711 replies to this topic

[lawdog]

the difficulty here is that i see this drop to be as much of a technical move as a fundamental move. on the surface, the technical trader will see it as a respnse to the healthcare no vote, but, as my prior posts show, there are technical problems here which suggest a need to become more oversold. so perhaps today and tomorrow will finish the process; on the other hand, perhaps the market bounces here immediately into mid-week, which might then be a good technical setup for a short. so this morning has not resolved any of these issues, so i wait for the market to give me a good opportunity, either way.

[lawdog]

don't trust this bounce; sold balance of longs on bounce to -12. if we rally, i will let it go, looking for a short setup on wednesday; if we decline, will be looking for long setup tomorrow perhaps.

[lawdog]

i think this bounce is just too easy for the bulls, but i am not prepared to take them on . . . yet.

[lawdog]

took on a small short, 10%

[lawdog]

both spx and naz100 rallying back to 30 minute downtrend line. Will see what happens when we get there, which is just a point or two away. One simple way of playing the market is to look which way it is going. Although we have rallied back nicely, the downtrend from a week ago is still intact and this could be an opportunity to catch some more downside. I don't think we have any kind of washout that one would expect with a decent bottom here.

[lawdog]

spx 30-minute chart is right on its downtrend line. Too strong to short more right now; pretty surprising recovery of 20 points. Not going to speculate on which way it goes from here. Holding 10% short but little conviction in that.

[lawdog]

Gaps are difficult for me. Two of the last 3 have hurt me. When we gapped up about 3 weeks ago and passed 2400 on the spx for a while, I initially bet against the continuation and paid for it; fortunately I stayed with the shorts and made back what I lost on that day. The next gap was last Monday, where I was short and it gapped down I think 15 points, then continued to finish -30. I stayed short that full day and it worked out. Now today we have a gap down of 20 points and I was fortunate enough to not close my longs on the -20, but still I gave up at -12 and now it is -2 on the spx, so this day has cost me some performance, and I got short 10% position at -11, so that on is underwater. So gaps have proved problematic, at least for me. 

 

As I think about them, I have stated this rule before, which I got from the guy who runs Minyanville, and he said that if the market holds its lows or highs from the open by the end of the first hour, then it is a very good chance of continuing the trend that day. Applying this to these three recent gap days, on the big up day, after the first hour the gains had held and the market continued up strongly; on last Monday after the first hour, the losses held and we had a good day down, finishing near the lows; and now today, after the first hour the market had come back from -20 to only -12, suggesting that there was a good chance the direction of the gap would not be continued. So that rule, at least anecdotally here, seems to work pretty well. I don't fault myself for reducing my position at -12 in the first 30 minutes, but I could have played it better by seeing that it was much higher than its low after the first hour and maybe held the remaining 15% long position and not going short.

[lawdog]

market backed off 30-min downtrend line. tempted but . . .

[lawdog]

Am enjoying the posts today from thoughtpower and qqqqtrader and others. Interesting and helpful. Now just include some of exactly what you are doing might help give perspective. I don't think you can appreciate a person's confidence in their position until you know if they have some skin in the game. Just something that could help in understanding exactly what you are talking about.

 

I do not think this is the beginning of a new leg up yet. The market has been correcting and this morning's gap down gave the opportunity to run some bears in (although I was a bull who got scared out.) In any event, I think this bounce gives the opportunity to do some shorting here and look for new lows in the next few days. We are moving nicely toward an oversold position, but today did nothing to get us close to truly oversold, so for now I am looking to add to my small, 10%, short position, expecting the market to continue down to give us a truly oversold condition, which would be the first since Oct. 31. 

 

That 30-minute downtrend line in the spx seems to have held, but it's not a big deal to me either way. It's been a lot more fun on the long side the last 5 months, and shorting has been much less profitable. Look at today: if you were a bear this morning you would have figured a nice green day in your accounts, and if you had some NAZ, you end in the red. That's a tough beat. Anyway, I am seeing some things that look good for the short side, so that will probably be my bias for now. But we are still in the strongest months of the year until the end of May, so I am not going to get too aggressive with shorts. I would love to have all my capital intact for a truly oversold bottom in the next week or so, setting up a great spring rally of 4-5% in the averages. I think this will happen; catching it correctly with a large long position will be the trick.

[Rich C]

But we are still in the strongest months of the year until the end of May, so I am not going to get too aggressive with shorts. I would love to have all my capital intact for a truly oversold bottom in the next week or so, setting up a great spring rally of 4-5% in the averages. I think this will happen; catching it correctly with a large long position will be the trick.

 

This is where I am, sitting in money market, I sold out the day after the Fed hiked rates and the market failed to follow through.  It's a bull market, but it's a late cycle, overvalued bull market, which has me a little more cautious than a few years back.

 

I have my eye on TBT at 38.50; it's sitting on a quadruple bottom, been going down since the Fed hiked.  Classic case of buy the rumor, sell the news.  There will be a buying opportunity when the correction is over, if you think bonds are in a bear market now (I do).