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Hussman more bearish beyond the very short-term
http://www.hussman.net/wmc/wmc090323.htm
Woot.. nothing like being down more than 20% on my FAZ first thing Monday Morning!!
Tonnes of people trying to fade this gap up from what it looks like.
Good morning, Charlie — welcome to the Free Market! Crimson, thanks for the Hussman link; excellent article. The amount of intervention is breathtaking.
This sets the stage for reaching Matt’s 444 target. We took out the expected gains so fast I’m having second thoughts of flipping to the long side; I might just stay out for the week.
I took the plunge and grabbed an initial position in FAZ at 28, SRS at 63, with tight stops if this blows past 804.
Hmm.. Possible H-S pattern on the 30 min XLF chart forming. We are at or close to the peak of the right shoulder if one happens. Will have to see…
Just as an observation, if you compare the peaks of the XLF and SPX at the peaks 2 days ago.. you’ll notice that the XLF right now is much lower than where the SPX is respectively. This is even after the huge gap up on financials this morning.
The financials are still very weak IMO unless they make up some more ground today.
We’ll see if the 804 top holds.
Market enthousiasm for government initiatives have a pretty poor track record, and the real economy is just getting worse. Still, chances are we’ll make a new top on this round, before we head south again.
Kailash – a good point. The AIG firestorm wasn’t/isn’t much in itself but a lightening rod for accumulated anger and disbelief. Which means the under-pinnings for any rally are really weak…and implies that any rescue package will run into serious political trouble; or it at risk of same. That would seem to say it’s FAZ time indeed.
Yes this looks like a good spot to fade. The S&P is retesting 800 and failing. Some serious buying will have to come in this afternoon, but I think profit taking will begin this week’s spiral.
SDS just touched the daily 200 day average. This may signal the turn around.
TICK has multiple readings above 800 so far this AM, and intraday CPC is rallying with this move. Downtrending TRIN. There is no reason to expect the market not to pop resistance here until we get some kind of sell signal.
Sorry, not downtrending TRIN… flat and low TRIN, the kind that fuels rallies.
Basically until we get one TICK reading that is less than -800, I would not be short. If this resistance pops there will be a huge short covering wave.
The thing about the bull case – sheep don’t stampede very well…
Until they get torches and pitchforks.
Zen – how do you read TICK ? By that I mean gut level not the formal definition. Thanks.
Continually banging against the 800 level. Probably will break through.
Hard to believe we go straight up 25-30% from 666 to 840-870. But it seems to be hapenning…
Not adding to my shorts at 800 as planned. I am a chicken
Still holding FAZ…
This is getting pretty frothy — a huge gap at the open and then a surge to the previous high. If we’re really headed to 850 I would expect some consolidation here — the goal would be to go out the month on 850, not to reach it today. There’s no way the market can hold 850 for a week and I don’t believe we’re going any higher than that. The fundamentals have not improved yet.
In the meantime, us FAZ holders may regret we didn’t listen to our inner chicken.
Well we chickens salute you…spent all day Fri thinking about going inverse but didn’t. Lesson being that calendar of events is as important a technical indicator as charts ?
Hey dblwyo…
The TICK has several uses, but, in general:
Levels between -400 and 400 should be ignored. That is just market chatter.
Levels above or below 600/-600 should get one’s attention. It takes a decent amount of buying to move there, but nothing alarming.
Above/below 800/-800 is very significant. That typically indicates a buy program.
Above 1000/below -1000 is extreme and means buying is in force.
As with anything, buying/selling can be stops, so the TICK needs to be used in conjunction with other techniques. Lastly, it is important to watch the move. I use the 5-min TICK with a 5 SMA. While the majority of the TICK is over zero, that should confirm an intraday uptrend, and vice versa. If there is chop above and below 600/-600 or something like that, it indicates a range bound market. I also consider the trend of the intraday TRIN and then levels like VWAP, prior highs and lows, pivots, etc.
Hope that helps!!!
Sorry, with the negative numbers it means sell programs/selling is in force.
This type of TICK reading is not related to how one reads the daily TICK or daily TRIN, btw.
And unless you see a TICK reverse and start going down under -600 and esp. -800, I would not short. So far we have a confirmed uptrend intraday.
I also use volume ratios of the up/down volume on the NYSE. This is also very strong today, stronger than I can remember in a while.
Well.. no use if the FED jumps out during the AH with bailout after bailout dblwyo… I mean.. if this stuff was announced during trading hours.. it might level the playing field a bit.. but they did this to prop up the markets. I did notice the volume today is not that high. I sense skeptism still.
Volume on this double top area for both the XLF and the SPY is very very weak right now..
dblwyo-
You’re right. Pay attention to the calendar
and don’t fight the tape. New plan shows
the power the big boys have. Bringing in
the FDIC puts all banks at risk. JPM wins
again.
dblwyo, “calendar of events” is putting it kindly; massive market intervention is more like it. There is a determination to avoid losses unfortunately looks to push us further into the tarpit.
The timing of this announcement wasn’t even made until Sunday night. Makes you want to trade futures, to avoid being powerless in the face of the Fed’s machinations.
Julie, do you mean bringing in FDIC in the bailout will weaken their ability to deliver on its insurance of deposit insurance? That’s an ominous thought.
Julie, Yerk,
bought out-of-the-money calls on crude last Thurs. Not concerned about bounce in USD. Considering the big one-day down move & break of the uptrend line & 50d a dead cat bounce is to be expected.
Big move in CME today tells me a lot.
Kailash-
The FDIC closed 3 banks and 2 credit unions
over the weekend. Action got very little press.
The FDIC is funded by banks. In the new toxic
waste plan, they will be responsible for losses
…putting every bank at risk…raising their
premiums.
Dave-
Thanks for the tip on crude.
Zen – THANKS. Quite clear and helpful.
Folks – event calendar…trying to be polite but I’ve been arguing for a while that this is an event-driven market since the recurring patterns we play are a bit broken. The specific announcement wasn’t predictable but this plan has been in train for a while now. Need a chart technique to track these things
Julie,
Closed > 50E; 20E X 50E ahead. USO hasn’t been > 50E, even intraday, since crude broke down in mid-July.
Recently, despite OPEC announcing that they weren’t going to cut production – crude went up.
On the 18th, despite a build in inventory – crude down then rallied.
I didn’t mean to offend dblwyo so sorry if I did, but I am just a little peeved as you can imagine.
BTW.. this double top is looking weak right now. Not sure if the market will have time to push through after lunch, but it is already up over 4% so it seems unlikely at this moment.. but what do I know…
XLF right shoulder target met. We’ll see if the H-S forms now.
dblwyo, another trick I use is that if I am in an intraday long position and the TICK hits -800 but I have not stopped, I will close the position usually. I got that from the book Master the Trade. I only apply it to index ETFs… with individual issues I would tighten up the stop.
the reverse applies to shorts
First -800 tick of the day
I wonder if the market will test the gap of doom today. Doubtful, but what if it closes above 805? Seems to me like it will bust through.
I am short now, was long BGU, now short BGU. Once the TICK hit -800 then I allowed myself to consider short positions.
Did we just get a double top and drop?
now flat, rising VWAP and indecisive price action for the moment
Charlie – you didn’t at all. My apologies if I mis-spoke and was mis-understood. Your frustrations are natural. When I said euphemism I was thinking of not calling events something else. You can imagine my menu of choices but it seems a waste of energy
!
We cool now bro ?
’cause if so the basic argument remains and is central to our trading !
H&S pattern on XLF. will it follow through……
Course we are cool dblwyo…
Shorts now scrambling to cover – look out above….
We need George to call the MOAR – where is he??
Took a beating from that gap up this morning. I’d be weary of any position long or short over the next few days (other than intra-day) until we get a clear direction. So far, that direction remains reasonably bullish.
Here are some scenarios I can think of for the next few days:
1. A close just below 805 and then a gap up above the Gap of Doom would leave us with a gigantic island pattern (very bullish).
2. Work off some of the overbought condition and plow through the Gap of Doom to close above it. Target would be 840-850 (bullish).
3. We become range-bound between 805-750 (neutral, leaning bearish)
4. This is as high as we can get by the end of the month. We drop down below 740-750 (bearish)
I need to learn to refresh my browser…Gap of Doom is being eroded…#2 scenario looks to be the most likely.
I’m just not buying this vol rise, especially on the XLF. Friday vol over 300M, today , now 3:08 240M. And not over last high last week.
Starting a position of SRS at $57.04 and sleeping with it tonight.
Keeping short short, but I am convinced beyond a doubt that this massive debt burden and credit crisis which is nowhere near done, will eventually
ruin us. Will let it play up to the next fib then sell it big time
this is what happens when:
a. Everyone and their dog uses EWT as a primary means of thinking a new low should be in and
b. Everyone consequently uses the high from last week as a stop.
I’m just trailing my long BGU stop up with this as more and more shorts clobber each other trying to wait on a pullback to get out. Pinned shorts, that is the theme of the day.
Sorry, “new low should NOT be in”
I don’t mean to offend anyone who likes EWT here but I think it is a miserable form of TA, esp. when the whole crowd of retail investors piled on it.
I am starting to feel bullish. This is probably an indication that I should go short but I am too chicken to stand in front of this train.
What am I afraid of? The psychology seems to have turned. The worst is behind us crowd may look at everything with rose colored glasses for a month or two (or three). Bad news will be ignored, good news, if any, will be cheered.
I still have the few puts I bought at 770. Will probably go out as 0. No big deal.
The question is, where and when will it be the right time to go short? Perhaps wait for 800 to be broken on the way down?
The pain of it all!!!
Sold FAZ for a big loss.. Bought some SPY May puts in hopes of a retrace in the days/weeks to come.
BTW.. I’ll stick to day trading instead of holding overnight. I find I have been burned multiple times holding through weekends. That will be my cardinal NO NO from now on. No more holding over the weekend. If I ever post that I’m taking a position on Friday near the close.. someone.. anyone.. please smack me and tell me that I’m not supposed to hold over the weekend!!
Thanks in advance!
Anybody shorting?
Even Denninger has turned bullish.
Sees 875 target on SPY.
However I suspect the McClellan Osc now is at a new record overbought reading.
The one sure thing I think is that we will not be seeing new lows anytime soon.
I was stopped out of FAZ & SRS but without a big loss, will look to re-enter tomorrow.
This rally I think technical, massive short covering once resistence was broken.
my biggest win today: I’d been holding a bunch of DIG I bought, and had taken a big hit. I doubled down recently, and now I’m even. So, do I sell? Seeing futures contracts in the 70 range for a few months down the line.
Who above said that commodities would be the tell whether or not this bull is (short-term) real?
It seems to me that we are kind of back to a pattern from several months ago – the only time that matters is what happens in the first 5 minutes of trading – the gap up or down – and the last hour or so. It’s like the NBA – you don’t need to pay attention until the very end of the game, especially if you miss the beginning.
Unfortunately, it’s still very hard to tell if the end of day break is going to snap the trend, or extend it, parabola-style.
I bought some SDS at the close…Charlie, in this ‘event-driven’ market (sorry DBLWYO) I think no holding over weekends is smart thinking.
Dressguard, I guess I’m a glutton for punishment. But I don’t see who’s going to buy tomorrow – why didn’t they buy today?
FO SURE Buzz.. I will hold overnight.. but never over weekends from now on. I exited FAZ, but had I held on longer.. imagine the pain at the end. FAZ @ $19.. nutty.
@Buzz: They weren’t sure so they stepped aside and watched. Lower volume tomorrow but not much lower prices. I was shocked to see FAZ after close. Almost halved in a single trading session. Wow!!! The damage is done to the bears. Bulls pushed the bears out of the arena. Now they can party like it’s 1999!!!
Actually this pattern and the talking heads remind me of this time last year… “this is a game-changer”. This plan is the right thing to do (& why oh why didn’t the announcement of principles kick this off – think about it) and starts the repair process now that we’re thru Triage and emergency battlefield first aid but…
You really owe it to yourselves to listen to Prof. Ben on Sixty minutes and think about what he’s saying. As he points out they just got Congressional authorization to put capital into institutions days before things really got ugly. He softsteps it but we’re talking about the collapse of the credit markets entirely and a real GD last Oct. (now that’s a funny piece of Serendipity)
Funny Charlie, I’ve found I am at my worst when I try to do intra-day or 1-2 day trades. My best trades last a few weeks to a few months. I guess I focus on long-term stuff too much…probably why I am always so bearish.
Zen nailed it with respect to the stops. Pretty absurd chart for today…and who says support/resistance doesn’t mean much?
Shorter Term: 840-850, possibly 870. If the craziness ensues (not as bad as we thought earnings season, perhaps?), back to the 900′s.
Longer Term: For the bears out there, this could take a while. Once again we’ve all been told we will recover by the end of the year and once again we have people trying to jump in front of this. It may take another pair of terrible earnings reports in a row before they admit defeat. If Geithner’s plan for the banks works, we will be on the road to recovery (and that’s still a big IF). 2008 was about the banks and Wall St. 2009 will be about the rest of the economy. We still have rising unemployment, falling housing prices and 401(k)’s that were sliced in half. My best guess is still a Lost Decade to call our own…hell, we all act like Japan actually got out of that thing…if you ask me, they’re still in it. Long decade….
HOLY CRAP IT’S DRESSGUARD!!!!!!!
yeah i wanted to short skf more but will see if we reach 70′s to double down. i’m short in the 150′s range (yeah taking a huge beating lol)
towlie – bingo. exactly an dead on imho.
God I hate the AP and the joke that has become journalism…here’s the article that just annoyed the crap out of me:
http://biz.yahoo.com/ap/090323/home_sales.html?sec=topStories&pos=7&asset=TBD&ccode=TBD
The quote in question that changes the entire meaning of the article is down near the bottom: “About 45 percent of sales nationwide are foreclosures or other distressed property sales, which typically sell at a 20 percent discount…..”
So lets THINK for a second. If seller asking prices are going up, but 45% of the sales are foreclosures, what does that imply? If existing sales went up but 45% of the sales are foreclosures or distressed property, what does that imply?
Perhaps more expensive houses are being foreclosed and more houses are being foreclosed. But I thought this was good news!
The worst part about AP articles is that they rarely cite an author and even if you do find a name it’s damn impossible to contact the person.
china wants out of the dollar. there is a reuters article about them wanting IMF’s currency as a super currency. im mobile so can’t link..
I am so proud of diagnosing myself lol. Walking pneumonia… rest time. when I decide to come bck to trading I want my SKF in mid 100′s
Pooh. Looks like Karl D. beat me to it on the housing numbers:
http://market-ticker.denninger.net/archives/892-Existing-Home-Sales-Beware.html