9 replies to this topic

[A-ha]

The market went almost nowhere in the last 2.5 - 3 months. Some indices gained little some indices lost little, the overall trend was an upward drift but no real gains indeed. Meanwhile significant bullishness was built among public during this illusional period. Today SPX is almost where it was on December 18, 2006 and NDX is well below Jan 18 high. However some of the leadership names in NDX got decimated even before the earnings. I see this time frame as a topping process. I believe it is over or about to end. Indices are set for a broad sell off across the market.

[greenie]

Thanks. Two questions - (i) what do you see right now that suggests that the topping is complete immediately and it will not go on for another month or so? (ii) Why did you take those index short positions (QQQQ and QID) before the topping process even initiated? I understand shorts in the individual stocks, but the indices are different. Did you expect that there will be no topping this time? Not being critical - just trying to understand the methodology.

[bliss just missed]

The market went almost nowhere in the last 2.5 - 3 months. Some indices gained little some indices lost little, the overall trend was an upward drift but no real gains indeed.

Meanwhile significant bullishness was built among public during this illusional period.

Today SPX is almost where it was on December 18, 2006 and NDX is well below Jan 18 high. However some of the leadership names in NDX got decimated even before the earnings.

I see this time frame as a topping process. I believe it is over or about to end. Indices are set for a broad sell off across the market.

Assuming you are correct, what are your plans to cover. Do you anticipate a mild selloff or something more significant...more than 2-3%?

Now, if you are incorrect, at what point do you cover. Going into options expiration next week, I would be careful since the market tend to have a positive bias. So, if we rally, say to 1460-65 on the S&P cash, will you hold on or cover. Say we run to 1500, would you cover. If I said 1500 before 1400 and was right, what would you do? Good luick.

[A-ha]

Thanks. Two questions -
(i) what do you see right now that suggests that the topping is complete immediately and it will not go on for another month or so?
(ii) Why did you take those index short positions (QQQQ and QID) before the topping process even initiated? I understand shorts in the individual stocks, but the indices are different. Did you expect that there will be no topping this time? Not being critical - just trying to understand the methodology.

Being criticized and questioned has always been good, helped me to discover the missing or unseen..as long as they dont come from sick mind sets with ill-intentions.

So here are my answers:

i) Leadership, trend and sentiment, earnings.

By trend, I mean all major indices, even their derivatives have been up against 4 year channel top lines for at least 2 months. That is why no index was able to move higher in the recent months but in fact they all have been drifted along those top lines. That was an intermediate term distribution that cracked the momentum coming from early fall.

By sentiment, I mean options data, Equity, OEX and CBOE options data I refer here. not "people is bullish i am bearish thing".

By leadership, you probably seen my thoughts on OEX. But there are more... Semiconductors are death, they have been in a bear market and there is no sing of any improvement. They lead over the long run. Similarly NDX lagged all major indices. But these can take longer and they are not the precise reason I am making a call here. It is the most recent weakness in OEX that convinced me. Also Dow which was the second leading index is showing somewhat very similar weakness.


And finally earnings were almost as expected with more disappointment in Tech. Once the earnings season is over the market will have enough data to look forward and it will not be pretty, especially for Tech and Semis.


ii) I took those index short positions because it was the most probable action based on historical data but I underestimated what I actually said from the beginning. Terminal moves can be violent. I also underestimated liquidity pump by FED. So those trades balanced out most of my gains in Semiconductors which were also supposed to lead NDX. It was the liquidity that mindlessly poured into ETFs as most of the leading sectors didnt get a dime from it.

The market went almost nowhere in the last 2.5 - 3 months. Some indices gained little some indices lost little, the overall trend was an upward drift but no real gains indeed.

Meanwhile significant bullishness was built among public during this illusional period.

Today SPX is almost where it was on December 18, 2006 and NDX is well below Jan 18 high. However some of the leadership names in NDX got decimated even before the earnings.

I see this time frame as a topping process. I believe it is over or about to end. Indices are set for a broad sell off across the market.

Assuming you are correct, what are your plans to cover. Do you anticipate a mild selloff or something more significant...more than 2-3%?

Now, if you are incorrect, at what point do you cover. Going into options expiration next week, I would be careful since the market tend to have a positive bias. So, if we rally, say to 1460-65 on the S&P cash, will you hold on or cover. Say we run to 1500, would you cover. If I said 1500 before 1400 and was right, what would you do? Good luick.

If it goes against me I will honor my stops that I posted today. If I get it right, I will listen and let the market take me out rather than picking bottoms. I expect a bear market , that will last minimum 9 months.

http://www.traders-t...?...st&p=270742

[greenie]

By leadership, you probably seen my thoughts on OEX.

Thanks for the explanation. Regarding leadership, check LVLT. This was one of the biggest percentage gainer in 2006 among the NDX components. For last two days, it was being sold with very high volume.

Another NDX component I watch is ATVI. It has almost identical pattern as QQQQ from July-now, and is being sold heavily in last few days.

[Rogerdodger]

XD:

The market went almost nowhere in the last 2.5 - 3 months.

I was looking at the SPX chart.
It has moved up but it's RSI has diverged!

[arbman]

I also think the indices topped today, any high will be marginal imho...

[BigBadBear]

His stops were 1455-1460 but he removed them from his signature so who knows whether this is a fantasy short position or the real deal.

I expect at least 1461 before we top.

The market went almost nowhere in the last 2.5 - 3 months. Some indices gained little some indices lost little, the overall trend was an upward drift but no real gains indeed.

Meanwhile significant bullishness was built among public during this illusional period.

Today SPX is almost where it was on December 18, 2006 and NDX is well below Jan 18 high. However some of the leadership names in NDX got decimated even before the earnings.

I see this time frame as a topping process. I believe it is over or about to end. Indices are set for a broad sell off across the market.

Assuming you are correct, what are your plans to cover. Do you anticipate a mild selloff or something more significant...more than 2-3%?

Now, if you are incorrect, at what point do you cover. Going into options expiration next week, I would be careful since the market tend to have a positive bias. So, if we rally, say to 1460-65 on the S&P cash, will you hold on or cover. Say we run to 1500, would you cover. If I said 1500 before 1400 and was right, what would you do? Good luick.

[eminimee]

We could still see 674/75 oex as I would still like to see one more high to make the ED perfect......that does jive somewhat with airedale's work which I respect very much. TWT...

[bobalou]

XD GOOD POST. picking tops are, tuff, now, I just use my chanel lines,w/ my time in the markets.note; w/ my, high trading range posts