Thursday’s Trading

Tiki Alert
On Wednesday, the TIKI closed at 18. That was the highest print in seven months. The tick count for the Russell 2000, TIKRL, closed at 1,000. That’s a new record high for the data that I have, which goes back to April. For comparison, the TIKRL printed at 776 at the rally peak on January 6th. These two indicators are flashing very overbought signals (short term).

Another Kud-blow-off?
Here is me calling Larry Kudlow a fool:

“Euphoria has officially broken out on CNBC with Kudlow screaming about “panic buying” and talking heads raving about how a giant rally is “in the air.” Fools.”

Was I being unfair? Nope. That quote is from this post on January 5th. The market topped the next morning, and then panic selling ensued. The exact opposite of what Kudlow predicted.

Guess what? Kudlow started shrieking about “panic buying” again on CNBC last night. If the Kud-Blow indicator is consistent, then the market will be peaking soon, if it hasn’t done so already.

No More Cars, Please
In case you missed it last night when I posted it in the comments, here are 13 cool pictures of cars piling up around the world.

196 Responses to “Thursday’s Trading”

  1. K says:

    yes dave K opernicus LOL

  2. George says:

    I caught that BBT reversal, along with et al.

  3. George says:

    Toby thanks. Sure, anytime you see something like that, it’s good to know.

  4. admin says:

    Toby,

    Yes, you could look at it that way. It did indeed predict the 2pm reversal. I was focusing on the series of bear flags that you will find inside the wedge. It’s a very interesting chart: a bullish falling wedge containing a series of bear flags. So, the ideal way to play such a day would be to short each bear flag, but keep an eye on the apex of the wedge so that you can cover and go long at the right moment.

    Also, there hasn’t been an expansion of volume as SPY broke out of the wedge, so this bounce may not have much staying power.

    Matt

  5. dave says:

    K,

    don’t go near the Vatican, you heretic. Do you believe in gravity ?

    (i’m not anti-Catholic, just warped)

  6. K says:

    i watched a video of Roubini at bloomberg videos lol. when he got to the part that he said we have to take this problem by the horns a phrase from “Borat” came into my mind and i laughed hard. I dont want to offend anyone here so i wont say anything since that movie was controversial

  7. George says:

    You know, the weekly for SPX and QQQQ is still positive on the stochastic and MACD. Barely positive. This is a down day in an up cycle?

  8. meb/Sherry says:

    Dave-
    How did you get into your current
    profession?????????????????????

    Sherry

    P.S. Do all brillant minds gravitate to trading as
    a way to get ahead??????

  9. Yerk says:

    narrowminds, lots of good advice… Look around, listen, watch. Understand how people are thinking so you can figure why they are sometimes right and sometimes wrong. Trust no gurus & black boxes… And don’t pressure yourself – value the lessons you’ve learnt.

  10. dave says:

    Phil,

    i asked this Q recently: since USO topped on 7/11 how many days has it closed > 20S ?

  11. K says:

    Dave I wont if you stop Calling me K opernicus haha. Boy this is fun.

  12. K says:

    any of you guys want to sneak preview superbowl ads? :P or you want to save it for superbowl

  13. George says:

    K, I want to see them because I’m not going to watch the bowl.

  14. George says:

    Hmmm, this move up is fishy. Perhaps a lure for the bulls to get a haircut. Fishy because the gap-fills were thawarted.

  15. dave says:

    Sherry,

    Too tall for the NBA. Probably a savant who can’t do much else. I was a mediocre student despite scoring top 1% math SAT’s who is self taught about the mkts; one can learn a lot from actual mkt action if one is very visual. I’ve never read Wells Wilder, but advocate oscillators (used properly).

    Read just a few books (3 or 4 and not deep ones at that) at the beginning. Seriously, the mkt itself can teach one a lot IF one has an open mind.

  16. meb/Sherry says:

    Thursday’s employment numbers are the least
    tinkered with…market moved in correct
    direction based on numbers.
    Powers to be working overtime to reverse
    direction.

    Sherry

  17. K says:

    just a few previews that are out now George..
    http://www.spike.com/blog/super-bowl-ad-sneak/73295

  18. K says:

    George this is a fishy move but i somehow dont want to rejoin shorts until maybe monday. unless i could take a quick scalp

  19. Toby says:

    Matt,

    Thanks. I did just what you said, except I bought SDS at each point. I’m still just paper-trading, but trying to keep it as realistic as possible. I was doubtful about the volume also, so just took a little scalp at the breakout. I also just noticed that SDS broke up again, bouncing off resistance that formed around 76.35.

    -toby

  20. George says:

    K, thanks!

  21. dave says:

    Oh K,

    I know that you want to blaze your own way thru the universe & not just be the first one to figure out that the earth is not the center of it.

  22. meb/Sherry says:

    Dave-
    Give yourself a pat on the back.
    I’m not big on oscillators…but I
    do look at them. My trading hero
    is Linda Bradford Raschke (LBR).
    I visit her site to look at her cum.
    tick and compression indicators.
    The compression indicator tells you wheter
    to look for a big move or not.

    Sherry

  23. K says:

    Everything revolves around me dave. i thought you knew that already!!!

  24. dave says:

    Sherry,

    Semi-smart people learn something new every day. Think i just did. Looked at LBR several months ago in a very perfunctory way.

    “The compression indicator tells you wheter
    to look for a big move or not” motivates me to look deeper.

  25. George says:

    If SDS loses this double bottom on the 5min, we may go green today.

  26. meb/Sherry says:

    Dave-
    Put your cursor over summation tick or
    compression meter…left click and it
    will tell you how to read the indicators.
    Compression meter not currently calling
    for a big move.

    Sherry

  27. phil says:

    DAVE…………..answer………11

  28. phil says:

    dave by 20s i believe u mean 20 day simple ma

  29. Yerk says:

    George, that weekly stoch line might explain things… Does it limit the possible strength of the next move? Btw you sound younger than I’ve ever been

    Sherry, I don’t think they know. I’ve seen their eyes and their body language. They want to preserve too much. I don’t trust them but I know my limitations and before dave dumps me in the “not so much” I quietly continue to fix my shattered crystal ball. I like this movie … explains a lot. Got me into trouble when I suggested to use it internally. Here an application to the current situation: http://equityprivate.typepad.com/ep/2008/08/those-vultures.html Never underestimate the will of organisations to carry on.

  30. dave says:

    Phil, yes,

    11 is close enough. Point being it was oversold & stayed oversold with such meaningless bounces that it could ONLY close above the 20S 11 days. What greater example of “The trend is your friend”.

    Which was the greater amount playing bounces on the way up or losses from playing bounces on the way down.

    Btw, does that “11″ # surprise you considering the extent of the decline ? It should.

  31. meb/Sherry says:

    narrowminds-
    From LBR…”Don’t try to make a profit on a bad
    trade…just try to find the best way
    to get out.”

    Sherry

  32. K says:

    so george time to load up on SSO? :P

  33. dblwyo says:

    George – remember ROC discussion last Fall ? Try looking at it on 30min. Using it on 5Day SPX chart on 30 min and 3Mo and daily. Tells us what’s coming up.

  34. K says:

    that 8:30AM GDP data might just send the market up for no reason. hmm will it?

  35. Charlie says:

    I’m not sure where we are going right now. The big gap from yesterday was closed, but the market is showing an inside day per what Matt outlined. This last 1/2 hr will either just bounce around or make a big move. Tomorrow is also month end and the chances of a positive January are all but gone now. Not sure if any of you have insight, but I heard that the first month for the year paints the story for the entire year. The correlation is stunning from a % wise.. can’t remember the percentage, but it was like 80% – 90% That basically means that if we close the month lower, we are going to have a lower year for the market.. (which we all know)..

    Matt… did you close out your shorts, or add more?

  36. K says:

    we might just hit 840 then bounce to 889 again.

  37. George says:

    SKF hasn’t closed its gap. I had a feeling SDS needed to do that. WOW.

  38. meb/Sherry says:

    Yerk-
    Thanks! A must look at link.

    Sherry

  39. Charlie says:

    btw.. the last 2 inside days we had on the SPX daily were in Oct 20-21 and Dec 8-9 Both were followed by corrections afterwards.

  40. K says:

    George just caution skf at ~138.37 if it soars through good job.

  41. George says:

    Yerk;

    The weekly is very weak. However, until, or if, it turns over, there will be volatility. Also means there has been an upward bias on the daily.

    Is that what you mean?

  42. dave says:

    Sherry

    From LBR…”Don’t try to make a profit on a bad trade…just try to find the best way to get out.”

    eloquent

    Some of the best trading i do is getting out of bad trades.

  43. George says:

    dblwyo;

    ROC making double bottom on 5min. I expect it to rebound from there (5min) . Weekly MACD has slightly moved up. 15min double bottom with positive but not trending, MACD.

    Will set up nicely.

  44. George says:

    BBT has nearly filled its gap. SDS hasn’t, and is still about $18 bucks away.

  45. meb/Sherry says:

    Most important data…yesterday’s high/low.
    SPX just tested yesterday’s low and failed.

    Sherry

  46. K says:

    when UYG closes gap at 3.19 i’m in baby :P

  47. dave says:

    George,

    If you’re long, & there is an up gap behind/underneath you, do you prefer that it remain partially open or closed ?

  48. Yerk says:

    George, the daily and the weekly are conflicting? I see lots of undecision and many models are distorted because of the violent moves in q4 and they postulate the next wild swing: 650 or 1050… So I was interested in your expectations. Matt showed the possibility of an ongoing sideways correction after the move through the apex. Let’s see when the conflict will be resolved.

  49. George says:

    K, Thanks.

    Yeah, SKF is a BIG mover – don’t want to get caught on the wrong side of that puppy.

  50. dave says:

    i’m a firm believer in deductive reasoning.

    Bonds are “oversold”. There have been all these pronouncements about the Fed buying back T-bonds. We’re sitting @ 61.8 Fib.

    And this is the bounce ?

  51. K says:

    skf’s high so far 138.13 i called resistance at 138.40 :P

    I did miss $6 more move to the upside on my $124-131 trade but be happy with green right? :)

  52. George says:

    Yerk;

    Different time frames are in different cycles. That’s why the appear to be conflicting. A lower time frame price (as detected by stochastic and MACD) will cycle causing the red or black candles. So, the daily is cycling, while its past cycles have caused the weekly stochastic to turn positive. Now, if the daily continues cycling down, it will turn the weekly down. Conversely, if it cycles up, it will turn the weekly up.

    It’s not known what will happen next, but a clue can come from where the daily stochastic is in its cycle. Mine has the daily stochastic crossed and positive and above the 20 line. Which means, to me, this was a down day in a stochastic up cycle.

    The daily stochastic can turn negative here by price continuing to go lower. However, probability is higher that price will move higher due to this “setup”.

    You wouldn’t think that, after today’s action. But these big down days in an up cycle are the ones I look for.

    Yesterday, SPX daily’s price hit th 36MA and today it backed off.

    This is my view on the immediate situation. I am not a good predictor, as all know :) but with following price, there is no problem. I only like to be aware where price is in the scheme of things.

    Thanks

  53. dave says:

    Sherry,

    I was wrong yesterday when i stated that there was no money flow info. There is on BigCharts. However, on first glance it doesn’t appeal to me. It did not non-confirm TLT on mid-January high.

  54. K says:

    here is a chart of the 2 retracements i drew of SKF. Run up gets a red color because is resistance. a pullback gets green because there is support. anyways

    i mentioned 138.40 as resistance.. but then i went and redrew it because it wasn’t on point. and when i resize the chart window it changes by a few cents (weird) so here it is.

    http://i41.tinypic.com/htvixi.gif

    (btw matt there is a comment in moderation but i accidentally pasted same link twice so just delete that comment thanks, K)

  55. phil says:

    dave …….. i have 20 shares of TLT……you want to buy them from me?????………lol

  56. George says:

    dave;

    My expectation is that all gaps will be filled, even intraday. Some intraday are not completely closed, but very close. I can’t remember ever seeing a daily gap not filled on the stocks I trade. I luv gaps. I remember one time it took 3 months for a daily to fill, but it got there.

    If there’s a gap below me, I am expecting a nice reversal. I like gaps closed to take away the mystery. :)

  57. George says:

    dblwyo,

    thanks for reminding me about ROC. With my newly arranged office, I didn’t have it on my screens. I will now.

  58. Yerk says:

    George, many thanks for your explanation. I always appreciate your comments.

    “You wouldn’t think that, after today’s action.” Hmm, the last two days felt very, very fishy… Gap up tom?

  59. dave says:

    George,

    If i’m long, i want the gap behind me to remain at least partially open demonstrating demand sufficient to keep it partially open. If that gap closes, i’m selling.

  60. dblwyo says:

    George. De Nada. What do you mean by setup in your earlier reply and later comment ?
    I read the ROC as favoring another down day tomorrow.

    Doing some Mattian back-testing on 5Day/15&30 min and 3Mo/Daily. In both ROC has been a great indicator of shifts. Prefer 30 min ’cause 15 is too noisy.

    Given my other argument that we’re event driven ROC jumped eod yesterday in SPY and XLF. If you could catch, had the liquidity and guts could’ve played it up yesterday and down today with SKF/UYG seesaw. Hard to catch yesterday though since bad bank was late on CNBC. But using ROC looks like you could’ve got it going down and set up yesterday for today. Again may require “event-driven” mindset.

  61. dblwyo says:

    Yerk – following on to the apex break comment looked at that earlier today and it seemed to me that rather than breaking it was extending. But overall think Matt’s wedge was a brilliant framing. Came to a similar conclusion about Sideways (Merlot anyone ?) building a rectangle around the last few weeks, excluding the event-driven false reads. The false breakdowns and breakups as Matt called them.

  62. meb/Sherry says:

    Dave-
    ” I also come because a certain female poster
    bosses me around & it gives me a chance
    to pretend that I’m deaf.”

    I just called the builder and cancelled the
    contract on your new homes.

    Sherry

  63. Yerk says:

    Sherry,

    be careful you’ll spill Dave’s wine when you read this. Better watch my movie.

    http://www.appraisers.org/images/fastread/Jan_23_09/Guidelines_Ltr.pdf
    Govt is suggesting to appraise RE by automated valuation models or even better broker price opinions – are they serious? Spain uses BPO to value the market. When I told this a guy investing big in Spanish RE he looked a bit uneasy. :mrgreen: DD is one of the cumbersome things we’ve lost on the road we’re following.

  64. dave says:

    Help !! I’ve been thru (where thought it would be) thrice looking for a post where someone commented about shallow pullbacks.

    If you posted that or remember who did, please let me know.

    My rollerball mouse is screaming “stop clicking, you idiot”.

  65. dave says:

    Yerk,

    I once had an appraiser appraise a piece of commercial property belonging to my mother. When he presented it to us he said, “I don’t know whether that’s enough or not”. And that’s when (if they ever really were) appraisers were honest.

  66. dave says:

    Phil,

    Try the Fed. I think they’re located in DC. Even better try the helioport at the Fed.

    My sympathies to you even if i did sell them to you. :)

  67. meb/Sherry says:

    Yerk-
    Another great link…can people
    become more corrupt???

    Sherry

  68. dave says:

    below is a good example of triple frame thinking:

    George Says:

    January 29th, 2009 at 2:37 pm
    You know, the weekly for SPX and QQQQ is still positive on the stochastic and MACD. Barely positive. This is a down day in an up cycle?

  69. meb/Sherry says:

    Yerk-
    You were right…I did spill Dave’s wine.

    Sherry

  70. dave says:

    Sherry,

    Apparently you can’t see my 5:10 post. It’s apparently awaiting moderation because i included a link.

  71. meb/Sherry says:

    Dave-
    Did not see your 5:10 post.
    Hope it lets me renew the contract
    on your 8 new homes.

    Sherry

  72. meb/Sherry says:

    Dave-
    Have a great evening!

    Sherry

  73. dave says:

    Sherry,

    My Australian Shepherd just kicked me out of my own bed & told me to go to Home Depot to buy a dog house before they close the store for good.

  74. Yerk says:

    Dave, scary that we want to go back to that level. Sherry use warm milk to get rid of the stains.

    Another level we have dropped by: Air cargo after 9/11 fell 12% because the fleets were grounded. December YOY comes in at -23%… Air cargo carries a third of the value of the world trade. Equals 7% contraction from air cargo alone… How faster must oil fall to keep profits for airlines up? I’d be disappointed though if xom fails as badly as Royal Dutch. Something has to give… The French are taking to the streets and they are the only nation which so far has come up with a decent revolution.

  75. George says:

    dave;

    I see your logic with gaps. I can’t tell a breakaway gap from a reaction gap. I don’t treat them as support or resistance, either: I mainly use MAs for that. (I know someone who only uses support and resistance to trade.)

    For some reason, gaps gape at me like a target to zero in on.

  76. dave says:

    Yerk,

    Best line i heard yesterday went something like “The original TARP was to buy the bad assets until we decided to do like the Brits. That doesn’t look so good now that England looks like it’s turning into Iceland”

  77. dave says:

    George,

    Btw, that was my Dad’s name.

    The trouble as i see it with relying on gaps getting filled is one has no timing for that. And prices can go away from the gap a long ways before it runs out of steam.

  78. dave says:

    Yerk,

    Did you make a comment late in the day about pullbacks ?

  79. George says:

    dblwyo;

    By “setup”, I mean (for going long) the bottoming out process, then turns back up for a long trade. There are several ways to do that, in this case, if ROC continues down to the double bottom on the 5 and 15min, it will have a good chance to turn back up. The 1 and 5min stochastics are at the bottom. Could go down some more to make the 15min bottom out, but the double bottom may save the day.

  80. dave says:

    George,

    When there are too many gaps they’re meaningless IMO – “common gaps”. The fewer the # of gaps the more meaningful they are.

  81. George says:

    dave, makes sense.

    I’ve seen some stocks, and I believe they were oil stocks, all they did was gap, almost every move. It was just part of the nature of the stock.

  82. dave says:

    George,

    Common gaps – if diamonds were as common as fallen leaves would they have much value ?

    Am curious from reading some of your posts you are a very perceptive thinker. Did this play a role in your previous occupation ?

  83. dave says:

    George,

    If a gap is only partially filled, i can go long (or short) & believe (until otherwise) that i’ve got more powerful forces than me backing me up.

    It’s like going into a street fight with the Big Red One having your back. And being a Georgia boy you know the importance of the Big Red One.

  84. George says:

    Dave;

    Re: “Common gaps – if diamonds were as common as fallen leaves would they have much value ?”

    My take:

    No, and if everyone had a million dollars, the concept of being a “millionaire” would be meaningless. Value is a strange animal. Old stamps, coins, antique furniture, GOLD, etc. Value is a perception as much as it is anything else. I should say “meaningful” perception. Supply/demand create value, need creates value, wants create value and marketing creates it, too. I remember Beanie Babys – the Ty type: $50 for a piece of cloth. Are humans silly, or what?

    “When the well’s dry, we know the wealth of water.” Benjamin Franklin.

  85. dave says:

    George,

    When Beanie Babies were really hot, my ex-gf Ruth would drive to 3 or 4 McDonald’s a day getting the kid’s meals with the promotional BB’s. Upon leaving the McD, she would promptly toss the kid’s meals in the trash can.

    Recently, when she told me that she had an annuity, i asked her whether it was 1) an investment-linked living annuity (Illa); 2) a guaranteed annuity; or 3) a variable annuity ?

    She replied that she didn’t know. Having been an ex-reg rep i knew that most annuities were sold (to clients) not bought (by clients).

  86. newbie says:

    @K, Nice pictures, not bad for a hand held camera & 8″ scope.

  87. newbie says:

    @K, Now I can picture what you look like when I read your posts. :D

  88. K says:

    newbie you found my pictures? :P haha i am one young fella eh? ;)

  89. K says:

    btw i hope you dont give my posts less value haha ;)

  90. newbie says:

    Some of you may find this handy:
    International Trading Calendar — Holidays & Expirations
    http://www.interactivebrokers.com/download/Calendar2009_large.pdf

  91. dave says:

    please no pix of K, we must not frighten the women & children nor the horses

    Think i’m going to have nightmares at the thought of :)

  92. K says:

    Harsh dave. i went out today and seemed to attract the women not frighten!! HA !!! i hope your positions reverse on you

  93. newbie says:

    @ I almost posted a link to your quarter Venus, it is not as common as some of the other astronomy pics. But that would out of this world off topic. Sorry, I could not resist the pun.

  94. dave says:

    K,

    It’s not fair. You’re in a town full of Ha’vad boys. And the women want real men like you – that’s like catching lobsters in a bathtub.

    Wait til you see my Ha’vad post tomorrow – with sound effects !!