(now updated)
Darned if I know!
Things that are compelling for (at least short-term) bear case:
- No pullback for 2 months and 35% rally;
- For 6 of the last seven weeks, the market was up; the one week it was down, it was down a paltry 0.5% or something.
- Volume is drying up as the market is heading higher
- Upper Bollinger Bands resistance on major indices and key stocks (see S&P, XLF, GS)
- S&P just ran into major trendline resistance (uptrend from Nov lows)
Me thinks that today is perhaps a blow-off top. Pullback to circa 820 will be swift. This is Mohan, and that is my position speaking. caveat emptor.
Update:
On 5/4/09, the number of stocks traded or closed above upper BB are over 900 (652 on NYSE and 255 on NASDAQ). Contrast that with another high of 621 (279 on Nasdaq and 342 on NYSE) on Jan 6th. in the ensuing 9 sessions, S&P dropped to the lower BB or 13.8%. This doesn’t mean that this will happen again. But it is very likely that the buyers have exhausted and without significant pullback, there will be no buyers.
Conclusion: I think that this market may have topped for the time being. A significant pullback (to 820) may be in order. After that, it is anybody’s guess.
http://finance.yahoo.com/news/Smart-money-starts-to-bail-on-cbsmtop-15121830.html?sec=topStories&pos=1&asset=&ccode=
I looked back at the action in the financials and this sort of thing has happened before. A rally topped and chopped for a few weeks, staged a big pop, then the financials crashed:
link to live chart:
http://stockcharts.com/h-sc/ui?s=$DJUSFN&p=D&b=4&g=0&id=p01930114101&a=167027128&listNum=-2
This is not necessarily over; it sometimes happened multiple times. Then they guys who are pulling the strings get in short and leveraged and get rich while we will be doing well to get even.
Link to static image of chart:
http://i43.tinypic.com/osaemd.png
Whose arrows are those?
I hope we drop about 5%, so I can reload.
WSJ: “More Banks Will Need Capital: Stress Tests Identify About Ten; Wells, BofA, Citigroup Face Order to Refill Coffers”
http://online.wsj.com/article/SB124148189109785317.html
“The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter, a move that officials hope will quell fears about the solvency of the financial sector.”
I don’t know…but I feel that market is priced to reach the 943 level….the stress test on Thursday will pump it to this top
Sorry…I FEEL…because at this moment nothing makes logic from TA perspective in this market
Feels like Mar 6 when everyone thought we were going to 500. I see the same levels of confusion and tendentious reasoning now as two months ago. Just an observation.
why is gold up along with the market?
Dollar down. Gold, oil, commodities UP
I am done! I have lost 75% of my money in the last two months shorting the market and today iced the cake. I retired in December and I took my buy-out and “invested” it. Now most of my life savings is gone and I am totally fu#ked. I am not kidding…I think I am going to kill myself. I haven’t told my wife yet, I don’t know what to do. This market has been totally manipulated by our Government. All the news is bad but nothing seems to matter. They will lie about the banks in order to keep this fantasy going. Obama is ruining this country. By the time everyone figures this out the economy will be destroyed, the market will crash 10X worse then it would have if they had just been truthful and I will be broke watching from the sidelines. I am TOTALLY DEAD!
I have felt some of the pain, as many of us have here. What are you in? Intermediate term there WILL be a correction. The longer the rally, the harder the fall.
Don’t contemplate the worst. Don’t follow the markets for a few days. Change of pace is needed.
Sorry to hear about your situation. Tell your wife and ask God for peace. Ask youself if you would give up 75% of your money to have two legs and run on the beach or swim in the ocean.
Also, stop listening to pigs in bear costumes.
Take a break and regroup you still can make a come back … This has happen to me ..
.I know what you are talking about .. The GOV PR Machine… hit all the talk show and all the news cast…
If you are not into any May options you still have a chance. If you are not dealing with options why not just wait it out. Either way, just take a break – life is much bigger. Time heals more than anything if you allow it.
sheetfaced,
I feel your pain! Take it easy. Money can always be earned again. Consequences of certain drastic actions can never be reversed. Take a walk. Go to a movie. There are a lot of thugs on Wall Streets – the US government is (has always been) in their hands. Manipulation cannot go on forever.
me too for real I started going back to church ,tithing, repenting, so far I have not seen an blessings, my neck is in need of surgergy, my mom well shes sick, no real friends some aquantanaces at work ,church, I ask god to help me but ,well time will tell. I need gods help what more can I say
Dear Brother, please remain Faithfull during this season of trials…God answers all prayers by hearing your petitions and will give you the strength and power you need to sustain you…your Faith is the seed which will bear Fruit!
I appreciate the words of wisdom however I don’t know how I will ever recover the money that I have lost. I don’t know why but everything I did was wrong. Each time I held the stock went down, as soon as I sold it it went back up, as soon as I bought it again it dropped. I held and held because I refused to sell it again at the bottom and all it did was go lower and lower. All I ever did was chase my stocks around buying high and selling low, over and over again. You guys have no idea how I feel. I am throwing up, laying awake at night sweating, totally depressed and nothing left to make it back with. Where do I go? What can I do? I am ruined.
Start over. Start small. DON’T trade options.With a long or a short position, you can wait, although never expose your short to more than a 10% loss. Use stops. It will take time, but it can happen. Good luck.
Sheetfaced:
You have a lot of friends here, pulling for you. Most of us have been where you are at one time or another. Many of us are there with you today. It seems really important and a really heavy burden now, but it isn’t. It’s just money.
Please do what others say. Hug your wife. Get out of the cesspool that is the markets for a few days or weeks. Things will look different.
When you come back, recognize that to be a trader means that what just happened to you happens to everyone. Don’t believe 90% of the comments you read from people bragging about how good they are. They aren’t in most cases. Jesse Livemore was arguably the most successful trader of all times and he lost 100% of his account MORE THAN ONCE! If he did it, I can guarantee you the rest of us do it as well.
When you come back, come back with rules that you will not break. Do not lie to yourself, but follow your rules. Here’s a synopsis of mine. I hope it helps.
1. Job 1 – Protect capital
2. Stops on every trade.
3. Don’t worry about getting stopped out on whipsaws. It happens. A day or two later, you’re usually glad it did.
3. If you’re winning, move your stops up, but ALWAYS have stops in place.
4. Never be tied to ideology. You are not a bull or a bear. You are a trader. You can take either side.
5. Never enter a trade without knowing why you entered and when you’re leaving.
That about sums it up for me.
Good luck to you Sheet. I think I know what you’re feeling. I’ve been there. It will get better……
Sheetfaced:
I’m with you, I was there once. I had more than 6 figures in my IRA account at one point in time and took it all the way down to $3M. This was during the internet bubble. I did pray to God and he gave me another chance. I also did not let the wife know but I had to inform her eventually. I was surprised that she forgave me immediately because my intent was to give the best that I can to my family. Take a break from the market for a good one to two weeks. It really is difficult to read because of all the gov’t manipulation. But we all know that they will be exposed sooner or later and that is the time we all get rich. Do not keep on pushing your luck.
Your wife is the most important person in your life and leaving her like this can be the worst thing you can do to someone you love so much.
Take a break and have a vacation and money can always be found most especially if you have the faith in God. His mercy will not be seen immediately but he will definitely provide.
we all support YOU and respect you for sharing your situation with us…
remember, YOU are already a success, your trading style is merely a preference and money doesn’t define who you really are or who you were created to …..I give you credit today for deciding to cover your position,… you are like a warrior who has survived (wounded maybe but stronger and wiser to live and battle again…
we all are frustrated because we want to nail each turn perfectly…
we have all learned the hard way to avoid front-running against this trend…but
following the turns and trend after retracements and confirmations is a style than can also work so don’t give up believing in better trades in the future.God Bless.
eric…i feel it ..i started investing on my own the summer the market started to crash. i have never been in a bull market. i have had very few winning trades. i started with approx. 50 000 and down to about 10 000. definitely take a few days off and get a bigger picture. don’t stare tick by tick. This market will go down and you will recoup some cash. take everyones words of advice with grain of salt. thing not like a trader but like an average person and what they would do.
Too bad about your loss. But it’s just money; easy come, easy go. Many of us, myself included have been there before. It is NOT the end of the world. There are much more important things in life.
You will get it back, don’t worry about it. Just make sure you are using money you don’t need anytime soon.
You dont really become a trader until you blow up an account. Ive blown a few myself. Get back up and make it back! I dont know….take what you have left and put it in the DXO, then just hold it for a few years. Youll have your life savings back eventually.
take not just a few days off , take a few weeks off and look again. you may see things different. keep a good portion of your remaining cash on the sidelines and when your head clears just take a few small positions. this is what i do. go mostly to cash and dont put more in than you can afford to lose short term. removing the pressure to bet big may help you make better choices.. ending your life is not the answer.
Trading is hard. I am new and trying to get it right. I have been mostly on the sidelines, just trading with a small amount until I get better at it. I thought I could be good at this, but it is harder than I expected. I have learned a lot from these guys, and reading some good books, but actually doing it myself is another story. For now, until I build my skills, I decided to subscribe to a good independent newsletter and follow their advice for most of my savings, and just have a small pool to play with, that I can afford to lose.
But you sound pretty stressed out and hopeless. Please get some help for your heart and soul. Perhaps you should leave the money management to more experienced hands, at least for now. Life is too good to throw away. Sure, I agree about some of the things you said about politics and the economy. Maddening, isn’t it? Maybe turning off the TV and computer for awhile is a good idea. I got so wrapped up in the politics, the trading, I became obsessed and out of touch with friends for quite awhile. Not good. Time to rebalance? I feel your pain. Count your blessings, not your losses.
Please don’t do anything crazy.
Traders find out the hard way, that trading is not about timing, but about risk protection. Comments from this board cannot fix your portfolio, but hopefully it soothes your pain. In time you will recover.
I started with 110K (all my lifesavings) in july 2007, now i ve got 15K left. life savings gone but ironically life is going on. honestly, i haven´t told anyone either
Sorry you lost out. Ive been long since march and made a bag load of money. I bet you listened to people on this board and you followed them. You need to take everyone’s assumptions as a pinch of salt and work on your own.
The only thing i use this website for is to find out the general consensus of traders. Then usually do the opposite. Its been working every time.
Sheetface….
Hit the enter key too fast….
Take it easy, it was going one way for a long while, momentum has changed. Many good TA Techs have been burnt on this rally and probably are embrassed to say how much they have lost in the past 6 weeks. Got to use the stop loss next time.
I lost most of my money in FAZ, I am hosed …
at most i put 10% of my holdings into a 3x and monitor it more than any other trade. hang in there. dont try to make it all back in one day or you’ll lose the rest
Can the government be charge with insider trading?? Just wondering the way they have hyped this market … now they are doing it to the flu outbreak don’t worry everything going to be alright .. kiss each other
Mohan – What is your take from looking at the bond market?
Also, it will help if you have anything to write on APOL.
The Feds are monitizing the debt left and right. There is no way we could know what is real buying in this market – both stocks and bonds. Unless treasuries (the next big bubble) start getting dumped, we will not know.
In short: I am clueless.
I don’t lightly accept conspiracy theories, but consider this chart of financials:
Static chart image:
http://i43.tinypic.com/ziwufc.png
This is not the first time an almost perfect Head & Shoulders pattern became complete at the close, with prices lancing the neckline, which then withstood some backtesting, only to have price action on the next market day do exactly the opposite of what one would expect. (On March 20 and April 9, FAZ completed inviting inverse H&S bottoming patterns — then gapped down 15% or so the next morning.) Worse, Friday’s H&S target for $RIFIN would have completed a double top pattern with a target way off the bottom of the chart. Observe also that great reversals occurred (sometimes once in each direction) at the open and close (pink arrows), and the indicator at bottom closed with a projection that was exactly the reverse of what happened at the next open (pink circles), especially Friday. This is a FIVE-MINUTE chart. Exactly how can an UNLEVERED INDEX of 227 components move 2% to 4%, sometimes in BOTH DIRECTIONS, in a few minutes, and do it almost EVERY DAY, almost precisely at the open and close, without some big money making it happen?
Well, since we can’t change that, maybe we can find something whose moves are more predictable. We also need to be alert for when the likes of us have been whipsawed sufficiently to drive the levered bear ETFs down to levels where the bad guys have bought a pile of them. This might not have happened yet in spite of what we say about blowoff tops in conventional stocks and capitulation bottoms in bear ETFs. They may take off like a rocket tomorrow — IN EITHER DIRECTION.
Live chart:
http://stockcharts.com/h-sc/ui?s=$RIFIN&p=5&b=2&g=0&id=p58490605858&a=166903413&listNum=4
Good to see you still posting Uner. I am also upset about this rally. Are you still holding FAZ? Still averaging in? I have a small amount and have resigned myself to holding it to break even or better ($42). If it goes below 5, maybe I will pick up more.
None of the triple levered ETFs, including FAS and FAZ are designed to be long term buy and holds. There have been plenty of posts on this site that have discussed the dangers of these securities. They are daytrading securities, or securities that can be used in trending markets, so long as the buyer actively monitors the price action. I suggest reading the prospectus from Direxion before taking a position in any of these securities.
Lastly, applying TA to a triple levered derivative, that is rebalanced daily and is subject to volatility decay, makes no sense at all. TA should be used on the target index which the derivative follows, which in this case is the Russell Financial Index.
In terms of how low FAZ can go, look at FAS. It hit a low of 2.36. No reason FAZ couldn’t get there as well. I wouldn’t bank (no pun intended) on FAZ ever reaching the 30′s or above ever again. The RFIN is rebalanced in June, and all the laggard financial companies (those with market caps that don’t meet the threshold for inclusion) will be removed from the index, and the stronger financial companies who have crossed the requisite market cap for inclusion will be added to the index.
In short there are several factors converging to prevent FAZ from reaching the 30′s and above. Its low share price, the upcoming rebalancing, and the government sponsored, taxpayer financed theft that is occurring daily as the government gives the banks essentially interest free money to re-loan to us as a very wide spread.
FAZ may be good for a trade here, but it is certainly not a buy and hold security.
GLTA
Agree, they are for day trading or multi day swing trades and you should keep stops , monitor, re-enter. in Uners case, his account restricts this type of trading. for most of us, preserving capital is the most important and big profits second. dont use stops on all my trades, but, with SRS they have made my trading a success. this is despite that damn thing not doing what i want. at least it has only frustrated me while putting $$ in my pocket.
when i swing trade these i limit the value i carry overnight. im ok day trading a 1,000 shares of SRS at times but holding 200 overnight is all im really comfortable with. stay within your comfort level.
Nice chart. I’m not a bear, but I think this market is way overdone. We are really due for a correction. I took a short late in the day on the S&P.
I may be too early and get stopped out. But I have trouble seeing how this market is going to go straight up after today. I have trouble believing this market is going to attract a ton of investors without a pullback.
Last I the S&P was in a nice ascending channel. I have trouble seeing how it can breakout to the upside of that channel. I would like to see it touch the bottom of the channel before I would consider going long.
No one ever said trading was easy, be you long or short. When trends extend themselves against our positions, and do so when the market is stretched (up or down) our emotional response is to place the blame elsewhere for our losses. I have never found that to be a useful exercise. The much better exercise is introspection, and controlling the trading decisions that we make. Hopefully we are using good risk management techniques whether long or short: position size, good entry, following the trend, fading at resistance, buying at support, using stop losses, paper trading new strategies, taking time out after significant drawdowns, etc, etc — There are plenty of good traders and trading rules to be found on the net; learn from the experience of others.
When the market was falling down, longs blamed the shorts: naked short selling, bear raids, failures to deliver, rumor mongering, using the triple levered bear ETF’s to create downdrafts, etc. etc. Now that the market is aggressively moving itself up, shorts blame the government and businesses: manipulation, PPT, lies about earnings, lies about the balance sheet, etc., etc.
How many of these “conspiracies” really exist? I have no idea. I am not sure any of them are relevant to a trader that is using sound trading techniques and disciplined risk management. But if you are one to give credence to any of these conspiracies, and if you are truly disgusted by them, then perhaps the wisest course is not to invest your money in the market —- at least not fighting against the conspiracy or conspiracies that you believe is/are occurring. Write a letter to the editor, start a blog, organize a PAC to educate and inform citizens, or do something more effective and wider reaching than simply depleting your hard earned capital by taking on the conspirators on their turf and in their rigged game.
Bravo! Trade the market that you see, not the one you think you should see. The market doesn’t care what you think or feel.
thanks for your insights…
“Those who can DO, those who can’t manage a Hedge Fund.”…….
think some of the biggest hints were given to the shorts early in this rally that it was going to be a decent rally but still this has went beyond my expectations.
hint #1 CNBC featured the 3x etfs as a great way to make big money
hint #2 Up Tick rule never re-visited. just suck the shorts in and squeeze them out, rinse and repeat. this is the best way to discourage short selling
hint #3 CNBC constantly planting doubt about the validity of the rally early on and at key levels. basically inviting shorts into the market.
however, now ive noticed a change in tune. the mainstream media has gone crazy bullish and their is little “doubt” about the rally anymore. for me, this hints that it will come to an end soon. but, soon is not a specific date.
I don’t know Mohan. As far as I’m concerned this market bought itself a ticket to 13 Tzameti in mid-April. Since then it’s had a streak of exceptional luck, surviving rounds 1 and 2. Closing above the upper BB today puts yet another round in the chamber. Spin the cyllinder!!! When the bulb lights on Tuesday you shoot!!!
http://www.youtube.com/watch?v=54jn0_ugqco
sorry to hear about your huge loss; however, as long as you aren’t in options you should be okay… we just need the bear capitulation and I think it’s coming soon….
next time, please just play with the money you can afford to lose, and keep the rest in safe investments. I only play with a small amount of my investments… the market is a shifty lady and the odds are 90% of the people who trade will lose their money…. those are terrible odds…
I find no problem with the market. Bears ignore all positive data, and bulls ignore all the negative. Profit from momentum. It is that simple. Pigs have adversaries and then ignore them. That is why they get slaughtered.
Find a way to not be a pig….and recognize the pigs when then preach. Don’t listen to pigs, and you make money.
Driving home from Pennsylvania today, I heard on the radio that the state’s unemployment fund is now bankrupt and that the state is borrowing half a billion from the Fed, with another billion to come. I would think this is not an isolated case.
Then I heard the S&P was up 3.5% today.
Will wonders never cease?
Maybe it’s time that everyone covers their shorts and jump on the LONG train to hell.
People have extremely short attention spans, like a 7 year old after six bags of M&Ms and 4 Ritalin caplets. This two month rally has gone to the bull’s heads. They now deliver lectures on high about a needed “bear capitulation” when just 7 months ago, Oct 2008, they were pissing their pants afraid the world was going to end, then in Nov 2008 curled up in a ball, then in Jan and Mar 2009 ready to step out on the ledge themselves. But that’s all forgotten now. In spite of the fact that the P/E ratios for the S&P are at insane levels, 9+ times fair value.
Trading is not the place to prove your political opinions. So you are bearish, the government is bad yadi yadi ya. I am bearish but I also make money going long and I only trade with the market not against it. Everyone has lost money. Not worth suicide.
Bill:
This is not about political views. There are some really odd things going on here:
http://zerohedge.blogspot.com/
Correct me here if this Q sounds dumb. The daily vol. on the top shows 2.8 Bil shares yet the totals for the market makers is only 66 mil.????
I believe that was the point of the article.
THE FUNNY BUSINESS HAS HIT ALL TIME HIGHS
look at KBH yesterday. i got out of my short for a profit and thought it would be just best to watch it before the home report crap. well yesterday, TA says a close below $17.50 would be very bad for that stock. so what did they do to it? got it right at $17.50 yesterday and invited me in… but this time… stepped aside to watch. what did it do today. popped up and ran like a mad horse http://stockcharts.com/charts/gallery.html?kbh its not odd that it moves higher on this “good news” which i think is total crap, but the fact that the day before it sold down to a key level ever so perfectly….. the perfect trap.. once again. so many lately its amazing.
housing recovery? my local mill says demand for lumber has not improved one bit over last spring. so how do they calculate these statistics? wouldnt demand for lumber improve if housing is improving. it would have to at least a bit right?
—————————–
http://www.youtube.com/watch?v=ma0V-wxPmng
—————————–
THE PENDING HOME SALES DATA…. THAT IS SOOOOOOO BULLISH
this guy has a good chart that clearly shows that every year since 2005, existing home sales increased Feb to Mar. i know this is not a chart for pending home sales. but provides insight. a good read
http://www.chrismartenson.com/blog/pending-home-sales-%E2%80%93-spin-cycle-set-%E2%80%9Chigh%E2%80%9D/18248
this years chart of the pending home sales data is far from bullish. we put in a bear flag for the data FEB/MAR and did not do anything to indicate a change in trend. maybe Kudlow would like to mention that
Given that selling should start anytime this week, what indiv stocks or etfs in your view are best (max return ability) for buying puts?
key word “should’ … we are thinking the probability is high based on the charts. but we as a collective group have been calling for a sell-off for the past 50 SP points so caveat emptor “seller beware”
im not so confident to recommend any charts at this time. look at my SRS post in social photos today. need a few more days of monitoring the market before making a re-entry. stopped out of position at break-even. that is not how you make money in this market
Haven’t post here for a while, for sheetfaced, You have already lost 75%, lost another 25 won’t makes the difference. First of all, do not trade the F’s, I repeat, do not trade fas or faz. It is not for retail trader like us. More than 80% of the time I lost money on it, because the time of those two stock drop is more than go up, so just quit it. It is crack cocaine. Ok, now, trade the rest of the money like play with poker, do not go all in with your money, use the most 50% of it. So you still have 50 % left to trade again. Have you check out the stock that have 50 to 60 percent move today. Look, at CENX, CPSL, FOE. Play with individual stock,, do not trade ETF to much, they are financial firms product. how can you use financial firm product to short financial firm. Hello! And do not listen to anyone but just yourself. Use them as reference, not a Bible. One day at a time, if you able to make back 25% a year, then be it. It will takes you four years to make it all back. This is a traders market, try to be follow the trend, and do your homework, read more trading books, educate yourself. Trust me, you will make it back. AGAIN REMEMBER, DONT BUY THE F’S AND PLAY WITH THE FINANCIAL. The best way is to short individual one. Good luck! Peace out!
Daniel, i had CPSL on my radar. trying to follow too many stocks and missed the move. http://stockcharts.com/charts/gallery.html?cpsl
have been in and out of it long for 5% moves. sadly ,,, did not hold onto 1 share.
up another 9% after hours. actually had this chart up yesterday and was cursing that i missed the breakout and then blankly ignored it today.
BEARS look at CPSL and tell me that it can be blamed on the PPT
Thanks Daniel, good advice.
The ETF’s are what killed me. My gut has been telling me for weeks that this market was going to go down so I jumped in on FAZ slowly at first and added more and more in an attempt to recoup my losses. The other day a week or so ago when it looked like we had finally broken the top and Idan stated that he was going blindly short I loaded up the FAZ truck with everything I had left @ $9.50 I was away last week and had a stop loss in @ $7.90 and lost all my shares. I bought them all back on Friday near the close @ $8.70 and yesterday I sold them all once again @ $6.65 I know now that I don’t own anymore FAZ it is going to go to $15.00 or more. When that happens it is going to really rub my face in it and salt in my wound.
Why did you take such risk? No-one would put there life savings into that etf. Its only for trading.
The thing that killed you off was risk management. People usually realise this when they blow their first pot. But people’s first pot is usually only 1000, you bet your life savings!
Sheetfaced.
As I posted earlier, I once had $99,000 in IRA and went all the way down to $3K.
I then stopped trading and enjoyed life with the wife and son. I lost most of my money from the Internet bubble. That was 9 years ago and now I am back trading again and actually making money by following the trend in the market. If we all know that government is manipulating the market including the media, we should be going long then. It is true that what is happening in the market is beyond logic but it is what it is. We know for sure that this cannot continue and that this manipulation will get exposed and I strongly believe that catipulation will happen sometime but no one knows when.
Be patient and when that happens is the time we will be rich. Make sure to preserve some cash for that time.
Daniel is certainly correct by staying away from those F’s.
Good luck to all.
El Guru, Wow, how do you recover from that? Thats where I am right now and it sure looks impossible from here. I lost so much money that I would have to have 20 100% gainers in order to get my money back. Hell I can’t even put a trade together now for a 200 dollar gain. The only way I can see to make any attempt at getting back up is by waiting for a market drop and taking whats left and trying FAZ one last time? What would you suggest I do? What other stocks would be a buy if we get a correction? I need all the help I can get before I’m literally dead.
TenK
I was so far down and that night when everyone thought that it had topped and was heading south I thought that it was the time to risk it all and try to get it back. I figured that even if it was short lived I would have at least gotten some of it back. Like every other time I buy a stock the market went the other way. I am a total loser.
sheetfaced,
Sorry you had that happen but your not alone. I also built up a hefty account during the nazdaq bubble and lost it all by doing exactly what you did. Got out of stocks for years until about a year and a half ago when I knew the economy was in trouble and the market would crash. I borrowed $10k from a credit card and over a year later built it to over $200k. You can come back but you have to treat it as investing and not gambling. I too lately have lost money during this run up. I even had it in my head that it could go to 915 but got impatient & bored sitting in cash and got in early. I purchased May puts and they are now pretty worthless so I took a huge hit to my account. But I learned from it. I wouldnt enter the market short until after the bank stress test rally exhausts which could be thurs or maybe early next week. We will see a correction but when you have gains right now you have to take them because the gov is pumping so much $ in the market that all the everyday people are jumping in not wanting to miss the boat. Also the market is such low volume that it is easy to manipulate right now. Once we retracement I see the market continuing up again. You have to play the trend for right now even though all the smart investors know the economy is crap. And thats okay because let them build up the s&p back up to 1000 to 1100 because later this year after we dont pull out of recession, more people losing jobs, businesses shut down, banks continueing to need $ to survive, the market will be on another down trend and we will get to take advantage of the s&p dropping from a higher point. Better for us. I honestly believe that once unemployment gets severely worse w/ more people losing jobs and everyone being taxed for everything, and the recovery they promise doesnt happen & leaves all the people in severe debt that there will be rioting that may cause capitulation. Remember cash is a position if you are unsure of the market. Dont give up yet because this is a once in a lifetime chance to make a ton of money as long as you dont make any more major mistakes like chasing stocks on the way down. Use stops and be patient. If you want to be safer, buy long term put options that expire in 10 or 11′, thats how I gained my $ is in long term puts and just waited for the crash. Its harder now because the stocks are cheaper but with them pushing the market up so high again looks like I’ll be able to do that stragegy again. Again, DONT GIVE UP!
If I can help on the investment side let me know. Nothing is worth freaking out over. It is only $$. So many more important things in life. Hang in there. you can get it back, but lessons learned 1) nothing is certain and 2) always use stops no matter what 3) have a disciplined plan and stick to it.
Sheetfaced,
Let me explain how I am trading currently. It is a limited risk trade, as long as you trade very volatile stocks, like the big banks. Usually it takes some time, 02/03 weeks for you to have profits:
- Buy options with at least 06 weeks to expiration from very volatile stocks
- I usually choose only ITM (in the money) Options
- The logic is to have 02 legs an make some calculation with their delta, in order to make them completely equal when you are buying
- You expect that any movement in one direction (or time decrease) will unbalance everything and you will have profits in the end
- Calculate the amount you will trade in the follow way:
Number_Call X Call_Price X (1+ Delta_Call)=Number_Put X Put_Price X (1+ Delta_Put)
Let’s say that in the end, you found:
Number_Call = 0.2 X Number_ Put …….So in this case, just multiply by 5 and you will have an even number, or:
5*Number_Call=1X Number_Put
AJVS
Does anyone think that the market is not correcting the way it should because of the Bank stress test or is it because the market is actualy waiting for how the SEC is going to modify the up-tick rule?
i think because of the stress test. I dont think the up tick rule will cause too big of a rally if any. They took away shorting for a short period of time last year and the market still went down eventually. The uptick rule will just slow down the drop but it wont prevent a drop from happening when it does. Volume will pick up after the stress test results are announced.
VIX looks due for a little pop.
http://shankystechblog.blogspot.com/2009/05/vix-falling-wedge-double-bottom-and.html
Ok, Sheetfaced, I hope you can read this post again. Trust me, Faz is going to $5.00 very soon. For sure, if you hold to all your share, can you take that pain, before it go back up to $15.00. Here is the thought, try to look at other stock. I have couple for you to check out. Again, do go all in with your money. Just to test and trial. Keep that in mind, the main point is loose less and when you are right you win a lot. Ok, if you have a margin account for play money. Short BWLD, at around $39 ish. The stop lost on $45.00, that is 52 week high. Earnings came out last week. So you could just stay with it for a while for your short. If you want quick cash cover on $36.00. If it broke 36, it is going to at least 31. If you don’t have margin account and have IRA. There is one Speculated play it is “COIN” If it pulled back in the morning to about $1.65 buy it, and make sure it is pull back on low volume. I think this stock can go to at least 2.50, that is almost 40%. Again, do use all your money, just try to get your winning feeling back, and also try not to hold these play over night. It is very volatile, and we are also very overbought for now. Good Luck! I hope you make some money, If not 40% at least 10% will you?
Sorry, I did not recheck my writing. I mean do not go all in with your money, sheetfaced.