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I see 1538 as important support, and yes it will be an up day today.
Dont see any significant decline until next week.
this pattern is soooooooooooooo similar to last march. if we repeat exactly, then we pull back into the end of the week, then up next week into a final top, with choppy action.
of course, patterns never are that exact. but sure looks like a top. But the fed is printing so much money and all the central banks are doing the same, could be different this time.
Am waiting for a clear sell signal before shorting heavily again. Lost too much money shorting recently on weak (like todays signal) signals, that dont work. High closing tick, or too much enthusiasm in the options, work. Overbought does not work to short in a strong uptrend.
We are so overbought, probably sideways into the end of the week. Plenty of ops to short. BTW, the "count" which I learned before computers ran the market, says short near the close Wednesday. If all fits, i will do just that.
1993 had the least volatility of any year I have seen in the past 28 years I have followed the market. The spx did have a couple corrections of 5%, but for the most part it just slowly went up.
that is why the vix bottomed back in the end of 1993.
The recent 3% corrections had the vix spike to 19 quickly, insane.
Bottom line: Dont fight the fed. Nothing works to stop a market based on liquidity. The last time the fed printed like this, at the end of 1999 due to worry about Y2K, the naz doubled in 3 months.
We have closed 2 days above the trend line going back to the high of Feb 1. That means getting overextended, although could get even higher in next couple days.
1470 is the sell level for sure.
FAct: If we close with low trin, we set up a very low 10dma of trin, which is bearish short term.
Hope for a big tick at close, that is clear sell.
I took a big loss on the uvxy I bought in afterhours friday at 8.6, ouch. I finally said owning it was insanity.
bought some sds at 44.8, will buy a bit more later. New moon tonight, we are getting extreme overbought, and big drop in vix is bearish, as too much too fast.
If we run to 1570, without any pullback, then will go 100% long sds.
Eventually every trend ends.
GS was down on big volume friday, an interesting divergence. Anyone else notice this, or have anything pertinent to say about it?
when financials start to underperform the market, is a big warning sign. Probably still too early to short like I keep doing, but the top is close. at the most, we go up into end of april, but could go up a lot more.
at the last important top in sept 14th of last year, the spx was 9.3% above the 200dma. It is 9.4% above that level now.
Interesting factiod:
Last major rally before a 5% or greater correction started in June of last year, lasted 73 trading days, and had a 16% gain.
current rally from november is now up 16% in 73 days.
There have only been 7 rallies that lasted longer than 73 days in the past 20 years.
There are good advisors and financial wizards. I remember how one said to sell emc at 85 in the summer of 2000. it got to 100, then fell to below 10.
I know eventually the market will fall, hard and faster than anyone expects, but this rally still has legs according to the stats.
New moon, today is probably at least a short term top, but I dont expect more than 2%, but will short near the close, but not much.
Cycles do work, but better to watch short term indicators, when they flash sell.
Options: Still on buy signal
Trin: Back on buy signal
moving averages: solid buy signals
Advance decline numbers: solid buy signals, but getting overbought.
Pattern: cant get much more bullish
seasonality: bullish until end of april, but could top out soon, and then go sideways.
Bottom line: Be ready to short the first rally after the next 5 to 7% correction, especially if the rally is volatile. Then you will make big money. I agree, likely drop next week, but how big?
Reality check:
I remember how in jan 1988, the consensus among economist was for a terrible recession in 1988, they were wrong.Everyone was sure appl was going to 1000 by the end of this year when it hit 700.
The Leading Economic INdicators are all pointing down again, after having been up for several months. They all started pointing down in the fall of 2007.
Bottom line: Dont trust all that you read, but make informed decisions. The fed can push a string for only so long, and when everyone knows you cant lose owning stocks as long as the fed is printing money, guess what will really happen?
Italy is a time bomb, same as spain, ticking, ticking, ticking. China real estate is worse bubble than ours, only they dont have banks selling bad mortgages to other banks, so it will not be as bad a financil problem when it bursts.
I am going to stop trading for awhile, as have been so bad the past couple months. BTW, I have only lost 3% of my money being long gld and sds. So not the end of the world. Am also going to stop posting my trades, as have been so wrong. Will keep posting interesting stats.
Market getting overbought on many levels. When it keeps going up when overbought, is bullish. However, RSI is making lower lows with each new high on spx, which is bearish.
For past 3 months, every time the market got overbought, it kept going higher. At some point that does not work anymore.
eventually, the market will be below 1450 this year, and so shorting makes sense.
Sold my sds, lost 1% of my money, time to regroup and think about what I am doing. Wil short again at close, if all fits. New moon monday, market often tops then. But nothing stops a run away train.
doubled up my short, buying sds at 45.45. I admit, the easy path is up, but hope springs eternal in the shorts still.
yes, is the ministry of lies and obfuscation.
Options pointing to a shor term top soon, maybe today. The count, an old form of trading before computers where you count the number of days in a rally, says sell tomorrow morning.
I agree with the bulls, buy the pullbacks for now, but with tight stops, as something is going to burst this bubble before the fed pulls the punch bowl away. They can keep prices propped up, but even they can not stop panic selling.
I talked about how 2007 looked a lot like 1973, and I was right in the end.
Today looks like early 2007, which means we still go a lot higher before the end. Remember there was a big drop in March 2007, scared a lot of bulls, china syndrome. Could repeat.
On short term, I feel good about predicting a top by next monday, and then at least a 5% correction. Am positioning for that. However, if we go sideways into monday, then that negates the sell, as this is a consolidation pattern, predicting higher prices.
Dont be greedy on the long side for very long, as we will get a 10% down day eventually out of nowhere.
End of the day note: Options starting to flash optimism, after being so negative (market positive) before, which was the tell we would go up to new highs.
Am still pretty sure we go up to 1550 or higher into friday morning. Todays open up, then close barely up, is on the whole, higher highs and lows, is bullish.
I plan to add a big more short buying sds tomorrow, but not will wait for friday before bying more, unless we get a sell at the close tomorrow.
Still a bullish patter, and possible we go a lot higher before any 5% correction, so not time to be shorting heavily.
would say dont buy in oct when in a bear market, although except for 2000 and 2008, it would have worked.
Capitilism is much stronger, resiliant than people think.
Great stuff, but of course it can never work 100%, no indicator ever always works.
Probably we go up almost every week this month, but I bet we get one week down pretty big, to set up the final top.
Not sure why, but sell in may and buy in oct works.
Looked at bullish percentage chart, then one of the spy, and guess what? currently it is looking exactly like what happened in march to april last year!
If that repeats, we have already done the 5 day drop, then a rally of 9 days, this time are on rally day 5.
Never exactly repeats, but I have seen many times off this 3% correction we get a 9 to 12 day rally into a top.
Just if we rally into friday, short, short, short is my best guess, with a small correctoin first, another new high, etc.
Tops are much harder to predict than bottoms, once again did not buy at the bottom.
Last, remember when everyone agrees that this rally will only end when the fed pulls the plug, everyone is looking to get out before that happens.
BTW, we have not broken outside the upper channel line at 1548 tomorrow. In the past, the last rally breaks above that line for a few days, then fails.
If we go sideways for the rest of the week, look out above, as that sets up a big rally next week. Best if we can get a few more big up days to set up a blow off top.
I have done this so many times before, shorted too early, know the drill. Yes, am no genius, but I do have experience.
Probably still best to be long the hot stocks, with tight stops. Will scream on this board when we finally do get another sell signal. The last one, closing tick of 1220, gave us only a 3% drop, amazing.
Am not seeing any signs of a top. I can not believe I am saying that, so is not time to short. Will take a loss and cover my short if we drop into the gap up area from today tomorrow.
Short at your own risk. Bulls are right until they are not.
This rally from november is now 70 trading days long. IHN the past 21 years, we only had 7 longer rallies without at least 5% correction.
another 2 weeks,and then only 4 rallies in past 21 years longer.
REcords are made to be broken.
Would have added to my short had we run up big into close, as that would be a sell signal.
Possible we fall back a bit tomorrow, to fill the gap up, but higher prices in next couple days looks likely.
OUch! Possible we have started a new leg up, but my gut is we dont. So will add some shorts by buying more sds tomorrow. spx 1550 is a good place to short.
The world economies are slowing down more, and stocks keep going up. Cna not last.
Housing topped in some markets in spring of 2005, like in my area of west sonoma county, where prices had doubled in 2 years. It did not top out in texas until 2008, thanks to oil.
In fact, if you bought in 2002 in my area, your house is still not worth what you paid for it.
Housing stocks topped at the end of July 2005. I know, as I lost 20% of my money shorting tol in june and july. I then made my money back in august and sept, and then never shorted housing stocks again. Almost did a few times, but had lost my nerve.
Follow the trend, why I am dumb shorting again. spx 1533 for sure tomorrow.
My Uncle, who was on the panel investigating the 1987 crash, and is super smart (he told me the economy was going down the toilet in Sept 2007, when he sold), says all the leading economic indicators are going down fast, and Italy is a mess waiting to happen. he sold all his stocks, after buying heavily in april 2009, last week.
I think this rally still has legs, so will dump my short and put it back on at higher prices, will take profits on the sds if we drop at all tomorrow, and then put more back on at spx 1530, then more at 1550, and then sell the farm and short the market at 1570 if we ever get that high.
FEd can not buy everything, and can not prop up stocks forever. The only govt agency that can actually stimulate the economy, our congress, is intent on hurting it instead. Bright. But they sure look good in those sound bites!
Hope you are wrong, put 20% of my money into sds at 47.75. will buy more at spx 1530 or if I get any short term sell signals.
Am short again, look for massive up day tomorrow!
Abby cohen, on wall street week, at the end of jan 2001 was super bullish. the last time she was bearish, was in another lifetime. Perma bull.
I learned a long time ago, when everyone agrees a stock or market can only go up, like appl when it was over 700 and everyone agreed 1000 was a done deal, that the end is near.
Not enough optimism yet, but pretty close to put in a major top. Watch for the next 7% correction and rally to new highs for the final top is the most likely scenario.
Have order to but sds at 46.7, and will buy more if we hit spx 1530. my system was right, another run to 1525 and more likely 1533 before any correction.
This is the energizer market, nothing can stop it, or will something eventually stop it?
I just almost bought a k of sds at 47.12, but the easy money policy is too hard to beat. The chinese RE situation will be the bubble that breaks hard and causes the next recession in this overal depression. When is the question.
Hard market to play, when the end is so close, and when it starts it will fall hard and fast, 5% a week at least.
Thanks for the links.
Oh no, this time it will be different, unlike the 05 top in real estate in usa. The chinese are too smart to have a financial problem. And the fed will save the day in the USA too.
History never repeats itself, isnt that the classic quote?
Have also read of the negative corelation between the spx and commodity prices. commodities were down 53% in 08-09, spx about the same. They were down 18% in 10, same for sxp.
They are down 11% so far in past couple months, will the spx folloow soon?
BTW, I remember 1988-1989, when commodity and oil prices went up big time, and the market marched higher and higher.
I have noticed that often markets-stocks bottom at a death cross.
Now, rallying back to a falling 200dma and then failing, that is as bearish a pattern as you can get. Look at may 2008 for the spx.
When defensive stocks and energy stocks lead the market, like now (but also with financial stocks thanks to the fed. Normally, it would be bullish for financial stocks to lead) the final top is close.
However, this can also be a time of big rallies into the final top, so going margin short is not smart.
bottom line: Bulls still in control, but for how long? If you are long, keep tight stops is my thought. I prefer to wait for the next sell signal. Will short a little at spx 1530 if we get that high on monday.
Fundamentals are getting worse, but not horrible yet. When you see auto sales starting to tank, stop being long and start shorting every rally.
Ilove reading old BArrons! cover of mid july 1990, right before a 25% bear that would have been a lot worse if not for first gulf war (want to end a bear market, start a war) had 3 bears running for cover from arrows, article made fun of the bear advisors.
We are almost there, articles saying spx 1700 outnumber those saying bear market coming.
I would not be surprised to see the market up or down 2% on monday, so am flat, other than the 10% of my money in gold. Am shooting myself in the foot for being in gold the past 6 months, as assumed if stocks went up, gold would too. NOT! At least i did nto pick the market leader, appl, and assume would make money if stocks went up.
Sounds like a good plan, undervalued stocks with decent charts. Yes, if you use stops wisely, you will not lose too much money, unless you buy right at the top and get stopped out right away.
My gut is we go up into the end of march or even april, bad news be damned. But i would use etf's myself at this point in the bull-bear cycle, as a classic last rally has poor participation, and so most stocks will not go up.
Getting all kinds of important non-confirmation, but not enough to call an important top yet. If we go up, with lots of volatility, the next month, then sell the farm and short the market.
System keeps me out of trouble, gut is based on intuition that any pure set of numbers will never be able to always predict.
Making mistakes is the best way to learn. Once again, I needed to just wait a couple days last week to make good money on my short, as the sds hit my upside target of 49.3.
bottom line: No "system" is as good as experience. Having done this for so long, rallies and corrections always last longer than anyone thinks, or logic would say makes sense. this current almost 4 year old rally (begun march 6, 2009) only makes sense if the economy is about to turn around and march upward faster, which only makes sense if you believe the fed alone can fix the economy, and that other governments can solve a financial problem that they have not had any luck fixing so far.
Seasonal postiive for 2 more months. Market topped out on March 24th, 2000. I will not miss out on the coming bear, will be fully short by end of april, and start shorting again soon.
Enjoy the weekend. Remember, anyone reading this, your health is all you really have so eat right and dont worry about lifes challenges, as worry will kill you faster than any bug can.