Hedging Long Accounts
By Barry Ritholtz - September 24th, 2009, 10:52AM
We are still long a number of names I have discussed in the past, but we recently added QIDs and SDS to our managed accounts as a hedge.
The technicians amongst you who pay attention to Japanese candlestick charts will note that yesterday was an “Outside Down Day.”
While no one knows whether this will be a collapse or a mere shallow consolidation, I suspect the latter — but we have had a huge run since March, and our managed accounts have profits that require protecting . . .
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September 24th, 2009 at 10:58 am
well, i don’t know outside down from upside down but i do know bearish engulfing when i see it, lol.
September 24th, 2009 at 11:05 am
@karen
Beat me to it. LOL. The weekly looks like it’s forming a bearish harami.
September 24th, 2009 at 11:07 am
I always suspected you were smarter than Harry Wanger, Barry.
Gold $1000 is now an interesting level as an indicator of the health of the dollar carry trade. If gold can’t break through above that level again, then we may have seen tops in a number of assets. Note that long bonds rallied since June, then Shanghai crumbled first, then crude, and now the Government Supplemental Liquidity Program, I mean US stock market. The reverse repo talk seems to be the big trigger. Durables tomorrow, last one was hot and it’s a famously noisy series, so I am bearish here as we get some post clunkers reversion to the mean.
September 24th, 2009 at 11:08 am
I don’t know much about JC’s. But in a search to learn more I found some notes in May 2009 of a rare Quintuple outside-down day with this from William Kurtz:
“It isn’t very often that we see a quintuple outside day, by either style of measurement. To see a quintuple outside day in both styles on the same day must be exceedingly rare.
We think that today’s patterns, and especially today’s pattern in the NASDAQ Composite, are bearish signals of considerable importance. Almost certainly, Investors who become aware of this highly unusual and bearish pattern will recognize it as a reason to review once again their portfolios and exposure to risk.”
And look what ensued from June through today. What makes this different in JC analysis?
I do think there are many other technical and fundamental reasons to bearish, though.
September 24th, 2009 at 11:09 am
Why not long puts instead of QID and SDS?
September 24th, 2009 at 11:14 am
No way. I’m buying this dip…….with leverage. Per Wanger’s counsel.
September 24th, 2009 at 11:14 am
As I have stated regarding T/A, the only one I pay any attention to is short term candlesticks. As I’ve said, they do display a psychological look at the market. That being said, yesterdays pattern certainly looks as though we’ll see the shallow 2-4% pull back – we haven’t had one in a while and we are certainly due.
Look at the chart as a whole and you can see how healthy and needed these shallow pull backs are. Each dip sets up for the next move higher. I would be very careful with QID or SDS here unless you got in yesterday and plan to close the position quickly.
September 24th, 2009 at 11:16 am
Wanger = Borchers. Now I’m sure of it. Borchers was saying the exact same things last year before conveniently disappearing right before (or while) the roof caved in.
September 24th, 2009 at 11:16 am
Lot of red today. One of my shorthands says that selling on fridays indicates a fear of holding over the weekend and should lead to more selling in the next week.
September 24th, 2009 at 11:21 am
Some trash stocks that had run up like crazy in recent months (I own one of them after selling half my holdings for a nice gain a month or so ago) taking a beating today. This is just a preview of what’s to come too.
September 24th, 2009 at 11:21 am
@HW
A 3.49& pullback using weekly closes will cause a reversal in the weekly TLB. If it gets confirmed by another lower weekly close then the trend is changing. A third lower weekly close means women and children first.
September 24th, 2009 at 11:22 am
Harry, do you understand the significance of reverse repos and phasing out of the TALF program? The hot money spigot is being slowly turned off here, and Uncle Ben is putting the helicopter away for a few months.
There will be rallies, but a reversion to the mean is quite likely as we have oscillated wildly around the 200 DMA this last year or so. With the spigot off, it is more than likely that the top is in for the year.
September 24th, 2009 at 11:25 am
Dow could certainly pull back to 9500 area which would put it at 3.5% from its closing high. That’s a great area to add or initiate long positions. Psychologically nothing has changed from buying on dips. More managers need to get in and the retail investor will also use a pull back to leap in. The trend is strongly upward on the indices.
September 24th, 2009 at 11:35 am
leftback: I do understand the significance of reverse repos (which won’t happen) and phasing out TALF. I think what you may fail to realize is that this is positive. If the money is not required, great! Put it away for a rainy day. I’d rather have money at the ready for any unexpected crisis than to burn through it now as the economy is clearly healing.
September 24th, 2009 at 11:39 am
@HW
A Dow close below 9505.96 will reverse the weekly TLB. It would have to have a weekly close above 9820.20 to negate the reversal.
September 24th, 2009 at 11:42 am
Hedging is, always, a good Idea, helps keeps one ‘out of the bushes’.
Puts are, still, Cheap, and fading in-the-money Calls on some the, recent, mo-mo/ Nifty50 Stocks should show merit, as well.
September 24th, 2009 at 11:43 am
Are these etf are good for long term holding. Or they are only for day time trading. I am thinking of getting into some short etf in 401k.
September 24th, 2009 at 11:44 am
This article says that QE hasn’t started yet but is about to begin.
The US quantitative easing has just begun
September 24th, 2009 at 11:45 am
rustum,
One needs to be cognizant of: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=etf+time+decay
September 24th, 2009 at 11:46 am
rustum,
good luck with that, no 401k’s offer short etf’s. Well, none that I have ever seen. Last I checked those weren’t really on the “to sell” list for Fidelity, Vanguard or Tiaa-Cref.
sounds like you might need to do a little homework before jumping into one of them.
September 24th, 2009 at 11:49 am
i have said again and again…
only way out of this debt driven hole is inflate your way out….fight deflation with printing press.
unless there is a huge currency crisis or a major stand off…….I wont count on stopped printing press. By hook or by crook the government has to be the spender of last resort…the employer of last resort and the credit provider of last resort.
but when it comes to stock market…it is too much speculation for me to fathom….so i am still mostly cash.
100% up and down….with a small change in fundamental is too much volatility to be able to make sense of it.
September 24th, 2009 at 11:50 am
Wanger-
if you say indices one more time i am going to hunt you down-
rustum-
any inverse or 2x+ long is not for long term positions- only tracks daily performance
September 24th, 2009 at 11:52 am
b22 aka mcfearless-
if rustum has a self directed 401K – as i do- he can buy QID all day long
September 24th, 2009 at 11:53 am
rustum: I agree with ahab and Mark about the short and ultra ETFs. I use them short term – especially the ultras. Although they have done so well for me over the summer that I tend to hold them longer now and add on shallow pull backs.
September 24th, 2009 at 11:55 am
Thanks for the info. I linked my 401k to brokerage link. I was under the impression that i can buy or sell anything in that.
September 24th, 2009 at 11:56 am
techy,
you don’t beat deflation in a credit based system. reflation is the only way EVERYONE knows to get out of this other than some pie in the sky ideas on how green energy and some unknown technology breakthrough will get us out, possible, yes, probable, ???. Why are people confident we reflate, that consumers will bring trillions more in debt to the household balance sheet, a consumer, that in general is aging, retiring, and switching to fixed income. the Fed tried to provide “liquidity” since 07, and we crashed. Sounds like a crowded idea to me. Government spending retards growth. As for employer of last resort, they’ve been doing that for 10 years now, look at public vs private job growth.
All that said, I think you are smart for staying mostly cash fwiw.
I seem to be in a tiny little corner with a select few on what is going on here. I’m headed back to that corner.
September 24th, 2009 at 11:58 am
rustum,
You might have some sort of self directed 401k so it’s possible you can get the ETF’s but you need to know how they work before you buy. jmo. Use Mark’s link.
You might also want to start with a regular short etf without leverage if you can get them so you understand how it works. Going to cash because you don’t like the market, and going short, are two very different things.
Good luck.
September 24th, 2009 at 12:07 pm
“Going to cash because you don’t like the market, and going short, are two very different things.”
Ain’t that the truth. A truth many have learned the hard way of late.
September 24th, 2009 at 12:12 pm
Mean reversion, ladies and gentlemen. Keep that in mind. Wanger, your grip of macroeconomic issues seems weak. The pumping has to take a breather here, the greenback is not the only currency that needs to be debased, look at King’s comments today and the effect on GBP. Sure there will be more pumping later, no question of that. Right now America may have to bend over for the winter while others ease a little bit. LB does think that all the “bond market apocalypse” people are off the mark here.
Harry, you are undoubtedly a successful mo-mo and I am sure you have enough good sense to bail when the trend changes. Right now we are in a no-man’s land until a new direction emerges, but all eyes remain on the dollar. This is not a normal market, Harry, the sources of liquidity here are quite different from a healthy bull market, and deflationary forces continue to press in on us in a way that most have not seen before.
September 24th, 2009 at 12:28 pm
b22-
no need to go off in a corner my man- you have been pretty much on the money with most of your observations-
wish i would have followed you and leftback on your bullish calls in March- it was brave to be a bull then
September 24th, 2009 at 12:33 pm
Protect them with collars. You still get upside paraticipation, though it’s limited
September 24th, 2009 at 12:39 pm
a little tidbit from ZH-
“According to the BLS, the exhaustion rate, or the number of people who have used up their benefits, and will no longer be receiving unemployment checks, has hit an all time high of 52.40% for August. This is a staggering number, and whats worse it was grown in practically a linear fashion with not even a hope of a second (third or fourth) derivative green shoot in sight. In fact, the deterioration in “employability” is accelerating. ”
if these folks drop off the rolls- think how much better U3 looks- not a green shoot?
September 24th, 2009 at 12:41 pm
Trapdoor, baby !! Look out below !!
September 24th, 2009 at 12:57 pm
It’s NEVER good when they start on a Thursday (going into end or quarter)…
WORSE…When it actuallt started Wednesday afternoon after FOMC statements and a blowoff top…
September 24th, 2009 at 1:00 pm
WORSE…
When it’s during a week that the Japanese markets are closed, and there is the RH – YK break…
This could go on through next Tuesday…
September 24th, 2009 at 1:02 pm
@BR
I just KNOW those SDS & QID’s were put on last week…
Are your computers Jewish, I wonder…or not? – jk
September 24th, 2009 at 1:20 pm
Cvienne, If Mr.Ritholtz’s computers were Jewish, they would have to coshier correct? Would that make them dill computers? Oh, man your getting a dill…..
September 24th, 2009 at 1:23 pm
@franklin420d
I was just thinking about you this morning…
A trivia question came up in which I was thinking about “Sonny Sixkiller” as being the answer, and for some reason my mind thought of you… :-)
September 24th, 2009 at 1:28 pm
ahab,
Just ask yourself how brave it is be bearish now, or better yet, a dollar bull!
September 24th, 2009 at 1:37 pm
ben22: I think you should rephrase the question as “ask yourself how foolish it is to be bearish now”. The only pull back we’ve seen on the indices has been very shallow since July. It’s very typical bull market behaviour of back filling. Until that trend breaks to a more decisive move, it’s pretty foolish to be bearish and face that momentum.
September 24th, 2009 at 1:40 pm
The 7-year auction was a huge success, predictable as the 5-yr pre-FOMC offering had a lukewarm reception – so much for the Death of Treasuries… might be some give back in these markets over the next couple of days.
BTW, those who bought TLT calls or large piles of the 10-yr note at 3.50% on Wednesday – KA-CHING!
The role of liquidity from the FED has been much debated in recent weeks. Now we might get to see who has been holding up the market. Prop desks using helicopter money, or JOHNNY RETAIL and other clients of BRIAN the broker, not to mention, the might and leverage of WANGER. Surely he is not that large. Only time will tell.
September 24th, 2009 at 1:42 pm
@Cvienne
Ahhh, you waz think’n of me, thanks man, brings a tear to my eye. I am too young have actually seen Sonny play, I hear he was pretty good. I used to work in a store that took phone payments, if the person did not bring in their receipt we would write one up for them, long story made short, one day I was writing up a receipt (for a tribal member) and asked the persons name – their last name was Whitekiller. Hmmmmm wonder how you get a name like that…….
September 24th, 2009 at 1:43 pm
Wanger is a large as he needs to be.
September 24th, 2009 at 1:43 pm
BUY those dips!!! No wait, SELL Mortimer, SELLLLL!!!
September 24th, 2009 at 1:45 pm
HarryWagner – Were you around these parts when Sonny Sixkiller played ball?
September 24th, 2009 at 1:48 pm
Harry, got stops? :-)
September 24th, 2009 at 2:00 pm
Wanger-
read this edit of a sentence from your post @1:37-
“the only pull back we’ve seen has been shallow since July”
perfectly understandable- correct? the indices are not pulling back- the stock market is pulling back- the index only reflecting that fact. So- you use the word “indices” either because you do not understand this simple fact or you think it makes you sound intelligent-
so which is it- and be honest
September 24th, 2009 at 2:03 pm
(wonders how long it will take for HW to move the goalposts from -4%)
September 24th, 2009 at 2:10 pm
@emmanuel117
What’d it take? about 7 trading hours to get that 4% dip?
Sounds like a bunch of “conviction longs” in this market… What do they say? Stairs up…Elevator down…
September 24th, 2009 at 2:10 pm
The Bears Are Back in Town
[apologies to Phil Lynott and Thin Lizzy]
Guess who just got back today?
Them wild-eyed bears that had been away
Haven’t changed, haven’t much to say
But man, I still think them cats are crazy
They were asking if you were around
How you was, where you could be found
Told them you were trading downtown
Driving all the old men crazy
Spread the word around
Guess who’s back in town
You spread the word around
Friday close, they’ll be dressed to kill
Down at Benny’s bar and grill
The Spoos will flow and blood will spill
And if the bears want to sell, you’d better let em
That jukebox in the corner blasting out my favorite song,
The nights are getting colder, and it won’t be long
Won’t be long till October comes
Now that the bears are here again
The bears are back in town
The bears are back in town
Spread the word around
The bears are back, the bears are back
(guitar solo fade….)
September 24th, 2009 at 2:21 pm
@Harry,
A “pro” like you should know that bearish doesn’t equal ultrashort. Only fools on blogs think that when someone says I’m bearish it means they are all in short. You aren’t a fool are you? I’ve been bearish for a long time, but was still smart enough to get long, and post about here, not the Yahoo message boards, months ago. As for this looking like a bull market to you, looks like a classic bear market rally to me. Keep on keepin on buddy.
September 24th, 2009 at 2:27 pm
I would not take today’s movement as a downtrend yet. Everything is so manipulated, that maybe Blackfein wants to send some signals to the G20 about financial regulations. If you get too tough the market can fall quickly, so keep giving me more money for free because I have not gotten yet my big bonus. It is weird that just before the G20 meeting the market is going to have the worst few days in several months. It just doesn’t fit to me. Just when they were going to proclaim the final victory the market has a terrible day. I believe banksters are behind yesterday close and today’s action. They want governments to keep thing as lately ( free money, no more regulations, regardless what is going on with the economy), the trading is good for them why to change anything.
September 24th, 2009 at 2:27 pm
@HW
I offer this with compassion…
http://www.demotivateus.com/firearms-more-useful-than-a-camera-demotivational-poster/
September 24th, 2009 at 2:36 pm
I am able to trade QID in my 401k by accepting leverage/inverse purchase agreement. Sorry for asking lot of questions. So far, i have tried investing with few Indian ADR’s in 401k.
September 24th, 2009 at 2:38 pm
franklin420: No I do not know who SonnySixKiller is
leftback: I use stops and keep placing them at 4% below the closing highs throughout this uptrend
ahab: I understand the difference between the market and indices. I use indices since they deviate relative to each other on occasion. Today is one of those days: Look at COMP vs. DJIA
cvienne: DJIA is only down 1.3% from its recent closing high. Not 4%. And your link is full of pop up crap.
September 24th, 2009 at 2:38 pm
Oil under $66, not very growth-y…. at last a commodity begins to pay attention to the FUNDIES.
cacerolo: The banksters made money long with borrowed money from the FED (taxpayers), and they recapitalized by selling stock to retail jackasses, now they can make money short and shore up the balance sheets while also reducing risk and deleveraging at the same time. We had the hand signals in March from Obama and a week or so ago from Timmy. All one has to do is pay attention. Manipulated market? Well, yes, there is no other.
When all the DOLLAR SHORTS and HEDGERS try to get out of this ONE TRADE at once it’s going to be a bloody mess. You don’t seriously think Blankfein’s boys are still LONG COPPER, GOLD and AIG, do you?
September 24th, 2009 at 2:44 pm
@HW
We’re just having fun with you Harry… (We are permitted to do so, aren’t we? After all, it’s like a 1 day in 10 occurrence lately)…
And I haven’t heard ANYONE, including myself, say we’re going to 600 right here right now… We’re simply relieved at getting a correction that, perhaps, has the initial appearance of meaning something…
September 24th, 2009 at 2:46 pm
good idea.. i think it will be a hell of a fight and would expect nothing less but i think we see SPX 1000 before 1100…
i’m 2x net short and my performance demand is that the market drop quickly with no material bounces that allow other shorts to enter the market .
i always keep an intraday chart on my wall of the 87 crash to remind me that half the losses were in the last hours.. of coures, i have no idea if we will get a push today…
i think a really good post would be to look at some of the recent secondaries prices and how close they are too being busted as of 2:45..
PALM 20 cents away. ETFC, busted, cx 17 cents away, AMR busted, SFD buted, HBAN busted, GNW, 25cents, ABX, busted,
others to watch that are right on the edge include.. PAA, LCC, ONB,
September 24th, 2009 at 2:48 pm
cvienne: Perfectly understandable but we’re not even at 1.5% from the closing high of a couple of days ago. There is no true catalyst to move this lower than a shallow pull back. I honestly cannot think of anything outside of a major external event that will push the indices any lower than that. Can anyone truly identify a near term catalyst for a bigger correction than 4%??
September 24th, 2009 at 2:53 pm
Any idea why markets are ignoring BDI. It is slowly going towards to 2000 from the recent peak of 4000.
September 24th, 2009 at 2:54 pm
well Harry- if we knew the catalyst- so would everyone else-
it is never as you expect
September 24th, 2009 at 2:56 pm
A catalyst? like the blindfold slipping off and the number of unemployed being counted in the light? or the realization the real estate prices, commercial and residential, have nowhere to go but down? or that losses will have to be accounted for eventually?
September 24th, 2009 at 2:56 pm
“Can anyone truly identify a near term catalyst for a bigger correction than 4%??”
Sure. Dollar rally – a short squeeze, to be precise. Do you have any idea how many hedge funds are long carry now?
Think of the other markets, Harry, that’s why it is called The Big Picture, this blog ‘ere, mate.
VT – interesting you mention ’87, there are some crash conditions present here: high valuations and few shorts. Wasn’t around then, do you know if there were carry trades/leverage in play back in 1987?
September 24th, 2009 at 2:56 pm
@HW
Can you TRULY think of a major external event back in March that put a floor in the S&P at 666?
Point?
Invisible forces my friend… The BOOGEYMAN!
September 24th, 2009 at 2:57 pm
ahab: That’s my point. I can give you several catalysts to move the markets higher. Hell, we’ve had several in the form of economic numbers over the past few weeks. But what I’m saying is I can’t see anything to move it the other way. Earnings and economic numbers for Q3 would have to be pretty bad and we already know they’re not going to be. That alone carries this rally through the end of Q4.
September 24th, 2009 at 3:00 pm
@HW
& Harry – BTW, many here have ‘discounted’ the possibility of making a return back to 1056-1060 before the close today…
So don’t get your panties all bunched up if it happens…
September 24th, 2009 at 3:00 pm
@rustum: BDI isn’t an important signal for the American economy. The Asian export economies (South Korea, Taiwan, etc.) should react more strongly, I think.
September 24th, 2009 at 3:01 pm
cvienne: “Can you TRULY think of a major external event back in March that put a floor in the S&P at 666?”
Yes, I can think of one really big one – the government. Rigged or not the Fed throwing money everywhere, mark to market, the “stress tests”, Obama’s declaration to buy stocks. All these completely slanted the market in favor of the long side trade. It’s not surprising at all that it has run so quickly.
September 24th, 2009 at 3:04 pm
harry-
i try to give you the benefit of the doubt- but your certitude sends me over the edge-
i understand catalyst to mean the spark that sends it one way or the other- can we agree on that?
so if that is what we mean by catalyst- then we cannot know in advance – can we?
September 24th, 2009 at 3:04 pm
@ahab
now I KNOW Wanger is f411…
September 24th, 2009 at 3:05 pm
…government…OBAMA… that’s f411 baby…
September 24th, 2009 at 3:06 pm
@cvienne: One of f411′s students? Although f411 has been strangely silent recently. Must be busy in the nanotech lab.
September 24th, 2009 at 3:07 pm
Ben and Karen – I figured out where you guys were spending most of your day, I just wanted to say I miss you both ;-)
September 24th, 2009 at 3:08 pm
rustum Says: September 24th, 2009 at 2:36 pm
I am able to trade QID in my 401k by accepting leverage/inverse purchase agreement. Sorry for asking lot of questions. So far, i have tried investing with few Indian ADR’s in 401k.
rustum,
worry not about asking Q:’s Knowledge is found when sought..
though, remember, do your own Homework, afterall, it’s your cache..
September 24th, 2009 at 3:09 pm
Leftback,
Last week, I posted about how manipulated were metal markets. So, I do not believe prices had any fundamental base.
But I also believe markets have been following a script since march and I do not think that in the celebration day, the market can fall apart. Banks are happy with their new lifestyle, they talk about free markets, but they are getting use to this new socialism ( for them) with a lot of gifts and no liability. So, I am pretty sure they are going to send some messages in order to keep thing in the best way for them. So, if some government had incredible new ideas for the G20 about how to keep the banks under control, maybe they would have to reconsider some of those proposals. ” The markets are still fragil, it’s no time to introduce new regulations, we have to wait until economies recover”. Then we all know, that recovery is not coming, or they would hva a new hot regulation.
September 24th, 2009 at 3:10 pm
ahab: Ok, I get your point. But I can give you several “sparks” that will send the indices higher. I’m curious if anyone has any realistic guesses on the “sparks” that could turn it the other way. I can’t see one unless it’s something like a terrorist attack or a major external event.
September 24th, 2009 at 3:11 pm
Leftback,
I have tried to answer several times but my post are erased.
September 24th, 2009 at 3:12 pm
but harry- it is easy to go back in time and say what the catalyst was- anyone can do that
you know- like when Marie Antoinette said- “let them eat cake” when she learned the peasants were complaining they had no bread-
but before she said it- who could say that would be the catalyst to send the peasants over the edge?
*disclaimer*- for dramatic effect only- so you history buffs can settle down right now
September 24th, 2009 at 3:13 pm
@ahab:
>so if that is what we mean by catalyst- then we cannot know in advance – can we?
Might we say a black swan? I believe our friend Harry is supremely confident that we can see the road ahead for miles and miles. I would argue, as Nassim Taleb does, that too much confidence in predictions leads to disaster.
What if…
Foreign governments can’t/won’t buy U.S. treasuries, terrorist attacks, unexpected fall in home sales, dollar weakens further or strengthens suddenly, universal health care passes in the form Democrats want, etc.
All those (and other things) could put a dent in the recent rally.
With that said, positive black swans could also occur and push up the markets more than we expect.
HCF
September 24th, 2009 at 3:16 pm
@ahab
“qu’ils mangent de la brioche.”
September 24th, 2009 at 3:16 pm
@Thor
Thanks… please keep it silent…
September 24th, 2009 at 3:17 pm
@HarryWanger: Any indication the Fed is even taking a toenail out of the markets and this thing falls apart, IMO. Yesterday was an indication of that. They can’t get out, nor can they increase interest rates any time soon. I’m with leftback. This is Japan all over again but on a grander scale.
September 24th, 2009 at 3:17 pm
I can see several – some likely, some not so likely. A massive fire burning thousands of homes here in Socal (just a matter of time). Another devastating hurricane, Israel bombing Iran causing a disruption in oil supplies, a large European bank suddenly imploding, one of the eastern European countries defaulting, swine flu on steroids, one of the shaky large corporations (an airline or a network maybe) going under . . .
HW, I should be shocked by your saying “I can’t think of anything . . .” Just because you can’t think of something doesn’t mean it can’t or won’t happen.
September 24th, 2009 at 3:20 pm
We couldn’t “think of anything” that would send home prices down either…..EVER, right? How’d that work out?
September 24th, 2009 at 3:21 pm
@Thor:
Heehehe… I think Harry would argue that your list is composed of all “external events.” I’m sure he’s looking for “catalysts, ex-external events.” Kind of like the inflation, ex-inflationary items measurement…
=)
HCF
September 24th, 2009 at 3:21 pm
@HW
The truth.
September 24th, 2009 at 3:23 pm
@HCF
Even Taleb has come out and said that what happened in the markets was not a “Black Swan”. This event was seen coming by some.
September 24th, 2009 at 3:26 pm
@AmenRa: By “some”? By MANY is more like it. Doesn’t matter though. Being right or competent in a country that values protecting the incompetent and criminals isn’t worth a damn.
September 24th, 2009 at 3:30 pm
i never play for a crash and i have found that the moment you start getting greedy on the short side and think the market is about crash is when you should cover…..
remember, you need aggressive selling to push the market down and the moment the last person sells b/c they think the market is about to crash is when it goes up…
i just mentioned that b/c the last hour is showdown time..
this was a mo-mo rally based on “green shoots”
we lost both in the last 24 hours…
September 24th, 2009 at 3:30 pm
@AmenRA
He can’t HANDLE the truth!
September 24th, 2009 at 3:32 pm
@AmenRa:
Agreed that the housing collapse was NOT a black swan event… Surely anyone who read Robert Shiller’s 2nd edition of “Irrational Exuberance” could have seen it as a high probability event…
As I recall, though, Taleb has often said that whether an event is a “black swan” or “white swan” depends on perspective. The butcher knows what will happen to the turkey in the days leading up to Thanksgiving. The turkey just happily eats away…
Alas, information (as well as blindness to it) has asymmetries….
HCF
September 24th, 2009 at 3:32 pm
@Thor,
I go where the knowledge is. That isn’t here in TBP comments as of late.
And Wangtard, I had another comment, all that momentum you keep buzzing about. Momentum peaked back in July with lower prices on the S&P. Unless you can provide some data to contradict that right now you can keep that to yourself. Seems that still gives you a novel size worth of reasons to stay bullish anyway.
September 24th, 2009 at 3:32 pm
@Thor
Since Harry is f411…
All he’s waiting on is for Obama to say… “Hmmm…stocks look a little rich here”…
September 24th, 2009 at 3:33 pm
Ben – Ouch, that was harsh.
September 24th, 2009 at 3:34 pm
This market could very well find support at 50 day on the weekly. How about that A123 systems ipo huh?
September 24th, 2009 at 3:36 pm
@ben
“aah that PESKY divergence”
September 24th, 2009 at 3:37 pm
@manhattanguy:
Indeed. Dot-com-era daytrader told me it was just like the old days.
September 24th, 2009 at 3:38 pm
@Wanger:
Monkey see, monkey do….
It is so easy to post the same theory AFTER the host does. I guess every day “we do not see a better report”. The housing report was unexpectedly poor. The hurricane analogy looks even better today than yesterday.
Yesterday the temperature was nice, the sun was shining, today after BR posts his “hedge” we are now looking for a pullback.
Sheesh. No credibility.
September 24th, 2009 at 3:38 pm
You know what? As soon as the G20 is over watch the bottom fall out of the dollar. The dollar needed to show strength going into the meeting. This was to keep the reserve currency talk at bay. But as soon as the last plane lifts off…SELL MORTIMER SELL!!!!
September 24th, 2009 at 3:39 pm
@HW
You MUST think that “durables” tomorrow is going to come in stellar…
I mean, no REAL car buyer would ever just buy on a clunker incentive (lest be labeled a WUSSIE)…
FULL RETAIL is the only way to go, right?
September 24th, 2009 at 3:42 pm
@AmenRa
I’ll go on record as taking the other side of that…(With NOTHING solid to substantiate my gut)…
September 24th, 2009 at 3:42 pm
AmenRa Says:
September 24th, 2009 at 3:21 pm
@HW
The truth.
_________
You beat me to it.
There’s also this: Reality (as in all of the millions of Americans who aren’t able to tread water any longer deciding, en mass, to take their futures into their own hands). We tend to forget those who have been shut out of our recent “prosperity” (for lack of a better word). The stresses on people and the system are great. Mark my words: something is going to snap.
September 24th, 2009 at 3:44 pm
ben22: The momentum peaked in July? That’s ludicrous! I’ll bite – exactly when in July did it “peak”?
Vermont Trader: “this was a mo-mo rally based on “green shoots”
we lost both in the last 24 hours…” Huh??? Indices down 1.5-2% in after a run of nearly 60% and we “lost” that?
Mannwich: Yes, we could and did think of a lot of reasons housing would crash. Bill Bonner laid it out nicely in his daily essays. And, based upon the clear presentation of that impending crash, I bought as much physical gold as I could afford – which at the time was around $385-$400.
September 24th, 2009 at 3:45 pm
AmenRa: Interesting point and worth considering. Thanks!
September 24th, 2009 at 3:46 pm
@HW
i remember seeing obama’s comment on the news in early march that stock prices looked cheap on their “profits to earnings ratio”. he was fed the line to say and muffed it because his teleprompter wasn’t present. but you’re correct, do not try to fight the boys from government sacs and the ppt.
September 24th, 2009 at 3:46 pm
@Thor,
That wasn’t towards you buddy.
September 24th, 2009 at 3:47 pm
Good to know that Wanger seems to never made a bad trade. If that’s so, then I think someone’s due to get slapped by the large hand otherwise known as REALITY.
September 24th, 2009 at 3:47 pm
Uh oh. I see upward movement in the SPX.
September 24th, 2009 at 3:47 pm
Harry,
Ludicrous. Really? The host of this site would disagree, I promise you….
back to the corner for me
September 24th, 2009 at 3:48 pm
dss: I’ve been stating since the day I began posting here that there would be shallow pull backs of 2-4%. Nothing to do with Barry’s post.
AmenRa: Agree on the dollar prop. After G20 it goes down hard.
cvienne: Yes, I think durables tomorrow will be a very big surprise.
September 24th, 2009 at 3:50 pm
Mannwich: I’ve made my share of bad trades but like any good trader I always limit my losses and go with the momentum. It’s clearly been up, so why fight that?
September 24th, 2009 at 3:51 pm
Just curious for those that don’t want to fight the PPT.
Where were those guys at last year? Vacation?
September 24th, 2009 at 3:53 pm
@Wanger: But curiously we never hear about those here, similar to the sports gambler.
September 24th, 2009 at 3:54 pm
b22-
different team in power my friend
September 24th, 2009 at 3:55 pm
@ben
Harry asked “The momentum peaked in July? That’s ludicrous! I’ll bite – exactly when in July did it “peak”?”
Don’t worry bro… I’ll handle this one 4u… I’m just a farmer, so I can handle dirt… You kep yourself clean over there…
HW… How about an RSI at 85 in July (when it was only 74 at the Oct ’07 peak, or 81 now, 100 points above)?
Do you want me to go on?…I will!
September 24th, 2009 at 3:55 pm
Ben – I knew it wasn’t meant towards me. I also didn’t say I disagreed ;-)
September 24th, 2009 at 3:55 pm
If you want to hedge a long portfolio, I strongly recommend listening to Russell Napier in this video:
http://www.bloomberg.com/avp/avp.htm?N=tvtoday&clipSRC=http%3A%2F%2Fvideo-static.clipsyndicate.com%2Fcs-video%2Fvol2%2F2009%2F9%2F24%2F58%2F351%2F04a06d41-e779-4d5e-9520-745762f5fba5.flv
“The fundamental flaw with finance and investment today is people have got a very short holding period.”
“You’ve no chance of getting short-term forecasts right.”
September 24th, 2009 at 3:58 pm
Mannwich: I’ll post any losing trade I make. Right now, I don’t have any. I’m long QLD, DDM, SSO, AAPL. Have been for quite some time, adding on dips. I have no problem posting losers. I just haven’t had any in a while to post.
September 24th, 2009 at 3:58 pm
@ben
Wanger said…”The momentum peaked in July? That’s ludicrous! I’ll bite – exactly when in July did it “peak”?”
I got this one for you bro…You just chill… I’m the farmer so I’m used to dirt…
Harry, how about an RSI at 85 back in July (when the Oct ’07 high was only 74, and recently, hit 81 with 100 more S&P points)…
Do you want me to go on? I will…
September 24th, 2009 at 4:00 pm
@ cacerolo
“Then we all know, that recovery is not coming, or they would have a new hot regulation.”
that is a very interesting oberservation and I completely agree. All the major regulation will be after recovery, in typical government fashion, after the horse has left the barn. Remember when Glass St. was implemented, and taken away at the time it was needed most, as an example.
September 24th, 2009 at 4:01 pm
harry-
you’re a stud-
you should write a book on investing-
oh sorry- think Eric Tyson beat you to it
September 24th, 2009 at 4:02 pm
@CV,
I wasn’t even going to bother. You’d think a “trader” would just know that.
@ahab,
The PPT can have some power for a day or two but not much after that. They aren’t going to ever stop a larger trend for much longer and they certainly aren’t going to stop credit deflation. This is my same old song and dance though. The Fed isn’t in control, they follow they don’t lead, blah blah blah. I’m a broken record.
September 24th, 2009 at 4:03 pm
@Wanger
“AmenRa: Agree on the dollar prop. After G20 it goes down hard.”
How cvienne LOVES the people who have embraced the idea that an UTTER DOLLAR COLLAPSE is ‘bullish on America’…
Yeah that’s it… Start a country, make your currency worthless, live in peace & prosperity!
Note: That statement had NOTHING to do with what I think the dollar will or will not do… I’m simply reflecting on the thought process involved, and the grasp of the fundamental meaning…
September 24th, 2009 at 4:06 pm
Not exactly screaming BUY BUY BUY into the close today.. except on CRAMER, of course.
It is ON, a burger bet. WANGER, if durables is an upside surprise (>+2%), then LB will send you a burger.
The Dollar might be short-term overbought – but there isn’t much resistance above, and plenty of dollar shorts. Any kind of selling or flight to quality tomorrow and the dollar will take off. Looking at spx 1030, oil $60, gold $950.
September 24th, 2009 at 4:08 pm
Watching this bear market rally is like watching the sparks fly off a car’s rims once the rubber has blown off. Exciting while it lasts, but eventually the car (market) will lose momentum and come to an inglorious end.
Been watching too much Reno 911…
September 24th, 2009 at 4:09 pm
@ben
but HW “isn’t” a trader, he’s f411 (pretending to be a trader)…
He’ll sell when Obama says to sell…
September 24th, 2009 at 4:10 pm
Just bought RIMM 74.60 AH. Looks like a steal.
September 24th, 2009 at 4:15 pm
@lefty
“Any kind of selling or flight to quality tomorrow and the dollar will take off. Looking at spx 1030, oil $60, gold $950.”
I’ll 2nd that… Mostly on the spx (although we may see a 1056 print for shits & giggles)…
I’ll defer to your call on crude… I’m not watching gold as much as I’m watching SLV…(a lot of room to go there, AND, on the dollar without even breaking the intermediate trend)…
cvienne is back to being OVER & OUT
September 24th, 2009 at 4:17 pm
Rimm is going down. I would not buy it now. They can’t compete with Apple. Period. A management consulting firm that I used to work for is switching from BB to iPhones. And they have over 100,000 employees. That’s huge.
September 24th, 2009 at 4:18 pm
“How cvienne LOVES the people who have embraced the idea that an UTTER DOLLAR COLLAPSE is ‘bullish on America’…”
cv- that is what the merry ‘ol Bank of England thinks about the £ and the UK- which i posted early this AM on another site i have been known to frequent from time to time
September 24th, 2009 at 4:18 pm
But RIMM is a “steal” here. It’s so easy being an inwestor.
September 24th, 2009 at 4:19 pm
@HW:
“Reports Q2 revenue $3.53B vs. consensus of $3.62B .”
“Sees Q3 revenue $3.6B-$3.85B vs. consensus of $3.92 .”
Q4 will clearly beat.
September 24th, 2009 at 4:20 pm
I’m turning my 2 year old blackberry curve for an I-Phone any day now (and I’m an Apple-cynic).
The old beat by a penny (three pennies, actually) trick. Jack Welch must be running that company or his ghost.
September 24th, 2009 at 4:21 pm
manhattanguy: added to my AAPL position AH as well.
emmanuel: Margins, EPS beat. Already up a buck from where I bought it.
September 24th, 2009 at 4:21 pm
What a day.
SPX
1. Bearish harami confirmed on the.
2. Daily TLB trend tested and no reversal.
3. Midpoint of weekly TLB range tested and held.
4. Gold had a reversal on the daily TLB (needs a weekly close below 978.80 to reverse the weekly TLB).
I need a drink.
September 24th, 2009 at 4:25 pm
RIMM might have been, ….might have been a “steal” at 35. At 80…..maybe not so much. I love those that bash technicals, claim fundamental trader and call stocks that don’t pay a div a “steal”
Looks like Wankster might get to post his first losing trade tom.
September 24th, 2009 at 4:25 pm
@Amen
Well, while you’re relaxing with your drink I’ll give you my NCAA ” September Pick of the Month”
Tonight…Take SOUTH CAROLINA and the points (against Ole Miss)… The line is jumping around between +3.5 – +4.5… No bother, just take the points… ;-)
September 24th, 2009 at 4:26 pm
Mannwich: “But RIMM is a “steal” here. It’s so easy being an inwestor”. Yes, somedays it is. Being able to grab RIMM at 74.60 and add to my AAPL @ 181.40 is about as easy as it gets.
September 24th, 2009 at 4:26 pm
What were RIMM’s estimates at the beg. of the year. Did they “beat” those? Never followed that stock.
September 24th, 2009 at 4:26 pm
AmenRa-
you have some good observations- interesting take on the G20-
so many scenarios being bandied about- my head is spinning
September 24th, 2009 at 4:26 pm
Almost forgot.
USD had a reversal on the daily TLB (closed above 76.68). I’ll begin to worry if it has a weekly close above 78.31 which would reverse its current trend. If that happens I wouldn’t be long equities over the weekend.
September 24th, 2009 at 4:27 pm
I guess Harry likes tech a lot? Shades of 2000 pre-crash?
September 24th, 2009 at 4:29 pm
@ahab
Re: the “symboitic” relation between the US & UK
Jeff Spicoli: ” So what Jefferson was saying was, Hey! You know, we left this England place ’cause it was bogus; so if we don’t get some cool rules ourselves – pronto – we’ll just be bogus too! Get it?”
September 24th, 2009 at 4:30 pm
Manhattan – good call!
September 24th, 2009 at 4:31 pm
AmenRa,
Agreed, too early to say anything is really going on here with the dollar just yet but it’s at least somewhat encouraging for dollar bulls.
@Harry,
That’s pretty amazing you were smart enough to set that limit order at 74 fully with such confidence that you’d be able to pick it up there, and you did this without any TA. Impressive…specially considering you only expect shallow dips all around, but I’m sure you didn’t mean that for individual stocks so no need to clarify.
September 24th, 2009 at 4:33 pm
@Amen Ra
“Almost forgot.
USD had a reversal on the daily TLB (closed above 76.68). I’ll begin to worry if it has a weekly close above 78.31 which would reverse its current trend. If that happens I wouldn’t be long equities over the weekend.”
Now you’re seeing what cvienne is seeing…
September 24th, 2009 at 4:33 pm
don’t worry harry-
the indices will lead the way- i have found that when they go up the market follows- sometimes the indices go down too- and then the market . . .hmm . . .
causation?
September 24th, 2009 at 4:35 pm
@HW
“Being able to grab RIMM at 74.60 and add to my AAPL @ 181.40 is about as easy as it gets.”
at 173 AAPL you’ll be saying… “Wow, I coulda had a V-8″
September 24th, 2009 at 4:35 pm
RIMM, AAPL? All we need now to round off the portfolio is Baidu and Google and we’re back in 2007… Happy days again!
HCF
September 24th, 2009 at 4:37 pm
ben22: I get nothing but grief here about my market opinions and people tell me they want to hear what I’m trading. I posted at RIMM to buy after the initial frenzy of sell off AH. It almost always works that way. It’s trading psychology. So, I posted my two AH trades.
September 24th, 2009 at 4:38 pm
Goog is going to $600-
Cramer said so
September 24th, 2009 at 4:39 pm
Durables, consumer sentiment and new home sales tomorrow. Hmm.. could be a barn burner.
Wanger did you take the burger bet on DURABLES or are you ALL HAT and no cattle?
To repeat, LB wagers that durables will not exceed +2%.
September 24th, 2009 at 4:39 pm
cvienne: Doubtful. My avg on AAPL is around 121. If it falls back 4% from my AH buy, I’ll sell out my entire position for a very nice gain.
September 24th, 2009 at 4:40 pm
@HCF
He’s more the JDSU type… to me…
September 24th, 2009 at 4:41 pm
Time for companies to start fessing up about their financials. Can’t hide the garbage for too long. What better time to come out with it then after a 60% run up in the markets?
September 24th, 2009 at 4:42 pm
leftback: The consensus is for +1%. It’ll easily beat that. You’re 100% higher than the consensus. If it hits +2% this market will rocket higher. I’m looking at close to +2%. Tough to go higher than 100% beat on analysts expectations.
September 24th, 2009 at 4:42 pm
Harry,
Nice trade, you are the f*cking man. Is that what you wanted? But really, what does someone that bashes TA care about “trading psychology” Might be a little easier to take you seriously if you didn’t seem to contradict yourself all the time.
At least you have stops man, I’ll ease up, promise.
September 24th, 2009 at 4:43 pm
@Harry
Can I just hand all my money over to you right now? PLEASE?
It’s burning a hole in my pocket!
Actually it’s NOT… I’m just a farmer and I have only freshly harvested soybeans at the moment (not trading profits)… (Most of which [soybeans] I’m going to lay on SOUTH CAROLINA +4 tonight)…
You can have the rest…
September 24th, 2009 at 4:48 pm
@Manny
“Time for companies to start fessing up about their financials. ”
all in good time, my friend…
ACTUALLY…I’ve said this before, and I’ll say it again…
cvienne ACTUALLY may be in Wangers camp a little here… The only difference is, cvienne thinks a ‘heftier’ pullback is in order (960 maybe)… Then you get the EOY windowdressing (Q4 ’08 vs. Q4 ’09 are going to be cupcakes)…
So cvienne thinks that Wanger may just be right and the ‘bear rally’ ain’t over…cvienne IS NOT, however, buying 4% dips into the end of Q3
September 24th, 2009 at 4:49 pm
ben22: I’ve been consistent in my views on chart gold digging. I’ve also stated that I like candlesticks for short term psychological moves. It’s all about trading psychology. How many times do I have to repeat this??? Is it really that difficult for you to understand??
September 24th, 2009 at 4:49 pm
poor Harry-
just trying to make friends-
tough crowd
September 24th, 2009 at 4:52 pm
@ahab
He needs to get into a good fantasy football league…
No smack talk there! :-)
September 24th, 2009 at 4:53 pm
Ok. I’m off to play tennis. Looking for good economic numbers and sentiment in the morning. Should be exactly what the market needs to complete the back fill and move up.
September 24th, 2009 at 4:55 pm
Ahab – I was thinking the same thing. I’ve decided to just let it go. To his credit, he has been telling us what he is in right now, how he does in these trades will be clear for all of us to see soon enough. The bashing from the TA’s is just a wee bit transparent though.
September 24th, 2009 at 4:57 pm
@wanger
I see you have completely ignored the housing report that you said yesterday was going to be so good:
HarryWanger Says:
September 23rd, 2009 at 6:11 pm
The severe storm/tornado analogy works much, much better here. Go back report by report and read the improvements in everything from industrial production, manufacturing, housing leveling off, job losses slowing rapidly. Every day we see a better report. Just wait until Thursday and Friday’s reports on home sales and durables. That should quiet quite a few critics.
Storm past, clean up well underway.
The housing report stunk up the joint. You have no credibility as only a fool makes predictions about things they know nothing about.
Your critics are not going to be quiet when a fool makes predictions just to show us how smart he is, turns out to be dead wrong, continues to post shit to make himself look better, but tries to ignore all of the wrong predictions.
You are not man enough to admit that you were wrong about the housing number, not man enough to own his own mistakes as doing so reveals that you have no credibility.
One day the sun is shining, the next day, ooops, now we are looking for a correction. Again, not man enough to admit that you are nothing but a sad bullshit artist who has a need for attention.
The Yahoo message board has it right, few people are as reviled as you are on that board, too bad we don’t have the same ability to ignore you that they do.
September 24th, 2009 at 5:05 pm
@ben22
>>RIMM might have been, ….might have been a “steal” at 35. At 80…..maybe not so much. I love those that bash technicals, claim fundamental trader and call stocks that don’t pay a div a “steal”
Looks like Wankster might get to post his first losing trade tom.>>
No, he will tell us how he took his “profit”, before the thing tanked below his b/e. All readily provable, of course. He bought at $74.60 and sold it right back out at $76.10 the next minute! as he is so nimble and such a great trader.
Now that it is at $74.55, he has a losing trade…
September 24th, 2009 at 5:06 pm
Rimm,
Look out below! $74. 40, 39, 38, 37, 36, 35,34, 33,32,31,oops, 16!
September 24th, 2009 at 5:08 pm
cv-
man- every time I think of Chris Johnson i become agitated-
i wonder if Obviously Offensive would do an even trade for Portis :D
September 24th, 2009 at 5:08 pm
Hilariously Wrong??
LOL
September 24th, 2009 at 5:09 pm
Oops! $73.65
September 24th, 2009 at 5:10 pm
Professor Dooch McBaggins at your command….
September 24th, 2009 at 5:11 pm
dss-
i think you were the one i was mentioning the other day who pulled all the old comments for Wanger- I knew someone did a little research on that-
irritating wanker isn’t he-
some people just don’t know how to make friends :-)
September 24th, 2009 at 5:14 pm
DSS – in all fairness, every competent trader on this site has on more than one occasion made several wrong calls. I’ve only been here for a little over three months but from what I can see so far, no one person, no matter what system or technique they use, has been consistently right in their predictions.
September 24th, 2009 at 5:14 pm
@ahab
I’m not on the same page with you on CJ & Portis…What do you mean?
September 24th, 2009 at 5:18 pm
my last opponent- Obviously Offensive- had Chris Johnson-
racked up about 45 points or so-
Portis netted me about 7 or 8 :-(
September 24th, 2009 at 5:19 pm
@Thor
“no one person, no matter what system or technique they use, has been consistently right in their predictions.”
Precisely – No one TRIES to be… You make your calls & limit your damages…
Preservation of capital, my friend…
Might I add? If someone is inherently BEARISH this market (as many are)… If you’re breaking EVEN this year, you’re doing well…
September 24th, 2009 at 5:19 pm
DSS – missed the last part of your post, sorry! Could you link us to the yahoo posts once again if it’s not too much trouble. If HW is as consistently wrong as you say he is then I retract everything I said earlier ;-)
September 24th, 2009 at 5:20 pm
Agree with you Thor…that includes me. It is hard to trade this market using common sense.
September 24th, 2009 at 5:22 pm
@ahab
CJ played Houston last week (who can’t stop the run)… This week he goes against the 2nd toughest nose tackle in the NFL (Kris Jenkins), a coach, Rex Ryan who knows how to game plan against his speed, and some ‘speedy’ contain linebackers (like Bart Scott)…
Portis goes against the Detroit Lions… But I still think he might put up pedestrian numbers (vs. expectations)…
September 24th, 2009 at 5:22 pm
we’ve all screwed up thor-
but we are not so naively sure of ourselves that we think we have a “sure thing”-
my last trade was a big bust- all cash since- watching from the sidelines
September 24th, 2009 at 5:25 pm
cv-
true- but portis has always underwhelmed me- ever since he was traded from denver-
i could see the ‘skins losing that game- they are almost unwatchable- hard to be a fan
September 24th, 2009 at 5:27 pm
I do have a question for the TA’s though. How do you guys square the techniques you use with the fundamental changes we’ve seen in the economy over the last couple of years? Massive quantitative easing, printing of money, fewer big players moving the markets, etc . . . . If the market is being pushed higher by someone or something, wouldn’t that imply that the old ways of viewing the market no longer apply?
Not trying to put anyone on the spot or pass judgment on TA, just curious. . . .
September 24th, 2009 at 5:32 pm
The oil chart is worth a look. Remembering last year I think oil collapsed a wee bit before the waterfall. Not that I think a waterfall imminant could be sign though.
September 24th, 2009 at 5:32 pm
@ahab
If you read my PREDICTION post in the fantasy league… I have it being HIGHLY PROBABLE that the Lions knock off the Redskins in that game…
September 24th, 2009 at 5:36 pm
@Thor
Simple… With TA, there is always the next “level”, which after all, are simply INFLECTION POINTS…
You wait for the move, assess the sentiment, and trade from there…
If you listen very closely, you’ll hear comments from lefty (and others), about WAITING and “fading the move”… That’s what it means… You expected the market to reach an inflection point at a certain moment, IT DOES, then you act accordingly…
THAT’s where you catch momentum, NOT BEFORE…
September 24th, 2009 at 5:36 pm
Thor, TA is incredibly useful but it’s just a tool. QE obviously is a huge factor but it is really the juice that alters the VELOCITY and AMPLITUDE of moves (hence this rally has been huge and rapid) but when it’s over it’s over and then the TA reasserts itself with a vengeance.
Remember my friend that QE is a two-edged sword. Infinite QE is no good, contrary to what many have stated here, b/c it would produce inflation, blow up the bond market and reduce the stock market to rubble. Zimbabwe baby. Despite Green Shoots, the FED and treasury are walking a tight-rope and nobody should lose sight of that fact.
September 24th, 2009 at 5:39 pm
@Thor
Note: Sometimes, ACTUALLY MOSTLY, it’s not that easy…
cvienne has had MANY of those INFLECTION points on the dollar in the past month (and each time the market CONTINUED to move against me)…
at that point you have to react on gut… Do you bail, or do you stay with it?… Re: Dollar… I still don’t know if I’m on the right side or wrong side…
September 24th, 2009 at 5:42 pm
Cvienne & Lefty – Thanks! so if I understand what you’re saying, TA is just one of the many tools you guys use to trade rather than being the only tool you rely on. That makes sense to me.
September 24th, 2009 at 5:45 pm
cv-
well cvienne- they can’t lose all 16 games this season- could they? now that would be unprecented- and never matched again-
32 losing games? the odds are against it and the ‘Skins could be the ones to cause riots on Detroits streets for allowing the Lions to win a game :D
September 24th, 2009 at 5:51 pm
@Thor
And I’m going to give you YET ANOTHER story about “inflection points”…
I’ve made the call numerous times today that I’m taking SOUTH CAROLINA (+4) against 4th ranked Ole Miss tonight in NCAA Football… I even made it my NCAA September Pick of the Month…
Why?
TECHNICAL ANALYSIS
It’s a mantra for me… Statistically, a HOME DOG on a weekday game “under the lights” has PAID out for quite awhile in recent years…
I know only “just a little” about Ole Miss ( I know I like their coach, Houston McNutt, but I think their QB Snead still has something to prove on the national stage)…South Carolina? Most people are familiar with Steve Spurrier, but what many don’t know is that SC has a great defense, and a QB who is incosistent, but has BIG PLAY capability…
None of that really matters… I’m playing the STATS & the 12th man (the home field)… I’m also playing the fact that the Las Vegas Sportsbooks set a 4 point line on this game (which could EASILY be a 7 point line because Ole Miss is ranked #4)…
The last I checked, Sportsbooks don’t like to LOSE money (and 84% of the money is being wagered on Ole Miss)…
Now YOU TELL ME whose going to go home happy…
Note: In the end I could be WRONG, but I simply stick to my TA over time…
September 24th, 2009 at 5:52 pm
@Thor
“TA is just one of the many tools you guys use to trade rather than being the only tool you rely on.”
Basically, in the end, we just try NOT to be “tools”… :-)
September 24th, 2009 at 6:02 pm
Thor,
I agree with what lefty said, TA is a tool, a very useful one to give yourself guidelines. Despite all the things you talk about that are going on we still somehow find a way to gravitate towards the inflection points CV is talking about. Sometimes we hit them right on, sometimes we come close, other times nothing. Many will tell you, for example, that fibo’s never actually happen, and they don’t happen as much as some would lead you to believe, however, they still serve as magnets in many cases and should not be ignored imo. A broader idea on using TA/wave theory might be described best by taking a few snips from Elliot Wave Theory which I’ll use below. I will warn you that most people would say it’s nonsense but you seem interested in at least knowing:
Do with this information what you want:
There is a harmonious relationship found in the Golden Ratio, which is basic to nature’s laws and forms part of the fabric of man’s physical, mental, and emotional structure as well. … Human progress seems to move in sudden jerks and jolts, not as in the smooth clockwork operation of Newtonian physics. ….these shocks are not of only one noticeable degree of metamorphosis or age, but occur at ALL degrees along the logarithmic spiral of man’s progress, from Minuette degree and smaller to Grand Supercycle degree and greater. To introduce another expansion on the idea, we suggest that these shocks themselves are part of the clockwork. A watch may appear to run smoothly, but its progress is controlled by the spasmodic jerks of a timing mechanism, whether mechanical or quartz crystal. Quite likely the logarithmic spiral of man’s progress is propelled in a similar manner, though with the jolts tied not to time periodicity, but to repetitive form.
Any rejection of the Wave Principle on the grounds that it is deterministic leaves unanswered the how and why of the social patterns we demonstrate in this book. All we want to propose is that there is a natural psychodynamic in men that generates form in social behavior, as revealed by market behavior. Most important, understand that the form we describe is primarily social, not individual. Individuals have free will and indeed can learn to recognize these typical patterns of social behavior, then use that knowledge to their advantage. It is not easy to act and think contrarily to the crowd and to your own natural tendencies…..
it goes on but maybe that helps you start?, from Chapter 5 of Elliot Wave Theory.
MEH had linked up several papers on fractals a long time ago and after spending time studying them (and still doing so) they have done a great deal for my development as a trader. Also related to this.
Thor, the more things change, the more they stay the same….
September 24th, 2009 at 6:05 pm
@Thor
TA is just a way to find out where the market is at this place in time. Is is looking to move up or down? This is what I use TA for.
September 24th, 2009 at 6:10 pm
@AmenRa
…and I want to thank YOU, my friend…because the 3lb is now something on my radar screen (which I’d NEVER heard of before)…
What’s most fascinating to me, thus far, is that I haven’t been able to decipher a REVERSAL yet (mainly because since the summer, there hasn’t really been one)…
But It’s OTHERWISE allowed me to be MORE patient in waiting out an eventual reversal (and in other cases – staying IN trades and not selling early)…
Thanks, my friend (you’ve saved me some money – whether you know it or not)…
September 24th, 2009 at 6:11 pm
@AmenRa,
I agree with CV, you have posted some really good charts lately. Thank you.
September 24th, 2009 at 6:13 pm
@AmenRa
Actually, while I’m at it… I’ve gotta ask you a question (because I’m still a rookie at this 3lb stuff)…
What does BAC look like to you?
It seriously looks to be breaking down from my perspective…
Thoughts?
September 24th, 2009 at 6:18 pm
@Thor
Re: what ben said (6:22)… Well said ben!
Golden Ratio = architecture
…and don’t you think that biological cells themselves, (or software programming, in your field), conform to architecture?
September 24th, 2009 at 6:47 pm
I’ve been wrong since March…..and I still think I’m right….LOL
My “trading” account is 30/30/30/10 in SDS/QID/SRS/GLD
No shit….I’ll ride it down to zero before I’ll stop believing.
Even then I won’t…but I won’t bet anymore.
But I’m not a trader…and this isn’t my life savings here.
That’s mostly in RE, Gold, Silver, and MCD.
What’s my point??
Preservation of capital/assets is absolutely the most important thing to me.
But there isn’t a thing wrong with gambling if its with money you can donate to your education.
Life tuition if you will.
September 24th, 2009 at 6:48 pm
Yes! – Thanks Ben, especially for always explaining yourself in a way I can fairly easily comprehend!
September 24th, 2009 at 6:52 pm
@cvienne
BAC daily TLB is trending down since 9/2/09. Reversal is at 17.91
BAC weekly TLB is still trending up. Reversal is at 16.42 (we’re getting close).
BAC monthly has no trend but did reverse up in August.
It’s also having problems closing above the 55EMA on the weekly charts for the last seven weeks.
September 24th, 2009 at 6:52 pm
Chart of BAC w/TLB: http://tinyurl.com/yb4hea7
September 24th, 2009 at 7:00 pm
@cvienne
BAC hasn’t made a new closing low since 9/2/09. Current range is 16.40 to 17.91. I guess they’re waiting on earnings season before letting things get out of hand.
September 24th, 2009 at 7:21 pm
@Amen
Thanks Amen… I just know it’s trending that way…fast!
September 24th, 2009 at 7:55 pm
@Ben22 6:02 – Being a cheap SOB, and instead of buying them at a bookstore, I am still waiting for my books to come in, but that you for posting the above.
September 24th, 2009 at 7:56 pm
Since you brought up BAC I took a look at XLF. It’s moving towards its weekly TLB reversal at 14.35 which also just happens to be close to the 55EMA at 14.33. Oddly enough the daily TLB reversal is 13.79 so I usually take the lower of the two as the point of consideration.
Chart of XLF weekly: http://tinyurl.com/y99dldu
September 24th, 2009 at 8:07 pm
@cvienne – Yearly you posted
“I’m watching SLV…(a lot of room to go there, AND, on the dollar without even breaking the intermediate trend)…”
I am assuming you ment more room go (down) can you explain what you are looking at, I believe Silver is going down and two weeks made my very first stock pick in ZSL – it was not very much (Cashed out one of the kids college fund…… Heck he wanted to work at McDonalds till he was 72 anyway – Just Kidding) But figured if I don’t get my feet wet, I won’t learn how to swim, one baby step at a time though.
Anyway after buying it I have watch the price go lower and lower, but I believe silver was selling at too high of a price and figured it would eventually come down, well ZSL is almost at the l bought in and am just currious what you are seeing and to test if my own line of reasoning.
I was going to wait for a 4% pull back and jump all in for the next 20% wave, but heck I don’t want to take the easy money.
Thanks
BTW if you get this and respond to it, I am heading out for a couple hours but will read it when I get back.
September 24th, 2009 at 10:38 pm
@franklin420d:
Be sure to use stops when messing around with the leveraged ETFs. They can get away from you quicker than you think.
September 24th, 2009 at 10:52 pm
Emmanuel thank you for the heads up, and I found that out :)
That is why I want to take it nice and easy at first, there is a lot to learn. Just an FYI, I am on the west coast, so I priced it out and set it to buy on market open, by the time I actually made the buy it had climb about 12 cents in price, then made the pull back, learned a lesson there too.
We are not talking beer money, but by no means is this big bucks either, I know a lot of you people might think it is crazy that I take an active intrest now instead of when the market stablizes. But I think the crazier thing to do is park my money in a 401k or mutual fund.
Again thank you very much for your input.
September 25th, 2009 at 3:20 am
C!!
Nice call on SC…they looked good…
Hear about that shit with the KU football and basketball teams getting in fights with each other?
Kansas….pfft….
I’ll say no more.
September 25th, 2009 at 4:59 am
Stop making sense; you are moving forward using your rear-view mirror, walking backwards into the future. Common sense for the common-ers keeps them poor.
“Thinking is the hardest work there is, which is probably the reason so few engage in it.”
— Henry Ford
September 25th, 2009 at 7:40 am
@franklin420d
Re: SLV & USD
All I’m basically saying is the two tend to trade in opposite directions of each other…
The largest trendline in the dollar (which began in March) is still fairly far from being broken… So I’d say there is a possibility for a dollar rally to even extend for a couple of days before meeting that resistance and making a statement…
Of course with silver it’s the other way… Silver appeared to “break out”, but is now pulling back (which helps ZSL)… But people who are “holding” ZSL need to understand they’re holding a “2x” etf… That means, they pay well at the onset, but then tend to have a diminishing rate of return… They’re truly for ‘quick hits’ (not investments)…
September 25th, 2009 at 7:51 am
@Christopher
Thanks! I started to get a little worried when SC had 5 straight 3 & outs in the 4th quarter (and weren’t using up much clock in the process, but the defense stepped up in the end.
It’s always nice to put a 5 unit play in the books (especially when it’s your “Pick of the Month”)…
September 25th, 2009 at 8:50 am
Cvienne thanks man, yea I have lots too learn