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Into the bell, I bought a 3/4 position in $AAP, one of the best performing stocks, and best looking charts, since late April.
All trades are timestamped inside The PPT.
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TOTAL PORTFOLIO:
EQUITIES: 66%
CASH: 34%
Comments »
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With the exception of my core reader base, which consists of the most intelligent and disciplined traders on the web, most of the people I see out there in “Trader World” belong in a Chuck E. Cheese. This stock market game is chess, not some morning after Thanksgiving clearance sale, where you think it is perfectly acceptable to trample store workers to death to buy your LED TV for 80% off. Most of the people I see want what they want, and they want it NOW. If you provide analysis, and it does not immediately pan out, they act like Tony Soprano with low blood sugar, confronting you and calling you out to “keep you honest.”
Here is the real question, would you have the demeanor to sit at a live poker table with nine other people looking to take all of your money, and keep your cool when someone gets lucky on you and wins a $5,000, a $10,000 or a $20,000 pot? Because if you don’t, pal, you are in the wrong business. If you live and die with every trade, you are going to see more funerals than that gay guy in Six Feet Under.
Trading is NOT college football, and it is NOT an individual baseball game. Going undefeated or pitching a perfect game is not a realistic or constructive goal. Rather, trading is an entire baseball season. No baseball team will go undefeated over the course of at least 160 games per season, and no poker player will always win every hand. Losing is part of the game. Take it in stride, and move on.
Now, with all of that said, nothing has changed in my belief that we are set up for a nice rally into the end of August.
Also, I covered my 3/4 $ANV short position for a push. With The PPT suggesting a bottom is in, I can think of better things to do with my money than to short a gold stock.
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TOTAL PORTFOLIO:
EQUITIES: 60%
CASH: 40%
Comments »A couple of my astute readers correctly pointed out that $FCX had a notably weak session today. As you know, Freeport-McMoRan Copper & Gold Inc. has been one of my key broad market “tells” for quite some time, due to the fact that it is a well run, mega cap firm that deals in economically sensitive commodities.
Today, $FCX was down 4.70% on above average volume. Under normal conditions, I would consider this to be a prima facie case (on its face) of a bearish omen for the broad market. However, I am reticent to do so for a few reasons. For starters, today’s price actions brings the stock back the same area from which the stock broke out higher on heavy volume back in late July. Despite how scary today may have been for $FCX longs (I have no position), the fact that the July 21st gap (denoted on the daily chart below) was filled can be seen as a constructive sign of the stock backing and filling.
Moreover, the stock created another gap today, as you can see that today’s price action is completely below all of yesterday’s trading. As a general rule, the market tends to fill gaps (common gaps). Of course, there is the possibility that today marked a breakaway gap to the downside, and we will see the stock press lower. However, I believe all of the value players who supported $FCX throughout this summer in the low to mid $60 range will not give up so easily.
With the broad market registering oversold by many indicators, I am skeptical of blindly relying on $FCX as a tell in this situation.
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MARKET WRAP UP 08/24/10
The stock market’s downtrend continued today, as the S&P 500 opened lower to 1046, before somewhat stabilizing to close down 1.45% at 1051. Selling volume saw a slight uptick from the recent price action, and breadth was weak. The action in the bond and currency markets, combined with terrible housing data, was more than enough ammunition for the bears to press their bets into the closing bell to erase any hopes of a last minute rally. The bears showed their claws and are out for blood, as both the technicals and fundamentals are lined up in their favor. Moreover, the confidence of the bulls has eroded to the point where any attempts at rallies can only be seen intraday, and are laughable in their vigor.
Despite all of the above, I am positioned for a tradable rally. I have maintained for several months now that we are in an oscillating market, rather than a trending one. This market has rewarded traders who have faded the prevailing sentiment at each extreme. Just when the bulls thought we were going to breakout above 1130, it paid to move to cash or go short. Similarly, each time that the bears have pressed their bets below 1060, it was correct to scale out of shorts and/or deploy cash to the long side. Bear in mind that trying to time an oscillating market carries additional risk, as we saw in early July when 1040 quickly became 1010.
Nonetheless, as the updated and annotated daily chart of the S&P 500 illustrates below, if you believe we remain in a trading range, now is the time go cover shorts and go long.
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Most of the other index and sector charts that I update for you on a regular basis display similar patterns to the S&P after today. The bears are knocking on the lower end of the trading range, but the risk/reward profile favors a snapback rally. The lone exception is the emerging markets ETF, $EEM. These guys have been the leaders, and today saw a marginal breakdown. I will be monitoring this closely to see if there is any convincing follow through by the bears. Based on the doji gap down, as seen in the chart below, I am inclined to think it is a false breakdown.
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As a trader, it is important to distinguish between a short term trading call and a longer term view. I have very little doubt that we remain in a secular, multi-decade bear market that began in the year 2000. Moreover, we have been in a cyclically corrective phase since late April of this year. Come Labor Day, I am likely to be positioned much differently than I am now. Until that time, however, the stage is set for relief rally.
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[youtube:http://www.youtube.com/watch?v=FXKBUK94cC0 450 300]r Comments »[youtube:http://www.youtube.com/watch?v=ZJtGuMTTSzA&feature=fvw 450 300]r
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In addition to all of the quantitative analysis that it provides members, The PPT also offers an organized “User Notes” section, which The Fly and Jeremy purposely designed in such a way to avoid the mindless chatter that you see elsewhere. In order to make a comment, you must first click on a specific stock, index, or ETF first. This helps to focus the conversation amongst members during the precious hours of the trading day.
One such member, @jungleegirl, noted the nice action in $SYNA today. The chart, seen below, is the perfect situation to take a starter position now, and add on further confirmation of today’s bullish engulfing candle. After the steep downtrend, we saw a nice strong day of buying volume today, and a large green candle “engulfing” yesterday’s price action, illustrating the new found strength of the buyers. Accordingly, I did just that, and took a 1/2 long position in the final hour of trading.
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TOTAL PORTFOLIO:
EQUITIES: 66%
CASH: 34%
Comments »
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I made two trades:
All trades are timestamped inside The PPT.
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TOTAL PORTFOLIO:
EQUITIES: 62%
CASH: 38%
Comments »
