If you represent the portion of the crowd that is eager to start betting against the market here, know that tops are a process and not an event. There are two main things you want to see happen in the market first before taking a stab:
- Speed. There is always a big correlated sell effort that comes into the market before a range is established. On the last market bottom, this occurred on November 12th. The day might not stand out as easy on the chart, but everything I owned or watched lost 3-5% that day. The market rallied back over the next few weeks, but that following rally was the one to short.
- Divergences. Similar to how I show you to watch for bullish divergences at lows, use the opposite into rallies. As bearish divergences persist, start lightening the boat.
Part of me is conflicted in this whole market set-up. The market has taught people to buy blood, and sell quickly. The bulk of participants were conditioned on this last drop that this was a bear market, and we were going to fall even further. Very few people bought in Jan-Feb…and that is how prices break free from ranges. The moment one side of trade cries uncle and doesn’t step in to buy, the market inflicts its pain upon them. At some point it will suck you in.
Enough of that, I am going to be in and out this week for personal reasons. I picked up $YELP calls and am watching $P here as well. Things continue to fire on all cylinders here, so keep making hay while the sun is out.
More later,
OA
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Watching P as well … seems they will be getting access to lots of cars according to a contact at Nissan.
http://www.nissanusa.com/connect/features-app
Raising cash….taking profits. Sold out of FCX and SQ positions.
buying P and YELP!!??? woohoo, trash pickin’ time!
anyone looking at this dip in natty gas as a buying opp?
VIPS on the move!
Added to LABU, holding CTRP, bought ZG and tiny DUST.
Hi OA, thanks for the information above. Quick follow up question. In relation to speed, are there any indicators or types of market participation or sentiment that allows you to distinguish a move that proceeds a fall in the market vs. a move that flushes everyone out and turns out to be bullish? Thank you in advance for any guidance on this.
Volatility based indicators would be a start…ATR, Bollinger Bands, etc.
Ok that makes sense, thank you for the help as usual. It is always appreciated.
I’m with Kidstock, selling select positions:
Sold half my GILD from the high 70s. Leaving half in case this is a true rotation into Healthcare. Also have an equal amount now of PFE.
Sold small UWTI as I mentioned earlier. Friday’s high in /CL May has not been violated.
Made a regrettable buy around 1:30 in /NG. Timing is not right. I’ll look to buy lower Tuesay as UNG is rotating into the May contract.
Based on price action so far, expecting weak longs to be tested on Tuesday.
I have dry powder and want to add to WYNN, AMT, CSCMA,
GILD hasn’t been below 81 since June 2014
My apologies, I neglected to include that my cost basis was reduced to the high 70s due to profitable puts that I bought earlier this year. My buys earlier this year were 84.1724 & 83.76. Thanks for the response.
Feb 11th was the buy signal, there is no sell signal on the horizon.
Healthcare and small cap made me the most money today.
Thank me for the heads up on Friday.
Bidding for cheap calls into this morning’s panic….BAC CSCO TSLA NKE
Hey OA – how did you know to buy GOGO on Friday? I got out on Friday because to me it looked like the triangle broke down. Friday’s move to 11 served to broaden the range and make lower lows…. Thanks boss.
I wanted to buy a move lower in that stock once I saw it. Friday was perfect.
aversion play?
Or a low in the discouragement process.
Bot
BAC weekly 14’s @ .05
BAC next week’s 14.5’s @ .04
CSCO weekly 28.5’s @ .04
CSCO APR 30’s @ .03
NKE weekly 70’s @ .25
Bought QUNR.. Good risk reward. Stop below 35. Like ALXN. Sitting on trendline. Just can’t buy another Bio.