Today my friend traders and I start looking at a longer term perspective and the possibility of wave B of primary wave 2, starting at the 87.50-87.60$ level. We look at some potential supports for this market and remind traders that we are still in a bullish channel nonetheless. 87.50$ has been incredibly strong resistance and support in the past, and it should hold for the time being as marked by the sell off and the 1 minute dead cat bounce at the end of the day which is very bearish. The financials were weak all day, despite a great earnings report from Citigroup and the bearishness on good news dictates a potential reversal. We look at XLF, C, GS for more guidance. Finally we look at some gold and the VIX for any indication of when the market will reverse and recommend putting a stop on gold if it were to fall below the 200 SMA. We currently are holding a lot of PUTS on XLF and SPY.
We will have an educational video out late tomorrow for those who have only started trading.
Well done. I know you are long AAPL for the longer term. Thoughts over next week about it going into earnings, if say the market in general is trending down?. Thanks.
I took off about 30% of my long-term positions 4 days ago to add them later.
Because S&P500 closed at the 61% retracement of the last leg up today, I decided to take off majority of my shorts from 876 in the AH (which also happened to be the intraday resistance turned support). Gonna look for a possible bounce, big or small, on Monday before I re-enter my position; anyone else feeling the same way?
Err, I meant that the “intraday resistance turned support” area coincides with the 61% retracement.
My feelings are:
- I want to be bullish. However the overbought levels are pretty high with several indicators divergences.
- I want to be bearish, but every time when SPY touches the 10 SMA it bounces.
http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=6&dy=0&id=p46555825612
Probably it will be wise to wait for this coming week and see what will happen
Just remember one thing. All the nonsense you hear on CNBC about the bear market being over is just a bunch of horsecrap. This is NOT the end of the bear market. We are NOT out of the woods. Cramer who has called 9 of the last 0 bottoms will be proved wrong, once again. So trade how you like. Just don’t get fooled again. New boss same as the old boss.
Talking about that, watch the video:
http://www.cnbc.com/id/30268549
Fas/Faz – Was just looking at the charts a little bit and at the close faz retraced to the 38.2 retrace between the daily high/low, which was also right below the daily vwap (looking at 5 min chart).
Fas dropped to the vwap and the 38.2 retrace also, as one would expect. So the day ended with fas at support and faz at a resist line.
I am happy with the vol with the highest vol bars of the day on fas red candles/faz green candles. I only sold 1/2 a position of fas calls in case bac pops the financials higher monday. RIFIN lost 600 support and also couldn’t break through the fork, so that is good for us bears.
Not guaranteeing anything, but I would like to point out what happened to C today (lost almost nine percent) after the runup to its earnings announcement.
BAC basically treaded water this week, but its stock has nearly tripled in the last six weeks, so we could see another sell the news reaction on Monday. Plus, we’ve already been told WFC’s earnings and the Wall Street Journal has reported that Morgan Stanley’s earnings are going to be hurt by bonds.
I think this is the week that the worm turns.
BTW Idan, looking forward to your video tomorrow, I think its a great idea.
Second that. Actually, I consider every day’s video an educational video. Thanks.
I saw here last week IDAN saying faz @ 50 or was it 5 ,I own it, also I read a chart gld at 94 eom / anyone able to answer thanks
I said faz could eventually reach 50 2 weeks ago, but also said if it breaks 18$ to get out… now though it might be a good short term play again…
Gold potentially good, unless it breaks my support line that i show in the video.
I own a ton of gold but only in my IRA and a pile of inherited coins. Stay away from gold as a short term trade. It is low but could go down to 750. Wrong season, wrong timing unless you are prepared to hold it.
Pile of Inherited Coins?
A 1933 Gold Double Eagle sold in 2002 for $7.6 million. You may want to check.
Mine are Mexican coins from the 30′s and 40′s
Faz/fas decay was $0.93 this week for a combined short profit with no risk of 4.5%.
Not a sexy play, but profit talks.
(I did still have not entered this trade)
The Bear Market is over folks. If the market can rally as it is with S&P earnings negative for the 4th quarter and estimated to be $20 for 2009 then a new Bull has started. It is as simple as that. Noone in thei right mind would buy now with these statistics unless a new Bull has started.
Lloyd,
how can you say this with conviction? take a look at my SPX WEEKLY ZOOM on stocktock social and you will see that we are banging our head in the same spot we have several times.
further. NOV we rallied the same percentage in the russels in the same amount of days …. that said, how can we be convinced that the market wont just roll over and make another multi month run lower like it did JAN-MAR.
im not convinced that the bear market is over but im also not convinced this rally is over. however, im short everything under the sun as the most likely action the market takes next is lower.
Richard,
I was being facetious when I wrote that. When this Bear market is over the Dividend yield will be close to the PE ratio. Right now the dividend yield is 2.81% and the PE ratio is 58%. In 1932 at the bottom of the Bear the dividend yield was 10.55% and the PE was 9.9. That is where we are heading. Right now with the S&P earnings(GAAP) projected to be $20 for 2009 the S&P average should be about 200. I’d say we’re are a little overvalued right now.
Not until we blow through 913, maybe then I will go along with that. For now we have at least two more legs down before a bull market can even think about taking the lead.
I say that there should be a public list of fund and institutional managers who are buying now
so that we can all follow them from now on and make a lot of money. If anyone can name some of them please list them here. I know plenty of people who would like to make up for all their losses from 2007.
You da man! Great idea! Ha ha…
Talking about financials and getting perspective on bank earnings:
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vGeYXt2wUxb8.asf
I have certainly missed the call on the reversal which I thought would happen when RIFIN hit 61.8. However, I did not bet on my ‘thoughts’. Why bet on a train that has so much room to run (down) until you see it really moving…..
There is no doubt that we are overbought and fundamentally full of bull nuts, but just wait. Don’t try to call the top….it will give you a nose bleed. Have a good weekend.
http://social.stocktock.com/photo/rifin-bull-dont-call-the-top?context=user
PS: Not ‘shot’ yet!
http://dl.getdropbox.com/u/312885/RIFIN%20Forked%20up.png
Nice and clean. Very Devil-Nagel. I hate using flare points, though.
Thanks!
Snagged it from a guy on evil speculator blog. I think moving above 600 was a fakeout as shown by the close back under it with high vol compared to the move up.
Having said that, I didn’t “pile in” just yet, would love to see another test tomorrow in the morning then drop hard.
$12.8 Trillion
Government loans, spending or guarantees to rescue the U.S. financial system total more than $12.8 trillion since the international credit crisis began in August 2007, according to data compiled by Bloomberg as of March 31. The total includes about $2 trillion on the Fed’s balance sheet.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aS89AaGjOplw&refer=home
Gee, what are they hiding?
When the curtain is finally pulled, I bet a lot of people are going to be surprised.
Downgrades on financials starting?
http://online.barrons.com/article/SB123991905382726865.html
Our World Leaders At Work
PARIS (AFP) — Despite staunch denials, French President Nicolas Sarkozy came under attack Friday for allegedly saying US leader Barack Obama was not “up to standard” and Spain’s premier not very bright.
“Dim, callow, irrelevant — Sarko’s verdict on fellow leaders” said Britain’s The Guardian, while The Times called him a “bitchy little princess” and Spain’s ABC said he “confirmed his superiority complex has no limits.”
The media buzz was sparked by a French press report that Sarkozy let rip at fellow world leaders during a lunch on Wednesday with parliament members to discuss the global financial crisis.
Idan, while i may not always agree with your analysis im very pleased that you take the time to share your ideas. many thanks for the video. let’s hope your short at 875 turns a profit as im short a pile of equities and looking for at least that 825 level soon.
I’m wondering if this whole rally is a big giant “buy on the rumor, sell on the news moment.” The catalyst for the rally were memos and rumors coming out of the banks. The news, however, are the bank’s actual earnings.
Alex,
If you don’t know about this site alrady, you will love it: http://www.drudgereport.com/
I check it every day. Good stuff.
Thanks. New home page!
Drudge Has Black Swan Alerts
Israel stands ready to bomb Iran’s nuclear sites
http://www.timesonline.co.uk/tol/news/world/middle_east/article6115903.ece
Beware: where California goes, the nation follows, That is historical.
http://online.wsj.com/article/SB123998769476529637.html
i live in north carolina…the state budget is getting very strained…laying off teachers, freezing all “non essential” state spending, freezing all new hiring etc…starting to really ramp up in the last couple of months…its going to get nasty here…which is very unusual for our state historically
additionaly, state has expectations that next year will be even more severe in cutbacks…has been described as brutal
“People Get Ready…There’s A Train A’Coming”
People laughed in 2006 when Peter said a collapse was coming. These were his words:
“Most of the profits that people have in real estate are going to vanish. Just like the profits from the dot-com bust back in 2000. It’s a fantasy.”
And now Peter Schiff warns,
“If history’s any guide, you do get the civil unrest, you do get the riots and the looting.”
http://peterschiffblog.blogspot.com/2009/04/in-2006-peter-schiff-warned-collapse.html
Citi Watch
Egan Jones, easily the best rating agency (which is not really saying much when your competition is the buffoonery conglomerates known as S&P and Moody’s), had the following choice words in their developing analysis of Citigroup:
Accounting and government magic – the recasting of FASB157 enables financial institutions to defer the recognition of losses with the result that C’s March trading profits swung from a $6.8B loss to a $3.8B gain. Another item worth reviewing is the decline in interest expense from $16.5B last year to $7.7B this year. Nonetheless, much more equity capital is needed. Beyond the conversion of preferred to common, watch the form of any additional capital. The Fed and Treas. have guaranteed $306B of C’s assets, have injected $45B in preferred and converted to common leaving few additional options. The problem is that C has $2T of assets ($3+T including off balance sheet assets) whose values are depressed by 10% to 20%. C needs to be watched.
Egan Jones is not alone in their condemnation of Citi’s grotesque Criss Angel-esque interpretation of reality. The consensus seems to be thumbs down for the bank, even though the latter, together with the balance of the worst companies in the S&P, has benefited mightily from the less and less connected to reality “crap rally” (but more and more connected to quant fund deleveraging and viability).
http://zerohedge.blogspot.com/2009/04/citi-market-barometer.html
Lehman Anyone?
mystery solved re: high bank 1st quarter profits (excerpt from Barron’s):
The question naturally arises: How did the banks, so many of which seemed to be slouching toward extinction, get their act together to the point where they were in the black in January and February?
In search of an answer, we turned up an intriguing explanation for this magical metamorphosis by Zero Hedge, a savvy and punchy blog focusing on things financial. Not to keep you in suspense, Zero Hedge fingers AIG , that repository of financial ills and insatiable consumer of taxpayer pittances, as the agent of the banks’ miraculous recovery.
But not quite the way you might think. As Zero Hedge explains, AIG, desperate to hit up the Treasury for more moola, decided to throw in the towel and unwind its considerable portfolio of default-credit protection. In the process, the badly impaired insurer, unwittingly or not, “gifted the major bank counterparties with trades which were egregiously profitable to the banks.”
This would largely explain, according to Zero Hedge, why a number of major banks actually, as they claimed, were profitable in January and February. But the profits, it is quick to point out, are of the one-shot variety, and, ultimately, they entailed a transfer of money from taxpayers to banks, with AIG acting as intermediary.