with 2005-2006.
7. Day 3 return was .210 versus .248 in the later period.
8. Day 2 return was .00 versus .25 in the later period.
9. Last Day return was .05 versus -0.06 in the later period.
10.Finally, I looked at the end of the quarter results for the past 13 quarters (tomorrow will be 14)
11.The average return for Day 3 and Day 2 exceeded the average return for Last Day TWELVE of the last THIRTEEN occasions, and is very likely to be 14 tomorrow.
Although I lack either the database manipulation or statistical power to prove this, I believe that increased scrutiny of fund activities and markup have shifted the putative markup earlier in the final week of trading but that it still exists.
Good trading and great risk management to all.
Education use only. Never intended as investment advice.
Just Charts
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Just looking at some charts. Stream of consciousness.
I've been long the Canadian dollar (FXC) and short some calls...double toppish with a hanging man. If I weren't long, I wouldn't be getting long here.
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VFC...the gap has filled, the stock is overbought, the MACD is diverging.
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Fedex (FDX)...new high on light volume, with close below the open and close in the bottom half of the range. Not so favorable.
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Brazil ETF (EWZ)...the correlation between so many markets is remarkable. I like to view countries like Brazil, Russia, Canada and Australia as the commodity producers and China, India, the US, and Japan as the commodity users.
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Goldman Sachs (GS) didn't bounce back end-of-day like many stocks did. Noise or signal? A pullback opportunity?
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Deutsche Bank (DB)...I've never come anywhere close to understanding this stock. They have high leverage and high risk, and yet have been embraced as though pristine. Not today. As a technician, I shouldn't care about anything about the chart...price, pattern, trend, and time...and how that relates to entry, target, stops, and risk control. But we are all prisoners of unconscious bias, professors and policemen alike.
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Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Just looking at some charts. Stream of consciousness.
I've been long the Canadian dollar (FXC) and short some calls...double toppish with a hanging man. If I weren't long, I wouldn't be getting long here.____________________________________________
VFC...the gap has filled, the stock is overbought, the MACD is diverging.____________________________________________________________
Fedex (FDX)...new high on light volume, with close below the open and close in the bottom half of the range. Not so favorable.______________________________________________________________
Brazil ETF (EWZ)...the correlation between so many markets is remarkable. I like to view countries like Brazil, Russia, Canada and Australia as the commodity producers and China, India, the US, and Japan as the commodity users.____________________________________________________________
Goldman Sachs (GS) didn't bounce back end-of-day like many stocks did. Noise or signal? A pullback opportunity?___________________________________________________________
Deutsche Bank (DB)...I've never come anywhere close to understanding this stock. They have high leverage and high risk, and yet have been embraced as though pristine. Not today. As a technician, I shouldn't care about anything about the chart...price, pattern, trend, and time...and how that relates to entry, target, stops, and risk control. But we are all prisoners of unconscious bias, professors and policemen alike.___________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
"Out damned five spot"
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Summer in the city, hot, humid, hazy, and halcyon trading. In other words, a nothingburger.
Yet another "hanging man" candlestick, with higher volume...on the SP500...and a stop at the magical Gann 980 mark. You can't make this up.
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And even the US dollar, kicked aside to the RSI and MACD nether worlds, showed signs of price and volume life.
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Lady MacBeth, Janet Yellen on Bernanke: “My own view is he has done an excellent job of managing through the most difficult time in U.S. economic history since the Great Depression,” Yellen said of Bernanke. Still, “we would not be lost” if he were not reappointed at the conclusion of his term in January, she said. Perhaps she wants to dream to be the queen (iambic pentameter...)
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The small cap Bear 3x fund continues to get dungeon duty, despite profound oversold status and
a TD Sequential (tm) buy set up (from Amibroker). I guess that just reconfirms the "no limits to greed" hypothesis.
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And for the pieces de resistance:
Educational use only. Never intended as investment advice.
Summer in the city, hot, humid, hazy, and halcyon trading. In other words, a nothingburger.
Yet another "hanging man" candlestick, with higher volume...on the SP500...and a stop at the magical Gann 980 mark. You can't make this up.___________________________________________________________
And even the US dollar, kicked aside to the RSI and MACD nether worlds, showed signs of price and volume life._________________________________________________________
Lady MacBeth, Janet Yellen on Bernanke: “My own view is he has done an excellent job of managing through the most difficult time in U.S. economic history since the Great Depression,” Yellen said of Bernanke. Still, “we would not be lost” if he were not reappointed at the conclusion of his term in January, she said. Perhaps she wants to dream to be the queen (iambic pentameter...)
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The small cap Bear 3x fund continues to get dungeon duty, despite profound oversold status and
a TD Sequential (tm) buy set up (from Amibroker). I guess that just reconfirms the "no limits to greed" hypothesis._____________________________________________________
And for the pieces de resistance:
- over 85 percent of SPX stocks exceed the ten period average
- 1 percent of SPX stocks are oversold by stochastics
Educational use only. Never intended as investment advice.
Time Wounds All Heels
We'll see what this means.
So far, a rather miniscule 1% off, with weak breadth (sub minus 2000), Goldman off, the US dollar up, VIX rising, and crude oil off. All the ducks prettily lined up in a row for those bearishly inclined. It takes awhile for a battleship to turn, whereas the motorboat trader can change course quickly. Still...not such a bad deal to be a battleship either.
At about 90 percent cash and with some hedges, this isn't a moving day for me.
Among the 'winners' on my screen TLT, BAC, DBA, BAX, and IBKR, none on meaningful volume.
I suggested to one analyst early on that today might be a good day for the beach. Maybe a better day for the biatch?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Dammit, I Said Marketish
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Keywords: Trading rules, Slope of Hope, Tim Knight, Dave Landry, trend following, volatility, technical analysis, stock investment
We all need rules. Societies without rules? Apocalyptic visions like those in Waterworld or Mad Max. But that applies far more for trading, where intelligence does not intersect success, at least compared with determination, discipline, and persistence.
Tim Knight hasn't been shy about staking out the dark side, and his Slope of Hope remains exemplary from the dark side. Here are his Trading Rules:
Here's the SPX weekly, with Bollinger Bands, 13 and 52 week averages, and MACD. Tim's algorithm has the short moving average below the long...the Raschke version of MACD has the long average (red) above the zero line and the short average (green) also above the zero line. I'd call this bullish.
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Here's Dave Landry's approach using IBM, although with simple moving averages (10, 20, and 30 - Dave uses 10 period SMA and 20 and 30 period EMA)...the averages line up with a "Bow Tie" cross (indicative of short-term strength) with lots of DAYLIGHT between price and the moving averages. Dave would wait for a pullback (first pullbacks during trends being ripe opportunities). You see the "breakaway gap" which hasn't yielded a pullback yet.
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Here's a sort from the 100 MUST series, using price disparity from the 200 day average. Blackrock is 40 percent extended. I'm not saying one should short BLK, just that 40 percent extended is out there.
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Same approach, some major ETFs. Russia, India, and China all over 40 percent extended from the 200 day average. One of my mentors in the Navy, Tom Walsh, had an expression about "following a lit fuse".
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Here's how Sentiment Trader sees it.
The 21-day put-call ratio of the OEX gives a hiccup. (From Schaeffer)
Not a lot of members on the reduced historical volatility (HV6/100), inside day, narrowest range of four (IDNR4) space that projects price volatility expansion.
The points? Be disciplined and be MARKETISH (we gotta do what the market does) not Marrakesh...
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Keywords: Trading rules, Slope of Hope, Tim Knight, Dave Landry, trend following, volatility, technical analysis, stock investment
We all need rules. Societies without rules? Apocalyptic visions like those in Waterworld or Mad Max. But that applies far more for trading, where intelligence does not intersect success, at least compared with determination, discipline, and persistence.
Tim Knight hasn't been shy about staking out the dark side, and his Slope of Hope remains exemplary from the dark side. Here are his Trading Rules:
Stops - a stop price must be in place at all times for all positions.
Exits - the only acceptable exit is either being stopped out of a position or reaching a target price which has a clear technical rationale, and even in cases of the latter, partial exits are preferable to outright closes.
Trend - the trend of the market is defined by the 13-week EWA and 52-week EWA of the $SPX. Based on the relative position of the 13-week EWA, the market is either Up-Trending (13-week EWA above the 52-week) or Down-Trending, and no more than 20% of the value of all your positions may be positioned against that trend at any one time.Freshness - positions should be regularly updated for the sake of updated stops.
Opening Bell - no new positions should be initiated in the first 30 minutes of any trading session. There are an astonishing number of pre-opening orders, and in my experience, I have found it better to let all the open bell excitement die away before getting into any new positions.Emotional Awareness - use emotional awareness to your advantage, understanding fear often accompanies reversals in your favor and hubris often accompanies reversals against your positions. My state of mind, when trading, will be carefree and fearless, and my total focus will be technical considerations and I will only trade what I see.
Sizing - position sizing must be consistent among instrument types irrespective of anticipated opportunity.
Here's the SPX weekly, with Bollinger Bands, 13 and 52 week averages, and MACD. Tim's algorithm has the short moving average below the long...the Raschke version of MACD has the long average (red) above the zero line and the short average (green) also above the zero line. I'd call this bullish._______________________________________________________________
Here's Dave Landry's approach using IBM, although with simple moving averages (10, 20, and 30 - Dave uses 10 period SMA and 20 and 30 period EMA)...the averages line up with a "Bow Tie" cross (indicative of short-term strength) with lots of DAYLIGHT between price and the moving averages. Dave would wait for a pullback (first pullbacks during trends being ripe opportunities). You see the "breakaway gap" which hasn't yielded a pullback yet.__________________________________________________________
Here's a sort from the 100 MUST series, using price disparity from the 200 day average. Blackrock is 40 percent extended. I'm not saying one should short BLK, just that 40 percent extended is out there._________________________________________________________
Same approach, some major ETFs. Russia, India, and China all over 40 percent extended from the 200 day average. One of my mentors in the Navy, Tom Walsh, had an expression about "following a lit fuse".____________________________________________________________
Here's how Sentiment Trader sees it.
The 21-day put-call ratio of the OEX gives a hiccup. (From Schaeffer)
Not a lot of members on the reduced historical volatility (HV6/100), inside day, narrowest range of four (IDNR4) space that projects price volatility expansion.The points? Be disciplined and be MARKETISH (we gotta do what the market does) not Marrakesh...
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Monday, July 27, 2009
Come Together
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For technicians, it's always a numbers game.
The Light Sweet Crude Index made a January low at 33. Looks like day 8 of a Gann '9' sequence.
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One 360 degree turn around the Gann Square brings us to 60; another 90 degrees to 68. The Light Sweet Crude Oil Index is 68.11.
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Thomas Bulkowski, an underappreciated technician, describes the "pipe bottom" on WEEKLY charts, with higher volume lows made after a decline. Here JBHT shows the pattern and on the MACD, the longer average is above the zero line and the short average "hooks" up. I'm net long with options.
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Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
For technicians, it's always a numbers game.
The Light Sweet Crude Index made a January low at 33. Looks like day 8 of a Gann '9' sequence.____________________________________________________________
One 360 degree turn around the Gann Square brings us to 60; another 90 degrees to 68. The Light Sweet Crude Oil Index is 68.11._____________________________________________________________
Thomas Bulkowski, an underappreciated technician, describes the "pipe bottom" on WEEKLY charts, with higher volume lows made after a decline. Here JBHT shows the pattern and on the MACD, the longer average is above the zero line and the short average "hooks" up. I'm net long with options.______________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Gone to the Dogs
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My father loved going to the dog track, watching the greyhounds fly around the first turn, speed down the front stretch, and pursue the mechanical rabbit to the finish line. I went as much to keep him company as bet, as I wasn't a handicapper, and he couldn't see the tote board in his later years. But I wanted dogs that could close, as nothing proved more frustrating than fading dogs down the stretch.
And so it is with markets, as we want our "dogs" to finish strong, with demand into the close.
Even the Mamis-Meisler breadth oscillator succumbed to gravitational pull today,
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but the SP500? Not so much.
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In Moneyball, Billy Beane asked, "if he's such a good hitter, why doesn't he hit better?" And so it is with the US dollar. If the dollar's so good, then why does it continue to drop?
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The long term bond ETF, TLT found yet newer short-term lows on light volume. No capitulation evident there.
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DBA (The Agricultural ETF) tries to find a bottom, with this trader on board (long DBA).
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After the long weekend on call, I'm burnt, so it's nap time.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
My father loved going to the dog track, watching the greyhounds fly around the first turn, speed down the front stretch, and pursue the mechanical rabbit to the finish line. I went as much to keep him company as bet, as I wasn't a handicapper, and he couldn't see the tote board in his later years. But I wanted dogs that could close, as nothing proved more frustrating than fading dogs down the stretch.
And so it is with markets, as we want our "dogs" to finish strong, with demand into the close.
Even the Mamis-Meisler breadth oscillator succumbed to gravitational pull today,_______________________________________________________________
but the SP500? Not so much._______________________________________________________
In Moneyball, Billy Beane asked, "if he's such a good hitter, why doesn't he hit better?" And so it is with the US dollar. If the dollar's so good, then why does it continue to drop?_________________________________________________________
The long term bond ETF, TLT found yet newer short-term lows on light volume. No capitulation evident there.____________________________________________________________
DBA (The Agricultural ETF) tries to find a bottom, with this trader on board (long DBA).________________________________________________________
After the long weekend on call, I'm burnt, so it's nap time.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Construction Paper
Today, we're talking only about psychology and philosophy. I can't in good conscience buy severely overbought (by the criteria I listed Sunday) markets, because there's no risk control and statistically, the market is statistically LIKELY to come back. That doesn't mean it can't get more extended; it can.
That also doesn't exclude buying pullbacks in individual positions within the context of the overbought market. In other words if short, medium, and long-term the market is overbought, I'm not touching it, long or short.
So let's review the 'tells'
- Breadth is flat
- The US dollar is flat
- Goldman Sachs is minimally down
- The VIX is up (mirabile dictu)
- September crude futures are mildly up
So the 'weight' of the evidence is NEUTRAL...
Winnahs? BAC (net long BAC and XLF via options), VLO, TBT, FSLR, and RHK
Losahs? COST and OIH are both down over a percent, and TLT is down almost a percent
I wish I could say that I were coining money, but markets have a way of dishing out humility, just like medicine does. You can do everything 'right' and still 'lose', but over time being conceptually correct, disciplined, and mentally stable works better than playing lottery tickets, although my hat's off to the lottery winners.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Trading Deadline
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While baseball's trading deadline approaches, one wonders whether so-called "flash trading" also has a deadline approaching. The better mousetrap looks like it's on life support with Charles Schumer having a bee in his bonnet over that one.
Meanwhile, the high stakes game of chicken goes on, with the futures up, world markets up, and the hyperliquidity taking hold.
Harvard classmate Kevin Kallaugher pens for "The Economist" and shows that he knows more than pen and ink in his Facebook rendition of his artwork.
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Some Amibroker triangles for today.
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Tim Sykes had another perspective on the market this weekend.
Jim Lehrer invited questions and comments in advance. Here is the question/comment that I submitted.
If you're all that, then why do you need to go on a PR campaign to explain it?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
While baseball's trading deadline approaches, one wonders whether so-called "flash trading" also has a deadline approaching. The better mousetrap looks like it's on life support with Charles Schumer having a bee in his bonnet over that one.
Meanwhile, the high stakes game of chicken goes on, with the futures up, world markets up, and the hyperliquidity taking hold.
Harvard classmate Kevin Kallaugher pens for "The Economist" and shows that he knows more than pen and ink in his Facebook rendition of his artwork.____________________________________________________________
Some Amibroker triangles for today._______________________________________________________
Tim Sykes had another perspective on the market this weekend.
The other day I asked my girlfriend “I need a Saturday post, what do you want hear about?”
She replied “nothing”.
She has a point.
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Regardless of whether he gets reappointed or not, Professor Bernanke has to feel comforted by the unwritten (and surely disavowed mission of the Fed), volatility dampening and inflation generation.
MISH on Bernanke's latest efforts, the self-aggrandizement within the continuing apotheosis of central bankers.
Bernanke stepped up his advertising campaign this weekend in a town hall meeting on public TV. The show will air this week in three installments on PBS' "The NewsHour with Jim Lehrer."Jim Lehrer invited questions and comments in advance. Here is the question/comment that I submitted.
Hello BenThink they will use my question? I don't.
Given that you failed miserably to see what was coming, how can giving the Fed more regulatory power possibly fix anything? I have a better idea, let’s get rid of the Fed totally along with its micro-mismanagement of interest rates that repetitively blows bubbles of increasing amplitude. Face the facts Ben, you no more know where interest rates should be than you know where the price of orange juice should be. The housing bubble and subsequent collapse that you failed to see coming is proof enough of your ineptitude. Only the free market knows what the price of money should be at any given time. Regardless, you sure don’t know. How about coming up with a 5 year plan to abolish the Fed?
Mike “Mish” Shedlock
If you're all that, then why do you need to go on a PR campaign to explain it?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Sunday, July 26, 2009
Ultra Bad?
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The ultrashort space hasn't been a great place to be recently. Quel surprise!
Six panel look at some ultrashorts (weekly)...inviting? Hardly.
Top from left: QID, TZA, BGZ
Bottom: SDS, FAS, SRS
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53 ETFs trade above an average of 5 million shares daily.
Here's the RSI8 (1 period average) from the Worden TC2000 system the most oversold. They have a terrific end-of-day data platform, although I wish I could alter the averaging mode.
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If you want the other end (who's hottest), it's here.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The ultrashort space hasn't been a great place to be recently. Quel surprise!
Six panel look at some ultrashorts (weekly)...inviting? Hardly.Top from left: QID, TZA, BGZ
Bottom: SDS, FAS, SRS
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53 ETFs trade above an average of 5 million shares daily.
Here's the RSI8 (1 period average) from the Worden TC2000 system the most oversold. They have a terrific end-of-day data platform, although I wish I could alter the averaging mode._________________________________________________
If you want the other end (who's hottest), it's here.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Reading List
Can you know too much? Probably. But in the end, it's about understanding the other side of the trade.
Two sides of the Bernanke reappointment coin. Pro and Con.
John Hussman, like Voltaire, believes in tending his garden.
I'd say that Jeff Saut leaned long last week.
Tim Knight asks (in essence) do bears need a Fail Safe?
Bespoke elaborates on what I showed recently.
The systemic risk regulator is nowhere in sight.
Is it "safer" across the street in Germany? No and no.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Two sides of the Bernanke reappointment coin. Pro and Con.
John Hussman, like Voltaire, believes in tending his garden.
I'd say that Jeff Saut leaned long last week.
Tim Knight asks (in essence) do bears need a Fail Safe?
Bespoke elaborates on what I showed recently.
The systemic risk regulator is nowhere in sight.
Is it "safer" across the street in Germany? No and no.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Theory and Practice
Yogi Berra reminds us, "In theory there isn't much difference between theory and practice, but in practice there is."
Theoretically, you 'buy low' and 'sell high', although with sustained periods of bullishness, momentum traders buy high and sell higher (a.k.a. greater fool theory). So, we (market timers, technicians, rock heads) try to figure out when that is. Markets excite participants at highs (bubble formation being part of the psychology of investing), and frustrate participants at both highs and lows. Underinvested investors feel the need "not to miss", and career investors have "career risk" on the line if their peers chase and they don't. Add in short covering, and it makes for quite a circus...and who doesn't love the circus?
We have oscillators (of various stripes), time counters (moves often lasting 17-25 days), point-and-figure, buying exhaustion (DeMark), sentiment indicators (e.g. Jason Goepfert's Sentiment Trader), put-call ratios, and so forth. Of course, overbought can become more overbought and oversold more oversold. Overbought doesn't say to me "sell short". It says get long with extreme caution. So "you pays your money and you make your choice".
I write to record my thoughts to assist my analysis and to consider "both sides of the trade", which comes up in most professions.
Oscillators: (overbought levels)
- RSI 14 week > 70
- RSI 7 system (Bill Cara), day-week-month > 70
- RSI2 > 98
- Stochastics (variety of time frames > 80)
- CCI (> + 100)
- stochastics oversold (almost nothing on the long side now)
Price exhaustion:
- DeMark 9 perfected
- DeMark Sequential (tm)
Volatility based:
- VIX reversals (from > 10 percent extension from the 10 day average)
- Bottoming average true range (ATR)
Breadth indicators:
- Worden TC2000 T2108 (high over 80, now 85)
- Mamis-Meisler breadth oscillator (10 day average high...it's now the highest in years)
- Point-and-figure breadth > 70
But no matter how you choose, it's about controlling risk at the end of the day.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Sunday Morning Coffee: The Other Side of Darkness
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There's no shortage of falling knives. But as I've said over and over this week, fear, not greed has limits.
The VIX futures ETF goes down to the ground like the itsy, bitsy SPYder doesn't
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The DeMark 9 'perfected' list looks like a who's who of invert ETFs and ultrashorts
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Even the most cautious of analysts are throwing caution to the wind at this point.
Within the "Trade Universe", we see stochastics extremes like the T2108 at the tippity top and the VIX and QID at the bottom.
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Do you believe that analysts can predict (correctly) the earnings on the SPX for 2010? I don't but that won't stop the numbers from flying up and the targets from flying up with them. That's the game, dear readers, and the same permabulls and permabears are out there telling us what it's going to be.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
There's no shortage of falling knives. But as I've said over and over this week, fear, not greed has limits.
The VIX futures ETF goes down to the ground like the itsy, bitsy SPYder doesn't____________________________________________________________
The DeMark 9 'perfected' list looks like a who's who of invert ETFs and ultrashorts_______________________________________________________________
Even the most cautious of analysts are throwing caution to the wind at this point.
Within the "Trade Universe", we see stochastics extremes like the T2108 at the tippity top and the VIX and QID at the bottom.__________________________________________________________
Do you believe that analysts can predict (correctly) the earnings on the SPX for 2010? I don't but that won't stop the numbers from flying up and the targets from flying up with them. That's the game, dear readers, and the same permabulls and permabears are out there telling us what it's going to be.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Saturday, July 25, 2009
When Indexes Trade Like Commodities
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Do stocks sometimes trade like commodities?
Some indexes with the Commodity Channel Index.
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Some commodity-type trades with the CCI
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Currency options with the CCI. The fate of the dollar links closely with that of US equities. The Fed wants its cake and its eating, too.
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Relative strength pairs: SPY:EEM relationship particularly interesting. The Gold to Silver relationship breaks down as silver gets treated as an industrial commodity. If the markets are really so hot, does commodity lagging present opportunity or truth?
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Foreign ETFs (weekly).
Top from left: EEM, EWA, EWC, EWZ, FXI
Bottom: IFN, RSX, TKF, CUBA (long CUBA)
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Do stocks sometimes trade like commodities?
Some indexes with the Commodity Channel Index.__________________________________________________________
Some commodity-type trades with the CCI____________________________________________________________
Currency options with the CCI. The fate of the dollar links closely with that of US equities. The Fed wants its cake and its eating, too.______________________________________________________________
Relative strength pairs: SPY:EEM relationship particularly interesting. The Gold to Silver relationship breaks down as silver gets treated as an industrial commodity. If the markets are really so hot, does commodity lagging present opportunity or truth?_______________________________________________________
Foreign ETFs (weekly).Top from left: EEM, EWA, EWC, EWZ, FXI
Bottom: IFN, RSX, TKF, CUBA (long CUBA)
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Greens and Dough
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When is food not food? When it's money...
Dollar ETF (UUP)...the MACD panel has been living underwater, but might be trying to move into positive land.
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Baxter (BAX)...MACD possible cross, cup with handle with reduced volume.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
When is food not food? When it's money...
Dollar ETF (UUP)...the MACD panel has been living underwater, but might be trying to move into positive land.______________________________________________________________
Baxter (BAX)...MACD possible cross, cup with handle with reduced volume.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Saturday Morning Coffee: Damn the Economy, Bull Speed Ahead
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Technicians study charts, each in their own style. Gann's "price, pattern, trend, and time" seems logical to me. History tells us that during the Great Depression rallies exceeding 25 percent occurred multiple times (five I think), including one of 48 percent.
Why not SPY? Here's SPY weekly, coming off 'generational lows' with a slight pullback, amidst declining volume. Price hasn't reached the top band (yet), although the bottom band has curled up, sometimes a warning. Bollinger Bands incorporate both trend and volatility-based signals.
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The daily chart, if it's possible seems even more bullish, with caveats of course. Price broke above resistance, the bands are widening, so-called "walking the bands" and all but "the last bear" have been slaughtered. The Gann "3 day chart" shows (naturally) a long bias. Gann would look for a pullback for his entry to lower risk. But the worry? It's the "new high with light volume" action yesterday. From a time standpoint, we' re "only" 12 sessions off the most recent bottom, so maybe the hyperbullish will laugh all the way to the bank.
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The DeMark version shows a recent '9' with nine consecutive prices higher than the prior four and bar 9 exceeds both 6 and 7. So even mega-rallies can tire. Maybe.
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The Gann Square of 9. 667 marks the bottom, the 720 degree turn around the square is 889. Another THREE turns around (circles) brings us to 880..
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The SPY point-and-figure chart is naturally bullish, too. Pullbacks? That's for sissies, right?
So technical analysis says, "damn the economy, bull speed ahead", unless you're a worrier concerned about "minor details", black swans, and the like.
I'll check in when I can, as I've got the weekend marathon, medically speaking.
Sentiment is getting frothier, although my own version shows even more extension.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Technicians study charts, each in their own style. Gann's "price, pattern, trend, and time" seems logical to me. History tells us that during the Great Depression rallies exceeding 25 percent occurred multiple times (five I think), including one of 48 percent.
Why not SPY? Here's SPY weekly, coming off 'generational lows' with a slight pullback, amidst declining volume. Price hasn't reached the top band (yet), although the bottom band has curled up, sometimes a warning. Bollinger Bands incorporate both trend and volatility-based signals._________________________________________________________
The daily chart, if it's possible seems even more bullish, with caveats of course. Price broke above resistance, the bands are widening, so-called "walking the bands" and all but "the last bear" have been slaughtered. The Gann "3 day chart" shows (naturally) a long bias. Gann would look for a pullback for his entry to lower risk. But the worry? It's the "new high with light volume" action yesterday. From a time standpoint, we' re "only" 12 sessions off the most recent bottom, so maybe the hyperbullish will laugh all the way to the bank.____________________________________________________________
The DeMark version shows a recent '9' with nine consecutive prices higher than the prior four and bar 9 exceeds both 6 and 7. So even mega-rallies can tire. Maybe._________________________________________________________
The Gann Square of 9. 667 marks the bottom, the 720 degree turn around the square is 889. Another THREE turns around (circles) brings us to 880.._______________________________________________________________
The SPY point-and-figure chart is naturally bullish, too. Pullbacks? That's for sissies, right?So technical analysis says, "damn the economy, bull speed ahead", unless you're a worrier concerned about "minor details", black swans, and the like.
I'll check in when I can, as I've got the weekend marathon, medically speaking.
Sentiment is getting frothier, although my own version shows even more extension.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Friday, July 24, 2009
Volatility Index to 7th Level of Hell
Click charts to ENLARGE.
The market can do whatever it wants. One of the 'core' beliefs I hold is that fear has limits but greed does not. Maybe we should rename the VIX the "fear index". The "fear" is low but no stone tablets dictate that lower levels don't pertain.
The VIX has continued to fall, with a MACD divergence, but nothing representing a 'turn'.
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The Amibroker chart with a DeMark Sequential (tm) shows a 'buy' signal for the VIX. That does not guarantee anything...just another data point.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The market can do whatever it wants. One of the 'core' beliefs I hold is that fear has limits but greed does not. Maybe we should rename the VIX the "fear index". The "fear" is low but no stone tablets dictate that lower levels don't pertain.
The VIX has continued to fall, with a MACD divergence, but nothing representing a 'turn'._________________________________________________________
The Amibroker chart with a DeMark Sequential (tm) shows a 'buy' signal for the VIX. That does not guarantee anything...just another data point.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
How Overbought is Overbought?
Click chart to ENLARGE.
The ten-period average of NYSE breadth has risen to the highest level in the past three years. Nosebleed territory, the eagle's nest, K2, a ladder leaning against the clouds. Other than that, it's business as usual.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The ten-period average of NYSE breadth has risen to the highest level in the past three years. Nosebleed territory, the eagle's nest, K2, a ladder leaning against the clouds. Other than that, it's business as usual.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Friday Nite Lite: Correlation
Click charts to ENLARGE.
Correlation: look at the sector charts from across the room.
Note that every sector exceeds the 20 and 50 period average, although XLE by the least. Also note that new relative high or not, volume was muted on every sector. Financials, industrials, tech, and discretionary all failed to make short-term highs.
So the sectors make 'V' bottoms, but will the economy go 'W'?
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This is a daily chart of YUM brands (YUM)...the weekly chart looked more promising, but the high volume gap down and the dead cat bounce doesn't exactly instill confidence.
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Of course the big dog of the sector, McDonald's (MCD) took an equally direct path to mediocrity, with light earnings, a high volume gap down and clings to support. Recovery?
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I'm a fan of the Bill Cara RSI7 system, looking at opportunities among "viable" elements using daily, weekly, and monthly charts and RSI7 values. The day-week-month RSI7 values for the VIX are 25, 26, and 34. The 'key' values are 30 on the downside. Should the VIX "feel" like this with the jobless recovery or is something else at work?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Correlation: look at the sector charts from across the room.
Note that every sector exceeds the 20 and 50 period average, although XLE by the least. Also note that new relative high or not, volume was muted on every sector. Financials, industrials, tech, and discretionary all failed to make short-term highs.So the sectors make 'V' bottoms, but will the economy go 'W'?
_________________________________________________________
This is a daily chart of YUM brands (YUM)...the weekly chart looked more promising, but the high volume gap down and the dead cat bounce doesn't exactly instill confidence.____________________________________________________________
Of course the big dog of the sector, McDonald's (MCD) took an equally direct path to mediocrity, with light earnings, a high volume gap down and clings to support. Recovery?_____________________________________________________________
I'm a fan of the Bill Cara RSI7 system, looking at opportunities among "viable" elements using daily, weekly, and monthly charts and RSI7 values. The day-week-month RSI7 values for the VIX are 25, 26, and 34. The 'key' values are 30 on the downside. Should the VIX "feel" like this with the jobless recovery or is something else at work?Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Wrongheaded Sycophants at Washington Post
Today the Washington Post gives the usual approbation to the "independence" of the Fed and its overlord, Professor Bernanke.
The Fed is not some democratic institution in the traditional, American sense. It is not "looking out" for Main Street. These people think the fed is something it's not. It's not independent, and it hasn't maintained the value of the dollar since its inception. The Fed remains a political tool that empowers politicians, bankers, and the wealthy at the expense of the poor and middle class.
Inflation, built into Fed policies, expands the property and equity values of those who have, and punishes those who do not. The stock market rises, Bernanke's a hero, a genius, a god? Correlation and causation do not intersect.
I have reviewed (along with many others), many of the missteps and exponentially wrong decisions by the Fed, but never to the extent of Warburton's prediction ("Debt and Delusion"). Carrying water for policy wonks who simply got it wrong so badly that it will cost trillions to try to STABILIZE the problem makes no sense. We can listen to this with the same rapt attention that any fairy tale deserves. Believe none of it.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
We All See the Same Data. How Do We Interpret It?
Click charts to ENLARGE.
One day at a time.
Amibroker triangles.
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Valueclick (VCLK)...I have no skin in this game, but this type of pattern would be "following a lit fuse" for me. DeMark 9 perfected recently, at resistance, with short-term RSI numbers in the treetop jungle.
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Hershey (HSY)...did somebody buy them out? This is a wide-range, double volume plus bar. If I owned it, I'd be moving on to something less loved. But that's why you play the game.
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ProShares Ultrashort (QID)...the problem with this 'concept' is the LIMITS to FEAR, NO LIMIT to GREED mentality that rules human beings.
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An analyst asked several "smart investors" what they would short, if they were going to short something and got three different answers:
Chartists rule the world right now as fundamentals disconnect from prices. Experienced investors recognize that prices "overshoot" to both the downside and the upside. As a trader, I want to be building my wall of capital, buying at cycle lows and selling at cycle highs, controlling risk, and maintaining the buy and sell discipline. When I err, it's on me.
Here are portions of stocks with RSI7 weekly "high" values.
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I invite your attention to this one, the percentage of stocks 2 channels above the 200 day moving average. Enough said.
Good trading and great risk management.
Educational use only. Never intended as investment advice.
One day at a time.
Amibroker triangles._________________________________________________________
Valueclick (VCLK)...I have no skin in this game, but this type of pattern would be "following a lit fuse" for me. DeMark 9 perfected recently, at resistance, with short-term RSI numbers in the treetop jungle.____________________________________________________________
Hershey (HSY)...did somebody buy them out? This is a wide-range, double volume plus bar. If I owned it, I'd be moving on to something less loved. But that's why you play the game._____________________________________________________________
ProShares Ultrashort (QID)...the problem with this 'concept' is the LIMITS to FEAR, NO LIMIT to GREED mentality that rules human beings._______________________________________________________________
An analyst asked several "smart investors" what they would short, if they were going to short something and got three different answers:
- Energy
- Industrials
- Utilities
Chartists rule the world right now as fundamentals disconnect from prices. Experienced investors recognize that prices "overshoot" to both the downside and the upside. As a trader, I want to be building my wall of capital, buying at cycle lows and selling at cycle highs, controlling risk, and maintaining the buy and sell discipline. When I err, it's on me.
Here are portions of stocks with RSI7 weekly "high" values.______________________________________________________
I invite your attention to this one, the percentage of stocks 2 channels above the 200 day moving average. Enough said.Good trading and great risk management.
Educational use only. Never intended as investment advice.
Thursday, July 23, 2009
Toes Exposed for Stubbing
Click charts to ENLARGE.
Keywords: Technical analysis, overbought, support and resistance, market dynamics, stock charts
Market dynamics are just one tool to help assess the ebb and flow, the cycle of payout and payback.
The NYSE breadth oscillator (Mamis-Meisler oscillator) reached an extreme last seen in March and previously NOT seen during the past three years.
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The SPX:VIX ratio shows something a bit similar.
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The dollar weakness shows up in other currency relationships as well. Here FXB (British Pound currency ETF) also threatens to move up out of an ascending triangle.
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Trade Universe for Friday.
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Several days ago, the issue was "the Hanging Man" which didn't follow through and became "The Running Man." Now we're in the mother of all overbought, and we'll see if the bulls can shake off gravity or even they need the paws that refreshes.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Keywords: Technical analysis, overbought, support and resistance, market dynamics, stock charts
Market dynamics are just one tool to help assess the ebb and flow, the cycle of payout and payback.
The NYSE breadth oscillator (Mamis-Meisler oscillator) reached an extreme last seen in March and previously NOT seen during the past three years.________________________________________________________________
The SPX:VIX ratio shows something a bit similar.______________________________________________________________
The dollar weakness shows up in other currency relationships as well. Here FXB (British Pound currency ETF) also threatens to move up out of an ascending triangle._________________________________________________________
Trade Universe for Friday._______________________________________________________________
Several days ago, the issue was "the Hanging Man" which didn't follow through and became "The Running Man." Now we're in the mother of all overbought, and we'll see if the bulls can shake off gravity or even they need the paws that refreshes.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
My Broker? IB, Of Course
Click chart to ENLARGE
Interactive Brokers (IBKR)...the broker I use, had solid earnings and revenues with its foundation of fast, low cost executions. After hours, IB is trading higher (disclosure: long IBKR)
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Interactive Brokers (IBKR)...the broker I use, had solid earnings and revenues with its foundation of fast, low cost executions. After hours, IB is trading higher (disclosure: long IBKR)Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Making Believe
Despite the cheerleading from the investing-academic-media complex, the reality of 2009 presents a harsh economic climate, with a relatively jobless "recovery", one built on hope, not a solid foundation.
That being said, how did this trader play it?
That being said, how did this trader play it?
- The rather speculative fervor existing, I opted for safety (if not panic), furiously raising cash and hedging some other positions.
- Why? Almost nothing is oversold (among longs), the magical 980 Gann number approached, and you could palpably detect the euphoria.
- So I sold most of my DBA and my TBT, took the windfall in CERS, and bought September BAC 12 calls for 90c and sold August 13 calls against them for 57c.
- I continued to hold OIH September 105 puts long against short August 100 OIH calls.
- I got out of speculative positions in MITI, ACCL, and others.
Among the "overbought" space, there's no shortage of items including the Worden T2108 space, the 10 day average of NYSE breadth (sky high), and volatility scraping Davy Jones' locker.
Why not get short? That's a great question, and if so, how to do it?
SPY puts without VIX put hedging might be one way, although I have some SPY butterflies centered on 940 currently. VIX calls or VXX? Maybe another.
Conor asked me today (a mental exercise), if I had one sector to short, what would it be? My first thought was energy (I don't think the demand is that high), BECAUSE financials (the other choice) are the crookedest, most manipulated space in this dirtiest of all games, far dirtier than mud bowl football or the lamest Japanese game shows.
That's my story and I'm sticking to it.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Pain Trade Whack-a-Bear
A total whack-a-bear pain trade today with
- Exuberant breadth
- Goldmanilocks winning
- Crude futures up
- TNX up (very long TBT coming in)
- The US dollar weaker (was long FXE)
- A marked exercise in bear-baiting
Crushed? EEV, RWM,
Winning? Potash despite bad numbers (it's not the news, it's the reaction), ABB, MO, FSLR (net long FSLR...vertical spreads), RSX, BLK, EWZ and more
My short-term target is the next Gann number 980 I'm watching
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
A Hard Slog
Click charts to ENLARGE.
It's not going to be easy, and cutting costs to prosper (short-term) won't grow bananas long-term.
The oversold weekly (RSI7) list is growing, but not necessarily with your favorites. You do see some volatility names, grains, and the US dollar on the list.
I recently asked a multibillion dollar manager if he would be willing to comment on the 'tipping point' for the US dollar. He replied, "no way, but it's coming."
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Kettle calling the POT black? Maybe all isn't well, with weak results for POT and Russian stocks under pressure.
The Amibroker DeMark Sequential (tm) daily screen remains not heavily populated.
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I don't always agree with Michael Kahn (like I'm a better technician...haha), but I read to get as much sense as possible of "the other side of the trade". He's worth a look.
Higher and lower priced triangles (from Amibroker screen).
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Reading the headlines from the pundits, you clearly grasp the picture. One says, trees are gonna grow to the sky, and the other says the rally lives on borrowed time. So stop reading and watch the prices already. The dip buyers/volatility smashers have been in control for awhile.
Has that filled up your portfolio? If wrong, why?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
It's not going to be easy, and cutting costs to prosper (short-term) won't grow bananas long-term.
The oversold weekly (RSI7) list is growing, but not necessarily with your favorites. You do see some volatility names, grains, and the US dollar on the list.I recently asked a multibillion dollar manager if he would be willing to comment on the 'tipping point' for the US dollar. He replied, "no way, but it's coming."
__________________________________________________________
Kettle calling the POT black? Maybe all isn't well, with weak results for POT and Russian stocks under pressure.
The Amibroker DeMark Sequential (tm) daily screen remains not heavily populated._____________________________________________________________
I don't always agree with Michael Kahn (like I'm a better technician...haha), but I read to get as much sense as possible of "the other side of the trade". He's worth a look.
Higher and lower priced triangles (from Amibroker screen).________________________________________________________
Reading the headlines from the pundits, you clearly grasp the picture. One says, trees are gonna grow to the sky, and the other says the rally lives on borrowed time. So stop reading and watch the prices already. The dip buyers/volatility smashers have been in control for awhile.
Has that filled up your portfolio? If wrong, why?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Wednesday, July 22, 2009
Trade Universe for Thursday
Click chart to ENLARGE.
Includes TD Range Projections (tm), NR7s (narrowest range of seven days), and more.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Includes TD Range Projections (tm), NR7s (narrowest range of seven days), and more.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Bernanke as Nostradamus. Not Exactly.
Click to ENLARGE.
Sharpest tool in the Shed...
Nostradamus, acclaimed as a great futurist. Bernanke? Not so much.
Bottom line? In traders' parlance, investors who listened to Ben Bernanke got their faces ripped off...and Bernanke received praise as the savior, the national hero, the man who knows more about Central Banking than any other. That traders, is what we call divergence.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Sharpest tool in the Shed...
Nostradamus, acclaimed as a great futurist. Bernanke? Not so much.Bottom line? In traders' parlance, investors who listened to Ben Bernanke got their faces ripped off...and Bernanke received praise as the savior, the national hero, the man who knows more about Central Banking than any other. That traders, is what we call divergence.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Don't Just Do Something, Stand There
Click charts to ENLARGE.
Woody Hayes Market today, 'three yards and a cloud of dust'.
The SPX shucked and moved but not much when all was traded and done. Beware consolidation at resistance.
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The US dollar...drifting down to support. A weak dollar may not be sufficient but seems necessary to sustain the equity rally.
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Selected Gann "three plus, two minus (pullback)" setups
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Interactive Brokers (IBKR)...long IBKR on the pullback.
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Among the sectors, one would think that the outcome of the financials (XLF) in the current flag will tell the tale.
________________________________________________________
The Mamis-Meisler breadth oscillator grows to the sky (moving average of breadth)
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Woody Hayes Market today, 'three yards and a cloud of dust'.
The SPX shucked and moved but not much when all was traded and done. Beware consolidation at resistance.________________________________________________________
The US dollar...drifting down to support. A weak dollar may not be sufficient but seems necessary to sustain the equity rally._______________________________________________________________
Selected Gann "three plus, two minus (pullback)" setups_______________________________________________________________
Interactive Brokers (IBKR)...long IBKR on the pullback.___________________________________________________________
Among the sectors, one would think that the outcome of the financials (XLF) in the current flag will tell the tale.________________________________________________________
The Mamis-Meisler breadth oscillator grows to the sky (moving average of breadth)Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Dollar Double Bottom on 60 Minute Chart?
If so, implications for about...everything.
Educational use only. Never intended as investment advice.
Bears Pummeled Again
Limits to fear, no limit to greed...
- Breadth mildly positive but accelerating
- Goldman positive
- US dollar getting rich-slapped again
- Volatility crushed (VXX new lows)
- Crude futures not part of the party today
- Basically, bears (and shorts) taking it
I wish I could say that I'm fully invested or heavily invested...I can't.
My discipline (such as it is) is to control risk, and I view risk as higher chasing strength, at extremes of short-term volatility compression. I'm certainly not going to stand in the way of the train, but the bandwagon gets harder to pull uphill...the more people jump on.
The morning dip was heavily bought (as has been the case), and that's no place for a top to start.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Does a Bear Sleep in the Woods?
Click charts to ENLARGE.
Bears have simply had nothing on their plate recently. And yet, bulls have had opportunities day after day to get in on the morning weakness. The futures suggest that again today.
The Amibroker DeMark Sequential (tm) list remains with negligible shorts among higher priced stocks.
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The world believes Ben Bernanke to be the savior, the fireman who put out the global economic crisis, NOT the arsonist who helped ignite it. When I forwarded this to one top blogger in the investment space, he said he reached for an air sickness bag.
Meanwhile, back in the real world, the Mamis-Meisler oscillator of NYSE breadth shows the 10 day average in nosebleed territory.
______________________________________________________________
The VIX is almost exactly 10 percent extended from its ten period average.
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The 100 MUST list is loaded with stocks and ETFs with topping stochastics.
_______________________________________________________
Virtually nothing shows on the EVERYTHING "DeMark Perfected" list (not endorsed by Tom DeMark)
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99 percent of SPX stocks are NOT oversold by stochastics (14 day) and 96 percent of SPX stocks exceed the ten period average.
The bandwagon beckons. Do you believe in feeding the ducks high and taking positions low?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Bears have simply had nothing on their plate recently. And yet, bulls have had opportunities day after day to get in on the morning weakness. The futures suggest that again today.
The Amibroker DeMark Sequential (tm) list remains with negligible shorts among higher priced stocks._________________________________________________________
The world believes Ben Bernanke to be the savior, the fireman who put out the global economic crisis, NOT the arsonist who helped ignite it. When I forwarded this to one top blogger in the investment space, he said he reached for an air sickness bag.
Meanwhile, back in the real world, the Mamis-Meisler oscillator of NYSE breadth shows the 10 day average in nosebleed territory.______________________________________________________________
The VIX is almost exactly 10 percent extended from its ten period average._______________________________________________________________
The 100 MUST list is loaded with stocks and ETFs with topping stochastics._______________________________________________________
Virtually nothing shows on the EVERYTHING "DeMark Perfected" list (not endorsed by Tom DeMark)____________________________________________________________
99 percent of SPX stocks are NOT oversold by stochastics (14 day) and 96 percent of SPX stocks exceed the ten period average.
The bandwagon beckons. Do you believe in feeding the ducks high and taking positions low?Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Tuesday, July 21, 2009
Left Hanging Wednesday?
Click charts to ENLARGE.
The 'theme' for Wednesday might be the "hanging man" candle. This candlestick formation can be a short-term topping formation and a cursory scan of some 'majors' shows a lot of it tonight.
Here's a partial list. In fact, about 10 percent of the "MASTER LIST" have this formation.
________________________________________________
Here's a stock that resembles three consecutive hanging men, with the 50 period moving average as resistance. Obviously it hasn't followed through (to the downside) but it's about education. Knowing that overhead resistance exists also becomes important.
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In this particular market, opening weakness has proven an invitation to the bulls to get back in, rather than the beginning of the end. This is consistent (statistically) with Toby Crabel's "Day Trading" with Short-term Price Patterns text. Conversely, opening gap reversals (Dave Landry calls them "OGREs" could be more tradable should the retail crowd come hard on an open.
The keys obviously include identifying momentum change and using protective stops.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The 'theme' for Wednesday might be the "hanging man" candle. This candlestick formation can be a short-term topping formation and a cursory scan of some 'majors' shows a lot of it tonight.
Here's a partial list. In fact, about 10 percent of the "MASTER LIST" have this formation.________________________________________________
Here's a stock that resembles three consecutive hanging men, with the 50 period moving average as resistance. Obviously it hasn't followed through (to the downside) but it's about education. Knowing that overhead resistance exists also becomes important._____________________________________________________________
In this particular market, opening weakness has proven an invitation to the bulls to get back in, rather than the beginning of the end. This is consistent (statistically) with Toby Crabel's "Day Trading" with Short-term Price Patterns text. Conversely, opening gap reversals (Dave Landry calls them "OGREs" could be more tradable should the retail crowd come hard on an open.
The keys obviously include identifying momentum change and using protective stops.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Additional Volatility Charts
Click charts to ENLARGE.
The VXX (VIX short-term futures ETF) hasn't really done anything wrong.
As a general principle charting bottoms more often show smaller price variation (not to deny hammer bottoms, particularly with big volume)....here the VXX continues to make new lows and drift down.
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The 60 minute version (one month) shows the drift down as well.
So it's a day later, with the dollar (earlier post) showing a potential exhaustion pattern, the SPX at resistance, and words from Minyanville's Mr. Practical echoing: "risk is high."
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The VXX (VIX short-term futures ETF) hasn't really done anything wrong.
As a general principle charting bottoms more often show smaller price variation (not to deny hammer bottoms, particularly with big volume)....here the VXX continues to make new lows and drift down._____________________________________________________________
The 60 minute version (one month) shows the drift down as well.So it's a day later, with the dollar (earlier post) showing a potential exhaustion pattern, the SPX at resistance, and words from Minyanville's Mr. Practical echoing: "risk is high."
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
We Are Here
Click charts to ENLARGE.
Keywords: Stock market, trading, DeMark Sequential (tm), stock charting, technical analysis of the financial markets
The early changes within the market, including breadth weakness, US dollar strength, Goldman Sachs weakness, and volatility strength all reversed to an extent.
Here, the SP500 daily advances for the 6th time in the past seven sessions. The one day it did not would count as an "inside day" ignored in a Gann 3 day chart. In candlestick chart parlance, this forms a "hanging man". Some have discussed a pullback to the 50 period moving average. Maybe 919, the Gann number would be more magical. We've taken out the next turn (949), so 980 would be another potential Gann turn...on the upside.
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Meanwhile, if we dig through the earth's geothermal center to the FXI, we see how the symmetrical triangle breaks to the upside...and MACD went positive with it.
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Coincidentally, the US Dollar ETF (UUP) has moved within a whisker of forming a DeMark 9-13-9 bottom on the DeMark Sequential (tm) pattern (Amibroker charting system). The checkers move might be buying the dollar, but the chess move could involve other currencies, precious metals, and commodities. Of course, the market CAN do anything.
Department of Redundancy Department:
Mike Shedlock explains the "National Hero" Bernanke's "exit strategy".
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Keywords: Stock market, trading, DeMark Sequential (tm), stock charting, technical analysis of the financial markets
The early changes within the market, including breadth weakness, US dollar strength, Goldman Sachs weakness, and volatility strength all reversed to an extent.
Here, the SP500 daily advances for the 6th time in the past seven sessions. The one day it did not would count as an "inside day" ignored in a Gann 3 day chart. In candlestick chart parlance, this forms a "hanging man". Some have discussed a pullback to the 50 period moving average. Maybe 919, the Gann number would be more magical. We've taken out the next turn (949), so 980 would be another potential Gann turn...on the upside.______________________________________________________________
Meanwhile, if we dig through the earth's geothermal center to the FXI, we see how the symmetrical triangle breaks to the upside...and MACD went positive with it.__________________________________________________________
Coincidentally, the US Dollar ETF (UUP) has moved within a whisker of forming a DeMark 9-13-9 bottom on the DeMark Sequential (tm) pattern (Amibroker charting system). The checkers move might be buying the dollar, but the chess move could involve other currencies, precious metals, and commodities. Of course, the market CAN do anything.Department of Redundancy Department:
Mike Shedlock explains the "National Hero" Bernanke's "exit strategy".
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Bernanke Missing 500 Billion Dollars?
Voice quivering, Professor Bernanke acknowledges that the FOMC lent out 500 Billion dollars to other central banks...extending credit to foreigners
"no money shall be drawn from the Treasury but in consequence of appropriations made by law." Has the Federal Reserve lived under its own set of rules?
In a global economy driven by debt and credit, the Fed has taken it upon themselves to put foreigners ahead of Americans in handing out credit. You cannot take it any other way.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Ron Paul (via LewRockwell.com)
Although Congressman Paul lacks any tact in dealing with the Professor, he seldom gets a reply to his questions either.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
VXX Rated
Click chart to ENLARGE.
Sometimes stuff works, sometimes not so much. Sometimes it works, WHEN you adhere to the message, properly interpreted. That's probably the 'right' answer.
One example, might have been a 'considered' short on USO or other oil ETFs, below the 200 day average after the rally caps were on. Or taking the dollar long (I had the Euro short for awhile today).
Here's a sixty minute chart of the VXX (VIX futures ETF) which shows, what it shows. Fighting that just hasn't paid out, or conversely "paid the man".
There hasn't been anything approaching panic, despite the lunacy emanating from Capitol Hill. But why should that change?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Sometimes stuff works, sometimes not so much. Sometimes it works, WHEN you adhere to the message, properly interpreted. That's probably the 'right' answer.
One example, might have been a 'considered' short on USO or other oil ETFs, below the 200 day average after the rally caps were on. Or taking the dollar long (I had the Euro short for awhile today).
Here's a sixty minute chart of the VXX (VIX futures ETF) which shows, what it shows. Fighting that just hasn't paid out, or conversely "paid the man".There hasn't been anything approaching panic, despite the lunacy emanating from Capitol Hill. But why should that change?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Weakness, Not "Give Up"
The Fed wants to have it both ways, with claims that economic stabilization is here (or close), yet wanting to be accommodative until the twelfth of never, and that's a long, long, time.
So traders are perplexed, not wanting to miss the next big move, but many dismissing that corrective action could be 'it'.
- Breadth is negative, but not even minus 2ooo
- Goldmanilocks is negative
- The US dollar is trickling up (long the Yen was the currency play du jour)
- Regional banks (RKH) were on my list today (for a breakout in either direction)...they broke down
- The VIX-August VIX futures have narrowed from circa 4 to about 3.5 today
- August crude futures remain marginally positive
- Volume in the Euro (FXE) is pickung up, although it is not "breaking" yet, but could see gap fillage (or not)
Bottom line? The "trickle" is in the negative direction, with dollar strength, breadth weakness, Yen strength, volatility moving slightly up, and the confidence in the central banker con game at odds with what people are seeing.
All that being said, this is a tough market, and those who "prebought" the breakout yesterday, haven't been rewarded so far. Cost reduction (via layoffs) isn't the same as organic growth.
I dumped my COW and most of DBA early today (on dollar strengthening concerns) and am willing to wait for better entry or more definitive action.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Money Emperor Bernanke Goes Up the Hill to Carry Water for No Man
Click charts to ENLARGE.
The close was near the high as traders "pre-buy" the breakout. I wonder what Tom DeMark might say. My guess is that he'd consider that 'negative' predictive value for a successful breakout.
Explosive price action needed? Here's a scan of reduced historical volatility ratio (HV6/100 or HV10/100 < onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_0jshcRmzyKA/SmWXhoW0avI/AAAAAAAAX7A/oKihzxrxtec/s1600-h/ScreenHunter_7348.jpg">
Same church, different pew. Reduced historical volatility, inside day, NR4
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Lawmaker "moved" by Bernanke words. Of course, others "movement" belongs in the Ipecac line. See below from the above Bloomberg article.
In spite of writing off $112 billion, Citigroup is still sitting on $800 billion in SIVs, off its balance sheet, not marked to market. What's that worth? No one really knows and the Fed does not want anyone to find out either. That is why mark-to-market accounting is still suspended.
Geithner's PPIP also masks price discovery (on purpose) given the public is on the hook for 93% of the losses. The PPIP encourages speculation (at best), and at worst is a purposely fraudulent scheme to dump assets on the backs of taxpayers to benefit bondholders.
The Fed's game is to delay discovery and pretend things are getting better. Things might be for some assets. In the meantime however, data suggests more foreclosures, more credit card writeoffs, and more commercial real estate losses. Is the Fed winning or losing the battle? On the surface, with no price discovery, it's hard to know. However, if you give any credence to Neil Barofsky, the Fed may be losing a $23.7 trillion battle.
And Bernanke gets rock star treatment for rock head economics?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The close was near the high as traders "pre-buy" the breakout. I wonder what Tom DeMark might say. My guess is that he'd consider that 'negative' predictive value for a successful breakout.
Explosive price action needed? Here's a scan of reduced historical volatility ratio (HV6/100 or HV10/100 < onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_0jshcRmzyKA/SmWXhoW0avI/AAAAAAAAX7A/oKihzxrxtec/s1600-h/ScreenHunter_7348.jpg">Same church, different pew. Reduced historical volatility, inside day, NR4_________________________________________________________
Lawmaker "moved" by Bernanke words. Of course, others "movement" belongs in the Ipecac line. See below from the above Bloomberg article.
Not everyone has been so moved. Shelby, the Republican who has been one of the top critics of government bailouts, said he had a “good working relationship” with the Fed until the $700 billion TARP was proposed. Charlotte, North Carolina-based Bank of America, the biggest U.S. lender, received $45 billion in aid under the program. Citigroup Inc., based in New York, also got $45 billion.
“I like Bernanke personally,” Shelby said in an interview. “But I have deep reservations about some of the Fed’s actions, especially in the regulatory field.”
You know how I feel.
Bernanke has conducted his own economic experiment in socialism, transferring risk from the private sector to the taxpayers on the way to the continuing apotheosis of central bankers. Along the way, his comments about no need to worry about a housing bubble, contained credit crisis, and more have simply been exponentially wrong and moronic. We won't know the full scope of the damage of Greenspan-Bernanke for many years.
Mike Shedlock with the latest city-state crumbling. Here are a few of MISH's comments from yesterday...guess nobody will be echoing them to Bernanke today?
In spite of writing off $112 billion, Citigroup is still sitting on $800 billion in SIVs, off its balance sheet, not marked to market. What's that worth? No one really knows and the Fed does not want anyone to find out either. That is why mark-to-market accounting is still suspended.
Geithner's PPIP also masks price discovery (on purpose) given the public is on the hook for 93% of the losses. The PPIP encourages speculation (at best), and at worst is a purposely fraudulent scheme to dump assets on the backs of taxpayers to benefit bondholders.
The Fed's game is to delay discovery and pretend things are getting better. Things might be for some assets. In the meantime however, data suggests more foreclosures, more credit card writeoffs, and more commercial real estate losses. Is the Fed winning or losing the battle? On the surface, with no price discovery, it's hard to know. However, if you give any credence to Neil Barofsky, the Fed may be losing a $23.7 trillion battle.
And Bernanke gets rock star treatment for rock head economics?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Monday, July 20, 2009
Ocean's Fourteen
Get out of my pocket, get into my dreams.
One Central Banker with a Briefcase can steal more than ten men with guns...modified from the Godfather.
Barry Ritholtz explains. The Whiz Kidz of Washington have enriched business and fat-arsed bankers on the backs of the taxpayer to the tune of TRILLIONS. This makes every white-collar crime in the history of the world look like Amateur Hour.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Dollar Demise Keys Ongoing Sprint
Click charts to ENLARGE.
"Round and round and round she goes, where she stops, nobody knows." The SP500 and US Dollar Index seem inextricably linked.
The US dollar weekly drifts down to support. Do dollar believers heed the warning "beware consolidation at support"?.
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And as the dollar tickles support, so the SP500 sits just below resistance. Colin Twiggs discussed the potential for false breakouts in this environment. I'd encourage all of us to view both sides of the trade, the potential for both failure and success.
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Myriad Genetics (MYGN)..."you're never as good as you look when you win or as bad as you look when you lose." Creeping stock, creeping commitment for me (long MYGN at 25.15)
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VIX Futures ETF (VXX) makes new lows. I've been trying to imagine some trade of buying VIX and selling VIX options, but I'm seeing ways to lose despite the four point differential between August VIX and VIX futures. I don't feel that I can do the "due diligence" on this one.
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I'm a bit more focused on managing existing positions than finding new ones right now. Correct? I don't know. But I don't see this as a low risk situation in either direction, especially with two SPX stocks oversold and 93 percent of SPX stocks exceeding their ten day average. Overbought can be worked off via either price or time, and I'll try to put away the saw while I'm out on the limb.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
"Round and round and round she goes, where she stops, nobody knows." The SP500 and US Dollar Index seem inextricably linked.
The US dollar weekly drifts down to support. Do dollar believers heed the warning "beware consolidation at support"?.______________________________________________________
And as the dollar tickles support, so the SP500 sits just below resistance. Colin Twiggs discussed the potential for false breakouts in this environment. I'd encourage all of us to view both sides of the trade, the potential for both failure and success.________________________________________________________
Myriad Genetics (MYGN)..."you're never as good as you look when you win or as bad as you look when you lose." Creeping stock, creeping commitment for me (long MYGN at 25.15)_________________________________________________________
VIX Futures ETF (VXX) makes new lows. I've been trying to imagine some trade of buying VIX and selling VIX options, but I'm seeing ways to lose despite the four point differential between August VIX and VIX futures. I don't feel that I can do the "due diligence" on this one.________________________________________________________________
I'm a bit more focused on managing existing positions than finding new ones right now. Correct? I don't know. But I don't see this as a low risk situation in either direction, especially with two SPX stocks oversold and 93 percent of SPX stocks exceeding their ten day average. Overbought can be worked off via either price or time, and I'll try to put away the saw while I'm out on the limb.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Yahoo Headline "CIT RESCUE PLAN PROVES CAPITALISM WORKS"
Well, if the plan proves capitalism works, then AIG, BSC, GM, LEH, FNM and FRE prove it doesn't.
But who's gonna quibble over a few trillion dollars.
- Breadth (number one tell) is up
- The Dollar continues its lonely trip downhill
- Goldman Sachs makes intraday highs
- The VXX makes intraday lows
- Crude futures won't go down (what's good for oil is good for the market?)
- RSX up over 5 percent, EWZ over 3 percent
- RIMM adds four plus percent with pretty good volume
- Citigrope falls almost seven percent, BAC almost five percent (healthy?)
Goldman "expects a sustained rally" (time for the big boys to hand equities to you and me?) Were they the 200 dollah a barrel oil folks, or am I misremembering (possible)? A Swordfish style misdirection or the real deal...you never know with the evil overlords.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
What to Watch
Click charts to ENLARGE.
Oil springs back to life in the reflation trade. Last week oil futures moved and proved along with the SPX.
The 60 minute CL futures chart shows this.
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Jason Goepfert's Sentiment Trader shows not as much extension as one might think.
Meanwhile "Ben (Honey I Shrunk the Dollar) Bernanke" must be pleased with rising market prices, declining volatility, and the IGNORANCE IS BLISS competitive devaluation trade. Above is the 60 minute chart of the dollar. Are we going to retest 71?
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The correlate is the Euro (Netdania.com chart of the EURUSD), breaking out of a symmetrical triangle on the daily chart.
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And GOLD is on the march, too. Mirabile dictu.
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If a little weakness of the dollar is a good thing, is a lot of weakness better? The argument advanced by weak dollar advocates is that dollar weakness makes US exports cheaper, benefiting US manufacturing. But buying foreign goods becomes more expensive, at least in a free-market consumer economy. As I've said before, on the rare occasion I go to Macy's with my wife, I spend the whole time trying to find ANYTHING for sale made in the U.S.A. Usually, I can't.
But I'm not oblivious to the impact of currency effects either.
Copper...
Cotton...
Lumber... Lumber is relatively weaker than the prior two commodities
So, there's always a trade-off at work. The rich get richer, and the poor have to spend more when commodity inflation strikes...
Last week I mentioned DBA and it should be a beneficiary.
As always keep on your radar:
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Oil springs back to life in the reflation trade. Last week oil futures moved and proved along with the SPX.
The 60 minute CL futures chart shows this.______________________________________________________________
Jason Goepfert's Sentiment Trader shows not as much extension as one might think.
Meanwhile "Ben (Honey I Shrunk the Dollar) Bernanke" must be pleased with rising market prices, declining volatility, and the IGNORANCE IS BLISS competitive devaluation trade. Above is the 60 minute chart of the dollar. Are we going to retest 71?_______________________________________________________
The correlate is the Euro (Netdania.com chart of the EURUSD), breaking out of a symmetrical triangle on the daily chart.________________________________________________________________
And GOLD is on the march, too. Mirabile dictu.________________________________________________________________
If a little weakness of the dollar is a good thing, is a lot of weakness better? The argument advanced by weak dollar advocates is that dollar weakness makes US exports cheaper, benefiting US manufacturing. But buying foreign goods becomes more expensive, at least in a free-market consumer economy. As I've said before, on the rare occasion I go to Macy's with my wife, I spend the whole time trying to find ANYTHING for sale made in the U.S.A. Usually, I can't.
But I'm not oblivious to the impact of currency effects either.
Copper...
Cotton...
Lumber... Lumber is relatively weaker than the prior two commodities
So, there's always a trade-off at work. The rich get richer, and the poor have to spend more when commodity inflation strikes...
Last week I mentioned DBA and it should be a beneficiary.As always keep on your radar:
- Breadth
- The US dollar
- Goldman Sachs
- Volatility
- Crude and copper futures
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Sunday, July 19, 2009
Housing Outlook from Barry Ritholtz
Barry Ritholtz gives cogent reasons why the housing "soft patch" can still get softer. Housing should NOT be expected to be a leader in the next cycle, but what will be?
Of course, that's a minor problem compared to THIS.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Will the Real Dollar Please Stand Up?
Click chart to ENLARGE.
The recent rally on the US equity markets has accompanied US dollar weakness, a helpful if not necessary condition. We shouldn't confuse causation with correlation, but neither should we ignore the facts.
The dollar has tried to stave off another breakdown from a symmetrical triangle, and whether intermediate-term (Gann) lows at 79.19 hold is more than an academic call.
The Greenspan-Bernanke administration has sliced a third off the value of our money in just six years. Not exactly an admirable record, is it?
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The SPX point-and-figure chart turned positive this week. The crowd was bearish and many got zapped for their trouble. Now the bulls beat their chest. Who takes the prize this week.
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Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The recent rally on the US equity markets has accompanied US dollar weakness, a helpful if not necessary condition. We shouldn't confuse causation with correlation, but neither should we ignore the facts.
The dollar has tried to stave off another breakdown from a symmetrical triangle, and whether intermediate-term (Gann) lows at 79.19 hold is more than an academic call.
The Greenspan-Bernanke administration has sliced a third off the value of our money in just six years. Not exactly an admirable record, is it?_____________________________________________________________
The SPX point-and-figure chart turned positive this week. The crowd was bearish and many got zapped for their trouble. Now the bulls beat their chest. Who takes the prize this week.___________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Saturday, July 18, 2009
Poena Par Sapienta
Click charts to ENLARGE.
End of the week reality? The foreign ETFs followed did pretty well.
Top: EEM, EWA, EWC, EWZ, FXI
Bottom: IFN, RSX, TKF, CUBA (long CUBA)
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Many commodities came off their bottoms, too. The Invert (DTO) oil double short, took it in the shorts.
Costco (COST) continues to form a base.
Under the best of circumstances, bull markets form under the aegis of large numbers of high earnings strength, relative strength stocks breaking out from sound bases. That simply isn't happening although this week's action has put wind beneath bullish wings within the broad context of a market that could remain in a longer-term trading range.
The mid 1960s to the early 1980s comes to mind. TC2000 chart, quarterly.
The commercials are "hoggish" on live hogs.
They aren't quaking over oats either.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
End of the week reality? The foreign ETFs followed did pretty well.
Top: EEM, EWA, EWC, EWZ, FXIBottom: IFN, RSX, TKF, CUBA (long CUBA)
___________________________________________________________
Many commodities came off their bottoms, too. The Invert (DTO) oil double short, took it in the shorts.
Costco (COST) continues to form a base.Under the best of circumstances, bull markets form under the aegis of large numbers of high earnings strength, relative strength stocks breaking out from sound bases. That simply isn't happening although this week's action has put wind beneath bullish wings within the broad context of a market that could remain in a longer-term trading range.
The mid 1960s to the early 1980s comes to mind. TC2000 chart, quarterly.The commercials are "hoggish" on live hogs.
They aren't quaking over oats either.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Friday, July 17, 2009
Currency Events
Click charts to ENLARGE.
I've discussed the relevance of foreign currency trends in helping assess dollar action. Weaker dollars obvious buy fewer imported goods, but are 'weaker' relative to other currency. The excellent daily currency charts are from Netdania.com.
Euro/US Dollar...symmetrical triangle.
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US Dollar/Canadian Dollar...the big picture is dollar weakness, a counter-trend rally tired.
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British Pound/US Dollar, a suggestion of pound weakness to my eye.
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Australian Dollar to US Dollar. It could be a flag, or lower highs.
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I don't trade futures contracts, although I do follow some, as well as the Commitments of Traders.
Top from left: FXE (Euro) and FXC (Canadian currency)
Bottom: FXB (British Pound), FXA (Australian dollar)
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
I've discussed the relevance of foreign currency trends in helping assess dollar action. Weaker dollars obvious buy fewer imported goods, but are 'weaker' relative to other currency. The excellent daily currency charts are from Netdania.com.
Euro/US Dollar...symmetrical triangle._______________________________________________________________
US Dollar/Canadian Dollar...the big picture is dollar weakness, a counter-trend rally tired.__________________________________________________________
British Pound/US Dollar, a suggestion of pound weakness to my eye._________________________________________________________
Australian Dollar to US Dollar. It could be a flag, or lower highs.______________________________________________________________
I don't trade futures contracts, although I do follow some, as well as the Commitments of Traders. Top from left: FXE (Euro) and FXC (Canadian currency)
Bottom: FXB (British Pound), FXA (Australian dollar)
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Saturday Tidbits
Click charts to ENLARGE.
The SP500 did nothing wrong this week. That's all you can say.
SP500 daily.
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Trade Universe for Monday. Note the high number of narrow range of seven day setups that may project wide price swings.
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SPY Tripanel: Daily, 30 minute, 10 minute, the smaller time frames show the narrowing, indecision as well
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Gold ETF (GLD)....negative oscillators within 60 minute chart.
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60 minute chart of the US Dollar..."stinky cheese" trying to rally, not a positive for US equities, living off dollar weakness.
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You don't think the market is overbought? 92 percent of SPX stocks exceed the 10 period average and 1 of 500 SPX stocks is oversold by stochastics, the lowest I have ever recorded.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The SP500 did nothing wrong this week. That's all you can say.
SP500 daily.____________________________________________________________
Trade Universe for Monday. Note the high number of narrow range of seven day setups that may project wide price swings.__________________________________________________________
SPY Tripanel: Daily, 30 minute, 10 minute, the smaller time frames show the narrowing, indecision as well____________________________________________________________
Gold ETF (GLD)....negative oscillators within 60 minute chart.____________________________________________________________
60 minute chart of the US Dollar..."stinky cheese" trying to rally, not a positive for US equities, living off dollar weakness._____________________________________________________________
You don't think the market is overbought? 92 percent of SPX stocks exceed the 10 period average and 1 of 500 SPX stocks is oversold by stochastics, the lowest I have ever recorded.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
"One of the Great Ones" Lenny Dykstra from Cramer's Mouth to Your Ears
Keywords: James Cramer, Lenny Dykstra, Daily Show, Jon Stewart, Schadenfreude
Is this the sorriest Wall Street clip ever? From Calculated Risk.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Lenny Dykstra's Financial Career | ||||
| ||||
Is this the sorriest Wall Street clip ever? From Calculated Risk.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Overbought Gets More Overbought
Click charts to ENLARGE.
As one analyst would tell me, "there's a limit to fear, but no limit to greed." Therefore, identifying tops is hard, but we look for new highs on light volume, new climax volume tops, and spike tops. If no tree grows to the sky, then one wonders how cutting produces infinite growth. But I digress.
Good trading and great risk management to all.
If you look at the "across the room" view, you see correlation, resistance on some areas, and energy (XLE) underperforming.
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Unfortunately, JJG (Grains) is extremely illiquid with wide spreads.
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The point-and-figure chart of the grain ETF (JJG) shows a deep pullback following the last advance.
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However, I can trade DBA as an alternative.
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There weren't a lot of "Gann Weekly Bottom" signals, at least that's what I call 'em...time and price lows, close above the open, close higher, top half of range closes. MYGN is one...(long MYGN).
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Educational use only. Never intended as investment advice.
As one analyst would tell me, "there's a limit to fear, but no limit to greed." Therefore, identifying tops is hard, but we look for new highs on light volume, new climax volume tops, and spike tops. If no tree grows to the sky, then one wonders how cutting produces infinite growth. But I digress.
Good trading and great risk management to all.
If you look at the "across the room" view, you see correlation, resistance on some areas, and energy (XLE) underperforming._________________________________________________________
Unfortunately, JJG (Grains) is extremely illiquid with wide spreads._____________________________________________________________
The point-and-figure chart of the grain ETF (JJG) shows a deep pullback following the last advance._______________________________________________________
However, I can trade DBA as an alternative.________________________________________________________
There weren't a lot of "Gann Weekly Bottom" signals, at least that's what I call 'em...time and price lows, close above the open, close higher, top half of range closes. MYGN is one...(long MYGN).Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Educational use only. Never intended as investment advice.
No Fretting
Although the market has become frothy by a number of measures, it has yet to show a willingness to "take profits"/pull back or acknowledge the possibility of perfection pricing. That's our job so far to identify if and when it does.
- Breadth is minimally negative
- The dollar is weakening if anything
- Crude futes are moving on up
- Volatility is down as is typical for a Friday (VIX)
- Bank of America (BAC) earnings have not been embraced so far
- The SP500 is considering an opening range breakout (ORB) as I type
Commodities do not go to zero, although a number of the grains have tried recently. Therefore, I am long DBA.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Rational Exuberance?
Click charts to ENLARGE.
A Chinese financial blog looks inside their numbers and sees debt as a looming problem. Sound familiar. A highlight:
The 'inverts' are in the third panel (across) and the bottom has breadth, the US dollar, Goldman, VIX, and GLD.
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Bad US dollar, good market (60 minute chart of the US dollar, from Netdania.com)
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I sold off some of my Canadian dollar (FXC)...will the US dollar continue to plunge (Professor Bernanke tells us that a weak dollar is not inflationary...did he teach his students that?) or retrace?
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Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
A Chinese financial blog looks inside their numbers and sees debt as a looming problem. Sound familiar. A highlight:
What about the dollars generated from the trade surplus and invested into US Treasury bonds? Won’t that help the US fund its fiscal deficit?
Again the answer is no. The US government is not borrowing for abstract reasons, but rather is borrowing in order to spend locally to generate domestic employment. The amount of borrowing it needs to generate a fixed amount of domestic jobs is correlated with the US trade deficit, because it is through the trade deficit that domestic consumption “leaks out” to create jobs abroad. The higher the trade deficit, in other words, the more the US government needs to borrow to generate a fixed number of American jobs, and so the fact that China is reinvesting the dollars generated by the trade surplus with the US does not make it easier for the US to borrow since it simultaneously requires the US to borrow more.
The Big Dogs? a 60 minute overview...
The 'inverts' are in the third panel (across) and the bottom has breadth, the US dollar, Goldman, VIX, and GLD.__________________________________________________________
Bad US dollar, good market (60 minute chart of the US dollar, from Netdania.com)____________________________________________________________
I sold off some of my Canadian dollar (FXC)...will the US dollar continue to plunge (Professor Bernanke tells us that a weak dollar is not inflationary...did he teach his students that?) or retrace?_____________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Thursday, July 16, 2009
When is a Market Overbought Short Term
Click charts to ENLARGE.
Why do most investors underperform the market? They tend to get long at the top and out at the bottom.
But how can we try to decide.
Here's the TRIN with 3 and 10 period moving averages. When multi-month lows occur on the three day TRIN, that's worrisome.
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The Mamis-Meisler NYSE breadth oscillator (10 day MA) is not at an 'obvious' top.
_______________________________________________________________
Additional "toppy criteria" (my observation) relate to the percentage of SP500 stocks above the 10 period average and the number oversold by stochastics.
Currently 96.6% of SPX stocks exceed the ten-period MA. Needless to say, this is extreme.
Additionally, 99.6% of SPX stocks are NOT oversold by 14 day stochastics.
SPX with 7 period RSI and 5 period stochastics also have moved to nosebleed territory.
__________________________________________________________
Trade Universe for Friday with DeMark Range Projections (tm).
_____________________________________________________________
I'm not gonna chase a market this extended. That's life.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Why do most investors underperform the market? They tend to get long at the top and out at the bottom.
But how can we try to decide.
Here's the TRIN with 3 and 10 period moving averages. When multi-month lows occur on the three day TRIN, that's worrisome.______________________________________________________
The Mamis-Meisler NYSE breadth oscillator (10 day MA) is not at an 'obvious' top._______________________________________________________________
Additional "toppy criteria" (my observation) relate to the percentage of SP500 stocks above the 10 period average and the number oversold by stochastics.
Currently 96.6% of SPX stocks exceed the ten-period MA. Needless to say, this is extreme.
Additionally, 99.6% of SPX stocks are NOT oversold by 14 day stochastics.
SPX with 7 period RSI and 5 period stochastics also have moved to nosebleed territory.__________________________________________________________
Trade Universe for Friday with DeMark Range Projections (tm)._____________________________________________________________
I'm not gonna chase a market this extended. That's life.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Neutralized
CIT dies and the market says, "what me worry?"
Foreclosures surge, the market says, "no problemo."
Breadth is neutral.
The dollar is weak. "Don't worry, we'll print more."
Goldman Sachs is neutral.
Volatility is down.
The SP500 came in with 99% of stocks not oversold by stochastics. The trend is your friend, unless it's not a trend.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Chart Porn
Click charts to ENLARGE.
You can't argue with a powerful move across many sectors. Sure, volume could be better, and well, a couple of swallows may not make a summer. Are there some 'stocks to watch'?
Transports (IYT)...small move, low volume. Three pushes to a top coming?
Newmont (NEM)...stalled at the 20 day average
Intuitive Surgical (ISRG)...if you came in long, okay, if you got long intraday, not so much
Mosaic (MOS)...some of the Ags, dragged
The US dollar (USD)...the Fed picks your pocket, and you laugh?
Volatility Index (VIX)...hammer time?
Baxter (BAX)...too boring to rally on a bear-killing day.
Nat Gas (UNG)...can't get out of its own way
Japanese Yen Trust (FXY)...pullback or plowed under?
Triangles, from Amibroker
______________________________________________________________
Get long, get short, or manage existing positions? Feels like the latter to me. Are you Homer Simpson?
The futures are pretty neutral coming in. A "substantial" downdraft is likely to be met with pullback buying initially. How CIT impacts the markets could also be a factor.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
You can't argue with a powerful move across many sectors. Sure, volume could be better, and well, a couple of swallows may not make a summer. Are there some 'stocks to watch'?
Transports (IYT)...small move, low volume. Three pushes to a top coming?Newmont (NEM)...stalled at the 20 day average
Intuitive Surgical (ISRG)...if you came in long, okay, if you got long intraday, not so much
Mosaic (MOS)...some of the Ags, dragged
The US dollar (USD)...the Fed picks your pocket, and you laugh?
Volatility Index (VIX)...hammer time?
Baxter (BAX)...too boring to rally on a bear-killing day.
Nat Gas (UNG)...can't get out of its own way
Japanese Yen Trust (FXY)...pullback or plowed under?
Triangles, from Amibroker______________________________________________________________
Get long, get short, or manage existing positions? Feels like the latter to me. Are you Homer Simpson?
The futures are pretty neutral coming in. A "substantial" downdraft is likely to be met with pullback buying initially. How CIT impacts the markets could also be a factor.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Wednesday, July 15, 2009
"Trust But Verify"
Click charts to ENLARGE.
Multiple time frame analysis. You be the judge.
These are candle charts, daily, 30 minutes, and 10 minutes, with Bollinger Bands.
Bank of America (BAC)...tires late in the day
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First Solar (FSLR)...net long via call spreads
________________________________________________________
Goldman Sachs (GS)
__________________________________________________
Agnico-Eagle Mines (AEM)
___________________________________________________
Intercontinental Exchange (ICE)
_____________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Multiple time frame analysis. You be the judge.
These are candle charts, daily, 30 minutes, and 10 minutes, with Bollinger Bands.
Bank of America (BAC)...tires late in the day___________________________________________________________
First Solar (FSLR)...net long via call spreads________________________________________________________
Goldman Sachs (GS)__________________________________________________
Agnico-Eagle Mines (AEM)___________________________________________________
Intercontinental Exchange (ICE)_____________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Hypothesis: Trading Market or Trending Market?
Click chart to ENLARGE.
Neither strength nor weakness requires an explanation. Our job is to follow not lead.
The Gann 3 day chart turns up and the major trend (Gann-style) similarly does within the context of the broader range (827-956). As a trader, I'm obliged to remember the mantra, "when the ducks quack, feed them."
The "big picture" is the range, and the small one is the day-to-day stuff.
_____________________________________________________________
Bank of America (BAC) showed a similar pattern, breaking above the Gann intermediate high at 13.48, but then came in to finish below at 13.42. I came in fairly long deltas with August 10 calls, and a sizeable position of August 14 and August 15 calls. I went home lighter, neither a bull nor bear, but no pig.
__________________________________________________________
The current number of SP500 stocks that are oversold by stochastics? FOUR, less than one percent. Not a be-all, end-all, but a risk metric I monitor.
Trade Universe
__________________________________________________________
Do you want to be LONG, SHORT, or OUT of this? Low, hammer, high in range, close above the open. Do you feel lucky punk, well do ya? It's the VIX.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Neither strength nor weakness requires an explanation. Our job is to follow not lead.
The Gann 3 day chart turns up and the major trend (Gann-style) similarly does within the context of the broader range (827-956). As a trader, I'm obliged to remember the mantra, "when the ducks quack, feed them."The "big picture" is the range, and the small one is the day-to-day stuff.
_____________________________________________________________
Bank of America (BAC) showed a similar pattern, breaking above the Gann intermediate high at 13.48, but then came in to finish below at 13.42. I came in fairly long deltas with August 10 calls, and a sizeable position of August 14 and August 15 calls. I went home lighter, neither a bull nor bear, but no pig.__________________________________________________________
The current number of SP500 stocks that are oversold by stochastics? FOUR, less than one percent. Not a be-all, end-all, but a risk metric I monitor.
Trade Universe__________________________________________________________
Do you want to be LONG, SHORT, or OUT of this? Low, hammer, high in range, close above the open. Do you feel lucky punk, well do ya? It's the VIX.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Live Alert: BAC
BAC at the Gann swing high...(disclosure: position in BAC)
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
One Final Thing
Time considerations, if considered off the short-term low, could argue for a more durable rally. This is WHY they sell options, with lower volatility producing cheaper entry...for speculation or for hedging.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The Least Important Price
"The least important price...is the one at which you own an investment."
Also, if one happens to be "in" today, one is making money. That could be brilliant investment strategy or dumb luck. Assign the appropriate one to yourself.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Dollar Crushed, Equities Rally
The US dollar continues its downward drip, and equities celebrate with breadth and winners among many areas.
- Breadth, the surest indicator soared to > +4000
- Goldman Sachs is up over 3 percent
- Bank of America is also up over 3.5% (long BAC calls of various stripes)
- Volatility is getting crushed
- is what it is
Good trading and great risk management to all
Educational use only. Never intended as investment advice.
Crunch Time, For Credit
Click charts to ENLARGE.
This anecdote came across my desk today, from my son, Conor, who has no debt, no mortgage, and a steady income exceeding most professionals.
I went to Bloomingdales today because I needed to replace some clothes that got lost in my move, and after racking up a fairly hefty bill I applied for a Bloomingdales credit card to get the discount you get by getting a card. I was denied. My credit score is 770+, so if I'm getting denied credit who's actually getting approved?
It does make you wonder.
All the SPDR sectors rose yesterday, except financials, so maybe Conor's experience isn't so different. Note the overall correlation though.
____________________________________________________________
Stocks above the 50 period average (NYSE stocks) are coming off lows.
____________________________________________________
Mike Shedlock with his usual gems:
Meanwhile, former Federal Reserve Chairman Alan Greenspan told Republican senators on Tuesday at their private weekly luncheon at the Capitol that the government's $1 trillion deficit was the single biggest hurdle to economic recovery.
Question of the Day Why is that Greenspan is ignored on the few occasions where he makes any sense, yet people fawn all over him the vast majority of the time when he makes no sense at all?
Bespoke with Sector P/E ratios.
The Amibroker DeMark Sequential (tm) list is quite short today (new signals)
________________________________________________________
Where is the easy trade today? Fading the open, presuming futures prices continue their ramp? The chart guys have been in control recently.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
This anecdote came across my desk today, from my son, Conor, who has no debt, no mortgage, and a steady income exceeding most professionals.
I went to Bloomingdales today because I needed to replace some clothes that got lost in my move, and after racking up a fairly hefty bill I applied for a Bloomingdales credit card to get the discount you get by getting a card. I was denied. My credit score is 770+, so if I'm getting denied credit who's actually getting approved?
It does make you wonder.
All the SPDR sectors rose yesterday, except financials, so maybe Conor's experience isn't so different. Note the overall correlation though.____________________________________________________________
Stocks above the 50 period average (NYSE stocks) are coming off lows.____________________________________________________
Mike Shedlock with his usual gems:
Meanwhile, former Federal Reserve Chairman Alan Greenspan told Republican senators on Tuesday at their private weekly luncheon at the Capitol that the government's $1 trillion deficit was the single biggest hurdle to economic recovery.
Question of the Day Why is that Greenspan is ignored on the few occasions where he makes any sense, yet people fawn all over him the vast majority of the time when he makes no sense at all?
Bespoke with Sector P/E ratios.
The Amibroker DeMark Sequential (tm) list is quite short today (new signals)________________________________________________________
Where is the easy trade today? Fading the open, presuming futures prices continue their ramp? The chart guys have been in control recently.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Tuesday, July 14, 2009
Sun Spots
Click chart to ENLARGE.
Took a small trade today...is it low risk or plain crazy?
Went long some August FSLR out of the money calls with FSLR at 140. Profoundly oversold with MACD divergence and (not shown) a recent DeMark Sequential (tm) buy.
_______________________________________________
Here's the Gann Square of 9, with FSLR topping out at 205. 360 degrees around the square counterclockwise brings us to 152, and another 90 degrees to 140. If FSLR were to rally, I could either sell the initial calls, or potentially sell calls to create a vertical spread "free trade".
_________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Took a small trade today...is it low risk or plain crazy?
Went long some August FSLR out of the money calls with FSLR at 140. Profoundly oversold with MACD divergence and (not shown) a recent DeMark Sequential (tm) buy._______________________________________________
Here's the Gann Square of 9, with FSLR topping out at 205. 360 degrees around the square counterclockwise brings us to 152, and another 90 degrees to 140. If FSLR were to rally, I could either sell the initial calls, or potentially sell calls to create a vertical spread "free trade". _________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
You're Welcome, Goldman Sachs
Click charts to ENLARGE.
Goldman Sachs made spectacular profits, partly because of their trading skill and business acumen, and in large part because the US taxpayer bailed out their counter-party risk. The market asks the question that in a deleveraging world, what will Goldman's future look like.
The US dollar teased and finished at the high end of the channel on the hourly chart.
________________________________________________________________
The US dollar had a counter-trend rally against the Canadian dollar (CAD), but that looks tired...(net long the Canadian dollar via FXC)
______________________________________________________
Goldman Sachs might have juiced the recent action, but it's been CRUDE (August 30 minute futures above) that have correlated better with overall market action. The central planners have fought the twin "perils" of volatility and deflation.
__________________________________________________________
The SP500 rallies to resistance (the 50 period moving average)...with underwhelming volume.
__________________________________________________________
What will be Wednesday's theme? Thirty-one of ninety-two of the "100 MUST" space show NR7 setups (narrowest range of seven days)...that means an above average chance of price expansion (no direction predicted).
Monitoring the "triple threat" of the US dollar, Crude, and financials should help direct us.
Best news? The "small cap" rallying space has crept upward in number.
Worst news? The 100 MUST Gann signal low space tonight checks in at zero.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Goldman Sachs made spectacular profits, partly because of their trading skill and business acumen, and in large part because the US taxpayer bailed out their counter-party risk. The market asks the question that in a deleveraging world, what will Goldman's future look like.
The US dollar teased and finished at the high end of the channel on the hourly chart.________________________________________________________________
The US dollar had a counter-trend rally against the Canadian dollar (CAD), but that looks tired...(net long the Canadian dollar via FXC)______________________________________________________
Goldman Sachs might have juiced the recent action, but it's been CRUDE (August 30 minute futures above) that have correlated better with overall market action. The central planners have fought the twin "perils" of volatility and deflation.__________________________________________________________
The SP500 rallies to resistance (the 50 period moving average)...with underwhelming volume.__________________________________________________________
What will be Wednesday's theme? Thirty-one of ninety-two of the "100 MUST" space show NR7 setups (narrowest range of seven days)...that means an above average chance of price expansion (no direction predicted).
Monitoring the "triple threat" of the US dollar, Crude, and financials should help direct us.
Best news? The "small cap" rallying space has crept upward in number.
Worst news? The 100 MUST Gann signal low space tonight checks in at zero.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Process Thinking
Ask yourself a few questions:
- Do I have an edge (technical, fundamental, something else?). I'm a visual trader. So be it.
- Can I "do" what the market "does"?
- What is my personality? Is my plan matched to it?
- Can I exploit that edge (what is my make-up)?
- Can I hold winners?
- Can I sacrifice losers (throw the small losses back into the ocean) purging my 'mistakes'?
- Will I let myself get blown up?
- Am I willing to pay the price, do the study, the analysis, to compete against the best?
- Can I accept the "rules of the game?"
- It's not designed to be "fair".
- Many major corporations exist for the management's benefit, not the shareholders.
- You won't have the best available information.
- Most of the cheaters will never get punished.
- Psychology is everything.
If you can't answer those questions and accept the unwritten rules, should you be playing?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Keen Sense of the Obvious
Click chart to ENLARGE.
The "easy" trade was selling early enthusiasm, but it didn't reap much benefit either.
- Breadth is mildly positive (+1000)
- Goldman is still in the red (sold my call spreads for lunch money gains)
- BAC is slightly down as well...sold some calls and repurchased cheaper
- TBT is up unspectacularly
- Losers: FSLR (long a little via calls on a mean reversion/Gann number trade), POT, VWDRY
- Winners: CIT, PCX, BNI, CPO, GOLD
Overall on the heels of yesterday's action, today is more of a win for bulls than anything else, having not given back much if anything.
The 'tells' of the market have been Crude, the US dollar, and financials (that's news?).
Here's the watch list I came in with...doesn't make it right.
Goldman Rush to Continue?
Click charts to ENLARGE.
Goldman Sachs and the US Government coin money, so what's a trader to do?
Is Nike (NKE) ready to fight the gap (arrow), defeat the one-day range (circle), and capitalize on strong support or is the greater concern the consolidation at support with a head-and-shouders top looming (no position).
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The weak US dollar has supported US equities...you gotta watch the Greenback.
___________________________________________________________
Will commodity ETFs like GSG feel the love?
_____________________________________________________________
Bank of America is the biggest tell now (BAC)...long BAC via options.
__________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Goldman Sachs and the US Government coin money, so what's a trader to do?
Is Nike (NKE) ready to fight the gap (arrow), defeat the one-day range (circle), and capitalize on strong support or is the greater concern the consolidation at support with a head-and-shouders top looming (no position).___________________________________________________________
The weak US dollar has supported US equities...you gotta watch the Greenback.___________________________________________________________
Will commodity ETFs like GSG feel the love?_____________________________________________________________
Bank of America is the biggest tell now (BAC)...long BAC via options.__________________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Monday, July 13, 2009
Comment du jour
In response to "bad ideas do tend to die", I received the following email:
...unless those ideas prop up the benevolence/effectiveness of the state, in which case they grow over time until they become the dominant state philosophy and cause the state to implode (Keynesian economics).
This explains it all.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
...unless those ideas prop up the benevolence/effectiveness of the state, in which case they grow over time until they become the dominant state philosophy and cause the state to implode (Keynesian economics).
This explains it all.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
SPX Gann 3 Day Chart
Click charts to ENLARGE.
My understanding of Gann was that he looked for LOW RISK trading opportunities. The 3 day TREND change occurred recently when the prior 3 day low swing was taken out. Gann would look for retracements to find lower risk entry, with stops above.
Here's the SP500 chart. SPX rallied to about the 50 percent retrace today. The 90 degree turn off the 889 pivot is 919.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
My understanding of Gann was that he looked for LOW RISK trading opportunities. The 3 day TREND change occurred recently when the prior 3 day low swing was taken out. Gann would look for retracements to find lower risk entry, with stops above.
Here's the SP500 chart. SPX rallied to about the 50 percent retrace today. The 90 degree turn off the 889 pivot is 919.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Fab 5.
Bill Cara had a request out yesterday for people's best five investment blogs. I enjoy writing mine, but I'm JAG (just another guy).
My top five:
Cara Community
Dave Landry
Weekly Technical Commentary
Tim Knight
Colin Twiggs
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
My top five:
Cara Community
Dave Landry
Weekly Technical Commentary
Tim Knight
Colin Twiggs
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The Smartest Man in America
Click charts to ENLARGE
The Housing Index.
Great stuff from MISH!
Nice call, guy...phi beta dunce kappa?
____________________________________________________________
Maybe MISH's article won't be on Ben's renomination resume'?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The Housing Index.Great stuff from MISH!
Nice call, guy...phi beta dunce kappa?____________________________________________________________
Maybe MISH's article won't be on Ben's renomination resume'?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
"Do Bad Ideas Tend to Die?"
Click charts to ENLARGE.
The Boston Globe presented a thought-provoking article yesterday called "The Next Conservative Thinkers." Within, the author notes that Megan McArdle says "bad ideas do tend to die." She qualifies that by noting that it may take a long time...
Consider slavery. Throughout history, groups have repeatedly sought to justify and enforce their 'superiority' by controlling and restricting the lives of groups and individuals based on 'arbitrary' criteria, such as race, sex, or ethnicity. Even within the context of the Declaration of Independence, slavery flourished until ended not by democracy but war.
We like to apply labels to people and ideas because we favor simplicity. We can discard a good idea if it comes from the wrong source or embrace mediocrity if it originates in our camp. If conventional wisdom violates common sense, which do we choose?
Market wisdom emanates from the higher levels of the cortex or the limbic system? Today, the Goldman Sachs upgrade created a synaptic tidal wave of bullishness, reflected by breadth and by a run to the financials.
Goldman Sachs (GS)...a gap and run with volume, but still below support. One analyst I spoke with today discussed GS July 150-160 one by two spreads, but I wasn't biting. I had concerns over a lack of risk control. I did take some refuge in some August vertical GS spreads.
_________________________________________________________
Bank of America (BAC) got an even larger (percentage-wise) boost with volume and an MACD cross from the collateral drift.
_______________________________________________________________
I like these kinds of trades, for Hologic (HOLX). HOLX made a big pullback to the .618 retrace and I took entry in the (highly) oversold area. Tom DeMark would remind us, "you can't do size, at highs", not that I'm doing that much size.
____________________________________________________________
Could these high volume ETFs be making turns?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The Boston Globe presented a thought-provoking article yesterday called "The Next Conservative Thinkers." Within, the author notes that Megan McArdle says "bad ideas do tend to die." She qualifies that by noting that it may take a long time...
Consider slavery. Throughout history, groups have repeatedly sought to justify and enforce their 'superiority' by controlling and restricting the lives of groups and individuals based on 'arbitrary' criteria, such as race, sex, or ethnicity. Even within the context of the Declaration of Independence, slavery flourished until ended not by democracy but war.
We like to apply labels to people and ideas because we favor simplicity. We can discard a good idea if it comes from the wrong source or embrace mediocrity if it originates in our camp. If conventional wisdom violates common sense, which do we choose?
Market wisdom emanates from the higher levels of the cortex or the limbic system? Today, the Goldman Sachs upgrade created a synaptic tidal wave of bullishness, reflected by breadth and by a run to the financials.
Goldman Sachs (GS)...a gap and run with volume, but still below support. One analyst I spoke with today discussed GS July 150-160 one by two spreads, but I wasn't biting. I had concerns over a lack of risk control. I did take some refuge in some August vertical GS spreads._________________________________________________________
Bank of America (BAC) got an even larger (percentage-wise) boost with volume and an MACD cross from the collateral drift._______________________________________________________________
I like these kinds of trades, for Hologic (HOLX). HOLX made a big pullback to the .618 retrace and I took entry in the (highly) oversold area. Tom DeMark would remind us, "you can't do size, at highs", not that I'm doing that much size.____________________________________________________________
Could these high volume ETFs be making turns?Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
It's All Gold(man)?
Goldman Sachs makes tons of money...so the market's fixed? The bulls get a life today, and the maelstrom of non-regulation, failing states, underemployment, pension shortfalls, and so on gets put on the back burner. I can live with that for today.
At least for today, so far.
- Breadth up + 2500 and change
- The US dollar is slightly negative (long FXC)
- Goldman is up (long some GS call spreads)
- Volatility is down
But riddle me this? The TNX is up fairly small, and TBT even less. Are there Phillistines among us?
Problems? CIT. Maybe it sounds too much like Citigroup?
The financials are carrying the day so far, and even XLB and XLI are up almost a deuce.
Not working so much? Energy, RIMM, and some Ed stocks, like APOL.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
ACME Stimulus Package
Click charts to ENLARGE.
The SP500 futures are off early. Why not? There's often a 'delay' between serving and digesting economic data like consumer confidence. And what about the states' budgets falling apart?
Find 889 (720 degrees of the SPX low)...go back 90 degrees (counterclockwise) and its 860, another 90 degrees 830. The stars aline at 830. Not a prediction, just an observation.
Some in the market were pricing in a second stimulus...the President says hold on. The market says "ACME?"
_______________________________________________________
Hershey (HSY)...relatively lower high (to the upper band) and lower band turns up and MACD cross (histogram)...I guess I'd call that an unhappy triad.
_________________________________________________________
RSI7 (weekly) low values-Cara style. Will the meek inherit the investment earth...or the dirt?
Good trading and great risk management.
Educational use only. Never intended as investment advice.
The SP500 futures are off early. Why not? There's often a 'delay' between serving and digesting economic data like consumer confidence. And what about the states' budgets falling apart?
Find 889 (720 degrees of the SPX low)...go back 90 degrees (counterclockwise) and its 860, another 90 degrees 830. The stars aline at 830. Not a prediction, just an observation.Some in the market were pricing in a second stimulus...the President says hold on. The market says "ACME?"
_______________________________________________________
Hershey (HSY)...relatively lower high (to the upper band) and lower band turns up and MACD cross (histogram)...I guess I'd call that an unhappy triad._________________________________________________________
RSI7 (weekly) low values-Cara style. Will the meek inherit the investment earth...or the dirt?Good trading and great risk management.
Educational use only. Never intended as investment advice.
Sunday, July 12, 2009
Sunday Morning Coffee: Legerdemania?
Click charts to ENLARGE.
Technicals, not fundamentals have ruled the roost, since the phantom "green shoots" announcement. Perhaps we need another injection of psychological crack to create the pablum running of the bulls.
The SPDR sectors sixty minute charts.
Top from left: XLB, XLE, XLF
Bottom: XLK, XLV, XLU.
______________________________________________________
Will the banks lead a rally into expiration or fail at support?
Daily charts from left: Bank index, Bank of America, HSBC
_________________________________________________________________
SPDR Housing (XHB)...daily. Why the obsession with the housing market amidst unemployment in the stratosphere, high inventory, and nothing in the universe to suggest that housing will be a leader in the next recovery?
__________________________________________________________
John Williams' Shadow Government Stats...does this look like green shoots or white lies?
__________________________________________________________
Commodities are "cool", but don't go to zero. Company management, politicians, and central bankers fabricate reality, but commodity prices show a certain reality. Livestock and industrial metals are a bit better than energy and the CRB itself. Bad companies go to zero; commodities don't.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Technicals, not fundamentals have ruled the roost, since the phantom "green shoots" announcement. Perhaps we need another injection of psychological crack to create the pablum running of the bulls.
The SPDR sectors sixty minute charts.Top from left: XLB, XLE, XLF
Bottom: XLK, XLV, XLU.
______________________________________________________
Will the banks lead a rally into expiration or fail at support?
Daily charts from left: Bank index, Bank of America, HSBC_________________________________________________________________
SPDR Housing (XHB)...daily. Why the obsession with the housing market amidst unemployment in the stratosphere, high inventory, and nothing in the universe to suggest that housing will be a leader in the next recovery?__________________________________________________________
John Williams' Shadow Government Stats...does this look like green shoots or white lies?__________________________________________________________
Commodities are "cool", but don't go to zero. Company management, politicians, and central bankers fabricate reality, but commodity prices show a certain reality. Livestock and industrial metals are a bit better than energy and the CRB itself. Bad companies go to zero; commodities don't.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Saturday, July 11, 2009
MACD Examples
Click charts to ENLARGE.
Moving average convergence divergence (MACD) has a number of useful applications. I'm going to look at some examples that MIGHT come into play next week.
The MACD looks at the difference of two moving averages and then applies a "signal line" to create an average of the difference. How might we use it? First, I like to use Linda Raschke's 3,10,16 defaults, as opposed to the Appel 12,26,9 that is widely used.
Google (GOOG) has been drifting down. The MACD crosses above the zero line (arrow). Will GOOG go on a positive tear?
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The Commodity Research Bureau Index (CRB) illustrates several points.
TLT (Long bond ETF)...bonds have drawn interest (and the Fed's account looked better) recently with equity weakness. The price pullback is accompanied by the "hook" to the long MACD line.
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The Gold ETF (GLD) has been weak lately. The volume (arrows) has shown up on the down side. MACD shows some divergence here, but I like this use of MACD the least, with the long MACD line (the 'trend' line) down.
It's hardly "all good" but difficult to make money on the short side, because the "machine" does everything possible to create either a real or 'spun' environment to get retail investors to engage. They don't call it Mad Money for nothing.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Moving average convergence divergence (MACD) has a number of useful applications. I'm going to look at some examples that MIGHT come into play next week.
The MACD looks at the difference of two moving averages and then applies a "signal line" to create an average of the difference. How might we use it? First, I like to use Linda Raschke's 3,10,16 defaults, as opposed to the Appel 12,26,9 that is widely used.
- When the MACD is above the zero line, that tends to be bullish, below tends to be bearish.
- A cross of the zero line tends to be a signal.
- A divergence between price and the MACD can also be a signal.
- When the MACD lines cross the zero line 'supporting' the histogram that tends to reinforce the signal.
- The longer average sometimes acts as 'support' or 'resistance' for the short average.
- The short average may 'hook' up during a pullback within a trend.
Google (GOOG) has been drifting down. The MACD crosses above the zero line (arrow). Will GOOG go on a positive tear?___________________________________________________________
The Commodity Research Bureau Index (CRB) illustrates several points.
- It has lived south of the zero line when recently bearish (debt deflation).
- It has a pullback to the long average (arrows) which gave an opportunity for traders to either get short or stay out (I'm mostly the latter).
- The MACD lines crossed negative (below) the zero line reinforcing the lousy action
TLT (Long bond ETF)...bonds have drawn interest (and the Fed's account looked better) recently with equity weakness. The price pullback is accompanied by the "hook" to the long MACD line.__________________________________________________________
The Gold ETF (GLD) has been weak lately. The volume (arrows) has shown up on the down side. MACD shows some divergence here, but I like this use of MACD the least, with the long MACD line (the 'trend' line) down.It's hardly "all good" but difficult to make money on the short side, because the "machine" does everything possible to create either a real or 'spun' environment to get retail investors to engage. They don't call it Mad Money for nothing.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Facts on Five
Click charts to ENLARGE.
In addition to the hospital work, I've been busy in the garden today and trying to complete the greenhouse construction, with some engineering assistance from my better half, the Rocket Scientist.
So let's check out FIVE charts, including Bollinger Bands, 20 and 50 period moving averages, and some MACD (3,10,16) assistance.
The small (daily) version of the SPY shows lower highs and lower lows. Price does make a higher 'relative' low to the lower band. MACD histogram and lines are below the zero line.
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FXI (Xinhua 25)...lower highs and higher lows (a triangle forming 'M' pattern). Price between the 20 and 50 period averages. MACD below zero.
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Oil Holders (OIH)...down channel, price below the 20 and 50 period averages. Gap down six sessions ago. More weakness or gap fillage?
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Silver (SLV) ETF. They've been selling rallies and so far NOTHING to encourage bottom feeders.
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Volatility Index (VIX)...short-term spike top, we'll see how it handles the 20 period average. The recent overall shape is that of a broadening horn, with high highs and lower lows. Not betting on that to continue.
Good trading and great risk management.
Educational use only. Never intended as investment advice.
In addition to the hospital work, I've been busy in the garden today and trying to complete the greenhouse construction, with some engineering assistance from my better half, the Rocket Scientist.
So let's check out FIVE charts, including Bollinger Bands, 20 and 50 period moving averages, and some MACD (3,10,16) assistance.
The small (daily) version of the SPY shows lower highs and lower lows. Price does make a higher 'relative' low to the lower band. MACD histogram and lines are below the zero line.________________________________________________________
FXI (Xinhua 25)...lower highs and higher lows (a triangle forming 'M' pattern). Price between the 20 and 50 period averages. MACD below zero.____________________________________________________
Oil Holders (OIH)...down channel, price below the 20 and 50 period averages. Gap down six sessions ago. More weakness or gap fillage?___________________________________________________
Silver (SLV) ETF. They've been selling rallies and so far NOTHING to encourage bottom feeders.________________________________________________________
Volatility Index (VIX)...short-term spike top, we'll see how it handles the 20 period average. The recent overall shape is that of a broadening horn, with high highs and lower lows. Not betting on that to continue.Good trading and great risk management.
Educational use only. Never intended as investment advice.
Saturday Crumbs: Foreign the Floor
Click chart to ENLARGE.
Who you gonna call?
Eight track, foreign ETFs weekly.
Top from left: EEM, CUBA, EWJ, TKF
Bottom: EWZ, RSX, IFN, FXI.
What's "obvious"? The markets have been treacherous. For example, India (IFN) spiked after elections to 33, and has come in to 26.47, a 20 percent drop in a month.
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Currently 54 ETFs trade an average of over 5 million shares daily. Here's a sort of the "worst" by RSI8 with a one period average (that's the way Worden's TC2000 does it).
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Who you gonna call?
Eight track, foreign ETFs weekly.Top from left: EEM, CUBA, EWJ, TKF
Bottom: EWZ, RSX, IFN, FXI.
What's "obvious"? The markets have been treacherous. For example, India (IFN) spiked after elections to 33, and has come in to 26.47, a 20 percent drop in a month.
_______________________________________________________
Currently 54 ETFs trade an average of over 5 million shares daily. Here's a sort of the "worst" by RSI8 with a one period average (that's the way Worden's TC2000 does it).Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Friday, July 10, 2009
Weakly Roundup
Click charts to ENLARGE.
Our job is simply to do what the market does. John Murphy follows a concept of trading in the direction of weekly stochastics.
Here's the weekly chart of the SP500...lower high, lower low, higher volume, and price below the 20 period average, and stochastics headed south.
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SPDR Sectors: weekly
Top from left (XLB, XLE, XLF)
Bottom: (XLK, XLV, XLY)
Is it just me, or do many of the parts look better than the whole?
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The market wouldn't give up this week. Could traders have some pinning plans in mind?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Our job is simply to do what the market does. John Murphy follows a concept of trading in the direction of weekly stochastics.
Here's the weekly chart of the SP500...lower high, lower low, higher volume, and price below the 20 period average, and stochastics headed south.____________________________________________________________
SPDR Sectors: weeklyTop from left (XLB, XLE, XLF)
Bottom: (XLK, XLV, XLY)
Is it just me, or do many of the parts look better than the whole?
_____________________________________________________
The market wouldn't give up this week. Could traders have some pinning plans in mind?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Stars Aligned
I use diprivan/propofol daily. But of course, I'm a critical care specialist using it in the ICU, not a celebrity using it for recreational purposes. Now that I've got that off my chest...
- Breadth is mildly negative
- The US dollar is up marginally
- Goldman Sachs is down a tad, and above the TD Range projection low of 142.06
- Volatility is off a hair, but 'jumpy'.
- Consumer confidence is poor. Who knew? Savings up, employment down, credit card and mortgage delinquency up. But don't worry, the government will save you, from whom?
Everyone remains focused on the head-and-shoulders and 875. Everyone SAYS Goldman has blowout earnings coming. The stock must be ready to rocket. But it isn't. Is somebody lying and laughing, or is it the case of the stolen software?
Not a lot of love on my screen, with only a few items in green, and plenty of lower end of the range stuff.
Who do you trust baby? "Crisis contained" and "green shoots" or your lying eyes. People's eyes do lie. Everyone tells me I look like I'm in shape. I explain that I've worn out the couch, not the treadmill...
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Fryday
Click charts to ENLARGE.
Risk grows that the fictitious green shoots cannot grow in the modern Carthaginian soil. In other words, fundamentals meet reality, and sentiment walks, money talks.
Of course, members of the club are quick to praise their peers. Or do some of the members have a "red phone" to the central planners?
John Lee had his usual terrific overview, this time of the sectors, yesterday. John's "blank box" technology provides him with a framework daily.
Yesterday, the sectors showed little light (price) and little heat (volume). XLP sits on the 50 period moving average, as does XLU (utilities), but the price-volume relationships have said "distribution".
Amibroker triangles.
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Inside day, narrow range of four, with reduced historical volatility 6/100 ratios (price expansion projections but not direction)
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So what's really different? Try "put up or shut up" as sentiment lags and earnings stand ready to beat investors over the head...or not. Objects in the rearview mirror are closer than they appear.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Risk grows that the fictitious green shoots cannot grow in the modern Carthaginian soil. In other words, fundamentals meet reality, and sentiment walks, money talks.
Of course, members of the club are quick to praise their peers. Or do some of the members have a "red phone" to the central planners?
John Lee had his usual terrific overview, this time of the sectors, yesterday. John's "blank box" technology provides him with a framework daily.
Yesterday, the sectors showed little light (price) and little heat (volume). XLP sits on the 50 period moving average, as does XLU (utilities), but the price-volume relationships have said "distribution".
Amibroker triangles._______________________________________
Inside day, narrow range of four, with reduced historical volatility 6/100 ratios (price expansion projections but not direction)______________________________________
So what's really different? Try "put up or shut up" as sentiment lags and earnings stand ready to beat investors over the head...or not. Objects in the rearview mirror are closer than they appear.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Thursday, July 09, 2009
Airline Industry Top?
Click chart to ENLARGE
I don't know about that, but not a great business move.
Airline Index, XAL, daily.
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Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
I don't know about that, but not a great business move.
Airline Index, XAL, daily.________________________________________________
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Testing the Predictive Powers
Click charts to ENLARGE.
What's your game?
Looking at the SPY (SPDR ETF) below, we can see a lot.
Trade Universe: Lots of NR7 (narrowest range of seven days) with potential price expansion but not direction predicted.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
What's your game?
Looking at the SPY (SPDR ETF) below, we can see a lot.
- The volume shows higher volume distribution days (a big negative)
- The NR7 bar (narrow range bar)
- If today's low were to hold, a 'relatively' higher low by Bollinger Bands
- Price below the 50 period moving average (negative)
- Down channel of price (negative)
- Head-and-shoulders top not yet violated (watchful waiting)
- MACD potential divergence (positive)
Trade Universe: Lots of NR7 (narrowest range of seven days) with potential price expansion but not direction predicted.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Greased Pole of Worry
Click charts to ENLARGE.
Back in the day, the two-word Navy description for today's action would have started with "limp".
The SP500 eked out a close just above the 880 support level. The "rally" came with negligible volume and the "catalyst" Alcoa did what?
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Alcoa (AA) opened strong and finished just above support but weakness ruled.
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Looking at Cooper "type" stocks with adequate price, range, and volume, FPL is one that made a lower low, higher close, and close above the open, and the top half of the range. I'm not sure that this is a target for me.
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One principle of technical analysis is that previous resistance may become support, or vice-versa. Here the Commodity Research Bureau Index might show that quality.
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It's all good? Winners live above the 200 day average and losers live below. Walmart (WMT), with a partial Gann 3 day chart...with a breakdown, retrace, and close right on the prior breakdown point. Wow.
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The US dollar weakness didn't provide enough support to give the market as much juice as many would have liked.
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Bottom line? Not much changed, and the market climbed the greased pole of worry. Speculation: the dollar weakness continues, under the direction of the powers that print.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Back in the day, the two-word Navy description for today's action would have started with "limp".
The SP500 eked out a close just above the 880 support level. The "rally" came with negligible volume and the "catalyst" Alcoa did what?________________________________________
Alcoa (AA) opened strong and finished just above support but weakness ruled._______________________________________________________________
Looking at Cooper "type" stocks with adequate price, range, and volume, FPL is one that made a lower low, higher close, and close above the open, and the top half of the range. I'm not sure that this is a target for me._____________________________________________________________
One principle of technical analysis is that previous resistance may become support, or vice-versa. Here the Commodity Research Bureau Index might show that quality.___________________________________________________________
It's all good? Winners live above the 200 day average and losers live below. Walmart (WMT), with a partial Gann 3 day chart...with a breakdown, retrace, and close right on the prior breakdown point. Wow.____________________________________________________________
The US dollar weakness didn't provide enough support to give the market as much juice as many would have liked._________________________________________________________
Bottom line? Not much changed, and the market climbed the greased pole of worry. Speculation: the dollar weakness continues, under the direction of the powers that print.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
No Way Out?
Kevin Costner starred in the thriller "No Way Out", where you wondered what his real intent, up until the end. Something like this market.
The market got relatively overbought and the bulls have put on a meager rally, and not yet recaptured the Gann number of 889.
Breadth is good, not great at 1890
The greenback is supportively weak
Goldmanilocks is up
Volatility has come in
Fly in the ointment? Crude futures are stubbornly weak.
Some of the refiners, like SUN and TSO have rallied on light volume, and generally volume is fairly weak...
It's better than nothing for the bulls, but hardly a satiating meal. "Bull markets won't let you in, bear markets won't let you out." This bull will let you in, so is it a bull?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Channel Changer?
Click charts to ENLARGE.
At the end of the day, we have to trade prices not excuses. The trading account gives an immutable representation of 'correctness'; we are 'in sync' with the market, or not.
The SP500 ETF (SPY) shows a down channel, volume has increased on the downside, and the MACD shows the long line (red) down, although bulls look to trade "in-between" and expect a 'hook' with futures up.
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The "triangle" space is pretty small.
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New highs and new lows are both tiny, Worden T2108 (stocks above the 40 day average) is low, and the SPX stochastics oversold is at 49%, all ripe for a reversal. Bulls will say, "aha", we have held 880 (with a slight delay) and bears respond, "technical correction".
The Commodity Research Bureau Index...good things come to all who wait, or a retest of something worse.
Will a superhero fly in and rescue states, municipalities, and the US government from themselves.
Walt Kelly's genius.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
At the end of the day, we have to trade prices not excuses. The trading account gives an immutable representation of 'correctness'; we are 'in sync' with the market, or not.
The SP500 ETF (SPY) shows a down channel, volume has increased on the downside, and the MACD shows the long line (red) down, although bulls look to trade "in-between" and expect a 'hook' with futures up._____________________________________________________________
The "triangle" space is pretty small.______________________________________________________________
New highs and new lows are both tiny, Worden T2108 (stocks above the 40 day average) is low, and the SPX stochastics oversold is at 49%, all ripe for a reversal. Bulls will say, "aha", we have held 880 (with a slight delay) and bears respond, "technical correction".
The Commodity Research Bureau Index...good things come to all who wait, or a retest of something worse.Will a superhero fly in and rescue states, municipalities, and the US government from themselves.
Walt Kelly's genius.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Wednesday, July 08, 2009
Cramer's Housing Bottom. How's That Working Out for You?
Barry Ritholtz reminded us of the latest housing bottom call of James ("Abby") Cramer recently.
On June 16, the Housing Index closed at 80.47, and in fifteen sessions, the HGX has drooped to 73.76, 8.33 percent lower than the bottom. Maybe housing is going to turnaround huge among ramping foreclosures, unemployment surging, and consumer retrenchment. Or maybe, Cramer's simply "Munsoned".
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
On June 16, the Housing Index closed at 80.47, and in fifteen sessions, the HGX has drooped to 73.76, 8.33 percent lower than the bottom. Maybe housing is going to turnaround huge among ramping foreclosures, unemployment surging, and consumer retrenchment. Or maybe, Cramer's simply "Munsoned".Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
"Tail" Risk
Click charts to ENLARGE.
If we were undergoing a process top, following a vigorous bear market rally, what would that look like?
Intercontinental Exchange (ICE) gives us one view, with a dramatic two day fall after lower 'relative highs' by Bollinger Bands. ICE falls from 110 to 85 in two sessions, about a 23% fall.
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Markets do NOT follow Gaussian distributions, because "fat tails" occur every day for a variety of reasons.
The article referenced reminds us that the 1987 crash caused a 22 standard deviation fall.
Here's the SPX, at the lower band, with the arrow showing a possible rallying point target.
What does this mean for the SP500?
I'll use the data coming in before today, and the accompanying implied volatility.
Price x implied volatility at the money x a correcting constant (corrects to daily values) yields 13.65 SP500 points.A four standard deviation move would be about 55 points lower (circa 826)....
A Bollinger Band representation shows similar but not exactly the same action. Of course this doesn't account for a larger standard deviation or larger implied volatility, particularly relevant with respect to options pricing.
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Of course, negative vibes doesn't equate to negative action.
Why a rally? The most 'bullish' technical aspect of the action for me is VIX extension, closing at 31.3, well-extended above the 10 period average at 27.83. The VIX close was NOT below the open, so it is not a CVR I VIX reversal. Rhymes but doesn't repeat.
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I want to be psychologically (and practically) prepared for a Black Swan event, even if it takes place over several days. The oversold action (by a variety of oscillators and the VIX extension) might encourage traders to "dance between the raindrops." I've never been good at picking up nickels in front of steamrollers, so I'm still a bit leery.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
If we were undergoing a process top, following a vigorous bear market rally, what would that look like?
Intercontinental Exchange (ICE) gives us one view, with a dramatic two day fall after lower 'relative highs' by Bollinger Bands. ICE falls from 110 to 85 in two sessions, about a 23% fall.__________________________________________________________
Markets do NOT follow Gaussian distributions, because "fat tails" occur every day for a variety of reasons.
The article referenced reminds us that the 1987 crash caused a 22 standard deviation fall.
Here's the SPX, at the lower band, with the arrow showing a possible rallying point target.What does this mean for the SP500?
I'll use the data coming in before today, and the accompanying implied volatility.Price x implied volatility at the money x a correcting constant (corrects to daily values) yields 13.65 SP500 points.A four standard deviation move would be about 55 points lower (circa 826)....
A Bollinger Band representation shows similar but not exactly the same action. Of course this doesn't account for a larger standard deviation or larger implied volatility, particularly relevant with respect to options pricing.______________________________________________________
Of course, negative vibes doesn't equate to negative action.
Why a rally? The most 'bullish' technical aspect of the action for me is VIX extension, closing at 31.3, well-extended above the 10 period average at 27.83. The VIX close was NOT below the open, so it is not a CVR I VIX reversal. Rhymes but doesn't repeat.____________________________________________________
I want to be psychologically (and practically) prepared for a Black Swan event, even if it takes place over several days. The oversold action (by a variety of oscillators and the VIX extension) might encourage traders to "dance between the raindrops." I've never been good at picking up nickels in front of steamrollers, so I'm still a bit leery.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Market Pundit Files for Bankruptcy
Read about it here. This guy gives market advice?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Deflation Despite All
Click chart to ENLARGE.
Mr. Practical laid it out simply at Minyanville. Demand adjusts to price. Endless intervention by the pols, bankers, and screams from the pundits doesn't fix the supply-demand dynamic.
Mr. Practical laid it out simply at Minyanville. Demand adjusts to price. Endless intervention by the pols, bankers, and screams from the pundits doesn't fix the supply-demand dynamic.
I explained it thusly to a family member. Let's say I'm ready for retirement and I have my primary home (with a mortgage), house on Cape Cod (with a mortgage), and a condo in Boca (note: I don't have such things)...and I need to compensate for declining income (whether I'm an individual or a business). The pols and central bankers can't fix my problem. I must deleverage, and sell off some assets, or keep working, or start charging for my sage investment wisdom (haha).
Magnify by the mass of people and businesses who must deleverage. PRICES COME DOWN because the demand for all these assets isn't there. Those who are leveraged are unhappy (or worse) and think it's not fair. That, dear readers, is the market. The deleveraging process is painful, and we need not review the many culprits involved.
A quick glance at the charts shows almost everything long in the bottom half of the Bollinger Bands. That's a negative for some....
So are you an in-vestor or an in-denial?
Deleveraging is a painful process. Trying to spend your way out of it (Keynesian style) doesn't work with the magnitude of the problem.
The Professor might be singing the old tune today, "I fought the law and the law won." Green shoots wither; policy wonks dither.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
So are you an in-vestor or an in-denial?Deleveraging is a painful process. Trying to spend your way out of it (Keynesian style) doesn't work with the magnitude of the problem.
- Breadth is poor
- The US dollar is holding up (debt deflation dollah)
- Goldman Sachs is getting whacked
- Volatility is ramping
- Energy ain't winning.
- Gold getting the Bravo Foxtrot treatment.
The Professor might be singing the old tune today, "I fought the law and the law won." Green shoots wither; policy wonks dither.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Not Here to Rediscover the Wheel
Click charts to ENLARGE.
John Lee with a great summary of the major US indexes and SPDR sectors. The point is: the broad US markets and the sectors (market of sectors at least) are hanging on by a thread even though it feels a lot worse if that's possible.
Despite most pols and pundits sturm and drang, the SP500 is in negative territory for the year, and remain 'stinky cheese'.
One measure of the speculative juice is the Consumer Discretionary SPDR (XLY)...down over ten percent recently, and with three distribution days in the past five, this isn't exactly nirvana. Add in a price oscillator with both the histogram and lines turned south of the border, NOT an invitation to get crazy with sidelined cash.
All of which reinforces (along with the obvious deflation) the talk of 1) second stimulus package (anybody know where the money from package one went) and 2) the likely talk soon about negative interest rates (they punish you for NOT spending your savings). Sweden did it, so the central planners won't even be able to claim originality.
RSI7 weekly oversold (Cara-style)...not so many household names in here.
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One (daily chart) is DBA (an agriculture fund)...you gotta eat, but you wouldn't know that from looking here. Jeff Saut has written favorably about DBA. They don't pay him seven figures a year for nothing. Volumes haven't quit and often at bottoms, the range decrease, although not always "volume makes moves and volume ends moves." (no position)
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Triangles anyone? Amibroker triangle screen.
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Barrons' Randall Forsyth sums up the technical picture we know too well:
Educational use only. Never intended as investment advice.
John Lee with a great summary of the major US indexes and SPDR sectors. The point is: the broad US markets and the sectors (market of sectors at least) are hanging on by a thread even though it feels a lot worse if that's possible.
Despite most pols and pundits sturm and drang, the SP500 is in negative territory for the year, and remain 'stinky cheese'.
One measure of the speculative juice is the Consumer Discretionary SPDR (XLY)...down over ten percent recently, and with three distribution days in the past five, this isn't exactly nirvana. Add in a price oscillator with both the histogram and lines turned south of the border, NOT an invitation to get crazy with sidelined cash.All of which reinforces (along with the obvious deflation) the talk of 1) second stimulus package (anybody know where the money from package one went) and 2) the likely talk soon about negative interest rates (they punish you for NOT spending your savings). Sweden did it, so the central planners won't even be able to claim originality.
RSI7 weekly oversold (Cara-style)...not so many household names in here.______________________________________________________
One (daily chart) is DBA (an agriculture fund)...you gotta eat, but you wouldn't know that from looking here. Jeff Saut has written favorably about DBA. They don't pay him seven figures a year for nothing. Volumes haven't quit and often at bottoms, the range decrease, although not always "volume makes moves and volume ends moves." (no position)________________________________________________________________
Triangles anyone? Amibroker triangle screen.____________________________________________________________
Barrons' Randall Forsyth sums up the technical picture we know too well:
But taken together, the fundamentals and technicals paint a consistent picture of growth falling short of the optimism embodied in the notion of green shoots.
The Standard & Poor's 500's decline of 2% Tuesday, or 17.69 points to 881.03, put the average right on its 200-day moving average, which is a widely watched measure of the market's medium-term trend. Recently, the S&P's 50-day moving average moved above the 200-day MA, a move called a "golden cross" by technicians. Translation: the short-term upward momentum had overcome the intermediate-term downward trend.
But, as Barrons.com's technical maven, Michael Kahn, detailed last week, this indicator is far from infallible ("Will Stocks Turn to Gold," July 1) And, indeed, this time it appears to be a case of fool's gold.
Another widely watched technical formation also appears to be breaking down -- the dreaded head-and-shoulders. That describes a market that hits a peak (the left shoulder), pulls back but rallies to a higher peak (the head), falls back and then rises to a third peak (right shoulder) that is lower than the head. When the stock falls below the "neckline" formed by the lows on either side of the "head," it's a negative signal.
We haven't heard much lately from the National Hero, have we? Must be spending time on a forthcoming book. I'd suggest the title, "How I Saved Capitalism and Became a Humble Icon."
Educational use only. Never intended as investment advice.
Tuesday, July 07, 2009
One Market, One Sound
Click charts to ENLARGE.
Where does the action come from on Wednesday? That shouldn't challenge us.
From Netdania.com, the US dollar in a triangle. If the dollar breaks through and holds, then it's Heavens to Murgatroyd.
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Gold, at the critical 920 juncture.
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August crude futures (60 minute chart)...where's the path of least resistance?
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Research in Motion (RIMM) with Fibonacci fan. I had some July calls that I took a small loss on but the Gann swing chart (3 day) and fanlines are both broken. As they say in 'Pirates of the Caribbean', they are more like guidelines.
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Goldman Sachs (GS) hasn't even retreated to the first fan line. Lower high but not yet a lower low. Ergo, for now it's a triangle. The high was 151, and the 90 degree Gann Square of 9 turn would be 139.
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Intuitive Surgical (ISRG) breakdown with volume. Topped out at 171, with a 180 degree Gann turn to 146 projected by the Square of 9.
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Intercontinental Exchange (ICE)...modified Gann 3-day chart with breakdown shown. Top at 122, with 90 degree turns 112, 102, and 92.
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The market always presents unique challenges. But what helps provide some clarity will never be statements from politicians, bankers, economists, or stock televangelists. The market speaks to us daily and our job is to hear and follow.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Where does the action come from on Wednesday? That shouldn't challenge us.
From Netdania.com, the US dollar in a triangle. If the dollar breaks through and holds, then it's Heavens to Murgatroyd._________________________________________________________
Gold, at the critical 920 juncture.______________________________________________________________
August crude futures (60 minute chart)...where's the path of least resistance?______________________________________________________________
Research in Motion (RIMM) with Fibonacci fan. I had some July calls that I took a small loss on but the Gann swing chart (3 day) and fanlines are both broken. As they say in 'Pirates of the Caribbean', they are more like guidelines.______________________________________________________________
Goldman Sachs (GS) hasn't even retreated to the first fan line. Lower high but not yet a lower low. Ergo, for now it's a triangle. The high was 151, and the 90 degree Gann Square of 9 turn would be 139._______________________________________________________________
Intuitive Surgical (ISRG) breakdown with volume. Topped out at 171, with a 180 degree Gann turn to 146 projected by the Square of 9._____________________________________________________________
Intercontinental Exchange (ICE)...modified Gann 3-day chart with breakdown shown. Top at 122, with 90 degree turns 112, 102, and 92.____________________________________________________________
The market always presents unique challenges. But what helps provide some clarity will never be statements from politicians, bankers, economists, or stock televangelists. The market speaks to us daily and our job is to hear and follow.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Need Convincing?
Click charts to ENLARGE.
20 and 50 period moving averages in the rearview mirror, except for XLP, XLU, and XLV, the defensives.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
20 and 50 period moving averages in the rearview mirror, except for XLP, XLU, and XLV, the defensives.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
One Stop Chopping
Click charts to ENLARGE.
The action? Not pretty. Socionomic 'exuberance' leads the market up, and down. Let's see how where the charts begin and end.
SP500 weekly. After a recent DeMark 9 (nine closes above the prior four closes), and a stochastics divergence, price has rolled over. The bulls' rallying cry? No volume. Drip, drip, drip.
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SP500 daily. Price takes out last week's lows and the June lows, and the 20, 50, and 200 day exponential moving averages are all in the rearview mirror.
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The 60 minute charts show price living below the middle of the Bollinger Bands and intermediate-term moving averages.
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The Gann Square of 9, two turns (each of 360 degrees) around took us to 889, and two quarter turns back could bring us (whoosh) to 830. A little rally brings us back to 889.
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So the markets are setup to "correct" to 830. Or are they critically oversold, with participants more concerned about missing the next three percent? Are traders going to pick up nickels in front of steam rollers?
The VIX has rallied off the bottom, with the 200 day moving average far over the horizon. The VIX is now extended greater than ten percent above the ten period average. Stretched, but not reversed.
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Sentiment. Jason Goepfert's site shows us the contrarian way. Or not. Sentiment is NOT very negative currently.
So, we're at 880 support, with Gann 889 close by, some overbought VIX action and sentiment more neutral than negative. The ratio of Gann Weekly Sell signals to Buy signals is 832:24. The cacophony of "second stimulus" calls rises to a crescendo? Do you feel lucky punk, well, do ya?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
The action? Not pretty. Socionomic 'exuberance' leads the market up, and down. Let's see how where the charts begin and end.
SP500 weekly. After a recent DeMark 9 (nine closes above the prior four closes), and a stochastics divergence, price has rolled over. The bulls' rallying cry? No volume. Drip, drip, drip.__________________________________________________________
SP500 daily. Price takes out last week's lows and the June lows, and the 20, 50, and 200 day exponential moving averages are all in the rearview mirror.____________________________________________________________
The 60 minute charts show price living below the middle of the Bollinger Bands and intermediate-term moving averages.______________________________________________________________
The Gann Square of 9, two turns (each of 360 degrees) around took us to 889, and two quarter turns back could bring us (whoosh) to 830. A little rally brings us back to 889._____________________________________________________________
So the markets are setup to "correct" to 830. Or are they critically oversold, with participants more concerned about missing the next three percent? Are traders going to pick up nickels in front of steam rollers?
The VIX has rallied off the bottom, with the 200 day moving average far over the horizon. The VIX is now extended greater than ten percent above the ten period average. Stretched, but not reversed.______________________________________________________
Sentiment. Jason Goepfert's site shows us the contrarian way. Or not. Sentiment is NOT very negative currently.
So, we're at 880 support, with Gann 889 close by, some overbought VIX action and sentiment more neutral than negative. The ratio of Gann Weekly Sell signals to Buy signals is 832:24. The cacophony of "second stimulus" calls rises to a crescendo? Do you feel lucky punk, well, do ya?
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Power Outage
Badness reigns. Four by 10 mins:
Goldman and Breadth (top), US Dollar and VIX (bottom)
This ain't inflation.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Gann Number Locked On
The market has a fairly ominous appearance here, why?
- The charts show little sustainability on the upside although support hasn't broken
- The surest sign that the United States of Goldman Sachs is worried? Talk of yet another stimulus package.
- Inflation or deflation? Gold isn't responding and the market threatens to thwart the 12 trillion dollars of money poured down the rabbit hole.
- Credit card and mortgage delinquencies are soaring.
- Weekly wages aren't growing
- Unemployment hasn't bottomed
- The "Green Shoots" gang looks more like the "Wack Weasels" workshop
Breadth is negative
Goldman is down
The US Dollar is up a tad
SPX is at the Gann 889 pivot
Volatility is up
Crude is down
So riddle me this, Moneyball style. If falling crude prices are so good for the market, then why isn't the market so good?
Additionally, the socionomic aspects are turning down for the 'in' crowd, as economic woes (not celebrity deaths) drive public action. The public sees that California is just the next card in the falling house of cards.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Worst RSI7 by Month
Click to ENLARGE.
Amibroker screen using RSI(7) monthly approach, Cara style.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Amibroker screen using RSI(7) monthly approach, Cara style.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Cooper Scoopers?
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Cooper type stocks (group 1)
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Cooper-Gann 3+2 pullback possibilities.
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Off to work early today.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Cooper type stocks (group 1)___________________________________________________
Cooper-Gann 3+2 pullback possibilities.________________________________________________
Off to work early today.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Monday, July 06, 2009
Bad Debt, Good Economy?
Click charts to ENLARGE
Mortgage and credit card debt delinquency from MISH.
Massachusetts mortgage delinquency rates by county (I'm in Middlesex)
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California. Staggering.
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Mortgage and credit card debt delinquency from MISH.
Massachusetts mortgage delinquency rates by county (I'm in Middlesex)____________________________________________________
California. Staggering.Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
Financial "Journalism" LOL
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What's the lead song in the Jackson funeral? No pun intended, this leads.
Not all financial journalism stinks, just most. Here's the juxtaposition today at Bloomberg, an unquestioned industry leader.
Here's the front page on Bloomberg.
First, Bloomberg says market rises on improved credit conditions.
Same lead page, credit conditions are bad, with California reduced to almost junk bond status. Where's the next bailout? Electoral votes, anyone?
So, "it's all good", sorta, and California Bad Dreaming on the same page. Jabberwocky!
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.
What's the lead song in the Jackson funeral? No pun intended, this leads.
Not all financial journalism stinks, just most. Here's the juxtaposition today at Bloomberg, an unquestioned industry leader.
Here's the front page on Bloomberg.First, Bloomberg says market rises on improved credit conditions.
Same lead page, credit conditions are bad, with California reduced to almost junk bond status. Where's the next bailout? Electoral votes, anyone?
So, "it's all good", sorta, and California Bad Dreaming on the same page. Jabberwocky!
Good trading and great risk management to all.
Educational use only. Never intended as investment advice.