So the day ends along with the week and the month. What started as very promising bogged down and now is in reverse. We definitely have our homework to do this weekend as we prepare for next. There are some weathering edges on this market and whether they show themselves as a continued problem next week is what will make the week interesting. Throw in earnings churn along with lots of economic indicators and we have a recipe for indigestion. If this is in fact the beginning of a significant pullback, there usually is time to grab a lifeboat if you don't jump headlong into the water first. When it comes time though, you have to be decisive. You have to decide ahead of time what your premise is, whether it looks to be working out or not and what you do if it does or doesn't. When the time comes to act, it needs to be seamless; without hesitation. So do your planning ahead of time. See you next week.
The Daily Dose of Trading Comments
Here you'll find short quips concerning the market mood and direction posted intra-day as the market dictates and time allows. You can find TATs strategy here. Comments here are from a trader who trades for a living.
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Friday, January 30, 2004
Next week there's a chunk of eco numbers starting Tuesday with personal income and spending. It's the last big week for earnings also cause after that they slow down considerably. The earnings have generally been what was expected and stocks that were on their highs have generally sold off while those that were near their lower range have worked higher for the most part. I don't see that changing.
What has changed is how data is viewed. What I thought would be a negative now is probably neutral and that is the eco data not being better than expected now is probably a good thing as it signals we are not overheating and the Fed isn't going to step in immediately.
The other thing that has changed is the technical picture. We finally have a rather serious crack in the short term technical wall and whether the mentality of selling begets more selling or buying begets more buying sets in remains to be seen. This is a herd market right now and it can go either way. I personally would like to see a move next week back to resistance the first part of the week and then the selling can ensue if that's what the market chooses. The big employment number is end of week.
As for the finish to the day, it's pretty much a dud. Volume is lower than average, the buyers really haven't materialized and we just seem to be drifting to the finish line. Maybe they will surprise me into the close having made my thought of a higher charge into the finish line wait until the very end.
What has changed is how data is viewed. What I thought would be a negative now is probably neutral and that is the eco data not being better than expected now is probably a good thing as it signals we are not overheating and the Fed isn't going to step in immediately.
The other thing that has changed is the technical picture. We finally have a rather serious crack in the short term technical wall and whether the mentality of selling begets more selling or buying begets more buying sets in remains to be seen. This is a herd market right now and it can go either way. I personally would like to see a move next week back to resistance the first part of the week and then the selling can ensue if that's what the market chooses. The big employment number is end of week.
As for the finish to the day, it's pretty much a dud. Volume is lower than average, the buyers really haven't materialized and we just seem to be drifting to the finish line. Maybe they will surprise me into the close having made my thought of a higher charge into the finish line wait until the very end.
Not only is the buying not materialzing, it looks like selling is starting to gain the upper hand out there. Has caused me to exit that QQQ long and get to the sideline. Having had a good start to the month, we are finishing with a whimper and simply looking to have some profits remaining into the end of the month. As I've said many times, it's much easier to forecast than to trade. We saw the fall coming, we thought we positioned well, but we ended up losing anyway (at least on paper). What a pain.
Volume is light today and the internals are flat to mixed. Not a lot going on. Is this the calm after the storm or while we are in the eye? Could be either. I'm still looking to see some of that buying power to be expressed as we turned towards the close here. Whether it materializes or not remains to be seen but the intraday trading seems to be setting up for a push. I've put on the QQQs again for another shot.
Stock prices are all over the map. I exited the QQQ long for a few bucks. The volatility is high comparatively now where volatility is defined as prices both up and down in wider ranges and wider amounts within a single day. These are days you can get thrashed easily so if you want to work a trade intraday you need to do it smaller and be willing to let it move against you a bit more than normal and when you have them, take smaller profits. Otherwise it's better to simply sit out the intraday stuff and keep picking at good positions in stocks sporting good charts; especially those who have already reported.
We still haven't see the listed issues move to the red today and I'm beginning to wonder if they can. The BBH is a big drag on the NASDAQ and the fuel that drove us higher on the SMH quickly was extinguished when they realized it was shorts doing the buying. So we are stalled here in the red for now.
I'm looking for some late day strength as profit taking sets in on the short side of the equation and end of the month buying walks stocks up late. We will see.
We still haven't see the listed issues move to the red today and I'm beginning to wonder if they can. The BBH is a big drag on the NASDAQ and the fuel that drove us higher on the SMH quickly was extinguished when they realized it was shorts doing the buying. So we are stalled here in the red for now.
I'm looking for some late day strength as profit taking sets in on the short side of the equation and end of the month buying walks stocks up late. We will see.
We saw a pretty good rally that now looks like it was fueled by short covering. The next step is to keep a higher low and then build off of it. I've done very little this morning and am watching that QQQ long. Will not let it slip to a loss now.
What a mixed up market. Yesterday they couldn't get enough of the biotechs. Today they can seem to dump them fast enough. I missed the AAPL trade getting to cute with the entry point. Likely that one's gone already. If we catch a dip in the next half hour, I'll try it. End of month today. With mutual funds likely being buyers, I expect to see the NASDAQ push us higher. It's also profit taking day and the shorts are there to take the profits.
Lastly, the perverse logic of the market is that the cooler GDP is now good, not bad given that the we are on Fed watch. Three days ago, this GDP number would have been the excuse to sell. The Fed changed that. Wacky huh?
Lastly, the perverse logic of the market is that the cooler GDP is now good, not bad given that the we are on Fed watch. Three days ago, this GDP number would have been the excuse to sell. The Fed changed that. Wacky huh?
Early jitters in the market. I stepped up and bought some AVA on the open and just added some QQQs for a trade north. SMH was weak but turning quickly.
Given the early thoughts below, does this mean it's time to be buying? Well, depends on your time frame. There are some good stocks out there for an intermediate term buyer. AVA is a good example. Good earnings report, good chart. It can be bought here with reasonable risk for a trade of a few weeks most likely. Could catch a nice bump and cash out sooner possibly.
Then there's something like AAPL. Nice earnings numbers but had ran up a lot into them. Gapped down has found a bottom and looks ready to rattle the cage higher again. More risky than AVA most likely but you could buy it here on a shorter term notion with a tight stop under these series of last day lows. Good risk/reward. I'm bidding it pre-opening on that thought.
For the most part though, I'm not looking to make big purchases here. We have a portfolio of metals, drugs and 3 to soon happen earnings plays and a couple more speculative small positions. I don't see a need to get crazy with adds this soon. Better to let the market digest all the news, gather itself. That could take another week or two. Not the time to load up the boat I would say. In fact, I have a standing order out there to short the QQQs on a move back to 37.68. I'm thinking we could see that today. This market will likely thrash for a little while now ... not head back to new highs immediately. Having said that, one only needs to look at the chart to see how the not straight back to new highs has been wrong for so long. After this long sprint from December though without taking a breather, this time it should take a bit longer to get back there. I'll be betting against immediate new highs.
Then there's something like AAPL. Nice earnings numbers but had ran up a lot into them. Gapped down has found a bottom and looks ready to rattle the cage higher again. More risky than AVA most likely but you could buy it here on a shorter term notion with a tight stop under these series of last day lows. Good risk/reward. I'm bidding it pre-opening on that thought.
For the most part though, I'm not looking to make big purchases here. We have a portfolio of metals, drugs and 3 to soon happen earnings plays and a couple more speculative small positions. I don't see a need to get crazy with adds this soon. Better to let the market digest all the news, gather itself. That could take another week or two. Not the time to load up the boat I would say. In fact, I have a standing order out there to short the QQQs on a move back to 37.68. I'm thinking we could see that today. This market will likely thrash for a little while now ... not head back to new highs immediately. Having said that, one only needs to look at the chart to see how the not straight back to new highs has been wrong for so long. After this long sprint from December though without taking a breather, this time it should take a bit longer to get back there. I'll be betting against immediate new highs.
Last night as I tried to digest the events of the week, I couldn't help but come back to the thoughts of a mistake I made in my trading thesis early in the brutal bear market in stocks that ensued from 2000 until last year. Back then the Fed started cutting interest rates and I formed the thesis that it would make a difference, that the markets would stablized and would do so reasonably quickly. What I came to find out is that the markets kneejerk, but then they settle right back into the patterns that they have held and that it takes quite a while to change their habits.
I believe that same thinking applies now that the Fed has removed the wording from their FOMC statement. My gosh, we haven't even began to raise rates and it feels like the market is pricing in a 6% fed funds rate already. A mistake if you look a couple weeks out.
The GDP number just came in weaker than expected. Should help the metals, hurt the dollar and oddly enough, should actually help the market because it says we are not overheating and the Fed stays on the sideline longer. Investment spending component up which is the key component. Looks like a good number to me considering this week. Futures sold down, but again, markets are nervous here and thrashing.
I believe that same thinking applies now that the Fed has removed the wording from their FOMC statement. My gosh, we haven't even began to raise rates and it feels like the market is pricing in a 6% fed funds rate already. A mistake if you look a couple weeks out.
The GDP number just came in weaker than expected. Should help the metals, hurt the dollar and oddly enough, should actually help the market because it says we are not overheating and the Fed stays on the sideline longer. Investment spending component up which is the key component. Looks like a good number to me considering this week. Futures sold down, but again, markets are nervous here and thrashing.
Thursday, January 29, 2004
By the end of this day I'm sure I can pinpoint another batch of grey hairs that have transcending to my head. We bailed to early on our short positions but today although I believe it was the day to lift them from a short term perspective.
We bore the brunt of a second day of speculative selling in the metals as the ill founded belief that the dollar will firm considerably as a result of the Fed speak yesterday continues to play out. We did manage one profitable trade there but that comes no where near evening out the paper losses that lay in waste.
The snap back rally seems to have been tied to the release of the Fed minutes where it is reasonably clear (if anything is clear from those guys) that the Fed has no intention of raising rates soon and clearly doesn't intend an eminent hike. Kind of what I thought we thought.
So now what? The damage was done on the pullback and the volatility increased with volume today. Likely that we move higher tomorrow although the early morning GDP number will likely set the tone to begin with. The shorts are still a nervous bunch even if they got their way these past few days so don't expect them to do anything until we get back up around those more irresisitible resistance numbers that are a decent percentage higher from here. I know I'm thinking you've got to short into those areas.
In between, there's just the slop of another day where many were thrashed and their money trashed by the few who made out. I added to SCSS and MNC to carry forward with the latter become a sizeable position again. They rewarded us last earnings season. Are they to be trusted once more? I think so.
Lastly, I got a little carried away today trying to carry a larger trade for a few ticks. Bad move. That's not where I make money. I make money by gaming the trend mostly and staying out of the way of ugliness most of the time (or at least cutting the losses before they get too severe). It's easy to get caught up in the excitement and that's the rub cause if you are around this stuff all day you can't help but thing "Oh, I can game a move here ... or there", but that's a lot tougher than you think especially if you are playing heavy. The money is always made by those who can sell on their own terms the majority of the time. That's an important factoid that should be lost. Good night.
We bore the brunt of a second day of speculative selling in the metals as the ill founded belief that the dollar will firm considerably as a result of the Fed speak yesterday continues to play out. We did manage one profitable trade there but that comes no where near evening out the paper losses that lay in waste.
The snap back rally seems to have been tied to the release of the Fed minutes where it is reasonably clear (if anything is clear from those guys) that the Fed has no intention of raising rates soon and clearly doesn't intend an eminent hike. Kind of what I thought we thought.
So now what? The damage was done on the pullback and the volatility increased with volume today. Likely that we move higher tomorrow although the early morning GDP number will likely set the tone to begin with. The shorts are still a nervous bunch even if they got their way these past few days so don't expect them to do anything until we get back up around those more irresisitible resistance numbers that are a decent percentage higher from here. I know I'm thinking you've got to short into those areas.
In between, there's just the slop of another day where many were thrashed and their money trashed by the few who made out. I added to SCSS and MNC to carry forward with the latter become a sizeable position again. They rewarded us last earnings season. Are they to be trusted once more? I think so.
Lastly, I got a little carried away today trying to carry a larger trade for a few ticks. Bad move. That's not where I make money. I make money by gaming the trend mostly and staying out of the way of ugliness most of the time (or at least cutting the losses before they get too severe). It's easy to get caught up in the excitement and that's the rub cause if you are around this stuff all day you can't help but thing "Oh, I can game a move here ... or there", but that's a lot tougher than you think especially if you are playing heavy. The money is always made by those who can sell on their own terms the majority of the time. That's an important factoid that should be lost. Good night.
I looked for this rally earlier and of course was disapointed. I'm not dropping any of the adds today that I still have, instead looking to take them into the close.
With volume heavy and internals 3:1 negative, it's likely that today was the short term blow off day that we spoke of earlier. I don't think this market is out of the woods by any means, but they are working it higher here towards the close. Lots of volatility.
The drugs and especially biotech have been strong all day. Now if we could just get the metals to move I'd feel a lot better.
The drugs and especially biotech have been strong all day. Now if we could just get the metals to move I'd feel a lot better.
In the recent past, Friday's have typically been profit taking days. For the vast majority of the sessions, that has meant that positions are sold. After early weakness in the morning, we should expect the converse where the bears take profits. We do have the GDP number before the bell and as I said yesterday, it will be interesting to see how the number is spun given that excessive strength can hurt more than help now.
There's one thing I can say that will draw no criticism and that this type of market is not for the faint of heart. Up and down, back and forth and fast. There's a lot of damage being done out there and at the same time, the bulls would argue that the table is being set for the next advance. It doesn't take a genius to look back at the charts and see that every time we get one of these pullbacks, even the violent ones, it simply refreshes the table and allows us to push higher. I'm not convinced that this one is the same, but I am reasonably certain that the bulls will not roll over that easy.
So you hold your nose at certain intervals on certain issues and buy. Today it's for a trade only given my uncertain conviction as we simply try to take advantage of the emotions that are being played out causing the volatility.
So you hold your nose at certain intervals on certain issues and buy. Today it's for a trade only given my uncertain conviction as we simply try to take advantage of the emotions that are being played out causing the volatility.
SMH has rolled over and now its looking pretty ugly. I'm slowly averaging into a couple of my more favorite plays (MNC so far). Hard to buy them here, but with earnings coming soon and they having sold down into what should be good numbers, I'll take the risk.
So that little jingle didn't work as I was rinsed it appears on that stop I had set so closely. Instead I'm now talking to myself about not trying to catch these little ticks. That's not our game. Instead, I'm turning my attention to looking at those stocks that I really like and building a list up of those that have reported good earnings and have soared only to be brought down by the events of yesterday. Much better to try to work a long trade or two in those area rather than playing with these indexes as I don't do well playing small ticks.
Still looking for this market to make a stand in here somewhere as I can't believe all the bulls give up that easy. That was just a good whooping, not a beating and it will take a beating to make them quit buying.
The metals are an exercise in futility and if I was lugging them around my mood wouldn't be so sour. Nevertheless, we need to deal with that frustration patiently and wait for it to develop.
Still looking for this market to make a stand in here somewhere as I can't believe all the bulls give up that easy. That was just a good whooping, not a beating and it will take a beating to make them quit buying.
The metals are an exercise in futility and if I was lugging them around my mood wouldn't be so sour. Nevertheless, we need to deal with that frustration patiently and wait for it to develop.
Stepping up to take the long side on the Q's as the wedge is narrowing. Either we break up or down from here and given the higher highs and volume intraday, I'll place the bet. Stops are tight though for this expected quick trade. Would like to catch some short covering as the day wears on from here.
I've been idle here. Did stick on a bid in the market for FTN which we let go early yesterday. I'm itching to see a new intraday high on the Q's in order to go long using today's lows as a stop out if wrong. Shorts have shown that they will cover quickly if the mo-mo starts the other way and even with the technical damage here, a bounce up is not only expected near term by this commentator, but one I'm willing to take a bet on. Just need the setup.
I feel like I'm ring side watching blow by blow today as the NASDAQ get's knocked right to the floor again and as soon as you think it's not going to bounce back up, low and behold there it is again. Although this retest of the lows is still tenative, so far they are holding. If we get a double bottom here, expect a nice bounce. If not, expect another 80 points down on the QQQ's to the 36 area.
Well, the SMH did bounce off that 41.50 area and we turned slightly green on the Q's. Lot's of damage out there but the listed issues are holding well and we may see some added strength as the day progresses. I'm sitting tight but bemoaning my metals. Still upset at myself there. Ruined a nice setup elsewhere and doesn't allow me to feel good about what we did right. But we trudge forward ...
I'm keying off the SMH on this expectation of a bounce. It's right at it's trendline and if the bounce is going to come, it should come from these levels. Next 30 minutes will paint today's picture.
Volume pretty heavy here early. Looks like a short term climatic type sell. I'm holding off thinking a bounce is to come still.
I've taken a calculated gamble here and have closed almost all the short positions expecting a bounce that will carry some today. If wrong, I've lost the bet.
Looking at the charts, the QQQ's should have some serious resistance back up around the $37.80 area so shorting as we get near that area is a good bet.
On the SPX, the same goes for it around 1142.
On individual issues, you just need to pull up the chart and check. This of course assumes we can rise from the early ashes.
Looking at the charts, the QQQ's should have some serious resistance back up around the $37.80 area so shorting as we get near that area is a good bet.
On the SPX, the same goes for it around 1142.
On individual issues, you just need to pull up the chart and check. This of course assumes we can rise from the early ashes.
Note that this market will likely retest the lows of yesterday sometime this morning and could bounce from there short term. I do not believe it time to buy though but will likely look to cover some of the shorts early to put back out higher. There are some naturally places to short now given strong resistance caused by yesterday's break.
If we head higher without a retest, then I'll simply look to add to the shorts at some point. Not the favored scenario but one we will have to work if it works out that way.
If we head higher without a retest, then I'll simply look to add to the shorts at some point. Not the favored scenario but one we will have to work if it works out that way.
After a night of tossing and turning, we greet the new day and wait for the dust to settle. I expect we will see some continued pressure early even though the pre-opening suggest a rise. I don't expect it to be long before some extra selling takes place that was missed yesterday. This market has the ability to move fast here as it went straight up for so long. Unless we see dip buyers in earnest jump in (which I don't expect yet), that's the forecast from this viewpoint.
Although we avoided the majority of the brunt yesterday, we did take a hit on the added precious metals. With those positions, the longer term looks great but I hate longer term. I live on short to intermediate term and will be looking for a place to lighten up a bit if presented. Don't expect that this week, but we will wait and see. Our positions are not overbearing so will not force a trade but would like to get a better entry point given yesterday's move. Who knows, I might be surprised and see others come to the same conclusion I have and that is that the dollar will ultimately not be supported by this notion of interest rate hikes sometime later this year. We will see.
Although we avoided the majority of the brunt yesterday, we did take a hit on the added precious metals. With those positions, the longer term looks great but I hate longer term. I live on short to intermediate term and will be looking for a place to lighten up a bit if presented. Don't expect that this week, but we will wait and see. Our positions are not overbearing so will not force a trade but would like to get a better entry point given yesterday's move. Who knows, I might be surprised and see others come to the same conclusion I have and that is that the dollar will ultimately not be supported by this notion of interest rate hikes sometime later this year. We will see.
Wednesday, January 28, 2004
As I look over the rubble of the day, there's this knawing inside that I didn't protect those metals. Man that one upsets me. We've played with the fear of a pullback for a long time and had successfully sidestepped it only to get hit from behind on our metals. Darn it!
The breadth turned decided negative. I actually see a rise in new lows. Man it's been a long time since that happened. The screens are pretty red; redder than I can remember. The indexes quickly gave up the better part of their gains since the beginning of the year today. New highs down; volume up. Lot's of technical damage today.
All in all, this does look like the start of something a bit more serious. That distribution that we felt like we saw on Monday along with the distribution that we indeed saw yesterday morphed into a real ugly today. We protected against it well and put the short positions in place just in time. Had we only protected those metals ....
Oh well. that's it for me tonight. I'm back to the books for a bit and then will call it an evening. I'm beat. I expect further damage tomorrow and will be looking hard at the metals to see how they react as well as the dollar as I want to average in more on these metals at some point, but I'm not willing to stand in front of a falling elevator if that is what happens short term. Good night!
The breadth turned decided negative. I actually see a rise in new lows. Man it's been a long time since that happened. The screens are pretty red; redder than I can remember. The indexes quickly gave up the better part of their gains since the beginning of the year today. New highs down; volume up. Lot's of technical damage today.
All in all, this does look like the start of something a bit more serious. That distribution that we felt like we saw on Monday along with the distribution that we indeed saw yesterday morphed into a real ugly today. We protected against it well and put the short positions in place just in time. Had we only protected those metals ....
Oh well. that's it for me tonight. I'm back to the books for a bit and then will call it an evening. I'm beat. I expect further damage tomorrow and will be looking hard at the metals to see how they react as well as the dollar as I want to average in more on these metals at some point, but I'm not willing to stand in front of a falling elevator if that is what happens short term. Good night!
There's always one or two things that you can look back, after the fact, and say, I should have seen that coming. In my case today, it was the precious metals. We were sporting some big gains a day into the trade this morning and rather than paying close attention and putting stop under them, I let them fail me. I should have realized the impact the Fed restatement would have on them just as I realized the impact it would have on the market. My bad and it is costing me near term. Longer term, they are a good play and I plan to buy more as they come in. Short term though, it screws up what was otherwise a nice trading today as our addition of short positions and our profit taking early kept us out of trouble elsewhere.
So, rather than a big gain, we dog peddle more as the metals weigh us down near term. That's the sort of things you put away in your little keppe and remember for the next time around.
I wouldn't overlook the significance of today's sell off. What it will mean and folks will start talking about soon is that when we get strong economic numbers, the fear of an impending rise in rates will grow louder. So good eco numbers now become somewhat bad for the market. Perverse, but true.
On the metals, I expect that the dollar will continue to weaken against other currencies and this selling today was a kneejerk that the dollar will strengthen. The problem is that once the Fed starts to raise rates, then others will do the same and the dollar is no better off than it was before. What helps the dollar is that the deficits come down and that's not going to happen anytime soon. If anything they will continue to baloon given our foreign policies and tax cuts.
Hope you held your own today. Tomorrow we will see if what I'm thinking is for real as folks will have a night to chew on things. With lots of profits to protect and now the market having to truly price in rate hikes down the road sooner, rather than later, it is likely to get ugly for a little while ... at least.
So, rather than a big gain, we dog peddle more as the metals weigh us down near term. That's the sort of things you put away in your little keppe and remember for the next time around.
I wouldn't overlook the significance of today's sell off. What it will mean and folks will start talking about soon is that when we get strong economic numbers, the fear of an impending rise in rates will grow louder. So good eco numbers now become somewhat bad for the market. Perverse, but true.
On the metals, I expect that the dollar will continue to weaken against other currencies and this selling today was a kneejerk that the dollar will strengthen. The problem is that once the Fed starts to raise rates, then others will do the same and the dollar is no better off than it was before. What helps the dollar is that the deficits come down and that's not going to happen anytime soon. If anything they will continue to baloon given our foreign policies and tax cuts.
Hope you held your own today. Tomorrow we will see if what I'm thinking is for real as folks will have a night to chew on things. With lots of profits to protect and now the market having to truly price in rate hikes down the road sooner, rather than later, it is likely to get ugly for a little while ... at least.
Sometimes the hardest thing to do is nothing. When the market gets a jolt, the tendency is to fly into action buying and selling. I've made two moves since the announcement; adding to the Q's short and taking small profits on the one bank concern FTN. Nothing more. I'm looking to buy more metals on weakness but am not in a big hurry. It's best to let this market work out its anxieties here and I'm suspecting that we will trend down now for a while. That's actually a good thing given how frothy things have been.
Well the Fed definitely shook this market out of its comfortable bed. I've added to the QQQ short and am trimming longs again. Trying to stay even in these shifting waters and positioning for a pullback as a result of the Fed action. Not making a major play on anything though ... easy does it.
Well, it's straight down and I've been unable to add to the QQQ short. Waiting for a bounce back to the resistance area around 37.65 or so to add.
Precious metals taking a good licking on this news but I'll hold tight in them for now.
Precious metals taking a good licking on this news but I'll hold tight in them for now.
As the market stumbles toward the Fed Open Market Committee's decision on interest rates, I've continued to chip away for small gains on long positions as I pair down a bit more and keep looking to add another short position or two. SCSS I let go for a few bucks because it looks like we can get it cheaper yet. The intraday stall here and the surge down early suggests a retest of those lows and I'll look to add it back down there rather than up here. Just jockeying for position so to speak.
I added a partial BONZ short as it couldn't move higher. If it does, we'll put some more on. I'm trying to stick to the New Year's resolution of partial buys and sells as we build a position rather than jump all at once. A little in a little out. This is also another explanation for the question over on the Message Boards regarding why there has been an increase in the number of trades over the past couple months.
This market is a bit sleepy here and continues to ease as we near the rate decision. I'm waiting it out.
I added a partial BONZ short as it couldn't move higher. If it does, we'll put some more on. I'm trying to stick to the New Year's resolution of partial buys and sells as we build a position rather than jump all at once. A little in a little out. This is also another explanation for the question over on the Message Boards regarding why there has been an increase in the number of trades over the past couple months.
This market is a bit sleepy here and continues to ease as we near the rate decision. I'm waiting it out.
I scaled a bit more into that QQQ short on that latest bounce towards the highs. Just inching into it piece by piece and am back to the 500 shares short again. Planning to hold tight there now unless we break down or take off. In the comfort zone so to speak.
Also scaled into some more SCSS on weakness this morning. Like POOL and MNC, I'm thinking their earnings will take us higher given how the stock has traded for a while now. It's built a long base and a good earnings report could launch it again. I'm not as confident about it's earnings though and am looking to trade it if we get a chance rather than simply hold.
Precious metals seeing some follow through to the bounce yesterday. I'm thinking it might be time there again and took a pretty good sized positions across three issues. Will look to add a bit more when the circumstances look appropriate.
Other than that, it's watch and wait. As has been the case for the past two weeks or so, it's dog paddle until we catch the next move. Stay even as best you can and keep looking for opportunities. Sooner or later it get's easier again and then we can press for returns.
Also scaled into some more SCSS on weakness this morning. Like POOL and MNC, I'm thinking their earnings will take us higher given how the stock has traded for a while now. It's built a long base and a good earnings report could launch it again. I'm not as confident about it's earnings though and am looking to trade it if we get a chance rather than simply hold.
Precious metals seeing some follow through to the bounce yesterday. I'm thinking it might be time there again and took a pretty good sized positions across three issues. Will look to add a bit more when the circumstances look appropriate.
Other than that, it's watch and wait. As has been the case for the past two weeks or so, it's dog paddle until we catch the next move. Stay even as best you can and keep looking for opportunities. Sooner or later it get's easier again and then we can press for returns.
The indexes are holding their early gains here and looking to build upon them. I'm expecting continued strength as a result of the way the market has traded here early up until the Fed decision. Let's consider what that decision could be.
If they do anything other than leave rates the same, it will be a bombshell. My expectation, and everyone elses, is that this will remain the same. What the decision is isn't the issue so much as what the wording of the statement will be. If the "considerable period of time" phrase is removed, expect the bond market to sell off and that will likely result in stock market losses. If it's all left the same, then a continued advance could ensue as the buyers wipe their brow. I believe the risk is to the downside but as always, you can expect a kneejerk reaction immediately after the decision that many times is a fakeout move. I don't usually trade on this news. If you look back at most rate meetings, the day after or two usually sees a reversal and some selling pressure. I don't expect this decision and reaction to be much different unless they surprise us.
If they do anything other than leave rates the same, it will be a bombshell. My expectation, and everyone elses, is that this will remain the same. What the decision is isn't the issue so much as what the wording of the statement will be. If the "considerable period of time" phrase is removed, expect the bond market to sell off and that will likely result in stock market losses. If it's all left the same, then a continued advance could ensue as the buyers wipe their brow. I believe the risk is to the downside but as always, you can expect a kneejerk reaction immediately after the decision that many times is a fakeout move. I don't usually trade on this news. If you look back at most rate meetings, the day after or two usually sees a reversal and some selling pressure. I don't expect this decision and reaction to be much different unless they surprise us.
Early strength is mostly bounce where we saw weakness yesterday. I've added one short, ADBE, but am being quite patient in getting very short in front of this bull. I think things will quiten out quite a bit earlier than usual this morning and will wait longer than usual before doing much of anything.
Yesterday the market started flashing warning signs yet again. After a day of what looked to be distribution on Monday but ended with a gallop to the finish line, Tuesday reversed and showed it's true colors. I've began putting the QQQ short back on this morning already as futures are up a nice clip from the close yesterday. It's my insurance policy that allows me to clip the coupons if I'm patient.
Is this seemingly teetering top for real this time? If I knew that, we'd all make a bunch of change. We don't know that answer although we do know that this market does look to be teetering here again and that a push back down increases when the market get's tipsy as it has done again. So we hedge.
Last night I spent most of my time looking for short setups. Just a gut feeling that somethings going to break. Of late, doing so has been a costly experience so I concentrated on setups that were either trend following short or wedge or momentum plays. I believe these offer the quick short term play that I'm looking for with smaller risk of loss near term. There listed on the Trade Sheets am my concentration is on those this morning. Tie your laces tight today, as this could be a thrashing move of a day.
Is this seemingly teetering top for real this time? If I knew that, we'd all make a bunch of change. We don't know that answer although we do know that this market does look to be teetering here again and that a push back down increases when the market get's tipsy as it has done again. So we hedge.
Last night I spent most of my time looking for short setups. Just a gut feeling that somethings going to break. Of late, doing so has been a costly experience so I concentrated on setups that were either trend following short or wedge or momentum plays. I believe these offer the quick short term play that I'm looking for with smaller risk of loss near term. There listed on the Trade Sheets am my concentration is on those this morning. Tie your laces tight today, as this could be a thrashing move of a day.
Tuesday, January 27, 2004
A flurry of activity at the end as I added to the metals a bit more and took the final profits on the QQQ short. We got close enough to the target that I reeled it in and booked the gains. Although today felt like a continuation of yesterday's distribution, we have quite a bit of news again tomorrow and I'd rather start with a clean slate on the Q's. So, we'll wait to see how that shakes out tomorrow.
As for today, we had a thoroughly down day with volume picking up. There was no late day dip buyers which we expected might be the case. New highs list still reasonably strong but continuing to slowly fade a bit. Breadth negative but not overly so. I'm thinking there will continue to be some thrashing in the indexes and will continue to use strength to short as a hedge. Today we started a reasonably large metals position gaming for a bottom there. Looking to add to it further in the coming days and attempt to trade around those positions over the coming weeks.
I'm not going to make any predictions about whether the selling that everyone and their mother has been waiting for is underway now but I will tell you that it is always possible. There have been warning clouds for a long time and it would make sense that sooner or later this market is going to rain on the bulls parade. Time will tell. For now, the real story is to protect your capital and attempt to eek out some gains in between while we wait out the storm clouds.
As for today, we had a thoroughly down day with volume picking up. There was no late day dip buyers which we expected might be the case. New highs list still reasonably strong but continuing to slowly fade a bit. Breadth negative but not overly so. I'm thinking there will continue to be some thrashing in the indexes and will continue to use strength to short as a hedge. Today we started a reasonably large metals position gaming for a bottom there. Looking to add to it further in the coming days and attempt to trade around those positions over the coming weeks.
I'm not going to make any predictions about whether the selling that everyone and their mother has been waiting for is underway now but I will tell you that it is always possible. There have been warning clouds for a long time and it would make sense that sooner or later this market is going to rain on the bulls parade. Time will tell. For now, the real story is to protect your capital and attempt to eek out some gains in between while we wait out the storm clouds.
Well, I don't see any evidence of dip buying today. All I see is more distribution out of stocks and I expect we will catch a further down draft here into the close as a result. I've added some more gold and that's about it. Making a little headway today as the markets sell down. I will likely hold that Q short into tomorrow but whether we bounce enough to add back to it is in serious doubt right now.
Even with a down day like today, you have to expect some dip buying to show up in here somewhere. I'm waiting for that dip buying to try and make a trade on the QQQ's for weakness into the close. Assuming we get a push here within the next hour and a half, that will be a decent setup most likely.
For clarification, I'm looking to average into more of the gold and silver on weakness or strength the remainder of the day and the coming days depending on how it acts. If gold is going to hold this $395-$405 area, then we could see the beginnings of the next push higher in what has been a long and strong bull market over there.
For clarification, I'm looking to average into more of the gold and silver on weakness or strength the remainder of the day and the coming days depending on how it acts. If gold is going to hold this $395-$405 area, then we could see the beginnings of the next push higher in what has been a long and strong bull market over there.
Just as a note, I have began automatic updates twice a day on the current portfolio. The updates come at 10:00 AM MST and again at 12:00 noon MST. Of course there's the evening update as well to all pages. Since we usually knock a trade or two out off the early pivots and sometimes position for the last couple hours trades, this should be useful to a number of the readers out there. Now that it's automated, it's easy.
Markets are really struggling today. As noted, I've started a beginner PAAS and GLG long and was trying to reload the QQQ short but have been unable to so far. If it rises we will do so. If not, then no doing and we will carry the remaining position looking for a short term move back to test the 32.60 area by end of day.
Markets are really struggling today. As noted, I've started a beginner PAAS and GLG long and was trying to reload the QQQ short but have been unable to so far. If it rises we will do so. If not, then no doing and we will carry the remaining position looking for a short term move back to test the 32.60 area by end of day.
Today looks like yesterday in that there's distribution. The difference is that the selling is certainly more serious than yesterday and the losses mounting on the chips and biotech argue that we won't see a run to new highs today.
Nevertheless I just booked half those gains on this latest plunge in the Q's and now will hold the rest and look for a place to remount additional short shares on any serious bounce from here. I've also stuck some orders out there for some silver and gold on an intraday pullback. We've been watching some hard selling over there for a good couple weeks and it may be time to start easing back in.
Lastly, I removed the rest of the HELE share profits thinking we can buy them cheaper. If they mount a run from here we may stick our toe back in the water with them, but if this impending pullback materializes and actually breaks below the breakout areas on the DJIA and SPX, then we will be on the right side of the trade.
Lastly, I continue to accumulate MNC on weakness. Earnings coming up and I feel reasonably confident that they won't disappoint given their business space.
Nevertheless I just booked half those gains on this latest plunge in the Q's and now will hold the rest and look for a place to remount additional short shares on any serious bounce from here. I've also stuck some orders out there for some silver and gold on an intraday pullback. We've been watching some hard selling over there for a good couple weeks and it may be time to start easing back in.
Lastly, I removed the rest of the HELE share profits thinking we can buy them cheaper. If they mount a run from here we may stick our toe back in the water with them, but if this impending pullback materializes and actually breaks below the breakout areas on the DJIA and SPX, then we will be on the right side of the trade.
Lastly, I continue to accumulate MNC on weakness. Earnings coming up and I feel reasonably confident that they won't disappoint given their business space.
This sure is looking like distribution as volume tends to rise on selling rather than buying. It's a slow drift down and internals are about even. Underlying indexes are showing mixed as well. The two NASDAQ leaders, chips and biotech are dogging it today and they influence the tape so much. Lots of economic data about to hit this tape the next few days and we already are seeing some concern as the sentiment numbers this morning did nothing to help. I get the feeling that expectations are so high that the next leg up has to come from eco data. If that doesn't do it, then we could settle back in for a while to the downside.
You have to be wary though as the shorters in this market have no stomach ... including me. We just set new highs yesterday and calling a top when we haven't even settled in on a few down days is not exactly bright so I'm completely aware that this could be nothing more than the calm before the next ramping storm. This is not the time to make huge bets either way in my opinion.
I've trimmed a little more taking off the FLDR issue. Never got the breakout and yesterday's attempt has fell upon hard times today. I'll just stand aside for a while and put that one back on the watch list.
You have to be wary though as the shorters in this market have no stomach ... including me. We just set new highs yesterday and calling a top when we haven't even settled in on a few down days is not exactly bright so I'm completely aware that this could be nothing more than the calm before the next ramping storm. This is not the time to make huge bets either way in my opinion.
I've trimmed a little more taking off the FLDR issue. Never got the breakout and yesterday's attempt has fell upon hard times today. I'll just stand aside for a while and put that one back on the watch list.
If there's one thing to say about these markets, it's that they simply won't quit. Even with the chips heavy, biotech not chipping in, there's a push back to even underway despite these facts. It sure looks like borrowed time to me but I've been bitting too many times thinking that so I set with big question marks in my head right now. Is this really distribution? I think so but am very cautious in believing it.
Trimmed a little HELE for some profits a bit ago. Have to take them while they are there.
Trimmed a little HELE for some profits a bit ago. Have to take them while they are there.
Chips are very heavy early and they will bleed this tape red unless something changes rather quickly. I've put more QQQ short out into this early bounce looking for the 10 o'clock turnaround to have us head lower. The sentiment numbers to hit soon.
Today we begin to get a teaser on economic news with the consumer confidence numbers and the Fed starting their meeting. Yesterday we saw another momentum surge, that kind of don't leave me out again copycat buying that has become more and more the norm. It came on reduced volume though and looked to be heavily short covering. I don't know that we will see back-to-back strength as a result but with this market move having gone as long as it has and strong as it has been, anything seems possible anymore.
When I get to the point where my ability to play along either becomes muddled or, or my risk level becomes greater, or worse yet, I'm simply on the wrong side of the trade, I pull my horns in and either move more to cash or increase my hedging. Last week I began moving more to cash again and consolidating my holdings in fewer particular issues. I've kept some stocks that I expect to show strong earnings and which are not at nose bleed levels from a chart perspective. I have also maintained a decent set of majoy pharma stocks as I think they have put their bottoms in and these are my longer term plays (something I have a hard time holding on to for extended periods of time but I'm trying). I also have a few momentum plays remaining in the cheaper stocks that I'm attempting to trade up and down on the surges and pullbacks that they do every so often.
In between, I'm working a QQQ short which feels like a lead weight now. I can rationalize it as an insurance policy but really it's only partially that as the intention is still to make money on it.
I'll repeat the short term thought (this week) which is that I felt like the market was climaxing short term and that distribution was taking place. Yesterday felt that way all day even despite the big surge. The fact that we got the surge on lesser volume continues to tease my thought pattern as being true. The remaining days of the week will validate or invalidate the thoughts. We will simply have to play it by ear, remain cautious and preserve capital at this junture. That's all I can offer. It's one of those times where the risks are greater and I'm not willing to chase anymore for now.
When I get to the point where my ability to play along either becomes muddled or, or my risk level becomes greater, or worse yet, I'm simply on the wrong side of the trade, I pull my horns in and either move more to cash or increase my hedging. Last week I began moving more to cash again and consolidating my holdings in fewer particular issues. I've kept some stocks that I expect to show strong earnings and which are not at nose bleed levels from a chart perspective. I have also maintained a decent set of majoy pharma stocks as I think they have put their bottoms in and these are my longer term plays (something I have a hard time holding on to for extended periods of time but I'm trying). I also have a few momentum plays remaining in the cheaper stocks that I'm attempting to trade up and down on the surges and pullbacks that they do every so often.
In between, I'm working a QQQ short which feels like a lead weight now. I can rationalize it as an insurance policy but really it's only partially that as the intention is still to make money on it.
I'll repeat the short term thought (this week) which is that I felt like the market was climaxing short term and that distribution was taking place. Yesterday felt that way all day even despite the big surge. The fact that we got the surge on lesser volume continues to tease my thought pattern as being true. The remaining days of the week will validate or invalidate the thoughts. We will simply have to play it by ear, remain cautious and preserve capital at this junture. That's all I can offer. It's one of those times where the risks are greater and I'm not willing to chase anymore for now.
Monday, January 26, 2004
When you see a market continue a move like this without so much as a simple pullback you have to ask yourself how far can it go? A reader that corresponds with me notes that the last time the general market went this long without a correction of 5% or more was 1996 and it went for another 100 days. Well isn't that a happy thought?
I'm taking the index short home tonight and will nurse it along. If it turns out that we are wrong yet again on the whether this market will find another sprint forward before it falls back a bit, then it will end up being yet another insurance policy that eats away at our profits on the long side. That's not what I planned, but so be it.
With the general indexes dogging it all day, with volume lower than normal, and with what looked like distribution taking place, I'll be quick to admit that this late day strength was not what I expected. Ring that one up as wrong. Nevertheless, we have to deal with whatever the market pushes at us and right now we are seeing new highs on the DJIA and the SPX. Only the NASDAQ lags and you can only wonder how long that will continue. As the market pushes higher I'm sure the frustration grows ... for both the longs and the shorts out there. For the short position players, it's obvious why they have their hair in their hands. For the longs, it's not quite as obvious but true nonetheless as few have full positions in play and thus they are watching a market walk higher without offering additional entry points. Pain for all.
I'm taking another push ( a smallish loss overall on the day actually) as I didn't get the weakness I was playing for. We will wake up and try again tomorrow but until then ...
I'm taking the index short home tonight and will nurse it along. If it turns out that we are wrong yet again on the whether this market will find another sprint forward before it falls back a bit, then it will end up being yet another insurance policy that eats away at our profits on the long side. That's not what I planned, but so be it.
With the general indexes dogging it all day, with volume lower than normal, and with what looked like distribution taking place, I'll be quick to admit that this late day strength was not what I expected. Ring that one up as wrong. Nevertheless, we have to deal with whatever the market pushes at us and right now we are seeing new highs on the DJIA and the SPX. Only the NASDAQ lags and you can only wonder how long that will continue. As the market pushes higher I'm sure the frustration grows ... for both the longs and the shorts out there. For the short position players, it's obvious why they have their hair in their hands. For the longs, it's not quite as obvious but true nonetheless as few have full positions in play and thus they are watching a market walk higher without offering additional entry points. Pain for all.
I'm taking another push ( a smallish loss overall on the day actually) as I didn't get the weakness I was playing for. We will wake up and try again tomorrow but until then ...
The internals and low volume push higher has me shorting more here. I'm unconvinced and am building a short as a result. I'll trade it if we pull back before the bell, but I'm not counting on that today. They did start the rally quite a bit in front of the close so if it's just shorting covering, we could see a fade here in the next 30 minutes as the shorts quite helping the bulls by covering.
Well, the late day buying is coming in and pushing us higher. If they can't take them down crowd is buying. I'm content to hold my own here and add to the QQQ short in a bit. Just averaging in there. I'm surprised by the strength as this day looks like distributon from the underlying numbers. Oh well, never that simple is it?
I've done little since those early short additions. The market hasn't given us much to work with today. I get the feeling that this market is pretty tired, but how many times have we thought that only to watch it waltz higher? Somehow I think this time is different but I'm unwilling to get too cozy with that notion. Instead, I'll maintain the longs we have on the books and look to work a few short positions that appear profitable. For now, it's all about patience and capital preservation.
I'm getting no indication that this market can move higher and I increased my QQQ short as a result a bit ago. I'll stay at this level unless we break down further. This is all in the context of offsetting my long positions and is done with the idea of a short term trade again. I'm not looking for a collapse, but some thrashing that will allow profits.
The early strength is beginning to fade a bit. I've shorted into strength again and will look to add on further strength or breakout weakness if either occurs. As you know, I'm unconvinced that we can move much higher here for now.
The markets look to be under some pressure to start the week with the overseas markets mired in red for the most part. Last week we finally saw some weakness in some areas; chips in particular. In fact, the extended stocks heading into earnings are getting hit while those not extended are being rewarded. That looks to be the pattern so far.
We turned cautious again and have raised cash. In between, we are looking to short the indexes for trades. It's another long week of earnings reports that are likely to keep things popping, both up and down. The telling news this week will be how the economic reports are digested. The big number is Friday with the GDP. There's a decent supply of paper this week as well and the Treasuries sported a reversal on Friday pushing rates higher after a string of lower moves.
All in all, we are still in a mixed market, one that rewards here and punishes there. Pick your spots and don't load your boat with one issue. The name of the game right now is capital preservation once again.
We turned cautious again and have raised cash. In between, we are looking to short the indexes for trades. It's another long week of earnings reports that are likely to keep things popping, both up and down. The telling news this week will be how the economic reports are digested. The big number is Friday with the GDP. There's a decent supply of paper this week as well and the Treasuries sported a reversal on Friday pushing rates higher after a string of lower moves.
All in all, we are still in a mixed market, one that rewards here and punishes there. Pick your spots and don't load your boat with one issue. The name of the game right now is capital preservation once again.
Friday, January 23, 2004
Another day another week another frustration. Didn't get the meat of that QQQ short ... just a bit of it. Ended up selling all those positions out yesterday only to watch a number of them move higher today. One more day and we could have taken come of them out at nice profits. Oh well. Onward and upward as we got good performance out of what we are still holding for the most part and we continue to dog paddle here as we await our next surge. Can't catch every wave.
Although I have some concerns about the coming week there are still positives. The negatives are:
1. The continued decline today in new highs being recorded
2. The fact that we are seeing choppy action many times is indicative of a near term turn
3. Even though we are working off the overbought condition to some degree, by all measures we are still extended on all the indexes
4. No one is worried up here
On the positive side though
1. Earnings are, for the most part, not causing a sell off. Just look at AMGN and MSFT for the most recent examples
2. The selling that is occuring is moderate still and looks to be rotation rather than exit
3. Volume is lighter (by a little) on the down days rather than heavier
My major concern is that earnings will begin to abate after next week and then almost completely the week after as the majority of the companies will have reported. The economic news will then have to support these levels and the risk there is, of course, that they disappoint. Given the expectations, it won't take much of a disappointment to trigger some selling. That's my latest worry.
Of course there's always the possibility of an interest rate spike. The Fed meets next week and that could cause some concern given how they may reword their famous "considerable period of time" statement. Lots of refundings are coming down the pipe as well.
A less talked about notion of late though is the liquidity. There's quite a bit of anticipation that the EU will lower their interest rates to make their currency cheaper with respect to the dollar. I don't know how that will play out, but the liquidity has fueled this market for a long time and it will need to continue fueling it if it is to rise. The fact that there's no where else to put your money has, in large part, continued to push this market higher. I know that for me personally, the thought of putting money in the bank and drawing less than 2% is not palatable. In fact, taking money out of the bank at less than 5% to invest draws a lot of debate.
So, have a great weekend and I'll see you next week. My expectations is that we will continue this narrowed fixation on a few issues and try to work a few day trades in for some extra change. I'll likely use the indexes short as the vehicle. Good night!
Although I have some concerns about the coming week there are still positives. The negatives are:
1. The continued decline today in new highs being recorded
2. The fact that we are seeing choppy action many times is indicative of a near term turn
3. Even though we are working off the overbought condition to some degree, by all measures we are still extended on all the indexes
4. No one is worried up here
On the positive side though
1. Earnings are, for the most part, not causing a sell off. Just look at AMGN and MSFT for the most recent examples
2. The selling that is occuring is moderate still and looks to be rotation rather than exit
3. Volume is lighter (by a little) on the down days rather than heavier
My major concern is that earnings will begin to abate after next week and then almost completely the week after as the majority of the companies will have reported. The economic news will then have to support these levels and the risk there is, of course, that they disappoint. Given the expectations, it won't take much of a disappointment to trigger some selling. That's my latest worry.
Of course there's always the possibility of an interest rate spike. The Fed meets next week and that could cause some concern given how they may reword their famous "considerable period of time" statement. Lots of refundings are coming down the pipe as well.
A less talked about notion of late though is the liquidity. There's quite a bit of anticipation that the EU will lower their interest rates to make their currency cheaper with respect to the dollar. I don't know how that will play out, but the liquidity has fueled this market for a long time and it will need to continue fueling it if it is to rise. The fact that there's no where else to put your money has, in large part, continued to push this market higher. I know that for me personally, the thought of putting money in the bank and drawing less than 2% is not palatable. In fact, taking money out of the bank at less than 5% to invest draws a lot of debate.
So, have a great weekend and I'll see you next week. My expectations is that we will continue this narrowed fixation on a few issues and try to work a few day trades in for some extra change. I'll likely use the indexes short as the vehicle. Good night!
Heading down the stretch here again in what turns out to be a bit of a weak day. That early strength faded and we have faded most of the day as a result. My general intermediate term bullishness remains, but I'm more concerned short term as I indicated yesterday and have decided to focus on just a few stocks rather than many and to stay, as much as possible, in sectors that have good prospects near term.
As everyone does, I've set out my personal goals for the year and have pushed my sights higher on returns. To do that we need to limit losses on mistakes and to let profits run longer than we have in the past. Knowing myself, to let profits run longer implies that I must deal in partial entry, partial exits. In that way, we can move in and out over time maintaining a position but taking profits on strength (when long), and reducing our exposure so that we can repurchase on weakness. It's a tried and true strategy but it takes patience and practice. This is the area I've been concentrating on this year and am focused on.
Another area where we can make better profits is to not put all our chips on one side of the boat in most cases. Hedging with an index short, for example, is a good way of spreading risk while maintaining a particular posture. This is another strategy that I have and plan to continue using this year in most cases.
I would encourage you to consider ways to increase your profits without increasing risk, per se. The little things add up over time.
The market is drifting towards the close and I've an order in to book a good portion of the QQQ profits for the day trade if we can. The 37.60 area should provide good support into the close so I'll try to take the profits out just above that area. With any luck, we can book a good trade for the day on the short side there.
As everyone does, I've set out my personal goals for the year and have pushed my sights higher on returns. To do that we need to limit losses on mistakes and to let profits run longer than we have in the past. Knowing myself, to let profits run longer implies that I must deal in partial entry, partial exits. In that way, we can move in and out over time maintaining a position but taking profits on strength (when long), and reducing our exposure so that we can repurchase on weakness. It's a tried and true strategy but it takes patience and practice. This is the area I've been concentrating on this year and am focused on.
Another area where we can make better profits is to not put all our chips on one side of the boat in most cases. Hedging with an index short, for example, is a good way of spreading risk while maintaining a particular posture. This is another strategy that I have and plan to continue using this year in most cases.
I would encourage you to consider ways to increase your profits without increasing risk, per se. The little things add up over time.
The market is drifting towards the close and I've an order in to book a good portion of the QQQ profits for the day trade if we can. The 37.60 area should provide good support into the close so I'll try to take the profits out just above that area. With any luck, we can book a good trade for the day on the short side there.
So the wrong becomes a right as the market comes in on the day. It's all relative isn't it?
I've been bothered by the volume today on the listed issues even though breadth is positive. Breadth is positive because the financials are generally up still due to take over news. That's the strongest part of the listed issues right now along with the oil sector and is likely to support us as we come in some. That of course assumes the dip buyers are kept at bay today which I actually expect given that it's Friday and the profit taking is more likely than buying.
On the OTC, there was an attempt to move us significantly higher but that looks to have failed and now it's up to MSFT and AMGN to keep us levitated. As I said before, I expect continued weakness as the day wears on and that view remains the same.
Looking ahead to next week, we get another full week of earnings (which have been supportive) but we also get a new slew of economic news that may not be as comforting. Expectations are high right now and any data that begins to temper those expectations will be ugly.
I've been bothered by the volume today on the listed issues even though breadth is positive. Breadth is positive because the financials are generally up still due to take over news. That's the strongest part of the listed issues right now along with the oil sector and is likely to support us as we come in some. That of course assumes the dip buyers are kept at bay today which I actually expect given that it's Friday and the profit taking is more likely than buying.
On the OTC, there was an attempt to move us significantly higher but that looks to have failed and now it's up to MSFT and AMGN to keep us levitated. As I said before, I expect continued weakness as the day wears on and that view remains the same.
Looking ahead to next week, we get another full week of earnings (which have been supportive) but we also get a new slew of economic news that may not be as comforting. Expectations are high right now and any data that begins to temper those expectations will be ugly.
New lows since the last comments confirms the thought that a drift lower today is likely. I'll looking for the next bounce in the QQQs to add to the short. The biggest surprise today has to be the strength in MSFT and AMGN when it looked as if they would lead the market lower last night, today they provide the support.
There are fewer highs again today and the volume in the NYSE is telling. All suggests lower prices short term on the broad listed averages.
There are fewer highs again today and the volume in the NYSE is telling. All suggests lower prices short term on the broad listed averages.
The most notable event this morning has been lack of volume on the NYSE on the early push higher. This market keeps giving off signals that it is ready to come in but there are so many who are unwilling to listen. At some point it will matter but until then ...
I've done little other than the QQQ short adds this morning and selling off a little BCON on the pop into short term resistance. I think that this market will succumb to selling for the remainder of the day and will be looking to intraday trade that expected weakness.
I've done little other than the QQQ short adds this morning and selling off a little BCON on the pop into short term resistance. I think that this market will succumb to selling for the remainder of the day and will be looking to intraday trade that expected weakness.
If you trade for a while you will have to quickly come to grips with the fact that you are wrong a lot of the time. It's one of the harder concepts to deal with and having to big of an ego can make it that much more difficult. One of the ways I deal with it is to remind myself that it's relative ... wrong is relative. I can be wrong for a day but right for the week for example. There's nothing inherently bad about being wrong.
The strength of this push higher has caught me by surprise but I'm looking to add further to the QQQ short as this market moves higher. I missed the profits early as I expected a push below 38, but we will give it time to develop. Besides, we are still quite long in individual issues and they are making the day rosy so far despite this wrong call on the QQQ ... at least wrong so far!
The strength of this push higher has caught me by surprise but I'm looking to add further to the QQQ short as this market moves higher. I missed the profits early as I expected a push below 38, but we will give it time to develop. Besides, we are still quite long in individual issues and they are making the day rosy so far despite this wrong call on the QQQ ... at least wrong so far!
It's really mixed this morning. There seems to be a flow of money away from the SOX and towards other places. The real surprise is the strength of MSFT and the fact that this monster can carry the market if it get's going. Up over 2% already, it's shaping up to be a MSFT day so far and that colors all the tapes.
With the market starting off stronger than expected, I have added to the QQQ short. Think they are mistaken here to believe they take it higher on the day.
Good morning and welcome to the end of the week. I was afforded the luxury of sleeping late as a result of risk cutting yesterday ... and I took advantage of it. The old body sometimes just doesn't want to move much; unlike this market of ours.
What was weakness last night looks to manifest itself as strength today. All the pre-opening indications are green as the earnings parade continues. Although we cut out many stocks last night and will be careful with any additions near term, it doesn't mean we have abandoned the long side of the tape. That side of the tape continues to paint a rosy picture. Until that picture is taken out back and torn up, you have to respect it. Instead, we have made little headway with the scattergun approach to buys making both good and bad and simply going no where as a result. So, we have retrenched to a select few stocks in a select few areas. Those areas that are likely to continue higher.
I'll look for an intraday play or two on momentum, either up or down, but I'm content to watch, wait, and and substract carefully. So ... let's close out this week and prepare for the next shall we?
What was weakness last night looks to manifest itself as strength today. All the pre-opening indications are green as the earnings parade continues. Although we cut out many stocks last night and will be careful with any additions near term, it doesn't mean we have abandoned the long side of the tape. That side of the tape continues to paint a rosy picture. Until that picture is taken out back and torn up, you have to respect it. Instead, we have made little headway with the scattergun approach to buys making both good and bad and simply going no where as a result. So, we have retrenched to a select few stocks in a select few areas. Those areas that are likely to continue higher.
I'll look for an intraday play or two on momentum, either up or down, but I'm content to watch, wait, and and substract carefully. So ... let's close out this week and prepare for the next shall we?
Thursday, January 22, 2004
It's been almost two weeks since we made any headway. Although our stance hasn't been that far off, making money during earnings is always a tough road. Tomorrow could be a tough day as both MSFT and AMGN are trading down after earnings. As was our stance earlier this month, we will try to stay selectively long and are back to using index shorts to cushion the ride. Hopefully this time we can trade in and out of the indexes for some small profits at the same time we use them as a hedge. That's ideal and usually doesn't work as desired because they typically are an insurance policy and it's hard to lift your insurance policy when things don't look good.
This market has had an extended run and although I don't want to assume it's over it's far enough along here to get a bit more defensive again. That's my view and how I end the day.
This market has had an extended run and although I don't want to assume it's over it's far enough along here to get a bit more defensive again. That's my view and how I end the day.
With AMGN earnings coming in light and MSFT about to report, I went ahead and put a QQQ short on as well. Just a little added protection here.
I got to looking at my spreadsheets and had an error. I couldn't believe I sold down that much stock late this morning. The real number is something like 48% long, 52% cash. There's a couple more positions to unload so we wil lend up somewhere around 40 to 45% long if we liquidate those positions.
The market is seemingly holding in here for the MSFT/AMGN numbers. There's no economic data tomorrow but plenty next week along with plenty of earnings. The big variable in this market continues to be liquidity. With interest rates trending lower both here and abroad, another liquidity push could be coming yet again down the road. So we remain bullish, but less extended in that bullishness at these levels.
The market is seemingly holding in here for the MSFT/AMGN numbers. There's no economic data tomorrow but plenty next week along with plenty of earnings. The big variable in this market continues to be liquidity. With interest rates trending lower both here and abroad, another liquidity push could be coming yet again down the road. So we remain bullish, but less extended in that bullishness at these levels.
A week ago today, I closed all my index shorts and put on some additional long exposure. I maintained that added exposure until today when I began to pull in my horns. I can't tell if a pullback is near, I only know that as I look at my own exposure, at how the market is acting today, the two big reports that are due out after the bell, that tomorrow is Friday and Friday's have had a history of profit taking, I just don't think the risk/reward favors me keeping all this exposure out there on the table. As a result, I've retrenched to the two sectors that I like right now (drugs and banks) and a few plays here and there where I either like the chart, or I like the company and they have a good chance of advancing on earnings, not falling given recent price action.
Unfortunately, a few of our picks turned out to be losers over the last week, wiping out the gains that we had made so we have spent a week running in place while the market has advanced. Earnings are always a difficult time to make money as the pin action is so random. So, that's where we are at. Retrenching to reduce exposure and looking to continue leaning long in particular issues. I will think long and hard about any purchases made from here on during the next couple weeks. There has to be a compelling reason for an overnight hold. Instead, I'll turn my attention to try to game an intraday trade or two each day.
Unfortunately, a few of our picks turned out to be losers over the last week, wiping out the gains that we had made so we have spent a week running in place while the market has advanced. Earnings are always a difficult time to make money as the pin action is so random. So, that's where we are at. Retrenching to reduce exposure and looking to continue leaning long in particular issues. I will think long and hard about any purchases made from here on during the next couple weeks. There has to be a compelling reason for an overnight hold. Instead, I'll turn my attention to try to game an intraday trade or two each day.