The SPX closed at 1099 on Friday. Let’s see if that’s a lucky number for the market. Here is a daily chart from 2002 during our last recession (click to enlarge):
Hmmm… doesn’t seem too lucky…
Looking at that chart, you have to conclude that shorting was practically risk-free during the first half of 2002. All that you needed to do was gut-out the occasional 50 S&P points of upside. Shorting rallies was like printing money – kind of like the action this week…
But before we get too excited, the SPX has painted a Bullish Inverted Hammer pattern onto its daily chart. If the pattern plays out and produces a rally, I will certainly be shorting it.
Here’s one thing that could trigger a substantial rally: if the “voters” pray hard enough to Saint Paulson and Saint Bernanke to save their sorry burger-flipping jobs, maybe the credit markets will unfreeze. If that happens, all the money that fled the stock market into bonds could flood back into stocks.
That is a possible scenario before the death-march down to the bottom begins. If the credit markets don’t unfreeze, then the death-march has already begun.
Death-march has already begun.
Matt, your “Withholding Taxes Chart” says it all. We are falling off the cliff even if not as deep as your chart is showing as of today. This quarter will be the no-more-denial-quarter.
i interesting on the funds rate
http://themessthatgreenspanmade.blogspot.com/2008/10/whats-fed-funds-rate.html
I have to agree…the death march has already begun.
If we couldn’t produce a positive gain after the bailout passed, what hope do we have?
a post and chart on M3
http://themessthatgreenspanmade.blogspot.com/2008/10/have-you-seen-m3-lately.html
any indication of things to come? i’m still trying to learn how that affects the economy and the market.
the elliot wave is next on my “to understand” list.
http://www.elliottwave.com/club/members/tutorial/default.htm
so many people talk about it lately and i feel stupid
I know I’m a scalper but I do look at the longer term charts each night on all the stocks I trade. I don’t try to guess what will happen the next day, only get a feel for overall price movement.
This time I thought I would try to project Monday’s direction based upon the stochastic.
The SPX weekly candle looks capulatory (may not even be a word). Not a capitulation as in a bottom reversal, but a correction. Price is very far from the 36MA and stochastic has moved up from the 20 with a “n” bottom, which by default, is a positive divergence of sorts. I see those all of the time and often they turn into a “W”.
Monday will be an up day for SPX from what I can tell.
The Q’s have a faint “n” on weekly stochastic, and possibly enough to bounce up considering the oversold condition and the position far from the 36MA. Also, the monthly has a well defined “n”. I would anticipate a move up very soon based upon that.
Monday will be an up day for QQQQ from what I can tell.
I don’t know how far they will move. I will track them with the intraday stochastic(s) and time frames.
This will be fun to see what happens.
K;
I’ve tried to learn EW and failed. It would take a long time for me to understand and be fully proficient with EW, it’s so complicated. I can take a car motor apart and put it back together, but EW…
I do like Fib all these folks have been using. I can understand that well but I haven’t incorporated them into my trading except in after-hours study to see where they fit in with the trades I make during the day.
You can probably learn it though. You’re sharp.
Alcoa starts earnings season next Tuesday. Could be an indicator for the rest of the month. I stick with my call: DOW below 8,000 at the end of the month.
“Capitulatory” seems to be the word you were looking for.
Dressguard;
That’s the word. I agree with you about the overall move down. May even be years unless a miracle happens.
I heard on the news about California not being able to get loans to meet payroll. And 15 other states are on the verge of bankruptcy.
Not looking fresh.
Thanks for the wordsmithing.
George to me it seems complicated too but when a friend from investing club shared his “in the future” senior thesis… how he was going to use Elliot and ..well i won;t share so his hard work can be rewarding a few years from now if it’s successful. but yea it got me thinking the “big picture” (elliot wave) might be an awesome tool to know. even though am sure there are websites keeping us updated on when the tide is about to turn.
yes yea intrade.com shouldn’t be trusted as they are people like us making guesses only with real $
The US Economy will go into Recession during 2008
up 12% today to 40%
we didn’t need them to tell us but just thought i’d mention it as long as i’m spamming
apple is right on the 200MA on the weekly chart. hmm. almost playing out like the march drop so far.
http://stockcharts.com/c-sc/sc?s=AAPL&p=W&yr=3&mn=0&dy=0&i=t79038727007&r=7644 this will probably not work for long if not delete this post
if you copy and paste that link instead if clicking you can see it
last spam of the midnight. KO and CCE should be ok.
AAPL dropped in the morning because there was this untenable rumour of Steve having a heart attack. During the day the stock recovered. But when the bill passed it dropped the same amount to the closing. Moral of the story: The bailout is like a heart attack to the whole stock market.
George trust me you may see a small move up Monday,but then a big move down later Monday or Tuesday.Next week could be horrid
Dressguard,dow 8000 i guess no later than the 15th.We have a turndate on the 13th +or- a few days.
Looking to play a nice dead cat bounce after the big drop
K – see here’s where you should be studying your calculus more. The end of the book chapters on Fourier series talk about breaking a time series in separate individual components and view an observable series as being built up of these sub-parts. I’ve always viewed E-wave theory as an overly complicated way to get at the same thing w/o the right tools and thru intuition.
We’re actually in a growth recession now and based on recent data revisions it began tipping over into a more severe downturn a few months ago. A growth recession is where the economy grows at less than potential which means underutilized resources and weak employment. Rule of thumb is <1% growth though <2% is also painful when the speed limit is ~ 3%. You all also need to know that employment is a lagging indicator that follows the cycles, not leads them.
If you’re interested I’ve put up a bunch of quasi-tutorial posts on the nature of business cycles and current situation assessments. The book to read is Ellis’ “Ahead-of-the-Curve”.
Analysing charts with Fourier mathematics is completely inappropriate.
Pooch;
What do you use for your analysis?
Global coordinated rate cuts. When?
ECB didn’t cut rates this week. Global rate cuts would make the global downturn obvious. We have to go through that shit and try to stay afloat as best as we can.
I agree Dressguard, but I don’t think the people in power see it that way.
Disclosure: I am all cash since Wednesday and of course hoping for a bounce.
Concerning the bill that passed, I am surprised we didn’t get more of a bounce. Even so, there are two indisputable facts:
1) The financials are the sector that is in the worst condition
2) This bill WILL haelp the financials.
The two main questions:
1) How much will this help financials: ie, how much will Paulson overpay for assets? The longer and deeper down we go, the more cover it provides for Paulson to recapitalize (not just “provide liquidity”) for the banks. Helping the banks is Priority 1, protecting taxpayers is way down the line. Best (reasonable) case: he overpays quite a bit, but takes warrants enough that taxpayers wil share the profits (if he doesn’t overpay, banks won’t lend and evrybody suffers). Losing future profits is better than bankruptcy for banks, so it is ridiculous to assume that taking too much equity would scare them away.
2) Will banks lend out money and loosen credit? This is the big question for the rest of the economy. I think the banks will hold credit tight until they know what rates they can sell their junk at.
Here’s the crux. While Paulson may not be able to buy securities for a while, there is nothing preventing the Treasury from indicating their intentions earlier, either publicly or through his Gold phone. You can see how quickly public (and Congressional) opinion changed on Monday, so Paulson could pay mark-to-magic rates and their would be little protesting in this market environment. Also, if he does announce higher purchase prices, this should also help the commodity stocks (inflation), which have been mercilessly pummelled.
My predictions:
- October bottom in the 9500-10000 range. (S&P will spend 1 week below 1000).
- Rally led by financials and commodities, primarily energy, utilities, and ag, driven by overpriced Treasury purchases
- Oct/Nov/Dec trading sideways in the 10000-11000 range (~1050-1200)
One more thing: California is having finacing trouble. If they default on their debt (unlikely, since Treasury will probably provide a loan in worst-case scenario), then BOOM!!!!
Paul F;
Re: “1) The financials are the sector that is in the worst condition”.
I did some research of BKX. It spiked down to around $45 in July. That was far below the $60 bottom in 1998 and 2002 which were around $60.
It bounced up and spiked to almost $85 for a couple of days, then back down to the $60 and $70 support area of 2002.
It would be a nice move if it goes back up to $120 again.
did you notice what time i posted yesterday?
i was watching my Red Sox win hehe.
WOW BKX. thanks George never knew about it.
OOO
http://econompicdata.blogspot.com/2008/10/long-bonds-short-equities.html
have fun
all of you that called dow 10,000 and 8,000 i join ya 
http://tinyurl.com/3j8k8v
Downside target 1073-1060. My sentiment guages show we have a little more to go. I hope they are accurate. A VIX gap up to a new high at the open would more likely than not mark a near term bottom. Latest work shows the next rally to be more like the one off of Jan. 22nd low and not the better one that started in March.
Good luck to all.
you saying to long for a few days if VIX gaps up monday?
yes, if you get a SPY gap down. but before going gun ho you want to see that VIX candle turn black. at an open like this, you may tip toe in. This could produce a feirce bounce for a few days, before the first pullback of a bear rally.
A black candle as I refer to it is produced by a gap up on the open followed by price trading lower than the open with it finally closing as a black candle.
There could be some backing up the following day or two to test the low, but if the VIX candle is like this, there should not be too much reason to worry.
you can see the candle turn black soon after the open once it trades below the open.
Earnings season begins next week. The VIX follows the earnings not vice versa. In other words it will be a rough ride esp. for the bulls
Calling the bottom… Yes, we are near the PPT intervention line but there is a real world out there (and wave 3(3) lapping):
Last weekend’s bail out of HRE fizzled. The banks pulled the plug without prior notice when the leading EU prime ministers were talking in Paris about joint action and crisis management. The original deal was for 35 bln over two years, now they are talking 50bln until year end and 100 bln for the next two years.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTzH1395FM8s&refer=home
Even if this is sorted out before the markets open Monday, don’t expect interbank trading to unfreeze any time soon. It shows how fragile things still are.
Guys. I am seriously considering switching ~5k at interactivebrokers.com
it seems soo much cheaper than $7/trade to buy and $7/trade to sell especially for low orders. i could make more return and be more sucessful.
any drawbacks scottrade vs interactive brokers that somebody here might help out?
Really dressguard? why not the selloff precedes the earnings
Actually, what I wanted to say: Don’t trade the VIX. Completely distorted. Follow the earnings reports. I used to trade the VIX but since they banned short-selling on financials I can’t make any sense of it. I am bearish. You know my big call. DOW below 8,000 at the end of month. What the VIX will do I can’t say.
SPY max pain 121. but it has been moving lower, and we have two weeks left.
K;
I don’t have Interactive Brokers. I haven’t heard anything bad about them. Scottrade’s charts are not adequate for day-trading IMHO, but I do like their real-time layout. I use them to monitor the market but not to trade.
i use tdameritrade program (have an account with them as well) to day trade the past few days. scottrade wants me to have 25k+ to even be able to download their program. yah ok
i’ve heard you need at least 25k for interactivebrokers from some reviews.
either way right now i’m happy as i plan to not trade a lot using day trades but if i could get away with 0.005/share instead of $7/trade to me it would be a BIG moneysaver.
this is going to be a good doom picture
http://d.yimg.com/us.yimg.com/p/ap/20081004/capt.f5e7ebb23a884ea9a771b561772ac765.aptopix_bush_financial_meltdown_whcd117.jpg?x=400&y=240&q=85&sig=QkPsnVamdmBAc3.kWzQz5Q– hehe
K,
interactive brokers (IB) is the way to go imo if you plan on daytrading.
I use IB for several years and can only recommend it.
Plus you can do all the stuff the master (Matt) does, options, futs like ES, or go crazy and trade around the clock DAX, FTSE, ASX etc.
Yes, 25K min is required for daytrdg and I would start with 27K just in case
order execution is lightning fast, the 1 dollar a trade sure helps. If you do a dozen trades a day (buy/sell) that’s $24 compared to $168 w/scott or close to $240 w/TDam. Times let’s say 16 trading days a month you start to add up real money.
I have a TDam acct (for the occasional swing) and I can tell you IB is a whole different world.
If you did not do so already try the IB trader workstation demo.
Talking about demo one other thought: imo paper trading is NOT the way to get the “feel”.
Your subconscious mind will always know that it’s just a game with zero at stake an no real loss/profit is in play. That’s why “successful” paper traders very often lose money once they go life.
With IB a ticket (buy/sell) is only $2 you can practice with real money trading 5, 10 or 15 shares (or one share if you try with GOOG).
I.e. you trade 5 shares APPL and it moves 2 Dollars in your favor you made $8 net which will show up on your IB tradg screen. It is surprising how $8 real money have a totally different psychological impact than $800 monopoly money.
Have a great week
PS: No, I am not getting any kick backs from IB
and what if i’m not daytrading? I do not yet have 25k to put into daytrading hehe. am using 4 free daytrades allowed by the (SEC?) in 5 business days just to get the feel of this new approach.
is i put 5k can i still use IB or no? I feel like if i buy stocks through IB and use average down method over time commission is only a fraction ($1 vs $7+) and rewards can be significant. I hope you read and give me your input on that. thanks
Shaishen;
Thanks for the info on IB.
K;
I would suspect as long as you stay within the Pattern Day-Trader guidelines you can use any broker with less than 25K.
Another option is to use a self-directed IRA. There is no requirement that I’m aware of for day-trading. However, on a round-trip trade, after the sale, you have to wait two days for the transaction to clear before you can use those funds again.
K
if I remember correctly you stated you are 19 ?
if so you can start with 3K
check here:
http://www.interactivebrokers.com/en/accounts/fees/minimumDeposits.php?ib_entity=llc
Is it really necessary to put down people who have “burger-flipping” jobs? Not everyone is as privileged (i.e. lucky) as everyone else. There is no dishonor in a blue collar job.
No, but it’s fun. One feels so much better knowing some people are even worse off than oneself.
Burger-flipping jobs may be the only ones remaining after the carnage. That was one of my first jobs, as well as stuffing newspapers, and I liked it. I was in control with a responsibility.
I wouldn’t have any problem doing it again if needed. Hey, all you can eat, too!
Zen;
I believe “burger-filpper” was used as a euphemism for folks that don’t understand the consequences of the financial situation, i.e., “… forgive them, for they know not what they do. (Luke 23:34).”
Not recognizing an opposing the need for help of some kind, is akin to not calling 911 during a heart attack.
Shaishen,
On paper-trading, I strongly disagree that beginners should skip that and go straight to real trading. While IB’s fees may be low, I am more concerned that they will lose their investments, rather than the issue with commissions. The most important trait for a good daytrader is not experience or intelligence, but discipline. So while your comment, “Your subconscious mind will always know that it’s just a game with zero at stake an no real loss/profit is in play” is true, it should not matter. A disciplined trader will follow his rules, because he/she has tested them and knows that in the long run, they lead to the correct decision. Any daytrader relying on their gut will have a short career.
Also, perhaps some are not approaching paper-trading with the right attitude. This requires discipline as well, as you have to develop rules and stick with them as a paper-daytrader as well. If you paper-trade one strategy and switch strategies when you tarde money, how can you be successful. Also, you have to use the same bankroll as you have available. If the paper-trading account is $100k, but you only have $10k to spend, don’t expect the same results.
George,
Thanks for the info on the banks. Knowing that they have already went well past their 2002 lows, makes a rally more reasonable at this point.
Also, I have commented about how I viewed the financials as cannibalistic and how I suspected that many of the problems were deliberately caused by their peers. Here’s an example: right before their bankruptcy, JPM froze Lehman’s assets:
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4882281.ece
I am very interested to see how this plays out. While JPM is very powerful, so are Lehman’s creditor’s.
Also, it turns out that Lehman was too big (interconenected) to fail. Lost in the shuffle was the fact that JPM forwarded to Lehman $138,000,000,000 after bankruptcy, which was reimbursed by the FED. JPM was one of their largest creditors. So basically while most of us have to worry about counter-party risk, JPM and a few others do not. What is also interesting is that it is not clear what JPM forwarded vs what the FED reimbursed. The FED could have given JPM more than they actually forwarded.
Currently, I am not short JPM (I closed my puts with a 50% gain at the end of Friday), but would be perfectly happy if JPM went belly-up without me profitting, since I consider them (the largest derivatives player on the planet and a HUGE holder of $138B in FIRST-LOSS CDOs) a cancer on the economy of the USA.
K,
($10K trades like $40K)
Re: IB and day trading.
IB bills itself as a professionl site so you may see some differences to what you are used to. Note if I use it so you certainly can as well. Below are some things to be aware of:
$10K minimum, noted exception for under 21 years of $3K min.
You get interday margin of 25% not just 50% so be CAREFUL.
Unlike Etrade (my other broker), there is no short sale or covering. You just hit bid and ask prices. If you prevoiusly owned the shares you sold, if you did not you sold short!
There are at least three trading tools. Trader workstation is the most powerful, web trader easier but more limited and mobile trader, very limited. I use them all depending on my current location (Home, work or at lunch) Still learning to use Trader workstation.
One day trader note: Pattern day trading, per SEC, is 4 trades in 5 days. The max is 3 trades in five days. IB gives you a count down and will not let you make the 4th trade. I got tired of this so I threw in more cash.
Also the cheapest route does not offer level 2 views, they are extra.
There is a $10 monthly fee if you do not rack up $30 in commisions etc. Of course it is still cheap compered to other brokers.
Shaishen
Thanks a LOT. i must have missed that. IB has so much info i got overwhelmed
I appreciate it. I guess i could take 3k now since commission will be so low i might actually obey my rules more. (before i wanted to break even after commission so i held on for too long)
if there is a referral part i wouldn’t mind helping you out since you seem to know a lot about IB
newbie. i like the idea that they don;t let you execute a 4th trade. i always get scared with scottrade because there is no way to know.
The paper-trading discussion brings back professional and military memories.
I was a computer programmer and we used flowcharts to map out our logic. Even after 30+ years experience, I would use basic flowcharts for some routines.
I agree that paper-trading is not like the real thing – it’s impossible in many ways, but that isn’t the purpose of paper-trading. In the military, running practice maneuvers was not the same as combat conditions. But the benefit of training practice is to be able to react with confidence by constant repetition of an activity.
My trading method allows me to jump into about any stock and begin trading. However, having some 10 years trading under my belt, I still paper-trade today. If I find a new stock or ETF to trade, I want to see the type of moves it makes. Now, this may last only a day or two, but it helps me to understand the stock better.
The most important benefit of this practice is to find out if this stock will “break” my method. None have so far.
The U.S. recession will be “significantly deeper” than they previously thought, Goldman Sachs economists predicted Friday in a research note. The economy will probably show no growth at all between the middle of 2008 and the middle of 2009. The unemployment rate will likely rise to 8% by the end of next year.
read the rest here,
http://www.marketwatch.com/news/story/more-severe-recession-now-forecast/story.aspx?guid={0E8D9604-3C9A-4994-911D-F9C6AE3C9FCF}&dist=msr_1
On the paper trading debate: I think personality plays a big part. I do both, but my paper trading is up over 1200% while my real account is essentially flat. (Cleaned up on Oct $160 and $100 POT PUTS in the paper account. However in the real account, I only made a few hundred bucks because I took profits way to early) BTW IB has a great papertrading option for the Trader workstation account. It plays like the real thing, there are no limitation on cool tools margin levels etc.
The delta is the discipline that Paul F notes. In my case fear of loss trumped the discipline in real money account, but not in the papertrading.
I plan to drop my position size again, and not raise it until I can demonstrate the same level of discipline.
My $0.02
Paul F,
JPM and GS seem to have their claws deep in the US government. Wouldn’t these two benefit GREATLY from our $700B? I have small long positions in both.
I would like to see all bankers prosecuted to the fullest extent of the law, but the sheeple refuse to wake up and demand accountability. Until that happens, might as well join the crooks.
Newbie;
I’m with ya. When I first started, I got the “analysis paralysis”, or whatever, due to my background in logic. I did extremely well paper-trading.
Then when I started the real thing, I was a loser. I stopped trading for real and went back to paper trading to find out the difference. I found I was not following my PLAN like I was when paper-trading.
I started trading REAL again. And like the sirens Odyssesus encountered, I resisted the temptation to do other than my plan called for…
… and the rest is history.
George same is happening with me. I will give it one more chance and will find a paper trading site. or sign up at IB
Gigi,
The only thing holding JPM up is their size and influence. If you cut all of their assets, liabilities, etc., by a factor of ten, then they would be long gone. Assuming Paulson overpays, JPM will be a huge beneficiary. Honestly though, with so many bad assets, they would need a huge chunk of that $700B to become solvent. Also, a lot of that is priced in, which is why their stock hit a 52-week high last week, instead of a 52-week low.
I have no idea what GS has invested in, but I don’t think any governement intervention will ever go against them.
Something I found out today: there are 9 NY Fed Board directors. Three represent banks, three represent large borrowers (also appointed by banks), and three represent the public (appointed by FED board of Governors).
Dimon is one of the bank reps, which explains why JPM gets much better deals than other banks. Of course, since he is supposed to represent the interests of banks, other banks (Lehman, BSC, WaMu) get screwed by him, not really the public as much. What is really disturbing is that one of the three directors that is supposed to represent the public interest is yet another former chairman of The Goldman Sachs Group – who is still the head of another financial firm.
http://www.ny.frb.org/aboutthefed/org_nydirectors.html
Great info , IB , paper trading , DISCIPLINE
thanks everyone , great blog Matt
Gigi;
Re: “…the sheeple refuse to wake up and demand accountability. Until that happens, might as well join the crooks.”
I might add that recently the House shot down a bill that would put a ceiling on credit card interest charges and other limits on various financing to prevent gouging. This is the same Congress that voted to require repayment of outstanding credit card balance by the sheeples when we file bankruptcy.
They also went home after voting on the bail-out without voting on the Economic Stimulus Package (which would have helped the bail-out cause).
Where I worked, you didn’t go home until the job was done.
Dressguard was pooh-poohing the VIX analysis I gave for a near term bottom. He used to use the VIX but has given up on it. Why? I assume, and probably correctly, that the reason is because the market failed to bottom with the VIX between 30 and 40. Yes, it is true that we are all surprised with the high VIX, but this is only because we did not use enough data going back far enough. But my point was not that a long trade may be a good call simply because of a high VIX. It is the type of market and VIX action with it so high that I was stressing. The VIX is really high. I doubt if it can keep going forever. But what we have not seen is a VIX gap up that clears all previous trades and then reverses forming a black candle. We have had a couple of gaps up but neither of them has cleared all previous trades and both continued up throughout the day.
Paul F, Gigi,
JPM – my trade of the year was to sell my puts seconds before the short ban was implemented
Now I bought some puts again for the reasons Paul mentioned. Take it as my vote against the opaqueness.
No news on HRE yet – German govt has promised to find a solution before Asia opens. If not, crash. HRE is bigger than Lehman.
VIX topped 150 in 1987
VIX topped 150 in 1987<<<
No, 150 is a calculation of what the VXO may have been during the crash of 87. Neither the VIX or VXO existed in 1987.
One problem with the sheeple (and I include most of the media in this category), is that, well, this stuff is complicated. The ones who understand it best (Wall Street) usually have a vested interest obscuring the facts. So you can’t completely blame the sheeple for not demanding accountability: they don’t know the half of what is going on.
While they can see that spending $700B on Wall Street doesn’t seem like a good idea, other factors such as inflation’s causes and wealth transfer effect are just as damaging (or more so), but much more subtle. The fact that I’m nuetral and not bearish on a company such as JPM is another example.
Also, it is quite ironic that the banks that amplified the housing problem pay for loans from the sheeple at 2%, but still can charge (and even change the terms!) 20%+ on credit cards, as George mentioned.
Uh-oh: “LIBOR bid only, no offer”, AT&T restricted to overnight funding and “The Treasury Tarp plan is an irrelevance if we are at a major funding crisis.”
http://www.rgemonitor.com/blog/roubini/253853/financial_and_corporate_system_is_in_cardiac_arrest_the_risk_of_the_mother_of_all_bank_runs
Still no news about HRE – My favorite quote of the day was “how can it be that banks which no one knows can bring the whole system down?”
David, apologies for my briefness – I skipped the “would have been”. Volatility can go significantly higher than it is today.
Paul F;
I agree about the sheeple (me, especially) not knowing what the problem really is in order to determine the needed solution. If I am to believe what the powers that be says it is, then I need to “vote” on the side of a solution that was presented. I just can’t imagine doing nothing.
I remember the 80′s when my pay was reduced, many of my comrades lost their jobs, pay raises were frozen indefinately, and I was fat, dumb, and happy not knowing what REALLY was going on while our country had one foot on a banana peel and the other in the grave.
Here is a link to an email I got today that explains exactly my thinking over the past several weeks. I’ve been reading John Mauldin for years and he is the most “balanced” person I know about the market.
http://www.frontlinethoughts.com/index.asp
Yerk you got that right. I do have a near term target on VIX made by a 162% extension (fib placing is a subjective encounter) of 50.5 though. we’ll see. we are at a place in history not seen very often.
Here is my extension target Fibonnaci chart for what it’s worth. It kinda for the advanced, but eh important things are noted.
http://tinyurl.com/4zqjbb
I should clarify that the 1200% gain was on the POT trades only. The full paper trade account is only up 15%. Of course being flat on the real account is still a little better than what the major averages have done since MAY 08, which when I started trading. I started out long with the SPY at 142. Ouch! Thanks to loss control discipline the losses were small. Also this BLOG has helped me recovered about 70% of my loss.
Thanks!
Woah – now THAT’S a chart, David.
960 is the strongest area before the last bear bottom
Does anybody look at the futures? (I mean besides Matt.)
I do and after forming a small bear flag at the end of trading Friday, they gapped down tonight
And that would mean…
HRE saved. Govt refused to pay more, let’s see for how long this works out. This bank got in the mess because it couldn’t refinance its short term obligations. As long as the credit markets are frozen, expect more surprises.
http://www.reuters.com/article/businessNews/idUSTRE4932O520081005
Russian markets were closed again on Friday. Good that it’s not 1998, so no one cares.
Monday’s 777 point drop was the biggest in history. That was about a 7% drop. A 1987′s one day drop was over 22%. (I wonder if that was “Black Monday”?)
Knowing this doesn’t make it easier for folks invested.
Just some perspective.
Just that they ended Friday on a crappy formation and are down so far tonight.
@David: As far as I see it a tsunami of poo poo is coming.
futures down 111 for the dow. down 12.25 s&p
FUN i somehow think GE will go up after earnings on the 10th. maybe i will make a small bet on it.
that’s true Dressguard. but the PPT can pooh pooh the decline and spark another BS rally at anytime.
so tempting to get in on the gap down tomorrow hehe
One can’t sparkle poo poo.
Just catching back up with the exchange. Obviously y’all have been cranking away with some very valuable insights. Here’s my dilemma. All this year we’ve gotten a bear rally on sentiment so we’re all so expecting one, duration and strength TBD. Unless it’s DOA because the general grasp of how much economic trouble we’re really in. It seems to me we’re at a cusp point where general understanding is shifting rapidly.
Dblwyo,
Right, but when the masses panic -> capitulation.
Here’s a question:
The PPT said that we have to help the banks because otherwise they would stop lending and nonbank corporations would suffer, which would hurt everyone. Well, the good news is, if the banks continue to refuse to lend, there is no longer any reason to prop them up. We gave the financial terrorists the ransom, but they haven’t yet released the hostages. Time to send in the Delta Force.
haha Paul mentioning the Delta force. I just watched 60 minutes
K, so did I. Actually I thought their description for the problems was pretty accurate, although they seem a few days behind and didn’t mention the credit crunch or the bailout. They did make the point that without the CDOs and CDSs, the housing crash would have been easily manageable.
I agree Dblwyo, it seems everyone in the general public is talking about the economy and while most don’t fully understand the reasons or the depth of our problems, most know it is very bad. The last week or two is the first where I really noticed the general public had grasped that this problem is and will continue to hurt them.
I can only see a few things generating a small rally at this point:
1. FED rate cut
2. Bailout plan…oh wait.
3. A second bailout plan
I don’t see any of those happening within the next few weeks. Together with some ugly earnings and terrible economic data, this could get interesting.
fed red cut def in the works. 1% here we come. someone has to move the next dead bear rally…
towlie – well my official opinion about the economy is a matter of very public record running back months…just been waiting for reality to overcome perception and denial….earnings estimates are still on drugs but that’ll be changing…
if we get the wheels back on the wagon we’re still driving down a steep, icy mountain road headed for a sharp curve with no guard rail and big fall…I put our chances of making the curve at about 80%…but that leaves us on the down road
judging from the futures that may be a broader view
Oh. Good. Paulson named a former Goldman VP to head the US’s asset purchases. F*ck me (I’m a US taxpayer).
http://www.reuters.com/article/businessNews/idUSTRE4950BS20081006?feedType=RSS&feedName=businessNews
oh am sure that will be AWESOME for the market. buy an asset for 10 times it’s value. YEEEEEEEEEEEEEA goldman is saved. everyone buy goldman now
This has some good info:
http://personal.fidelity.com/misc/frameset…80929govtrescue
sorry http://personal.fidelity.com/misc/framesets/iwarticle.shtml?pagename=IW080929govtrescue