You Think I’m Losing? Utter Bullshit.

Wow, that ride down ended quick. Really quick, at least temporarily. I would have gotten my face ripped off today if it weren’t for my program auto-buying FAS in increments. I realize that the market is becoming more volatile with multi-percentage days, just as it did back in September, but is that a good thing or a bad thing? This is why it’s so important to be flexible. It doesn’t matter what you think…if the market thinks otherwise.

What today showed me is that there are too many things, both visible and invisible, that are propping up this market. In addition, the news flow EOD today was incredibly positive and the anticipated decline will have to be placed on hold pending a possible gap up tomorrow in response to AAPL earnings and desperate bank executives buying up shares to prop up their own stocks. (Didn’t Pandit do this in November?). It’s a confidence move and it’s working, at least in the short-run.

As for price action, today’s gains nearly cancelled out yesterday’s losses and the volume is being maintained. Obviously, the bears could not follow through, suggesting that it’s not quite time for an Armageddon-style cliff jump. I would like to see a stick sandwich, thank you very much.

It is possible that the financials could become those ‘Spikers’ that I always talk about, giving me the opportunity tomorrow to recover the hit I took on the gains made yesterday. The way that works is that it’s not always a long opportunity, but a short one as well. I posted it here before, so I’m going to go around looking for it.

I think 99% of traders would not be able to withstand the joy ride that goes on in my portfolio. To give you an example, I was up (YTD) around +21% on Friday, +64% on Tuesday, and I now stand at +52%. The daily change is a reminder of an ex-girlfriend that PMSed on you – sometimes she loved you, sometimes she just wanted to kill you. But I can handle that.

Let’s see what tomorrow brings. Currently, I am hedged and willing to stick with a short bias IF the market action indicates further downside continuation, but I’m currently more inclined to preserve my ridiculous January gains. At this point, some financials look like they will spike higher and some do not, giving me mixed signals. Another thing to look for is if they lead the market right out of the gate tomorrow. This will all be looked into further.

I also see that the “haters” have re-emerged from their cave. lol, please. Make note that I never had a down month in over 2 years, Madoff-style. You can kindly suckle on that till it bursts on your face. Have a good night!

Comments »

Yes, We Can…drop -332 points! heh heh…congrats to our new President. I would have gone to the Mall, which is only minutes away, but decided not to because 1) I had a good amount of money at work since Friday, 2) it’s 20 degrees in DC these days, 3) I had to coach my students, who also made profits on a shitstorm day. Besides, why not watch the Inaguration on your favorite financial network in your heated office? Exactly.

What’s great about charts is that sometimes you know immediately when you are right or wrong and if you should add or reduce positions. Today was one of those days. I’m not going to bs: I was slightly questioning my decision to hold my short positions on Friday. That was normal given the power rally that occurred end of day. The rewards for those who held shorts over the long weekend were immediately realized and it was a major day to make a killing. I am personally up a ridiculously large amount and I regularly use the same charts I post here for intraday guidance.

What do I mean by guidance? The first things you should note are the key support/resistance levels, any moving averages or fibs (if any), and price/volume action. When you are trading the next day, you should be keen enough to discover that these “magical” lines and stuff actually do work, despite that fact that I just made TA sound like Tasseography. Sometimes, in the heat of battle, it’s easy to forget the key technical levels because emotions are running so high. This is why I encourage people to actually write this stuff out. It only takes a few seconds and it could save you thousands of dollars.

Today was an important day. I needed the market to close in the red to support my short bias. I didn’t need a -5% down day, but I’m not complaining. We took out the key levels I mentioned yesterday, especially 820 SPX. The Dow broke and closed below the 8,000 level. This level is not necesarily a major technical level, but it’s more of a psychological level (remember when we broke 10,000? Pure chaos). The COMP and R2K both failed the 50-day MA and all 4 indices are in comfirmed downtrends. There is no reason to be an a-hole dip buyer here.

For weeks now, I’ve told you guys to observe the financials, the weakest sector in the S&P. They made a new low today and they won’t hesitate to bring the indices back down to test their own respective lows. The only time where someone should be long in this situation is if the financials stem the decline with capitulation and rally on a highly reliable reversal on massive volume. Until then, the bleeding will continue as the fear continues to permeate the markets and people sell stocks like it’s going out of style.

Right now, I’m going to ride this downtrend until the wheels fall off regardless of whatever small bounces occur during this descent. I am up +64% YTD thanks to 1) going long spikers, 2) going short financials, and 3) my tea leaf readings.

In other news, this idiot finally quit.

SPX 3-day

SPX 5-day

SPX 10-day

SPX 50-day

SPX 4-month

XLF

Comments »

NOTE: The photos are too big. Click on them to expand if you want.

Just came back from NYC for a weekend vacation, but like any serious investor/trader, I had to do some walking around to see the extent of the damage in NYC. I saw firsthand the awfulness of retail and commercial RE and anyone that knows NYC can clearly tell the difference. In addition, a BAC trader friend of mine and I went to the new $1 billion BAC NYC headquarters in front of Bryant Park and also took a look at the excess and extravagance that you, the taxpayers, are now supporting (and not by choice). It’s sickening how there isn’t a limit to luxurious spending even after accepting a bailout.

BAC also just stopped issuing Styrofoam, plastic spoons, and other cheap cutlery to “help the environment by reducing non-biodegradeable waste”. Hold up. When I was up on the trading floor,  there were 3-4 people up there (including my friend and I), and every single desk’s CNBC and every ceiling light was on. I even saw some traders stashing away plastic spoons in their bottom drawers. News is that 80-90% of BAC traders will get laid off, with decisions as early as this Friday. They will all be replaced by the Merrill traders (even though those guys took huge trading losses!).

Charts are perfect representations of the struggles of human emotion. However, if you get so immersed into charts and that’s all you use (like I do), then you slowly get disconnected from reality, disconnected from what’s truly happening beyond the chart. It is good to actually go out there and see what’s going on. What I found supports the case for massive upcoming retail and commerical RE liquidations. It is inevitable. No joke – there’s at least one vacancy on every block in Midtown. We’re talking about prime real estate and this is only the beginning.

As for retailers, I saw more employees than customers in at least 80% of the stores. I’m talking about 5th Ave, the “throw away your money” capital of the world. The employees were getting paid to talk to each, basically. Also, I told my friend to “Look at the Hands!”. That’s right. Are they holding anything…a shopping bag, perhaps? Nope. This was on a Sunday afternoon and people were not shopping. I could tell it was a disaster and yes, there were plenty of out-of-business signs. If Fifth Ave is the symbol of wealth in NYC, then the pictures below show not only the present, but the future as well.

First, the usual charts. They will be important tomorrow as the financials get destroyed (thanks to RBS, and of course HBC, BCS, and LYG). Make note of the marked support levels. 834 (SPX) is the initial support level, followed by 830, and finally 820. There’s a good amount of support, but if the market undercuts 820, we could have some major problems. The financials are still in focus, don’t take your eyes off of them.

Next, BAC’s extravagant NYC HQ, now being partially funded by taxpayers (the extra $20 billion is going to the building either directly or indirectly…don’t think that it isn’t):

Lobby

Conference Lounge

These walls actually change color during the day (currently red). Ridiculous.

Do you need a jungle in your office? I didn’t think so.

They have the space age waterless urinals!

The trading floor that’s about to be slightly less occupied. Someone please turn off the TVs and the lights.

Finally, retailers and commercial real estate in NYC. I can’t fake these pictures. They are very real:

Even Elmo and the Cookie Monster are out of work.

Side-by-side vacant stores on Fifth Ave.

No, they’re NOT moving in.

This last one is right in the heart of Times Square!

*FYI – All of the above pics were taken in Midtown Manhattan, not South Bronx.

Here’s some useful data (courtesy of SB):

If you want to laugh after reading this depressing post, I recommend Dangerfield’s Comedy Club between 61st & 62nd Sts.

Comments »

We formed a force doji on a massive volume spike. I believe that we will see even greater spikes in volume. Typically, the doji is a 50/50 candle that basically shows the struggle between the bulls and bears. The volume was encouraging as it finally broke the tape’s trend of dullness. We’re no longer lolligag turtle fucking in this market. Excuse me, but I feel relieved of this.

Do I think the decline is over? No. I believe that this doji represents a pause in the decline. We’ll see a short-term rally, but I can’t imagine us shooting through the moon from this point on. That’s ridiculous. We hit the technical 820 support level today, and that was the reason for the rally. Anyone who thinks that the banking crisis is all over because BAC just received this absurd bailout is a fool. We’ve been throwing hundreds of billions at this problem, but to no avail.

As for breadth, we made 173 new lows and 6 new highs. It is a deterioration of yesterday’s NH-NL index, but it’s acceptable given the bounce. We had a 2-to-1 advance-decline (A-D) line on the NYSE and a 1.5-to-1 A-D line on the NASDAQ. This is a typical reading for a doji suggesting that the bull/bear fight was a very close call.

If we gap up and stay up, we’ll form a morning star reversal, a highly reliable signal, even if it’s only for one more day. If we close lower, then it’ll just be a continuation of the downtrend. Treat the doji as a meeting point, a battleground with a lot of idiotic confusion and indecision on both sides. A winner will be picked at the close later today.

Personally, I’d like to see some capitulation. Yesterday was not a capitulation day. The bulls do not have full control, and I would advise both sides to remain cautious. I personally have financial shorts that are hedged with FAS, so I could care less what happens tomorrow. Looking at several charts in a non-biased way, many stocks do exhibit reversal signals for the short-term.

We have CPI@ 8:30AM, Industrial Production@ 9:15AM, and Consumer Sentiment@ 10:00AM. In addition, we have earnings from BAC, C, SCHW, JCI, PPG and FHN.

Important levels (SPX):
Support – 838 (Initial), 820 (Major)
Resistance –  850 (Initial), 855, 862, 874

Sorry for the delay. I was skiing in PA in 10 deg weather. Just a few hours ago, I was one of those idiots that dropped a glove halfway on the lift. Someone jacked it, which was infuriating.

Comments »

First, Moran e-mailed me his new rap vid on Madoff. I’m sick and tired of hearing about Madoff, but check it out:

[youtube:http://www.youtube.com/watch?v=rLarQAmsf_g&fmt=18]

Second, the breakdown has just begun. As long as we don’t get a +250 pt day on the Dow, the shorts are fine. For now, the selling appears like it will accelerate. For example, look at the Dow and SPX’s red candles and volume pattern. The open-close ranges are becoming larger and the volume is expanding on the down days. Subsequent larger candles make good waterfalls or cliffs.

If you recall from my post yesterday, this is enough to satisfy #1’s “price/volume divergence”. #3’s band expansion has only just begun. Look at the July-August rally, because there’s nothing funny about it. The similarities are astounding. You are crazy if you’re net long.

Also, I’ve mentioned the significance of the financial sector this entire week. They are responsible for dragging this market down and I explicited stated many times that the market could not rally if the financials did not participate. If you were long, that’s your fault. Citi is still screwed and BofA now needs more capital so they don’t look stupid for spending only 2 days hammering out a $50 billion deal. Come on, it took you longer than 2 days to think about buying your sub-$100,000 house.

So the problem now is, “How will taxpayers, with their own money infused into these banks, be protected in the coming decline?”. They won’t. I suspect there will be a significant level of outrage once the public realizes they got duped. What’s the Treasury going to do now, buy more stock? Please stop.

Today’s action was boring/sideways because, by 2PM, I realized that we were forming a bear continuation flag for tomorrow’s set up with a range between 820-860. I was right. We need a 5+ pt gap down on the SPX tomorrow morning for the flag’s fulfillment. I am not covering my financial shorts until there is capitulation on massive volume. I am also considering shorting REITs as many of them show signs of topping out and ready to roll over.

I also mentioned breadth for several days now, more specifically the $NYHL & $NAHL and less so the $NYAD & $NAAD. Not only did the New-Highs/New-Lows indices turn red, we can now visibly see them turning down. Not only that, keep in mind that the only time we turned green was right before the crash. We formed 96 new lows and 4 new highs today and I suspect it will not get any better for the short-term. As for Advance-Declines, we had 1-to-10. It’s been over a month since we’ve had these kind of internals.

As for the NASDAQ, they’re going to have some problems tomorrow pending reaction from the AAPL news. In other news, Jim Goldman is an idiot. Sometimes the truth hurts, but you don’t withhold it from the public. He’s my “Asshat of the Month” nomination – you don’t have to wait until the end of the month for this one.

[youtube:http://www.youtube.com/watch?v=g47goge2S6I]

Pwnd.

You can’t ignore the fact that fear is coming back into the markets. I sense panic selling once again. The best sector to short is obvious the financials. Watch for a possible bounce at 820 SPX. Resistance is at 860 SPX. Watch C, BAC, JPM, and the rest of the financials very closely as well as a potential bounce off of the VIX at 54-55.

On a side note, beware the next several days. There is something evil in the air. This is beyond “WTF”. I’m not bullshitting on this one. There will be a pretext.

By the way, Jeremy, we still have porno in the “Posting Videos” section. Not that I was looking.

—————————————————–

PPT Overall Market Summary (& historical scores):

No.    Date    Technicals    Fundamentals    Hybrid Score    Hybrid Change
1     2009-01-14     1.32     3.67    2.31 (Sell)     -4.63%
2     2009-01-13     1.53     3.66    2.43 (Sell)     5.73%
3     2009-01-12     1.33     3.66    2.31 (Sell)     -3.11%
4     2009-01-11     1.48     3.65    2.39 (Sell)     -3.90%
5     2009-01-09     1.48     3.65    2.39 (Sell)     -3.90%
6     2009-01-08     1.67     3.64    2.50 (Sell)     3.00%
7     2009-01-07     1.58     3.64    2.44 (Sell)     -12.63%
8     2009-01-06     2.22     3.64    2.81 (Sell)     0.24%
9     2009-01-05     2.23     3.64    2.82 (Sell)     -3.22%
10     2009-01-02     2.41     3.64    2.93 (Sell)     4.10%
11     2008-12-31     2.28     3.61    2.84 (Sell)     12.63%
12     2008-12-30     1.84     3.53    2.55 (Sell)     9.78%
13     2008-12-29     1.49     3.53    2.35 (Sell)     6.87%
14     2008-12-26     1.23     3.53    2.20 (Sell)     -3.39%
15     2008-12-24     1.66     3.53    2.45 (Sell)     -2.63%
16     2008-12-23     1.78     3.53    2.52 (Sell)     -4.57%
17     2008-12-19     2.03     3.53    2.66 (Sell)     1.59%
18     2008-12-18     2.00     3.52    2.64 (Sell)     -2.04%
19     2008-12-17     2.13     3.52    2.72 (Sell)     4.73%
20     2008-12-16     1.96     3.53    2.62 (Sell)     7.10%

Comments »

Looks Pretty:

I was twittering all day that we were forming a symmetrical triangle, then an ascending triangle. The breakdown of the triangle set off a cascade down from 12:30PM to 2:00PM. And then, from 2:30PM till 4:00PM, many people got mauled. It is a fact.

Just when you thought that the market was going to breakdown at 3:00PM, you got screwed. The movement in the last hour was definitely impressive, nothing short of a spectacular come back. It made you say “WTF?!”, didn’t it?

The only trades I made were closing out positions in the morning. It’s typically not good to trade on doji days also known as tight-range indecision days marked by very little volatility. Doji tell you that the bulls and bears fought all day long, and neither side could best the other. The market could go 50/50 from here. I did not trade all day long because there was no edge. Did you see one?

We are very close to 857-860 once again. In addition, all three 20-, 30-, and 50-day MA’s are above the SPX, no doubt going to make the SPX’s rally attempt laborious and very irritating. The downside is not that far, in fact, a breakdown is waiting only about 12-15 pts below. Watch the charts, they’ll tell you where YOU need to be.

SPX 1-day

SPX 3-day

SPX 40-day

Here’s a very important observation I made today. Below is a 3.5 month chart of the SPX  right now. Below that is a chart of the SPX from 06/08 – 09/08. See any similarities?

1) Price/Volume Divergence – The rally heads higher, but volume isn’t sustained. Here is where volume will be important. Once the range is broken, a burst of volume should be present.

2) 50-day MA Churning – Churning is the equivalent of “hanging out”. In this case, the SPX has repeatedly made numerous attempts to rally on both charts, passing and failing over and over until the MA could no long support the market.

3) Bollinger Bands – The BB’s are currently at their narrowest levels since the August-September rally. The market was in an approx. 50 point range before a major move occured (down). The market right now is in an approx. 87 point range. The more narrow the bands, the more explosive the future move.

4) V-Spike Bottom – Look carefully at both charts and compare their rallies since the first long white candle and it’s trek upwards. It’s similar enough to not ignore.

Keep these things in mind. I’m not saying it’s going to be this way, but it’s nice to know, right?

Finally, PPT requests from a cool person (PEP, TOT, LH, AFFX):

No.    Date    Rank – Daily    Close    Technicals    Fundamentals    Hybrid Score    Hybrid Change
1     2009-01-13     1147     52.02     1.64     3.96    2.61 (Sell)     6.97%
2     2009-01-12     1288     51.39     1.34     3.96    2.44 (Sell)     -5.43%
3     2009-01-09     1110     52.57     1.59     3.96    2.58 (Sell)     0.39%
4     2009-01-08     1527     53.25     1.57     3.96    2.57 (Sell)     1.18%
5     2009-01-07     1380     53.89     1.56     3.91    2.54 (Sell)     -4.87%
6     2009-01-06     1988     55.70     1.78     3.91    2.67 (Sell)     2.30%
7     2009-01-05     2125     55.60     1.68     3.91    2.61 (Sell)     -13.58%
8     2009-01-02     1425     55.97     2.35     3.95    3.02 (Buy)     10.22%
9     2008-12-31     1909     54.77     1.87     3.95    2.74 (Sell)     -4.20%
10     2008-12-30         54.88     2.18     3.82    2.86 (Sell)     22.75%
11     2008-12-29         54.07     1.26     3.82    2.33 (Sell)     -5.67%
12     2008-12-26     956     54.56     1.50     3.82    2.47 (Sell)     0.00%
13     2008-12-24     1201     54.54     1.75     3.82    2.62 (Sell)     4.80%
14     2008-12-23     1707     54.17     1.55     3.82    2.50 (Sell)     -11.97%
15     2008-12-19     1132     54.09     2.14     3.82    2.84 (Sell)     -10.41%
16     2008-12-18     434     54.71     2.70     3.82    3.17 (Buy)     0.63%
17     2008-12-17     680     54.33     2.68     3.82    3.15 (Buy)     8.25%
18     2008-12-16     954     54.21     2.26     3.82    2.91 (Sell)     14.57%
19     2008-12-15     1442     52.42     1.62     3.82    2.54 (Sell)     3.67%
20     2008-12-12     1861     52.03     1.46     3.82    2.45 (Sell)     0.41%

No.    Date    Rank – Daily    Close    Technicals    Fundamentals    Hybrid Score    Hybrid Change
1     2009-01-13     1064     51.85     1.00     4.90    2.64 (Sell)     7.76%
2     2009-01-12     1266     52.73     0.68     4.90    2.45 (Sell)     -9.59%
3     2009-01-09     706     53.64     1.12     4.90    2.71 (Sell)     -2.87%
4     2009-01-08     822     55.97     1.25     4.90    2.79 (Sell)     25.11%
5     2009-01-07     2174     54.85     0.30     4.90    2.23 (Sell)     -26.89%
6     2009-01-06     1042     56.28     1.71     4.90    3.05 (Buy)     -5.57%
7     2009-01-05     736     56.57     2.01     4.90    3.23 (Buy)     -13.64%
8     2009-01-02     106     57.56     2.90     4.90    3.74 (Buy)     7.78%
9     2008-12-31     235     55.30     2.43     4.90    3.47 (Buy)     13.03%
10     2008-12-30         55.30     1.83     4.78    3.07 (Buy)     0.66%
11     2008-12-29         54.07     1.80     4.78    3.05 (Buy)     15.53%
12     2008-12-26     411     53.90     1.08     4.78    2.64 (Sell)     0.76%
13     2008-12-24     1266     53.05     1.02     4.78    2.60 (Sell)     -9.09%
14     2008-12-23     672     53.12     1.46     4.78    2.86 (Sell)     1.42%
15     2008-12-19     1190     54.61     1.39     4.78    2.82 (Sell)     9.73%
16     2008-12-18     1807     56.20     0.96     4.78    2.57 (Sell)     -19.44%
17     2008-12-17     604     59.58     2.04     4.78    3.19 (Buy)     -6.45%
18     2008-12-16     142     58.07     2.42     4.78    3.41 (Buy)     36.95%
19     2008-12-15     1550     54.54     1.25     4.18    2.49 (Sell)     -11.39%
20     2008-12-12     933     53.88     1.38     4.78    2.81 (Sell)     -18.08%

No.    Date    Rank – Daily    Close    Technicals    Fundamentals    Hybrid Score    Hybrid Change
1     2009-01-13     277     61.47     2.44     3.75    3.00 (Neutral)     11.94%
2     2009-01-12     602     60.62     1.79     3.90    2.68 (Sell)     3.47%
3     2009-01-09     1080     60.85     1.64     3.90    2.59 (Sell)     -3.00%
4     2009-01-08     1159     60.72     1.77     3.90    2.67 (Sell)     -3.96%
5     2009-01-07     720     60.59     1.96     3.90    2.78 (Sell)     5.30%
6     2009-01-06     2047     61.40     1.73     3.90    2.64 (Sell)     -15.65%
7     2009-01-05     925     65.66     2.68     3.75    3.13 (Buy)     1.29%
8     2009-01-02     1264     64.93     2.60     3.75    3.09 (Buy)     4.75%
9     2008-12-31     1383     64.41     2.37     3.75    2.95 (Sell)     3.87%
10     2008-12-30         64.17     2.18     3.75    2.84 (Sell)     15.45%
11     2008-12-29         63.51     1.51     3.75    2.46 (Sell)     13.89%
12     2008-12-26     1688     62.93     1.00     3.75    2.16 (Sell)     -6.49%
13     2008-12-24     989     61.86     1.90     3.75    2.68 (Sell)     -1.11%
14     2008-12-23     1133     62.25     1.95     3.75    2.71 (Sell)     5.86%
15     2008-12-19     1929     63.10     1.69     3.75    2.56 (Sell)     -15.51%
16     2008-12-18     686     63.78     2.50     3.75    3.03 (Buy)     0.33%
17     2008-12-17     943     63.65     2.48     3.75    3.02 (Buy)     4.50%
18     2008-12-16     987     63.64     2.26     3.75    2.89 (Sell)     17.48%
19     2008-12-15     1629     61.33     1.42     3.90    2.46 (Sell)     1.23%
20     2008-12-12     1899     62.20     1.46     3.75    2.43 (Sell)     0.41%

No.    Date    Rank – Daily    Close    Technicals    Fundamentals    Hybrid Score    Hybrid Change
1     2009-01-13     2056     3.66     1.54     3.20    2.23 (Sell)     -1.33%
2     2009-01-12     1729     3.48     1.59     3.20    2.26 (Sell)     -21.25%
3     2009-01-09     387     3.84     2.64     3.20    2.87 (Sell)     4.74%
4     2009-01-08     959     3.58     2.42     3.20    2.74 (Sell)     11.84%
5     2009-01-07     1602     3.34     1.91     3.20    2.45 (Sell)     -9.93%
6     2009-01-06     1822     3.41     2.38     3.20    2.72 (Sell)     14.77%
7     2009-01-05     2646     3.16     1.78     3.20    2.37 (Sell)     -16.84%
8     2009-01-02     1811     3.12     2.60     3.20    2.85 (Sell)     0.00%
9     2008-12-31     1627     2.99     2.42     3.45    2.85 (Sell)     10.89%
10     2008-12-30         2.86     2.03     3.30    2.57 (Sell)     26.60%
11     2008-12-29         2.66     1.11     3.30    2.03 (Sell)     0.00%
12     2008-12-26     1993     2.66     1.10     3.30    2.03 (Sell)     0.00%
13     2008-12-24     2281     2.70     1.35     3.30    2.17 (Sell)     -7.66%
14     2008-12-23     2028     2.79     1.65     3.30    2.35 (Sell)     -3.29%
15     2008-12-19     2206     2.71     1.79     3.30    2.43 (Sell)     4.74%
16     2008-12-18     2345     2.70     1.60     3.30    2.32 (Sell)     -11.79%
17     2008-12-17     1847     2.88     2.13     3.30    2.63 (Sell)     20.64%
18     2008-12-16     2523     2.64     1.36     3.30    2.18 (Sell)     -4.39%
19     2008-12-15     2061     2.45     1.47     3.40    2.28 (Sell)     4.11%
20     2008-12-12     2417     2.45     1.31     3.40    2.19 (Sell)     2.34%

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