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Monday, March 12, 2012

Range bound or Breakout

Here's the chart. See the falling volume and the weakness in the MFI and Stochastic RSI. I'm looking for a Turn-around Tuesday (I think today's close will be higher than open, but I still lost money).



Falling volume like this can mean that the price isn't supportable. Meaning price should go lower.

It was pointed out to me that we could play the SPY as though it were in an upchannel like this:



If this is the play, it shows great weakness having broken the channel on the downside on extremely light and decreasing volume. In which case, it seems we should go lower and perhaps look for support points.

I don't think the second scenario will play out. There's too little volume and too many plungers. IMHO it's likely we will stay range bound until, as Mutt says, the market vomits and we go one way or another.

41 comments:

  1. I'm out on my longs. Will see wassup tomorrow. These tight ranges really suck to make money, probably best to not even try.

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  2. Unemployement ArticleMarch 12, 2012 at 4:23 PM

    Rock - I will read that unemployment article you posted on the last thread, it sounds like it will be interesting and maybe insightful.

    Mutt

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  3. @Mutt:

    If it's original work by the author, he's a genius.

    The only problem is how will this black collar generation eat.

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  4. @Rock: Great article about the "black collar" generation in the previous thread. Not sure I totally agree with how it will play out but he makes a cogent case.

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  5. And, on my watch list from yesterday, almost every weakest and strongest stock pulled back, except for a very few shining stars. However, on the revenues list, AAPL, QCOM, PLCN and VTR were all up.

    I read a report that said AMZN will be headed lower because they'll lose their media revenues to AAPL. And we know Joy is not in the cards.

    So those seem to be pretty good picks. Let's see tomorrow.

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  6. Does it actually look like the market will break 13k and stay above that?

    Is today the day?

    Will see

    Mutt

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  7. Now I know why the smart shorts like Fleck shut it down way back in '09. They knew these markets weren't going to be allowed to fall in any meaningful way for a long, long time,, maybe never again. It's really a joke what the "markets" have become but they way past all-in now on their strategy of keeping everything supported, so on and on it goes. Where/when/how it stops, nobody knows.

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  8. @Mannwich:

    That may be why the volume's so low these days. Nobody to trade your shorts with.....

    (story of my life....)

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    Replies
    1. Exactly. They've basically broken the market for good (was probably already broken but not it's completely so).

      Benny's Put the Put to end all Puts. Going to be very interesting watching the consequences of all of it play out.

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  9. I hear yea there Rock...

    Mannwich - If you have listen to my whining, that is the biggest reason I have been on the side lines, Oh I am still looking at patterns and trying to hone my knowledge, but at this point I do not trust the market enuff and I keep waiting for a real pullback, oh well.

    As volume goes down HFT need to make up a bigger precentage of the declining volume, so at what point is it all about the bots? And what happens if volume reaches a critical low?

    Mutt

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  10. @Mutt:

    Bloomberg says right now at these volumes, it's only the hedge funds and bots trading.

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    Replies
    1. Trying to suck in the little guy who they hope will get in too late (AGAIN), and then, and only then will they pull the plug on it. Again.

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  11. Hello all, hope everyone is doing fine.:)

    Glad to see that the shop is still open (kudos to Rock). These last few weeks, I've been stepping back from trading and economics in general. Not much happening on my side of the pond anyway...

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  12. IOW, another bear bites the dust.

    xD

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  13. Hey Wolfie! Good to hear from you.

    Maybe the Potemkim "markets" will just keep churning upwards in the face of rising oil & gas prices? I gotta believe that rising oil prices will bring it all down again at some point. The question is at what point and price will that occur?

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  14. Agreed. Good to hear from you.

    Disagreed: it's all on your side of the pond.

    Will you guys just dump grease in the med? Like the song goes, "get over it!"

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  15. Grease's credit rating upgraded.

    Can you believe that headline? The unit labor cost in Greece is like 10X Germany's. How can any responsible organization upgrade Grease's credit rating.

    I will be sure to check the CDS tonite.

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    Replies
    1. The term "responsible credit rating = oxymoron, Rock.

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    2. I mis-spoke. Should have said "dump grease in the Fed." After all, they're the only ones that can afford it.....

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  16. Well, I've learned my lesson. Going with partial positions on AAPL and QCOM overnight.

    Goodness, my ex-mother-in-law's account is impressive. She still wants me to come over for her 90-umteenth birthday.

    Well, Taiwan does have barber shops.....

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  17. Well, a wrap for the day.

    Just an opinion here: (remember I lose my opinion when the market opens so I don't lose my money)

    The financials led us down. Companies responded by dumping fat, getting lean and mean, and although the financials are all still pretty down, suddenly the news is good. The liquidity that was pumped in let them pass their tests, and they're passing some of that liquidity on as dividends.

    Remember they lowered the capital standards, down to 5-6%. The stress test is designed to pass, not fail.

    But it doesn't matter. Everyone's feeling good. So let's all ride along. We got a long way to go, but with continued good news, we'll go there. I don't predict tops and targets but it wouldn't surprise me to see the financials improve by 20% this year, and push the market right along with them.

    Sorry, Mutt, I don't think your pullback's gonna happen. I think that 2000 point run by July is where we're headed.

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    Replies
    1. Not Overly SurprisedMarch 14, 2012 at 10:23 AM

      Rock - Although I was surprised with the strength of yesterdays push up, I am not overly surprised we are still going up, but in my mind that pretty much confirms what Mannwich is saying below about the markets being manipulated.

      You see at this point I do not have the skill level to make the moves (I am always either too early or behind the curve) and like I said earlier, the way I was choosing to read the data said we were (are) over due for a correction and the higher we go without one, the more scared I get to make a move.

      Oh well I knew it was not going to be something I would get a handle on over night.

      Mutt

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  18. @Rock:

    RE: your post.

    Man were you wrong. We're right back in the middle of the upchannel.

    How can you be so stupid? Better put up another post to hide this one.....

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  19. Ride the wave. All about the Fed and other Central banks now. They have WAY too much invested to let things fall apart, so the intervention will continue until something else blows up. Kick the can is now the official policy of the world's elites as they buy time and hope that most don't notice the slowly declining living standards for most in developed nations. Anyone who still believes this market isn't being manipulated in many ways, is smoking some strong shit.

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  20. VXX is getting very close to my "all in" price of $20. Only around 7% away.

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  21. @Rock: I might try that one (again) at that point as well.

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  22. How about this one today? This gentleman had better brace himself for the oncoming smear campaign.

    http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?pagewanted=2#commentsContainer

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  23. There's a guy over at Cobra's, here's a piece of his post:

    "Also thanks for the advise/opinions on my current loss due to holding apr 25 calls on VXX; currently they trade at 1, so I would realize a loss of 125k if I sell now"

    Don't ever ever do this. Don't ever ever bet with your heart or your opinion. When a trade goes against you, get the F*** out of Dodge. Define the loss you are willing to take, and get out at that point.

    You know how I trade: let the market guide and set my expectations, and wait for a setup. I look for (at a minimum) the Stochastics to be on the bottom for the 3, and 15 minute charts, for a stock that is trending higher, and on the 60 minute chart for a stock that is trending with the market (equal relative strength to the SPX). If the trade doesn't make money immediately, I'm out.My trades today have netted me 1400 which I took as profit, and am now waiting for a setup.

    Just don't ever ever throw good money after bad. And don't ever ever trust your heart and judgement. My rule is to let fundamentals and structurals and psychologicals tell me what to trade, and the charts when to trade it. I am up over 111000 this year on my trading account, and a lot more on my investing accounts. (thanks AAPL)

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    Replies
    1. Aren't you speaking somewhat out of your emotions?

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    2. Not here to annoy you Rock, BUT if you take out "heart" and "judgement" (the latter meaning "rationality" in my mind), then what's left... :s ?

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    3. As an aside, I guess my questions won't help our trading skills.. but I guess that was worth asking.:p

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    4. @WolfStreet, yes. I always get emotionally involved when I or someone I know makes a bonehead play. Which is why I am often emotionally involved with my worthless son.

      @WolfStreet: what's left in my mind is to come back another day with another trade, facing another opportunity, knowing I've beat the bots.

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    5. Do you really think you ever beat the bots Rock ? :) I mean, (just guessing) they're "coding" according to some nonsense model, which they may be somewhat sharing, but not with you nor me?

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    6. Ok, I admit it: I'm momentarily (or not) disillusioned with TA and my abilities to be in the 10% winning streak of the traders.:(

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    7. Wolfstreet - I hear you on that disillusionment, but you have to concider TA is only a tool much like a table saw, which is pretty simple looking, but unless you know how to use it, it can be dangerous, but even if you do learn to use it, you still need to have other tools avalible to get the job done.

      If I understand correctly what the above quote and Rock is trying to get at - Is not every job requires a table saw and even if the job does require one, it will not be used all the time.

      And that is where you (Me, everyone) needs take our emotions out of the equation and let the job dictate what type of tool needs to be used.

      Also as Mannwich has stated (And I believe) many times, the current market is so stinking rigged, you would need to have the skill and patients of a master carpenter to even want to start a job.

      One example of it being rigged is how can JPMorgan announce 2 days before the *secret* results of the banking "Stress Test" and say they passed.

      How on earth can even the best TA person trade that?

      Mutt

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    8. @WolfStreet:
      You're probably right, I don't "beat the bots", but it's my motto, and it's up in 30 point font behind my desklight. I look at it every day. Maybe I only beat a few investors, and the bots continue to win all the time.

      I like to think I'm better because I can simultaneously feel the psychologicals, understand the structurals, evaluate the financials, and look at the charts. All the bots can do is run the statistic models and read the news, assigning risk values to word combinations.

      My brain is superior to the bots. Remember I was the one who said the greek default would cause the market to braxton hick, and would be a buying opportunity. I don't think one single bot was coded for that (but who really knows, eh? Maybe the bocoders read us?).

      I don't win every trade, in fact, I lose more than I win, but because I use the charts and follow the trend, I make more money on my winning trades than I lose on my losing trades. Plus evaluating every losing trade has helped refine my trading model.

      Take a look at the Quote of the Day. I've left it up for awhile because I really believe that.

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  24. @Mannwich:

    I read the article. Wow. Kind of misty in here right now.

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  25. ECRI recession call stands. Things have also gotten quieter on my end and I've noticed fewer recruiting jobs posted lately. That's my one anecdotal indicator on jobs and outlook for the economy going forward.

    http://www.ritholtz.com/blog/2012/03/why-ecri%E2%80%99s-recession-call-stands/

    I'm starting to think this call may indeed be right. Not to mentioned there's way too much complacency in the markets right now.

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  26. @Mannwich:

    We just recently hired my replacement. He's got many of the qualifications, but his coding skill is, well, poor is not a good term, because he really hasn't done much hands-on coding, so I guess it's just missing experience.

    When we actually got permission to hunt for a guy, you'd be surprised at the numbers of applicants we had who thought C and assembly was career suicide. I'd have thought a job is a job, and this one will absolutely go on forever. I guess your perspective changes as you get older.

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  27. New post is available. This one being a complete miss, I want to move on. Higher and higher.

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