Just One of Those Days
Right now, the tape is very quiet. A lot of stocks are illiquid, and there really isn’t much out there to day trade, except a few sectors like tech and solars (which is grouped with semis). That’s pretty much the only setup I’m looking for today… profit-taking in solars ahead of the long weekend. I can only wait for that trade to come to me.
On the medium term, we are bullish. There still is a lot of firepower on the “sides” that can push this Sisyphean boulder higher in December, but first we need some cleaning up to do on the sectors…
– In the past 3 days, we have been moving up and up while volume keeps getting lower and lower. We really need to flush out these “weak” or “me-too” bulls.
– The Vix is near the mid-50s, which I targeted as a point to short the market as traders become blinded by complacency.
– The seasonality of the “turkey effect” is probably what is feeding this melt-up (a melt-up is a slow move up on low volume. It is the term that follows the same principle as “never short a dull market”… tough days to be a bear, no?). However, if this continues, we could set-up for a big selloff when volume returns.
-… that is why, at this point, I am watching today’s market, and this is something that even Mac agrees with. You do not want to see the market move triple digits up to invite profit taking ahead of a high volume return, rather you want a market down to invite foolish short-sellers to enter the market that will be forced to cover when volume returns. These are the kinds of patterns you want to see in a bullish tape. Plus, there are a lot of ugly stocks that are way up on low volume, and those too need to be flushed out.
Other then that, there’s really not much to say about today’s market. Just keep your positions small heading into the weekend. The Vix is too “low” for me to enter new longs, and the force of the bears is on vacation.
Turkey eating a bear? Only on Wall St.
See yall on Twitter!
Aloha and a Hi-5 to my new twitteridiculously awesome friends. I actually know some of you already, I think. Like Heckler, wazzup! Eric Purddy… you a pilot? WallStreet1929, great tag! Yieldofdreams, lol!:
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Should be support around 56-57 on the VIX – both 50 day MA and trendline there. If it doesn’t hold there, maybe this rally has more to it. However, today was just the type of day I didn’t want to see, at least so far. Volume is way down while the market is way up. That is not bullish.
I have no positions and therefore don’t think I have a bias one way or the other. I am not trading the rest of this week but if today continues positive and Friday turns out the same way, then next week could indeed be setting up as a very nice shorting opportunity. JMHO.
Wazzup Gio! Glad to be following you on twitter and stocktwits!
Good post today. I like your thinking here and will keep this in mind as I watch the market into the weekend.
Have a good Holiday brah!
Great post, great discussion. Visiting your page helps me to relax on the sideline as well. This market will not trade sideways for long. We all know what happens. Heckler hit it on the head, might be a good time to go for a ride for a couple of days, there won’t be any volume back on Friday.
Happy Turkey Day!
Im going to start buying SRS on Friday and Monday. Hopefully in the 110s. There is no way we stay down here. By January, we will revisit the 180s.
Mabuhay!
Seems to me as if too many people are calling for a big rally from here. I want to be on board for that, and to some degree I am already, but I would still like to print a new low first. I may dabble with EEV or FXP this last hour. Or perhaps not. Meh.
FXP getting murdered. Not even sure why its down -18% on a Dow +150 day. i think its something about interest cuts in China.
Interests cuts and a second Chinese stimulus package?
Well, this is exactly what i was concerned about. A 200 point melt-up on nothing. This is bearish written all over it, and now we have a good oppoturtunity to short.
1) Vix to mid-50s was my target to short. Now all i need is a Vix spike down intraday to trigger the play.
2) Panic in the inverse ETFs. Using them as a contrarian indicator. The panic selling in SRS, SKF, and FXP today is a good sign the weak bears are out.
GIO, what’s your plan if you decide to short?
if i get Gio right, a gap up on friday morning is a good trigger point,no?
richard
Richard, yeah, that makes sense to me… also wondering about specific names for a possible short.
I rolled with FXP and EEV at the close, but that’s just me. If this holds up on Friday I might choose to go with TWM or maybe even SRS, but I don’t want to spread it around too much in case I have to backtrack.
I admit that I dipped my toes into FXP at the close as well… wouldn’t not be at all surprised to see it move higher very soon.
Great post. Confirms my reasoning for holding all my 9/19 shorts for much lower lows in December. I like the BIG swings.
Dookies, XOM breaks out.
Hey, the D-squared visited here.
I’m building a list of ugly rally stocks to short. So far, I got IRBT, MELI, and CPF. Just a list, will add to em.
The solars are fuego, no?
-gio-
Richard… you got it! Any gap up is worth shorting. Bulls will take those opportunities to take profits.