Okay, when the Dow was trading down -250 I said the Dow was going to go to +220 today Lol. Um, I didn’t really believe that. But whatever, I put my money down. If you’re looking for another idea on how to make money off this market’s volatility check out my previous post. I shorted FXP covered ALL my shorts after the Vix had a mini-intraday spike. FXP moved 10% in about 1.5 hours.
Dow is currently +160. Guess what…
… I’m scanning for shorts. I wouldn’t want to go heavy long here after having 3 distribution days in the past two weeks (check my other post before my previous post on IBD distribution-days). I hope to start shorting again at least by late next week.
Oh yeah, I will try to get Jeremy to put a twitter widget on my blog so you can follow me there. I’ve been getting a lot of alerts from twitter that people are following me. I don’t know how they found me, but I guess I should use it then.
After the +4% spike from 65-68+ market recovered +150 points, or half back. Bears can get scared, therefore I am currently shorting FXP off that mini-spike:
Just wanted to give an update to my IBD people. We had two “distribution days” in a row on Tuesday then Wednesday.
If you don’t know what a distribution day is, its almost the opposite of a “follow through day” concept. When the Nasdaq or S&P 500 fall on higher volume than the prior session, it usually means institutional investors — the most influential players in the market — have sold stocks, i.e., distribution. If you get a few of those over a few weeks, then that usually leads to another ugly downtrend. Again, this is for a longer time frame, so if we start getting more distribution days, then we’re probably going to get more ugly trading. So far we had 3 distribution days in November!
November 6
November 11
November 12
Look at the damage done by institutional investors:
Anyway, I have December 14 circled on my calendar. I’ll tell you why later.
As for today’s tape. The Dow is currently down -300. And the Vix is up about 5%. Ridiculous!! That’s why we keep falling.
My portfolio was set up for this week, then I scaled out of it last week! What the horse!!
Portfolio last Friday…
Previous shorts:
New Oriental Education & Tech. Group Inc New Oriental Education & Tech. Group Inc New Oriental Education & Tech. Group Inc [[edu]]
Energy Conversion Devices, Inc. [[ener]]
DryShips Inc. [[drys]]
Encore Wire Corporation [[wire]]
MercadoLibre, Inc. [[meli]]
Bank of Hawaii Corporation [[boh]]
Eldorado Gold Corporation (USA) [[ego]]
Previous longs:
[[fxp]] … largest position
GMX Resources Inc. [[gmxr]]
BE Aerospace, Inc. [[beav]] …from Fly
Current gay portfolio:
longs: Continental Resources, Inc. [[clr]] , [[eev]]
shorts: GeoEye Inc. [[geoy]] , [[skf]]
… ouch! I had a real good winner. I went from 90% short, to 60% long. I stated over and over that the “Turkey Rally” was NOT coming. I thought the euphoria would collapse next week, but it happened yesterday. Did you notice how bearish yesterday was? The market started off well in red, rallied back to the green, the collapsed back down -180. That was a prelude to today’s -400 Dow smack down. Tuesday’s action was VERY BEARISH. It was 95% controlled by the bears and I failed to see that. Notice the intraday pattern folks:
1) Morning starts gapped down… sellers appear to be in control
2) Daring bulls step up to rally the market + weak bears cover adding fuel to the rally. All day long the Vix was flat!! Too complacent. You are NEVER EVER EVER EVER going to get a bottom when the Vix is flat while the Dow is down -3%. NEVER!
3) End of the day, the buying stops, and the real bids and ask show their face. And it sure is ugly.
Sometime tonight I will post up some great short ideas. So far I’ve picked some pretty good one because I don’t pick based on technicals alone. Its important to check fundamentals, especially during earnings season. I’ll start of the short-tutorial with the current top shorts on my list and WHY they are good shorts.
ALL RALLIES MUST BE SHORTED FOR THE REST OF THE YEAR. Listen up guys, this is NOT a market you want to get long. Especially if you are a trader. If you’re a “value investor”, then go ahead. We’ll forgive you when you look smarter 3 years from now. Come on now, the Vix barely budged today again (http://finance.yahoo.com/q?s=^VIX). Here’s a rule of thumb during the bear market for those you struggling with entry or exit points:
1) If the Dow, SPX, NDX is down at least -3%, and the Vix is up < +9% then there is no signficant panic. Especially if there are no spikes on the intraday chart. Then hold your shorts, add to shorts, and definitely don’t get long. The Vix should be up at least 12-15% then you can cover shorts and start hedging with longs. Look at today: the NDX is down -5%, put the Vix is only up 8%. What are we? Stupid?
2) Watch the Vix in terms of “channels”, and not so much numbers. Forget Vix 20. For example, Vix 40 is the new Vix 20. Vix 80 is the new Vix 60. Et cetera.
If you want to join the short party, then don’t be a crazy and start aggressively shorting here. You already missed the Election spike, then the Chinese Stimulus Spike… I’m not sure whatever catalysts remain to give us a bear market rally, but I would wait for Friday for some bears to start covering. You might get a triple digit rally, then you can start thinking about shorting.
Shoot, I’m taking my frustration on the court tonight. Gonna play some pick up basketball. C yah.
… has got to be one of the dumbest bailouts ever. This one goes in the history books. Just wait. Corporate America needs a cup, a guitar, and a street corner to make it in this blow up of our economy. Pathetic.
