Surf report: Exchanges under pressure- CME, NYX, ICE

Market is flat.

Did find a surf spot that will play out in a few weeks:  [[cme]] , the correlation stock for this group, is forming a triangle, which means this group of stocks is getting ready for the next big move.  With ICE and NYX trading near 52 lows, and CME selling off on relatively high volume from June – July, we could see another leg lower.  Keep this on your list to short in September.

[[ice]] [[nyx]]

NASDAQ OMX Group, Inc. [[ndaq]]

 

… ICE is forming a base near its 52-low.  This is typically the weakest types of bases.  ICE under 80 by September.

… I’m not really sure how much lower NYX can go, but the volume from July through mid August is telling us something is happening.

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This is a really serious subject that every trader should consider… their health.  This post was inspired by Broker A’s visit to the doctor post, as well as my doctor visit. 

I often wonder about the health of professional day-traders.  Some of them sit all day, staring at a monitor, eating pastries, drinking Monster-flavored coffee… you do that day in and out, there will be some long term damages (who wants chrome spinners on their wheelchair?) 

But I guess every trader should consider their health as an important indicator when making a trade.  For one, you probably don’t want to make any trades when you are physically and especially psychologically beat up, or even drunk (wait, maybe trading drunk might work on this tape)  But really, psychologically, you have to be fit when you make any trades.  That means no trading after you find out your girl has loyalty issues, your favorite dog dies, you’re studying for the bar exam, you’re running from the border police, or if you just found out your son wears Abercrombie and Fitch underwear. 

Why?

I want to say, because its bad to trade on emotion.  That is very true, but that’s a different story.  I’m talking straight up about your health.  Get up and stretch!  Exercise!  Laugh!  Reward yourself, please! 

So how do we measure that most important indicator?  Well, not with the Vix, but with a sphygmomanometer.  A whaa?  Check your blood pressure people!  Being an investor is a high emotion occupation, that is why you should work to the point of trading with zero emotion.  As was recommended on this site earlier, buy yourself one of these blood-pressure machines, and pray that 140 resistance point is strong. 

Yes, today I came home from the doctor and for the first time ever, my blood pressure was 140 on the systolic pressure.  Man, that sure was a wake up call for me.  You want to have something lower than 140/90 to stay healthy.  After getting smacked to reality, here’s my game plan:

1)  Exercise every other day.  I have a gym at home, but have little inspiration until now.  I was thinking of getting a 24-hour fitness pass since I’m only free to workout at nights.  Anyway, I’m doing ab-circuits, plyometrics, and the usual weight-training with dumbbells.

2)  Sports on the weekend.  Basketball saturday nights, soccer sunday nights, swimming Saturday day, no surf, its flat.

3)  No spam musubis

4)  No Star Bucks coffee

5)  Limit salt

6)  Sleep early.  My biggest evil.

7)  I must Relax.  This past week I’ve been a real misanthrope.  I don’t know why, people just annoyed me.

Finally, to make this post stock-market related, I leave you a “blood-pressure” stock.  Isn’t this ironic.  Investors in this company are sure to make use of their product, which should eventually drive the price back up, right?…

http://www.forbes.com/2008/05/16/pharmacopeia-hypertension-trials-markets-equity-cx_lal_0516markets26.html

Never trade your health!

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Bottom 5 industries for Dow -240, Vix +11%.

On an ugly day, find the ugliest. When volume picks up, short these stocks on weakness…

Manufactured Housing -6% (Champion Enterprises, Inc. [[CHB]] , Skyline Corporation [[SKY]] )

Internet Service Providers -4% (priceline.com Incorporated [[PCLN]] )

Health Care Plans -3.9% (Aetna Inc. [[AET]] , Humana Inc. [[HUM]] , Health Net, Inc. [[HNT]] )

Recreational Goods, Other -3.9% ( Fossil, Inc. [[FOSL]] , [[JADE]] .. ignore this stock, Movado Group, Inc [[MOV]] )

REIT – Hotel/Motel -3.77% ( Host Hotels & Resorts, Inc. [[HST]] , LaSalle Hotel Properties [[LHO]] )

Link to charts:

5-day chart for these weak sauce stocks on Dow -240/Vix +11%

3-month chart

1-year chart

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Completely sold longs: 

NCTY ( -1.40% @ 18.97, bought at 19.24)

ICE ( -3.12% @ 85.40, bought at 88.15)

FXP ( +0.82% @ 88.45, bought at 87.67)

ACH ( +1.45% @ 21.63)

Partially sold longs:  MEA ( -17% at 12.76, bought at 15.41)

Added to longs:  GMXR (68.17), CLR (49.61)

Trader notes:

Clean it up.

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Hurray!

It’s nice to see this stock down.  Let’s find a few more..

Fuel Systems Solutions, Inc. [[fsys]]

[[lulu]]

VistaPrint Limited [[vprt]]

priceline.com Incorporated [[pcln]] …under 100

Abercrombie & Fitch Co. [[anf]] …almost under 50

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Right now, your probability is less than 50%.

It’s very difficult to “wave-trade” right now because the volume is just too low.  It’s like trying to catch a bunch of 1-footers with a short board.  Don’t get me wrong, there’s always a trade that can be made, but it’s important to realize that when the volume is this low in the market, then probability for successful correlations, trends, and therefore trades, drastically decline.  Whether you day trade or swing trade, you will be working really hard for some gains.

Last week we put up some record numbers… the lowest volume week of the YEAR!  I saw stocks rally on Friday 2% intraday on 5,000 volume, in blocks of 100.  Say what?!  That’s ludicrous (See “Space Balls” the movie).  These are not waves you want to surf.   For now, build a watch-list and attack hard and nasty when the volume gets back.  You don’t have to hit the very bottom or top, you’ll have ample enough time to surf a good stock when the real waves are back.

Right now I am ignoring almost ALL TRENDS, since the volume makes whatever movements in stocks a nonfactor.  Instead, I am watching stocks with 200, 100, 50 moving averages with negative slopes (down-trends), that are at the moment moving back UP .  The closer and closer these stocks get to these resistance points on low volume, the higher the probability for a successful short.

… I think that’s what your approach should be to this market right now.  Just sit tight, make little or NO trades, and just let the rest of the impatient and addicted traders out there bid prices up and down for you until you get a better entry point.  Think of these traders and this market as WORKING FOR YOU! 

I’m building a list of stocks to short.  I feel that with the volume this low, we will begin to “trickle up” on this “dull” market.   So, if you want, you can catch some of these “trickle ups”, but I think if you do that, then you risk missing a bigger run on better probabilities.

Remember, it’s okay to not trade. 

In the meantime, I will give you scenarios that I want to play out, and if they do, then how to trade them:

• I want to see Ags fail here, and energy move up.  Oil, gas, whatever, needs to break away from Ags/Chems so that energy can make its next run up. 
• If you want to catch a good “trickle up”, then short SKF or other inverse-ETFs.  This is a contrarian play on the heavily shorted sectors.
• Short gold soon for the week, on any spike.  Probability for gold to move up is highest when the market is in panic mode.
• Watch the tech giants.  I think when volume starts to pick up again, tech will be smacked right back down with some of the big names like GOOG, EBAY, RIMM getting hit.  Again, I would like to have some traders out there bid these stocks up for a better entry to short.
• I would like to see the Baltic Dry Index jump up on the news of China opening up factories, then if DRYS fails to break 80, then I’m re-shorting the sector.
• I have re-set my Vix charts, and therefore am waiting for the Vix to “spike” below 18 to open up my list of shorts.  Also, I think you can short SKF for now and use that Vix spike as a cover point.
• Other strange stocks on rally mode (which are for real? which are playing with yah?):  NetLogic Microsystems, Inc. [[NETL]] , Overstock.com, Inc. [[OSTK]] , Mindray Medical International Limited [[MR]] , Herbalife Ltd. [[HLF]] , New Oriental Education & Tech. Group Inc [[EDU]]
• And I hope to get long oil stocks with short term bases:  Southwestern Energy Company [[SWN]] , Hess Corp. [[HES]] , Arena Resources, Inc. [[ARD]]

Those are just a few for now.  The good thing about an idea, is that if it doesn’t work out, then you just don’t go with it…  versus people who just have to trade, they’re money is at the mercy of this low volume chaos.  Remember, let the market work for you!  Don’t overwork the market.

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