“Hope” is a Sell Signal
Both President Bush and Ben Bernanke spoke on Tuesday, and there were points when both seemed to be on the verge of tears. They know that the situation is hopeless.
During the week before the House first voted down the TARP, CNBC constantly ran a message on the screen: “Hope on the Horizon”. That was a sell signal. On the weekend before the House voted down the TARP, news stories were filled with the words “hope” and “hopeful” when describing the prospects for the House passing the TARP. That was a sell signal.
Numerous times we have seen various things announced and implemented. They have all been sell signals. Just today, the market rallied up a bit before Bernanke’s speech. The market was “hoping” that Bernanke would announce a rate cut, which never happens during such a speech. That was a sell signal. I shorted right into that foolish hope.
I’m thinking that I can short hope all the way down to the bottom. Once there is no hope, I will know to stop shorting. How does the hope end? The market beats it out of traders by slamming their heads into the concrete over and over. Which brings us to the next topic:
Should We Forget About Rallies?
We have all been trying to spot the beginning of the next rally. Perhaps instead we should be looking at the October 2002 low and trying to estimate when we will arrive there, and subsequently plunge through. This economy seems to be in far worse shape than the 2002 economy, so why not? The market seems intent on proceeding down in a straight line. Why argue?
How to Short Rallies When there are No Rallies
Suppose the S&P 500 drops 80 points in the morning, and then makes an intra-day bounce of 40 points? Guess what? You have a nice 40-point rally to short.
Maybe my pessimism here will be a contrary indicator. We will see. I dare this market to rally. I double-dog dare it!
Watch the comments for updates throughout the day.
TNX +1.70 basis points is huge. Esp. since it started out at +.50.
… where’s my truck?
Yeah.. maybe George.. I think that there is too much fear in the market right now for anyone to want to buy.
The TICK is still deep underwater, but there is a slight tilt upward since the open.
We’ll close pretty unchanged.
I know the last SDS dip I buy will clobber me.
ICE keeps sneaking up like a kitty with a mouse in front of it.
BBT 1 minute chart looks like a monkey painting.
Matt,
You guys must be making a killing.
Can you slow down the transients? I saw FSLR topped about $130 in the premarket. Planned to short more there but it came an went as I was taking carre of the kids. I guess I need to put orders in.
The VIX has exceeded Monday’s high and is up 9.5%.
Newbie,
You can’t take your eye off of this market for a minute!
Matt
The TNX has been marching straight up since 9:15am.
On SDS, I’m waiting until the 1 minute stochastic goes down to 20 and then I’m getting in. I don’t have to wait on the 5 minute stochastic (I could though) because the MACD is already positive and trending up strong. The assumption and probability is that the 1 minute stochastic will cycle up. But I do wait until it moves off the 20 line.
I didn’t think the VIX ever got that high.
NOW TNX is up +2…..
OK. I bet I get burned on this last SDS trade, as soon as, or IF stochastic moves up above the 20…………………
TNX +2.5 AMAZING
Matt — what do you think? I’ve been holding off buying the bottom, but this is looking extremely tempting. If we double-bottom today, which looks like what’s happening, I’ll go long at the close (I can only trade mutual funds).
Yeah, nice SDS scalp. Can you believe this? I missed the SSO though – next time.
George,
Great call on SDS at 12:34pm.
Matt
Kailash,
The market is now more oversold than it was after 9/11/2001. However, I want to see a reversal on the daily chart before I would consider turning bullish. An intra-day double bottom doesn’t carry enough weight. I’d like to see a three-day reversal pattern develop.
Matt
Thanks, Matt. That may have been the last one due to the 15 minute turning over.
TNX +2.62
Houston, we don’t have a problem.
TNX +2.83. This reversal sucked a dollar from my DUG.
SPY’s MACD just turned green on the 15-minute chart, and there is volume behind the buying.
OMGosh, TNX +3.22!!!!
we don’t? well f me hard if the market doesn’t go up tomorrow.
after all to short the brokers need to shore up stock. no?
SPY is heading for another test of its downtrend line at 100.
An intra-day double bottom doesn’t carry enough weight. I’d like to see a three-day reversal pattern develop.
Matt,
didn’t you read my posting? We’ll close pretty unchanged.
This is the biggest TNX move in years.
Yep.
Matt, thanks for the hint to the TNX. Very helpful. Feeling confident now. This baby is going up like a rocket.
ICE has been Soooooo Cooool today. You gotta luv it.
Dressguard,
George was first to bring up the TNX this morning.
Matt
Are you guys seeing this move in TNX (and other long bonds) as good or bad?
I didn’t trade BBT but it finally came out of its funk.
SDS may find support here at its open price.
Kudos to George. Speaks for you, Matt, you are not taking the credit. Respect!
I haven’t had lunch…. daym this is exciting.
Not open price on SDS, breakout price. May want to hold here some.
At this point, this is a nice correction until SSO 15 minute clears its 36MA, then it will be a reversal.
Gigi;
Yes. It’s a good indicator for stocks going up.
When TNX (and others) interest rates go up, funds are being W/D and usually buy stocks. This would make the general market go up. It’s odd that the market would go down while TNX interest rate goes up – should be the opposite. There are times when this doesn’t happen and that is, as I recall, when the market changes course.
Also, be aware that it TNX $change can go positive and negative in the same day.
To put it bluntly, “something’s up”.
SPY is doing a much better job of attacking its downtrend line than it did this morning.
ahahaha damn it you guys. I am stuck with fuel for the rocket but hasn’t yet ignited
Guys, it’s time to get on board. Benny boy is starting off.
Dressguard;
Matt was the instigator. He was calling out the bigger picture and I just happened to notice the TNX.
I appreciate it, but I am humbled by all here… believe me. It’s just when I saw that TNX and had a wierd feeling today… something was out of kilter.
We’ll see what happens – if the theory holds.
You may be correct about breaking even today.
Hmm.. definitely something is going on George… but will be be able to find out and guess based on the charts?
SPY is currently in oversold conditions on the daily. Hasn’t been this region since the July sell-off so there could be a argument that we are going to bounce from here and that a short-term bottom has been found.
Worldwide interest rate cuts, the FED buying unsecured commercial paper, bailouts for everyone, October elections vs. 4Q earnings, continued credit issues, bad retail numbers and general fear/panic in the market.
At this point in time, I think the thing that makes the least sense will win.. that means that the market is probably going to go up as there may have been enough bandaids on the gunshot wound to stop the world from bleeding to death for a few days.
This is soooo great, even if it stopped right here. LOL
I will take the Call of the Day Award. Unfortunately I’ll lose my Call of the Year Award
Charlie;
SDS is bumping the 15 minute 36MA support. THE test for today.
SPY has broken above its intra-day downtrend line and is now trying to break above yesterday’s intra-day low of $100.64.
Did anyone notice that at being down 200 points, gold stocks were none the less up strongly. I’m of the opinion that gold stocks are a screaming buy here and have acted accordingly.
The TICK is holding strong, so I’m guessing that SPY will be able to break higher.
I would buy gold only in physical form. Just in case the world is going under. I hate trading that piece of metal. Market not liquid enough and prone to manipulation.
SPY has cleared yesterday’s low. The next challenge is this morning’s high around $102.
Wouldn’t Barry and the FusionIQ boys be in for the call of awards with their pointing to resistance in the 960-1000 area ? Seems dead on to me.
TNX has been consolidating over the last 45 minutes, but it may be ready for another move up.
Dressguard;
You get the “calls” awards… mine were “observations”. LOL
Remember, I can’t predict anything!
Ok, I hand my Call of the Day over.
Houston, we REALLY don’t have a problem.
Dblwyo,
Barry had some help from Trichet and the global rate cut, but yes that was a good call.
Matt
Well, we haven’t cleared the 15 minute 36MA on SSO. S/B a tough one.
It doesn’t matter to me which way it goes here, I just hope one or the other makes a big move.
Thanks, Matt — this looks like a turning point to me; let’s see if we get a dip towards the close.
Charlie;
Hope you got some ICE. I’m up 8 bucks on it.
What is ICE?
DUG was up $5, now it’s down >1. I’m just sayin.
That’s a spicy meata ball.
If we’re lucky, SDS 5 minute will go all the way up to its 36MA, then reverse back down.
Jim;
ICE is and exchange stock that has good moves from time to time.
hmmm, that SDS weakling can’t even make past the 1 minute 36MA.
Hopefully, it will try again.
SDS nearing a 5 minute double bottom of sorts. I would expect support here.
Be careful of ICE around here. Just in case.
SSO is backtesting 15 minute 36MA. If successful, we have liftoff.
ICE is acting so well today.
SDS is still on its support trying to work it out.
next race to the bottom? head and shoulders on spy?
Yerk;
Don’t know. SDS is back testing its 15 minute 36MA while testing its 30 minute 36MA support – that’s the reason for its effort. If it fails, SSO goes up a lot more.
While it’s doing this, the 1 minute has good scalps for SSO/SDS available ranging from $1-2.
Right now, it looks like SDS is barely hanging on to its effort. We’ll have to see what the next 1 minute stochastic does.
Just be careful with ICE while it’s doing this.
TED spread was over 4.0 today, and most recently at 3.87 after dipping slightly lower than this. Still very, very high. Credit situation makes it hard to hold any SSO plays (or other rally plays) as anything longer than a day trade right now.
TNX still hanging tough.
Nice intraday ranging bounces.
SDS is either painting a bear flag or it is turning upwards.
What does everyone else think.
I’d like to see us go fill the gap, but play day trades for now. Yep, agree to keep one eye on the TNX also.
George, what stoch settings do you like to use?
Charlie, my post was not meant to be a response to yours, just got positioned below. Don’t want to confuse anyone.
Well, SSO is making me proud right now – just a little bit more.
Without the shorting ban, we may have gotten a more vigorous bounce. I’m going long with a one-third position.
junglegirl;
I use 14,3 on StockCharts right now and 8,3 on AskResearch charts.
When is Hanky boy finished with his address? This guy is really pissing me off. Spoiling my day.
George, thanks. I’ve been liking 5,3 placed just above 14,3 on StockCharts.
JG;
I’ll give that a try. Tks.
I knew that had to be some Hanky Panky going on to kill the rally.
If SDS busts that 89 level support, it’ll go down big time
“One thing we must recognize – even with the new Treasury authorities, some financial institutions will fail.” Therefore we lift the short selling ban tonight to the detriment of all institutions I do not like – is this guy nuts?
http://www.marketwatch.com/news/story/text-statement-treasury-secretary-paulson/story.aspx?guid=%7B63A01A6B-D65A-44C8-8208-124453203F9F%7D&dist=msr_1
So what do you guys think will happen with the shorting ban being lifted tonight?
Remember this ‘Golden Oldie’ via Rich? I wonder what his thoughts are now…
http://www.trivisonno.com/mondays-trading-6
1. Rich Says: August 25th, 2008 at 11:49 am
The SPX 1310s were the bear market rally top; now we head to the upper 1100s and then 900s-1000s by Oct.-Nov. before a large oversold bounce into winter/spring.
Financials are again poised to plunge to new lows with widening global recession and growing global financial system stress.
The banking system is de facto insolvent, and the FDIC’s balance sheet is insufficient to make good on its commitments. The Fed will have no choice but to print money 24/7 as the lender of last resort to the gov’t to bail out everyone and to shore up banks’ balance sheets via lending to banks to purchase Treasuries.
Eventually, banks via the Fed will be the largest holders of gov’t paper, requiring higher taxes on incomes and capital gains, the revenues of which will go increasingly to the Fed in the form of interest on the Fed’s and banks’ holdings of Treasuries.
Most Fed credit-money printing will circulate in the banking system and gov’t sector, not the stock market and real economy.
There will be a shortage of after-tax incomes, profits, capital, and liquidity in the financial markets and real economy, creating a situation in which cash is increasingly dear/scarce. Be long the US$ for a debt-deflationary and possible price-deflationary env’t, with all fiat currencies trending toward par of US$ Index 100. The US$ you hold today will buy more tomorrow.
Sell/short stock market rallies into technical resistance and on weakening breadth. Sell commodities and related stocks. Buy US Treasuries until the 5-yr. yield falls below 2% and the 10-yr. yield below 3%; thereafter, gov’t paper will become “certificates of confiscation” for a couple of decades.
We will eventually see the mass public and most of the top 10% swearing never to own stocks ever again or to buy real estate other than for a primary residence.
US gov’t/GDP will surpass all records and defy imagination. Tax evasion skills will become a prized asset. Capital controls, and perhaps gold confiscation, are likely.
Good luck; we will all need lots of it.
Dressguard,
Bernanke likes to say that the credit crisis is “psychological” but none of our leaders know how to give a speech that can improve confidence. None of them know how to lead; from President Bush all the way down to Ron Paul. They really should just be quiet.
SPY is holding up though, and the volume is very heavy, so maybe this one will stick. And that’s exactly what I said about the last rally attempt a few days ago!
Matt
I couldn’t agree more. We need some guys in politics who can go out and give a proper pep talk.
I think that the market turned down when Paulson said that it would be a few weeks before TARP did anything.
This is how you make money by watching CNBC. As soon as you see one of our “leaders” coming on, you sell, sell, sell!
Now it has become two heads or a double-top…
I like Rich’s crowding out argumentation. This part the “psychological” leaders just don’t get. If they take all the funding nothing is left for the private sector. Econ 101
Matt.. that last comment was funny.. You should create a RSS feed called the “Some Dumbass Leader is about Speak.. Sell Sell Sell!!”
SPY is fighting hard to stay green. This is a major high-volume battle.
Dressguard, your call as 01:10 was a good one… Only 15 min to go
The TICK is deep underwater. Advantage: bears.
Yerk, I am not happy about it.