“Too much complacency.”
That is what me and Mac (chartswingtrader.com) were chatting about yesterday as the market punched in another 200 points before elections (http://ibankcoin.com/gioblog/?p=2220). “The spike down only tells me we are getting near overly complacent levels. Take partial profits, or start hedging some longs.” …Vix wins again. Here’s our chat yesterday:
Mac: Gio, Do you see volume totals still low overall for today? Not as low as yesterday’s putrid totals but well below average? They look low here via Telechart but it is always hard to tell intraday. All I see moving here are solars, coal, and oil stocks, at least on my watchlists. The strong stocks of the past week are pulling back or putting in reversals. I find that weird. I would agree therefore that things are possibly getting complacent here and the possibility of a reversal exists. That is, unless we are going to have a rally like August-October of 2007, where there was virtually no volume the whole time but stocks still went up. Hard to play those rallies though. I have a feeling that is what we may be in for.
Gio: I’m bullish on commodities in November, but the Vix this “low” is telling me to start taking profits or not enter new longs. A lot of low quality stocks are up on low volume.
Man, I remember that dumb rally from August-October! It really hurt the technicaltraders. It also led to THE selloff of the decade. I hope that doesn’t happen again.
I originally had Dow to +10k on this rally, but seeing how fast the Vix got crushed makes me think twice. People forget, that the reversal to the upside occurred when the Vix was north of 80. That’s almost 50% away in less than 2 weeks. sheez.
Pinoy (pinoytrader.blogspot.com) wants me to buy solars on a dip, but I’m like, “what dip?” We haven’t had one for about a week! Oh well, lets watch this market rip higher.
… after the spike down, the next day the Dow dropped almost -500 points, even though many people were bullish on the elections. Too many people wanted “green-energy” stocks as Obama was stomping the competition. We told you to fade. Look at [[spwra]] or even ReneSola Ltd. (ADR) [[sol]] or JA Solar Holdings Co., Ltd. (ADR) [[jaso]] . Case closed.
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Gio, take a look at the last line of my post from last night:
“One thing I feel certain of is that this is no time to let yourself become complacent.”
http://www.ibankcoin.com/woodshedderblog/index.php/2008/11/04/you-people-are-making-me-angry/
… wood, i read that venting post. i think the Bamboo’s very rare losing streak gave me confidence that its next pick was going to be a winner. so, i went and sold my longs.
nice work