Today will be short.
The market is still pzchzoid (spelling?? no idea :) )
but the reversals on attempted sell offs accompanied with volume must be viewed as strength. Must respect the tape... and right now.. the tape is saying we go higher.
900-905 is still the neckline of the inverse H&S. We are getting close again. Today the financials showed up to play... the commodity space is still lagging.
look for financials to continue plowing ahead and for the commodity space to make a strong move up soon that really pushes the market over 900. Could happen anytime between now and the end of next week.
Because of the strength showing up,.. I think any additional sell off back down under 800 is probably off the table. If that were to happen, it would kill whatever confidence is brewing and it would be a failure of the inverse H&S breakout.
On the other side... if financials pullback and commodities fail to make a move.. i.e. oil keeps sinking and doesn't start a sharp rally.. if gold still flounders... if basic materials don't try to join in the rally.. steel, aluminum, etc.. (X, AA, etc) Then a potential failure to break out should be considered a high probability.
Current positions;
Long 1000 FAS 18.65 average
Long 300 ERX at 36.45
Only 30% invested.. will be hesitant to add more without a breakout over the neckline.
GL trading.
Wednesday, December 3, 2008
Tuesday, December 2, 2008
12/02/2008 Some more small signs of strength....
A few things I liked about today if you are looking to go long.
1) We bounced off the huge sell off (really huge)... this would normally be expected but given the current market climate, it was just as possible that we could have collapsed.. The sell off yesterday being on low volume is telling.
2) The bounce failed... twice...but both times we reversed higher yet again and on volume. This is a good sign, first sign of real strength after fairly large moves down intra-day in awhile.
3) we closed very near the high of day and on higher volume than yesterday. It's beginning to appear that this market has literally run dry of sellers at least for awhile.
We want to see 900 get taken out to the upside...
this will require these 3 things to happen;
1) UYG takes out 6.30 in the northerly direction
2) UYM takes out 14.30
3) FAS (which represents the Russel 1000 section of financials) needs to take out 31$
The S&P will need help to take out 900.. particularly from commodity stocks and financial stocks. Which it is full of. So these 3 indexes need to take out their previous highs when the S&P reversed off 898. Those indexes don't take out those levels, we fail at 900.
My guess is that we test 900 again with these 3 indexes still off their highs.. reverse one more time, but not as far.. and then these 3 do a rocket shot and boost the S&P past 900 and confirm this inverse Head and Shoulders pattern...
GL trading. It's wild out there.
1) We bounced off the huge sell off (really huge)... this would normally be expected but given the current market climate, it was just as possible that we could have collapsed.. The sell off yesterday being on low volume is telling.
2) The bounce failed... twice...but both times we reversed higher yet again and on volume. This is a good sign, first sign of real strength after fairly large moves down intra-day in awhile.
3) we closed very near the high of day and on higher volume than yesterday. It's beginning to appear that this market has literally run dry of sellers at least for awhile.
We want to see 900 get taken out to the upside...
this will require these 3 things to happen;
1) UYG takes out 6.30 in the northerly direction
2) UYM takes out 14.30
3) FAS (which represents the Russel 1000 section of financials) needs to take out 31$
The S&P will need help to take out 900.. particularly from commodity stocks and financial stocks. Which it is full of. So these 3 indexes need to take out their previous highs when the S&P reversed off 898. Those indexes don't take out those levels, we fail at 900.
My guess is that we test 900 again with these 3 indexes still off their highs.. reverse one more time, but not as far.. and then these 3 do a rocket shot and boost the S&P past 900 and confirm this inverse Head and Shoulders pattern...
GL trading. It's wild out there.
Monday, December 1, 2008
12/01/2008... Gathered thoughts..
I've been absent for a couple weeks. This market is almost too crazy to attempt to relate daily commentary to.
So i will keep the updates short and sweet and very technical.
822 was the 50% fib retrace of the rally from 748 to 898. We closed beneath it, but not enough to convince... it could just be a pin underneath. It was a huge down move, but did so on very low volume. (at least compared to recent volume, which is what matters)
804 is the 61.8% fib retrace. If we close below that.. we are going to head for a double bottom test.
An inverse H&S is in play.. 900 is the neckline. A close above 900 could be a massive breakout north.
I have no big bets in either direction right now...
Here are my options...
TBT .. ultrashort long bonds... we have a potential bubble in treasury long bonds. Ben is going to keep this going by buying the long end of the curve, so this is just an idea for the future.
UYM and ERX... UYM is 2x basic materials long... ERX is 3x energy long... these should both kick ass if the government manages to reinflate the economy. Cause if they do.. there is no way they shut off the money spigot quick enough to not cause massive inflation. Commodities will do well.
If deflation wins... well... save every penny... cause you'll need it.
FAS is also a potential short term trading option... 3x financial bull.... the nice thing though about FAS is it is mostly comprised of Russel 1000 financial companies.. which have much more to gain from the destruction of the large conglomerates like Citigroup going into the future....
if we have one...
GL trading.
So i will keep the updates short and sweet and very technical.
822 was the 50% fib retrace of the rally from 748 to 898. We closed beneath it, but not enough to convince... it could just be a pin underneath. It was a huge down move, but did so on very low volume. (at least compared to recent volume, which is what matters)
804 is the 61.8% fib retrace. If we close below that.. we are going to head for a double bottom test.
An inverse H&S is in play.. 900 is the neckline. A close above 900 could be a massive breakout north.
I have no big bets in either direction right now...
Here are my options...
TBT .. ultrashort long bonds... we have a potential bubble in treasury long bonds. Ben is going to keep this going by buying the long end of the curve, so this is just an idea for the future.
UYM and ERX... UYM is 2x basic materials long... ERX is 3x energy long... these should both kick ass if the government manages to reinflate the economy. Cause if they do.. there is no way they shut off the money spigot quick enough to not cause massive inflation. Commodities will do well.
If deflation wins... well... save every penny... cause you'll need it.
FAS is also a potential short term trading option... 3x financial bull.... the nice thing though about FAS is it is mostly comprised of Russel 1000 financial companies.. which have much more to gain from the destruction of the large conglomerates like Citigroup going into the future....
if we have one...
GL trading.
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