Wednesday’s Trading

Another FOMC Rally?
If we have another one-day wonder rally like we did for the last FOMC meeting, a potential target is SPY $87.26. That is the top of the gap that was created at the open on January 14th.

Banks Saved Again
This is the CNBC story that rallied the futures Tuesday after the close. It appears that the banks will be saved yet again. Our government has been “saving” the banks for almost a year now. I reckon we are nearing the first anniversary of our lost decade. Only nine more years to go!

193 thoughts on “Wednesday’s Trading

  1. Dave-
    Just checked my account and didn’t see
    any bonds…did we have a breakdown
    with Matt?


  2. narrowminds,
    Below is from late yesterday.

    dave Says:

    January 27th, 2009 at 3:22 pm
    Charlie; K,

    TBT’s got hit at 1PM because that’s what time the Treasury auction results were announced.

    As for the move up in bonds (TLT), it was to be expected as a “return move” to the area of the 50dma which had been crossed to the downside several days ago.

    “Return move” is an important concept. Usually you see an important resistence, support, moving average, trendline when crossed revisited in “Return move” to test the break’s valididty. If anyone has ever been fishing at a farmer’s pond, he’ll usually say “As long as you close the fence behind you”. That’s the way i think of a “Return move”.

  3. I’ve bought everything that is low and sold everything that is high. Small positions until the second leg of movement after the Fed-Speak.

  4. narrowminds,

    I just hope it’s the way a friend of mine describes bad trades, “took the escalater up & the elevator shaft down”.

    More, Sherry ?

  5. Sherry,

    You’re not picking up your phone ! I even told your assistant to tell you that “It’s Lehman calling”

  6. Sherry, just back in from shovelling about a foot of snow …I do think the market has room to run to at least 944, and possibly until 1006 like for the coins..our Maple Leafs are beauties…I have been trading gold through a closed end fund on the TSX (GTU.UN) that owns bullions bars but not holding any right looking at a short term GLD at the money/slightly in the money calls as a way to play a re test of 1033 through Mar/April..I think gold will touch 880’s before bouncing stringly again..i do have a long term plan to buy gold and silver coins but am betting gold / silver will break down into 2010/in 2010 by 30-40 %. Who knows..if gold breaks 1033 and holds I will jump back in as something else may be for using my address..of course !…given this is global and central banks being the parasites they are, i am sure any confiscation attempt will involve most countries..that said, you never know..i do not expect the Fed to celebrate its fact, i am pretty sure they will be gone by end of 2011..i heard there are companies that open post office boxes in different countries for a fee and allow you to keep confidential items in there..may be worth researching.

    Good luck.

  7. Sherry,

    I’m calling the WaPost financial editor and telling him that we’re going to have a balanced budget, but i’m using your name.

  8. JO – how do you come up with those price levels ? ~940s and 1066 ?

    narrow – you’re counter-arguments would be ?

  9. Jo-
    I’m only kidding about the address thing.
    I’m not into gold and will have to depend
    on you and Dave.
    THANKS! for the gold overview…
    sorry you had to shovel snow…
    how about a snow blower???


  10. OMG, $33 spike to the upside on SKF. Oops, that was a market order. You always get screwed at the drive-thru.

  11. I am just looking at nw right now, they are saying that the current wave should end short of the 940s, but it can go to 1006, but if it goes higher then all bets are off on the downtrend..

  12. Jo-
    Some people claim that the U.S. defaulted
    on its debt in the 1930’s when bond holders
    were not allowed to redeem in gold as promised.


  13. ROFL – quant model gone berserk

    S&P500 Fair Value Estimate – January 1, 2008
    The model continues to signal a strong buy signal with fair value for the market as a whole at 2330, some 58% higher than where it currently trades. Our confidence in the model remains low for the reasons pointed out…

  14. 944 is high of 09 so far on intraday basis. it was 935 on a closing basis -date jan 6 …1006 is nov 08 high..both very important..i would be willing to start buying puts at 930 or so but only if macd h / macd lines, sentiment, and volume look bearish enough.

    Sherry, if you live up here, a blower is a must as you can imagine..we do not have parents are old school..did it the old fashioned…gold has room to break 880 and if it does, could reach 850’s..either way..there is good support for a run to 1033 in the next two months but only after the short term correction IMO.

  15. Sherry, you’re right. So many calls for extreme moves but things are connected… Btw why should treasuries collapse in Q1? I’d rather buy US treasuries and pocket the currency gains than buy UK treasuries…

  16. Dave-
    I looked at money flow this morning and
    said this could be a 25-35 point SPX day.
    But I took profits at 15…would have stayed
    for more if I had known the FED would buy
    your liabilities.
    Can you track money flow in the bond market???

    WaPost just called me for an interview. Thanks!


  17. Yerk,..the CDS spreads on UK bonds has been looking real bad..UK by several measures seems much worse than US and they are not reserve live in Europe from your past comments..any thoughts ? It seems to me Italy and UK are headed to national bankruptcy by end of 2010..maybe sooner..Soros said today he had shorted the pound (will be called the gram one day) from 200 down to about 1.40 but has exited for now. Western Europe is looking rough IMO.

  18. Matt, I am no chart expert.but as of right looks like a good chance we will have softenss into the close and for the next 2-3 days..MACD H / Lines and slow stoch do not look bullish for next day or two..maybe a good time to try a fade….

  19. Jo, narrow, sherry: ran a Fib on the market from Sep to date. If one uses the Citi hoha as the bottom 940 and 1060 fall out beautifully. But, following Matt’s argument which I share (and have so said publicly in posts), you discard that the levels could be 975 and 1022/1076 or so (38, 50, 61% levels I thimkp). Hangs together for me but feels wrong. If Mauldin’s got it right we’re likely to see the next big bust late Q2/early Q3.

  20. narrowminds-
    Can you explain the NeoWave X wave
    thing to me??? They’re looking for
    the X wave to complete before the


  21. Sherry, this should not prevent you from giving me advice. I’ll follow you.

    I swore I’d never short financials again. Couldn’t resist today. I hope I get a bail-out if I need one.

  22. A few minutes ago, the Republicans said that they had a better stimulus plan than the Dems. They said it will create 6 million new jobs instead of Obama’s paltry 3 million. So, it must be twice as good, right? 🙂 In any case, if you look at SPY’s 15-minute chart, you will see a bearish engulfing candle at 3pm. You can thank the pubs for that.

  23. Hope you do too Yerk.
    I don’t like to short the S&P 500 futures
    unless I see a reason to…SPX fails on
    test of prior high…SPX makes a high on
    lower momentum…big increase in negative
    money flow…etc.
    Good luck with your position.
    By the way…I would never tell another trader
    what to do…maybe Dave.


  24. Matt-
    Republican plan…no one who makes over
    $100K will have to pay taxes…that includes
    the SS tax.


  25. Sherry – We are in the E-wave with the target at X (unknown), projected at below 940’s for the trend to continue downwards.

  26. narrowminds, my understanding is that glen neely is calling for the rally to end no higher than 1006 too…it seems now neowave is stating 940’s as the max high point ? Can you clarify for me? Thanks

  27. Thanks!!! narrowminds…
    How did you come-up with
    your BLOG name??? Your
    posts project the opposite.


  28. JO, you get the picture… Western Europe looks better than Southern than Eastern Europe. Western Europe finances Southern and Eastern Europe. Uups. UK does not belong to Europe but to the US 😉

  29. Sherry, Mommy, i’ve finished my spinach. Can i go outside & play now ? Should i wait for the plane to land ?

  30. Sherry,

    I thought the Republican plan was that no one who makes over $100k has to ever die ?


    registered Republican

  31. SPY closed a bit higher than my target of $87.26, which I mentioned up at the top. 875 is the important resistance area for the SPX now; 872 for the futures.

  32. thanks for those levels much for the fade for today…not looking good…i’m still trying to improve my short term trading skills…i usually focus on longer time frames…but hey can’t get them all right..

    Since we are in deflation, i think it is a good time to go shopping for that blower sherry..they might have it half off…lol

  33. Dave-
    No money flow…no bonds for me.
    I think you’re right about the
    Republican plan…but also no

  34. Sherry, Just the name which popped in my head when I was signings for the blog – Strange as it maybe, but a lot of people are quite narrow minded in their views/understanding, one does needs to step back and look at all perspectives in life… Albeit I was/am a bull at heart, i guess goes with my personality which is an ultra optimists, but lost quite a lot of money (my retirement) with the bozo brokers.. so now trying to see if I can do any better, and potentially recover the loss… the first few attempts were not good as I lost even more, so started digging and found you guys…

    JO, It states that the current wave should end below 940, but can potentially go as high as 1006 – which is the max. Above 1006 the downward trend is in question…

  35. Matt-
    I’m not going to trade bonds, but if
    I did you make a good suggestion
    about following ETF volume.


  36. narrowminds-
    Hope you make back your loss.
    Always use tight stops. Do not
    be afraid to take a small loss.
    Cut your losses quickly…let
    your profits run…use trailing
    stop on running profits. When
    you hit a lot of singles, you will
    get your fair share of home runs.


  37. Read the Fed statement. Maybe we see 950 again, but please show me someone from the value side of things who thinks the market is priced attractively at 900…

    … the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply … Furthermore, global demand appears to be slowing significantly. [You’re kidding. That is all covered with the bad bank] … The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant. [The second half recovery is certain, they are just talking the markets down]

    950 / 42 = 12 so we got our typical bear market valuation. Where is this Fairfield Greenwich prospectus, I’ll put my money where it is safe…

  38. Yerk-
    Never follow me. I only trade the
    S&P 500 futures…but do have
    a keen interest in economic conditions.

    Got a letter from my Credit Union telling
    me that due to the low Treasury bill
    rates they cannot pay the interest
    rate they were paying…they hope
    members do not jump ship.


  39. Dave-
    You are the best. When I get my TV
    show, I’ll hire you as a writer…
    will pay you more than the Republican


  40. Dave-
    Love my Credit Union. When PA did not
    pass their budget and could not pay
    the state employees…the Credit Union


  41. Sherry,

    Seriously, it’s interesting that so far no horror stories coming from cu’s. Must mean the folks wearing hush puppies were wiser than the tasseled loafer set.

  42. Dave-
    A really great painter in my opinion.
    My Credit Union’s numbers look

    You have the Republican min right.


  43. 1 more note SDS closed above 73.02 which is where my fib line put support. so we shall see the next day for confirmation.

  44. utilized the fibs in forex and made a quick $12 :). i put a sell right below the big fib line and thats all it reached :).

    note to self is make lunch money every day in forex and dont overdo it.

  45. Matt. how do you think the jobless data tomorrow will affect the market? am unavailable for most of the first half of market due to school and am a bit short so just curious on your opinion most i’ve heard say its priced in and market will go up further.

  46. I think that longer term the # unemployed is not as a big factor as the sentiment of the much larger employed group. The unemployed still need to eat etc. They will curtail spending to greater degree than the employed but in aggregate, the bigger employed group will have a much larger impact on the reduction of consumption.

  47. Jan. 29 (Bloomberg) — Indian exporters have shed as many as 1 million jobs, more than 15 times a December estimate, amid the most protracted decline in overseas sales in a decade, the commerce ministry said.

    oh yes things like these are defenetly priced in… LOL

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