Possibilities
I took profits on my shorts Thursday and went back to cash. Like George says, get the honey and get away from the bees. But I’ve probably taken profits too early again. As you may recall, when I shorted the January 6th top, I took fat profits as the SPX fell down to 900. And that was about 100 points too early. I might be making the same mistake again, so don’t read too much into my move back to cash. I’m actually just looking for a day off from trading, though I may pop up to short Friday’s close.
If you look back at the chart, you will see that the market made a small bounce on January 8th before resuming its plunge. We could see that type of pattern again.
The futures were testing 840 after hours until Amazon’s earnings were announced. Then the shorts threw in the towel and the futes started moving up.
Don’t forget that next week is the first week of February, and the first week of the month is always treacherous because that’s when the window-dressing ends and the jobs report looms. Even though the jobs report comes out on Friday, Bloomberg will publish their survey of economists on Sunday, and the market will price-in those expectations first thing Monday morning. So, you need to think about the jobs report a week in advance.
The SPX’s false breakout above the resistance around 850 may prove to be a very serious issue because it implies a breakdown out of the range may be in the cards. If you want a short position with an eight handle, you might have to get ‘em while their hot. We just saw this phenomena a month ago. The SPX broke above the resistance at 911 on the first day of the year, but fell back below only three days later. That false breakout implied a break below the lower band of the trading range around 865-870, and the market wasted very little time doing so.
Candlestick Pattern
It’s not a perfect fit, but bulls can pin their hopes on SPY’s three-day pattern possibly being a bullish Upside Gap Three Methods. Also, the plunge in breadth Thursday may be some kind of one-day record. It usually takes a two-day panic to move breadth down from such a bullish extreme to such a bearish extreme. While I don’t regard this as bullish, the market just has to bounce after such a breath-taking crash in the internals, right? Right? Enough solace for the bulls…
Links in Comments
I came across the “links in comments” setting in WordPress and raised it from two to five. It’s used to filter out spam, however, I have the “new posters must be approved” setting turned on, so no spam bots are going to get through anyway.
there’s only one “e” on my keyboard
just remember……predictions are very difficult to make….especially about the future
yerk…..8000 handle …..all fixed
OK EVERYONE…….thats it for me…..have a great weekend….
soo 8.57% loss in january for S&P. nice. lol
Karl is a bit erratic in his chart analysis lately calling first for 1100 and now for 210 on the s&p, reading his analysis of the bond market (starting at 1. ) is worthwhile though. His ensueing frontal assault against the cds is right on target.
http://market-ticker.denninger.net/archives/756-On-The-Edge-of-The-Abyss.html
I’d give him a primetime show, TV is so behind the curve. Loosing all the young viewers to the internet. Unsustainable business model.
Yerk,
“Unsustainable business model”
You have to forget that you went to Harvard biz school if you’re ever going to be able to talk to the common man…:)
and i’m as common as they get.
i have a weekend “help wanted” post for you guys.
A friend and I are trying to find people at our school who could potentially be good traders.
the thing right now is coming up with a questionnaire for them to answer so we can select who might be fit for a trader. keep in mind most of these people might not have traded before.
my friend will then train them… give $500 each on their accounts to trade forex.
so i am just looking for suggestions on this AND/OR questionnaire questions to consider.
(I will post this one day during the week too when and others are active here and can maybe give suggestion so forgive me if that annoys you)
Hey K.. been away again for most of the day. Not liking the fact that work is so busy I can’t trade. I have my hedged SRS and FAZ positions which are looking good right now. Will let them ride…
BTW.. K.. Look at DRYS.. down 20+ % for 2 days in a row. Trading at $6 and change now.
For your question, I think to be a good trader, you need folks that have good pattern recognition skills, math and stats. I found that it is almost better if you don’t know anything about the company you’re trading and that you trade a stock purely by the charts. With that and a good knowledge of patterns and setups, you could make a lot of good trades. It’s when our emotions and opinions get in the way that causes us to do stupid things.
Just my 2 cents.
Dave, me and Harvard… You said “thrice”. I got laughed at and ridiculed for that word. And I was so proud to put Shakespeare to good use.
First Witch
Thrice the brinded cat hath mew’d.
Second Witch
Thrice and once the hedge-pig whined.
Third Witch
Harpier cries “‘Tis time, ’tis time.”
for wave 5(3)?
Yerk YIKES about DRYS thanks for bringing it up feel so much better. forgot to draw fibs on it hehe.
as for the trading it’ll be forex. but like most people that might be interested will be in it for the money. we need to weed it down to 5 people he can teach. this is for a start up capitalistic fund lol
Matt,
Potential H&S forming on the Sox spanning from early Dec. If it does, watch out the Nasdaq.
Yerk,
OMG, you’ve gone from B school speak to spouting poetry. Oooh, i feel like i need take shower.
K,
Seriously, are you & Yerk thinking about starting a fund ?
yes and yes we will beat your fund.
Sherry, silver is the poor man’s gold. It follows gold (silver bugs disagree). The inflationists are driving up the price of gold. I suspect they are 6-12 months ahead of themselves (again). The Asians are selling their physical gold. Imports of gold to India have fallen 90%. The Thai and Chinese gold shops are running out of cash. (this from mobile, use google news to find links).
I think your trader friend is correct. I am a so-called inflationist (but been betting the opposite direction for last 12 months).
Bank Failure #5 : Bank of Essex, Tappahannock, Virginia, Acquires All the Deposits of Suburban Federal Savings Bank, Crofton, Maryland
Bank Failure #6 : CenterState Bank Acquires All the Deposits of Ocala National Bank, Ocala, Florida
YAY 6 for the month of January it seems
So much for the EOM mark-up, if the markets couldn’t rally into Friday, we are really screwed next weakkkkkkkkk………………
NFW, BS, because you two are going to be IN our fund.
I feel like i have been recruited as the young intern for the fund
.
i need to build skills before i could join your multi home fund
but yeah dave how would you weed ordinary people to find a few that have potential by asking them questions or patterns?
I wish I could upload a picture of my chart. Do a Fib retrace of the 9/19 top to the 11/21 bottom. Add the symmetrical triangle we have had for the last few months. Then add another fib from the 1/5 top to the 1/20 bottom.
Basically, the 1/5 top is also the top of the symmetrical triangle which is also damn close to the 38% retrace of the big fall. Our recent peak on Wednesday (1/28) happens to have a closing price right on the 50% retrace from the 1/5 top to the 1/20 bottom. It gets better…a retrace up from 1/5 to 1/28 gives a 161.8% retrace at our 11/20 November low close of 75.
Coincidentally, I went heavily short on the close Wednesday…fighting the urge to sell today. Support from the triangle will be at 81.3ish…if we get down that far on Monday, I will exit out of my most recent positions in anticipation of a bounce (core short position will remain). Either way it isn’t looking too pretty on this chart as any bounce is going to hit some resistance very quickly and we’re running out of room on that triangle. Perhaps we just blow right through the bottom of it next week? Wishful thinking…however, I can’t see any MOAR starting without a touch back to that November low. Perhaps it will be started by the initiation of the next foolproof scheme from the Fed.
So how long until our recent GDP number is revised down?
K,
What is a “multi home fund” ?
the homes that sherry got you. i took it as a hint that you would name your fund the “multi-estate fund” haha
by the way i need opinions on 3 sectors.
XLB
XLP
XLU
overweight, underweight, neutral.. and why. if youre not lazy. no need to go in detail just a sentence will do.
Hey Matt,
Blinking. Couldn’t log on today until now as either I’m so short I couldn’t reach my computer keyboard from my chair or I was busy with other things in life.
Looking for a break below 790 and slide on down to 737 or lower for this next portion of the ride. My equations (and charts) still have us on 5 of (3). Looks like we are on a subwave 3. Other TA supports downside. My VIX gap is holding nicely, MACD invisisignal is firing sell, and all the other usual and not so usual signs are in play.
Could we still play out that larger triangle? Possible, but I have more evidence against it than for it. Next week will be exciting.
Have a great weekend!
K,
So you do understand that the 8 homes is just Sherry’s way of teasing me.
“…recruited as the young intern for the fund” K, oh no, there’s some misunderstanding on your part. We would want you to be Chief Astronomer & Chief Astrologer. We’re going to base trading decisons soley upon lunar cycles & sun spots. To make your job more effective you will be based upon a satellite circulating the equator. You’re not claustophobic are you ?
i assume that the following was directed towards me altho it didn’t say so specifically
XLB underweight for at least another couple of months: Can’t call a bottom in commodities until i can call a top in the dollar.
XLP neutral – relative performance about to end
XLU overweight _ total return incl. dividends
is there a prize if i get them right ?
dave like you point about XLB. Get your candy. It might be worth the effort to start looking for the doomed ones in all sectors. Credit spreads going higher and these guys actually look at the fine print, not only at the glossy we’ve beaten yesterday’s down-revised outlook.
towelie, nice analysis. You can use jing to upload pictures. In the thirties there was also a long-term trend-line which contained all bounces during the long treck down.
Another thing to ponder about. The chart in the infamous short-squeeze week in Sept looks very similar to this week’s. We also had a govt sponsered bump-up. Both spikes got stuck at the 50dma and 20dma crosses down. If we follow that pattern, next week will be some slow consolidation before stocks become less overvalued. Alas, too many people calling for a slow uptick Monday and Tuesday this sounds a bit crowded to me (Randall
)
Deutsche Bank sees no need for subsidies as there is no need for further write-offs. 92 bln level-3 assets valued at model-to-myth.
K we only employ people who refuse to take tests.
Yerk,
Thank you very much, Sir, uuuum Candy (with a capital “C”).
Not sure i agree (that’s irrelevant) with every point that you made, but i like that you put some (actually lots of) thought into it.
Since 7/11, would you like to have 25 cents for every time someone thought “It’s too late to short crude” ?? How about another 25 cents for every “I gotta buy it for a bounce” thought ???
Stk mkt http://www.youtube.com/watch?v=H09g3gZ7XAs in February
dave i know that was teasing so i decided to join the fun lol. as for chief astrologer find a fortune teller. unless my horoscope one day says i will be a chief astrologer
that opinion was meant for everyone but you answered first and your prize will go to one of your 8 undisclosed homes so be sure to check the mail for all 8
I found this interesting..
Zecco is saying that they are raising their free trade minumum balance to $25,000 from $2,500… for 10 free trades a month. Talk about B.S lol no more zecco.
junglegirl,
Thanks for the update. I have your Vix gap marked on my charts. It worked like a charm on January 28th.
Matt