Big sell off this morning, rally into the afternoon, then the last 15 minutes, a reversal back to negative, closing down 4%.

What a very odd day this was.

After yesterday’s big reversal, anything is possible . . .

>

Category: Markets, Technical Analysis, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

39 Responses to “Volatile Day”

  1. thezo says:

    So when did they say the blackjack tables were opening at the NYSE?

    ~~~

    BR: Try to guess why the spam filters grabbed this one

  2. albnyc says:

    This market needs Xanax. Seriously. Good for traders, bad for anyone else.

    ~~~

    BR: And this one

  3. AGG says:

    It’s not hahd to make moola in this environment.
    You need to do the following:
    1) Have a trading account.
    2) Have 8 hours a day available to watch stock price movements.
    3) Have access to a lot of leverage.
    4) Be a stock Broker.
    If you have everything but item 4, you are going to lose big time.
    Try smoking. It’s less hazardous to your health.

  4. mitchn says:

    > What a very odd day this was.

    It’s like watching a giant prehistoric beast writhing in its final death throes. Fascinating, in a gruesome sort of way.

  5. DL says:

    If the SPX does manage to get to the 1000 level within the next 7 trading sessions, it’ll be a screaming short. However, I have my doubts that it’ll get there (soon), since most people expect it to.

  6. Peter says:

    Have not seen anyone make the Hartford news after 3:00 with the market selloff, looks to me the market doesn’t like Hartford being able to spend 10 mil, convert to an S&L and access TARP This is wrong!!!

  7. Baille Beag says:

    I have to keep adding more URPIX (fund equivalent of SDS) in order to hedge the Hussman fund (HSGFX) in my 401(k). I thought he would be doing the hedging…

    Today’s market notwithstanding, it seems like a bear market rally is possible.

  8. batmando says:

    SnowyTrail (http://community.marketwatch.com/Snowytrail)
    just posted this on MarketWatch:

    Invest $10M for some rinky dink S&L and you are eligible for $1.1B. Nice return on investment there. This is like pigs at a trough, and we all pay for it. Absolutely disgusting.

    This just in:
    Al Qaeda and North Korea are teaming up to buy the First National Bank of Bozeman Montana for $30 million dollars. They say they will be eligible for $4.5 billion from the TARP program and will immediately loan the money to their affiliates for missile development. 5,000 good paying jobs will be created.

  9. KJ Foehr says:

    Not just day — Volatile Year!

    There is only one word to describe what we are experiencing: BRUTAL!, or any synonym thereof.

    It has got to be excruciating for bulls and bears alike. I assume only the best (luckiest?) of traders can profit in this kind of environment.

    GLTA.

  10. bri says:

    win’s a win.

    stay short/ own puts.

    try not to do any analysis regarding multiples.

    enjoy your weekend, all.

    p.s. this is officially the best site on the street.

    cheers.

  11. DL says:

    AGG @ 4:18

    “You need … to have 8 hours a day available to watch stock price movements… and have access to a lot of leverage”.

    Tell me about it.

    I have a normal 9-5 job. But I have a computer on my desk, and this market has become a HUGE distraction over the last two months. Hard to get any work done.

  12. mlomker says:

    AGG, I’ve never met a broker that trades. Brokers make money on commissions. I assume you meant that you need to know what you’re doing. I’ll agree to that.

    DL, tell me about it! I have an IT job and although I made money on the morning short and caught the turn at the 50% retracement…I got smoked on the late day sell-off because I was in a meeting. No big deal since the morning short was entirely profitable.

  13. Andy Tabbo says:

    Picked a great day to be flat.

    That was a big fat bull trap today… A classic bull trap…everyone geared up long on the pull back looking to take the market positive to “really take it to shorts”….market sets a marginally higher high and then Lo’ and Behold…there’s No Short Covering?!?! Wile E. Coyote moment sets in for the fresh length and newly minted bulls….and the market gets SMOKED. Futures actually set a new low into the 4.15 close!

    I really don’t know what to make of the price action at this point…probably a great time to be flat. I can make a technical case for a sharp move to 1000-1050 zone which would be the greatest selling opportunity before the end of the year. I can also easily see us careening lower and setting “decisive” new lows on the year which would be a good buying opportunity as we would be set up for the predictable spring seasonal rally that I’ve been looking for.

    If anyone else comes on talking about retesting lows again, I’m going to puke. Double bottoms are very rare…Triple bottoms are the stuff of Unicorns and Leprechauns….and quadruple bottoms is just Koo-Koo for Cocoa Puffs trading….

    Flat and Happy for the weekend.

    - AT

  14. KJ Foehr says:

    Sheesh! My screen shows Dow futures down 459 now and S&P down 46!

    Is that what is was on the close or after the close? Did some bad news break that I missed?

  15. dead hobo says:

    BR pondered:

    After yesterday’s big reversal, anything is possible . . .
    —————————————————————————————————-
    Nope. It’s pretty much normal variation. You ought to learn a little about Statistical Process Control and, in particular, the concept of normal and abnormal variation. I figured out this morning that there would be some kind of shenanigans this afternoon. I just didn’t know what. You want to be a quant? Look into this.

    The bottom traders need to be taken out of the market before it will rise above the recent peaks. And then there will be more oscillations in a new range. This IS normal variation.

    Instead of naked shorts crashing the boards, a few have learned a new trick and are perfecting it. All you need is low volume, a lot of cash, and a plan. VaaaVoom. Big jumps on some days. Big falls on others. I’m pretty sure all you can affect is variation within a range with this plan, and not big assed rises or falls to new levels. But you can still cash in if you have enough cash to play with. (Of course, this is really a fair game. I must be crazy.)

    I’m in. I’ll buy next week “when the lows are tested”. (I love that kind of talk. Do people really believe lows are tested, or crap anything like that?) Well, if that’s what the computers are programmed to hither to, so be it.

    Meanwhile, enjoy the quick range trading.

    ~~~

    BR: heh heh — thanks Mr. Shewhart — but that wasn’t meant to be taken literally. No, monkeys won’t fly out your butt.

    If I start writing about process center variations, you and I will be the only people here . . .

  16. kiltartan says:

    Um, I think I have the solution. If I go lonnnnnng, the market goes south. If I go short, the market climbs. (Sigh. If only it was that easy. Still 60% long and 40% cash).

  17. Mike in Nola says:

    RE: futures

    Strange. Usually it’s only CNBC.com’s futures quote is screwed. Maybe it’s Warren. There’s a news story that he’s buying Conoco and selling BOA and Home Depot. Surprised it’s taken this long on Home Depot. Saw something about an SEC report that Soros had bought a huge chunk of Walmart stock.

  18. dead hobo says:

    I observed cleverly:

    Instead of naked shorts crashing the boards, a few have learned a new trick and are perfecting it. All you need is low volume, a lot of cash, and a plan. VaaaVoom. Big jumps on some days. Big falls on others. I’m pretty sure all you can affect is variation within a range with this plan, and not big assed rises or falls to new levels. But you can still cash in if you have enough cash to play with. (Of course, this is really a fair game. I must be crazy.)
    _____________________________________________________

    I suppose when the new market regulation schemes are discussed, I wonder if they will be smart enough to discuss the legality or ethics of working out a plan with your hedge fund buddies to do a little ‘smash trading’ on low volume days where it will make a difference. I don’t think it is illegal, since your cash is it at risk of loss if the devil moves against you. I’m no genius and I’m not a paranoid, but this crap is happening for sure.

  19. constantnormal says:

    Doesn’t seem strange to me …

    It is my experience/recollection that bear markets alternate between relentless downward slides, and actions more akin a a cross-cut ripsaw slicing through one’s perceptions. Yesterday, started the ripsaw actions, with the pace picking up today.

    It’s kind of like playing Space Invaders (I’m dating myself here, I know), the longer you play, the more rapid the tempo, until you cannot keep up and are overrun.

    When the last of those who are surfing the swings in the market are wiped out, or are sufficiently scared/discouraged to move them to the sidelines, then we FINALLY get the capitulation and bloody plunge from a massive GMO (GET ME OUT!!!) movement. So long as there are some surfer dudes (or dudettes) out there on the waves, the tempo and unpredictability will increase.

    And with the worst markets, there is no quick rebound. After an unbearable (no pun intended) period of languishing, crawling along the ocean floor, there is a slow but increasing movement upwards, until the economy is firing on all cylinders once more, and probably with a new crop of investors who are lacking the experience and can inject some risk-taking into the markets.

    That’s what a Minsky Moment is all about. Enjoy this one, as you are unlikely to see another quite like it in your lifetimes.

  20. larster says:

    I wonder how many of those congressmen and women that are totally outraged about using bailout monies for the auto companies will express outrage over the Hartford scam? I’m betting on the under, myself.

  21. Winston Munn says:

    Nothing new in this piece but it helps understand the “big picture”: http://www.cnbc.com/id/27716231

    Although the article does not say so, the conclusion is there in the data: there is no solution other than a worldwide contraction of debt. All the stimulus in the known galaxy cannot spur consumption at the pace artificially induced by the last 6-8 years of recklessness.

    This is not the ususal market – it is an 80-year flood event.

  22. longshort says:

    We will break the lows and end lower. And then the technical geniuses (incl BR) will turn bearish again. Technicals are not a crutch to lean on – in these markets. Banks, funds, insurance companies, pension funds, pvt equity firms, endowments, small businesses, levered large businesses, entire countries and perhaps continents are in trouble. A 820-850 spx level means nothing, other than for a day to get the technicians excited. Hedge funds and Mutual funds may want a year end rally to get paid – but if so we will pay the price in Jan/Feb

  23. dead hobo says:

    Winston Munn,

    How about a little experiment?

    I read your article and, you’re right. Nothing new.

    Now, rather than read about people in the third person and depersonalized using phrases that everybody already knows, do something a little different.

    Instead of thinking about imaginary people who fit your preconditioned expectations, imagine yourself as a living breathing person, and a billion others just like you. How’s your job? How’s your house payment? How will $1.50 gas affect you, as compared to $4.50 gas a couple of months ago? Some people are having problems,. Most are not, but people think they are and that is why humps at cnbc and elsewhere write about them like that. Are you feeling crushed, helpless, and at the end of my rope? I’m not.

    It’s Pepsi writing … empty from the neck up.

  24. Mannwich says:

    Am begging for a solid year-end rally so that I can get the heck out of most of my longs ahead of the big deluge next year.

  25. scorpio says:

    i would like to take this moment to vent about GE taking $88 B taxpayer funds to replace its CP and i believe another $139 B to gtee its other short-term debt then have the CHUTZPAH TO DECLARE THAT ITS DIVIDEND IS SAFE. this bailout is the most monstrous joke i’ve ever seen. and the fact that these Congressmen can call Kash-N-Karry a chump: they’re the chumps! they bot into this scheme w no oversight and no strings attached. they’ve made the hard-working US taxpayer the chump. when will this end

  26. Mannwich says:

    @dead hobo: No disrespect intended, but I think we should revisit your assumptions in another 6-9 months. Me-thinks they’ll be much, much different.

  27. Mike in Nola says:

    You know things are bad when:

    Killing the sub-penny rule

    http://www.reuters.com/article/ousiv/idUSTRE4AD63P20081114

  28. Mike in Nola says:

    Another possible explanation and not good news for a rally:

    U.S. hedge funds anxious as redemption deadline looms
    http://www.reuters.com/article/americasDealsNews/idUSTRE4AD04220081114

    (if we ever get a preview mode, I’ll provide nice looking links.

  29. Dan Duncan says:

    Want to know when to go long in this market?

    Enter the day after the S&P begins the day down 3%. Then, by lunch it’s up 3%. Then it’s back down and up 4%. Then, by the close it’s down 5%.

    Then…and this is the most important part: Come to Big Picture and look for the Comment Section on that day’s action. If there’s only 1 maybe 2 comments…none of which regale you with the important echnical levels or where we’ll be in 3 months time….you will know it’s because the stellar trading geniuses at Big Picture got obliterated….it is then that you should start buying.

  30. Jonathan says:

    I think the market is being controlled by the Russians. That is the only thing that can explain it at this point.

    Oh yeah, and Elvis is alive and lives in San Francisco.

  31. drudru says:

    @Andy Tabbo

    This isn’t a double/tripple bottom. The lows were lower and broken on S&P and NASD.
    The fact that people got lucky (and there is nothing wrong with that) and caught the bounce up
    after the low doesn’t invalidate that. Some of the technical guys will now start looking at
    those new lows as the new support.

    At this point, I’m waiting for the new pattern.

  32. Andy Tabbo says:

    drudru:

    Agree with you. Sometimes sarcasm doesn’t come across well in writing.

    I must say this is as confusing a moment as I’ve had all year long as a technical trader. I’ve been studying the various models all day and all evening and I’ve reached the conclusion that I cannot be in this market until I get more price action.

    Unfortunately for bulls I only see three degrees of bearishness at this point (although there’s always a dim light on at the end of the tunnel at this low of level):

    In order of most bullish to most depressingly bearish:

    1) sharp rally to 945 – 1020 zone to complete a fairly major fourth wave of whipsaw congestion that will be followed by a marginally lower low in the high 700′s-800 level. This will be followed by at least a few months of good bear market correction.

    2) the larger degree fourth wave concluded at 1007 and we are in the midst of some kind of ‘irregular’ fifth wave that will resemble a ‘falling wedge.’ This move will finish around 768 level and it will be a very choppy grinding motion down. When this move to 768 level is finished it will trigger a ROBUST Spring time rally.

    3) from 1007 we are in the midst of a fairly major unfolding five wave move down that began with 1-2 from 1007 to 900, and then another 1 – 2 from 953 to 818. This means that we’re about to really come apart….a vertical move down is imminent and we’re ultimately heading for the 600 level, the 61.8% retracement of the ENTIRE S&P500 lifetime. The 604 level would be the 2.618 extension of the major first wave. In terms of classical charting: this channel looks very much like a downward sloping pennant or maybe descending triangle. If the lower levels get snapped, then it looks like it could move to low 600′s from a purely Classical chart pattern type view.

    Given the extreme amount of pessimism and anxiety that currently exists, it’s very difficult for me to see how Option #3 can come true. However, there’s plenty of technical evidence that suggests that it’s more than a remote possibility. As bearish as I’ve been ALL YEAR long, I really hope that a move to 600 doesn’t come true.

    - AT

  33. Winston Munn says:

    Dead Hobo,

    Sorry I couldn’t respond earlier.

    You may certainly be right – after all, I am only expressing my opinion based on the facts I see and my interpretation of them.

    What I saw in the data, though, is that as a nation we succumbed to the lure of “something for nothing”, the too-good-t0-be-true scenario of living the life of Riley inside our retirement account. We didn’t have to save – we could simply buy property, the bigger the better, and watch our values soar. We did this so well as a nation we ended with a 0% saving rate.

    What I see is the past 6-8 years of economic growth based on non-sustainable debt production. MEW and credit card debt – not wage growth – provided the bulk of economic growth. It turns out nearly all of that growth was Ponzi growth that cannot be reproduced. Ergo, the debt load created must contract.
    There is no mechanism to service it.

    Things are not horrid at the moment – agreed. But what I am saying – even if things never get horrid – it will be many years before things are anywhere near where they were just a couple year ago.

  34. coler says:

    drudru, you’re right. People seem quick to forget that the lows were broken. The fact that we never saw a high-volume follow-through today (so soon after the big rally) suggests that what we saw was nothing more than a pull-back (a decent one, granted, but a pull-back nonetheless). If this crashes right through the floor on Tuesday or sometime next week, I wouldn’t be at all surprised. Most of the people who went long at the lows are expecting price to reach >1000. They’re holding. If price breaks down here and drops like a rock, there are going to be a whole boat-load of people crying real tears. That’s how the market works. It’s brutal and uncaring. And to get suckered in just before a long weekend is… well… part of the pain, I guess.

    Anyone see the weekly / monthly charts? Have you ever seen such strong momentum in your lives?

    Forget trying to stop a moving train… this one is a moving planet. Unless you’re God, I’d get out of the way until you see some friendlier longer-term candles. Otherwise, you’re liable to get sliced and diced with that sharp knife.

  35. TrickStyle says:

    Two separate thoughts: the swings are so huge, that trading in this environment seems to offer more room to operate in. It’s less science more art. I’m a value investor, but can’t help myself in shorting the S&P every time it runs up.

    Second comment is that these late day rallies remind me of a bunch of ants trying to rebuild their hill on a sinking iceberg. We’re going down to 725 +/- 25, so the more the ants trade here, the longer it will take to get there.

  36. drudru says:

    @Andy Tabbo

    Ah, sorry I didn’t recognize the sarcasm. Good luck and trading.

  37. jakester says:

    volatility and volumes are at its greatest just before a major crash.

  38. H.T. says:

    I want to be clear, I make my own calls–blame no one, listen to no one, but weigh some opinions that have some value in my view.

    One being Art Cashin’s, floor director of UBS. The tell tale call of this bear trap [which i fell into, and would have made a lot of money both Thursday and Friday IF I had SOLD], was Mr Cashin acting almost smug of how he choreographed the whole thing, with the test of 740 on the S and P Thursday, the big mid-day reversal [and on a Thursday! He loves Thursday!]. And even more Friday, with the magic 50% retracement [--kudos hit exactly where he said at 770 and started to rally], and then off to a 30% rally lasting months…

    Except… down 400+

    He seemed like a salt of the earth guy that didn’t take himself too seriously, but that was not the guy on CNBC—and the market, as it loves to do, proved his arrogance wrong…

    Quote: “How could I have been so naive to have believed the experts” JFK, after the Bay of Pigs

  39. leftback says:

    I think people just didn’t want to be long going into the G20 meeting, nothing more complex than that.