Hate it or love it… the market now up over 1,700 points since buy signal…

IronMan 2008 Kona, Hawaii

I issued a statement last week that Thursday or late Friday would be a great opportunity to get long an “epic bounce”.  I even told you to make the trade when you’re afraid.

Thursday’s panic at the Vix disco only confirmed my strategy (that’s how you should trade- place different scenarios/biases and when you get confirmation, trade!  Even if you’re afraid, just trade because when your mind was normal a few days ago you conjured up that strategy.  Don’t use the current mental despair to nullify your game plan.)

 Since then, the Dow has charged forth over 1,700 points.  Are you kidding me?  Nope!

Congrats to those who can swing.  (Note, i just changed my headline to 1,700).

😉

I was running a ton of charts, screens, moving averages on a bunch of correlation stocks and ETFs over the weekend.  Anyway, I still think we have a tradable bounce to move us back above 10,000.  I can’t say exactly how we get there, but judging by the volatility in our market last week, we probably get there like a drunk guy on ice skates.  Even if we don’t get back to 10,000 in the next few weeks, there still is a lot more room to go before we hit any meaningful resistances.

What does that mean for you?  Well, basically the easy money on the short side is done, and if you’re waiting to short again, like me, then wait for the Vix to make another considerable spike down (for example, I’d feel more comfortable shorting with the Vix back at the high 40s).  Whether you get long or short here, get ready to stomach more volatility or else you’ll get shook out early.

I hope more people are shorting this tape because with earnings around the corner, we are set up for some contrarian trading (the herd wants to short earnings).  I can only point out the doors of opportunities out there… you decide if you want to go through them.

Petrohawk Energy Corporation [[hk]]

GMX Resources Inc. [[gmxr]]

[[fxp]]

Excel Maritime Carriers Ltd [[exm]]

Diana Shipping Inc. [[dsx]]

DryShips Inc. [[drys]]

I never thought the Vix would get this high… okay I did.  But I didn’t think it would until we hit high 30s first. 

I posted this on October 7th and traded accordingly, sticking to my plans to buy either today’s reversal, or yesterday’s close.  I chose yesterday’s close.:

“Right now, all I can do is day trade the powerful volatility… my current strategy is to hold all cash, then wait for a day rally, either Thursday or late Friday.”  [http://ibankcoin.com/gioblog/?p=2088]

So you tell me, did I get it?  Let’s see… the Dow rallied 1,000 points at one point today. 

All comments and criticisms welcomed… from both fans and haters.

… means time to buy.

No time for intraday commentary.  Just know I’m buying here.

Finally!  This is very significant for me.  I’ve been waiting for these shippers to finally sink.  I think of all the sectors, besides financials, the shippers have done almost the worst!

As for trading, I am now all cash.  I’ve sold out on ALL my OSTK puts, which I was buying up in the 20s.  OSTK is heading to $4, but I will wait for a super bear rally before re-buying puts.  I thank you in advance.

I’ve been quite busy running faxes, talking to desperate clients, that want to move their money to fixed index returns.  Its funny how everyone NOW is talking about risk, and want to build conservative portfolios….

Baaah!

I think opposite.  Right now, I’m enjoying the panic as people start moving money around to their conservative retirement portfolios… it at least tells me that the fear is real, and that the market is churning.  But then again, the numbers don’t add up for most people:

An investor who loses 15% in a single year, for instance, needs to make 18% the next year just to get back to the starting point. And if the retirement plan depends on earning an average of 10% a year, recouping those losses as well as the extra 10% would require a 29.4% one-year gain, or 13.8% in each of the next two years — returns that many advisers agree can’t be captured without taking on still more risk and volatility.

I have a lot of clients who are fresh to the market, or haven’t invested a penny in it yet.  I’m trying to tell them to start reserving some money to buy the great dip to set up their IRAs.  Its a tough pitch to sell, even though I’m out for their best interest. 

Unfortunately, the recovery for this market and the therapy for its investors, may take many months, maybe 2-3 years of real boring trading (I hope not!).  So although we may be making money on the downside, think of it as an advanced pay for the many months of boring trading as the volatility subsides and we get stuck in a multi-month channel on ALL indexes.  Right now, all I can do is day trade the powerful volatility… my current strategy is to hold all cash, then wait for a day rally, either Thursday or late Friday.

We need new leaders.  The old ones are done.

I think the last time I checked the futures we were down about -200 points.  Finally!  I’ve been waiting for a big down day on the futures, which is actually a short term bullish sign. 

This happened back in the end of July 2007:

http://www.marketwatch.com/News/Story/us-stocks-sharply-lower-dow/story.aspx?guid=%7B4A5406BD%2DA06A%2D4A54%2DA5CC%2D9633BC8E9100%7D

… I think the Dow was down -300+ on the futures, and global markets were falling hard back in July 31, 2007. 

The best case for the bulls tomorrow, from a technical standpoint, would be to open gapped down, then have that gap filled.  Kind of the opposite of what happened Friday.  If the Dow cannot hold 10,100… and 9,950 then expect to be in a long and drawn out and unexciting bear market.  In other words, no one wins.  No bulls, no bears.

If you have been long this market for over a month, then you are too late to sell.  Sorry I wasn’t able to screen for double bottoms this past weekend, only because when I was reviewing some charts, I noticed the volumes on the second bottoms where consistently weak.   Normally you want big big volume on the second floor, followed by a nice follow through, something that you saw earlier in January.  Right now, there’s just too much weakness to be recommending to get crazy long, but at the same time, its a bad place to be short, as I do expect the Vix to eventually get back to the high 30s; and just as we’ve seen the Dow fall quite hard, I wouldn’t be surprised to see a relief rally of epic proportions… one every blog will be writing about.

Right now, I am mostly on the side, cheering the bulls to do something soon.  If they don’t, stick your money in a CD account, or pay off some high % loans… at least you’re guaranteed a gain.

A hui ho!