Thursday, June 6, 2013
06/06/13 Dead Cat Playbook
The DJIA led all indexes to the downside on Wednesday (percentage-wise). It likely bounces to 15,1xx, followed by a new wave of selling to 14,8xx. I'm more comfortable playing a short squeeze (and less inclined to time a short entry), so I'll be waiting for a clean pitch while playing for the embattled 'Longs.'
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There's my instantaneous analysis, CP.
ReplyDeleteFriggin A I was just thinking the same thing!
DeleteTook extraordinarily longer than usual but I kept confident Mr. Instantaneous in the black suit would come through! ;)
DeleteWe can now feel free to take vacations without leaving our clientele in the lurch, bro. One of us will be around to cover.
DeleteGGB - Just keeps getting cheaper.
ReplyDeleteFMD - I was convinced this one would be red today.
Meanwhile the market makes it's decision, I'm reviewing my existing GTC stink bids and considering new ones.....
ReplyDeleteNLY - Anticipating ex-div rally should begin any day, was only able to lower my basis to $13.82 so needs more effort.
Got Random Thoughts?
ReplyDelete"The market continued to get whacked. All of the major indices were down well over 1%. As I've been saying, the pullback has to stop pulling back at some point.
The Ps are now all the way back to their 50-day moving average. There's nothing magical about this average but paying attention to "daylight" (see the MIM or come to the chartshow) can help to keep you on the right side of the market.
More and more sectors have lost steam. Plot your Bowtie moving averages (10 simple/20 exponential/30 exponential) and you'll notice that many are rolling over. In fact, notice that these averages have turned down in the major indices. A Bowtie down sell signal from all-time highs is not a good thing.
Again, a few big up days would make a huge difference. Until/unless that happens, you might want remain cautious.
So what do we do? As I've been saying, waiting for entries can often keep you out of new trouble. So with the market sliding, it has become tougher and tougher to get triggered. And, after yesterday's action I'm not seeing many new meaningful longs setting up anyway. I'm seeing some shorts but with the market oversold, I would avoid the short side for now. I guess that's a long winded way of saying sit on your hands and let things shake out.
Speaking of "shake outs," the market's job is to frustrate and fool the most amount of people. Right now, it is shaking out longs and attracting eager shorts. I would avoid making any drastic decisions until we see who will be vindicated. Let the ebb and flow of money management (i.e. stops) keep you in or take you out of positions. And, again, avoid taking any new action for now.
Futures are weak pre-market.
Best of luck with your trading today!"
"more sectors have lost steam." The time to short arrived 5/22, agree too late now. Further downside would be too much of a gift, life doesn't tend to work that way very often. Whipsaw McGraw?
DeleteUNG on the 200SMA ropes here... Probably follow natty, a little coal could reheat the boiler?
KOL - Opened 20.12, can we get a little lift today?
ReplyDeleteMy new Verizon service.
ReplyDeletehttp://www.newyorker.com/online/blogs/borowitzreport/2013/06/a-letter-to-verizon-customers.html?mbid=nl_Borowitz%20(134)
http://www.youtube.com/watch?v=tOEvS8awmb4
I think there's at least a small chance we're in a melt up phase that is the exact opposite of the melt down phase in 2008/9. That kicked into gear in September and lasted all the way through March with violent counter trend rallies. What if the same happens here?
ReplyDeleteFolks, check out the 1-year chart of DXJ (Japanese ETF that also shorts yen). It seems to me that the small uptick in the Yen we had since mid-May does not justify the huge correction it had since then. This seems like a shake out of weak hands from this trade. Maybe starting to scale into DXJ now is not a bad idea?
ReplyDeleteOn a different note: why exactly did I sell my VXX calls yesterday???
ReplyDeleteDavid - If it makes you feel better I had 50% of my $$ in SPXS and sold it two days ago.
DeleteIt is really hard to judge the magnitude of some market moves. It could be a small bump on the road or a huge slide like in October 2008, or a huge rally like Nikkei had over the past 6 months...
DeleteWell, my target was doubling my money on these VXX calls. Now I found a better way to double the money -- January 2014 options started trading on AUMN recently! So I recycled the $1500 I got from selling my VXX calls into January 2014 AUMN $2.50 calls at $0.25 (60 contracts). SLV and GDXJ are up nicely today but AUMN is not responding yet. It will respond eventually...
DeleteOil at $20 was a no brainer for instance(How stupid I was for getting shaken out at that price!), currently it's slightly more difficult to judge prices on a daily basis but referencing the longer charts might assist?
Delete$USD broke below its late-April low just now:
ReplyDeletehttp://www.finviz.com/futures_charts.ashx?t=DX&p=d1
So what looked like an uptrend since early February might very well turn out to be a double top between July 2012 and May 2013. In that case, gold/silver should do very well going forward...
Midcaps up today.
ReplyDeleteIs the selloff over? Not sure but I do see a lot of "gurus" recommending people wait for signs of a selloff to be over. We all know that that's an easy thing to do.
ReplyDeleteAdded to EGLE at $4.16.
ReplyDeleteLove this quote:
ReplyDelete"The poker game is not over when the ashtrays are emptied and the beer cans are thrown out," Birinyi told USA Today.
"The poker game is over when the guy who has won all your $50 and $100 bills starts sliding them off the bottom of the pile and puts them in his back pocket. The market works the same way."
Now people are afraid that bonds are going to kill the market. What are we at? 2.05% ten year? Shit we're not even close to getting out of the cup created when our debt was downgraded:
ReplyDeletehttp://finance.yahoo.com/echarts?s=^TNX+Interactive#symbol=^tnx;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
Just keep on piling it on the wall of worry. This market is amazing man. Still way too many worrywarts out there. We will get a melt up phase eventually that will rival the melt down from 2008. I think we started entering that a little a few weeks ago and were quickly shaken off. We still haven't hit the middle of it is my take…
TOF, while the jump in the bond rates may not kill the economy right away, it can definitely damage the market right away, since traders have recently been pricing equities under the assumption that the current yields will stay constant forever (this is what happens when traders are trying to figure out the fair price for NEXT year based on the current bond yields).
DeleteTime for some EWZ? Yesterday Brazil removed the foreign bond holder 6% tax and raised rates, still the Real didn't respond favorably?
DeleteDavid - either that or the big money that missed the run up is trying their damnedest to get back in on the cheap.
DeleteWLT - What if that one guy who bought at $16 today took his gains now? ;(
ReplyDeleteIts a blah trade right now.....shoulda followed all you guys out of it. Still watching it melt.
DeleteThere is a steady sequence of higher lows on GLD since mid-May, which has now reached the resistance level established by the peaks on May 30 and June 3. Time to break out?
ReplyDeleteI still think it gets to 1,530ish before turning back down.
Deletebut i have zero faith in gold longer term.
DeleteSLV has formed a perfect wedge formation on the intraday data between April 29 and now. We have reached the apex of that wedge. Fireworks next week?
ReplyDeleteThat VZ trade would have been nice.
ReplyDeleteThe sixth sense is turning bullish. Long EEM @ 40.67.
ReplyDeleteThe fact that today's trip into the red was bought definitely suggests that we are due for a bounce, until the upper trendline on S&P futures...
Delete