Vix +6% Dow -250

I find it hard to believe that the Vix is only up 6% today even though the Dow has broken 8,700.   It’s kind of interesting.  I would expect the Vix to be at least 12% higher, but it looks like its just melting down.  I think this tape is too light on volume and too easy influenced by news.  Not my kind of tape.  I will be really lightening up my folder here.  Especially with the Vix acting this way and stuck in the low 60s.  I think trading will be light for the rest of the month until we get past Thanksgiving.

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Well, it was quite fun playing the volatility of the market.   You know, down 500 here, up 1,000 here, down 400 here, up 300 here, down 1,000 there… all in a week or so.  I think there was one day where the market didn’t move more than double digits.  Truly a traders market.  Especially effective was using the Vix to “time the market.”  Here’s a video (my second one!) that I created on how I used the Vix these past few weeks:

 
 

Anyway, I’m not a true value investor, so I hope we can finally get a trend going.  Up, or down… preferrably up.  I have down in my notes that November is a good time to get long commodities… in particular energy stocks, and precious metals.  I would recommend you stay away from the double inverse and non-inverse ETFs for now because the volatility in them will greatly shrink in the next few weeks.  Just take out a 2 month chart of FXP, SKF, EEV… all are losing there “panic effect”… one thing though, I guess if you do decide to play them you can at least shrink your stop losses.  Anyway, there’s better plays out there.  

I hope to get long Freeport-McMoRan Copper & Gold Inc. Freeport-McMoRan Copper & Gold Inc. [[fcx]] , GMX Resources Inc. [[gmxr]] (sold that last Friday, I don’t know why), and stick to fading Chinese stocks on euphoric trading.  

Anyway, now that we have new issues to focus on, in particular global issues (no longer elections), we have to “re-set” our thinking and our approach to this market.  We got Obama out of the way, so the question is what now?  Pay close attention to the action in energy and gold, and especially watch leadership stocks (see the IBD100 list).   The light volume trading in the past week has created a very loose bottom on the Dow near 8700 area and I would be careful making a big bet as to whether that support fails or bounces there.   Usually a quiet market leads to a “melt up”, and that’s probably what we could see there.   I’ll let you know what activity stands out to me on the IBD100 because I think it can give you a hint on what the next chapter of our market is going to be.  Frankly, I don’t believe in the whole Turkey-Rally theme… that’s lazy.  Get out there and scan some stocks and look for what they are telling you.

 

Another thing to notice, is that the Vix is in my “no-trade” zone.   Stuck in the 50s doesn’t tell me nothing!  I was getting long when the Vix was at 80, and that was easier to predict direction.  But with the Vix at 54, and the Dow near 9,000 is frustrating.  Let’s wait a little and see how the rules for the game now affect our strategy.   I’ll sit on the bench for now.

… volume is pathetic.  But we still seem to be forming a bottom, a real ugly bottom, almost made of jello.  But I still think the chances of a “melt-up” on quiet trading is very likely.  

 

Here’s the IBD100 list.  Look who’s #1!  “Gio Approved” AFAM!!  I discovered this stock over two years ago, and I was happy to see it on the IBD100 a few months ago in the high 70s.  Now its #1!   Look out for QSII… that one has the potential to hit the top 10 also.  ISYS is another Big Wave pick (see my list of stocks on the sidebar Google Docs list). This IBD100 list is  as of 11/7:

Rank	Company	Symbol	Price
—-	—-	—-	—-
1	ALMOST FAMILY INC	AFAM	51.47
2	AMERICAN PUBLIC EDUC INC	APEI	46.02
3	EMERGENT BIOSOLUTIONS	EBS	20.35
4	EZCORP INC CL A	EZPW	15.26
5	SOUTHWESTERN ENERGY CO	SWN	34.42
6	INTEGRAL SYSTEMS INC	ISYS	20.39
7	LIFE PARTNERS HOLDINGS	LPHI	33.19
8	PETMED EXPRESS INC	PETS	17.8
9	GENTIVA HEALTH SVCS INC	GTIV	24.98
10	COMPASS MINERALS INTL	CMP	58.19
11	HUDSON CITY BANCORP INC	HCBK	17.65
12	EBIX INC	EBIX	27.42
13	AXSYS TECHNOLOGIES INC	AXYS	64.64
14	THORATEC CORP	THOR	24.53
15	STANLEY INC	SXE	34.25
16	EMPRESA NAC EL CHILE ADS	EOC	38.83
17	CELGENE CORP	CELG	60.31
18	SYKES ENTERPRISES INC	SYKE	17.08
19	AMEDISYS INC	AMED	50.06
20	I T T EDUCATIONAL SVCS	ESI	86.2
21	KNIGHT CAPITAL GRP CL A	NITE	15.82
22	SYNAPTICS INC	SYNA	28.86
23	NATIONAL PRESTO IND	NPK	65.4
24	ENSIGN GROUP INC	ENSG	15.12
25	N C I INC CL A	NCIT	22.86
26	QUALITY SYSTEMS INC	QSII	38.94
27	STRAYER EDUCATION INC	STRA	219.94
28	AEROVIRONMENT INC	AVAV	32.32
29	PSYCHIATRIC SOLUTIONS	PSYS	32.43
30	WORLD FUEL SERVICES CORP	INT	27.46
31	WEBSENSE INC	WBSN	18.06
32	CORNELL COMPANIES INC	CRN	22.88
33	PANERA BREAD CO CL A	PNRA	44.41
34	CHATTEM INC	CHTT	72.08
35	MANTECH INTERNATIONAL	MANT	49.4
36	ROCK TENN CO CL A	RKT	32.72
37	HOME BANCSHARES INC	HOMB	26.31
38	SOUTHSIDE BANCSHARES INC	SBSI	21.69
39	NEOGEN CORP	NEOG	28.26
40	L H C GROUP INC	LHCG	33.07
41	FLIR SYSTEMS INC	FLIR	30.23
42	ONEOK PARTNERS LP	OKS	53.83
43	H M S HOLDINGS CORP	HMSY	25.1
44	SOMANETICS CORP	SMTS	19.52
45	FIRST CASH FINANCIAL SVS	FCFS	15.11
46	CEPHALON INC	CEPH	71.5
47	STERIS CORP	STE	33.24
48	SHENANDOAH TELECOMMCTNS	SHEN	22.55
49	SPARTAN STORES INC	SPTN	25.84
50	PINNACLE FINANCIAL PRTNR	PNFP	28.33
51	GLOBAL PAYMENTS INC	GPN	41.07
52	TECHNE CORP	TECH	69.24
53	A A O N INC	AAON	19.09
54	CLEAN HARBORS INC	CLHB	63.98
55	STERICYCLE INC	SRCL	55.95
56	C H ROBINSON WORLDWIDE	CHRW	51.76
57	MARVEL ENTERTAINMENT INC	MVL	30.01
58	NETEASE.COM INC ADR	NTES	21.72
59	DEVRY INC	DV	55.53
60	FLOWERS FOODS INC	FLO	26.65
61	DOLLAR TREE INC	DLTR	37.9
62	GENOPTIX INC	GXDX	38.63
63	EXPRESS SCRIPTS INC	ESRX	59.87
64	EXXON MOBIL CORP	XOM	73.95
65	GILEAD SCIENCES INC	GILD	45.04
66	ASTRAZENECA PLC ADS	AZN	42.65
67	SOUTH JERSEY INDUSTRIES	SJI	34.28
68	BARD C R INC	BCR	87.14
69	HAEMONETICS CORP	HAE	57.53
70	CALIF WATER SVCS GRP HLD	CWT	38.76
71	TRACTOR SUPPLY CO	TSCO	40.87
72	STANDEX INTL CORP	SXI	26.49
73	EMERGENCY MEDICAL SVCS	EMS	34.14
74	HEALTHSPRING INC	HS	16.42
75	BOARDWALK PIPELINE PRTNR	BWP	22.37
76	MCDONALDS CORP	MCD	55.47
77	NORFOLK SOUTHERN CORP	NSC	53.72
78	SUNOCO LOGISTICS PTNR LP	SXL	45.52
79	FORRESTER RESEARCH INC	FORR	26.5
80	QUIDEL CORP	QDEL	15.77
81	CHEMED CORPORATION	CHE	42.5
82	GENESEE & WYOMING INC	GWR	32.7
83	GENZYME CORP	GENZ	70.38
84	BAXTER INTERNATIONAL INC	BAX	59.35
85	ARGON ST INC	STST	21.44
86	BALCHEM CORP	BCPC	24.46
87	AMGEN INC	AMGN	58.87
88	APOLLO GROUP INC CL A	APOL	69.61
89	MYRIAD GENETICS	MYGN	70.93
90	COVANTA HOLDING CORP	CVA	22.01
91	ORACLE CORP	ORCL	17.53
92	CHEVRON CORP	CVX	73.46
93	GRAINGER W W INC	GWW	72.18
94	PROASSURANCE CORP	PRA	47.95
95	CAPELLA EDUCATION CO	CPLA	52.49
96	EXPONENT INC	EXPO	27.5
97	SIGNATURE BANK	SBNY	29.88
98	IMMUCOR INC	BLUD	27.17
99	FRANKLIN ELECTRIC CO	FELE	39.95
100	B J S WHOLESALE CLUB INC	BJ	37.07

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I guess this is stock related.   Sorry, I was bored.

 

What a cool guy to just laugh it off!  He’s right though, this one goes on the internet…

 

Jane Skinner…Top what?!  Hehe.  Shepherd’s face… classic!  There’s no way he’s not going to laugh…

 

What goes around, comes around, Shep…

 

Bwaaaaa ha ha!!!   I don’t know which is more impressive to climb Mount Everest…

 

According to her, its time to get long energy, um, I think…

 

 

Third tier bloggers decides to call the weather instead…

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I completed a short on ENER today.  It was almost like a costanza on my constanza on my costanza.  Anyway, the setup was there so I took it.  

1)  Lots of overhead resistance between 58.58 – 58.78.  A stop at 59.10 was natural

2)  Saw the huge spike DOWN on the Vix just before Obama’s speech = Dow moves to +240.  Nonsense!

Here’s the chart, using Jing’s screencapture program (junk drawing tools, but easy to send to blogs)

38.16 got tested over and over, bouncing off low volume in anticipation of Obama’s speech.  Nonsense!  Short this.  Right now ENER is still falling so I’m kind of bummed at that false-cover signal when volume hit 21.4K on the red candle.

Anyway, I’ve come to the conclusion that the probabilities of shorting Obama’s speeches is good for a good 30 minute day trade, especially during this lame duck period.  Buy the rumor, sell the news.

What a day!  Not only was I able to be one of the few to go into Friday bullish (majority out there were very bearish after a -400 point drop in Dow and the unemployment numbers today), but I was also able to use the constanza on the costanza to short ENER as the market spiked up over 200 points.  So confusing! Well, all I can say for now is that the market will move up or down on Monday.  Lol.  

Aloha!
-gio-

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Buy on the dips:  

Quality Systems, Inc. [[QSII]]  … an previous Big Wave stock pick.  

Advanced Medical Optics, Inc. [[eye]]

First Solar, Inc. [[fslr]]

A-Power Energy Generation Systems, Ltd. [[apwr]] … high spec

Sell on the nonsense:

Herbalife Ltd. [[hlf]]  … target is single digits

MercadoLibre, Inc. [[meli]] … target is single digits

Encore Wire Corporation [[wire]]  …nonsense

Netflix, Inc. [[nflx]]  

Philippine Long Distance Telephone (ADR) [[phi]]

Gmarket Inc. (ADR) [[gmkt]]

iRobot Corporation [[irbt]] …new 52 low coming up

Other plays:

– Short New Oriental Education & Tech. Group Inc [[edu]] right here, right now, with a stop near today’s high = 58.

–  Day trade short Almost Family, Inc. [[AFAM]] on Monday, which will get profit-taking based on the IBD100 new ranking.  Buy on the dip for a position trade.

–  Day trade short [[eye]] or Amedisys, Inc. [[amed]] Monday or Tuesday based on AFAM’s behavior (see above… I am short term bearish on health care heading into next week)

–  Short Eldorado Gold Corporation (USA) [[ego]] above 5

–  Get long [[PEIX]] in a virtual trading account

–  Get long Goldcorp Inc. (USA) [[gg]] between 20-21

–  Fuel Systems Solutions, Inc. [[fsys]] , a former “big wave stock” just made a tsunami of a wave!  Put it on the radar.

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Where’s my Panic Spike?!

Well, if you’ve been following me yesterday, I made a bold and traitorous move in going against my Vix indicator.  As you know, I always search for a Vix “spike” to determine that a reversal in market trend is near.

Anyway, there was virtually no “spike” in the Vix all day intraday on Thursday, which is normally not a good sign for the bulls.  I mean, there was blood all over the tape, but no significant panic!  That kind of action translates into hopefulness in the bull camp, or complacency, or perhaps heroics.  As a result, the Dow shut down every single rally attempt intraday.  So yeah, that’s how you normally would play the Vix-spike indicator.  No spike, then keep shorting aggressive…

However, my trader instincts told me to forget that Spike rule, just this once, because what’s been happening lately has been expectedly unpredictable (is that an oxymoron?).  In other words, its been so crazy out there that I decided to go contrarian on my contrarian plays, or as Alphadogg would put it, get Costanza on your Constanza plays… would that be reverse trader psychology?  Okay, I’m losing you…

Anyway, what I’m saying is, normally I would not cover shorts and buy some longs unless I get a Vix spike up, but I decided to make those moves on Thursday anyway.   But this time, I don’t know, its just a feeling, a trader’s instinct, that even though we are in for some ugly employment numbers tomorrow, I just don’t want to be short.  I feel very few people share this sentiment with me heading into the weekend after that nast 2-day near 1,000 point drop in the Dow (except Mac and Danny).

Its me versus my own Vix indicator.  Discipline versus instinct.  Man versus machine.  Kasparov versus Deep Blue.  Should I sacrifice my queen for two rooks?  Lets see what happens tomorrow.

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