Vix @ 55 predicts major selloff, + Look who is repping it at StockTwits!…

Yours truly. 😉

I used to hang out over at WallStreak, now I post my intraday moves on Twitter through StockTwits. Whenever I see a good setup for trading, I usually take the top spot on the “top talkers” list… I think out loud a lot! Hope yall caught some good shorts today! We started off shorting at the open, and never looked back. Top picks were to short $SPWRA and long $SKF. I really warned you about these Sisyphean Type rallies last week… they ALWAYS end in the boulder coming smashing down! And once again, I used the Vix to pinpoint an almost exact area for shorting aggressively…

“The Vix is near the mid-50s, which I targeted as a point to short the market as traders become blinded by complacency.” –http://ibankcoin.com/gioblog/?p=2397

Always pay attention to a rally if it is legit or not! Stocks moving up + Volume moving down + Vix moving down = horrible rally.

More importantly, it was critical that you cover as many short positions as you could into this sell-off. The Vix spiked an incredible 23% today, so do not overlook that. This is only the first “spike”, so you can take a chance, but when the market drops -670 points, please don’t be greedy, take a profit while you can, it is like once in every 20 years you get a day like this.

Today’s tape deserves this video again..

Check out the rest of iBankCoin’s posse over at StockTwits:

Nothing much to report about this tape. This is a classic reaction to a low-volume rally. The “Turkey Rally” from last week lasted all the way until Friday! A really impressive move.

… but really? were you really expecting a Turkey to roll up a boulder that far?!

Now, we are simply unwinding that low volume staircase. I am taking this opportunity to cover many shorts I entered last week, including FSLR, SPWRA and MELI, and debating what I should do about FXP… yeah, I’ll sell that knife. (note, I just covered all FSLR which accounted for nearly 1/2 of my profits on this sell-off. Therefore, I am holding majority of the SPWRA short for a possible next leg down in the market. There are many ways you can scale in and out of trades. For the moment, I prefer to scale out of sectors instead of stocks.).

If you are bullish, you want this kind of selloff. You NEVER EVER want a rally to start off with very low volume. You need to flush out those foolish bulls (“Sisyphean Bulls”) and get aggressive long after a follow-through day (= volume) instead. But since the Turkey Rally was quite drawn out, I really cannot be that bullish for the rest of December. Anyway, I’ll keep an eye on the Vix to get a better read on things in the coming weeks.

Dow is currently down -360. Vix at +13.6% and will move up.

Update:  The Dow is now down -450 points … I would avoid entering any day-trade shorts here, as the market is waiting for the close for more volume.

I’m getting a lot of requests for Meredith’s Report on the Banks/Financials, in particular Citigroup. If anyone is interested, I have it in .pdf form (I got it from my twitBuddy Raznick). It is a must read for investors in the sector, and covers the effects of TARP Capital in the light of C’s bailout. There’s also an analysis of BAC, C, JPM, WFC, GS, and MS credit card securitizations.

This report is 37 pages, and i’m still on page 12 or something, but i hope to get an opinion up and a strategy up by the end of the year.

If you want a copy, email me. ..

[email protected]

– Sell on the online retail-news.  A nice high volume bounce on OSTK sends the stock rightabove the 20.  Retrace back to the 10.

– SPWRA crossed the 10, but moved above the 20 on low declining volume.  Stock nearly doubled in less than a week.

– IRBT, another eerily similar 1-week pattern to SPWRA, but this one crosses both the 10 and 20 on declinig volume.  Up about +25% in past week.  Fade back to the 10.

– GG, will have a tough time getting past 30.  Gold stocks are crowded.  Trading above the 25 resistance point, but on declining volume.  Should get backbelow 25 in the next few days.

– CPF, is one ugly bear controlled bank stock.  After 5 bars of buying volume, it follows with heavy selling.  Short here with a stop slightly above the 20-day (13.20)

– TGT, sell on the retail news.  TGT only slightly below the 20-day after thin trading.  Now at the top of its 3-month down channel.

Finally, I like energy stocks heading into the winter.  If we get a dip on Monday (OPEC didn’t cut anything Nov 29), I’ll be looking for my first entry into some energy/oil plays, while shorting gold as a hedge.

An aLoHa to my new twitterfunknasty friends.  Let’s see, who do we got here? AbnormalReturns, a veteran in the stock blog community.  Mac, ChartSwingTrade! Another great IBD believer and contributor to this blog.  A few strange ones, like Masturbation.  Don’t know who Pinays is, but tempted to follow. Lol.  And BobBrill, an “IP Lawyer”, don’t know what that is but he seems like a smart guy.  Wazzup Bob!

	gludibokslosh
	bobbrill / Bob Brill
	geolaw
	timothystevens
	elkate
	jameshawkin
	colonmadness
	Masturbation
	safeheaven
	olgs / Kenny Luk
	lopsang_sherpa
	roxbury51
	rw007
	LiquidMountain
	pinays
	ForexMasterfcck
	ForexTraderljhl
	abnormalreturns
	NextBest
	darkobodnaruk / Darko Bodnaruk

	ep34 / EP
	StockMasterlkmv
	ChartSwingTrade / Chart Swing Trader

… shopping that is.  Today we’ll see some very low volume action, so just extend your vacation.  Too many people trade, just to trade.  You need to quit that.  Wait for high probability setups.  Only trade low volume days if you want to take advantage of exiting or adding to swing positions on a move against your play.

The price actions in the double inverse ETFs are very startling.  Especially FXP, which is near a 52-low, despite having both the U.S. and the Hanseng trading on a very bearish multi-year chart pattern.

… what are investors thinking about our global markets, especially that of China?  Are they betting on China reaching record growth again?  Or is the FXP ETF just badly priced?

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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Weeks before I called a fade on solars and the whole sector dropped over -40% in a matter of days.

Over the weekend I called a bounce in solar. Let’s see how we did, shall we?

Enjoy the video! (again, I’m not good at video editing)

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