Friday was an extremely weak day in the market. We had a true selling day on Friday across the board. Today is shaping up to be a strong day. Today is Monday. Today is the last day of the month. Consider this passage from trader Gary Smith:
"One of my more reliable momentum patterns over the years has been the Friday-to-Monday pattern. Stronger-than-average strength on a Friday is expected to be followed by more strength on Monday (or Tuesday if Monday is a trading holiday). Conversely, extremely weak price action on a Friday is expected to lead to more weakness on Monday. A Friday-to-Monday momentum break pattern occurs when the expected strength or weakness on Friday doesn't carry over to Monday. These weekend momentum break patterns are highly significant and indicative of a short-term trend change."
Source: Gary Smith, How I Trade for a Living, page 112.
If the market closes up today, then the momentum pattern has changed on a Monday following a weak Friday. Thus, I would change and revise my top target from 1294 to 1320. The volatility should increase between now and the end of February.
Have a good day!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Monday, January 31, 2011
Tuesday, January 25, 2011
Market Conditions
I normally don't like to blog during market hours because (1) the last hour of the trading day is the most important hour of the trading day and (2) the closing price is always in question until the close.
But I have some free time during lunch, so here goes....
The market's behavior is consistent with a developing top. The market dipped down to the 13-day moving average. Buyers came in to buy the dip. I was then looking for the market to rocket to new highs and to take out resistance @1291. Instead, the market stalled out @ 1291. Q: What does this retreat tell me? It tells me that resistance is beginning to matter more and more. In a raging Bull Market, resistance is cut through like butter. We are far from that condition now.
I think the market will power higher than 1291, however, it may or may not happen today. Even though I am bearish, I actually want the market to bounce higher above 1291 and 1296. Why? Because a higher high with a lower high in the Relative Strength Index (RSI) will set up a nice negative divergence that can be sold. As a rule of thumb, a negative divergence is a desirable set up and trading opportunity. It doesn't happen often but it is worth waiting for.
The time is now 12:37 in San Diego. The market will close in 23 minutes. The opening price was 1288.17. So, I want to see how the close correlates to the open. Will the close be higher, lower or the same level as the open? We have had a ten-point range day, so today will not be a narrow range seven (7) day.
Some days are days of opportunity. Today is just a day for watching the market and taking cues from the price action.
Later.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
But I have some free time during lunch, so here goes....
The market's behavior is consistent with a developing top. The market dipped down to the 13-day moving average. Buyers came in to buy the dip. I was then looking for the market to rocket to new highs and to take out resistance @1291. Instead, the market stalled out @ 1291. Q: What does this retreat tell me? It tells me that resistance is beginning to matter more and more. In a raging Bull Market, resistance is cut through like butter. We are far from that condition now.
I think the market will power higher than 1291, however, it may or may not happen today. Even though I am bearish, I actually want the market to bounce higher above 1291 and 1296. Why? Because a higher high with a lower high in the Relative Strength Index (RSI) will set up a nice negative divergence that can be sold. As a rule of thumb, a negative divergence is a desirable set up and trading opportunity. It doesn't happen often but it is worth waiting for.
The time is now 12:37 in San Diego. The market will close in 23 minutes. The opening price was 1288.17. So, I want to see how the close correlates to the open. Will the close be higher, lower or the same level as the open? We have had a ten-point range day, so today will not be a narrow range seven (7) day.
Some days are days of opportunity. Today is just a day for watching the market and taking cues from the price action.
Later.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Monday, January 24, 2011
Market Conditions
The S&P 500 Index opened today @ 1283.29. The low was made early in the day @ 1282.47. The market gradually drifted higher throughout the day before making a high @ 1291.93 and closing @ 1290.84. Today was a bullish day because the close was higher than the open. However, the volume was less than Friday's volume. I read less volume as a lesser commitment by institutions, funds, and wealthy individuals compared to Friday's price action.
What catches my eye about today's action is the Relative Strength Index indicator (RSI) on a daily basis. The RSI heading has dropped below the 70 overbought level and closed @ 67.81. The reading is heading higher towards 70. What I am looking for is a higher price action on the S&P 500 Index and a lower RSI reading then the last week's high. In other words, a reading higher than 1295 with a RSI reading below 70 would say to me that the market can be sold short. That's the setup.
We remain in a well-defined uptrend on a daily basis. The 13-day moving average is above the 50-day moving average. The 50-day moving average is above the 200-day moving average. Trend followers will "buy the dip" in anticipation of higher prices ahead. That strategy has worked since December 1. True believers in trend following will have bought Friday's dip in price down to the 13-day moving average.
In the next 1-3 days, I am looking for either (a) a new high @ 1300 or (b) a new dip to the 1274 level. The new high on a negative divergence with the RSI reading would be ideal. The new dip would just be a short-term buying opportunity until a new high is reached.
The scuttlebutt at clearstation.com is that there are alot of sell stop orders below the market @ at the 1250-1260 level. These people are looking to lock in profits. As a result, we have the conditions in place for a quick, sharp correction when the time comes. I view 1271 as key support on the S&P 500 Index.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
What catches my eye about today's action is the Relative Strength Index indicator (RSI) on a daily basis. The RSI heading has dropped below the 70 overbought level and closed @ 67.81. The reading is heading higher towards 70. What I am looking for is a higher price action on the S&P 500 Index and a lower RSI reading then the last week's high. In other words, a reading higher than 1295 with a RSI reading below 70 would say to me that the market can be sold short. That's the setup.
We remain in a well-defined uptrend on a daily basis. The 13-day moving average is above the 50-day moving average. The 50-day moving average is above the 200-day moving average. Trend followers will "buy the dip" in anticipation of higher prices ahead. That strategy has worked since December 1. True believers in trend following will have bought Friday's dip in price down to the 13-day moving average.
In the next 1-3 days, I am looking for either (a) a new high @ 1300 or (b) a new dip to the 1274 level. The new high on a negative divergence with the RSI reading would be ideal. The new dip would just be a short-term buying opportunity until a new high is reached.
The scuttlebutt at clearstation.com is that there are alot of sell stop orders below the market @ at the 1250-1260 level. These people are looking to lock in profits. As a result, we have the conditions in place for a quick, sharp correction when the time comes. I view 1271 as key support on the S&P 500 Index.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Wednesday, January 19, 2011
1294 - The Top
Yesterday, the S&P 500 Index closed @ 1295, one point above 1294.
Today, the market behaved as if the trend has changed to the down side.
Q: Why do I say that? First, the bull flag pattern has worked very well during this rally since December 1. The market would correct and then rally higher. But the corrections were always higher than the previous correction. This morning, I was observing the cash futures for the S&P 500. Another bull flag formed at about midnight with a low of 1290. If the uptrend had still remained in play, then the market should have bounced off of 1290 today. Instead, the market dropped through support @1290. This little behavior told me that the character of the market had changed. Second, there was support from Friday @ 1287. The market dropped through this support as well. Third, yesterday was a narrow range 7 day. In other words, Tuesday was the narrowest range day out of the previous seven days. Normally, a price expansion follows a narrow range 7 day. So, the market's behavior of ranging widely was to be expected following a narrow range day. Fourth, the 2011 Stock Almanac warned that this week in January stood a high probability of producing losses in the market. Finally, the market stopped right @ support @ 1278 before closing @ 1281.
Taken together, all of these events told me that the trend had changed early this morning before the market opened
So, if 1295 was the absolute top of this move from the July 1, 2010 bottom of 1010, what should happen next? This week should be a down week. Levels of support are @ 1278, 1259, 1242, 1225, 1207, 1191, and 1173. These support levels are key because they mean that buying pressure will come to slow the market's drop before the down trend renews itself. Notice how we go back in time when the trend has changed to down. Unfortunately, many longs will try to convince themselves that the market is still advancing higher. They will continue to buy the dips in the market because that strategy has worked since December 1.
However, the character of the market has now changed. I am 100% in the G Fund and have been since 1240. We should see 1240 again real soon. Now is a good time to sell, although yesterday and last week were better times.
Looking ahead, the next stop is 1259. I would not be surprised if the market made a low @ 1259 tomorrow. Notice how the bullish sentiment will begin to change over the coming days.
Did we have a true selling day today? Yes, we did. Remember that true selling days occur when at least three indexes drop by 1% or more. This rough rule of thumb separates dips to be bought (buying opportunity)from times to sell and get out. The following indexes were down by more than 1% today at the close: Nasdaq, 1.46%; NYSE, 1.05%; S&P 500 Index, 1.01%; NDX, 1.09%; Russell 2000, 2.56%. Yes, today was a true selling day.
I don't know how long it will take for this correction to play itself out. We could either see three or five waves down. I am waiting for the 1173 zone as a good buying opportunity. By buying at this level, I can ensure that we buy low and are in a good position to outperform the S&P 500 Index this year.
I did not blog on the market yesterday because I was home sick with a bad cold.
In a month, it will be nice to look back and say that the 1294 zone was the top and that we nailed it. We just have to see what develops. I remain biased towards May as a good buy time for 2011.
Thought for the Day: "First acquire patience and perseverance, then make up your mind what else you want, and you will be almost sure to get it." --Napoleon Hill, The Law of Success in Sixteen Lessons (Volume 2), page 122
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Today, the market behaved as if the trend has changed to the down side.
Q: Why do I say that? First, the bull flag pattern has worked very well during this rally since December 1. The market would correct and then rally higher. But the corrections were always higher than the previous correction. This morning, I was observing the cash futures for the S&P 500. Another bull flag formed at about midnight with a low of 1290. If the uptrend had still remained in play, then the market should have bounced off of 1290 today. Instead, the market dropped through support @1290. This little behavior told me that the character of the market had changed. Second, there was support from Friday @ 1287. The market dropped through this support as well. Third, yesterday was a narrow range 7 day. In other words, Tuesday was the narrowest range day out of the previous seven days. Normally, a price expansion follows a narrow range 7 day. So, the market's behavior of ranging widely was to be expected following a narrow range day. Fourth, the 2011 Stock Almanac warned that this week in January stood a high probability of producing losses in the market. Finally, the market stopped right @ support @ 1278 before closing @ 1281.
Taken together, all of these events told me that the trend had changed early this morning before the market opened
So, if 1295 was the absolute top of this move from the July 1, 2010 bottom of 1010, what should happen next? This week should be a down week. Levels of support are @ 1278, 1259, 1242, 1225, 1207, 1191, and 1173. These support levels are key because they mean that buying pressure will come to slow the market's drop before the down trend renews itself. Notice how we go back in time when the trend has changed to down. Unfortunately, many longs will try to convince themselves that the market is still advancing higher. They will continue to buy the dips in the market because that strategy has worked since December 1.
However, the character of the market has now changed. I am 100% in the G Fund and have been since 1240. We should see 1240 again real soon. Now is a good time to sell, although yesterday and last week were better times.
Looking ahead, the next stop is 1259. I would not be surprised if the market made a low @ 1259 tomorrow. Notice how the bullish sentiment will begin to change over the coming days.
Did we have a true selling day today? Yes, we did. Remember that true selling days occur when at least three indexes drop by 1% or more. This rough rule of thumb separates dips to be bought (buying opportunity)from times to sell and get out. The following indexes were down by more than 1% today at the close: Nasdaq, 1.46%; NYSE, 1.05%; S&P 500 Index, 1.01%; NDX, 1.09%; Russell 2000, 2.56%. Yes, today was a true selling day.
I don't know how long it will take for this correction to play itself out. We could either see three or five waves down. I am waiting for the 1173 zone as a good buying opportunity. By buying at this level, I can ensure that we buy low and are in a good position to outperform the S&P 500 Index this year.
I did not blog on the market yesterday because I was home sick with a bad cold.
In a month, it will be nice to look back and say that the 1294 zone was the top and that we nailed it. We just have to see what develops. I remain biased towards May as a good buy time for 2011.
Thought for the Day: "First acquire patience and perseverance, then make up your mind what else you want, and you will be almost sure to get it." --Napoleon Hill, The Law of Success in Sixteen Lessons (Volume 2), page 122
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Sunday, January 16, 2011
1294 Then 1319?
On Friday, the market closed @ 1293. We've got about 2 more weeks in this final fifth wave up. When I look at a chart of the S&P 500 Index, I see five (5) clear waves up since July 1, 2010. Wave I up was from 1010 (July 1, 2010) to 1129 (August 9, 2010). Wave II down was from 1129 (August 9, 2010) to 1039 (August 27, 2010). Wave III up was from 1039 (August 27, 2010) to 1227 (November 5, 2010). Wave IV down was from 1227 to 1172 (November 16, 2010). Wave V started at 1172 (November 16, 2010) and is now entering its third month.
Levels of resistance are at 1294, 1299, 1310, and 1319.
The higher we go, the greater and more dramatic will be the drop.
That's my thinking. Certainly, Wave V is the final leg up, according to Elliott Wave theory. I'm waiting for the correction. The violation of 1286 as support will signal and confirm a change in trend.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Levels of resistance are at 1294, 1299, 1310, and 1319.
The higher we go, the greater and more dramatic will be the drop.
That's my thinking. Certainly, Wave V is the final leg up, according to Elliott Wave theory. I'm waiting for the correction. The violation of 1286 as support will signal and confirm a change in trend.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Friday, January 14, 2011
Sticking by 1294
The S&P 500 Index closed @ 1293. We are in a selling zone. Is it possible that the market could print a higher number on Tuesday? Yes. Maybe, 1297. What about 1300? My point is that we are in a selling zone right now. Now is an outstanding time to sell, not to buy. I would not be a buyer until the S&P 500 Index returns to the 1172 area. That is my position tonight. I also think that May and June will present a better buy opportunity for the year than January.
Next week should be a down week. When I say a down week, I mean that the week should open at a higher price than the closing price for the week next Friday. If I am wrong, then I am wrong. We will see. Keep an eye on the opening price on Tuesday and the closing price next Friday. The trend will have changed when the closing price falls below 1281, today's low.
Have a good weekend!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Next week should be a down week. When I say a down week, I mean that the week should open at a higher price than the closing price for the week next Friday. If I am wrong, then I am wrong. We will see. Keep an eye on the opening price on Tuesday and the closing price next Friday. The trend will have changed when the closing price falls below 1281, today's low.
Have a good weekend!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Wednesday, January 12, 2011
1294
We are creeping towards a top. We may reach the top this Friday. 1294 appears to be the final resistance. Once a top is reached, a correction should follow. Ideally, a buy should be placed once the correction is complete. Normally, the 50-day moving average provides support in an uptrend. Then, a bounce should follow. Then, a lower low should complete the correction. The price action since July 1, 2010 suggests that the lower low should be around 1197 - 1200. I would be a buyer at those levels.
It goes without saying that the market is severely overbought. There are way too many bulls out there for new buy positions to be initiated. I'm watching and waiting right now, just watching and waiting.
It is a hard thing to do but the best time to buy is not at the end of a rally. It is at the end of a correction. But I'm probably repeating myself by now.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
It goes without saying that the market is severely overbought. There are way too many bulls out there for new buy positions to be initiated. I'm watching and waiting right now, just watching and waiting.
It is a hard thing to do but the best time to buy is not at the end of a rally. It is at the end of a correction. But I'm probably repeating myself by now.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Monday, January 10, 2011
Watching Paint Dry
There was nothing much going on in the market today. We had a mildly ranging day with a low of 1262.18. If that low is breached, then we should see some action to the down side. Arguably, the S&P 500 Index could be tracing out a descending triangle pattern since Thursday's high of 1278. The support level for the pattern would be 1262. We'll just have to see what happens. In the past when I have been bored by market action, things picked up within a day or two. Maybe, we will see something more definitive tomorrow.
Did you know that over 90% of the gains in 2010 were made on just 12 trading days? I think that is a fascinating statistic. It pays to be positioned long at the end of the month. Maybe, that's why August 25, 2010 was such a great entry point.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Did you know that over 90% of the gains in 2010 were made on just 12 trading days? I think that is a fascinating statistic. It pays to be positioned long at the end of the month. Maybe, that's why August 25, 2010 was such a great entry point.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Sunday, January 9, 2011
A Sad Day for America
I am sure that everyone shares my sad feelings about the events this weekend. As a former congressional staffer, my heart goes out to the Congresswoman, her family, and the family of the staffer Greg Zimmerman. Out of respect, I will not blog about the market today.
Our prayers are with the victims of this horrific event.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Our prayers are with the victims of this horrific event.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Friday, January 7, 2011
Market Recovery by the Close - 1271.50
I returned from lunch and saw that the market had recovered somewhat. The close was 1271.50 on the S&P 500 Index which makes for a 0.18% down day. This is not a 1 % true selling day, so our watch continues. The open was 1274.41. The high was 1276.83. The low was 1261.10. And, of course, the close was 1271.50. It was a bearish day. The close was lower than the open. The RSI reading was 70.26, overbought status again. The 13-day moving average was clipped at 1263.50. That's a red flag. The 13-day moving average was last clipped on a down day in early November. The day's volume was the highest this month. And it was higher volume on a down day than the previous day's volume. William O'Neil has written that these days are distributive in nature. In other words, institutions are distributing shares to the retail public. The MACD lines flipped again and are now positive. Finally, the MACD histogram turned positive.
All in all, we are topping. Topping is a process. We were saved from a 1% true selling day, however, I would not be buying or adding at these levels. A correction is in order.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
All in all, we are topping. Topping is a process. We were saved from a 1% true selling day, however, I would not be buying or adding at these levels. A correction is in order.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Club Members - A 1 Percent True Selling Day
One of the rules that I use for calling trend reversal is Gary Smith's 1 percent true selling day.
What do I mean?
According to Smith, "A 1 percent true selling day occurs after a period of rising prices of at least two weeks in which the Dow, S&P, Nasdaq 100, and Russell 2000 indexes all close down 1 percent or more on the same trading day. These types of days often are trend busters and can be harbingers of serious price declines ahead. I use a little leeway, however, in defining such selling days. For instance, if three of the four indexes are sharply lower--say, down 1.5 percent to 2 percent or more--but one is down only .75 percent to 1 percent, then I interpret that as a true selling day. However, my limit is .75 percent." Gary Smith, How I Trade for a Living, pages 112-113.
My personal style is to look for any three indexes to be down more than 1% on the same day.
As I type, the Nasdaq is down 1.20%, the NYSE is down 1.00%, and the Russell 2000 is down 1.76%. And it is a Friday.
I'm calling today a 1 percent true selling day.
Bad news is sold in a Bear Market.
Later.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
What do I mean?
According to Smith, "A 1 percent true selling day occurs after a period of rising prices of at least two weeks in which the Dow, S&P, Nasdaq 100, and Russell 2000 indexes all close down 1 percent or more on the same trading day. These types of days often are trend busters and can be harbingers of serious price declines ahead. I use a little leeway, however, in defining such selling days. For instance, if three of the four indexes are sharply lower--say, down 1.5 percent to 2 percent or more--but one is down only .75 percent to 1 percent, then I interpret that as a true selling day. However, my limit is .75 percent." Gary Smith, How I Trade for a Living, pages 112-113.
My personal style is to look for any three indexes to be down more than 1% on the same day.
As I type, the Nasdaq is down 1.20%, the NYSE is down 1.00%, and the Russell 2000 is down 1.76%. And it is a Friday.
I'm calling today a 1 percent true selling day.
Bad news is sold in a Bear Market.
Later.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Breaking News - S&P 500 Index @ 1267.25
It is Friday. We are seeing selling in the market.
The selling is noteworthy for five reasons. First, we are seeing selling on a Friday. This selling could set up an inflection point in the market if the selling continues on Monday. Second, the market's reaction to the "good" jobs report is bearish. This tells you that the character of the market has changed. The market's reaction is your key to the future trend, not whether the news is objectively good or bad. Third, we have a crossover on the MACD lines on a daily chart. What do I mean? Some investors and traders will tie their decisions to whether the black or the red line is on top. If the black MACD line is above the red MACD line, then many market participants will take that as a sign to buy. They will believe that the trend is up. When the red MACD line above the black MACD line, then they will take that as a sign to sell. They will believe that the trend is down. Its the perception of market participants in the market that will move the markets. Right now as I type, the black line is 14.765. The red line is 14.975. The red line is above the black line. An unknown number of market participants are now selling the market. They will perceive that the trend has changed to the downside. Fourth, the MACD histogram on a daily chart has turned negative. When the histogram is positive, the market momentum is up. When the histogram turns down, the market momentum is down. Right now, the MACD histogram reading is -0.192. That is a negative reading. That means that the market momentum has now turned down. The flow of the market is now down, not up. Finally, the Relative Strength Index (RSI) reading on the daily chart has dropped out of overbought down to 66.61. When an overbought RSI reading drops down from above the 70 overbought line and goes below 70, it can be confirmation of a change in trend.
The trend is your friend. If I were long, I would sell. If I were aggressive, I would short the market for the next two weeks. [Full disclosure: I am short the Shanghai Index since Tuesday.] If I were still in the C Fund, I would sell out. I am in the G Fund, so I'm content to watch the correction play itself out. Remember that our Club's goal is to beat the S&P 500 Index this year. The best way to do that is to wait for the market to drop below 1257 before re-entering the C Fund. We want to enter the market when prices are low in a correction.
I feel strongly that we saw the S&P 500 Index top out this week. Stay tuned.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
The selling is noteworthy for five reasons. First, we are seeing selling on a Friday. This selling could set up an inflection point in the market if the selling continues on Monday. Second, the market's reaction to the "good" jobs report is bearish. This tells you that the character of the market has changed. The market's reaction is your key to the future trend, not whether the news is objectively good or bad. Third, we have a crossover on the MACD lines on a daily chart. What do I mean? Some investors and traders will tie their decisions to whether the black or the red line is on top. If the black MACD line is above the red MACD line, then many market participants will take that as a sign to buy. They will believe that the trend is up. When the red MACD line above the black MACD line, then they will take that as a sign to sell. They will believe that the trend is down. Its the perception of market participants in the market that will move the markets. Right now as I type, the black line is 14.765. The red line is 14.975. The red line is above the black line. An unknown number of market participants are now selling the market. They will perceive that the trend has changed to the downside. Fourth, the MACD histogram on a daily chart has turned negative. When the histogram is positive, the market momentum is up. When the histogram turns down, the market momentum is down. Right now, the MACD histogram reading is -0.192. That is a negative reading. That means that the market momentum has now turned down. The flow of the market is now down, not up. Finally, the Relative Strength Index (RSI) reading on the daily chart has dropped out of overbought down to 66.61. When an overbought RSI reading drops down from above the 70 overbought line and goes below 70, it can be confirmation of a change in trend.
The trend is your friend. If I were long, I would sell. If I were aggressive, I would short the market for the next two weeks. [Full disclosure: I am short the Shanghai Index since Tuesday.] If I were still in the C Fund, I would sell out. I am in the G Fund, so I'm content to watch the correction play itself out. Remember that our Club's goal is to beat the S&P 500 Index this year. The best way to do that is to wait for the market to drop below 1257 before re-entering the C Fund. We want to enter the market when prices are low in a correction.
I feel strongly that we saw the S&P 500 Index top out this week. Stay tuned.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
The Importance of Fridays
I wanted to follow up on the importance of Fridays.
According to the Stock Trader's Almanac of 2011, "Fridays and Mondays are the most important days of the week. Friday is the day for squaring positions--trimming longs or covering shorts before taking off for the weekend. Traders want to limit their exposure (particularly to stocks that are not acting well) since there could be unfavorable developments before trading resumes two or more days later...For over 30 years, a down Friday followed by a down Monday has frequently corresponded with important market inflection points that exhibit a clearly negative bias, often coinciding with market tops and, on a few climactic occasions, such as in October 2002 and March 2009, near major market bottoms." page 52
When it comes to investing and trading, the day of the week matters. Take advantage of this information.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
According to the Stock Trader's Almanac of 2011, "Fridays and Mondays are the most important days of the week. Friday is the day for squaring positions--trimming longs or covering shorts before taking off for the weekend. Traders want to limit their exposure (particularly to stocks that are not acting well) since there could be unfavorable developments before trading resumes two or more days later...For over 30 years, a down Friday followed by a down Monday has frequently corresponded with important market inflection points that exhibit a clearly negative bias, often coinciding with market tops and, on a few climactic occasions, such as in October 2002 and March 2009, near major market bottoms." page 52
When it comes to investing and trading, the day of the week matters. Take advantage of this information.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Thursday, January 6, 2011
The Market is Not Behaving as it Should
When an inside day breaks out to the upside, the target should be reached fairly quickly. There is no slow motion move to the projected price target. As you know, the inside day breakout should have taken us to 1292 on the S&P 500 Index today. That did not happen. Instead, we got a meandering market. In fact, the day was technically a down day on higher volume than yesterday. This is bearish action.
Because of today's price action, I am revising my price target. I think 1279 is a more likely top for this move than 1292. Thus far in January, we have had two down days where the volume was greater than the previous day. Some analysts might describe this price action as "distributive." That just means that institutions were selling to the retail public as opposed to accumulating shares. William O'Neil has written about discerning the tea leaves of distribution from volume on down days.
Tomorrow is Friday. The jobs employment report comes out tomorrow. The expectations are high. Observe how the market reacts to the news, not whether the news is good or bad. The market's reaction will give a hint of whether the Bull Market remains intact or not.
The prominent trader, Larry Williams, is just a walking library of wisdom. I noticed today that he determined Fridays were the best day of the week to sell S&P 500 futures. He also noted that Fridays can offer a very intriguing opportunity. If the market opens higher on Friday and then sells off to the previous day's high, then the market should be sold. This is a simple pattern that has a high probability of a pay off. So, watch the market tomorrow and observe whether the market opens higher or not. If the market opens higher than today's close at 1273.85, see if the market sells off during the day to today's high price of 1278.17. If this pattern holds up, then tomorrow may be a good selling day.
We may be closer to the correction than I thought.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Because of today's price action, I am revising my price target. I think 1279 is a more likely top for this move than 1292. Thus far in January, we have had two down days where the volume was greater than the previous day. Some analysts might describe this price action as "distributive." That just means that institutions were selling to the retail public as opposed to accumulating shares. William O'Neil has written about discerning the tea leaves of distribution from volume on down days.
Tomorrow is Friday. The jobs employment report comes out tomorrow. The expectations are high. Observe how the market reacts to the news, not whether the news is good or bad. The market's reaction will give a hint of whether the Bull Market remains intact or not.
The prominent trader, Larry Williams, is just a walking library of wisdom. I noticed today that he determined Fridays were the best day of the week to sell S&P 500 futures. He also noted that Fridays can offer a very intriguing opportunity. If the market opens higher on Friday and then sells off to the previous day's high, then the market should be sold. This is a simple pattern that has a high probability of a pay off. So, watch the market tomorrow and observe whether the market opens higher or not. If the market opens higher than today's close at 1273.85, see if the market sells off during the day to today's high price of 1278.17. If this pattern holds up, then tomorrow may be a good selling day.
We may be closer to the correction than I thought.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Follow the Commercials
One of the best traders is Larry Williams. I was listening to a You Tube video yesterday by Larry Williams and was reminded that it pays to follow the Commercials over the long run. Commercials are institutions in the business of buying and selling stocks, futures, commodities,equities,and options. Commercials are often early but they are usually right about long-term market direction. If given a choice, it is a better bet to side with commercials against the retail public.
Q: What are the commercials doing right?
Google "Fin Viz." You should pull up FINVIZ.com. Double-click on Finviz.com. You should see the homepage. There is a chart of the Dow, Nasdaq, and the S&P on the home page. There is a blue tape across the top of the screen that reads "Home News Screener Maps Groups Portfolio Insider Futures Forex Collorborate Store." Double-click on "Futures."
You will now see rows and rows of quotes for various futures and commodities.
The first row is titled "Indicies." The first future in this first row is DJIA. The second future in this future row is S&P 500. Double-click on "S&P 500."
You will first see a thirteen-month chart for the S&P 500. Below this daily chart is an important Commitment of Traders (COT)chart for the S&P 500 Index.
The position of Commercial Hedgers is in green.
Review the entire graph of the positioning of Commercials from December 2009 to the present. See how the green line moves up and down over time. When the Commercials are increasingly bearish on the market, they close out their positions. The green line drops. You will see that the green line dropped in November and December of 2009. The Commercials were becoming bearish on the market.
Now, the Commercials control billions of dollars. They are the Big Whale. They cannot easily move in and out of positions. So, they scale in and scale out in advance of market turns. They tend to be early, and right, about the long-term direction of the market.
The market went up in December and into the first half of January.
The market topped during the January 14-19 time period. You can barely see it but the green line flat-lined during this week. The retail public was at their maximum bullishness during this week.These two conditions led to a 110 point correction in the S&P 500 Index over three weeks into February 5.
Q: Where are we at today in terms of this setup? Well, the green line dropped alot from August into December. Commercials were selling into the rally. In December, the green line hooked upwards and has now flat-lined. Check. The retail public is at a record level of bullishness. Check.
These two conditions suggest to me that we are now topping. The next big money will be a correction, comparable to the January 19 - February 5, 2010 time frame. So, I am not excited about the market right now. The Commercials are not excited about the market.
Look to the right side of the chart. Those numbers reflect the total volume of Commercial interest, be it positive or negative. Right now, the Commercial interest is about negative 40,000. That means the Commercials are not long-term bullish on the market. If the Commercials are not long-term bullish on the market, then I am not long-term bullish on the market. Certainly, I'm not going to be 100% in the C Fund.
But I do think we will see a fine buying opportunity come May.
Have a good day. And keep an eye out for a possible trend reversal. The Commercials are not positioned for a bullish run at the moment. And they have more money than you or me.
Later.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Q: What are the commercials doing right?
Google "Fin Viz." You should pull up FINVIZ.com. Double-click on Finviz.com. You should see the homepage. There is a chart of the Dow, Nasdaq, and the S&P on the home page. There is a blue tape across the top of the screen that reads "Home News Screener Maps Groups Portfolio Insider Futures Forex Collorborate Store." Double-click on "Futures."
You will now see rows and rows of quotes for various futures and commodities.
The first row is titled "Indicies." The first future in this first row is DJIA. The second future in this future row is S&P 500. Double-click on "S&P 500."
You will first see a thirteen-month chart for the S&P 500. Below this daily chart is an important Commitment of Traders (COT)chart for the S&P 500 Index.
The position of Commercial Hedgers is in green.
Review the entire graph of the positioning of Commercials from December 2009 to the present. See how the green line moves up and down over time. When the Commercials are increasingly bearish on the market, they close out their positions. The green line drops. You will see that the green line dropped in November and December of 2009. The Commercials were becoming bearish on the market.
Now, the Commercials control billions of dollars. They are the Big Whale. They cannot easily move in and out of positions. So, they scale in and scale out in advance of market turns. They tend to be early, and right, about the long-term direction of the market.
The market went up in December and into the first half of January.
The market topped during the January 14-19 time period. You can barely see it but the green line flat-lined during this week. The retail public was at their maximum bullishness during this week.These two conditions led to a 110 point correction in the S&P 500 Index over three weeks into February 5.
Q: Where are we at today in terms of this setup? Well, the green line dropped alot from August into December. Commercials were selling into the rally. In December, the green line hooked upwards and has now flat-lined. Check. The retail public is at a record level of bullishness. Check.
These two conditions suggest to me that we are now topping. The next big money will be a correction, comparable to the January 19 - February 5, 2010 time frame. So, I am not excited about the market right now. The Commercials are not excited about the market.
Look to the right side of the chart. Those numbers reflect the total volume of Commercial interest, be it positive or negative. Right now, the Commercial interest is about negative 40,000. That means the Commercials are not long-term bullish on the market. If the Commercials are not long-term bullish on the market, then I am not long-term bullish on the market. Certainly, I'm not going to be 100% in the C Fund.
But I do think we will see a fine buying opportunity come May.
Have a good day. And keep an eye out for a possible trend reversal. The Commercials are not positioned for a bullish run at the moment. And they have more money than you or me.
Later.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Wednesday, January 5, 2011
I'm Bullish, Then Bearish
The inside day resolved itself to the up side. When the S&P 500 Index hit its high of 1277.63 today, I knew that 1292 was the next and probably final stop for this Bull Run since July 1, 2010. So, I'm bullish on the market until the S&P 500 hits 1292. A correction should follow 1292. Then, I'm a raging bear. When the correction is complete, it will then be a good time to buy.
The way to beat the S&P 500 Index is to wait patiently for corrections. Ideally, we want to enter the C Fund when the Index falls below 1257. If we buy when the market is making fresh, new highs, we stand the risk of having to patiently wait out corrections.
If I had to call a date for 1292, my odds on favorite would be tomorrow, January 6, 2011. I will be looking for a trend reversal tomorrow.
The open for today was 1268.78. The low was 1265.36. The high was 1277.63. The close was 1276.56. The close was very bullish because the market opened low and closed near the high of the day. That is a bullish development and portends higher prices tomorrow. 1277 is significant resistance and, in my opinion, the next to last significant resistance before 1294. Our high today was right at 1277 resistance. Given the close one point below 1277 resistance, the probabilities suggest that tomorrow will see the Index clear 1277.
The 1289 to 1294 zone is a selling zone. Let's see how the market reacts in this area tomorrow.
Q: Do I think that the release of the employment report on Friday makes a difference? No. I am a strong believer in technical analysis and Elliott Wave Theory. I think that the good, the bad, and the ugly about the employment report has already been priced into the market. What will matter is the market's reaction to the news on Friday, not the news itself. Remember that if the trend changes, even a good employment report will be ignored and discounted in a Bear Market/Down Trend.
All the best,
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
The way to beat the S&P 500 Index is to wait patiently for corrections. Ideally, we want to enter the C Fund when the Index falls below 1257. If we buy when the market is making fresh, new highs, we stand the risk of having to patiently wait out corrections.
If I had to call a date for 1292, my odds on favorite would be tomorrow, January 6, 2011. I will be looking for a trend reversal tomorrow.
The open for today was 1268.78. The low was 1265.36. The high was 1277.63. The close was 1276.56. The close was very bullish because the market opened low and closed near the high of the day. That is a bullish development and portends higher prices tomorrow. 1277 is significant resistance and, in my opinion, the next to last significant resistance before 1294. Our high today was right at 1277 resistance. Given the close one point below 1277 resistance, the probabilities suggest that tomorrow will see the Index clear 1277.
The 1289 to 1294 zone is a selling zone. Let's see how the market reacts in this area tomorrow.
Q: Do I think that the release of the employment report on Friday makes a difference? No. I am a strong believer in technical analysis and Elliott Wave Theory. I think that the good, the bad, and the ugly about the employment report has already been priced into the market. What will matter is the market's reaction to the news on Friday, not the news itself. Remember that if the trend changes, even a good employment report will be ignored and discounted in a Bear Market/Down Trend.
All the best,
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
European Markets Are Down
The DAX (German Stock Market) is down 1.70%. The CAC (French Stock Market) is down 1.37%. I use a 1% down day as a true selling day indicator. For example, if the market is down less than 1%, then a down day is a buying opportunity if the trend is up. However, if three out of four major indicies are down 1% or more, then I view this circumstance as a change in trend. It is best to step aside for the moment. Waves of selling overseas have been known to impact U.S. markets.
Also, the Santa Claus rally officially ends on the second trading day in January, according to the 2011 Stock Trader's Almanac. So, today may represent an opportunity for selling to enter the market.
Yesterday, the bullish sentiment reached an extreme only seen twice since 2007. Clearly, we should not be shocked by some selling today.
And then there is the inside day indicator. While I thought we might go higher to 1292, the explosive price action will be to the down side if we breach 1257, Monday's low, on the S&P 500 Index. The immediate target to the downside is 1239 (1257 - 18 = 1239).
The Russell 2000 Index (Small-Cap) was down more than 1% yesterday. Perhaps, the Russell was sending us an early warning sign of selling in the marketplace.
We will have to see how the day develops.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Also, the Santa Claus rally officially ends on the second trading day in January, according to the 2011 Stock Trader's Almanac. So, today may represent an opportunity for selling to enter the market.
Yesterday, the bullish sentiment reached an extreme only seen twice since 2007. Clearly, we should not be shocked by some selling today.
And then there is the inside day indicator. While I thought we might go higher to 1292, the explosive price action will be to the down side if we breach 1257, Monday's low, on the S&P 500 Index. The immediate target to the downside is 1239 (1257 - 18 = 1239).
The Russell 2000 Index (Small-Cap) was down more than 1% yesterday. Perhaps, the Russell was sending us an early warning sign of selling in the marketplace.
We will have to see how the day develops.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Tuesday, January 4, 2011
An Inside Day
Today was an inside day.
Inside days are found when the day's trading range is less than the previous day. Yesterday, the S&P 500 Index opened @ 1257.62. That was the low for the day. The high was 1276.17 and the close was 1271.87. So, yesterday's trading range was between 1257.62 and 1276.17. That's 18.55 points.
Today, the Index opened @ 1272.95. The high was 1274.12. The low was 1262.66. The close was 1270.20. Notice how the entire trading range today was contained within the range of yesterday's trading range. This condition suggests that today was a day of indecision in the market. It also gives us a hint as to what the future may hold. Usually, savvy traders will presume that an explosive price action is on the horizon. Now, we don't know whether the price action will be up or down. We just know that today's indecision will be resolved in an explosive fashion.
I think that we will go higher within the next day or two. Resistance lies @ 1292. 1292 is important and substantial resistance for several reasons. First, the inside day breakout should lead to price action ending @ 1292 (1274 + 18 = 1292). Second, the five-wave Elliott Wave in play since the July 1, 2010 bottom targets the 1292 area as a top. Third, I believe that the powers that be that utilize supercomputers have programmed this area for selling. See my earlier posting on "If I Were A Supercomputer."
For these reasons, I believe that 1292 is in our immediate future this week. And 1292 should prove to be a top leading to a tradeable correction.
***********
Macro Thinking
While this blog is for TSP investing, I suspect that many readers have accounts outside of TSP. I believe that precious metals, silver, gold, commodities, cash and bonds will offer superior opportunities for the rest of this decade. We are in an economic winter where alot of debt has to be wrung out of the system. If the Federal Reserve continues to print money, then their printing of money will simply devalue the U.S. Dollar and increase the value of hard assets that cannot be debased like cotton, cooper, and rare earth elements.
Consider that the S&P 500 Index was up 12.8% for the year while gold was up 35%, cotton was up 90%, and some rare earth elements were up over 1,000% for the year. So, give some consideration to hard assets as this decade progresses. Ian Gordon is an investment guy that I follow. He was urging readers to buy gold back in 2000 and he has been dead on right for the past 10 years.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Inside days are found when the day's trading range is less than the previous day. Yesterday, the S&P 500 Index opened @ 1257.62. That was the low for the day. The high was 1276.17 and the close was 1271.87. So, yesterday's trading range was between 1257.62 and 1276.17. That's 18.55 points.
Today, the Index opened @ 1272.95. The high was 1274.12. The low was 1262.66. The close was 1270.20. Notice how the entire trading range today was contained within the range of yesterday's trading range. This condition suggests that today was a day of indecision in the market. It also gives us a hint as to what the future may hold. Usually, savvy traders will presume that an explosive price action is on the horizon. Now, we don't know whether the price action will be up or down. We just know that today's indecision will be resolved in an explosive fashion.
I think that we will go higher within the next day or two. Resistance lies @ 1292. 1292 is important and substantial resistance for several reasons. First, the inside day breakout should lead to price action ending @ 1292 (1274 + 18 = 1292). Second, the five-wave Elliott Wave in play since the July 1, 2010 bottom targets the 1292 area as a top. Third, I believe that the powers that be that utilize supercomputers have programmed this area for selling. See my earlier posting on "If I Were A Supercomputer."
For these reasons, I believe that 1292 is in our immediate future this week. And 1292 should prove to be a top leading to a tradeable correction.
***********
Macro Thinking
While this blog is for TSP investing, I suspect that many readers have accounts outside of TSP. I believe that precious metals, silver, gold, commodities, cash and bonds will offer superior opportunities for the rest of this decade. We are in an economic winter where alot of debt has to be wrung out of the system. If the Federal Reserve continues to print money, then their printing of money will simply devalue the U.S. Dollar and increase the value of hard assets that cannot be debased like cotton, cooper, and rare earth elements.
Consider that the S&P 500 Index was up 12.8% for the year while gold was up 35%, cotton was up 90%, and some rare earth elements were up over 1,000% for the year. So, give some consideration to hard assets as this decade progresses. Ian Gordon is an investment guy that I follow. He was urging readers to buy gold back in 2000 and he has been dead on right for the past 10 years.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Sunday, January 2, 2011
The Michael Burry Story - Part II
A Contrarian by Nature
Burry was a contrarian. He sized up value and had no hesitation in going against popular sentiment. He typically bought stocks on the way down that would go up ten-fold. Not many investors can play this game well.
Contrarians are often early. Burry was early in spotting the housing bubble. In May 2003, Burry wrote "I am extremely bearish, and feel the consequences could very easily be a 50% drop in residential real estate in the U.S...A large portion of current [housing] demand at current prices would disappear if only people became concerned that prices weren't rising." Michael Lewis, The Big Short: Inside the Doomsday Machine, page 47.
What I find interesting is that Burry felt a sense of urgency even as most professionals continued to believe in the Housing Bull Market. In early 2005, Burry felt he had to place his bet now. Id. Jim Rogers has talked about seeing a new trend before the market sees the change in trend. Anticipating before the crowd is the best way to make money, however, it is also a lonely path. Being ahead of the herd isn't fun at times.
On May 19, 2005, Burry did his first subprime mortgage deals. He bought $60 million in credit default swaps from Deutsche Bank. Deutsche Bank seemingly had no interest in the mortgage backed securities Burry had bet against. Then, Burry bought $5 million in credit default swaps from Bank of America. Then, he executed a $100 million deal with Goldman Sachs. By July 2005, Burry owned $750 million in credit default swaps on subprime mortgage bonds. By October 2005, Burry's bet against sub-prime mortgages approached $1 billion.
I began this blog with the post "Opportunity is a Powerful Force." I cannot improve upon Burry's eloquence about the power of opportunity:
Markets erred when they gave America Online the currency to buy
Time Warner. They erred when they bet against George Soros and for the British pound. And they are erring right now by continuing to float along as if the
most significant credit bubble history has ever seen does not exist. Opportunities
are rare, and large opportunities on which one can put nearly unlimited capital to work at tremendous potential revenues are even more rare. Selectively shorting
the most problematic mortgage-based securities in history today amounts to just
such an opportunity.
Id. at 54.
Resistance from Investors.
Investors in Scion Capital didn't get it. Why was their ace stock picker betting against macro trends in real estate? How could anyone call the top of a seventy-year housing cycle? Why was Burry bearish on real estate while everyone was bullish? The investors had signed up for a nice return in stocks, not a leveraged bet against a red-hot housing market.
Burry stuck to his guns. In the face of veiled threats of financial withdrawals, Burry wrote that his mission was a global search for value. And that included credit default swaps on subprime mortgage bonds.
Them, the insiders began to catch on. On November 4, Deutsche Bank offered to buy back the credit default swaps. Burry said, no. Three days later, Goldman Sachs came a calling; i.e. "Could Mike Burry sell them $25 million of the stuff, at really generous prices, on the subprime mortgage bonds of his choosing?" Id. at 59. Burry said, no.
So Close and Yet So Far.
By mid-2006, Burry was stressed. Scion was down 18 percent on the year. Investors began to pull their money out of the fund. Potential clients lost interest in Burry. Many investors questioned Burry's competence to invest in (or against) mortgages at all.
Late in 2006, Burry sold 1/2 of the protection he held on $7 billion of corporate debt of companies like Countrywide, Washington Mutual, AIG, and other exposed players in the subprime mortgage industry. It was probably the worst time to sell. The market was still in denial about the credit bubble. Burry took a "substantial loss" on the sale of his insurance. Gregory Zuckerman, The Greatest Trade Ever: The Behind the Scenes Story of How John Paulson Defied Wall Street and Made Financial History, page 166.
At the end of 2006, Burry wrote "A money manager does not go from being a near nobody to being nearly universally applauded to being nearly universally vilified without some effect." Id.
Vindication.
The real estate market peaked in early 2007. But it didn't matter. Investors wanted out. They continued to stress Burry about his involvement in complex subprime derivatives. Burry continued to sell but now he was doubling his original investment upon the sales. The market was proving Burry right but his triumph was joyless. He was selling because he had to and in order to keep his firm together.
By the Summer of 2007, it was clear to the outside world that Burry had foreseen the greatest trade ever. Inside Scion, the mood was gloomy.
In August of 2007, Burry's firm had gained 60 percent for the year. This rate of return was one of the best in the world. Burry finished the year with a gain of over 150 percent. The subprime trade had quadrupled in value. Burry's personal net worth increased $70 million in two years.
It amazes me that Burry was dead on right in his trade. But his investors deserted him a year before the trade proved itself. By all rights, Burry should have been celebrating and feeling good at the end of 2007. Instead, he was hollow inside and bitter.
He had not aced his Soros trade.
Conclusion.
I consider Burry to be a Hall of Fame Contrarian. He saw the trade of a lifetime in 2003. He followed through by betting against subprime mortgages in 2004 and 2005. He knew he was right, however, he was too far ahead of his investors. And so we are reminded that one can be dead on right about the market, have the market move in your favor, and not be able to celebrate or feel good about the outcome.
Burry's trade is a cautionary tale for all of us.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Burry was a contrarian. He sized up value and had no hesitation in going against popular sentiment. He typically bought stocks on the way down that would go up ten-fold. Not many investors can play this game well.
Contrarians are often early. Burry was early in spotting the housing bubble. In May 2003, Burry wrote "I am extremely bearish, and feel the consequences could very easily be a 50% drop in residential real estate in the U.S...A large portion of current [housing] demand at current prices would disappear if only people became concerned that prices weren't rising." Michael Lewis, The Big Short: Inside the Doomsday Machine, page 47.
What I find interesting is that Burry felt a sense of urgency even as most professionals continued to believe in the Housing Bull Market. In early 2005, Burry felt he had to place his bet now. Id. Jim Rogers has talked about seeing a new trend before the market sees the change in trend. Anticipating before the crowd is the best way to make money, however, it is also a lonely path. Being ahead of the herd isn't fun at times.
On May 19, 2005, Burry did his first subprime mortgage deals. He bought $60 million in credit default swaps from Deutsche Bank. Deutsche Bank seemingly had no interest in the mortgage backed securities Burry had bet against. Then, Burry bought $5 million in credit default swaps from Bank of America. Then, he executed a $100 million deal with Goldman Sachs. By July 2005, Burry owned $750 million in credit default swaps on subprime mortgage bonds. By October 2005, Burry's bet against sub-prime mortgages approached $1 billion.
I began this blog with the post "Opportunity is a Powerful Force." I cannot improve upon Burry's eloquence about the power of opportunity:
Markets erred when they gave America Online the currency to buy
Time Warner. They erred when they bet against George Soros and for the British pound. And they are erring right now by continuing to float along as if the
most significant credit bubble history has ever seen does not exist. Opportunities
are rare, and large opportunities on which one can put nearly unlimited capital to work at tremendous potential revenues are even more rare. Selectively shorting
the most problematic mortgage-based securities in history today amounts to just
such an opportunity.
Id. at 54.
Resistance from Investors.
Investors in Scion Capital didn't get it. Why was their ace stock picker betting against macro trends in real estate? How could anyone call the top of a seventy-year housing cycle? Why was Burry bearish on real estate while everyone was bullish? The investors had signed up for a nice return in stocks, not a leveraged bet against a red-hot housing market.
Burry stuck to his guns. In the face of veiled threats of financial withdrawals, Burry wrote that his mission was a global search for value. And that included credit default swaps on subprime mortgage bonds.
Them, the insiders began to catch on. On November 4, Deutsche Bank offered to buy back the credit default swaps. Burry said, no. Three days later, Goldman Sachs came a calling; i.e. "Could Mike Burry sell them $25 million of the stuff, at really generous prices, on the subprime mortgage bonds of his choosing?" Id. at 59. Burry said, no.
So Close and Yet So Far.
By mid-2006, Burry was stressed. Scion was down 18 percent on the year. Investors began to pull their money out of the fund. Potential clients lost interest in Burry. Many investors questioned Burry's competence to invest in (or against) mortgages at all.
Late in 2006, Burry sold 1/2 of the protection he held on $7 billion of corporate debt of companies like Countrywide, Washington Mutual, AIG, and other exposed players in the subprime mortgage industry. It was probably the worst time to sell. The market was still in denial about the credit bubble. Burry took a "substantial loss" on the sale of his insurance. Gregory Zuckerman, The Greatest Trade Ever: The Behind the Scenes Story of How John Paulson Defied Wall Street and Made Financial History, page 166.
At the end of 2006, Burry wrote "A money manager does not go from being a near nobody to being nearly universally applauded to being nearly universally vilified without some effect." Id.
Vindication.
The real estate market peaked in early 2007. But it didn't matter. Investors wanted out. They continued to stress Burry about his involvement in complex subprime derivatives. Burry continued to sell but now he was doubling his original investment upon the sales. The market was proving Burry right but his triumph was joyless. He was selling because he had to and in order to keep his firm together.
By the Summer of 2007, it was clear to the outside world that Burry had foreseen the greatest trade ever. Inside Scion, the mood was gloomy.
In August of 2007, Burry's firm had gained 60 percent for the year. This rate of return was one of the best in the world. Burry finished the year with a gain of over 150 percent. The subprime trade had quadrupled in value. Burry's personal net worth increased $70 million in two years.
It amazes me that Burry was dead on right in his trade. But his investors deserted him a year before the trade proved itself. By all rights, Burry should have been celebrating and feeling good at the end of 2007. Instead, he was hollow inside and bitter.
He had not aced his Soros trade.
Conclusion.
I consider Burry to be a Hall of Fame Contrarian. He saw the trade of a lifetime in 2003. He followed through by betting against subprime mortgages in 2004 and 2005. He knew he was right, however, he was too far ahead of his investors. And so we are reminded that one can be dead on right about the market, have the market move in your favor, and not be able to celebrate or feel good about the outcome.
Burry's trade is a cautionary tale for all of us.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Saturday, January 1, 2011
Thinking About the New Year - 2011
Happy New Year!
Well, it is a New Year. Many investors and traders begin the year with a clean slate. The idea is that you are starting from zero. Past performance is no guarantee of future results. Each year is unique in terms of the nature of opportunities that might present themselves. Remember that we must strive to look at the road ahead, not the rear view mirror.
Consider these words of caution from Gary Smith:
"I always approach new trading years with great trepidation. I want the market to show its hand, to tell me what it wants to do. I'm always leery of what occurs on the first trading day of the year. I remember too many Januarys when the market would begin the first trading day in one direction, and then a few days later violently reverse that direction."
Source: Gary Smith, How I Trade for a Living, pages 113-114.
Last night, I reviewed The Right Stock at the Right Time: Prospering in the Coming Good years by Larry Williams. I credit this book with putting me on notice about the 2007 - 2009 Crash back in 2003. Williams suggested that the stock market has patterns that repeat every decade. The last third of a decade is prone to be a time of crashes and panics. Note that the Crash of 2008, the Crash of 1998, the Crash of 1997, the Crash of 1987, the Bear Market in the late 1950s, the Crash of 1929, and the Panic of 2007 all happened in the final third of a decade. So, it pays to be alert to crashes and panics in the final third of a decade. Second, the best buy opportunities seem to occur at the very beginning of a decade. Consider that August 2010, October 2002, 1992, 1982, 1962, 1952, and 1932 were all excellent buying opportunities. It pays to wait for these times at the beginning of a decade when the market is oversold at unsustainable levels. Third, buy opportunities tend to recur every four years. The rule is not perfect but, if you wanted to put probabilities on your side, it was wise to buy in 2002, 2006 and 2010. I suspect that we will see another ideal buy moment in 2014 as well. Williams has provided the proverbial keys to the kingdom, as I see it. Remember that I read Williams' book in 2003. I became convinced then and there that we would have a panic in the final 1/3 of the decade. I remember warning my office colleague, Joel, in 2004 that a panic was coming down the road. I didn't have a crystal ball but I had something better-- I had read Williams' book. You should do the same as a long-term buy and hold investor.
Now, my biggest inner conflict is that I have read the doom and gloom work of Daniel Arnold (The Great Bust Ahead) and Harry Dent. Their arguments make sense to me that we will face the Depression of a lifetime due to demographic trends. So, my opinions based on fundamentals are uber bearish. Wisely, I have learned that investing and trading is about making money, not opinions. If the Great Depression II does not happen, I will be surprised but I will take my cues from the behavior of the market. Arnold and Dent may be great analysts but there is a time for analysis and a time for making money. (For an example of how great analysis can cloud your judgment, read about Jesse Livermore's disastrous decision to follow another trader's opinions in the cotton market. Edwin Lefevre, Reminiscences of a Stock Operator, pages 152-155. See also Nicholas Darvas' sad tales of listening to others for stock tips in How I Made $2,000,000 in the Stock Market, pages 8-9)
So, what does this all mean for 2011?
In my humble opinion, the best I can do is suggest possible scenarios. The arch of the decade should be up (unless Arnold and Dent are correct). One possibility is that the market continues to go up into March/April when we have a traditional sell-off until May. I strongly believe that May 2011 will present a good buy opportunity. I will be ready. Our Club will be ready. Another possibility is that the market goes up for the first two trading days in January, thus providing a parting gift to the La Jolla Fisherman. After that, we see a rapid and dramatic drop in the market until around January 15. This drop provides a wonderful buy opportunity, maybe the buy opportunity of the year. The rest of the year is choppy since 1257 on the S&P 500 Index is very strong and substantial resistance. We won't go through 1257 on the first or even the second attempt. The third attempt will be the charm. At this point, even the most bearish Elliott Wave folks recognize that we are in a substantial bull market. Arnold will be proven wrong. A final scenario is that the market tops out around the end of January and then drops all year into an October bottom just like 2001. I don't think this will happen but the market will tell me whether a rise into the end of January is on the menu.
The wild cards for the year are the European debt crisis, the rising interest rates in Asia, and Quantitative Easing II. I don't care whether these cards are objectively good, bad, or indifferent. What I do care about is the market's reaction to these cards. If the market continues to shrug off these inconvenient truths, then I will know that the Bull Market very strong. If the market starts to care about these issues, that will be the sign that the character of the market has changed. In a Bull Market, bad news is discounted and ignored. In a Bear Market, good news is ignored and discounted.
Conclusion.
If I had to venture an opinion, I would say that the first two trading days of January will be up days. These days would represent the end of the Santa Claus rally based on the research of Hirsch in the Stock Trader's Almanac. Then, the market would drop into January 14/15. This drop would take the S&P 500 Index back to the 1180 level. It would feel bad at the time but, in actuality, would represent the best buy opportunity of the year. The rest of the year would be choppy as we went back and forth in a wide ranging trading range between 1180 and 1257. Finally, the year would end up with a clear thrust through resistance @ 1257.
That's my best opinion this New Year's Day morning. As always, I will invest and trade the market's behavior, not my opinions.
May we seize opportunity this year with confidence and grace!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Well, it is a New Year. Many investors and traders begin the year with a clean slate. The idea is that you are starting from zero. Past performance is no guarantee of future results. Each year is unique in terms of the nature of opportunities that might present themselves. Remember that we must strive to look at the road ahead, not the rear view mirror.
Consider these words of caution from Gary Smith:
"I always approach new trading years with great trepidation. I want the market to show its hand, to tell me what it wants to do. I'm always leery of what occurs on the first trading day of the year. I remember too many Januarys when the market would begin the first trading day in one direction, and then a few days later violently reverse that direction."
Source: Gary Smith, How I Trade for a Living, pages 113-114.
Last night, I reviewed The Right Stock at the Right Time: Prospering in the Coming Good years by Larry Williams. I credit this book with putting me on notice about the 2007 - 2009 Crash back in 2003. Williams suggested that the stock market has patterns that repeat every decade. The last third of a decade is prone to be a time of crashes and panics. Note that the Crash of 2008, the Crash of 1998, the Crash of 1997, the Crash of 1987, the Bear Market in the late 1950s, the Crash of 1929, and the Panic of 2007 all happened in the final third of a decade. So, it pays to be alert to crashes and panics in the final third of a decade. Second, the best buy opportunities seem to occur at the very beginning of a decade. Consider that August 2010, October 2002, 1992, 1982, 1962, 1952, and 1932 were all excellent buying opportunities. It pays to wait for these times at the beginning of a decade when the market is oversold at unsustainable levels. Third, buy opportunities tend to recur every four years. The rule is not perfect but, if you wanted to put probabilities on your side, it was wise to buy in 2002, 2006 and 2010. I suspect that we will see another ideal buy moment in 2014 as well. Williams has provided the proverbial keys to the kingdom, as I see it. Remember that I read Williams' book in 2003. I became convinced then and there that we would have a panic in the final 1/3 of the decade. I remember warning my office colleague, Joel, in 2004 that a panic was coming down the road. I didn't have a crystal ball but I had something better-- I had read Williams' book. You should do the same as a long-term buy and hold investor.
Now, my biggest inner conflict is that I have read the doom and gloom work of Daniel Arnold (The Great Bust Ahead) and Harry Dent. Their arguments make sense to me that we will face the Depression of a lifetime due to demographic trends. So, my opinions based on fundamentals are uber bearish. Wisely, I have learned that investing and trading is about making money, not opinions. If the Great Depression II does not happen, I will be surprised but I will take my cues from the behavior of the market. Arnold and Dent may be great analysts but there is a time for analysis and a time for making money. (For an example of how great analysis can cloud your judgment, read about Jesse Livermore's disastrous decision to follow another trader's opinions in the cotton market. Edwin Lefevre, Reminiscences of a Stock Operator, pages 152-155. See also Nicholas Darvas' sad tales of listening to others for stock tips in How I Made $2,000,000 in the Stock Market, pages 8-9)
So, what does this all mean for 2011?
In my humble opinion, the best I can do is suggest possible scenarios. The arch of the decade should be up (unless Arnold and Dent are correct). One possibility is that the market continues to go up into March/April when we have a traditional sell-off until May. I strongly believe that May 2011 will present a good buy opportunity. I will be ready. Our Club will be ready. Another possibility is that the market goes up for the first two trading days in January, thus providing a parting gift to the La Jolla Fisherman. After that, we see a rapid and dramatic drop in the market until around January 15. This drop provides a wonderful buy opportunity, maybe the buy opportunity of the year. The rest of the year is choppy since 1257 on the S&P 500 Index is very strong and substantial resistance. We won't go through 1257 on the first or even the second attempt. The third attempt will be the charm. At this point, even the most bearish Elliott Wave folks recognize that we are in a substantial bull market. Arnold will be proven wrong. A final scenario is that the market tops out around the end of January and then drops all year into an October bottom just like 2001. I don't think this will happen but the market will tell me whether a rise into the end of January is on the menu.
The wild cards for the year are the European debt crisis, the rising interest rates in Asia, and Quantitative Easing II. I don't care whether these cards are objectively good, bad, or indifferent. What I do care about is the market's reaction to these cards. If the market continues to shrug off these inconvenient truths, then I will know that the Bull Market very strong. If the market starts to care about these issues, that will be the sign that the character of the market has changed. In a Bull Market, bad news is discounted and ignored. In a Bear Market, good news is ignored and discounted.
Conclusion.
If I had to venture an opinion, I would say that the first two trading days of January will be up days. These days would represent the end of the Santa Claus rally based on the research of Hirsch in the Stock Trader's Almanac. Then, the market would drop into January 14/15. This drop would take the S&P 500 Index back to the 1180 level. It would feel bad at the time but, in actuality, would represent the best buy opportunity of the year. The rest of the year would be choppy as we went back and forth in a wide ranging trading range between 1180 and 1257. Finally, the year would end up with a clear thrust through resistance @ 1257.
That's my best opinion this New Year's Day morning. As always, I will invest and trade the market's behavior, not my opinions.
May we seize opportunity this year with confidence and grace!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Subscribe to:
Posts (Atom)