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Weekend Update ~ 10/03/2009
– October 3, 2009Posted in: Intraday Commentary
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following thanks
i See triple top on 60 minute 6 week chart for WYNN. what are your perspectives? You’ve been on top in the market Idan, i’m impressed.
well you see how 69$ held today as resistance, that shows that the bears are relatively strong. My stop was a few cents above today’s market high, hopefully now i can lower it to the mid 68.50, and then lower and lower. The hedge fund got stopped out at around 65 ish. Even though this stock got an upgrade, it’s overbought, and could see more downside. I’m just not sure how the upgrade will affect the stock in the future.
Triple Top? Come now, we all know there is no such thing. LOL
Thanks for posting Idan.
triple top = head and shoulders he means
Hi, I’m new to this blog. I’ve been following all your comments and decided to join.
I saw this article by Barron’s I found interesting. He thinks the market will have more downside to it. Have a read.
http://online.barrons.com/article/SB125442609384657205.html?mod=BOL_hpp_dc
Sounds like the author sees a sizeable correction on the horizon…’when’ remains the question. Stops in place??
I’ve been cautiously bearish up to the beginning of last week. I’m holding POT puts an a small position in Kinross gold. Being in Toronto I usually trade Canadian holdings to avoid the currency effect.
85% cash right now as the market can go either way. I expect sideways to down movements in the coming week. If we break 1015 I would look for 995-998.
What hockey team do u play for?
In the coming downturn, the canada exchange will be hardest hit as commods
will lead the downturn as predicted by the Baltimore Dry Shipping Index and the
fib retracements on the china exchanges.
Hong Kong trilionaire Lee Sheng just announced he would not buy stock at
current levels and expects a massive decline in the very near future. Lee owns
a huge interest in the Canadian bank of commerce.
Don’t you mean Baltic Dry Shipping Index?
Actually I don’t play hockey, I play soccer and no our homes aren’t made of ice. Come one you can’t be stereo typing like that. Actually I had a good laugh.
I can see the commodities turn south once there is a major correction, that’s why my only long position is Kinross gold at this point (small amount). I just don’t like the currency risk with the US holdings. Maybe when I see the US $ go up when the markets go down then I’ll short some stocks in the US.
I think it’s possible we get one last push lower next week to the 1000 area. maybe even sub-1000??????????
We will see.
My question is how much can a monthly economic news weigh on the markets. We’re down from 1060 since last week. I think we’ll get a weak Monday and if we don’t go down from 1015 on Monday I would expect a back test of some kind which may have already started on Friday. Friday there was probably a lot of short covering which controled the drop for the day.
A couple things I want to point out which I am sure have already been.
This is all about the SPX:
#1) When I have been doing my fibs, I started out with the high printed on (last new high) on August 11, 2008. ($1313.15)
#2) Our next new low was printed on March 6, 2009 ($666.79)
Numbers are rounded:
$666.79 = 0%
$666.79 X 1.236% = $824.15
$666.79 X 1.382% = $921.50
$666.79 X 1.50% = $1000.19
$666.79 X 1.618% = $1078.87 (We printed $1080.15)
$666.79 X 1.764% = $1176.22
This should show you where and why some of the predictions have been made and carefully watched off the most recent high.
Each and every single time i have snickered at or ignored the fib retracements and
advances. . . . it has come back to bite me in my Tuchas (yiddish for azz) and cost
me many thousands of shekels.
Not sure if we stall or crash. Markets, traders and investors are not passive by nature
and its not likely to be allowed to drift. Besides, a good 75% crash would cause
more stimulus, lower interest rates and junk programs like cash for clunks.
Bonds and gold are telling us all is not well and that a crashola is very, very, very likely.
Too much bearishness for the start of a drop. The market will take a breather and probably retest the highs. Put/call ratio too high so don’t count on anything big until after opex. Shorts have already been wiped but put buyers still have money left to be taken. Only when bears are completely broke will the market destroy the bulls, although a massive negative shock will reward shorts and long puts regardless of the machinations of the big boys.
Funny, the market did not sell off and all i saw here was guys screaming but the drips?
Tells me a crash of biblical proportions as big money sells to the dippers.
Put your money where your mouth is.
I’m long equities since Last Friday. I’m up 6% on 160k in 1 day for being long on safe stocks. Where is your money?
I agree with you Jeff, that’s why I think 1200 will be tested very quickly by end december 2009.
My money is short. I should have bought Idan’s Wynn on Friday. I was looking at some other stuff though, but I knew that would be great for an oversold bounce and it was. Oh well, can’t watch everything. But anyhow… Look at this… http://www.cnbc.com/id/33146351 We have people like this guy here saying they are going 100% long because we didn’t sell off that hard on Friday, and you are telling me it is too bearish? I heard that crap all day on CNBC. “Terrible jobs data and we didn’t sell off, let’s celebrate!” Moronic. We would have sold off hard on Friday if…
1. We werent oversold.
2. We didn’t make the first test of the 50s in forever.
3. GS didn’t tell us what to expect the afternoon prior, “pricing in” the data.
4. We didn’t have alot of short covering to do given all the ravaged shorts over the last month who could finally take some profits.
Do I acknowledge the possiblity of a further oversold bounce on Monday? Sure I do, but Friday’s performance, inability to get beyond 1030 for more than a few minutes, weakness at the end of the day, further -5 S&P points lost after 23 the day before wasn’t impressive at all in my mind.
Good point Marc, from your post I think IT IS POSSIBLE to touch high 900s.
I hope the market dips to 900s (so you profit), and then comes right back up to 1100 (so I profit)
It’s a win=win !!
Too many times I’ve seen the market not do the obvious right away. If it was like that then everybody would make money in the markets. The data was mostly priced in from Thursday. To me Monday is a 50/50 chance and I don’t like those odd. I’d rather be patient and confirm the direction. On the S&P the 5 day and 20 day have crossed over to the downside, need more down side as confirmation. On the S&P 60 min 50 day and 200 day are crossing over. If don’t get through 1030 next week I’d be worried for the bulls.
The last couple of weeks saw the news flow change. The market began to realize that once stimulus is withdrawn, the market cannot sustain itself. We saw disastrous car sales this month after “cash for clunkers” sale is over. The market is expecting house prices decline to accelerate once the $8,000 rebate is over. There is also a lot of talk about the political will to withdraw stimulus. Uncle Ben said he has the political will to do so once inflation rears its ugly head (which I very much doubt).
The best indicator I use to gauge if the market will go up or down is how it responds to news. On an intermediate term, it is not responding well. I expect this decline to continue for another 4% to 4%.
On a short term basis, I thought it absorbed the jobs number quite well. SPY bounced back and was only down 0.5%.
Based on the above, I am expecting a short term bounce followed by a decline.
If you guys look into ISM a little more deeply you will find that the new orders to inventories ratio saw the biggest month over month drop since 1980. It is not only likely, it is very likely that ISM will fall back below the 50 mark next month showing that manufacturing is once again contracting. If this indeed ends up being the case you will see the markets sell off alot harder. Not only is the market questioning what will happen if the stimulus is withdrawn, some of us are questioning if the government can pull us out even with all the fiscal/monetary stimulus. ISM should have been stronger. Cash for clunkers withdrawal last month should NOT have hurt ISM. After cash for clunkers ended dealer inventories of popular models were depleted. You don’t make these new cars instantaneously. These inventory replenishment vehicles would have needed to be manufactured well into September. It doesn’t matter if we sold cars or not in September, if the dealers are short popular cars on the lots you still gotta manufacture them. You manufacture products before you sell them, not at the same time. The cash for clunkers argument does not explain ISM. It may start to explain Oct/Nov ISM however if that disappoints. I’ve heard folks talk about double dip in 2010, I think we might see it far sooner than that.
But maybe you aren’t as macro-bear as I am. It doesn’t really matter. When the argument is that we are in the midst of a V-shaped recovery as the bulls claim, sequential declines in the economic numbers are not good at all.
I can actually see a different senario playing out… one which actually rather agrees with Zee, but not for the same reasons! I could see us falling a bit more early this week. Then I could see Q3 earnings coming out decently. Why? Because Aug/Sept were pretty decent and that could be reflected in the numbers. But then I could see us falling early Nov when Oct ISM/Jobs come out.
“I can actually see a different senario playing out… one which actually rather agrees with Zee, but not for the same reasons! I could see us falling a bit more early this week. Then I could see Q3 earnings coming out decently. Why? Because Aug/Sept were pretty decent and that could be reflected in the numbers. But then I could see us falling early Nov when Oct ISM/Jobs come out.”
You bring up some good points.
985 SPX is really the key number I am looking at. If that breaks, the markets will collapse and I mean it.
GS is just below consensus on ISM non-manufacturing at 49.5. Street is at 50. 49.5 would mean contraction is still upon us. Would still be a rise over last month however. 49.5 probably wouldn’t hurt market much, but if it came in more appreciably under 50, and if it came in under last month in particular, get ready to crash though the 50s in a hurry on Monday.
Again I don’t think the real test and determination of market direction will come until we start to get earnings rolling in on Tuesday. If we crash a little on Monday it will not hold if earnings start to come out strong. However if we crash a little on Monday and earning suck we will keep falling. If we move up early in the week and earnings suck, that move will not be sustained. Remember, the drop to 875 S&P in July was reversed very quickly when earnings came out strong.
In response to #6 for Jeff:
“Too much bearishness for the start of a drop.” May I remind you of the 50+ handle days back in the first 10-15 days of this rally, when the bears were in the same mindset? We have rallied for 7 straight months, why wouldn’t a pullback (start of P3) take a nice orderly decent? I do think there is a dead cat bounce most will be able to capitalize on even if it is. As far as testing the top, why would you think we haven’t already done so? We spent 5 days up in that area, and it looks like the backtest was completed. I know back in March we didn’t mess around all that long around the lows. Furthermore, since last October, many traders and investors have taken over their own personal account. They have been much more cautious with their money, not leaving it in the hands of others that try to salvage their clients accounts in the event of a major sell off that probably won’t happen without a major catalyst. The bulls are the first to admit the printing presses run freely.
How much more of a pullback are you willing to sustain before you lock in some of the profits you have made? I have no idea what your trading style is, but I do know you and some of the other bulls in here are intelligent enough to protect you and yours. I want to see the U.S. recover just like a true American should. I just ask that you look back over the past few quarters and see what has changed. Why are most of these earnings beating? Overhead has been dramatically reduced via a 9.8% Unemployment rate. I would love to see this be the beginning of a bull market rally, and targets some have in mind to the upside would suggest this. I however, have been around for the better part of 4 decades and just don’t see that happening. I could go on and on about the numerous reasons for a decline, but I rather remind those who have profited to be a little greedy when need be. Nobody else if going to do it for you. For now, I am more a bear than a bull, but only because my eyes are open. I look forward to the day I can position trade “without fear”.
Be prosperous,
Ox
1 more thing; flip some of those charts upside down and ask yourself if that is the bullish set up you want to be trading? I have been through numerous over the weekend and am having trouble with that. There aren’t that many AAPL’s out there. I am not bullish on AAPL, don’t get me wrong, I personally think they have run into overhead supply at this point. (Just look at last year)
Unfortunately, I plead not guilty to being a bull. I was a bull from the lows in March through April, then became quickly neutral and then became over 70% bearish by May (I sold in May and the only thing that went away was my money). Bad move. I have been losing money ever since, but other than one foolish time in May or June when I was so certain of a reversal that I sold my hedge insurance (and paid dearly) the losses have all been hedged and it is only a slow bleed now. Despite the clear change in direction, I am not so cocky as to sell my insurance and certainly not before opex. Just because I think we will hover and maybe once again retest the highs does not make me a bull. This is a bear market rally, perhaps the worst in history and the falls to new lows will probably be the worst in history (tulip bulbs excepted). I even hold out the slim possibility of a capitulation day to 1100 or higher, but the fundamentals do not support this. Much as we all hate boring days, I think boring days and time decay lay ahead until opex, But the only scenario that will lose me real money is a slow steady bull market over the next three months. I need a drop to 880 to get back to my April highs.
A drop to 880s? It won’t happen.
Art Cashin is one of the few out there on TV who makes any sense. Even under pressure from the CNBC guys he stuck to his guns and was saying this market is overbought and he isn’t participating. This is his Friday morning comments:
http://www.cnbc.com/id/15840232?video=1282677319&play=1
He has been saying that for the last couple of months. Again the broken clock saying.
A true long term bottom doesn’t happen the way this one has, quick turn around and with declining volume. I would say in the next few months we’ll see a major downer and at least test the March lows. I know you’ve been extra bullish Jon, but we all need to be flexible and not fight the market. I’m not a perma bear by the way.
No I am not extra bullish nor a bull or a bear. In my book we have already tested the low twice, one in Nov and other in March. The rise from Nov to jan-feb was on low volume. The is a perma bear site and I try to add a diff prospective.
Many here lost a golden opportunity to make some serious money from march till now.
I am in the Silicon Valley and companies have started hiring. Majority of the pay cuts have been reinstated. Yes, unemployment had increased but it has always been the lagging indicator.
GLTA and lets make money
Bought Aloca on Friday. The aluminium prices in Q3 were significantly higher than Q2. The inventory of aluminium has stopped increasing. They also aggressively cut costs in Q2 and should see lower lost structure in Q3. Deutsche Bank upgraded this stock to Buy from Hold on Oct 1. If it pulls back, I am buying
When you live in America with no recycle plan in place, lose your job, can’t find one for six months (at least) with no end in sight, what do you do? Buy beer! What are the cans made of? Not my situation, but think this is a great call for long term.
LMAO
LOOKS LIKE THE IYR FORMED A BEARISH BUTTERFLY!
Trivia note: Art Cashin was in 2 of the ‘cheech and chong’ series of stoner movies.
His father put up the cash to finance the first c&c feature.
Ahh futures bright green. Love it.
Spy 107 calls are 0.46.. Bought $2000 worth of them.
If we don’t break 101.99.. I believe 1080 is posible by OCT 16.
Read it here first folks.
OCTOBER 16TH. —> 1080
Only if 101.99 does not break.
I’ll sell you some $107 calls for $1
Not to burst your bubble but just because it’s green now doesn’t mean that it will stay green until tomorrow morning. Futures markets in the evenings are much more different than after 8 am before the markets open. I’ve seen it reverse too many times that’s all.
Zee…
Lets see what happens tomorrow. I am long UCO and I am placing my bets on the dollar going down. We are testing the lows on 30yr treasuries and one it bounces it will bring equities up.
What is your cycle theory for the next 3 months?
Agree, futures are meaningless till the market opens. For chartists they may make some sense.
I think S&P will backtest the 1040 before the “Big drop”
u guys are all too bearish… all the scenarios i hear are either (a) modest rally continues til we test 1150~1200 on spx or (b) trend reverses and big correction comes.
has it occured to you that we have a scenario (c) market explodes upwards and NASDAQ re-tests 2000 highs for a long-term double top!
i ve never been this bullish in my entire trading life of 17 years…. be long or be wrong!!
why are you so bullish now? What about proabable long period of high unemployment, slow growth, continued lack of consumer spending – do you expect something different?
Futures are up about 26 Dow points. The S&P futures (+3) are trading in a well-defined pennant formation and should breakout here.
http://i37.tinypic.com/28slvsn.png
Futures in the green… nice… I might finally get my JPM put orders filled…
I am not a permabull or permabear, I use mathematics, probabilities, basic technical analysis and timing analysis to gauge the next move. While I am more bearish on the market now than two weeks ago, I remind myself not to overlook the fact that so far BAC is the only stock in the DOW group to have retested its broken uptrend line as resistance (and DOW 9415 & SPX 1015 major support right underneath). This combined with SPX bouncing off the uptrend line on Friday are my signals that further bounce could be possible. I don’t short stocks or ETFs unless I get that (failed) back test. Sure you will miss out on the tops (and bottoms) if you do what I do, but you’ll save yourself from a lot of grief.
Fritz;
Good analysis.
Can you post a chart for a example.
thanks for your contributions.
Fritz, you have said in previous posts that your intent is to front-run the real, big drop and nail a 30 – 40 bagger.
without giving away more than you want to…it seems like you would need to buy deep OTM puts on the cheap while the market is complacently marching upward to nail such a score.
When a backtest fails, you will be one of the crowd, not a front-runner, and a huge win would require a deeper OTM buy, or would you wait for your confirmation and then roll 3-4 trades forward – i.e. sell SPY 100 puts (bought at SPY 108) when they get in the money and buy 95′s, cash them out and buy 90′s when they get ITM, etc, etc, etc and compound the wins all the way down to the 700′s?
I can’t always watch the markets real-time, so for me it seems like buying puts that are 15% – 20% OTM when an index EFT looks toppy will eventually (no more than 3-4 months surely) bring home a big score. Kinda like going to Vegas and betting black on the roulette table until it hits, although in this case the pay is more like 20-1 when the fecal matter finally impacts the rotating air deflector.
Final thought: SPY Dec. call spreads will yield 4-6 to 1 if one believes that the insanity can continue till year-end. This is a nice backstop to premature bearness…
blah….blah…..blah…..just buy calls and sleep well