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This market is so rigged, it's sickening. Most daytraders I follow are all saying they are seeing the same thing I am in the way intra-day reversals happen. Totally rigged. Almost untradable.
So, here we are at SPX 1300 or so and the expected EPS for the SPX for 2012 --- 2012! --- not 2011, is about $100 per share on the most optimistic scenario. A PE of 13 gets you to...wait for it...1300!
So now what? The Fed has clearly been the cause for this. But now everything is so overpriced, or fair priced, it seems there is little upside. The Fed is supposedly done with QE in June, and considering the SPX was about to break in late Aug the 1040 neckline before they came out with QE thus running the DOW up 2000 points straight up because they basically made all other investments un-investable, the 2nd half of the year is going to be very interesting without big daddy out there behind them.
It seems all the hedge funds and trading firms are not trading the stock market and thus trading commodities, hence the huge food price increases, and thus, problems like Egypt.
They are going to try and hold things to prevent a 'bear raid', but that gap down in AAPL is an official 'break' of the trend and eventhough they might try and push it back up to that $350 area again to scare shorts, just watch what it ends up meaning. C is crashing on pathetic earnings and the DOW is up 50 points. Again, huge disconnect. AAPL reports tonight and I'm betting most of the fear of a 'big' short in the stock is that. So, tomorrow will be interesting indeed.
Well, we know that the put to call ratio is at levels (.35) that it only saw last April at the top. The VIX is at 15 and the QQQQ along with most other etfs are trading at RSI's around 99. (2 period). Throw in a wave pattern that screams 5th of a 5th, along with the end of the typical Jan 2 to 3 week prior year retirement investing ending, you have the makings of a substantial reversal right here, right now. But what would cause it? Well, we know the volume on the upside has been a joke all of the last 4 months.
But then, BAMM! Steve Jobs has some issues again. The last time this happened the stock topped out at $195 and fell to $85 before he came back to save it. Since AAPL is some 30% of the NDX, (QQQQ), and with the Nas futures down 25 points right now, I have to believe that this could be that beginning of this ABC selloff over the next few weeks.
Now, an interesting tidbit is that if AAPL chokes here, then all the secondary companies like BRCM, QCOM, MRVL, etc, are going to choke, too.
With oil at near $100, food inflation taking off sparking near riots over the globe, and a valuation in the stock market clearly pumped by the fed in this artificial attempt to create the illusion of something that isn't actually so, yeah, a pretty big top could be here. But I think we go down for a month or so, bounce pretty hard and fast into the typical April-ish area, making a possible double top around these levels, or possibly a tad higher to hit 1300, then the market sells off in the 4 year cycle low due Fall this year to maybe reattempt a test of 1040 again.
I think that SPX level of 1040 needs to be tested again to see if it was real. I think that was clearly a head and shoulders breakdown level that should have given way, but was reversed artifically by the Fed's QE pump job. They destroyed the shorts when they did that, but the low volume supports the idea that none of that rally was a true fundamental rally. You see, fundamentally we keep hearing how strong these multinationals are. But why? Because they have layed off so many workers, they are all efficient as hell. But they are a small minority of the total amount of companies out there who aren't making record profits. Thus, the companies that comprise the DOW and larger SPX 500 are an anomoly and don't represent reality for everyone else. So, the possible $100 per share for the SPX predicted for 2012 is mostly an illusion. Take away the weak dollar, cut off 5% to 10% of that number. As they start to hire again, the labor costs will eat away at that number. If oil starts moving up over $100, overall GDP starts to drag very quickly.
Most of the tech world has only caught fire due to the explosion in smart phones, which still only comprise what? 15% of the total cellphone biz? But that is just some 10 companies of Nasdaq?
You see, in the 1990's you had $10 oil, $200 gold, no inflation, and world peace. Today, you have, well, all the crap going on today. It's not the same. So, the idea that the market is going to be trading in this phantom PE expansion is all Wall Street (and CNBC) happytalk trying to scare people back into the market for Wall Street's sake (and the commissions).
This AAPL stuff is big stuff and could be a bigtime game changer.
But watch the stock tomorrow and specifically the Q's. "They'll" try to reverse it back up to freak out the shorts and give the longs a reason to not sell. But it won't work over the week. Stay short.
Hey Plash, just sit back and hold some cash ready. There's a bigtime trade coming. I'm not sure if it's up or down, but it's coming. I have a feeling we're going to get a quick ABC correction to a Feb/March low, then a big pop into summer. It's that low I'm looking for.
Well, it's not really fair to call TZA the worst ETF because of course it was bad considering what the market did.
What I am wondering is simply looking at the chart of the Q's or DOW or whatever index you want, look at that clear head and shoulders 'about' to break down in late Aug and the timing of the Fed's QE announcement. Literally the same day almost. They knew the market was about to tank and thus came in to rescue the market and scare the literal hell out of shorts. Thus you get 30% in 5 months on the $RUT and a more than double on TNA and a crash in TZA from over $40 to $15.
Yet, all that considered, the public has barely come into the market. Now let's look at simple valuation. IF the SPX does in 2012 around $100 per share EPS, a multiple of 13 gets you to 1300, and a higher valuation gets you to 1400 or so. We're almost at 1300 now. So, not much upside and a ton of downside because the market HASN't done that $100 per share.
See?
Ron Insana on CNBC yesterday said commodities are going to see a 'super spike' early next year, just like oil did in 2007 to $147, then crash mid to late next year.
But that aside, you HAVE TO WATCH THIS...
http://www.stansberryresearch.com/pro/1011PSIENDVD/PPSILCAD/PR
It's about 20+ min long, but man, oh man. Just watch it and pay attention.
Oh yeah, you have to love Paul. You know what's funny about him is that during the Republican primaries where he was running for Prez, he was laughed off as the 'mad professor'. But now boy has he turned out to be dead right about just about everything. He's no dummy and truly gets it. So he's going to be fun to watch. It seems that Obama is starting to come around to the biz community and they are all in cahoots with Wall Street and especially the large banks. They don't want to change things one bit and guys like Paul are very dangerous if he starts to get traction. We'll see how much power the Tea Party ends up really having because it's already starting. This tax cut extension bill is now turning out to be a joke filled with spending and earmarks and that was not what it was about and the fact that Obama is touting it as is says tons about his about-face.
Can you f'ing believe TYO? 1 friggn' day from this we sold out. If they didn't add the 7 year, it would probably be over $70 right now.
Damn it!
I hope you got into MNKD.
As for the market, I made a huge mistake in Aug. Most have come to follow me from my cycle predictions over the years and foolish me wasn't following my own advice. The cycles have this quarter as THE strongest of the entire 16 quarters of any Prez cycle. That's why the market was never going to break down out of that large head and shoulders at 1040. Now next year gets interesting because it's the strongest year of the 4 years, but by miniscule % gains, which makes me think that most of the rally has probably been seen. But there's clearly more to go into about April/May because the breadth indicators like the bullish% charts, Mc Ocsillator, and 50 day MA% charts of the SPX are not yet extreme like they ALL were in April this year. But man look at the put to call chart. Yowza. That's screaming top here.
So, expect more upside, but limited into year end, if not a beginning of profit taking before a rally from mid to late Jan to April/May.
Honestly, I think we get a near carbon copy of this year. The good thing for us is that now we have clear setups with wave counts setting up for monster trades next year. No BS this time.
No, I got rid of that awhile ago. But things are about to change. The market is making a near perfect 5th wave of a complete wave count. Just look at a chart of the Q's or SPY from the late Aug low to now and you got a perfect example of how elliotwave works. Now also remember that the 4th q of the 2nd year of a 1st term prez is always the best. Well, here we are.
Yeah, that damn TYO trade now looks pretty good, of course right after we SOLD it out for a loss. Welcome to trading! I knew I was right on it. It's that 7 year that scared me. The idea is that many are dumping out of the allocated 2010 bond trade to raise money for the new 2011 stock trade.
As for silver, I don't know. Commodities are dangerous.
Hey biotech researcher, it's a thing a buddy of mine wrote in MetaStock. Here's one for you, and the rest...
MNKD.
I've been looking more into this one and it looks very promising. Dec 29th they have a possible FDA announcement on approval of an insulin drug, Afrezza, and if it gets approved, I think could be a new DNDN possibly. I took a position in the Jan'12 $5 calls today at $3.40. Could be a $20+ stock.
http://seekingalpha.com/article/240665-clearing-up-the-uncertainty-around-mannkinds-afrezza
I picked it up on one of my screeners and was trying to find out further info. Notice I mentioned OREX the other day in response to a question as to why the options in ARIA are not inflated like OREX and MNKD. Well, look at what happened to OREX today. $4.70 to $11 this morning.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=57409189
That's the kind of stuff you expect when there really is something coming out that could have a big effect on a stock price. You didn't have to know anything about the stock or sit in it for months on end. Just watch the options.
Basically looking for another OREX, but I don't think ARIA is it. At least yet.
Check this out -- ISPH. I've been doing some research on it because it popped up on my metastock screener for high volitile options pricing for Jan and after looking at a bunch of these little biotech charts, I now know why the market is running like it has. These are all responsible for the Russell to be doing what it's doing.
Okay, I guess I'm the idiot here and have it all wrong, except for the fact I've been doing this now for over 15 years and have made millions doing it. I'm just looking for another big winner and my point was that the options typically back up any expected large move, which in this case isn't the case.
So, my point being that based solely on the options prices, ARIA will most likely not move anywhere in at least the next two months.
Well, here's two perfect examples --
OREX -- $4.82 Friday close, the DEC $4 call BID at $1.70 with TWO weeks left.
http://finance.yahoo.com/q/op?s=OREX&m=2010-12
Why? Some diet pill thing. I don't follow it that close, but it makes my point in relation to why ARIA's options are not expensive considering a potential event. You see what I'm talking about? No market maker is going to bid a call option with two weeks left almost 30% over intrinsic without a reason.
Another is MNKD -- $6.34. The Jan $6 is bid $1.53. Hell, the $7 is bid $1! Again, an expected event in Jan.
http://finance.yahoo.com/q/op?s=MNKD&m=2011-01
The main reason for both is that market makers try to make doing a straddle meet the expected volitility on the news. So, buying the call and put together at the money should cost you what the stock will move in either direction. With FDA announcements, you really don't know and thus the need for a straddle over a directional play. You pick one direction over the other and win, you hit a lotto ticket. But we all know that's a rare event.
These two examples are why I am wondering if you're a bit too excited about ARIA's near future because money talks. Forget charts. Just look at how the options are priced in any stock and you'll have all you need to know typically.
Hey, I even have another -- ISPH. Friday's close $7 with the Jan $7.50s bid $1.15.
ARIA's are pennies. In other words, no one thinks much of the stock action anytime soon.
Oh, it's a sure thing. It's just a timing prob I had with the options. And actually, now that I'm watching it, it's looking actually like it's probably going to start really moving north. The bond market is giving a big middle finger to Bernanke and it makes you wonder what he's going to do about it.
New to ARIA here from reading around and seeing all this exciting stuff potentially coming for this stock in the coming few months, specifically Jan apparently. I like so far what I see, and you have to agree the chart looks beautiful.
But there's one thing that bothers me and I've learned this from years of doing this and specifically with these biotech stocks - the option's volatility premium. Typically when a stock has a potential monster announcement coming shortly, even if it's outside of the company's purview, (ie, FDA announcement) you'll see the option's prices shoot up to well north of 50% of instrinsic value, typically more around 80%. For example, an option that expires within a month or two of the expected anouncement will trade say, $2 for a $4 or $5 call option with the stock trading at $4. I know my math doesn't add up, but you get the point.
Here, the Feb $4 are only .80 and the Jan '12 are only $1.65. That's almost free considering the potential everyone is thinking.
You understand my point? Something doesn't add up because if all this was truly so great, the options would force you to pay up for it.
What's missing?
You know, check this out - a big selloff could be in the offing because most of this run probably is nothing more than 'performance chasing', setting the stage for the capital gains tax rate selling before month end.
You know, check this out - a big selloff could be in the offing because most of this run probably is nothing more than 'performance chasing', setting the stage for the capital gains tax rate selling before month end.
First off, read this...
http://www.cnbc.com/id/40416734/
Now with that in mind, the reason stocks like NFLX are doing what they're doing is precisely because of what that guy is saying. All of these computer traders are basically screwing the market. It's scared probably 80% of the public out of the market, thus the low volume, and has created these setups where the market magically runs when it is breaking down, and then falls dramatically when it should be running. Like that guys says, the market's a sucker's bet and is rigged.
But that doesn't mean you have to stay away. No no no. It just means you have to be extremely careful. So, if the market is trading via the waves, then we are in a final leg setup and a 4th wave pullback probably somewhere around DOW 10,750+ as a bottom and SPX 1150ish. It shouldn't go lower than the Aug peak, which I'm counting as the wave 1 high.
We then get the final leg 5th wave by month end leading into week 1 of Jan, and then the market begins to get crushed next year in a dramatic selloff from sometime around April-ish as a high. So an ABC from the Jan-Feb peak down, then another 'flat' into April and then BAMM.
That's the setup. What I want going into year end is a selloff here to those numbers above, probably QQQQ $50 ish and then go long big the Q's Feb calls for $51. Should be around $1 or less. That could be a biggy because the 5th should take the Q's between $55 and $57.
Man, market's been tough with all this manipulation out there. This insider trading stuff has exposed why the market has been so nutty. These hedge funds are all colluding with each other to push stocks up all working together. This is why you've seen stocks like NFLX, FFIV, AMZN, AAPL, and all the other low float stocks moving the way they've been moving. The bank stocks have been falling, which normally would have made the market in general go down. But that hasn't been working out that way.
In other words, things aren't normal. So, it's dangerous out there. Now, we didn't get the Q trade. So, I'm looking seriously now at BRCM as a big put play. But the market most likely has hit a top for now. Possibly a quick selloff over the next few weeks, then run at the end of the year, then another selling in early Jan, then a ramp into April-ish, then fall off the cliff into next fall.
We'll see, but the market is just so screwed with, all these imbalances are now getting resolved.
Yeah, Ron Paul is going to be very interesting now that he heads the committee that overseas the Fed. He hates the Fed and is in line with Fleckenstien who thinks that all this country's problems dating back to the '50s were caused by the Fed. Now he'll have to power to audit them and see where all this money has gone. The conspiracy being that they've been using tax dollars and newly printed money (that we all now owe) to funnel through the banks by buying their bad debt making them go out and buy stocks to prop the retirement accounts up to create an illusionary wealth effect.
Sounds like a great plan, but the problem is who gave the Fed the power to prop up anything? Talk about a dangerous precident.
Their measily $600billion is peanuts compared to the amount of money that's wanting out of the bond market now.
The volume is irrelevant in index ETFs because they are derivatives of larger indexes.
The trade clearly hasn't worked out as planned as when I got into the trade the bond was clearly looking to break out and making a great weekly chart setup. But now since Direxion added that damn 7 year to the mix, it's held us back.
But now things are starting to look up. I'd give it until next week because next week should be a pretty good up week which means much of the money that's been in bonds is now coming out to come into the stock market which should send the 10 to at least possible 3% next week, getting TYO to that $45 to $48 level possibly next week. After that, things change. I'll explain in the email.
Yeah, well, looking at that, we should have gotten into that one. But today's selling is clearly giving me hope in TYO. The 10 year looks almost for sure to break through 3% shortly. Even the 5 and 7s are selling off. And all this on a day the Fed begins buying! Bernanke has to be freaking out. What appears to be happening is that there's more supply hitting them than they have buying power. Too many people piled into bonds. Now it's a small door to get out of even with a measily $100 bill of buying. The bond market is worth trillions.
In other words, either this 'correction' we're about to see is just that, or you're seeing signs of something possibly bigger. 'Everone' thinks this is a buying opp for the end of the year. But everytime the market gets on the same page, watch out. Just look at Sep and Oct. The playbook was to selloff into late Oct, then spike into year end. Well?
Maybe everyone has this wrong too.
Sorry for not responding, I've been busy with a new trading system. I'll explain later. But the problem we have with TYO is that they now have included the 7 year as part of the ETF equation. Now there's no doubt that over time TYO has nowhere to go but up.
But we don't have that much time. What happened today I think is that the Fed saw the selling in the 7 and 10s and specifically the 5s and came in and started buying. They'll never admit it, but how else do you explain a day when the selling was overwhelming and then out of the blue, BAM. Now I know they announced the buying for Friday which included the 7s, and thus the buying in them today overall. Probably some short covering.
But you can't deny the selling has been consistent since last week's Fed meeting. I think we see $45 for sure, getting us at least our money bac
Market has some BIG upside here and I think that bodes very well for TYO. Just sit tight on that one.
Well, Eminiforecaster says...
We expect the market to decline next week all week with some upside the
first couple of days to trade the longs in before the sell off.
The market is moving higher with our G-line forecast as was predicted and
is mainly due to FEDs EQ2 efforts.
We expect consolidation tomorrow, another peak at the high on Monday to
shake weak hands out and a pullback.
Tomorrow is Friday and we have Emplyment situation numbers out at 8:30 am.
More on Sunday.
Wishing you the very best,
I don't think people truly understand what the Fed is doing here who think the market is on the verge of some large selloff. I did, but now after reading countless articles about it, I've come to a completely different point of view.
Okay, the market is doing what most expected. However, just wait a bit and you'll see the 'real' reaction. However, what I think will happen over the next few months is the 'real' trade - the banks should take off. Not neccessarily BAC, but specifically the low PEG ones like PNC.
A trade on that I think would be to buy the Jan 12' $50 calls for as close to $10 as possible with the stock headed easily toward $70 within the next few months, or sooner. It's just now breaking out of it's downtrend and has fair value of about the April high of $70ish. It's at $55ish now and just breaking out.
You see, the banks are the big winners here because Bernanke just guaranteed their future and now their profitability which will start to skyrocket. Since he wants stock to clearly go UP, it will be the banks now that lead.
HBC and PNC are the two most profitable/cheap ones out there and will get the attention.
Now for TYO, watch IEF, which is the ETF that TYO tracks against. No one is going to want 10 or 30 year bonds with the devaluation of the currency like this. It's going to be payback time for the US. As one guys put it from Morgan Stanely yesterday on bloomberg, the move from 3.2% to 2.5% on the 10 year was all Fed front running. Much of that was caused by a report by Goldman Sachs that suggested the Fed would buy 30 year bonds. Goldman was dead wrong and now most of that 'hot' money will have to bail to run into the shorter end with the 3's and 5's only chasing the rise in prices. That means the money that caused the move in the 10 to fall in yeild to where we are now will be leaving shortly setting up a move back to that 3.2% area. That puts TYO probably around $52ish. Today is the 'top' for awhile I think. However, the DOW could be setting up for a move into the 12ks soon.
Bill Gross yesterday said he'll be selling the Fed those bonds they want to buy and said not to buy long dated bonds like 10s adn 30s.
They're not buying 10's. They're looking at 5's specifically and 3's. What they are trying to do is run up the spread between the longer term bonds like the 10's and 30's and the shorter term 3's and 5's so banks can make more money. The fed will buy these off the banks directly freeing up money for them to hopefully lend.
The prob now is all these countries are pissed because the expected lower dollar screws them. Well, apparently two can play that game.
Could get ugly. 10 year is most likely now gonna fill the drop from 3.2%, which should get us to $50+ on TYO
The war begins...
http://classic.cnbc.com/id/40000129
Look at this chart of the 30 year. Yikes. No one is gonna show up at the next auctions. TYO headed for 50.
Well, Gross says QE is the end of the bond rally, whether Wed or a month or two. I completely agree with Bill Gross when he says these problems are not Bernanke's but our own and it's sad it's come down to him to try and fix things. Just read this...
http://www.pimco.com/Pages/RunTurkeyRun.aspx
What I suspect is about to happen Wed is we get a pop, maybe even for a few days, then a BIG selloff. I say that only because everyone is talking a sell the news on the announcement. The "smart money" will clearly wait to do the math as for what it means. So the "real" market effect wont happen for awhile. As for daytrading it, you want to fade the move right after the announcement.
As for mini trading, I've learned to keep it simple. The 5 ema direction is what I use.
You all know how I always tell you how Oct is usually bad because mutual fund's fiscal year ends which means they want to get out of losers to raise money for next fiscal year. Well when the market runs up like this into EOY, they wait to sell their winners until Nov so they book their taxes into next year, not this one. So next week could be a big seller week.
Talk about a reversal day!
I think that article I posted might be on to something. If you look at the futures right now, the SPX is up 10 points. That's big. Why? The G20 meeting over the weekend left everyone agreeing they won't bitch about the falling dollar - or in other words, the dollar will fall more as evidence by the Euro right now trading almost at 1.41 with 1.40 being resistance. So, everyone is apparently buying stock futures assuming the market will rise as the dollar keeps falling.
But do you see a problem here? The SPX might trade to 1200 tomorrow, but based on what? The dollar falling? At probably $76ish tomorrow, or $1.41ish on the Euro-dollar, that's a pretty big low area. There's going to be a bigtime rebound coming. But why do this now? It's like Nas trading at 5100 in 2000.
Maybe because the Fed is trying to juice things enough to blunt the effects after they don't do QE on Nov 3rd?
Net, the problem with that is the reason why the 4th q of this year and the 3rd year of the Prez cycle is typically pretty good is because the Fed and congress 'ease' to make things good for presidential re-elections. You see the problem? THEY CAN'T EASE ANYMORE!
Oh, my thoughts exactly---->>
http://www.decisionpoint.com/TAC/HARDING.html
Nov 3rd could be VERY interesting and VERY profitable for us.
I'll check it in a minute. How about this guy saying sell bonds now...
http://www.cnbc.com/id/39794020
I'm long VIX Jan calls. Same thing. Now read this.
http://www.bloomberg.com/news/2010-10-15/fed-wants-to-hoodwink-public-fools-itself-commentary-by-caroline-baum.html
And then read this.
http://curiouscapitalist.blogs.time.com/2010/10/19/will-the-federal-reserves-next-meeting-lead-to-civil-war/
Nov 3rd gonna be a BIG day!