"The wiseacres on the Street are quick to cloak their opportunistic bullishness in the guise of being contrarians, making a lot of noise about how everyone's so blamed bearish. The true contrarians these days are not the optimists, but, rather, those of us who believe that most investors, for all they might profess a negative tilt for the nonce, simply haven't a clue as to how bad things might get." - Barron's, March 31, 2008
Set aside all the other stuff. Set aside the sentiment indicators and CNBC. Ignore the bottom-fishers and the volatility readings. Turn your back on the pundits and the prognosticators. And just ask yourself this.........
Looking at these quarterly charts of the major indexes, do you consider them bullish or bearish? It all comes down to that. Because we immerse ourselves in the tick-by-tick gyrations of every trading day, it's easy to lose sight of the big picture. So sometimes we need to make the granularity much, much cruder to gain true insight. So ask yourself that question, answer honestly, and act accordingly.
My decision to exit my puts this morning turned out to be spot-on. IWM's pause at Fibonacci support was a picture-perfect exit.
However, we have traversed all the way from the 50% line to the 61.8% line, so I'm comfortable getting back in again. My other 65 positions have been happily sitting there. But once the IWM got to about 69.10 I felt it was safe to get back into the water. The graph below shows where I got out (the green circle) and where I re-entered (the red circle).
This morning, I closed my index puts on $NDX and $SPX. The profits were nice, and I don't have any concrete reason for doubting those profits might increase, but the notion of a consolidation and breakout from these levels worries me too much.
I haven't had any time to check my charts out this morning, but I'll let my stops do their work. By the way, one gent asked if, based on my "no activity in first 30 minutes of the day" rule, if I canceled all my stops each morning and re-established them half an hour into the open. The answer is an emphatic "no!" By "no activity" I mean for a goober like me to be messing around. I am perfectly happy to let my stops stand sentry day and night. That's what they are there for.
Happy weekend, everyone. I had a terrific trading week, and although I'm still concerned that we're between a rock and a hard place in the markets (in the middle, uncertain what is coming next), there's nothing I can do to change it, so I'm just doing the best I'm able.
The task before us is plain (again, not that we can do anything about it): push beneath the "shelf of support" ranging from 645 to 680. Do that, and it's an all-clear for the bears.
The problem is that you can look at the activity on the IWM and construct a bullish or a bearish argument out of it. One could take the past 60 days of the IWM and plausibly state that we've just done a retracement back to a cup with handle breakout, and it's ready to blast higher to new highs for 2008.
Yet one could take the exact same graph and say that the broad downtrend is still very much intact (the red line below shows resistance) and the brief rally has been broken, retraced, and has now failed (the green line).
I lightened up quite a bit on index holdings due to this uncertainty and am more weighted to sectors I think are more cleanly ripe for a fall, such as oil services.
I've mentioned Apple a few times (all of the following are stocks on which I own put options). The resistance level is super clean.
ACL seems to be wrapping up a nice topping pattern.
I've had ANF for a little while, and on Friday it finally started moving.
APA is a higher risk play, due to its strength, but any weakness in oil could make for a juicy 20 point drop (and thus a huge jump in the option value).
Ah, our old friend Chipotle is back. I haven't played this in a while, but I'm ready to rumble again.
I haven't done anything with GENZ in years, but I've got puts on this since the pattern is mildly interesting.
Lastly, CEPH really has me intrigued. The neckline isn't straight across, but that doesn't bother me. I have big hopes for this one!
We've got a new puppy in the house, so I'd better go romp some more. See you Monday.
The IWM fell today, magnificently nailing its 50% retracement level (smack dab in the middle of the two big Fibs). Breathtaking!
I
sold my RUT puts near the end of the day, but I'm still holding onto my
NDX and SPX puts. Like a total coward, I sold a block of IWM puts
earlier today (at a profit, but a profit that would have been three
times larger had I not wussed out). Anyway, it was a great day, and
I'll do a post late tonight with my musings.
For a while, I mentioned the "rectangle of resistance" on the IWM. That rectangle was half-penetrated early this week, and although the market has softened up a bit, now the bulls have something equally formidable in their favor - - a "shelf of support" (I'm in a phrase-coining mood this morning). So we're between the proverbial rock and a hard place at this point; it's going to take some serious buying by the bulls to push above resistance, but it's going to take even more dramatic selling by the market by melt through all this support. It's a tough call.
On a shorter-term, positive note, I got out of my APOL puts this morning for a profit of about 120%. Given the 20% plunge in price, that's not a huge profit, but my option plans tend to be relatively conservative (in the money, several months out). So it's not the multi-hundred percent gain I'm sure others had. What's particularly nasty about these deep in the money puts is that the market is barely willing to pay intrinsic value for them, and sometimes the bid is even less! Oh, well. I'm out and I took a nice profit, so how can I complain?
After a few days at Prophet North, I'm heading back to my beloved Palo Alto. Thus, my post will be quite late today.
But what a day it was! I think God heard (or read - - He has good taste) my bellyaching about the market and His Divine Trading Account intervened with massive selling. So I ended up wayyyyyyyyyy in the green today.
I trust my beloved readers did well too. I'll write to you again tonight from the Silicon Valley. Oh, and by the way, I've gone back to the original Disqus settings. Too many people remarking about quirkiness, so I'd rather keep the user experience superb.
If I were a true day trader, I would have been smart enough to bounce out of all my indexes when the IWM kisses its lower retracement level. But I'm more of a swing trader, and hence my big fat green profit swung to a big fat red loss. So here we wait, ad nauseum, for a level to be broken. To the downside, God willing.
OK, I need to talk about something - anything - to get Hillary's face off the top of Slope. So it'll be AAPL.
I've got puts on this, and I might get some more at these levels. I like how this price has broken its major trendline, fallen hard, and now has retraced to close its gap.
Here's a closer view.
It was weird to see the headline "Worst GDP in Six Years" this morning with a gain on the Dow next to it. Oh, well. As of this writing (only about 40 minutes into the open), it looks like the SPX and NDX are down, and the Dow has whithered away to just about flat. Naturally I always worry that the bad news is already priced in!
OK, I am a fast typist (Sure, you want a piece of me? I'll take you on!), but I am nervously eying my battery indicator since I only have a few minutes of juice left. Start the tense music!
Today was a pretty good day. Our friend the Fibonacci continued to scare the IWM away. Hold that line!
Volume continues to shrivel, though. Do you realize today's IWM volume was one THIRD of what it was back on March 14th.
All that matters to me, though, is that we continue to carve out a series of lower highs and lower highs. Given that, we can rest assured we can trade bearishly and profitably. Violate that trend, and I get grumpy.
Since I am frantically trying to get this post done before my laptop goes kaflooie, I will simply post a few of my favorite positions now, without comment. I have puts on all of these. You can tell they tend to be retracements, by and large. I hope some of you yield some good ideas from these examples!
Well, it's hardly a rout, but 100+ points off the Dow as of this writing is a nice change. My index puts (SPX, NDX, RUT, DIA) are all doing dandy.
I had a field day over the past few weeks with oil and gold shorts, and I got out last week. I've been getting back in - - in some cases, too early - - although my interest in oil shorts is much stronger than gold shorts. I think gold as as commodity could shock everyone, heading to $2,000/ounce, so I'm not getting too freaky with the shiny stuff. I do find ABX an interesting "kiss the trendline" opportunity, so I've got a small position on those puts.
The slippery stuff, on the other hand, is getting possibly enticing again.
The IWM is pretty key at this point as for the indexes. The next Fib level to break is 69.05, and that's a ways away at this point (IWM is 69.67 as of this writing). IWM is in between Fibs at this point, so we'll just have to bide our time.
The surging popularity of Slope isn't lost on political pollsters, and in a desperate move to turn their fortunes around, the Clinton campaign contacted me not long ago so that Hillary herself could provide running commentary during the trading day.
Sadly, given the market's behavior of late, this went poorly for both viewers and candidate alike. I managed to get a screen shot off Slope TV.
It seems to me that it's about time that Something Happen. After all, weren't we getting a Bomb-Per-Week recently? C'mon, market newsmakers - show your stuff! Let another investment bank fail! Expose a fraud! Something! This is getting dull! You can even see the dullness in volume shriveling up. It's less than half what it what a week ago!
Oh, this is totally random, but I offer you the least surprising event of my Facebook news feed today.
The Fibonacci retracement has been doing an admirable job keeping a line in the sand from being crossed. I hope it continues to do so.
What if it doesn't? What if the IWM, in spite of yet more economic bad news today, pushes above the 70.35 level? Well, there's a much bigger line in the sand above that. Of course, if it crosses above that, I don't even want to think about it.
I am somewhat heartened that maybe this little bull run has petered our. At least that's what the slow stochastic is indicating to me. I've tinted in prior instances of the SS pushing above the 80 line.
You can see in the lists on the right column what my holdings are, and investment banks are scattered here and there. When I look at a graph like this, the possibilities to me are very exciting.
I'm going to close it here. I'm not as chatty as usual, because there isn't nearly as much to chat about. But I'm waiting for another shoe from the centipede to drop. Until then, we wait. Like Hillary.
Well, it's nearly midnight on Monday as I'm typing this, and I suppose I felt compelled to put up a decent post in light of the lame-ass ones I submitted Monday. Call it blogger's guilt.
I get the feeling investors have severely impaired short-term memories. Anytime there's a lift in the market, the assumption is that all is well, and all the problems people were screaming about just a few days prior seem a distant memory.
Of particular interest to me is watching securities that are getting pummeled to death have frequent "pauses that refresh." You can just picture during every one of these instances people saying, 'Well, it looks like a nice base is forming and the selling is over. This looks like a buying opportunity." And then the stock breaks, and it's on to the next delusional bout. Just take a look at CFC to see what I mean.
I took advantage of the big surge up in prices lately to get more aggressive on the short side. I made some nice profits on the pop between last Thursday and today. I found the volume on IWM especially interesting. Just look at how the volume is shriveling up each day of this bull run. Not much oomph behind this rally, is there?
Of course, the insanity behind all the investment banks is a big part of this recent run-up. BSC is a basket case. But look how powerfully the XBD has rallied. To me, this retracement to the Fibonacci retracement level simply hammered home the shorting opportunity for me.
Here are a sampling (out of 50 open positions) of charts on which I have bearish positions. I've embellished them a little to help illustrate my rationale.
All right, my guilt is passed. Off to bed...........see you Tuesday.
I started the day with fifteen call positions (including some big ones on FXI and OIH), and I sold 'em all. Every one of them. I made a nice profit on just about every one, with a couple of minuscule losses here and there.
So I'm 100% in bear mode again, having exited during today's big rally. I've got 50 positions - 25 in one account, 25 in the other - and all of them are puts, including a few monster-sized index puts.
See, I may be a traitor to the cause, but my betrayals are measured in hours, not months. I'll excuse myself at this point because I'm doing an "open house" on Investools.com. I'm not sure if I'll have time to post again today, but I hope my multiple posts during the Easter weekend grant me some forgiveness among you.
I am enjoying some nice profits on the calls (yes, calls) I bought last Thursday. But I feel seasick fighting a primary trend, and I still think that, on the whole, we're in a bear market.
I'm taking profits on my calls in FXI and OIH. I'm going to reverse my position on OIH and go into puts, and I'm accumulating $RUT puts at these levels as well.
This is ridiculous. It's something like my 4th post over the long Easter weekend. Anyway.
I read with great interest an article about Martin Armstrong's Economic Pi Cycle. I am always seeking an orderly framework to understand disorderly-looking markets, so this was terribly alluring to me in its simple elegance.
A cursory comparison of the key dates versus the S&P 500 yields mixed results. Some of the dates presented are uncanny (October 18, 1987; November 6, 2002; February 24, 2007, to name a few) whereas others seem to hold no meaning.
I was particularly drawn to understanding this since the latest "turning point" is this weekend! Supposedly this indicates a bottom or top in the market.
I'm a little disappointed the "hit rate" isn't better for these dates. I'd be interested in hearing thoughts from others.
One person in the comments tossed out a bunch of symbols (about 150), so I decided to check 'em out.
I'm only a tiny bit through the list, but I took a look at one, symbol NLY, that I had never seen or heard of before. But this graph is something! It's very well traded (tens of millions of shares a day recently), is optionable (with a not-great, but not terrible bid/ask spread) and looks like it's just about finished a monster of a retracement.
I can't believe I had never seen this one before. Slope readers, I think 90% of the value of this blog is from reading the comments, and I appreciate everyone's willingness to share their thoughts and ideas. It's a true community.
This is by far one of my favorite Patton Oswalt routines. It's got some salty language, so for those of you with sensitive ears (or who work in Draper), you might want to give it a miss.
What a week. I'm ready for a break. So this is going to be short.
I know some will consider me a traitor to the cause, but I assure you, my bullish outfit is (a) temporary and (b) not complete. I've still got a variety of puts, mostly in oil-related items. But I've accumulated a lot of calls today, since I think we could be nice for a nice-sized bounce.
I will note at this point I have no index positions of any kind, either bullish or bearish. I am too uncertain about the near-term direction of indexes to take any position.
However, as a change of pace, here are the items on which I bought calls today.
Considering the insanity of the past 8 trading days as well as the quadruple witching going on today, I'm amazed how quiet things are. This feels like the calmest day of the entire week!
I've trimmed back some on OIH. I still feel great about oil-related bearish positions in the coming weeks, but I don't mind taking some cash off the table since we're boinking around a long-term trendline at this point.
My call on XAU was superb. My close was good, but not superb! I was a day early. Ah, well. Lots of worse things could have happened!
As for the index markets, I am feeling more cautious and defensive. It's all well and good to have our "rectangle of resistance", but there is some pretty serious basing going on, tinted below, which could provide enough strength to blow that rectangle out of the sky in the weeks ahead.
At the beginning of 2008, a reader mentioned what a nice head and shoulders pattern the FX symbol GBP/JPY was (for the non-initiated, that's the ratio of British Pound to Japanese Yen on the foreign exchange market).
The pattern wasn't just nice. It was breathtakingly perfect. Using the simplest method for measuring a price target, I took the highest price (reached on 7/22/2007, $251.14) and the neckline price ($221.05, marked at 3/5/2007) and calculated the difference, which was $30.09. I then subtracted the difference from the neckline price and got a target of $190.96 (that is, 221.05 minus 30.09 equals a target price of 190.96).
This week, on 3/16/2008, the price reached 192.48, which is an accuracy of 99.2% compared to the target price. Un-freaking-believeable. I had at the time (back when the reader brought this chart to my attention) that I'd sworn off FX but I would have loved to have made this trade. Just stunning.
Let me start by saying that today was the best trading day of my life.
It's insane, because two days ago (Monday), that was the best trading day of my life (until today). And then we all know what happened yesterday. Let's not go there again. I had nightmares about nuclear holocaust last night. Swear to God. I only have such nightmares when I've had a really awful day. And, yep, there they were, rewound and ready to play.
I was still really rattled this morning, but as I said, I was ready to "suit up" and get back into things.
Tonight's post is going to be short. I am so behind in everything. Even the simple pleasure of reading newspapers - - I've only read the news through Monday, for God's sake. Three days worth of the Journal and Times are staring at me. Not to mention the eight billion other things I've got to do (or want to do).
But my general theme is this............and take it as you want..........take it as a contrary signal; take it as the sign the bottom has been solidly reached; take it as a sign I'm letting today's profits go to my head. But here it is: after looking at my positions, I have never been more optimistic about the profits ahead of me. I have never been more sure that my charts are going to collapse. And I've never been more comfortable holding onto my positions so that my big gains get positive gigantic.
There, I said it. History will make me a fool or a hero (to myself, anyway). We'll see.
So here's a smattering of charts. Just a few favorites. It'll be interesting to come back to this post in the weeks and months ahead and click on the Original/Present tab to see what happened after today.
As for the title of today's post - I simply think it's funny that last week, we went down (Monday), Up HUGE (Tuesday), and then down (Wednesday). This week is a virtual carbon copy.
I've gotta go clean the kitchen. Honest. Good night.
OK, after yesterday's quote-induced debacle, I'm ready to suit up again.
I've recommitted myself to $RUT puts ($710 Aprils) with a stop at 723.93. Looking at the IWM, we have pushed all the way up to the bottom of our Rectangle of Resistancetm
I am delighted with my gains on the $XAU puts (in spite of the horrendous bid/ask - - 31.90 by 35.90 - -are you kidding me???) but I've trimmed back the position about 20%.
It's a few minutes into the open, and we're over 200 points up on the Dow. That's fantastic.
Like I said last night, I want a rally. A big, fat, juicy one. That's exactly what we need to be able to make relatively low-risk entries. So I say, bring on the buyers!
Last week was amazing in the world of politics and business. Just one thing after another. I was still catching up on Friday's paper during Sunday, the news was so cool and dense. Spitzer. Scruggs. Obama. Bush's moronic speech in New York on Friday. Just waist-deep in news and events. I'm a news junkie, so it was awesome.
And here we enter a new week with the financial world is total turmoil and chaos.
For myself - - - wimpy little puss-man that I am - - - I'm probably going to bail on my index -puts almost immediately since they're going to be at a compelling area.
I would imagine the VIX is going to start blasting toward 40. There's no way for me to tell, of course, what's going to happen in the next few weeks, but I'm operating under the assumption this awesome party may be nearing an intermission or pause of some sort. But I've got 80 puts, and even if I dump my index puts, that still leaves with me 78!
Good luck out there, folks. This is going to be one hell of a ride.
My brain doesn't spend all its time thinking about doom and gloom in the markets. I spend some other time thinking doom and gloom about other things (lest one think I'm a total sourpuss, I am madly in love with my wife and kids, so there actually is some light in my life).
One ad that I've been sort of obsessed with is the one below for Hyatt Place. I read the WS Journal and NY Times every morning, so I see hundreds of print ads each day, but for some reason, this one seems to rankle me particularly.
I have the following issues with this ad:
What is it that the patron finds so delightful? She seems to be on cloud nine right now. Does she find the presence of food surprising? Is she alarmed that Hyatt would offer something palatable? Is there a slip of paper with a funny joke on top of her food pyramid?
What is the staff member doing there? When I eat, I either want to be (1) engaged in conversation; or (2) totally alone with my newspaper. There is no in-between. I'm not going to eat some highly processed meal while some underpaid waitperson watches me eat. Piss off.
My depress-o-meter pegs badly looking at the gaping maw of emptiness in the background. Take note of the food serving area, complete with sneeze guards, but completely lacking in..........food. Perhaps there is a metaphor hidden here for the corporate soul of Hyatt. Or maybe the photographer just didn't want to bother.
Where is everyone else? Is the message here that it's approaching 1 in the morning, and this pathetic wage slave finally has a chance to sit down and have a meal? She looks awfully fresh-faced for it. And does she really want to hit the sack on a full stomach? I sense her life is gross is multiple dimensions. And sad. I assume her cheerful pantsuit is meant to combat my feelings. You have failed, pantsuit.
Finally, I think there's simply too much food here. This Carol Brady-lookalike appears to consume about 700 calories per day. However, she has a massive bowl of rich-looking soup, a giant plate piled high with food, and a glass of calorie-rich alcohol. You all know what's going to happen here. She's going to have a spoon or two of soup. A few nibbles from the dish of her favorites. And she's going to shotgun the wine. Afterwards, the even more pathetic staff person will throw away a pile of food that hundreds of millions of people on Earth would love to have.
What's that you say? You glance at the ad for 1/2 a second, assume it's a pleasant scene showing good service, and turn the page? That's why you're not insane, my friend.
Well, I see that Bear Stearns has, over the course of 14 months, gone from about $170 to $29.
Perhaps
this indicates that, when one is in the process of making hundreds of
millions of dollars personally, that taking a private helicopter to
weekday golf games and toking up while playing bridge aren't components
of a good management style.
If I ever live to be 100, I'll still be amazed by these things. Fibonaccis are my best friend (Lord knows I need them). It's only 15 minutes into the trading day so far, but the resistance presented by even short-term Fibonacci levels has been uncanny. After trying to push higher, IWM finally gave up and beat a hasty retreat. Remember, the day has barely begun as I'm typing this, but these are my impressions thus far. These levels have true significance.
I am usually really, really good about following my three rules, but on a morning like this (when the GLOBEX has been getting assailed all through the night and we open down 200 points), I am OK making an exception to my "no action in the first 30 minutes" rule. I felt the indexes were stretched pretty hard to the downside, so I closed out my $SPX and $RUT puts for great profits, having acquired them just two days ago during the huge 416 point rally.
Anyway, I'm sorta kinda keeping an eye on the IWM pulling back up to about 66.17 or so. As of the moment, I have no index puts (again).
I bought puts yesterday when the market was up 320. It closed up 416.
I bought more this morning when the market was up 50. It then proceeded to go up over 100.
So I'm certainly not getting these things are the cheapest price possible, and they are in the red so far. But I'm honestly totally cool with that. I am basing these purchases on the notion that this is a big bear market rally and is simply another profit opportunity.
I notice one thing I said in last night's post got the attention of a few commenters (including Winace, who described this blog as having become a "clan", which I find a disappointing assessment). I wrote about my "distaste for trading against the primary trend". Others jumped in and said that's ridiculous, because I traded against the bullish trend for so long.
You are right, and that was poorly phrased. But I can also say honestly that I have a "distaste for losses", and one should not assume I've never lost money in my life. In any case, we all know that trading against the primary trend is a mistake. So that was really the only point I was trying to make.
As for this morning, we got a very early bounce (about 50 points higher on the Dow) to tack onto yesterday's monster rally, but as of this writing (merely 15 minutes into the open) it seems to be backing away from a retracement line. This is a very short-term line, drawn from the peak of February 1 down to the bottom made a couple of days ago. But the number of "hits" on these retracements seems to give it some credibility, so I'll be watching these levels.
Here's a longer-term view, so you can see the basis of this minute-bar based retracement.
As is often the case during the bounces: (a) I was right about its coming (b) I didn't profit from it. Seeing the bounce come was relatively a piece of cake. I've repeatedly shown over the past few days how the indexes have gotten beaten down to very clean support levels. It was high time for a rally.
My failure to profit from it comes from two places. One is a distaste for trading against the primary trend. And two is losses on both Friday and Monday to "play the bounce" (these losses were small, but losses nonetheless). Indeed, moments before the close on Monday, I placed a trade for a substantial position in Russell 2000 April calls, but I set a limit price that wasn't met, and it was never filled. So it goes.
The key difference between, say, a year ago and now is this - - - I love rallies! I love 'em to pieces! Because, just as bulls like to "buy on the dips" during a bull market, bears love to sell into strength in a bear market. I'd much rather be being puts after a day like today (with the Dow up an incredible 416.66 points) than the day prior.
Observe the tinted area below. This is what I call, to coin a phrase, the Rectangle of Resistance. It is our ally.
A similar situation is found in broader indexes.
I held on to virtually all my positions today (and I got smacked around good, to be sure, but it only meant my obscene profits got less so). I intend to reload in the land of gold and oil.
The only really "green spot" among my portfolios today was in my IRA account, whose contents you'll see here on the blog under Long Positions. With the latest Fed attempt to rev things up, battered stocks had a fine day.
I'm pooped from my business trip, so I'll close here. I'm sure the comments section is probably stark raving mad (particularly since Beanie finally had the opportunity to spout off about how bullish things were), but I haven't had time to meander in there. In a day or two, blocking should be in place, and we can get rid of some of the other riff-raff polluting our corner of the world here.
So today I woke up in a miserable mood, had to give a one hour talk, and was on a plane for two hours - - all while the market is up almost 400 points. I knew a bounce was coming, but nowhere this fast. Wow.
What am I doing now? Buying OIH and RUT puts. I'd buy XAU puts too, but the bid/ask is absurd. I think we could be in for more bounce from here, but I'm OK nibbling at some new positions.
I'm sure comments is a zoo, but I've have no time to peek in.
And there it is. Rainy Day Bailouts #12 and #35 by the Fed.
I'm glad. I'm glad I didn't have any index positions, since my concerns about where we were on the Fibonacci were well-founded. And I'm glad to be given the chance to reload at attractive prices.
I'm sorry to be so 'thin' on content right now, but I'll make up for it later.
My Internet connection is miserably slow, so I think I'll go through charts early in the morning before the open. It was a great day for oil and gold shorts - - - those have been doing fantastically - - but I remain extremely cautious about a strong bounce. The IWM seems to have been badly wrung out, and although I've been wrong on this before - - witness today's 150 point drop (approximately) on the Dow - - I still am devoid of index positions and am playing it defensively.
I'm terribly busy right now, so I'll be doing one of my late night posts. And remember, if you're a bull, no matter how bad your day might have been, someone else had it worse.
Andrew Horowitz of The Disciplined Investor interviewed me a few days ago for his podcast. You can hear it directly off the web page or subscribe to the free podcast via iTunes. I did the interview by phone, so you might want to bump the volume up some when I'm blathering away, but I hope you enjoy it.
It seems the bad economy and battered markets are all anyone is talking about, which in itself is probably a (very short term) bullish signal. In a market like this, I'd never try to ride those little waves up. I'd rather just update my stops and stay put.
Looking at the IWM over the past 60 days, it's been making a push toward that next Fibonacci level down, but visually it doesn't seem to quite have the "oomph" to crack through. I think it's more likely we get another little leg up before we get our pitching arm tuned up for that throw.
I have no equity index positions at all right now. What would entice me would be a climb toward that 66.75 level on the IWM. I think that's the current line in the sand between the bulls and the bears. A relief rally toward that level would drop the risk enough for me to feel comfortable.
For the moment, my bearish plays are heavily weighted in oil- and gold-land. I'll be in back-to-back meetings today, so I won't be in the comments section, but good luck, and I'll see you at some point after the close (perhaps on the late side).
I am reminded this morning of Paul Simon's lyrics......
When something goes wrong I'm the first to admit it I'm the first to admit it And the last one to know
When something goes right Well its likely to lose me, mm Its apt to confuse me Its such an unusual sight Oh, I cant, I cant get used to something so right Something so right
Everything is going my way. I've got over 80 equity positions, most of them in oil and gold, and those are going fantastic. I had no index positions, but when the market briefly bounced higher this morning (actually into the green), I bought a huge block of Russell 2000 puts.
Thus, I am skeptical and in a defensive posture, since the stars rarely line up quite this well.
For the moment, I'm going to take my profits on my Russell puts. I am thrilled with how my commodity-oriented puts look, however, and intend to hold on to them for what I hope are huge forthcoming gains.
Someone asked in the comments section last night why I didn't have a single index put if I was so bearish.
An excellent question, and I have an answer. I simply believe there is a lot more potential for downside in charts (and those in their sectors) that look like these:
As opposed to indexes, which seem kind of wrung-out to me right now.
Well, the jobs report came out moments ago, and as I'm scanning the pre-market ETFs, they are down about 1%. Well, I guess at least we're not going to get zapped at the opening.
As for this picture, I figure it's a good way to shock you into being fully alert and awake for the trading day ahead. You're welcome.
With all the small ups and downs from day to day, it's easy to lose sight of what a devastating bear market it has been for stocks in the real estate finance arena. It just goes to show how the mighty have fallen. Breathtaking.