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Thursday, March 21, 2013

Spanking the Market - Like a Baws.


Was awesome.


It was just one of those days (and weeks) where longs and shorts just seem to be working. Some of this is luck and some of it skill - but I just love when the volatility starts to increase... The cracks are starting to reveal themselves.

So, Anything Interesting?

A lot, again:

GS got murdered. I participated in only $1 of its death, but it was slashed by 3+% or almost $5 today. GS has been a market leader for some time now, leading the XLF rally since November 2012. This weakness is quite telling. After breaking that $147, next MAJOR support is in the $130 range. It has been forming a huge pennant on the weekly chart, and the bottom side of that pennant is where is see its next MAJOR support level - in the low $100's. This is huge for the bear case, and a major crack.

EUR/USD continued its slow slide down. This one has been weak for some time now, and cannot manage even the smallest of bounces. This scares me a bit, for I think it is due to bounce some time soon. Only time will tell. The contrarian in me says it will bounce - and also when you compare the US FED policy to the EURO central banks, the US FED is much, much more aggressive with monetary easing. So, while technically speaking, the chart looks lower to me, fundamentally, I think we go up. Final answer? I have no idea. WAG? EUR/USD drops over the summer, maybe testing the mid to low 1.20's, and then bounces back toward the 1.30+ level.

IYT - very weak today, giving up 1.6%. Another market leader is showing big time weakness and now looks to be very toppy. There is a lot of underside support in the 102-107 range - wide range, I know - so I don't really have a nice target here. It is just noteworthy that it was THAT weak today, weaker than the SPY.

XLF - continues to look very toppy like the rest of this list. $17.75 is my first target here, and if selling really accelerates, I am looking for that $16.50 area (10% correction).

SPY - breaking below that $152.90 area would be huge - that is what I am watching for my first SPY target (The SPY was rebalanced last Friday, so this number should be closer to $152.5 or so). My second target is $148, and third $142.


Yeah, some thoughts are that the market appears to be quite toppy here. This is a little abnormal that it is coming about one month before its typical pullback. Remember that tops are a process, and that this jerking up and down choppy price movement can easily continue for days or weeks. I am relatively confident that we are going to correct by at least 5-10% over the next few months.


Positions Closed:

VXX +2.1%, TVIX -1%, DDD 4.3%, APOL 4.5%, GS 0.67%. Another 10% gainer of a day for me. Huge.

Open positions:

FDX long from $97.29, EDU short from $17.17, LNG short from $22 (ugh), SPXU from $29.30 and BX short from $19.32.

Awesome day again today. Incredible last 5 trading days now. I feel at my best in this type of trading environment. Longs are ripping, shorts are working  -  it is beautiful. FDX is a bounce play, it could very well go lower, but my opinion is that it is oversold. I am looking for $98-100 on this swing. EDU is more of a fundamental long term play, I just don't believe in the product/service, and I think it will fall. My PT is $10. LNG will (or should) drop during the summer. I will continue to hold into April and May. My position is mid sized, and when it appears to be topping, I will add to this short. My PT is $18-20 by mid/end summer. BX PT1 is about my entry, $19.38 - but I think it will fall a bit further. To be honest, I'll probably just exit this one at B/E.


The market will probably remain choppy to slightly heavy biased. The NYMO is slightly low at -18, but has a LONG ways to go before it receives an 'oversold' name tag. The news from Europe will control our destiny, so stay quick and nimble. The sells can easily end in 1-2% flush or distribution days, and those days can easily be followed by 1-2% sharp rallies. Stay smart and very disciplined with stops. Until this topping pattern plays out, I will continue to buy stocks on dips, and sell short the rips.

Tuesday, March 19, 2013

Selling? Volume? SOOO Happy to See You!!


Sorry, I ran into a unforeseen busy period in my life. Everything is fine, thanks for asking. Just busy running here and there, business stuff, family stuff, friend stuff, etc etc. 


I am in love. These days were awesome, not only because I am short and made out like a bandit, but because it is so nice to see some volume in the market. We had some huge volume days, some buying and selling, rapid covering, surprise news, etc. This was awesome. This is why I trade. I love that the bears came back to life. The market is most healthy when the bull/bear quarrel exists. 


Lots and lots. 

IYT: Has shown a small bit of weakness, but the pullback looks muted, very mild. Extremely strong sector. 

XLF: Appears to be very toppy here. The news from Cyprus is certainly not helping, nor is the GS weakness. Realistic target is in the 17.70 to 18 range. Looks WAY too strong to pull back much more than that. 

SPY: Series of lower lows and lower highs over the last 4 trading days. This is a welcome sight. If the selling continues, look for a bounce around 152.6 or so (that is where the SPX will fill its gap - obvious). 

EUR/USD: The beating continues. This is in a slow trend down. A test of the 1.265 area seems all but certain. Over the summer, I expect this to break that low, and test the 1.20 level. There needs to be a mini-bounce soon... maybe this week or the next is my guess. 


I have made several trades in the last few days (most were today though)

Sold VXX for +2.75%, TVIX for 2.5%, 20% of my SPXU for .5% loss, and I lost 50% on some SPY puts (153's and 155's)  from last week, and gained about 70% on some others (155's and 156's). (Thank you Cyprus!). 

Open: BAC long (12.70), HES long (69.50), EDU short (16.64), BX short (19.32), LNG short (22.04), SPXU 29.30)

YES!! I killed it the last few days, and my account has made new highs. I am SO pumped we had a brief sell off. I can at least feel comfortable going with a few longs again... I generally perform terribly in long slow trends up or down... LNG (my position is -11% or so) is a bit concerning, but I will wait to see how it does in April. Everything else is more than acceptable. 


It should be fun with the FED and all. News from Europe will continue to drive this market - the FED reaction could go either way, so stay nimble and small. Remember, the initial reaction to the FED announcement is USUALLY the correct one. I am expecting a choppy sell off into the SPY 152-153 range this week. I expect that weakness to get bought up for one last push up before summer time. My desire is to transition from mostly short to slightly long during this week - that is the plan - but we all know the market will do what it wants to do... rarely do I correctly predict something like this. 

We will see!


Thursday, March 14, 2013

More of the Same... OR, Maybe Not?


Same. Read old posts. All the same. Can you sense my lack of interest in this market? The market is very 'frothy' feeling, many small cap names continue to break out of pretty much minimal volume. XLF/IYT were the leaders today, up 0.65%/0.75%. The EUR/USD made a complete red to green reversal today, but is not in range of breaking out. The market opened up, traded in a small range, and then again melted up at the end of day... See? More of the same. Volume was very weak all day.

Anything Interesting?

YES! GS and JPM were asked to reevaluate their capital planning after hours today, both are down about 2% in after market trading. This is big news, and could crack things lower tomorrow.


USB, AXP, RF, BAC and C all announced HUGE stock buybacks in after hours to combat the bearish news above. Only BAC is really impacted here, up a huge 4% in after market trading.

My Trades:

Pretty much none worth mentioning. They were all scalps for pocket change, a couple up and a couple down. I am short right now, and was this whole week, so some small damage has been done to my account over the last 3-4 days -but I almost bought a large position of JPM right before the close today because that chart is just so bullish. This JPM play was going to be my hedge. I didn't take it. And for that, I am thankful. So, even though the day finished red on paper for me, I am thrilled I didn't take JPM. That would have shaken my confidence.


Surprise! I am expecting weakness either Friday or Monday and am willing to hold the path short. GS and JPM are both huge names in the financial sector, and 2% down is no joke. On top of that, we are over extended again, hitting up against the upper Bollinger Bands. Maybe this news will be the catalyst to at least take a small breather away from this relentless bull.

Take care!

Wednesday, March 13, 2013

Lame Action... I Want to be Entertained!


Very boring again. SPX range was 9 points... but it was just kind of a melt up all day. This morning had potential, but the low volume push up, that is 2013 trading, took over again.


IYT was the big surprise, finishing UP 1.5%... That is HUGE. Many view the transports as a leading indicator, and that indicator is trending up and showing no signs of slowing. This is VERY bullish.

XLF ended up 0.3%, another healthy move up. GS was battling red and green and ended flat.

EUR/USD was weak sauce all day long, down as much as 0.85%, and down about 0.55% as I write this. In a normal market (and it is clear this is not a normal market) - a rule of thumb is that the EUR/USD loosely mirrors the US indices. If EUR is down .5%, expect the SPX to be down roughly .5%. Well, there has been a complete decoupling of this relationship. EUR has gone from 1.37 to 1.29, a 6-7% decline, while the SPX has gone up 3+% over the last 6 weeks. Weird.

The DJIA finished green for the 9th straight day. It has been 12 years since that last happened. Wow.

My Trades:

Minimal. I only added a few SPY puts to my already short-biased positions.


Who knows. This is OPEX week and anything can happen. I am expecting a fair amount of chop, and we will probably go neither up or down until Monday. The DOW broke its 12 year streak of not allowing more than 8 straight green days. 9 straight days have now finished positive - and 11 out of the last 12. This is just weird. Volume is gone. Europe does not really matter. I should be long enjoying this melt, but call me a fool, I just can't participate... It is my Achilles heel; my weakness (slowly trending up or down markets). I remain lightly committed, in mainly shorts. I will trade heavy again (long or short) when I see a small pullback, a well defined topping pattern, or a nice base from which we can jump to new highs.

Good day ladies (?) and gentlemen.

Intraday Update


Because today is so incredibly boring. Ugh.

What are you seeing:

Well, the indices are flat, if DIA closes green, that would be unprecedented. 9 days straight green would be a new record that is 12+ years old. Asian markets are down, most other major markets are relatively flat.

Bullish things:

IYT - extremely bullish, up over 1% (!)
GS - its green.
TLT - its red.

Bearish things:

EUR/USD got slammed this morning, this is usually very bearish. Was down 0.85% this am, recovering a bit now.
Volume? Maybe? Its very low and weak. This is a ghost market.

SO, now what:

Who knows... you can make a case either way here. But whatever is going on is extremely boring. I can understand traders not wanting to short this market, but I don't really understand traders buying this market. So, I am lightly committed to the short side.

Interesting note: From the desk of Ryan Detrick: "The percentage of bears in the Investors Intelligence poll declines to 18.8%. It's the first time below 20 since May 2011, and dips below 20 marked market tops in 2010 and 2011.... 'Be aware.'"

Tuesday, March 12, 2013

Hallelujah!!! I'm BACK

WE SOLD OFF!!!! Ah! I knew it had to come, and it feels great.


We opened relatively flat, and then once again moved up and made new highs on the SPY. We then sold off (what! red?) nicely to a low of what I projected, -8 points on the SPX. The SPY then rallied to cut its losses in half. The DIA closed green which is amazing, that is 8 (!) straight green closes for the Dow Jones. The EUR/USD was flat most of the day. TLT finished up a very significant 0.7%. The IYT and XLF finished lower by 0.3% and 0.5% respectively.


Today was awesome. I almost completely recovered my stupid positions that I will readily admit were unintelligent:

Closed Trades:

SPY puts 153 (Friday expiry) closed at a loss of 50% (medium position)
SPY puts 155 (Friday expiry) closed at gain of 50% (large position)

Open Positions:

LNG (short), SPXU, TVIX. BX (short), and VXX.

I made up for the vast majority of my losses, and am again near my account highs for the year. Yes, I was gambling and Yes, I was stupid, but I knew the odds were in my favor, and I followed a gameplan... we just can't keep melting up. Well, I guess we can, but not without at least showing a little bit of intraday weakness.


The DIA closed positive for the 8th straight day, which is ridiculously incredible. This has happened 5 times in the last 12 years, in every situation, the DOW was red the following day. Under this premise, and seeing the strength in bonds (via TLT), I held my SPXU. I am expecting some weakness tomorrow, but not a large amount. I will be trading lightly for the remainder of the week to honor the stock gods for showing me mercy today... but for real, I just want to get my head on straight for next week. I had an incredible start to this year, and I want to make sure I am ready for the upcoming sell off. This sell off has occurred every April for 3 years now. Will this year be different? I think not.

Monday, March 11, 2013



I was throttled today. SPY was up for the 7th straight day. I am giving back major gains from January and February. I am not happy, but you have to deal with what the market gives you. Mr. Market is not happy with me it seems. 


Today? Just a resumption of the melt up - led by the XLF up 0.8%. volatility (VXX) was murdered, down 4+%. Complacency is vogue, no doubt. TLT was green pretty much all day which was interesting. The EUR/USD bounced .4%, but not even close to breaking out. A fairly boring gradual move up 0.4% on the SPY


Well, its not the end of the world - but if this continues, I will be in danger of some serious losses on my hands. Today I got even more short, and doubled some SPY puts... Can we be up for 8 straight days? I'm still betting no - but I have been wrong for what seems like an eternity LOL (not really LOL though). 


Closed: DNN for 1.5%, CLNE for scratch, GLUU for scratch, CJES for 1%, NFLX for 2%. 

OPEN: very large position of SPY puts, heavy SPXU from 29.35 (down 3%), LNG from 22.04 (down 6% OUCH!), VXX (down 5% OUCH!), TVIX (down 7% OUCH), BX (down 3%)... wow. Things are getting close to out of hand. The volatility play are fine with me, and I have plenty of $ to average down. LNG doesn't bother me either. SPXU and SPY puts are very concerning, number one priority will be to sell at least 1/2 my SPY puts tomorrow, hopefully, for some green. 


I have averaged down to the 10th power it seems, the story is the same. IF (a HUGE IF) we get a 0.5% sell-off, I will cover most of the above with losses. An 8 point drop, as small as that sounds, would do wonders for my account. A roughly 12-15 point drop, not even 1% would make all of the damage to my account go away. Hmmph. 

Take care everyone.