Looking at 875 SPX

875 is the top range of the mid-Jan to mid-Feb SPX consolidation area. So far, all indices have hit resistance areas but continue to push forward. Bad news is considered good news and good news is considered great news and the market rallies every chance that it gets. At this stage, the Nasdaq actually has a really good chance of reaching the 200-day MA, something that was quite unheard of a few months ago. The problem is that not all indices are following each other perfectly, so you are seeing divergences between the SPX, DJIA, and COMP.

It will take some seriously terrible news to bring this market down, and I think it would take a massive pre-market gap down, sustained with follow through, in order for a downtrend to emerge. The last breakaway gap down at the end of March actually failed, which was a signal to go long. Those gaps have a 1% failure rate, so it’s important to pay attention to them.

I didn’t want to hear any bullshit from anyone, so I just posted on my other blog and told just a few people of my long swing experiment. The experiment was to open large long positions before last Friday’s close, hours before I left for my trip. The purpose was to prove that TA still works and that it is not “dead” when it comes to swing trading. I’m up +8.7% as a result. Prior to leaving, I was down -2% for April. The decisions made last Friday had to meet several criteria:

1) The breakaway gap down fails and fills to the upside within 5 days, breaking the 1% probability. Check.
2) There needs to be a equal or greater-sized upside spike than the gap down spike. Check.
3) The market needs to be consolidating or flagging for a potential breakout. Check.
4) Individual names must be setting up in high probability consolidation patterns. Check.

This is the rare Rising 7 Method.

I know that the Ragin and I are in several names together, but I also added MI, HBAN, and SIRI to the overall mix, which includes TSL, JASO, FEED, and LDK, which was actually bought on 4/7. I still hold everything cause I got back well after the mkt closed. 875 will be an initial sell point. Some stocks, such as FEED, and SIRI did not breakout while I was away, which was frustrating. I’ll give them just a bit more time to cook in the microwave before deciding their fate. Another promising wave 1 symmetrical triangle? FIG. I’m not in it, but I will likely add it into the bunch.

Just a personal experiment for my own benefit since I never left so many positions open while at the complete mercy of the market. I did not want people following me on this, since I know there are people that just blindly follow other people without any good reason. It was just a test and yes, TA still works so don’t worry.

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I got back really late last night and I am sick. I think I have the flu or something because I started getting symptoms on day 2 probably after my dumb ass left the AC on all night long leaving me freezing for many hours, or maybe it was on day 3 when I left the balcony door open all night long in 90+ degree heat leaving me soaking in sweat in the AM. Who knows.

My camera got jacked early Tuesday morning by some sneaky local. That really pissed me off because I had a lot of cool pics. I have to get pics from the others and post them as my own. No one will know the difference.

The Cozumel snorkeling was really irritating and scary because the instructor just told us what to do and then just told us to jump off the boat. Let’s not get started on the boat ride getting over there, goodness. No one got any live instruction. People were crying, getting sea sick, etc. You had to balance yourself with the flippers or else you’d flip over on your back and panic. The view was absolutely incredible though. The fish, coral…everything was amazing, as if you were flipping through a National Geographic.

Chitzen Itza was great, as a historical site to view for only 30 mins. Beyond 30 minutes, and you risked dehydrating in 100+ degree weather, not to mention the 5hr roundtrip on a bus. I knew I was dehydrated because I was obviously sweating profusely and after huting down a makeshift 7-11, I chugged down 2 liters of water in only a few minutes. The Mexican gov’t no longer allows people to go inside the temple. The entire site is now protected by the UN as it should be. It’s amazing how people long ago could build these structures without the technology or knowledge that we have.

I spent half a day at the Wet ‘N Wild water park. It was really nice, considering all the crap I went through at Chitzen Itza. Afterwards, I went golfing at the resort. I met an 8 ft. crocodile face to face while losing one of 8 balls on the course. It was the most difficult course I’ve ever been on. In case you want to say that I’m terrible, the group ahead of us lost all of their balls and had to quit. I don’t want to talk about this anymore.

People tried to sell me timeshares in three different instances. Do they think that I can be easily sold? People in Cancun will vigorously attempt to sell you anything and everything they possible can.If you want a souvenir, you have to bargain for it. For example, when I was at the “mall” in downtown Cancun, I bought 2 souvenirs for $2 each. The guy started off with $7 each. My general rule is that you should immediately take 50% off, if not more, from the orginal asking. I, however, always started with $1, because you never know if they will take it.

The resort itself is easily one of the very best. The place actually makes America look like a third world country. Now, if you go outside of the resort/hotel district, then America looks rich as hell. There are 2 Cancun’s: one that all the Americans talk about, and then there’s the one where all the locals live and no American wants to visit. It’s third world out there, with people living in shacks, seriously.

When I talked to the manager and several English-speaking employees, they confirmed that business has slowed down noticeably. To me, it didn’t look like the recession hit at all, but since 90% of the travelers are from the US, it’s obvious that Cancun would take a big hit. There are a lot of American companies doing business over there as well, so it seems like there’s no escape from the recession.

About the dollar and pesos. Initially, I got confused because they used the “$” for pesos too. If something cost ~$13.20 in pesos, it would be $1 USD. The price tags never said pesos or USD, so I found it absurd when a t-shirt would have costed me $66. Or how about $30 for a box of Advil?

Enough for now. I’ll post more when I get those pics.

Btw, I did go long before the vacation with FEED, TSL, JASO, SIRI, HBAN, & MI. LDK was added on 4/7. I did this primarily to see if I can just depend on technicals while I was away. It worked. Some of the picks have not broken out yet, but I expect them to do so in a few days.

Here are the results: the portfolio is up 8.7%, primarily due to the financials (MI & HBAN), and most solars (TSL & LDK). FEED current has a loss of 3.6% and JASO has a loss of 1.1%. No change in SIRI. I still hold all positions. I used a secondary, smaller portfolio that went long 90%.

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Here are some random pics I think I’ll have close to a thousand pics by the time I’m finished. Obviously, I can’t post certain pics here, but I assure you, everything is going to plan. I’ll try to update here once in a while. See ya!

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..in a few hours.

I have chosen ZMoose, February’s KOPG, as my guest blogger. Treat him with some respect. He is only 18, still in high school, and he is well qualified in the art of reading tea leaves.

I’ll be back in a week with a big smile on my face.

Now, go bank some coin.

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Yesterday was very interesting for me. I spent all of last night packing and preparing for my trip to Cancun (I will be leaving later this evening, and no, I’m not finished preparing). Around 2PM, I fell asleep at my desk and woke up at 4:20PM – right after the market closed. It’s great to see that FAZ didn’t go to hell at the end of the day, but I made a fatal mistake. Don’t trade when you’re too tired to function, since it’s like trading when you’re drunk, maybe worse. In any case, I still hold the remainder of my FAZ and I’m willing to play it out as the market consolidates its gains.

There is significant overhead resistance as the market and most sectors are riding along the upper long-term multi-month channel trend line. The line also marks where the 100-day MA is located. We will consolidate here in the 50/100-day MA box until the market makes it’s decision. I’m surprised by how some people “know for sure” what’s going to happen. If that’s the case, go ahead and draw on your credit lines, mortgage your house to the hilt, max out your credit cards, and go make your bet.

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Let me get your opinion:

How long does the rally last?	1 day 2 days 3-4 days 1 week 2 weeks 3 weeks 1 month 2 months 3 months Longer…
	Current Results

There has been a lot of rising/falling wedges and funnels as they can be seen most clearly on the 5-day chart. They are typically followed by a spike. Today’s action suggests the market has an equal chance of going in either direction, diminishing any edge that once was present. As a result, I removed more than half my positions and hold onto a majority cash position until this resolved. The market has flagged the past 3 days, within a larger flag.

(Note: Futures indicate a large spike to the upside).

World indices are not breaking down as expected, with the FTSE leading the European markets with the DAX, and CAC following. The Nikkei is leading the Asian markets. Not only that, almost all sectors negated their reversal patterns. Patterns do fail, so be aware of that.

My thinking is not “bullish”, but rather neutral for the time being, just as the market is neutral. The market rebounded from the 50-day MA, but remains in a larger multi-day consolidation. The 5-month charts are drawn with a bullish bias, and I can clearly see the multi-day flag forming. I will have to see another 50-day MA failure to re-initiate committed short positions. It was definitely fun and very interesting while it lasted.

The M2M FASB meeting is scheduled for 8:00AM EST with approx. 5 hours of discussion. In addition, jobless claims will be reported at the usual 8:30AM EST. The consensus is 655K with a range of 630K to 672K, the previous reading being 652K. The employment situation report will be released tomorrow at 8:30AM EST. The consensus is -650K with a range of -711K to -525K, the previous reading being -651K. Shortly after, the ISM non-mfg report comes out at 10:00AM EST. The consensus is 42 with a range of 40 to 44, the previous reading being 41.6. Lots of news ahead folks, strap on those seat belts.

With the present allocation, I can take about a 40% loss on the current FAZ position before my March gains are entirely wiped out. As much as I would hate to see that happen, I am willing to hold if the market runs and tops out in the short-term. If you are short, daytrade long to recover as much of your losses as you can.

The riots continue into the night…

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