A New Economic Indicator
We have a new economic indicator. When you see Bill Gross on CNBC demanding this-or-that bailout to save his ass, go long. The indicator is 2-for-2 so far. The Treasury department bailed Gross out of his Fan-Fred exposure, and the Fed just bailed him out of his AIG CDS positions. Both bailouts came almost immediately after he appeared on CNBC with his suggestions – or instead of “suggestions” maybe I should say “announcements of new federal policy.”
Watch the comments for updates throughout the day.
I believe that SSO 15 minute divergence is taking hold.
It’s an absolute wall out there in the credit market. Zero, zilch.
BBT is making a great move. It was down over $2.
Closing out my core QID.
There is positive divergence on the SPY 60-minute chart. We have had much stronger downward momentum on the MACD today, but not lower prices. The futures show the same. This is an indication that we have successfully tested yesterday’s low.
I guess things that seem stupid ideas ARE profitable sometimes. GS up $10 since I last posted.
Dblwyo,
If you get good at this, you don’t need to do “real work”!
Matt
Thanks Matt.
SSO Hitting 36 MA on 15 minute.
HEADLINE: WORLD FAILS TO END!
lol
LOL – the kind of failure I like.
On a day like this you would expect more gain in SKF. At least I do. So I just checked again the SKF portfolio which I have saved in Google Finance. And yes indeed again, the numbers add up perfectly. How can you make money in a market where SKF hardly goes up after losing two of the biggest ibanks and the biggest insurer in the world? BTW, the biggest gainer percentage wise is TMA with about 30%. Risen from the dead. (But has no influence on SKF. Negligable.)
K;
That latest little counter-move in SDS (1 minute chart) was worth $1.00 so far. At 200/500/1000 shares, adds up.
The TICK and TICKQ have been trending up since 11:30am, believe it or not. Looks like the counter-trend rally is underway. Let’s see how strong it is…
Why would Morgan Stanley talk about a merger if everything was so swell?
The Bulls and CNBC in complete denial. Can’t have capitulation with denial. Run this thing back up, fools.
Aye, Captain, me tryin’ with all me force to punchin’ thru the 36MA. Me inverse hardies yre puttin’ up a fight.
Shiver me timbers, Mate, I mean Matt.
George, I just ran that counter-move, in @ 75.54 –
My challenge, I trade mostly off 1, 3 and 5 min and the
1 min keeps getting to my greed/fear brain causing me
to get out too early ;(.
Btw I really appreciate sharing your techniques with the
group here. One never stops learning.
Matt, “10:51 am Take a look at the GLD 5-minute chart to see two classic bull-flag patterns and a third one in the making.”
Thanks for pointing this out, worked out very well for me.
Yield on 3 mth treasuries doubled to 0.04%
The market was waiting for K to barf up that Apple.
Your welcome Shaishen.
Shaishen;
Ok to get out with a profit if that’s what you mean by early. I swing the 1 minute all of the time.
At this time of day anything can happen.
Good going.
Hey Matt,
I thought K mentioned he barfed up his AAPL earlier already and was in 100% cash. Am I wrong?
The volume during the 2 o’clock hour was the highest of the day for the futures. So, that was a very strong rally bar, and it’s following through even stronger now.
Charlie,
K’s post was at 1:50pm, which looks like it will be almost the exact panic low – at least for today.
Matt
Come baby on LOD
McClellan Osc today probably hit the extremely low readings that have ALWAYS been followed by decent rallies in very short order.
http://www.stockcharts.com/charts/indices/McSumNYSE.html
Shaishen;
I make many .20 – .40 cent trades per day, mostly .40 cents.
Five .40 cent trades @ 500 shares = $1,000. Those are just scalps, not counting the longer trades throughout the day, buying more shares, or the core positions, if any.
I almost always have a trade going on intraday. Like this latest little upturn in SDS which is up over a dollar. I got a 1 minute stochastic bottom and cross with the first MACD histogram going above the zero line. The 5 minute is confirming so I’ll see what happens.
I can’t make that kind of money elsewhere and have as much freedom and fun.
Danny – here’s a first pass on some stuff. Let me know how it works for you.
On earnings and the economy: http://tinyurl.com/4f4xdd I cheated and pointed you at an archive ’cause it’s a long-running theme.
On profits vs economy: http://tinyurl.com/3s9aq5
On why analysts are usually wrong: http://tinyurl.com/3ume39
On how they should do it (Retail Example):http://tinyurl.com/3rrmpp
On the top-down macro-environment: http://tinyurl.com/6r6pwm
That may not keep you happy but it’ll help you go to sleep.
Dave
lol.. I think you’re right Matt..
Man, Dylan and Maria and are really reaming out the S&P guy.
Not sure
I got in SDS at 75.52 I’m out at 76.90.
Still some uproom according to 5 minute, but too tricky.
Pooch,
Did you get those 400 QQQQ calls? If so, are you still lugging them? And what month and strike are they?
Matt
(Maybe we should buy AAPL as a K-contrarian play?)
Maria gets ornary when the market is in the tank and her 401K loaded with GE stock is going to be worth a buck.
I am still convinced this will crash now. Probably a good buying opportunity.
Matt – on “getting good”. I wish and how true. Someday. But..having mis-spent my youth doing all the other stuff you’ve seen need to build up a nut again.
Not comfortable with day-swings but George’s approach is similar to mine except I’m using the Ryder inverse funds over 1-3 month time frames. My two biggest and most painful learnings (wish I’d known about you guys earlier) were figuring out sentiment could swamp analysis. OUCH. And then figuring out no matter how right I turned out riding a losing bet cost me money and stubbornness wasn’t a good idea. Much smarter now and the hospital says the burn scars will fade with time.
Matt never got those,they never let that trade go thru so i didn’t do anything
It’s nice to finally see JPM take a turn in the wringer.
on that note paul, Wells Fargo (WFC) has been doing awesome today. What is with that stock?
Matt;
Actually, that divergence on the SSO 15 minute is still working. It just had to go through another stochastic cycle since it didn’t punch through the 36 MA.
So, there may still be some life in it. I think I’ll buy some SSO at the close which I normally don’t do.
Uups – dax in afterhours trading just hit a new low…
Db – I have a post-it on my monitor that reads “market irrationality > my capital” an abbreviation of the old maxim. I too started losing a lot less when I realized that, and better late than never. There is no one who is successful that hasn’t paid market tuition for similar lessons.
Dblwyo, I think you trade like me.
I used to put all my confidence in the fundamentals and ignored charts, setiments, etc. Now first I look at overall sentiment to decide if I want to look for long or shorts. Then I look for strong or weak companies and sectors as based on fundamentals and general price action. Finally, I look at the charts to find pivot points for entry positions on the trades.
Ditched my SKF. Will look for an XLF pop tomorrow and re-enter.
George,
Yes, I’ve been watching the 15-minute too.
Matt
ahhh – yessss, the US following
Crash tomorrow??
George Says:
September 17th, 2008 at 3:42 pm
I got in SDS at 75.52 I’m out at 76.90.
Nice going George, I guess I need more guts and trust the charts.
The baby boomer age takes its toll on the risk tolerance
Look at SDS now… and I sold my sds core yesterday
I’m in SSO at 49.60.
Wow. Nasty close. K is saved from being a contrary indicator!
WOW, already up .40 cents!
Charlie,
While everything else financials are trying to make mult-year lows, WFC broke $35, which is a high for 2008.
They kept their noses out of the really stinky derivative stuff unlike the IBs, C, and JPM. However, I find it doubtful that their old-fashioned loan-portfolio is hot sh*t while WB’s portfolio is regarded as total trash. I haven’t really looked into it though. I think it is an image thing. However, the gold came off GS and it plummetted. WFC might have a similar future, although it is not as vulnerable due to having actual depositors.
Darn – another disappointing day. Was so hoping for 500 pts. on Dow
Danny – when it clears the promised URL’s will be back up the trail.
Paul F – well kinda but close. Danny’s point about tuition is so…o true. Trading and poker. I look at long-term trends, fundamentals ala chart fundamentals, themes, e.g. emerging markets, commodities in the day, then technicals then sentiment with the latter driving decisions and all the prior stuff defining the ecology. If that’s at all clear. As usual it’s in some long posts somewhere
But thanks for the advice and helpful suggestions.
Time to go long!!!
Shaishen;
Absolutely necessary to trust the indicators. I used to not trust mine and it whipped me. Now, it caresses me.
I’m a baby boomer too – 65.
The SDS close went a buck above where I sold my core. And I made some profit on its way back up. QID went up another dollar plus some change, but I didn’t trade it at the last half hour.
We’ll see what SSO does tomorrow.
I luv this stuff.
I sensed weakness, and sold Sep puts towards my MSFT calls in the morning. MSFT dropped. Yesssss, good decison! Ok, now tech is rising, so I can buy back those puts…and watch MSFT tank. Oops.
Well, at least I sold JNJ Sep puts to cover that drop. 2/3 in spidey sense today.
VIX ended on it’s high. It started above 30 and still moved 20%. Looks like it will make a multi-year high. Forget capitulation at VIX 30. Looks like 40 is the new number.
1/2 Billion shares SPY traded today…
Dress;
Ha, I sure hope so. My EOD trade is on a whim. But I have a positive divergence to back it up – so it is not without merit or collateral.
Are tradeable bottoms established with the closing bell?
Fed, i-bank, commercial, and exchange officials are in pure panic mode. Don’t be surprised if they shut ‘em down as in Russia and on 9/11 to quell the emotion.
Again, SPX 1130s-54 is the next major support zone, which could occur tomorrow or weekly close; we’re already at or near the top of the range at the close here.
After 1130s-40s, weekly support is at 1060s-90s (61.8% cyclical EW retracement from 769 to 1576 is in the 1070s).
Back overnight for the Asian session.
BTW;
I don’t know if any of you are trading BBT. It is great but it will get in a funk every so often, too.
But I have never lost a dime trading that stock. Early on I would get “stuck” because I didn’t know how to trade. It may take some time, but it always comes back to make money. The longest I have ever waited was a month and got a nice dividend to boot.
Just always buy as low as possible when the market (S&P) starts to come back up, follow it up using stochastic and MACD intraday.
It’s a winner for now. If all of finance goes to hades, who knows?
90 day Treasuries: 0.04%
VIX: 36.1 +19%
Credit markets falling apart.
how maney votes for a repeat of today
Who knows, but Asia/Europe might crash tomorrow.
Good luck Dressguard
Rich;
Do you mean close down the US stock market? That’s just not right to do that.
Unsurprisingly, this short-term saving the markets has longer-term implications
They didn’t pay for fnm and fre and now this:
“The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”
http://www.reuters.com/article/ousiv/idUSPEK4365020080917?sp=true
and combine this with:
http://www.financialarmageddon.com/2008/09/anticipating-wh.html
George,
Yes, I think Rich means close down the US market.
Matt
Morgan Stanley and Wacovia merging?? Why is this news out now when we have the market by the balls
The market’s strong bounce during the 2 o’clock hour was soundly defeated. Now, the bulls will give up hope and the bears will press their shorts – and that is the exact moment that the market is likely to bounce – just as everybody is leaning the wrong way.
I have seen this happen during extreme overbought and oversold conditions before. The traders who try to anticipate the reversal get killed, only to see the reversal materialize as soon as they give up. It’s like a “false dawn”.
Not making a prediction though as this may be a special case with the world ending and all that…
I surely would hate to see the market closed. At the same time I understand that folks don’t want or need to loose their investments.
I think I will add FOREX to my repertoire.
Thanks Matt
Guys,
something is confusing me.. SPX showing that it closed around 1156, but SKF closed only at $135 and change is now down to $132. Did it spike down at the end cause I don’t see it on stockcharts properly drawn.
Matt;
“The market’s strong bounce during the 2 o’clock hour was soundly defeated. Now, the bulls will give up hope and the bears will press their shorts – and that is the exact moment that the market is likely to bounce – just as everybody is leaning the wrong way.”
Nice comment. A perspective of the minds of the masses.
Charlie;
I’ve noticed that too. Maybe last minute orders that were in the queue got filled.
Charlie;
I don’t know those companies that well, but those descriptions are funny.
I still haven’t figured out this whole mess. Easy to describe it as “the bigger they are, the harder they fall”. Is it John Q public that crated this mess or both? We may never know. Oh, I forgot to add the Fed to that equation.
WaMu being sold. Wanna buy?
MS and Wachovia. What a week.
Larry looks like they will do anything for a short term pop,maybe the big dogs need to sell there stock options .Of course to me this just shows the desperation of the issues.
Matt,
Well said, spx 1172 +/- is the 50% fib retracement from the 03 bull run. It’s at a logical support.
Would rather see the futes down than up because they will probably sell off by the opening
Matt: “Not making a prediction though as this may be a special case with the world ending and all that…”
LOL
Kevin,
Yes, Dblwyo mentioned the 50% fib retracement earlier, and I was going to post a chart on it last night, but didn’t have time. A lot of people are talking about it. The market should be able to hold here, but then again, in a panic who can tell? Margin clerks don’t look at charts before they dump stock onto the market…
Matt
ouch futes are barley positive
I heard from a good source you may see a 2-3 week rally before the mother of plunges.(disclosure)I would not trade this based on what I am saying just the messenger.So don’t shoot me,do your homework I have to see a tart of a rally to believe it
Dave – got the links, thanks!
Matt – “The market’s strong bounce during the 2 o’clock hour was soundly defeated. Now, the bulls will give up hope and the bears will press their shorts – and that is the exact moment that the market is likely to bounce – just as everybody is leaning the wrong way.
I have seen this happen during extreme overbought and oversold conditions before. The traders who try to anticipate the reversal get killed, only to see the reversal materialize as soon as they give up. It’s like a “false dawn”.
Not making a prediction though as this may be a special case with the world ending and all that…”
That was ME! Went from up big to up only a little. Fortunately, I got it together and mde it all back in the close. But what you described was so identical to what I did. got short at 1178 via sds. 2x down at 1185. by 1188, I was out. Then, after we broke 1190 to the downside after the bounce, I said, “what in the world was I doing?” and got back short into the close.
MS and WB make a lot of sense.
Wow, Cramer is calling “we haven’t bottomed” and he is saying we need foreign help. He’s really fluuffin up for a crash.
He said don’t panic, but we could go a lot lower. Keep your eye peeled for bargains – but not yet. It could be next week or it could be next month. Don’t make the mistake that I made in 1987 and miss the buying spot, but I’m not saying buying. In other words “I know NOTHING!“
I’m not sure about a bounce tomorrow…the market really needs a catalyst to make it fly. What could it be? WM buyout? Do the big boys still have enough sway in options week given the state of fear in the market? That close today was brutal.
I was talking with a coworker today who asked me “why AIG needs so much money,” and I got to thinking about how we got in this mess. In engineering, disasters usually need at least three major failures to occur (think Exxon Valdez – sleepy/drunk captain, nobody watching the sleepy/drunk captain, shallow waters, single hull ship)…it seems the financial industry had even more backstops, all of which failed:
The banks should have had some type of risk assessment. If that fails, the regulators are there to keep the banks in line. If the regulators turn a blind eye, the ratings agencies should be there to bring things into perspective. If those are twisted, surely the insurance companies can run their own risk assessment and charge them an arm and a leg to insure this crap. Finally, Average Joe could use common sense and know that he can’t afford a house making $8/hour. All of these fell victim to greed. Quite amazing.
Still impatiently awaiting a good short entry point…hopefully I don’t miss the boat after waiting so long.
Paul,
I actually use Cramer is a contrarian indicator. I get very uneasy when my thoughts come close to aligning with his ramblings. SPX 1300 here we come!
Paul F;
Funny. I get it, like Hogan’s Heros’ Sgt. Schultz. Come to think of it, he (John Banner) did have a son.
towelie you nuts,is that you or Kramer talking,but Kramer just said”we are not done going done” so who knows
BTW, did we break that DOW 30 year trendline?
towelie, that’s why I listen to him. I should have kept my shorts on Monday, when the Cramer contrarian fear indicator didn’t confirm the bottom.
Cramer is also blabbing about the uptick rule. So let me get this straight, naked shorting is already out (this is an idea I agree with). Let’s assume they can enforce this rule. This means that if you have stock (either original owner or borrower), you aren’t allowed to sell it unless it goes up? Sounds a bit like price-fixing to me. If both these rules were fully enforced, this would make technical analysis very interesting, since high-uptick volumes could just be pent up selling.
Matt: “Not making a prediction though as this may be a special case with the world ending and all that…”
After predicting the downfall of GS and MS yesterday, Karl’s back… Not the end of the world, but of the US:
http://www.youtube.com/watch?v=kqtAzRNhTTY
No clue what tom brings – if reality sinks into the market, they’d better close them.
The bounce should be initiated or at least mirrored by the money/bond market otherwise it won’t last.
Interesting that the financials did NOT make a new low today even though the major averages did.
The financials are going to fly if the market bounces.
Ok ….this is dislocating badly, look for crash Thurs AND Fri with a bottom on Monday—-why , there is a very arcane cycle date in effect starting this evening that runs into Friday mid-morning.
Also notice B/D’s and big insurers in Europe are vunerable too, yet focus has been in US—they all booked this stuff , how do u think they drove earnings ……think we get the Euroland raid tomorrow.
Be careful , Karl was very good on this mortgage CDS stuff months ago ie. early on , very good. Yet lately he is getting full of bravado (conceit) on his ability about being all knowing and seeing….. That usually leads to head in hand when things turn the other way.
WARNING:YOU SHOULD NEVER USE K AS A CONTRARIAN INDICATOR!
I am on your side, I come in peace, I might be stubborn and hold too long but haha. I was so glad to see apple finish lower.
To reverse the curse I did get a haircut and ate some comfort food =P
Thanks for your Advice George. I do not have enough capital for 200 SDS at any given time but certainly will play with maybe 50-100
my capital is now just 10% south of 10k but still workable. after reading that pdf that was posted a few days ago i got enlightened and sold apple if you must know my real reason
GOGOGO CRASH CRASH
and lastly i apologize for the CAPS hehe
jayJ turndate on the 22nd give or take a few day may be a short term bottom.Next downturn will really leave your head spinning…but my guess is it will come when we least expec it.Just keep yourself covered until mid Novemeber. If it doesn’t happen in that time frame then the market will have dodge a bullet.
everything considered…..
this has been an orderly decline
I have to say I have the bulk of my savings in money market funds and I am spooked about it. Thing is, FDIC isn’t any better.
The Fed also effectively ran out of money today and had to borrow itself.
Scary times, these.
where could I go buy real gold or silver and store it in my safe at home? LOL
any serious ideas? hehe
Bloomberg says ‘next wave’ of financial crisis may be foreigners no longer buying US debt