On Monday, I’m going to add point-and-figure charts to my trading system. What I find most appealing about them is that they eliminate a lot of noise, and make it very easy to see when prices reverse. For example, on a daily P&F chart, SPY did not register a reversal on Friday.
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http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$spx,pltadanrbopadf1!3!!!2!20&pnf=y
S&P 500 P&F chart above.
it is a A Long Tail Down Pattern….
It must have at least twenty Os down. A buy signal is given whenever there is a 3 box upside reversal. A stop-loss can be placed where a double bottom sell signal may occur.
argh next time tinyurl’s will do i guess.
Hi Matt,
Your blogs are very enjoyable and insightful. What do you think of today’s rally ? I feel that it was the least impressive of all the rallies we have had recently. The breadth was horrible for such a massive rally (A/D – 1:1). The volume is misleading as it was mainly due to options expiration. It seems almost certain we continue going down next week and at least test today’s lows or more likely make lower lows. Please let me know your views on today and your short term market view.
Hey Matt.. I think using P/F charts would be a great idea. Do you have any pointers on the best way. I’m pretty new to them, but from what I can tell, they are really good at pointing out support/resistance lines.. something that I traditionally really really really suck at.
Hi Bob, check out comments at the end of Friday’s trading. This happened yesterday.
1. Futures were up 300 pts all night (DJ). After Thursday crash.
2. Then markets slowly falling.
3. Then new Treasury announced at 3pm.
If you can time and predict these events you will get rich. I gambled on Gov’t intervention for Citi in the morning EST. I was wrong, but got bailed out by futures.
Citi announcement? Sunday evening? Long weekend again for Hank P.
90 cash/10 gold
Larry,
I’m not so sure government intervention will be seen as a good thing…This hasn’t hung over us for several weeks like FRE, FNM and LEH did. I don’t think many people knew there was a problem with Citi until a day or two ago.
Here’s a sweet little options heavy charting tool from the International Securities Exchange:
http://www.ise.com/WebForm/md_livevol.aspx?categoryId=124&header3=true&menu1=true
In addition to being a fairly slick candlestick chart (though not very customizable), it also shows historical and implied volatility, put/call ratio (for each day!), and option volume for any ticker that has options. This is the first time I’ve found this information in a chart, rather than a table.
For fun, check out the chart for Citi. Somebody sure knew something was up a few weeks ago. They had put/call ratios of 6.3 and 4.2 on Nov. 3rd and Nov. 18th, respectively. Today, they have 1.5 calls for each put. Looks like you aren’t the only one betting someone will buy them out, Larry.
As far as govt. intervention is concerned, have these shareholders not seen what happened with FNM, FRE, WM, LEH, and AIG? Other than BSC (back when we thought a bank run was a fluke) none of these things have been kind to the shareholders.
For a larf, I just skimmed through the yahoo message board for citi, just as I did with FNM, FRE, LEH, and WM. I swear if you replaced the company name in each thread you wouldn’t be able to tell the difference. It’s either the fault of the CEO, SEC, or short sellers. Someone with a psychology degree do a case study on these people! I’m continually surprised at how many people invest their 401(k) like they’re in Las Vegas. My mom just told me she had to cancel a vacation with one of her long time friends (who has been retired for several years) because her friend had a large chunk of her retirement portfolio in WM. I remember her mentioning this fact several months ago and I tried to tell her to sell it all, but I guess at that point she had suffered so many losses she didn’t seem to care if she went down with the ship. Hopefully she’ll still have enough to not rejoin the workforce.
Towelie, nice summary. I’ve tried to convince approximately 20 people to get out since February. Success rate 50%. Not saying anything anymore.
hi guys, long time no speak, hope all is well.
Larry, did i see you were in gold ? physical or shares? quite the rally for gold shares on Friday!
I mentioned BASF… The CEO said in a presentation before the top management they did foresee the decline in the US and Europe but were taken by surprise by the lack of demand from China. No ramp up after the Olympics:
Can someone please enlighten me why China will grow >7% next year? And has the insane amount of bad debt in the Chinese banking sector been reduced during this downturn? This was much talked about and then fell below the radar screen. Here an article from 2006
“Chinese debt is a clear concern at a time when both Chinese and global growth are strong and liquidity is high, Pettis said. “This is as good as it gets: it’s the sweet spot,” he said. Possible future developments, ranging from an economic hard landing in the United States to a liquidity squeeze in China, would only make things harder. “Until we know how much hidden and indirect debt there is, no one can honestly say the creditworthiness of the Chinese government is not an issue,” Pettis said.
http://www.chinadaily.com.cn/opinion/2006-10/30/content_759721.htm
Larry, yep not saying anything anymore. Only people in cash will listen. My biggest success so far was talking my dad out of investing in solar nonsense during the plunge.
Given all of the news I digest I think 700 would still be too high for a panic bottom, eg a price point to support a bounce for more than a month. If some miracles – Chinese buying Citi or whatever over the weekend – prop the market up now, we’ll continue the grind down after a bounce like we have been doing since September – or was it August?
i believe i’m seeing a head and shoulders pattern on the $indu
starting in october and now right shoulder is in the making. i’d give it monday to tuesday and i’m running away with my hopefully profits.
btw i see dow at 8300 but there has to be a down day then an up day. ok i’ll stop my weekend yapping
Matt,
Just wanted to take a minute and thank you for all the time and work you put into your blog. Your efforts are appreciated.
I second junglegirl on that one
Best blog in the blogosphere! Now even with UFC postings!
Blog Numero uno!
After, i’ve been 10% in gold for a mth to hedge my previous heavy short. Physical and mining co. Mining share down 50%.
Obama talking heavy stimulus. Thread carefully, this market will follow Yerk’s table.
Thanks everybody.
Bloomberg’s economic survey for this week’s reports is here, and “Everything is contracting.”
The Wall Street Journal reports “a pervasive downturn that is spreading at an accelerating pace.”
I think it will be next to impossible for stocks to sustain a rally while the economic contraction not only continues, but accelerates.
FWIW Israel market closed down 6%
Why can I only find this on the BBC…http://news.bbc.co.uk/2/hi/business/7744814.stm
looks like the news is just coming out, pooch:
http://www.cnbc.com/id/27873985
So they have a few hours to hash this out before the Asian markets open. The $64,000 dollar question is if this is enough to stop the customers from taking all of their money out. Could have a good one day pop for holders of C.
ARRRGHHH
i guess never go long over the weekend.
funny i’ve seen 3-4 citi commercials in the past 2 hrs on tv.
hmmm very odd hahah
http://www.cnbc.com/id/27835645
I would give this guy some money. Looks trustworthy. hate these videos as they are sooo slow.
so fast forward to
3:30
7:50 ROFL
13:40 “All financials will be owned by the U.S. government in a year”
16:30 about BKH
17:50 on bonds
Dollar-Euro parity equals oil below $40
yerk 3:30-7:50 you made my day
“Saving Citi” Tonight 8pm on CNBC
also interesting chart from stocktiger
http://premium.fileden.com/premium/2006/9/9/209573/78yearsp.png
Citi going down as we speak. Nikkei and futures up.
black monday ?
C should last another ten days so I can withdraw my money. After that I don’t care.
ahahah C should push market up so i can get out of my longs after that i dont care
Citigroup To Receive Equity Infusion Of $10 Billion to $20 Billion – CNBC
Guys,
is Citi traded overseas? What’s the current price action looking like?
If AIG needed 150 Billion, C needs no less than a trillion. 10 – 20B = a limp a$$ bandaid designed to lose the US taxpayers more money, what a waste.
They wanna give C $10-20bn??? Are they kidding me? This will last till the end of the week. They should give them $40bn so I can withdraw my money in time!
Watching CNBC and Bloomberg TV has been really entertaining this year. But now they are a bit getting on my nerves. All one hears are two words: “bail-out” and “bottom”. And by the way, I wanna see more blood like in the UFC. That’s most entertaining.
yeah you know dressguard. they won;t give 25bill to autos but they will give 20bill to a “bank” that’s going to take the money while it runs away
I will be shorting into any pop in the market due to news regarding Citi or Obama’s plan to save the world. I will bet money (my own, apparently) that any pop at the beginning of this week will be washed out by the end of the week when the unemployment numbers are announced. Short of the government banning short selling or pulling some other shenanigans.
I may sound overly pessimistic, but people in the general public still have no clue as to how bad things really are.
Dressgaurd: I think you nailed it. This is a bandaid that will last until the end of the week, at which time they will hopefully have a “real” plan. It sounds like the FED and SEC weren’t really expecting this to unfold so quickly (a la WM) or want more time to think out their options. Govt. takeover midweek like WM? Or crazy short squeeze rally that keeps it afloat for another couple of days?
Thanks for the video, Yerk. I don’t watch CNBC much, but do their commentators always show so much contempt for people with bearish views? Give that guy a show of his own because everyone else on that panel is clueless.
Hey Towelie,
I’m already short as of 3:59 pm on Friday. Maybe a bit premature, but to be honest, if we can tell that 20 billion or even 40 billion is like a bandaid, it isn’t going to take long for everyone else to realize the same. If things continue as they are, Citi will lose 20 billion in market cap in about the first 30 mins of trading on monday.
I’ll add to my shorts on any bounce as well.
and i’ll liquidate my longs asap
Hey.. I think that Citi just got bailed out. There is a bulletin on the Marketwatch. I wonder if it is true or another false rumor on a deal that is still in progress.
nop charlie you are right. just got it on my forex software
sorry for copy and paste am a little tired
[US STOCK] futures extending gains on the Govt backed Citi bailout, with S&P futures rising 1.8% above 840. [YEN] also easing back, but to a lesser degree. The plan which involves the Govt guaranteeing up to Usd 306 bln in Citi’s assets against losses, and injecting a further Usd 20bn in capital from the TARP, would be in return for an 8% dividend on preferred stock, and essentially put the government in the position of insuring a slice of Citigroup’s balance sheet. The govt is not expected to require any management changes, which was seen as potentially being too destabilizing. Market reaction has been positive in Asia but far from ebullient, with caution still dominating ahead of the US market open.
Hey K,
I’m not sure about those S&P futures numbers. The highest I saw it was 806 for the Dec e-minis. I think that Bloomberg confirms those numbers.
Charlie.
like i said people that write these news mess up or dream sometimes
but now yahoo confirms the rest of the details.
I think that was a dream.. S&P @ 840?? Lol..
The futures are up, but not by a whole lot. Got as high at 807 I think. Market doesn’t seem thrilled, but then again.. it is late at night. Maybe the bulls will wake up in the morning and say WTF.. bailout!! let’s pile into this market!!! NOT…
all i want is the market to open up for the first 30 minutes or less. I unload my longs on ICE and AAPL and let there be blood!
i win the award for weekend spammer and now let’s get 8hrs of sleep for 9:30AM kickoff