Looks like the GM and BAC news last night did not have the effect on the market that I was expecting.
It will... eventually. But looks like it is being ignored for now.
912-914 could be a stopping point.
but.. i'm gonna be quiet and not say much until we get a reaction to finally releasing the stress tests results tomorrow.
Will it be buy the rumors sell the news? or mega rally extension?
i'll tell you one thing.. it won't be a nothingburger.
Wednesday, May 6, 2009
Tuesday, May 5, 2009
Late night ALERT.. ALERT ALERT
GM just had a 100 to 1 reverse split... essentially common holders are destroyed and GM will likely open at penny stock levels tomorrow.
On top of that, Bank of America is rumored to need 34 billion in new capital. For those who haven't been paying attention... 34 billion is half of their Market Capitalization. Which means if they have to raise the money by equity offerings, you are talking about 50% dilution.. and probably will be far higher by the time it finishes trading tomorrow.
This changes everything. News trumps all. And this is some freaking news.
GM is screwing over the bondholders and common. GM was getting government money. Anyone who is a bondholder in a government "assisted" company... (tons of banks).. is going to be freaking out tomorrow. Because the sudden realization that they CAN be wiped out... is going to sink in awfully fast.
I won't write off potential of lock limit down tomorrow. I won't say something like that often, but all the ingredients are there. Extended bear rally... horrible news.. this has potential of a no bid situation. There WILL be big money having a heart attack tomorrow.
It's tempting to go heavy short the open tomorrow and ride it down. But I think I may just watch the fireworks happen and see where it ends up and come up with a new plan.
Tomorrow is one of those days where what happens in the stock market will be the new main article on CNN 5 or 6 times during the day.
You won't hear about swine flu tomorrow.
GL
On top of that, Bank of America is rumored to need 34 billion in new capital. For those who haven't been paying attention... 34 billion is half of their Market Capitalization. Which means if they have to raise the money by equity offerings, you are talking about 50% dilution.. and probably will be far higher by the time it finishes trading tomorrow.
This changes everything. News trumps all. And this is some freaking news.
GM is screwing over the bondholders and common. GM was getting government money. Anyone who is a bondholder in a government "assisted" company... (tons of banks).. is going to be freaking out tomorrow. Because the sudden realization that they CAN be wiped out... is going to sink in awfully fast.
I won't write off potential of lock limit down tomorrow. I won't say something like that often, but all the ingredients are there. Extended bear rally... horrible news.. this has potential of a no bid situation. There WILL be big money having a heart attack tomorrow.
It's tempting to go heavy short the open tomorrow and ride it down. But I think I may just watch the fireworks happen and see where it ends up and come up with a new plan.
Tomorrow is one of those days where what happens in the stock market will be the new main article on CNN 5 or 6 times during the day.
You won't hear about swine flu tomorrow.
GL
05/05/09 Rally on.. Nothings wrong, nothing to see here
Yeah so if you hadn't noticed, we broke the 875 level from my last post and shot up 32 points.
There's really nothing stopping us from going straight to the 200DMA which is 960. Although, I don't think that will be the top of this rally and it would be too easy for the bulls if we just went straight on up to it.
There's not a lot of technical analysis to do here.. if you try to apply a Elliot Wave count, there's a number of ways you could call it. We have some signals that say correction near and yet others that say rally on.
How the market reacts to the stress test results will be key here I think. The instant reaction will probably be wrong as is usual. However, how the day ENDS after the results are announced is what will be important.
I'm on the sidelines personally. Trading at the moment is too much like gambling. It's a roll of the dice where this market will be sitting by next Monday morning.
The continous rally up to the stress tests results is curious though. You would have thought the opposite would happen as no one would want to be long through the annoucement... this could be setting up a sell the news event and kick off the long awaited pullback.
But like I said, it's a roll of the dice at this point. My advice is to wait, see what the reaction is, and then position yourself in that direction.
That's what i'm doing. :)
GL trading.
There's really nothing stopping us from going straight to the 200DMA which is 960. Although, I don't think that will be the top of this rally and it would be too easy for the bulls if we just went straight on up to it.
There's not a lot of technical analysis to do here.. if you try to apply a Elliot Wave count, there's a number of ways you could call it. We have some signals that say correction near and yet others that say rally on.
How the market reacts to the stress test results will be key here I think. The instant reaction will probably be wrong as is usual. However, how the day ENDS after the results are announced is what will be important.
I'm on the sidelines personally. Trading at the moment is too much like gambling. It's a roll of the dice where this market will be sitting by next Monday morning.
The continous rally up to the stress tests results is curious though. You would have thought the opposite would happen as no one would want to be long through the annoucement... this could be setting up a sell the news event and kick off the long awaited pullback.
But like I said, it's a roll of the dice at this point. My advice is to wait, see what the reaction is, and then position yourself in that direction.
That's what i'm doing. :)
GL trading.
Tuesday, April 28, 2009
ALERT... 04/28/09... 875/top of channel important
This post won't have a lot of text like the last few, but will have 2 charts, unlike the last few. :)
875 is a MAJOR level on the S&P... for more reasons that you might be aware of... yes is was the 04/17 high.. but it was also 2 previous highs well before that... and also support at least 2 times even further back.
There's a few things happening here... in the first chart.. you can see we are in a rising channel.. and in a wedge (black).. we can ride the top of the channel without breaking anything.
but as you can see in this second chart.. 875 is a big level going way back, so a break of that could really signal as much as a 100-150 point move north in the S&P. The break must be on volume and must be convincing and must CLOSE above 875 but at least 5 points.
IF we close 880 or higher.. you must step to the side or go long. I would recommend going long. There is a huge gap after that with very little to stop the move. However, 875 has A LOT of resistance, and it's hard to believe we could get such an explosive move without a long shake out first.
GL trading.
875 is a MAJOR level on the S&P... for more reasons that you might be aware of... yes is was the 04/17 high.. but it was also 2 previous highs well before that... and also support at least 2 times even further back.
There's a few things happening here... in the first chart.. you can see we are in a rising channel.. and in a wedge (black).. we can ride the top of the channel without breaking anything.
but as you can see in this second chart.. 875 is a big level going way back, so a break of that could really signal as much as a 100-150 point move north in the S&P. The break must be on volume and must be convincing and must CLOSE above 875 but at least 5 points.
IF we close 880 or higher.. you must step to the side or go long. I would recommend going long. There is a huge gap after that with very little to stop the move. However, 875 has A LOT of resistance, and it's hard to believe we could get such an explosive move without a long shake out first.
GL trading.
Sunday, April 19, 2009
Sunday night post 04/19/09 BAC on deck
Over the weekend, we had the news that the government may convert the TARP money into common equity shares in the banks.
Bank stocks are not going to like this. To give an example, even after the recent rally, Bank of America has a 65 billion market cap, which means the value of all common shares added together is 65 billion. If BAC borrowed 20 billion (conservative estimate), considering it is one of the nations largest banks, that is a dilution of almost 30%. The dilution in Citi will be worse. And that is after this run up, which isn't surprising that the government would convert our tax dollars to common equity shares at over 10$ in BAC, when they could have bought it for 3$. Don't want to own bank stocks you say?? too bad, as a taxpayer, you are going to anyway, and on top of that, you'll own the largest stakes in the ones with the most problems at most likely far too high a price. Awesome!
On to the market;
hmmmmmmmm..... I want to say we have topped a couple days after the turn date mentioned in the last post. I want to say that we are about to have a decent pullback in the range of a 38.2%-61.8% retrace of the 665-872 move.
Those spots btw would be;
792ish 38.2% retrace
769ish 50%
744ish 61.8%
I want to say that's all about to happen and faster than the run up took. But... i'm still hesistant. The action in the market is still looking constructive, still brushing off bad news, still avoiding a big down day. We could get that on Monday and that would signal the turn is here. But we could also get one more push up to about 915 before pulling back. Why 915? well.. i'm not going to post that chart yet and jinx what i hope is going to be a pretty big down week coming at us. But if Monday looks constructive again and/or BAC posts good numbers and ignites the market, I will throw it out there.
BAC earnings on tap... bulls better hope they're good. They'll need something good to offset the mega dilution news.
Oh.. btw.. just a note, but Wells Fargo is back up to levels it was at in June of 08 before the mega selloff started in October. Things are definitely working their way quickly into "Way ahead of itself" zone.
GL trading
CJ
Bank stocks are not going to like this. To give an example, even after the recent rally, Bank of America has a 65 billion market cap, which means the value of all common shares added together is 65 billion. If BAC borrowed 20 billion (conservative estimate), considering it is one of the nations largest banks, that is a dilution of almost 30%. The dilution in Citi will be worse. And that is after this run up, which isn't surprising that the government would convert our tax dollars to common equity shares at over 10$ in BAC, when they could have bought it for 3$. Don't want to own bank stocks you say?? too bad, as a taxpayer, you are going to anyway, and on top of that, you'll own the largest stakes in the ones with the most problems at most likely far too high a price. Awesome!
On to the market;
hmmmmmmmm..... I want to say we have topped a couple days after the turn date mentioned in the last post. I want to say that we are about to have a decent pullback in the range of a 38.2%-61.8% retrace of the 665-872 move.
Those spots btw would be;
792ish 38.2% retrace
769ish 50%
744ish 61.8%
I want to say that's all about to happen and faster than the run up took. But... i'm still hesistant. The action in the market is still looking constructive, still brushing off bad news, still avoiding a big down day. We could get that on Monday and that would signal the turn is here. But we could also get one more push up to about 915 before pulling back. Why 915? well.. i'm not going to post that chart yet and jinx what i hope is going to be a pretty big down week coming at us. But if Monday looks constructive again and/or BAC posts good numbers and ignites the market, I will throw it out there.
BAC earnings on tap... bulls better hope they're good. They'll need something good to offset the mega dilution news.
Oh.. btw.. just a note, but Wells Fargo is back up to levels it was at in June of 08 before the mega selloff started in October. Things are definitely working their way quickly into "Way ahead of itself" zone.
GL trading
CJ
Thursday, April 9, 2009
04/09/09 Weekend edition... whip snap pop
I might expand upon this on further research over the long weekend, but for now I need to point out a few things.
My initial feeling is now looking to be wrong, which is sometimes dangerous to ignore your first intuition, but have to go with what I see.
In my last post, I felt we were looking at putting in a bottom in this turn date period... the 6th-15th.
This is a tough call now.... we COULD have put in a bottom on the 6th around 810. Meaning we will have almost a straight up explosion well into the 900's on the SPX.... ORRR... we could be forming a top within the turn date period, which COULD be at heavy resistance around 880. In which case, I expect the top to come closer to the 15th and have a pin over 880 to drag everyone in and then start a real pullback in this ABC correction.
So... I LEAN SLIGHTLY towards us forming a top for wave A of the ABC correction, sometime around the 15th and somewhere around 890 as a potential intra-day high.
REASONS for thinking so;
1) the Wells Fargo news changed the game in the short term... news trumps technicals.. It will be difficult to have a real pullback here without becoming EXTREMELY overbought in the financials.
2) "Sell in May and go away" ... here's how I see this playing out.... We rally hardcore til the 15th or so... then start a pullback for Wave B of ABC correction. This drags in the sell in may crowd and causes a very fast and ugly rash of selling into early May. Then we reverse hardcore... and screw everyone in the sell in may crowd and head up into Wave C of ABC correction and power ahead well into June up to 950+ and potentially as high as 1050. This would ultimately cause the most people to be screwed over big time. Which is generally what the market does.
3) I don't think 810 was enough to be a "bottom" for Wave B. This market has been far to volitile. The VIX was still at 40 at the time of the potential "bottom" 40 on the VIX is nearly as high as the highest it ever got in the 2000-2002 bear market. Which btw, was one of the worst ever percentage wise before this one. Since the VIX measures volitility, I don't think that was enough to really whipsaw some people. It kept the shorts out of the game for the most part... but certainly wasn't enough to cause anyone who was long to give up on the rally. Wave B will end when a large percentage of longs think the rally is over.
So no charts again for this post... but I may have a few coming this weekend after some more research.
GL and goodnight. Enjoy the weekend.
My initial feeling is now looking to be wrong, which is sometimes dangerous to ignore your first intuition, but have to go with what I see.
In my last post, I felt we were looking at putting in a bottom in this turn date period... the 6th-15th.
This is a tough call now.... we COULD have put in a bottom on the 6th around 810. Meaning we will have almost a straight up explosion well into the 900's on the SPX.... ORRR... we could be forming a top within the turn date period, which COULD be at heavy resistance around 880. In which case, I expect the top to come closer to the 15th and have a pin over 880 to drag everyone in and then start a real pullback in this ABC correction.
So... I LEAN SLIGHTLY towards us forming a top for wave A of the ABC correction, sometime around the 15th and somewhere around 890 as a potential intra-day high.
REASONS for thinking so;
1) the Wells Fargo news changed the game in the short term... news trumps technicals.. It will be difficult to have a real pullback here without becoming EXTREMELY overbought in the financials.
2) "Sell in May and go away" ... here's how I see this playing out.... We rally hardcore til the 15th or so... then start a pullback for Wave B of ABC correction. This drags in the sell in may crowd and causes a very fast and ugly rash of selling into early May. Then we reverse hardcore... and screw everyone in the sell in may crowd and head up into Wave C of ABC correction and power ahead well into June up to 950+ and potentially as high as 1050. This would ultimately cause the most people to be screwed over big time. Which is generally what the market does.
3) I don't think 810 was enough to be a "bottom" for Wave B. This market has been far to volitile. The VIX was still at 40 at the time of the potential "bottom" 40 on the VIX is nearly as high as the highest it ever got in the 2000-2002 bear market. Which btw, was one of the worst ever percentage wise before this one. Since the VIX measures volitility, I don't think that was enough to really whipsaw some people. It kept the shorts out of the game for the most part... but certainly wasn't enough to cause anyone who was long to give up on the rally. Wave B will end when a large percentage of longs think the rally is over.
So no charts again for this post... but I may have a few coming this weekend after some more research.
GL and goodnight. Enjoy the weekend.
Wednesday, April 8, 2009
04/08/09 Up... or.... down....
Been away for awhile... other things in life have not allowed me the time to post lately. I will be making an attempt to get back into doing this regularly.
So...
We are in a fibonacci turn date period. It started April 6th and ends April 15th. What this means is that sometime between the 6th and 15th.. we will either put in a short term bottom or top.
My guess is this will be a bottom, but not the kind of bottom we are used to for the last couple years. This is turning into a sideways consolidation move. Essentially, the market is coiling a spring for another shot upwards by burning off the overbought conditions of that last big ramp off the March 6th bottom.
The target for this next move north is tough to call, but I will say it will be AT LEAST S&P 950. I think 1050 is possible but certainly not gauranteed.
However, this will be an opportunity to sell and go short again somewhere north of 950. Even if 665 was THE BOTTOM... we will at least try and test it one more time before this bear market is over and it's certainly possible that we actually take it out and go much lower. If that does happen, the target is somewhere below 400 btw, which is very very ugly and will not be fun for anyone.
For now though... this rally is not done, by the 17th of April we should be on our way higher in another power move north through the end of the month.
*** beware the sell in may and go away crowd. We could get another dip in May sometime for the sell in may crowd, looking like the rally is over... followed by yet another surge before it really ends. Just something to keep an eye out for... but that would be something that would likely occur in the 2nd-3rd week of May and the real end of the rally would occur near or into June.
No charts today.. but will update with charts before the end of the week.
GL trading.
So...
We are in a fibonacci turn date period. It started April 6th and ends April 15th. What this means is that sometime between the 6th and 15th.. we will either put in a short term bottom or top.
My guess is this will be a bottom, but not the kind of bottom we are used to for the last couple years. This is turning into a sideways consolidation move. Essentially, the market is coiling a spring for another shot upwards by burning off the overbought conditions of that last big ramp off the March 6th bottom.
The target for this next move north is tough to call, but I will say it will be AT LEAST S&P 950. I think 1050 is possible but certainly not gauranteed.
However, this will be an opportunity to sell and go short again somewhere north of 950. Even if 665 was THE BOTTOM... we will at least try and test it one more time before this bear market is over and it's certainly possible that we actually take it out and go much lower. If that does happen, the target is somewhere below 400 btw, which is very very ugly and will not be fun for anyone.
For now though... this rally is not done, by the 17th of April we should be on our way higher in another power move north through the end of the month.
*** beware the sell in may and go away crowd. We could get another dip in May sometime for the sell in may crowd, looking like the rally is over... followed by yet another surge before it really ends. Just something to keep an eye out for... but that would be something that would likely occur in the 2nd-3rd week of May and the real end of the rally would occur near or into June.
No charts today.. but will update with charts before the end of the week.
GL trading.
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