Monday, November 21, 2011


As I size up this roster the first thought that comes to mind is whether any of them got short Friday knowing they would not come to an agreement before today. At least one of these people is among those rumored to have done quite well trading off insider information. Of course as we have learned insider trading rules don't apply to government officials apparently. It is likely that this lack of a deal did drive the market down today as much as I hate to admit that. However, you really have to be a fool to think that they were ever going to make a deal. This was setup from the beginning to fail, so I really don't see it as a surprise. The trend in the market is still down on all time frames the way I see it, and again surprises generally come in the direction of the trend.

I really have no idea what will come of the political situation that is at hand, but from the recent things that have happened my current thought is I might be done as a voter in this country. The insider trading allegations disgust me so thoroughly, that I feel like if I vote now I am just condoning it all. What if the whole electorate just refused to even participate? As much as I am conservative, I am not sure one side is much better than the other will all the crap that goes on. I do think as they bring the house down, they are going to ultimately provide us with more great shorting opportunities so part of me wants them to just keep doing what they are doing. The other strategy which I have considered is getting everyone to vote democrat, then just short everything as they turn us into Greece and make everything crash. Mixed emotions I guess in summary.

I was also told by a friend that Buffett had a tax battle going on with the IRS, and I was surprised to find out that is actually true. It is amazing how this has been kept out of the media isn't it? I can't tell you how much I want to make a big killing shorting his stock at some point. I will have to choose that time wisely. He may be a huge hypocrite, but he is also an incredible businessman. It is on my bucket list to make a million shorting Berkshire at some point because of this ....... who runs it.

As we saw today, there was a late rally in the stock market which pared some of the damage. This is what I predicted in my last post. I think the PPT will be able to lift the market during the next several weeks due to light volume. I did start buying some SPY's today trying to leg into a position to hold through the end of the year. I will add some more tomorrow if we go down again. I do not have any short term buy signals, so this is a different type of trade and might require me to take some heat in the process.

Here is another market that I think is setup nicely, Coffee.

I am not sure this is a bet the farm trade, but there is a nice seasonal low due, and a pretty clean trend line containing prices coming in just above the current action. Once again, the COT indicator is not on board here actually with the last indication being a sell. As I have said I really have no idea if that indicator is worth anything at all. I rarely trade using it, but it is on the chart so I thought I would mention it to head off the questions about that up front. This appears to be a trade worth doing if we do get going on the upside out of this formation.

As far as the rest of the week goes, here is a table that shows buying the SP 500 x number of days before the holiday and selling the day after. As you can see all days from 1 to 5 days before the holiday show a net profit, so the bias is upward pretty clearly here. The percentages are not super high, but the average trades are very good. What that tells us is in general we move up and when we do it is a lot more than when we move down. I would never trade off just this alone, but it does show a pretty decent bias. You are going to have to click on this to enlarge it, this capture did not come out too well.

I am looking up as you know this week, so 0 for 1 so far since today obviously closed lower.

I don't see any other imminent setups for tomorrow other than a marginal short in the ten year notes which is not one I am going to play.

Good Trading


Anonymous said...

We are hugely extended to the downside using the indicator I use but meltdowns happen from already oversold levels. I think if we take out today's low its bar the door, Katie. You must trade very differently from me because I am not at a point where I would go long. I closed my 3x inverse emerging markets position today, I have a rule that when I make 10% in one day I need to take what the market giveth, that along with the oversoldness got me flat for now. I will jump all over it again though if we open weak tomorrow. It really looks like gold could take out the recent lows and if it does I think its all over. I dont have a futures account but I need to open one in case this occurs! Love your blog dude. Thanks for doing it.

Anonymous said...

When do you buy SPY and when do you buy ES? I know the difference between the two, one is an ETF with finite loss and no possibility of margin call (if not buying on margin) and the other is a futures contract with higher loss potential. But you must have some stop on this trade? Why not just buy ES? I just wanted to know when buying one or the other is a better idea.

Chris Johnston said...

well I guess I never should have posted this tiny little trade I made in an equity IRA account since it has created some confusion.

I mostly trade futures, I just have a few hundred k in IRA accounts that I dink around with equities in. As I have stated, the only reason I am bullish at all is longer term cycles, seasonals, and the election cycle. I have no long futures positions in anything at the moment. This SPY trade is a tiny little trade, irrelevant. Just forget about this one, even if I am right on this it is only going to make me 5 to 10k so it is not a big deal at all just doing it for principal.

With the SPY trade I am just legging into it and will risk 5% of the account on it overall, but will not trade an open stop it will be a judgement call if I think things have changed enough where I am dead wrong about the seasonal rally.

I do trade the ES and actually this is the first SPY trade I have made this year.

I do agree on the GOLD market if we break the lows of 9/26 the game ends for 20 years or more there as I have stated before. I don't think that is going to happen this year but you just never know.

ya said...

Look at silver on longer term chart
you can easily make a case for this market near completion of may-november correction & ready for higher ground. The minute pm markets will show signs of life plenty of buyers will emerge.

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