Uh-Oh...
Tuesday, December 15, 2009 at 04:25PM 
I can't say that a move like this one above is supportive of higher stock prices. I do think the market can stay in this range for an extended period, despite weakness in the financials, but I can't say that we smash higher while the banks erode.
I think the next 2-3 days will be the tell for financials. The individual set-ups going on within this index are a great conversation over dessert, but using the index itself, I think a retest of these old lows ($43)is going to happen by tomorrow or Thursday. This retest should be interesting, based on the cumulative oversold balance of the individual components within this index. I think we could see an outcome similar to the head and shoulders breakdown on the S&P back in July...but who knows. I might be sippin' the syrup.
The options market continues to punish those that are long theta, unless you've managed to be a stock picker. I have found that identifying strength that lasts more than a day has become easier over the last 2 weeks, which is always an encouraging sign to me, and are generally much more favorable conditions to trade in. We're a little far off of January expiration to start initiating new spread positions, but I plan to walk down that path as soon as we are about 3-5 days past "Deece" expiration.
I feel I am in the right trades right now, especially with a few of my "$10 Dollar Darling" candidates breaking out this week. Now the fate of my remaining longs lies in the hands of those whom I have no trust. The Federal Reserve and Friends.
My best advice to you, is to hand pick your favorite long/short candidates, and be ready to initiate a few new trades tomorrow afternoon once the dust settles. I collectively shopping for mine, and will also be curious to see where the option volume is active ahead of the Fed.
With any luck, this range is resolved on tomorrow's momentum.
Before I depart, I must forgive myself for my rant yesterday. However, my ability to take a personal problem and relate it to trading, helped me to vent and realize what I needed to do to remedy a situation. I gotta say, that's always been my favorite part about blogging; and that has been to vent. It really is good for the soul, and has really helped lift my game and my energy since I've slowly dipped back into it.
Also, a "thanks" to those that have been contributing here, as your efforts are always appreciated. This place always was a good source of great individuals.
OA
Reader Comments (15)
Reading this post makes me all the happier I got out of a few longs today. I'm less concerned about the fed than I would be otherwise. Of course if there is a rally tomorrow I'll be ticked:)
Hi, Is KRE the ETF that tracks $BKX....Thanks
Even the most senior and hardcore traders out there seem to be having a tough time these days. I was striking up a chat with T.K. a few days ago and he sounded pretty despondent. I think people are just worn out and this sideways range we've been locked in for over six weeks doesn't help. I felt like shit most of this fall and was about to kick the blog to the curb. But miraculously I somehow found my mojo again a few days ago. HOW? I simply started to fade out all the noise and went back to Jeff Kohler style symbol picking. I ran my filters via finviz and then imported my symbols into Prophet for further triage. What was left turned into winners at a ratio of 9:1. And I was thinking to myself - frankly, who gives a rat's ass about the Fed, the primary wave count (I know you don't care on a good day), or whatever is happening during FOMC days? Basic TA still works for me and I have gotten pretty good at NOT DOING ANYTHING until I see a winner that feels just right. Trading at least for me seems to be about knowing when to fold, when to do nothing. The good trades are so clear - so obvious. Because those suckers usually fly fast and hard - and you just knew it. Where I have been failing myself in the past and until recently was trying to force things - attempting to make the market my own and to predict where it'll go next. And quite frankly - I didn't even do too bad of a job and avoided many traps. But I did get slammed a few times this year and it sucked the energy right out of me.
So, if I can offer anything intelligent here it's for you to go back to the basics. You LOVE picking symbols and you are damn good at it - forget all the noise and focus on your unique talent. The rest is bullshit and noise - just fade it all and you'll actually have fun again :-)
Putting on the Armour and thanks Jeff for the post.
akini55 KBW Bank Index tracks the $BKX
Jeff,
I often find market to real-life analogies, as well, and truly appreciate your transparency. I may be wrong, but in reading your blog it seems you are kicking your trading self for what is going on with your personal self. It's very hard to be in the "public" eye during personal hard times, when you feel you must be "up" and performing. I personally believe the holiday season is especially difficult for more people than it is euphoric. I have several theories on this subject but won't go into that...
I don't often post because I'm not as wise as the rest of you, but I do appreciate all you do, as well as the input of all the TAs. Someday, under your continued guidance, I WILL be able to contribute. And in the meantime I will be lurking and admiring the rest of you--especially YOU, OA.
mo
Tightening up stops on this move.
Blind Squirrel:
Thanks for the reply..
akini55
Housing stocks making a move anyone know the catalyst for these stocks HOV, BZH ect.
A nice cup on the IYR
unbelievable... we're right back in the range.
Welp... since we didn't crater... and we didn't rally... we can pretty much count on our counter-Fed-Day to go.... nowhere, and we get yet another day 'stuck in the range'...
Something has to move this market... Maybe if "Cheetah"'s (aka Tiger's) next 15 goomare's come out of the closet... we might get a catalyst....
crossing fingers.
I don't think the dollar has a head and shoulders in mind.
http://screencast.com/t/ZGJiZjI3NTY
It looks to want to go straight up, which makes me wonder how you can have a 2.5 point move in the dollar yet the SPX remains range bound. Has the dollar completely de-coupled from the SPX?
AAPL is coiling up ? http://screencast.com/t/MzNjYjg5YTAt
Longer view on AAPL http://screencast.com/t/MDA1ZTQ3