Thursday, November 13, 2008

11/13/2008 And the reversal appeared...

We finally got that reversal I was talking about. This is the kind of move you look for that, at the very least, can mark a short term bottom. Now we really got to get to work.

So the first most obvious question is "O.k. we were up 550 points today, after being down 300 making it a 800 point swing... so now what?"

well... it WILL take TIME to repair the technical damage done in order to continue this move higher. So here are some things to look for, followed by a chart that is important in the short term;

1) We must now look for a follow through day in the next 2 weeks or so. A follow through day would be another rally with a more than 3% gain across the indicies and it must come with greater than average volume. A follow through day will confirm a trend change and confirm that we are in a rally.

2) Today was a monster move and may still be extended further (see chart below), but there will be some pullback before a further push higher. Remember it will take time to repair damage, indentify leaders for the rally (most likely financials and commodities), and really get the move going.

3) For a clue/hint on whether this is real and we are going to get a full blown bear market rally... watch the financials on market pullbacks. If financials and commodities stay relatively strong on pullbacks of these moves up, then there you will find strength behind the move and will suggest more pushes higher. An example of this would be the S&P down 25 on a pullback of a big move like today and UYG only down 1-3% or DIG/USO barely down or flat.

Here is a chart of where we might get a near term resistance for a pullback on todays rocket launch;

S&P first



Now UYG



Good luck trading... A lot of money can be made from down here if played correctly.

Change in position today...

Doubled my UYG position to 8000 shares... at 7.75$ average..

DIG position unchanged at 500.

Wednesday, November 12, 2008

11/12/2008 At least short term bottom close...

From here (852) and 770 will be a short term bottom. The next 80 points on the S&P is a prime spot to start building a full long position.

770 is the 2002 bear market bottom. There will be at the very least a big bounce off of that area.

That though IMO, would be a little too easy, so I suspect we either reverse here very soon, maybe tomorrow after making a new low under 848, or we go much lower than 770.

I'm going to play a major bounce/rally beginning in the next 80 S&P points. If it doesn't work I will take losses and sit and wait. Next target on a convincing break of 770 is another 200 points lower. Don't think that's happening this round.

Good luck trading.

Tuesday, November 11, 2008

11/11/2008 Will 848 be the bottom...

No charts for today, not much has changed from my previous post with the 3 charts of UYG, GS and C.

GS did get a bounce today. We'll see if it holds, if it does that could be an good sign. C is still in bad shape though, need to see it start to carve out a bottom.

With 50 points to go to hit 848, taking out 7.01 on UYG and making new lows is possible. If that happens I would look for 848 to get taken out as well.

There are no changes to my core current positions.

One thing I will say is that the media is the very very negative along with terrible sentiment with just about every analyst on CNBC saying we have further down to go. Remember, these are the same people that were screaming buy about 400 S&P points ago. You know, people like Creamer who waited until we were within 100 points of a potential bottom to tell everyone to sell everything.

I think we have a washout day on the way... that is what will finally bottom this market. Big down day... 400+ points that reverses to positive. That is why it is important to be positioning yourself long before this day happens, because when it does it is almost impossible to catch the bottom and even if you do it will be a small position you were praying would work. Then the reversal moves up so fast you never find a good entry and end up missing a large part of the move as it will move very quickly from there.

Any big down day from here on out, I will be buying the market at -400 or more with the second half of my portfolio. If the reversal doesn't show, I will dump it and try again. That classic reversal day is coming.

Monday, November 10, 2008

11/10/2008 Not much changed today....

Not much changed today, but.. there are a few minor changes worth talking about.

1) GS and C both look like they are nearing trendline support... the interesting part about this is that GS, C, and UYG(the bank ETF) are nearing the pervious bottom from the 10/10 low. This is while the market is still managing to hold above 900 on the S&P. This will make heading lower than 848 pretty difficult as the financials are sure to bounce soon;

here are the charts;







You can see the line in the sand on UYG.. if that is taken out to the downside, I will step aside and wait for a lower target on the S&P (848, 770)

But a significant bounce is within sight here and if 1003 gets taken out.. a bear market rally.

Sunday, November 9, 2008

11/09/2008 Sunday night update.. futures up big...

No reason for cheering yet, but the futures are up huge tonight. 50 points away on the S&P from making a convincing break north.

If the financials and commodities are having a big a day tomorrow, you should think real real careful about being short this market through January.

Watch UYG, XLF, UYM, and DIG.

If these ETF's are up big tomorrow, we are 1 step closer to a 2 month long rally. It will be powerful and it will go higher than you think.

Line in the sand is 1003 S&P.

Good luck trading.

Friday, November 7, 2008

11/07/08 Bear market rally a'comin?

Is a bear market rally coming?

some typical responses to this might be.. "NO WAY".."HOW?".. "THERE'S NO GOOD NEWS, WHERE WILL IT COME FROM?".. "YOU'RE CRAZY C.J.!"

Listen, bear market rallies happen. They exist. And they usually happen when you can't find a single reason for it. Think after the Bear Sterns blow up. The day after Bear Sterns exploded we started a massive bear market rally that lasted over a month.

The reasons for this can be best explained in some charts;

S&P first.. we have a short term double bottom potential, a channel to pop out of over 1003, and a long way to go after that.



DIG next... same exact look..



UYG last... same exact look.. remember.. commodity stocks and financials are what will drive the next bear rally.. cannot have one without them. These all look like short term bottoming patterns with a potential HIGHER LOW in play after today.



It IS still possible that we head back down and visit 897 one more time, so I am not advocating adding to long positions quite yet. If 897 falls, then a prime opportunity to add to a long position will be between 897 and 848. And the last potential range is 770 and 848. But IMO.. I think we may have a seen a bottom for the next few months.

I only added 500 shares of DIG this morning.

Position is now 4000 shares of UYG at 8.65$ and 500 DIG at 31.85$.

I will not add more unless one of these 2 things happen;

1) we take out 897 to the downside. In which case I will add some more near 848.

2) we take out 1003 to the upside.. in which case it's time to go all in long with potential targets starting at 1150 and higher.

Have a good weekend. And good luck trading.

C.J.

11/07/2008 Morning Note (Jobs Report)

The futures are up this morning. Some of you may be asking... who would buy this terrible market ahead of a terrible jobs report? All news is awful.

well yeah.. but the market also is forward looking. So we've priced in some pretty terrible economic news for awhile at these levels. Probably have priced in an eventual -5% GDP print. We will need to expect a -10% GDP print for the plunge to S&P 550.

On to jobs... I think -200K or less and we'll rally. If we rally, the chances of locking in a higher low and a short term bottom rises.

November and December are historically kind to the market, even in bear market years.

Here's a chart for past November/December market performance, and why 8 of the last 13 bear markets bottom in October;

Thursday, November 6, 2008

11/06/2008 2 double bottom chances

Welcome to my new blog. A little history on myself; I've been trading for 12 years and still learn something new almost everyday. In 12 years, the most striking thing i've learned is that each bull and each bear market is different yet history repeats itself without fail. Moving on to the market....

The major indicies are down 10% in 2 days. Is this a "market no like Obama" move? or is this just the market pulling everything back off after ramping to give McCain a little at the polls?

well.. the answer is that it doesn't matter... what does matter is that the market has 2 chances at a "double bottom" here;


1) The October 10th bottom... S&P 848... DOW 7773

2) the 2002 bear market lows.... S&P 780... DOW 7175


Between S&P 848-780 is a PRIME spot to really scale into this market for at least a bounce.

The market though likes to play tricks on you. It's likely we touch one of those price points for a total of 2 minutes before a large reversal. So you have to scale into a long position very carefully.

Ultimately, this market is likely to go lower than these targets, but we are due for a bear market rally. The MOST POWERFUL rallies that exist. You DO NOT want to be caught short in a bear market rally.

My current positions;

91K possible investment;

4000 shares of UYG now averaged at $8.65 (my only current position)

I plan to add another 1000 shares of UYG near S&P 848 (if we get there)

I also plan to add 1000 shares of DIG near S&P 848 (oil will rebound heavily in a bear market rally)

IF 848 gets taken out... it will be time to sit and watch. At that point I will be nearly 50% invested sitting on a small loss.

The next double bottom potential will be key at S&P 780. If the S&P closes below 780 and stays there the following day. I MUST take my loss and wait. Because the target becomes something MUCH lower. Something near S&P 550.

Now.. I EXPECT a S&P 550 print at some point before this market truly bottoms, BUT I fully expect another bear market rally before this happens, therefore I'm playing that way.

8 of the last 13 bear markets have bottomed in October. Making the chances of at least a short term bottom and a 3-4 month bear market rally very high.

Remember, you must know your targets and respect them. This kind of volitility just begs you to trade 10 times a day, but this kind of volitility will rip you to shreads if you aren't careful.

Some charts;

UYG (ultra-financials) .... As of the close it's sitting on the 78.6% Fib retracement.. the last retracement before testing the first double bottom. If UYG takes out 8.01$ to the downside, then you know will are going to the to test the first double bottom potential at S&P 848.



DIG (Ultra-Oil and Gas) ... As of the close it's sitting on the 61.8% retracement. I want to put at least a toe in the game here and I might. But it might see the 78.6% fib like UYG at 27.44$. IMO, it WILL NOT break the potential double bottom at 23.33.



These two stocks are doubles IMO in a bear market rally. Either could be more than a double. This may not sound like much to those of you that trade options, but my risk profile is also significantly lower.

Good luck trading. Tomorrow is the jobs number, the reaction could be key. WATCH 848 on the S&P.... If it falls, it falls. But that is why scaling in slowly is important, because we get a chance at more shares for cheaper.

780 is the line in the sand. Below that for more than a day and losses must be taken.

See ya tomorrow. Hope I hear from you all often.