Sunday, April 26, 2009

Time to be out Sports Fans

We have seen renewed commercial selling in this past weeks cot report and now you see the red arrow on the screen above last week. This is a mechanical sell signal based on COT data. Entry is another matter, but this tells us we now want to short this market. I know in my last post I said I expected this rally to last into May but part of being a trader is to adapt to what takes place on a daily basis.

I have continuously maintained that we had not seen the lows yet and I am still of that belief, so this is an opportunity for those who had not switched to cash in the retirement accounts to do so now. I have no idea if this is the exact high of the bounce, just that we are in a zone where fundamentals say the next big move should be down.

I have so many stocks setup for short trades that I am having a hard time paring the list down for the best candidates, and literally none on the long side. This acts as further confirmation of where we are.

Monday, April 20, 2009

Well all we need is at Weekend at Barry's to get a day like this. It is absolutely mind boggling how every time he opens his mouth the market tanks, never seen anything like it.

However, if you look at the chart it does not look like much of a big deal does it? So far as ugly as today was, I think it is a pullback in an uptrend. I certainly hope it is more because some of my short positions I mentioned in my last post were made very healthy by today. Hope cannot be part of your plan as a trader or investor. It is time to watch now how the market reacts on the bounce from this. There are certain proprietary things which I will not reveal here in this free forum, that I will watch on the bounce to see if they indicate it is likely to fail or if it is a continuation long entry possibility.

Nobody ever knows that for sure, trading is at best a good guesstimate of what might happen next, you deal the cards and play the hand. Obviously there are certain things to watch like the commercials to get an idea of what the major players are doing. So far there is nothing there that indicates the low for this whole move is in, which is my big picture view. Also there is not an obvious sell signal on a short term basis to re-enter index shorts for the big move back down. So short term trend is still up and long term trend is still down. I would not recommend anything other than short term trades on the long side, this upward move could end at any time now even though I still expect it to carry into May. It is a traders market not an investors.

My shorts are in individual stocks and some currencies at this point, not in the SP 500 itself. I will be watching my secret stuff now to see if a short entry is appropriate on the bounce, but I think it is likely I will be buying this dip

Friday, April 17, 2009

Not much has changed except one thing. The chart looks the same as it did last week, price rallying, commercials selling. We have reached the over valued zone however, so we may be nearing a short term peak.

We have what I call a running market now where we have very small retracements, too small to enter longs, and the price just keeps creeping along. The PPT showed up in a blatant fashion the last hour of the Tea Party day. There was no way in the world the new administration wanted a down close on that day, and they clearly manipulated the futures during the last hour.

What to do? In all honesty I have lost some money trying to short a few things this week. This bull move is lifting virtually every thing in the world except the soft commodities, and a couple of currencies, so shorting what is a pullback against a long term down trend has not been profitable this week. However, over the long haul, that is the way to play things.

Be careful shorting the stock market until we see some sign of the institutions slowing down on their push here. I will post something when I see that happen. The good news is that this is a great opportunity for those who got hurt last year to be able to now begin moving back into cash having recovered some of their lost money. Hard to say numerically how far this could go, but time wise another month or so is what I am thinking.

Friday, April 10, 2009

As everyone begins to celebrate the rally, and declares the low is behind us, it is time to look at fundamentals.

The commercials are selling this rally in a weekly downtrend, the perfect scenario for a large move down. We are a little early on the seasonal, and the short term trend is strongly upward. As a result we could continue up for a bit, but when the music does stop here and we begin to drop, it will be important to see if the commercials begin aggressively buying the dip. If they do, the suits are correct, if we see scale down selling, the drop could be breathtaking.

When I take in everything I study, alot of which I do not place here for free due to it's proprietary nature, I have seen nothing that tells me we will not make lows under 6500, possibly quite a bit lower than that. However, the trend is up for now, so I am mostly looking to buy the dips and short extensions upward as we are entering an overbought zone. In other words, play both sides for now until the downtrend re-establishes itself. I think we will have an upward bias for about another month or so, but I will dial in dates tighter as we approach the sell zone.

Thursday, April 02, 2009

My comment about a 2 day pullback was pretty good, although it was mostly a guess.

The rally sails onward here helped by the PPT pressuring the change of the mark to market rule. I am not sure that is a long term fix, but in the short run it is going to help.

I would caution people not to get suckered by all the hoopla that is starting to accompany this rally, unless something changes dramatically with what the commercials are doing, this is going to end badly, perhaps shockingly so. However, for now the trend is up and other than short term trades, longs are the choice. Some of my shorter term things are indicating a possible short term short trade early next week but time will tell when we get there if conditions are right for it.