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* S&P is showing what can be considered either a Cup & Handle or Inverse Head & Shoulders pattern...
* Nasdaq 100 and SOX both at 200 MA/EMA resistance
Given the importance of these patterns and moving averages to traders, it's highly likely the direction of the market will be determined by whether we can cleanly take out these resistance or not.
One thing that is bothering me here is the negative divergence on the NDX as it makes a higher high and hitting up against it's 200MA.
Probably after the 2pm FOMC meet we'll see whether these resistance hold or not.
This market does not behave like one that wants to sell off much further....looks more like consolidation.
Only a few days ago, i was concerned about 825 (at the time the S&P was trading at around 828/9 when i had mentioned my opinion that 825 needed to hold)...825 did hold and here today we almost tested 875 again. If you look at the slight trend line between the previous 2 highs, you'll notice actually that the projected resistance was actually hit today before we turned...Does it mean the restest failed? i don't think so just yet, as it is now starting to look like a Cup & handle setup.
1st week in 7 that we have had a red weekly close...a sigh of relief to bulls or a reason for concern?
i don't think i have seen a market this volatile in terms of intraday swing in a long time...it's one thing to have huge up days and down days, but to see the type of intraday swings we have been seeing lately..that's not common. Something's gotta give...either breakout or breakdown.
because....
:)
imo, it's a negative if it continues lower and touches .55 to .60 (10ma and 21ma respectively). However it's been turning up since the 13th it seems...so that to me is possibly a good only for the fact that it's not trending lower.
by 'long bear stocks' are you referring to inverse ETFs?
If so, i'm not outright shorting right now. only shorts are via options and strictly for hedging long positions. I'm not going to be shorting unless 825 S&P is taken out cleanly.
I think if we manage to test upside resistance again, we could breakout with a another leg up.
I understand what you are saying...but i just think we need to really separate current economic and fundamental data from the market itself. it sounds illogical, but i think that's the better way to play the market short to interim term...by accepting that fundamentals will lag, and today's NEWS and DATA reflects yesterday's price.
again, i'm would say at this point i am long term bearish, but short to interim term i'm going with the flow...hedged every step of the way where it makes sense.
This period we are in currently is actually very similar to the 1929 to 1930 period...based on volatility not seen since that period and based on time frame of when the top is likely to come.
ultimately, none of us can predict the market...we really can only prepare or react.
there is a lot that scares me about this market...but i appreciate that fear very much.
i hear you...but i guess the difference might be this....
I am not looking at the economic/fundamental data today and asking does it support the price we are trading at today or does it support future price. What i am instead asking is does the data today, justify the bottom last october, or was that low too shallow based on what we now know? I reason that the lows in october did accurately price in the state of our economy today.
So i think in october, the market did price accurately, 6 to 8 months ahead. What i now wonder is...what could this market be pricing in Oct/Nov and has the move we have had thus far completely priced in whatever that is?
Again, i am not married to any positions or possible outcome, but as of right now, i need to see a sustained sell off. That may very well come soon...if it does happen, i'm protected for now.
There is an old saying among traders: "Don't fight the FED".
For the most part, the saying is true..you do not want to go into a fight on the opposite side of the FED. It does not mean that you believe the FED is doing the right thing...in fact, in most cases, many traders count on the FED manipulating and 'fabricating' market movements.
The point is, we are in an environment where we can all agree that things being done are probably not the best course of action. Had we let real estate market collapse or let banks failed, it would have been quick, PAINFUL, but likely the worst would have been behind us already.
We did not...but what we do have now is a government, a treasury, a WORLD in fight for their very lives....as a trader, you need to pick YOUR battles wisely in these times i think.
this is my opinion ofcourse..
To go up against all these people is dangerous.
To bet that these people can defeat the natural market forces and tendencies to 'cleanse' itself is also dangerous.
Best approach then? Quick, nimble, and do not be stubborn about position..in fact, DO NOT PICK A SIDE, let the government and market fight it out...you just trade the volatility and hedge appropriately! Be a market brown-noser and swap sides often...nothing wrong with that.
But isn't that really the point...you are looking for current news or data to justify the market movement today. the problem is, the market moves first (prices in)...then the 'news' catches up...
This is something i think that is worth reminding ourselves occassionally...
I think many investors have a natural pessimistic inclination at bottoms to not believe in what the market might be telling them.
I am not saying that we are out of the woods and the market is giving the all clear signal...but i am saying that we should be open to the possiblilties and TRADE this market.
Just maybe...just maybe GM does not go under and Rome does not burn. who knows...
The "who" part i don't remember...
'turn around tuesday' and 'contra hour' (2pm)....yes i remember
Some thoughts on the market here..
It is interesting to note that the S&P turned almost exactly at 875..an area that a few of us here expected to be tested. If this is the expected turn at 875, then ideally, there would be a re-test of 875 and a push above to break the backs of bears and set a trap for bulls.
I think for that to happen sooner than later, 825 on the S&P might be key and needs to hold...around 825 is where the market broke down in feb. We are only about 3 pts away from that support right now...so clearly the risk is to the downside.
Last thing i am noticing is volume...the nasdaq showing multi-month high on volume yesterday, while volume on Dow and S&P were not as impressive. That tells me it was speculators that were running for the door, and (based on the VIX and P/C readings) institutions might have preferred to stay in equities, but hedge with puts as protection.
With a sell off like yesterday, and what looks like almost concerted effort by major publications to put an end to the rally by attempting to force logic and common sense down the market's throat...it's hard to really bet on the upside, but i think one strategy might be to do just that, while shorting a break of 825...that is a pretty tight stop for any long play.
i don't argue that...and as Court mentioned, i'm sure they will find a way to spin the fact that most banks are pretty much insolvent already...as positive.
it does...
Well, as long as they are wise enough to recognize that possibility...we'll see.
What i don't like about the move today..is that is seems to be news and rumor driven. I see that barrons and wsj did a good job over the weekend...and apparently there are rumors about the test stress that might be affecting the market today.
Opened up some puts in the XLF and SPY this morning...as protection for remaining longs.
...and it looks like alot of folks might be doing the same based on P/C and VIX action.
Closed out just about half of the open bullish plays i had on the board for the last several weeks. In addition, a few puts sold on the SPY should expire and settle today/tomorrow to provide some additional coffee cash.
The natural inclination is to find somewhere to put this cash ofcourse...and i think tonight i'm gonna head up to midtown and have some friends visiting from out of town help me put some of that cash in my belly...
have a good weekend all. It is suppose to be very nice here in the N.E.
Yes, i heard this on BB yesterday morning. I think he stated also that "real buyers" weren't there.
I find it interesting only because it usually is traders that drive the markets. NYSE data shows a spike in program trading over the last several months. Now while most of those might be automated systems, they are triggered by institutional traders...the fact that institutions are participating here might be more a reflection of their interest in volatility more than anything else, but one one thing is true historically, when program activity spikes (indicating instiatutional participation), the market usually does well..when program activity falls, market usually does not.
"free market"...i think it's normal for us to react the way we are currently when bubbles are formed and when bubbles burst. If you step back away and look at this from 10,000 feet...you might be able to breath a sigh of relief and say "ah...things are working just fine; we are in the cleansing phase of excess".
As you move in closer and closer and start hearing voices opining left, right, center, up, down...if you are not careful, you too become emotional over what really is nothing more than yet another cycle of evolution and economic darwinism.
narrow but volatile...i'm counting about 8 times already that we have flipped between red and green for the day?
thats probably a little better than a monkey and dartboard...
joe:"hey bob, i got a good one for you...with nearly a 100pct run in the last month, LOWes aint low no mo...get it, 'low', 'mo'..they rhyme"
bob: "yeah i get it..i like it...lets upgrade!"
fuzzy acconting...from bloomberg this morning..
I can't recall where on the balance sheet this was pegged, but i heard Citi was able to show some 2+billion positively on their books because their credit spread widdened (in other words, they benefit from becoming more risky of an investment).
Not exactly something that should give investors much confidence, should it?
When the S&P closes up for 5 straight weeks...typically this is followed by a down week 6 (that's this week).
Interestingly however, if the S&P made it to 6 consecutive up week, the probability of a 7th up week was high.
Today's action will determine whether we chalk up a 6th up week or not. We are pretty much flat for the week right now.
Those are some awesome returns! nice
As it stands right now...GOOG is in breakout..and all those bears that were gobbling up puts are poised to take a hefty loss (assuming no one spokes investors on the CC).
Would have been nice if i followed through and sold some puts as i intended to. and would have been nice if i COULD HAVE sold some C calls as well...the pricing of some of the OTM contracts seemed way too pricey and easy money to me..
technically speaking i agree...strength does beget strength. a market that manages to forge ahead in overbought conditions, does "show the signs of a bullish undercurrent".
I think if we finish this week up on the S&P, it will be 6 consecutive weeks we have now traded up. I was looking for a study regarding this that i thought i had posted in the past...but can't seem to find. I will re-run it tonight..but i think the gist of it will be that...while you can expect a pull back, the odds of us trading higher than these levels in a few weeks is high.
>I do wonder if a break out can be sustained. "The taller they grow, the farther they fall".
That i do agree with. I find myself not wanting to bet on it though, not yet anyway. I think the strategy i'm following is to let it it fall when it decides, and i'll take my 5 to 10% loss if i happen to be on the wrong side. I think at this point, unless i see at least a 10% retrace sustained retrace, my gut tells me they are bear traps. 10% seems like a lot, but when she decides to fall, i suspect it will be equally as impressive as the recent rally. When when when..is the question. for now, i'm still buying the dips and selling some options around expiration to lower cost.
soon soon...break out or break down next week.
Speaking strictly data...overall sentiment remains bearish:
-Consummer Confidence is just bouncing off multi-year lows
-Michigan consumer sentiment bouncing off a re-test of the oct lows
-Investor's intelligence survey shows a big improvement over a month ago, the bull/bear ratio is .97, but still, 37% account for bearish views while 36% account for bullish views. Given that these guys are almost always wrong...i just don't see this being a case where half of them suddenly get it right. I think it will warn when it shifts to about 45% or higher bulls.
the one sentiment indicator that seems to be warning of a possible top here is the VIX. But consider that this is not an indicator with a fixed buy/sell line...in the year prior to the the Setp/Oct 08 market breakdown, it's range was between ~17 and ~35+. It looks like it may be heading back to that range...that's a big guess there on my part, primarily because it only recently started making lower lows.
i actually haven't seen too much CNBC lately to be honest. just mostly been catching news from net and bloomberg during morning drive into work.
So CNBC is "rah rah" i presume?
I don't know about this...i am not seeing everyone as bullish; in fact that is one of the reason i am bullish...simply for the fact that many of the media personas seem to be bearish or advising that the run is over, in particular the financial and bank stock run.
They could be right...but i don't think so just yet.
Dow 4000 still doable?
that's probablby where the "stress test" comes in...perhaps it will likely show all banks in the same boat so as to not adversely affect the weaker ones.
Google...classic double top showing, with turn at almost exactly the 200MA
With GOOG reporting thursday this stock is poised for huge breakdown or breakout. Seems a lot of bears positioning today, so my guess is a a breakout is likely to clean out all those buying way out of money puts hoping to hit a lucky roll...
i'm tempted to sell some 300 to 330 puts on this...i'm a bit suprised at the premium on these things.
Worth a watch...
China: Let's Keep this Party Going
Lance Lewis Apr 14, 2009 2:30 pm
We got several important data points out of China over the weekend that I think are worth repeating. First was the fact that loan growth in China exploded 1.89 trillion yuan ($277 billion) in March, according to the PBOC. M2 money supply also exploded by 25.5%, which is the most since Bloomberg began compiling data in 1998 and well above the consensus.
If annualized, this rapid rate of credit growth also happens to be even greater than the record rate of nonfinancial debt growth the US was experiencing back in 2007 as the housing bubble peaked (roughly $2.5 trillion) - and China’s economy is obviously quite a bit smaller than that of the US.
In a statement that followed the data release, the PBOC said that the government’s stimulus package was showing initial results, and reiterated its commitment to “moderately loose monetary policy.” It also pledged “ample liquidity” to “ensure money supply and loan growth meet economic development needs.” China obviously intends to keep this party going if it can.
Meanwhile, we additionally learned that China’s foreign reserves grew to $1.9537 trillion in the first quarter. But that was also the slowest pace in 8 years, as reserves grew by just $7.7 billion versus the record-breaking $153.9 billion in the first quarter of 2008. A slower pace of reserve growth obviously means that China is buying fewer Treasuries - which means the Fed will be forced to buy even more US government debt going forward if it wants to keep bond yields in their current range.
Tonight we’ll get China’s first-quarter GDP data. Should China shock the world with a recovery in GDP and a renewed trend of growth versus the expected continued contraction in GDP, it could potentially be a catalyst for not only commodity prices (especially gold) to surge, but for the dollar to fall broadly as well. After all, if there’s a source of growth in the world to invest in (in this case, China), there’s no reason to expect capital to sit in zero-yielding US Treasuries. Thus, anything that's positive for Chinese growth should, in general, be negative for the dollar and positive for commodities (and gold, I'd think).
http://www.minyanville.com/articles/gold-CHINA-GDP-housing-liquidity-pboc/index/a/22181/from/ameritrade
It means be wary of such a creature...poke it with a stick to make sure it's real, but don't get too close, it could be rabid. lol
rsi: 5 and 14
MACD: default 12,26,9
stoch: 9 and 14 (don't really use that mucch however, unless strictly looking for OB or OS confirmation)
i liked fullboogie...reminded me of the now classic Saturday Night Fever..
"My hair! my hair! he hit my hair!" lol