A Forced "Mid-Day Thought"
Wednesday, January 23, 2008 at 12:35PM According to my investment bankers, they are preparing to short my blog on this recent rally in traffic, unless I do something more than provide one unfulfilling post a day and dick around in the comments; lacking direction and supervision.
I often think about posting dozens of colorful charts to glaze the eyes of my readers, as many other bloggers so often times do...
"Check out this chart of the S&P! Through the use of these creatively combined technical indicators, even though hard to detect, will effectively tell you the price of the index!!! 1,300...I think."
"WOW! I haven't seen a pattern like this since I last worked with the Option Addict!"
Rather than try to create art everyday, I try to focus on actionable content; and more importantly teaching trading strategies. Both of which I will avoid today, specifically on this post.
I'm not sure what my intent is here, other than to hammer out something to write that my last few readers will look at, maybe even comment on. You know...kinda like the old days. Remember those? An average of three decent offerings per day, netting an average of over 200 comments on each?
I don't.
Anyway, based on recent demand, I will take the opportunity to talk about the few trades I have taken in the ES throughout this landslide.
Here is the primary trend I have been following...
I try to pick off a trade or two during the day. As you can see it has been as easy trend to follow (30 day chart). However, the questions really started firing off about a comment I made ahead of Tuesdays trading and how I was going to handle it...
"I am going to use the Mini S&P to ride the rallies and short the declines that will take place during the day. There will be some great waves to catch if you are disciplined."
Here is a 5 day chart, this ought to illustrate what I did...
Sorry to leave you hanging...the end of that thought in the last bubble says:...got stopped out.
I've talked a few times about daytrading, but the thought process is simple. I wait for about 30 minutes or so for the market to pick a direction, hop on, and set tight stops. When the daily ranges are this good, there is a ton of money to be made.
I am going to leave it at that for now, I have a few positions to attend to. My press secretary says..."No further questions."
Sorry.
Reader Comments (173)
OMG Im sure I can see a super bearish batwing fall from grace pattern in the first half of the first s&p chart - that combined with those pretty circles makes me think of anothe great aussie.
heath ledger. Now last time he died he caused the markets to rally at the end of the day...
GO BULLISH - CALLS BUY BUY BUY!
THANKS OA - I would never have thought of this if it wasnt for you :)
P.s HEHEH love the post mate!
Now THAT was funny.
HuH?
referring to the first chart Jeff posted.
Jeff,
I love you man........maybe someone will bail out he bond insurers...for fucks sakes can someone let the market take its course.
I would think shorting th bond insurers we should wait a couple days.
Cheers,
ARTY
This has definitely been a day trader's dream market! With the clustering on the mfc and the extreme pessimism in the market, it was just a matter of time to rally back from the brink. That and the idea that the fed may cut interest rates even more next week is adding to the euphoria. This is why it is good to take the gifts that are given and keep a balanced portfolio. If you enter at the REE then you may be able to ride out some of this movement, my example is CMA. I entered a put position on 01/14/08, covered enough to be completely unexposed (trading the markets money) and now I can sit back and watch for the retest, which is happening today and perhaps for the next few days. When the market has finally decided it has put in a lower high, I'll buy more puts and watch the money flow from this one Again! But the REE has saved me untold amounts of stress! I love the concept, but never realized how to change my mindset. And because of jeff and raimo and all the others, I am finally learning.
Jeff, you are a great resource and I have enjoyed your blog. Some may be thinking that this week is a bust on the puts, but this movement was expected! The watchlist specifically stated that we should be careful, but watch for the specific setups, which for bearish positions will be in a few days to a week. I expect a test of 1360 area on the spooz and then a fall back down to test the recent lows. When could this happen, perhaps in march, perhaps sooner. But remember the overall market is looking at 6 months from now as today... Just remember, this market has lost a significant amount of "value" and those that rode this to the bottom can't wait to get out on the next move up, and those that did (all of the 401k folks that capitulated, I witnessed too many people jumping ship) have put in a bottom for the rest of us But the technical picture still shows a broken market, however, the h&s is completely confirmed. We just need to wait for the next big signal. And I'm sure that Jeff will keep us ahead of that!
Thanks for all that you do, Jeff...remember, you may be at the peak of your career, but I see it as another higher high!
Love that 2nd chart pattern!
- Todd
I do want to add that if you are on the sideline, or frustrated that you are not doing more; be patient.
This isn't the best price action to trade in. I don;t think this temporary bottom is as tradeable to the upside as others claim.
Be patient and don't settle here for anything less than the best.
For those who are telling me gold and commodities do well during a recession, why do you believe that?
If everybody is struggling to pay their mortgage or other debts, they won't have enough money to create sustained demand for gold jewelry and other trinkets. So why would they go up during a recession?
Gold as a safe haven during recessions and depressions is just not confirmed by any historical data that I know of. Perhaps if the recession is caused by geo-political turmoil, but this is not a recession caused by geo-political turmoil.
Jeff,
You read my mind. Frustration is an understatement.
I agree this is not a very good bottom and we'll have another leg down soon enough. Retail and financials have already had a big rally. If that rally fails within the next couple days, things will begin looking scary again.
Even though the Dow is up 3 bills...
Jeff-
Thanks for the encouragement to "stand by"- I caught myself feeling like I needed to trade today, so I just walked away. Good to hear your words!
By the way, did anything ever come of you personal coaching idea? (I still think it'd be great!) Thanks for all you do!
- Todd
It's proven that through inflation and falling stock and bond prices that commodities will rise. Not a good defensive play in your opinion?
Tuba Todd,
We were sampling demand and encouraging Investools to look at that demand. As far as I know, nothing has materialized yet.
Did I miss a joke? :-)
WOW - what happened!
Got the watch list - did due diligence - got in some puts at reasonable entries (I thought) on JCP, EXPD,PNRA, LIFC, and TIF. Cut some loosers mid day. Made the mistake of watching tennis and all hell brook loose! Most of my positions are down 20 - 30% at the end of the day. My biggest winner, X, dropped from +50% at mid day (not yet at target) to ~ break even. What will tomorrow bring? This will be a real test of my rules and 'patience'.
Does anyone know where I can find a list of "defensive" stocks like PG, KO, MCD, etc? I'd like to look through it and try to find some good buys for my IRA.
Thx
Jeff, I am not convinced there is rising inflation. I think the inflation has already happened and we are likely to deflate from here rather than inflate further.
Contracting stock values and home prices are deflationary.
Obviously the Fed is not too concerned with inflation if they are slashing interest rates like crazy.
Inflation takes time to enter the economy and I think it already entered over the past several years and is on the way out now.
Gold and oil have been in a bull market for several years already. The easy money has been made there. I think this is the peak and those commodities are going to enter a bear market soon.
Just my contrarian thoughts.
Nibbled on some POT Calls and some AKS Puts at the close today. Not much else tripping my trigger.
Someone get monsieur a bucket.
Chris,
Take mine...I'm done with it!
I don't know if posting an article is appreciated but this is big news.
New York Meets With Banks On Stabilizing Bond Insurers
By LAVONNE KUYKENDALL
January 23, 2008 3:48 p.m.
CHICAGO -- Regulators at the New York Insurance Department met Wednesday with banks that are parties to contracts with bond insurers to discuss ways of stabilizing the business and bringing in additional capital and capacity.
JH,
I respect contrarian opinions.
There is bearish RSI divergence on the weekly chart for USO as well. Peak in November with another peak at the end of December.
December's higher prices are not confirmed by a higher RSI(14) reading.
The fundamentals and prevailing opinion may seem to be supporting higher commodity prices, but I am just not seeing that in the weekly charts.
Sorry for another post. To see the value of bearish RSI divergence, look at the 3-year weekly chart for OIH. There is a bearish divergence in the first half of 2006 followed by a bearish period lasting nearly a year. There was another bearish divergence in October followed by the current correction in OIH. It seems likely that at least the next few months will be a period of underperformance for oil-related stocks.
I agree..I mentioned on the Marketcast last night that it is likely we are on the other side of the oil rally.
Which could be bullish for stocks...
Jeff, thanks for answering my last post about triple bottom on SPX. I am not bullish, HELL NO! But I wonder if we are due for a rally, and if so, how do we spot it. I guess I got my answer with the last trading hour, and a confirmation on the hammer formation across indexes.
I am sitting on hands with 95% cash, a tiny bit of GLD and 3 Mar DBA calls. It's so frustrating sitting on the sideline. You nail that one.
Curious, aside from looking at support / resistance, would you wait till the rally losses stream before entering puts?
Well, I was shocked, SHOCKED I tell you, to come home to see the Dow UP 300 pts. When I left the house this morning it was struggling at -200 or so. WTF?? Is this just short covering and margin calls?
Krystal, thanks for asking. I'm still here and read EVERYTHING but have been really busy with real estate these past couple ofweeks. I am mostly in cash and earmarked a few stocks from Jeff's list to possibly take positions on but didn't get home in time to do anything.
Someone PLEASE tell me why the piece o'crap stock AIV was up over $4 today??? (and don't say 'more buyers than sellers') Those were the only puts I had left and I now have a sizeable loss. Feh.
Grace,
That was my point...had you been daytrading, the 2 day chart might have led to a rally that lasted a couple hours. Maybe you have a knack for that sport?
About your question...
"Curious, aside from looking at support / resistance, would you wait till the rally losses stream before entering puts?"
No, not necessarily.
Remember...entry/exit...entry/exit...entry/exit...entry/exit...entry/exit...entry/exit...
A strong rally can take me right to suport/resistance (entry/exit), but when it gets there, I don't wait. If I am wrong, that is fine as long as I manage a small loss.
I appreciated your comments on the cast yesterday Jeff about don't try to be a cowboy. I was tempted to saddle-up but resisted the urge.
What do you think of the MOO? Would you consider it or just stick with the DBA?
Doji,
I've concluded those stocks are shit.
Just my opinion.
Ryan,
DBA over MOO. MOO is made up of the comapnies, DBA backed by commodity futures contracts. Take the substance over the substance abusers.
Jeff,
A few questions from Boise......if you don't mind
Bullish for Which stocks???? The long Reco's you mentioned in your watchlist? And BTW why does SHV go down approx every 30 days? Should I hold over earnings? Why are you a Bear right now? Whay didn't you tell me to scalp the e minis? Oh and how come you never talk about VV% change anymore?
Oh Earnest - do me a favor and stay the same wonderful person you are today.
Thanks for the guidance.
Cheers,
ARTY
Jeff...I remember when this thread section....JEFFS THREAD SECTION..was for you to communicate to us, and vice versa.A place to get to Jeff. To learn from Jeff. Kinda like the old blog.
Is that first chart representative of the chaos in your thread? Are bloggers missing the purpose of the trader chat section and chit chat section??
That is my interpretation, and I agree. WE need FOCUS!
Arty,
Boy...those questions take me back to the good ol marketcast; summer of 07.
Can I get a quick quote on DG?
Hilarious.
Raimo,
Does that mean I shouldn't have asked all of those unrelated questions to the daily thread?
Cheers,
Arty
Raimo,
I was making fun of other bloggers who spew charts left and right with all kinds of beautiful artwork on them.
I got into a fun argument with one of them earlier today; hence the cool price pattern :)
Jeff,
When you said "those stocks are shit" (AIV) were you meaning don't buy puts on them because they are shit to trade and don't do what they're supposed to do? (which is the conclusion I have too slowly come to on my own).
Yes. This is the second time in recent months that they were ripe for a free-fall and kicked my ass.
To hell with them.
Kohler,
Oh that takes me back......feels so right....sitting around sippin on a husky glass of '07 Cast, seeing flag patterns in my patio cover, watching black swans swim buy, laughing with uncle foolin, and of course the long lost Mr. Utley saying, Jeff, let;s read some galdamn e mails. I weep with reminiscent joy!
Arnold T. Pants Esquire
The Boise GRMN flag.
You just can't script that type of stuff any better.
I weep as well...
Jeff,
With the Fed cutting, bond insurers being bailed out, and the fact that I really want an iPod, do you think AAPL fills in the gap it created today if the markets hold up tomorrow?
Where did Eric go?
Jeff,
I traded that chart pattern, so easy big fella. Cost me too, the Tye dye off my back...
Arty..
Yes..sorry dude..but all the posts in here..trade ideas from others instead of in the trader area.., useless posts like mine...some of the same old crap I've complained about in the past..and the same bloggers dont get it either..all posted in here ...this place has run a muck!
Sorry all, I calls it likes i sees it..
I miss the phantom poet days........
Great chart! Love 311! Looking forward to the trading that is coming. Everyone I work with thinks the market has hit the bottom, I only laugh! Thanks for everything!
Arty, you crack me up!!! LOL!!
scott
Jorge,
I think their guidance was conservative. If I were an investor, I would be a buyer.
Since I am not, as a trader I am waiting and watching. Apple has been good to me over the years.
JTK,
To the happy hunting grounds :)