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Update 6:50 PM: Everybody on CNBC Fast Money show are Bullish. Jeff is cautious, but bullish. Seems like everybody who was bearish on stocktock has either given up or bullish.
Update: 4:00 PM: Rising trend line resistance held at the close. Even slightly higher close tomorrow will also keep the resistance intact, because the trend line is rising. Strange action in financials during last hour of trading – huge swings up and down. That usually happens when a major reversal is about to happen.
There is more evidence that Monday’s move is similar to 6th Jan top. Look for a breach of the third fan-line somewhere around 880. When that level is breached, it will be a waterfall decline to 770-800 range, followed by a bounce and then – possibly to new lows. (chart updated with additions from Uner).
Am I first today? I’ve never been first at anything other then first to go broke. I have a little money left, should I start a short position now or wait? If I’m not careful I’m going to end up with nothing left. I need some good advice.
Thanks
May 6th, 2009 at 8:16 am
If you mean playing with the last bit of savings, then no… don’t do anything. Keep it safe.
If you mean playing with 1/10th of your wealth that you can afford to lose and won’t hurt. then go for it
May 6th, 2009 at 9:17 am
We are at the crossroads .. too risky to take your limited capital and put it in the market at this moment up could go up or down .. stay on the sidelines
May 6th, 2009 at 9:57 am
Play it safe. There is too many questions marks that can happen based on the stress test.
There was a leak in the stress test that BofA needs $34 billion in additional capital and since they are only valued at $70 billion this is supposed to be a huge negative. But then the market is currently up.
There is just no clear direction.
Cash is king and go fishing.
May 6th, 2009 at 10:54 am
Here is some advice: Don’t take advice from strangers.
May 6th, 2009 at 11:03 am
Sheetfaced, I hope you get some of the move I told you last night. If you missed it, i will found some more for you next time
May 7th, 2009 at 1:54 am
Everyone has to make their own decisions about what style works for them. To build up cash, I would review history and find out what is the safe bet and then STICK TO YOUR TRADING RULES. I generally lose money when I become emotional and break my own trading rules, thinking I am smarter than the trading rules I made. If you don’t have firm rules, make some that work 90% of the time based on history. Avoid being too leveraged, so you can build a solid base.
May 7th, 2009 at 2:00 am
Stay simple: buy low, sell high.
If you feel like buying, ask yourself, “Is this low, turning up?”
sell time: is this high and now turning down?
People lose sight of the big picture and just see something moving and pile in.
Be patient. It is not quite the the time to go short or long. It’s hard but sometimes its better to go fishing than to trade for the sake of trading. Only the most nimble chart following traders
(like Idan) who stay glue to their screens can make any money at the present time. And then its only a few bucks. When the trend is more obvious then jump in.
Advice? Dont listen to any trader!
When FAZ was in the 40’s and 50’s so many traders was pumping this stock (it will go back to 100 again). I bought FAZ at 34 but it didnt feel right to many bearish views in this blog and I sold @32..small loss and then I bought FAS. You dont see many of the posters who was pumping FAZ at 30’s, 40’s and 50’s that much…have you asked yourself why?
Second advice: Put STOPS!
I come to this blog to read the Idan’s market updates.
Thanks, Mohan, for the informative chart. You provide a very simple and elegant argument to support what some others here only shout about. It’s well appreciated.
Futures
DJIA INDEX 8,338.00 -44.00 8,375.00 8,385.00 8,289.00 07:46
S&P 500 895.90 -7.50 903.10 904.40 891.20 07:47
NASDAQ 100 1,416.75 -10.50 1,425.25 1,426.75 1,411.00 07:43
Adding a few more important lines, including, of course, Richard (PB)’s fave Fib 805:
http://i41.tinypic.com/10dec82.gif
May 6th, 2009 at 9:17 am
Any opinion on FAZ? Still holding?
May 6th, 2009 at 9:53 am
I just bought more at 5.93, but if you read back a way, you will find plenty of sages who are certain that I am crazy. However, SKF once rose from 67 to over 300, with some nice opportunities for medium-term swing trading on the way, and we have some new 3x ETFs since January, so we pigs should have opportunities to revive those paper balances. A 30-min chart of indexes or unlevered ETFs to signal trades of levered ETFs, such as $DJUSFN or $RIFIN for FAS/FAZ, $DJUSRE for URE/SRS, $DJUSEN for ERX/ERY, EEM for EDC/EDZ, $RUT for TNA/TZA, $COMPQ for TYH/TYP, and maybe $SPTGD for HGU.TO/HGD.TO might be useful. I have been fiddling with various TA to support trading the swings better, and it’s pretty tricky with all the action after hours and pre-market that doesn’t show on a chart, so be careful if you try it at all. I had a Roth IRA in a fixed-income mutual fund that was going up at about 1% per week during this rally I hope is now ending. Maybe I shoulda left it there. Oh well. It’s only money.
May 6th, 2009 at 10:14 am
My 30-min chart has standard Bollinger bands, RSI, and MACD. It was making FAZ look pretty good, so (of course) after I bought at what looked like a bottoming 5.93, it promptly rolled over and plunged to 5.69. It still isn’t back up to my buy price. Oh well. It’s only money.
May 6th, 2009 at 9:34 am
they could screw with us and paint Nov.999 and serve a cherry on Top…
May 6th, 2009 at 9:51 am
I updated the chart with your additions.
Market hit resistance at 912
Oil up 3 percent 55.43 Oil report released in 30 mins…plenty of supply i believe keep my fingers crossed
anyone having trouble shorting today? I have some killer shorts and TD would exectute them.
NFLX is caving and could go down $10! CERN and DIN are also good shorts! THis is really pissing me off.
May 6th, 2009 at 10:27 am
I can not even add to my MHK short. AGGGGGHHHHHH
Sheetfaced, have you read my comment on some of the move you can take. If you didn’t, just let you know that you still can get in COIN now for some quick cash. 1.65 is a good price. You can end up sell on 1.92 today at least. Good Luck, I think it is little late to short BWLD now. Good luck!
May 6th, 2009 at 10:40 am
The book value of COIN is $.50. Why are you so bullish on this?
May 6th, 2009 at 10:42 am
sorry….$.45 according to 2008
there was a draw down in crude supply bullish
May 6th, 2009 at 12:21 pm
I think crude is above the pivot. I really want to buy hou.to, but I’m scared of a pullback.
It’s a buy, some think the USD/CAD will be 1.05 hence the reasON why oil will increase.
3 min, what sit are you on, we don’t look at fundamentals here, we look at chart, chart say it will go to $2.5 at least, but don’t be greedy, get out today at 1.92 is pretty good. Still a chance, 1.76 now
May 6th, 2009 at 11:15 am
It could go up to $1.92 but the liquidity could dry up and it could drop to $1.00. The last insider buy was at $.90. What chart are you looking at that say it will go up to $2.50?
Also, not looking at fundamentals in conjunction with charts is not so wise. IMO. That is what burned so many bears over the past 2 months.
I was looking at my trades for the past month. All were short then cover , short then cover.
All losers. Am I the only one who kept seeing the top just over the next hill, only to get burned? In hindsight what an idiot I was not to get the message that it was NOT WORKING!
Duhhhhhhhhh!
I hope I don’t forget this lesson: Don’t trade against the trend no matter what the fundementals (or the fundementalists) are saying. WAIT till it is an obvious change and
than jump in. It is greed that makes one not want to miss the first drop or rise. I will bet the pros think we retail traders are such suckers! I’ll bet they wait then jump in and get 50% of the gain then jump out and wait for the next concrete change.
May 6th, 2009 at 2:56 pm
Im with you. I’ve been in cash for quite a while now sad and lonely because I missed this awesome move up. As soon as we get a confirmed reversal with wide participation I will be short. I will then likely then get very long once the pullback appears to be complete. Im not going to catch any tops or bottoms, I will gladly miss them and ride the trend.
May 6th, 2009 at 5:28 pm
The trend is your friend, until it’s not. As long as stocks trend above a rising 5-day, 10-day, and 20-day MA, then the trend is up. You can short strength in an uptrend. But you better be quick to take profits. Because in a blink of an eye, your profits will turn to losses. Conversely, if you buy dips in an uptrend, you can hold that position for as long as the trend continues up.
The same is true in reverse. A downtrend is when stocks trend below a declining 5/10/20-day MA. When they rally up to the declining MAs, you re-short. And you can hold those shorts for as long as the downtrend continues.
May 6th, 2009 at 6:24 pm
SC good advice …
so based on this, the stops for your position / option will be set just below or above the 20 day MA depending on whether you are long / short the stock / position. Is that correct ?
Also – I am guessing that this system would be used primarily for swing trades … since intra-day, these MA only provide a bounce …. typically ….
Thoughts welcome ….
May 7th, 2009 at 2:57 am
Yes, you can place stops above/below 20MA. One way to use it is to keep trading long (or short) as long as the stock stays above (or below) the rising (or declining) 20MA. As the stock pulls away from the 20MA, you would sell half your position (or cover short), and let the other half ride. Then as it reverts back to the 20MA, you would buy the other half back. You keep doing this for as long as the trend lasts. In a really strong trend, you never see it revert back to the 20MA (like now, we’ve had 8 weeks of no reversion to the 20MA). So maybe you start using the 10MA instead.
You can draw the lines from a bullish perspective and it shows a massive breakout
(Feb high on S&P across to April high) 870 and 875. We are now at 908.
You can make the charts prove anything you want.
May 6th, 2009 at 11:30 am
bingo
May 6th, 2009 at 11:37 am
I agree too. Too many times have i seen posters on these boards changing the lines on their charts to show that we are at a resistance. Apparantely now this is like the fourth major resistance that has been shown on the charts. I bet if we break through this one, someone like Mohan will draw another line from somewhere to suggest that it is the ‘real’ resistance.
lmao at the stocktock traders.
May 6th, 2009 at 12:26 pm
Surprisingly, I too agree with you.
May 6th, 2009 at 12:30 pm
Exactly. Most people find what they want to find to justify their positions, rather than looking at all the evidence objectively and reaching an unbiased conclusion. In addition, they seek out others that share the same opinion and it reinforces their own opinion and undermines any legitimate interpretation of reality. Worse yet, some are so convinced of their analysis that they throw out risk management rules and keep doing what hasn’t been working.
Dennis Gartman’s golden rule of trading is still the best: “Do more of what is working, and less of what is not” Over the past 8 weeks, being long has worked, and being short has been a disaster. The tide will turn, as it always does, but in order to play that turn you have to have capital, and the market thus far has been doing a decent job of depleting the bears of theirs.
Forget the S&P. Look at some of the stock today. FIG had a nice run for the past week. Not to tell you to chase it. But we will miss some good stock, if we just look at S&P. Anyway, just want to help each other to give some good idea making money
May 6th, 2009 at 4:40 pm
What plays are you looking into daniel?
My comment would be: Do not underestimate the power of money printing. The floodgates have opened and there is just more money out there then ever. Silver and gold look so juicy and so do the gold and silver stocks.
Shorting is great in a contracting environment because you bet on falling prices. But in this environment EVERYTHING will go up. So eventually NOTHING gains value. The problem is: If you dont join this SCAM, you will get lost. Thats why using long term trading technicals dont always work because inflation adjusted we may not have even moved our ASS from the bottom. Okay I may be exaggerating but you can not stop this money supply from hitting the market hard. It would make a MAJOR difference if the Fed raises interest rates. That would immediately hit the banks. But I guess they will wait with that until the VIX is at 18….
What is your thought on shorting in an infltionary scenario in which stocks, commodities etc. run wild?
May 6th, 2009 at 4:13 pm
You could be absolutely right. If this rising trend line resistance from Nov lows is taken out, I have to give credence to market reflation via printing.
I agree with Mohan – here is a look at the /ES minis that calls for the same fall to 800, but then I think we go up. Good work buddy glad to see you are still producing nice quality stuff.
http://shankystechblog.blogspot.com/
May 6th, 2009 at 4:12 pm
Thanks.
May 6th, 2009 at 4:34 pm
Mohan:
Any thoughts as to why the Trim Tabs Report is so different than ADP’s ? You seem to have a real good grasp of this stuff.
http://zerohedge.blogspot.com/2009/05/real-unemployment-report.html
May 6th, 2009 at 4:48 pm
I would believe ADP numbers over TrrimTabs. ADP is a payroll management company and they have access to better data than TrimTabs. JMO.
May 6th, 2009 at 5:31 pm
Thanks Mohan. I second Shanky’s sentiments.
I think tomorrow will be up in the morning, then roll back big time. Looking for some good shorts. I am not looking at S&P, but Dow. Dow has hit the magic mark 8500. Good Luck
I’ve come to the conclusion that all of these charts and graphs mean nothing as all anyone has to do is re-adjust their lines each time the market moves. Eventually even a broken clock is right twice a day. These freekin charts haven’t been right in over two months. The DOW is going to be back at 14,000 by the time it reverses and they will all say “See! I told you a reversal was coming!”
I am totally disgusted with everything!
May 6th, 2009 at 5:33 pm
Congrats, you’ve come to the same conclusion most experienced traders have discovered after many years of trading. Technical analysis is only good in hindsight and seldom effective in predicting short-term (1 day to 3 months) price movement.
The winning strategy is to go with the flow. In today’s market, the majortiy of active traders are staying long with tight stop loss or put options as a hedge. Don’t try to predict the TURN, let the market sell off first before going short and again with a stop loss in place. Most traders know this.
The key to success in trading is common sense plus knowledge and not blind faith in charts or any other religion.
If TA is effective, most of the tockers here would be multi-millionaires.
Good luck.
May 6th, 2009 at 7:52 pm
Well it’s good that we have guys like you to tell us how it is Sam. I don’t know how we’ve gotten along without your wisdom, which of course is half baked and about 90% cliche. Thanks though. I’m sure it makes you feel good to spout such nonsense.
May 6th, 2009 at 7:54 pm
Actually, Sheetfaced, the charts do mean a great deal but like anything it takes a long time to get comfortable with what they’re telling you. I think we all have a tendency to make things more complicated than they need to be, but a chart with a couple of moving averages does give a clear picture of trend, where key resistance and support points are and where turns are likely. Nothing is guaranteed, but if you sit down with a chart and can ID support and resistance and trend, you’re ahead of 90% of the people who spout such nonsense such as “go with the flow” whatever the hell that means.
You have to be patient. Wave A of Primary 2 is nearly done and may have actually completed today.
UPDATE: CREDIT MARKETS:Robust Rally Ahead Of Stress-Test Results
http://online.wsj.com/article/BT-CO-20090506-721039.html
It would seem financials have further to go:
http://www.reuters.com/article/americasDealsNews/idUSTRE5457B620090506
May 6th, 2009 at 5:53 pm
Hell of a ride. I was out of the office at the close but obviously my late call for a 918 close meant I wasn’t done riding this train yet. $$$$$ made on those FAS and last batch of LVS calls. I know the end is in sight. BIG day tomorrow.
SPY finished with hanging man.
we got this 2 weeks ago (on a friday) and markets came down 4% the next monday
http://img147.imageshack.us/img147/9788/0506spyhangman.jpg
Also similar to MAY 2008
I heard about FAZ for a reset in june is that bullish or bearish I guess bullish since some of you are holding and buying more ahead of it? anyone have any info on the reset and what they are going to do with faz (price wise). Thanks in advance
May 6th, 2009 at 8:10 pm
I believe the index that FAZ tracks is due for a reset which should make the index stronger overall (which is bearish for FAZ).
Repost from yesterday:
Question: Let’s say stock XYZ is heavily shorted. The market rallies and the short squeeze runs the stock up A LOT. I’m sure we can name a few of these. Then, the market reverses, as it will.
Will XYZ fall
A. Less than the run up.
B. Equal to the run up.
C. More than the run up.
D. Hardly at all
I’d really appreciate input. No clue how to research something like this. Experiences? I believe we’re at a crossroads and want to get my shorts (puts) ready. Thanks!
Anyone know any good hedging calculators I found this one but expected decline is throwing me off.
http://www.schaeffersresearch.com/streetools/market_tools/hedge_calculator.aspx
FAZ holders – Is there any chance of FAZ going back to 9 in the next few days – before the May opex?
May 6th, 2009 at 7:20 pm
9 is probably too much to hope for. Here’s the trend that I’m following:
http://i41.tinypic.com/10744e8.jpg
personally, my FAZ position is averaged at around 6. I plan to sell my faz at that trendline, even if it’s at a loss. If it breaks that trend… it’s never too late to jump back in.
I am stuck with some FAZ May calls bought yesterday – need to decide if I hold it for potential reversal before opex (but decay kills) or sell it off tomorrow independent of anything.
If you’ve missed this uptrend (or worse, lost money shorting it), then here’s an article that might help you *not* make this mistake again. Read section on RSI indicator:
http://stockcharts.com/members/analysis/20090506-1.html
May 6th, 2009 at 7:41 pm
Link does not work sc. Could you post the article?
May 6th, 2009 at 8:28 pm
Guess article is members only… here’s the general idea:
When stocks are trending down (e.g., Sept 2008 – Feb 2009), the RSI will stay below 50. When it falls below 30, it is oversold. Eventually it pops back above 30. As it corrects higher, watch if it hits resistance again at around 50. As long as 50 serves as resistance, the downtrend will remain intact. In this case 50 serving as resistance would be your signal to re-short.
Conversely, when stocks are trending up (e.g., March 2009 – present), the RSI will cross above 50, and stay above 50. When crosses above 70, it is overbought.
We’re getting close now to 70 on all major indices. Nasdaq100 is actually there already. You could do a quick counter-trend trade here, and short it anticipating that there will be a pullback (common sense tells us one is imminent). But you better be quick. Because when RSI hits 50, it will likely find support. If it does, then the uptrend is still intact. And you should go long.
You can also use the 20 SMA, in conjunction with RSI, to confirm the trend (up or down). Note the Nasdaq100 has not touched its rising 20 SMA since March. The first touch will likely produce a bounce, and the RSI will likely bounce off 50. I’d be surprised if we crash ‘n burn on this first touch of the 20MA. This market has too many “I missed the rally and want in” investors…
So bring up any chart with RSI. Look at it along with 20MA. You’ll see that since March 9th, the RSI has crossed above 50, and stayed above 50. Every pullback to 50 was a buy signal. It’s not rocket science.
The trend is your friend. Don’t aggressively short (or God forbid stay short) until the RSI crosses below 50, and stays below 50.
Good Luck.
May 6th, 2009 at 10:51 pm
Nice work, SC. One needs to pay attention to ‘time frame’ too. If you are a long term investor, AT LEAST start with a ‘Day’ chart of 1 yr to 10 months or so. Then look at a ‘60 minute’, of say, 4 months. This is where the REAL trends show up, on the 60 min/4 month chart. Put a ‘50 m/a’ on there,,,and stay Long ABOVE that line, or short it below it. Stops?? Hell, put it under the 50 m/a on the 60 min chart.
What if it goes back up? Re-buy the sob!!!
#1, one needs to learn a MINIMUM amount of ‘how to chart’,,,or else. Go to the ‘Motley Fool’ site,,, fool /com if you like longer term stuff. Many here are short term traders,,,,minutes to hours to days…
Quit whining and coming here saying you lost it all or most of it when in fact it is YOU that didn’t learn one damn thing about the stock market trading before you began. I can’t believe this shit of one of ya saying you were gonna by-god kill yourself because you lost 3/4 of your money. Fuc*ing growthefug up, and LEARN.
p.s. I hope your wife kills ya,,ya knucklehead. Save yourself the trouble. pss. Tell your wife to get back with us and let us know the outcome of your dumbass tirade the other day. Are ya still with us or not?? hellfire,,,sell it to the National Enquirer. Make a ‘reality show’, and come back and tell us how much you made,,,ya worm,.
Today, WFC, was a good opportunity to play with Options & Deltas.
- FHUGY (July 25 Call) and FHUSZ (July 26 Put) were having the same Delta and price.
- Bought both by $4.10 (WFC was $25.75)
So far so good, without any risk, I got 5% of profits. Expecting much more by the end of the next week.
“Update 6:50 PM: Everybody on CNBC Fast Money show are Bullish. Jeff is cautious, but bullish. Seems like everybody who was bearish on stocktock has either given up or bullish.”
So what are you saying? This market continues higher on “irrational exuberance” or the market does what they always say it does “the opposite of what everyone thinks its going to do”?
Am I the only one here that is totally exhausted? All I want is the market to reverse so I can get some of my money back. How freekin high is this thing going? I know that the minute I go long on any positions and go to lunch this thing is going to drop like a prom dress.
May 6th, 2009 at 8:39 pm
hehe. same here.
seems like i’m always in the exact wrong spot.
i’ve also been afraid to get long, and i’ve been saying the same thing, as soon as I do it’s going to drop. Problem is that was 20% ago.
i’ve said for a while i think it’s going to 1000. i bet i’m right, not going to put money on it at this point though. again, problem is i keep saying that.
THIS WHOLE THING SEEMS REALLY OFF SOMEHOW.
serioulsy. i feel like i was really fooled like a sucker March 15 2009.
May 6th, 2009 at 8:42 pm
Yea a drop would be sick.
May 6th, 2009 at 8:43 pm
Like i said in comment #29 above…. the trend is your friend. Don’t fight the trend just because the “market has gone up too far”. Sure, we’ll get a pullback. You can short it and make good $$$ playing the pullback that way. But until RSI crosses and stays below 50, and until the 20MA flattens out, and prices start to trade *beneath* the falling 20MA, you can’t stay short.
Everyone wants to catch “the turn”. Don’t try it. You’ll get burned. Just be patient and trade the trend. When it reverses, you’ll have plenty of time to stay short and make good $$$.
May 6th, 2009 at 10:23 pm
I am totally exhausted too. But trying to keep my logic prevail over emotions.
May 7th, 2009 at 12:16 am
There’s nothing more exhausting than fighting the trend. We’ve all done it, myself included. But I’ve learned. Logic and emotions do not prevail in trading, particularly in bear markets.
The best thing to do is to trust the charts, no matter how much they defy logic.
What’s that saying?? “We don’t trust opinons, we trust the charts”… can’t remember where I heard that, but it’s a GREAT saying.
This is very reassuring for financials:
http://www.nytimes.com/2009/05/07/business/07bank.html?hp
Why does Mohan “re-draw” the resistance line? If left as this morning’s was it would show a dramatic breakout. But anything that is bullish is not allowed on this site I guess. Even the facts.
May 6th, 2009 at 10:19 pm
In the end, do your own DD and make your own decision.
–> Woo called 845 and 875, and 934 a while back when S&P was 800, so he did state that if we break strong resistance lines, we will go higher.
This site does have a bearish bias, and a balance is needed.
May 6th, 2009 at 10:20 pm
Not really. The same lines are still there. Uner added more lines. If you look carefully, your breakout should be there.
May 6th, 2009 at 10:40 pm
The time to be bullish was March 9.
We are soooooooo overbought because of mutual funds chasing the rally. The hedge funds are not chasing it anymore.
The only reason that I don’t want the market to correct is avoid hearing Uner doing his “I told you so dance”.
Still want to short some more BWLD. I think there is still a little left there