Monthly Archive for August, 2010

I seen the needle and the damage done

Published on August 31, 2010, 9:55 pm in Opinions and Trading. Closed Tags: , , , , .

The stock market is the biggest junkie in the world. The Fed says that we don’t need no stinkin’ quantitative easing, which should be good news, but the market quickly goes into DT’s and trembles all the way down. “But every junkie is like a setting sun.”

No QE means a strong economy, it means a recovery is in process! Oh, but it also means a strong dollar…and at the present the stock market does NOT like a strong dollar. So today, everytime the dollar shot up, the stock market, along with the oil market, moved down. And it seemed to happen about 20 times today!

Volume doubled yesterday’s totals and I think it should continue throughout the week, even though we are leading up to a holiday weekend. Too much news going on which will stir up the pot. Tonight I was waiting for China’s PMI, which has come out at 51.7, up from last months 51.2. And by morning we should have heard some GDP’s from European countries. We’ve also got ADP payroll report Wednesday morning, along with Construction Spending and oil inventories and more.

So much going on, Australia GDP up along with China PMI so futures are moving up strong also. Let’s hope it lasts until US markets open….and through the day tomorrow! :mrgreen:

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Just another manic Monday

Published on August 30, 2010, 10:11 pm in Opinions, reading and Trading. Closed Tags: , .

It was just another Manic Monday, until the last hour, when indexes closed at their lows….on very low volume. It was a slow-motion crash.

We’ve got a load of economic news coming starting tomorrow: Home Price Index, Chicago PMI, Consumer Confidence and FOMC minutes. The question is, will good news or bad news make the markets move up? Or will nothing happen until Friday when the monthly employment numbers come out. Crazy market!

When everyone is bearish, that is the time to go long, a contrarian indicator. But what if all the contrarians are saying that there are too many bears out there and start writing stories about that? I found a couple stories today to read: Are Wall Street Analysts Contrary Indicators? Then followed that up with Sell Signal on 36% Profit Increase Has Analysts in Math Denial.

Thanks for reading and good luck tomorrow!

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Reaction vs Reality

Published on August 29, 2010, 10:02 pm in Charts, Opinions and Trading. Closed Tags: , .

The news continues to suck, with GDP, consumer sentiment and speeches to confuse everyone. But, stocks still rallied. As we say, sometimes the reaction is more important than the reality.

Traders did take a quick trip down to test that 1040 S&P level. That level has been tested several times the last 3 months. We’ve also got oil moving up and bonds moving down…which should be good for stocks.

Sunday evening futures are moving up. And merger Mondays have brought good news lately, although Mondays have not been moving up much after the open. From the Stock Trader’s Almanac: August next-to-last trading day, S&P up only twice in last 13 years :-(

The market may be bad, but I slept like a baby last night. I woke up every hour and cried.

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Weekend Reading 8/27/10

Published on August 28, 2010, 11:42 am in Opinions and reading. Closed Tags: , .

After a crazy week with sucky news, try to relax, eat, drink and be merry!

When bad is good.

How to read Bernanke’s Jackson Hole Speech.

Stocks Surge, And Bonds Get Crushed: Here’s What You Need To Know.

Perception Versus Reality.

Ever wonder what a “prop trader” does? Wall Street Whispers: A Proprietary Problem.

Beware That New Credit-Card Offer. Have you noticed a whole bunch of credit card apps in your mail box?

I hope these definitions put a smile on your face:

Momentum Investing - The fine art of buying high and selling low.

Value Investing – The art of buying low and selling lower.

P/E ratio - The percentage of investors wetting their pants as the market keeps crashing.

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Trading some ETFs

Published on August 26, 2010, 9:33 pm in reading, Tools and Trading. Closed Tags: , , .

I like to daytrade the index ETFs….y’know, TNA/TZA BGU/BGZ SSO/SDS and a multitude of other bull/bear pairs. Depending on how the market is doing, I jump on either the bull or bear ETF and scalp it for as long as all day sometimes….and other times for 60 seconds….sometimes for a profit and other times for a loss. You know how it goes. 8O

As I was watching the grass grow at mid-day today, I was daydreaming at where I would be if I had bought some pairs at the beginning of the year. Logic would be that one side would be up and the other side down. But no!

On January 4th this year, TNA opened at $44.66 and closed today at $33.58, down about 12%. The Russell is down about 4% for the year, and since TNA is a 3X ETF, being off 12% is about right.

So TZA should be up about 12%, right? No! TZA opened the year at $47.05 and closed today at $39.06, down about 15% for the year. What!? The bear ETF is down more than the bull ETF? Yes. So if you had decided to put on some sort of spread bet taking both sides to hedge yourself, you’d be a real loser! :cry:

My lesson here is … not to hold leveraged ETFs for more than a day. Yes I have held overnight and have both profitted and lost on the gamble…. But now just daytrade or scalp….make more money and sleep a whole lot better.

Here’s an article that should be read by anyone trading leveraged ETFs. This study is based on 2X ETFs so the issues are greater in the 3X and 4X ETFs available now. The explanation is a lot more technical than what my daydreaming came up with. How Long Can You Hold Leveraged ETFs?

For all the periods studied except one-year, tracking error grows larger … and more negative … as the expected return grows.
The results of the study are clear. As you move further away from the targeted one-day time period, tracking error on these funds grows.

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Slick oil

Published on August 25, 2010, 10:34 pm in Opinions and Trading. Closed Tags: , , , , , , , .

One of those weird days when gold, oil and the dollar, along with stocks, were up! As expected Durable Goods and the New Home sales sucked. Unexpected was the big oil inventories build-up, which sunk oil prices. But, like the last time this happened in late May, traders saw opportunity and started buying oil futures. And like it has done all year, oil led a move to the upside for stocks.

Keep an eye on oil to see which way we go stockwise. If oil continues its bravery, watch UCO USO and ERX.

Semiconductors also had some oomph in its step, most likely with the help of AAPL and INTC, but also watch XLK and SMH.

The crash for the day belongs to golfer Jim Furyk: Jim Furyk is disqualified from Barclays for missing pro-am tee time. Gee if he traveled more often he would know wbout hotel wake-up calls! :cry:

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It’s only a flesh wound

Published on August 24, 2010, 9:38 pm in Trading. Closed Tags: , , .

I fought the market today, and the market won! Do you ever feel like the Black Knight in the Holy Grail movie? I was the knight today and King Arthur was the market.

The individual investor has left the marketplace…computers and HFT are in charge! This can only help the bears ravage the market. Did you see some of those whips in nanoseconds? The bid/ask spreads were pretty wide also. Nobody can click a mouse that fast.

I spent most of the day just trying to get to cash with minimal losses. I was zigging and zagging as snipers kept shooting. 8O

I think I’ll trade futures this evening and take it easy during the cash market hours. Seems like the futures markets are much more reasonable and orderly during the night sessions. Night time money spends just as well as day time money!

New Home Sales report Wednesday…hoping it’s not as big a stinker as existing home sales were today. But we also have Durable goods before and oil inventories after. Oh boy, another quiet day! :mrgreen:

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No news is bad news!

Published on August 23, 2010, 10:32 pm in Opinions and Trading. Closed Tags: , .

Wow, what an an illiquid violent market today, with big bid/ask spreads. The first 30 minutes had me feeling real good about today’s market, but it quickly dwindled away. The markets closed near their lows….looking like a setup for a another drop tomorrow. The only hope is that it finds a bottom and starts a climb….turnaround Tuesday? Wobbly Wednesday? Thoroughly-ugly Thursday? F’ked-up Friday?

Tuesday we have Existing Home Sales and Wednesday is New Home Sales. Thursday brings us the usual Jobless Claims and the biggie of the week is on Friday, GDP with a smattering of Consumer Sentiment.

Now here’s a hypothesis…..traders think that home sales, unemployment and GDP are going to suck, so they started the sell off today. So if any of those reports come in just a little bit better than expected, we just may have a bottom and a take-off to the upside. Well….it is possible. 8)

And remember…

Hoping or Wishing or Praying = exit position immediately!

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Channeling

Published on August 22, 2010, 6:31 pm in Charts and Trading. Closed Tags: , , , , .

Diving right from the git-go, the morning turned out to be a wait-and-see when low would be low enough. By noontime the low was hit and the slow climb up started and continued for the rest of the day. At one point all the indexes were green, but they couldn’t hold it. The Nasdaq was able to close in the green and the Russell was nearby but closed slightly red. I was disappointed that the markets weren’t more volatile for an options expiration….volume was down from yesterday also. Can’t really decide if Friday was bearish or bullish. :?

The S&P is still bouncing within this 3-month long channel.

If it’s going to obey the channel, it needs to bounce….a dead-cat or bull resumption bounce.

We’re in the summer doldrums and still have another 2 weeks to go. We’ve also had a lot of bad economic news but the market has been able to maintain itself within the channel. It still has not challenged the May, June or July lows….although it is trading below the 20- 50- and 200-day moving averages.

The semiconductors SOX had a good week, but we still need those banks BKX to show some enthusiasm. And oil sure could use a fire under its barrel.

Charts are very schizophrenic! Arguments can be made for a long and/or short position. Cash may be the position of choice, at least until the charts points one way….or the other. :idea:

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Weekend reading 08/21/10

Published on August 21, 2010, 10:52 am in Opinions and reading. Closed Tags: .

I called my broker yesterday to ask him what I should be buying. He said, “Canned goods and ammunition.” :D

Now on to some serious reading….

Levkovich Says `Hindenburg’ Shouldn’t Preempt Stocks.

Norwegian traders charged with manipulation.

Bulls in Jeopardy of a Total Breakdown.

When Wall Street Rules, We Get Wall Street Rules.

A Dip In Capital Markets Pushes Oil Towards Reversal, Tempers Gold’s Rally.

Rethinking Gold: What if It Isn’t a Commodity After All?

Bonds are Most Certainly NOT in a Bubble.

Now….that doesn’t matter much to computers – oops, I mean traders, does it? Have a great weekend!

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