Summary
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Lately, there has been quite a lot of conflicting opinions about whether the market will go down or go up. When there is this much crosscurrent of opinions, I find it best to stop reading them, and concentrate on the chart and listen to the message of the market. I did notice something interesting about today's action.
Today's action looks surprisingly similar to the hammer reversal on Feb/10. I have described some parameters which, if we are indeed putting in a bottom, I think the market will conform to.
Will look for confirmation to short 1141-43 area, and buy 1124-26 area.
Baidu Inc (NASDAQ:BAIDU) did not bounce as strongly as the rest of the leadership stocks. Therefore, it is safer to watch for signs of buying strength at the gap fill 71-71.4
Goldman Sachs (NYSE: GS) looks interesting, especially if the overall market is in the process of bottoming out:
If GS dips below 140 again, I plan to buy my other half position. stop on full position will then be 138. If a rally materializes in the afternoon, then I may even hold my position.
I didn't have a chance to buy Berkshire Hathaway Inc. (NYSE:BRK.B) because I was too busy scalping BIDU today for a few dimes. But now that the market is potentially trying to carve out a bottom, I will pay attention to the oracle of omaha. Plan is unchanged for BRK.B tomorrow:
1/4 position long at 76
1/4 position long at 75
1/4 position long at 74.5
1/4 position long at 74
initial stop on all 73
target 80
Monday, May 17, 2010
Deja Vu ?
Wednesday, November 04, 2009
Notes for Thurs Nov 5/09
Anything is possible so long as you trust in your ability to perform.
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Sentiment indicators ($TICK, $NYSI, $BPSPX, $NYAD) have all been trending down, suggesting bearishness creeping into the market.
Thursday, September 10, 2009
Potential Euro Short Term Top ?
Strange.....
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Yesterday, as I was watching the Euro, I started having this urge to sell it. I was looking only at the Euro chart and nothing else, and after staring at it for a while I wanted to sell it. I couldn't explain exactly why I wanted to sell it, only that I wanted to sell it. So I sold one contract @1.4565, just to test the waters. Price went against me shortly after I sold it. Strangely enough, I was reading "Reminiscences of a Stock Operator" at the time, and can compare it to this excerpt from the book:
I was looking-over the quotation board, noting the changes they were mostly advances until I came to Union Pacific. I got a feeling that I ought to sell it. I can't tell you more. I just felt like selling it. I asked myself why I should feel like that, and I couldn't find any reason whatever for going short of UP.
I stared at the last price on the board until I couldn't see any figures or any board or anything else, for that matter. All I knew was that I wanted to sell Union Pacific and I couldn't find out why I wanted to. I must have looked queer, for my friend, who was standing alongside of me, suddenly nudged me and asked, "Hey, what's the matter?"
"I don't know," I answered.
"Going to sleep?" he said.
"No," I said. "I am not going to sleep. What I am going to do is to sell that stock." I had always made money following my hunches. I walked over to a table where there were some blank order pads. My friend followed me. I wrote out an order to sell a thousand Union Pacific at the market and handed it to the manager. He was smiling when I wrote it and when he took it. But when he read the order he stopped smiling and looked at me.
"Is this right?" he asked me. But I just looked at him and he rushed it over to the operator.
"What are you doing?" asked my friend.
"I'm selling it!" I told him.
"Selling what?" he yelled at me. I f he was a bull how could I be a bear? Something was wrong.
"A thousand UP," I said.
"Why?" he asked me in great excitement.
I shook my head, meaning I had no reason. But he must have thought I'd got a tip, because he took me by the arm and led me outside into the hall, where we could be out of sight and hearing of the other customers and rubbering chairwarmers.
"What did you bear?" he asked me.
He was quite excited. UP. was one of his pets and he was bullish on it because of its earnings and its prospects. But he was willing to take a bear tip on it at second hand.
"Nothing!" I said.
"You didn't?" He was skeptical and showed it plainly.
"I didn't hear a thing."
"Then why in blazes are you selling?"
"I don't know," I told him. I spoke gospel truth.
"Oh, come across, Larry," he said.
He knew it was my habit to know why I traded. I had sold a thousand shares of Union Pacific. I must have a very good reason to sell that much stock in the face of the strong market.
"I don't know," I repeated. "I just feel that something is going to happen."
"What's going to happen?"
"I don't know. I can't give you any reason. All I know is that I want to sell that stock. And I'm going to let 'em have another thousand."
I walked back into the office and gave an order to sell a second thousand. If I was right in selling the first thousand I ought to have out a little more.
"What could possibly happen?" persisted my friend, who couldn't make up his mind to follow my lead. If I'd told him that I had heard UP. was going down he'd have sold it without asking me from whom I'd heard it or why.
"What could possibly happen?" he asked again.
"A million things could happen. But I can't promise you that any of them will. I can't give you any reasons and I can't tell fortunes," I told him.
"Then you're crazy," he said. "Stark crazy, selling that stock without rhyme or reason. You don't know why you want to sell it?"
"I don't know why I want to sell it. I only know I do want to," I said. "I want to, like everything."
The urge was so strong that I sold another thousand. That was too much for my friend. He grabbed me by the arm and said, "Here! Let's get out of this place before you sell the entire capital stock." I had sold as much as I needed to satisfy my feeling, so I followed him without waiting for a report on the last two thousand shares. It was a pretty good jag of stock for me to sell even with the best of reasons. It seemed more than enough to be short of without any reason whatever, particularly when the entire market was so strong and there was nothing in sight to make anybody think of the bear side. But I remembered that on previous occasions when I had the same urge to sell and didn't do it I always had reasons to regret it.
I have told some of these stories to friends, and some of them tell me it isn't a hunch but the subconscious mind, which is the creative mind, at work. That is the mind which makes artists do things without their knowing how they came to do them. Perhaps with me it was the cumulative effect of a lot of little things individually insignificant but collectively powerful. Possibly my friend's unintelligent bullishness aroused a spirit of contradiction and I picked on UP. because it had been touted so much. I can't tell you what the cause or motive for hunches may be. All I know is that I went out of the Atlantic City branch office of Harding Brothers short three thousand Union Pacific in a rising market, and I wasn't worried a bit. I wanted to know what price they'd got for my last two thousand shares. So after luncheon we walked up to the office. I had the pleasure of seeing that the general market was strong and Union Pacific higher.
"I see your finish," said my friend. You could see he was glad he hadn't sold any.
The next day the general market went up some more and I heard nothing but cheerful remarks from my friend. But I felt sure I had done right to sell UP, and I never get impatient when I feel I am right. What's the sense? That afternoon Union Pacific stopped climbing, and toward the end of the day it began to go off. Pretty soon it got down to a point below the level of the average of my three thousand shares. I felt more positive than ever that I was on the right side, and since I felt that way I naturally had to sell some more. So, toward the close, I sold an additional two thousand shares.
There I was, short five thousand shares of UP. On a hunch. That was as much as I could sell in Harding's office with the margin I had up. It was too much stock for me to be short of, on a vacation; so I gave up the vacation and returned to New York that very night. There was no telling what might happen and I thought I'd better be John ny-on-the-spot. There I could move quickly if I had to.
The next day we got the news of the San Francisco earthquake. It was an awful disaster. But the market opened down only a couple of points. The bull forces were at work, and the public never is independently responsive to news. You see that all the time. If there is a solid bull foundation, for instance, whether or not what the papers call bull manipulation is going on at the same time, certain news items fail to have the effect they would have if the Street was bearish. It is all in the state of sentiment at the time. In this case the Street did not appraise the extent of the catastrophe because it didn't wish to. Before the day was over prices came back. I was short five thousand shares. The blow had fallen, but my stock hadn't.
My hunch was of the first water, but my bank account wasn't growing; not even on paper. The friend who had been in Atlantic City with me when I put out my short line in UP. Was glad and sad about it. He told me: "That was some hunch, kid. But, say, when the talent and the money are all on the bull side what's the use of bucking against them? They are bound to win out."
"Give them time," I said. I meant prices. I wouldn't cover because I knew the damage was enormous and the Union Pacific would be one of the worst sufferers. But it was exasperating to see the blindness of the Street.
"Give 'em time and your skin will be where all the other bear hides are stretched out in the sun, drying," he assured me.
"What would you do?" I asked him. "Buy UP. On the strength of the millions of dollars of damage suffered by the Southern Pacific and other lines? Where are the earnings for dividends going to come from after they pay for all they've lost? The best you can say is that the trouble may not be as bad as it is painted. But is that a reason for buying the stocks of the roads chiefly affected? Answer me that."
But all my friend said was: "Yes, that listens fine. But I tell you, the market doesn't agree with you. The tape doesn't lie, does it?"
"It doesn't always tell the truth on the instant," I said.
"Listen. A man was talking to Jim Fisk a little before Black Friday, giving ten good reasons why gold ought to go down for keeps. He got so encouraged by his own words that he ended by telling Fisk that he was going to sell a few million. And Jim Fisk just looked at him and said, "Go ahead! Do! Sell it short and invite me to your funeral."'
"Yes," I said; "and if that chap had sold it short, look at the killing he would have made. l Sell some UP. yourself ?"
"Not I! I'm the kind that thrives best on not rowing against wind and tide."
On the following day, when fuller reports came in, the market began to slide off, but even then not as violently as it should. Knowing that nothing under the sun could stave off a substantial break I doubled up and sold five thousand shares. Oh, by that time it was plain to most people, and my brokers were willing enough. It wasn't reckless of them or of me, not the way I sized up the market. On the day following, the market began to go for fair. There was the dickens to pay. Of course I pushed my luck for all it was worth. I doubled up again and sold ten thousand shares more. It was the only play possible.
I wasn't thinking of anything except that I was right 100 per cent right and that this was a heaven-sent opportunity. It was up to me to take advantage of it. I sold more. Did I think that with such a big line of shorts out, it wouldn't take much of a rally to wipe out my paper profits and possibly my principal? I don't know whether I thought of that or not, but if I did it didn't carry much weight with me. I wasn't plunging recklessly. I was really playing conservatively. There was nothing that anybody could do to undo the earthquake, was there? They couldn't restore the crumpled buildings overnight, free, gratis, for nothing, could they? All the money in the world couldn't help much in the next few hours, could it? I was not betting blindly. I wasn't a crazy bear. I wasn't drunk with success or thinking that because Frisco was pretty well wiped off the map the entire country was headed for the scrap heap. No, indeed! I didn't look for a panic. Well, the next day I cleaned up. I made two hundred and fifty thousand dollars. It was my biggest winnings up to that time. It was all made in a few days. The Street paid no attention to the earthquake the first day or two. They'll tell you that it was because the first dispatches were not so alarm ring, but I think it was because it took so long to change the point of view of the public toward the securities markets. Even the professional traders for the most part were slow and shortsighted. I have no explanation to give you, either scientific or childish. I am telling you what I did, and why, and what came of it. I was much less concerned with the mystery of the hunch than with the fact that I got a quarter of a million out of it.
Ok, so maybe it wasn't as extreme as what Jesse Livermore did. Later, as I was reviewing the charts of the other currencies, I found out something to confirm my bearish hunch on the Euro:
Lower highs on the Loonie:
Broadening mega-phone top pattern in the Aussie:
Potential Triple Top in Cable:
As it turns out, my hunch on the Euro was correct:
Euro made a lower high, and a sustained move below 1.4510 will confirm the short term top in Euro.
UPDATE: covered my Euro short @1.4540, on the sidelines now waiting for new opportunities
Tuesday, January 27, 2009
Got POT ?
Taking a closer look at Potash Corp. (NYSE:POT)
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The whole agribusiness sector is still looking healthy. Potash Corp. (NYSE:POT) is one boat amidst that rising tide which has caught my eye.
50d EMA is just under 77, so that is the level to watch for the next few days.
Based on the 15-min. chart (not shown here), 74 also looks to be a key support level to watch. A break above 87 would confirm the double bottom.
Sunday, June 15, 2008
Pockets of Strength: Visa and MasterCard
Time to buy Visa Inc (NYSE:V) and/or MasterCard Incorporated (NYSE:MA)
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There was a lot of technical damage done to the market in the past week, and I'm not sure that we've seen the bottom. However, despite all the carnage, I am sure that both Visa Inc (NYSE:V) and MasterCard Incorporated (NYSE:MA) are both in significant uptrends, as indicated by the blue line.
There are several reasons to buy either Visa or Mastercard this week:
1. They are both in uptrends
2. The financial sector is so beat up and pessimistically oversold that the conditions are there for a technical bounce.
3. They are both close to their respective trendlines, so the risk is not that bad.
Friday, May 09, 2008
waiting for Visa Inc (NYSE: V)
Summary
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SPY's selloff two days ago (Wednesday) seems to have been the catalyst for a change in trend in Visa Inc (NYSE: V). Right now, the path of least resistance is 82. This mild pullback also has the potential to be more than just a mild pullback. I have no clue how long this will take to play out, therefore, the best thing to do is just sit back and watch what the institutional participants are doing.
MasterCard Incorporated (NYSE: MA) seems to support my thesis on Visa with its break below 290. It will be interesting to see if, in the next week or two, whether or not Mastercard tries to fill that huge earnings gap that it left behind.
Tuesday, April 29, 2008
Update on Visa Inc. (NYSE:V)
do you have any newer info?-Oh
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I made a purchase of Visa Inc (NYSE: V) about a month ago, and since I am still holding it, I guess it's time to do an update and see where we are.
The above chart of Visa Inc. (NYSE: V) pretty much speaks for itself, and I don't have too much to say about it other than the fact that it looks pretty nice. Buyers are accumulating this stock. The stock is behaving exactly as I described. The 10d EMA average is trending up. The earnings beat delivered by MasterCard Incorporated (NYSE: MA) was equally as good for V. In fact, going forward, any analysis I do on Visa will automatically consider the state of the chart for MA as well.
Leadership was previously provided by GOOG, RIMM, and AAPL. Well, now add these two credit card giants to that privileged leadership list.
Tomorrow will be too early to buy some more NYSE:V. The above chart indicates that Apr. 17-18 was the best time to buy (stock bounced back up to alleviate oversold conditions, and broke above short term resistance). Support levels are at $72.6, and possibly at $75 as well.
I have a hunch that the fund managers are waiting for the next pullback below $75 or any test of the 10d EMA to make their next purchase, so that is where I will be making my next purchase as well. If I do make another purchase of NYSE:V, I will post the trade in (almost) real-time on jaiku.
Saturday, March 29, 2008
Visa Inc. (NYSE:V) Analysis
Summary -
- Defined resistance level in place
- possible support level exists, but is untested
- waiting for a fundamental event.
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Here is a chart of MasterCard Incorporated (NYSE:MA) just after its Initial Public Offering.
There are two things that I found somewhat interesting in the above chart:
- MA traded sideways for a couple months until a fundamental event occurred on Aug 3/06
- During this time of sideways trading, MA always stayed above the upper half of its OR (Daily Range of first day of trading).
Now compare that to Visa Inc. (NYSE:V):
While it's not a perfect match, I do see some similarities between how Visa has behaved with how MasterCard behaved the first week after its IPO:
- found resistance
- stayed above the upper range of its Opening range.
I interpret staying above the upper range of its Opening range as a good sign, as that means buyers are still acting aggressive with regards to this stock. However, in order for Visa to break above its resistance level @64.1-ish, it will require a fundamental event. An analyst upgrade from a big, well known brokerage house might do it, but what did it for MasterCard was an earnings beat.
Will Visa also report earnings that will beat expectations?
No clue. I don't even know when they will report earnings.
But for the sake of argument, let's pretend that for whatever reason, Visa was able to overcome resistance at 64.1 and ran up to $66-$67 on anticipation of a good earnings report. The earnings report disappoints expectations, and as a result, Visa drops 10% on the bad news. That would take it down to $60.
$60 also happens to be a level of possible support, so I will be watching to see how Visa behaves at around the 60-ish level (or even below), and buy if I see the rest of the herd buying.
Monday, January 28, 2008
Chart Review: Yamana Gold Inc (NYSE:AUY)
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The measured move strategy (AB=CD, where C=opening low on Jan. 22/08) suggests a price target of 19.7-ish, the round number of 20 also makes sense as price target. If Yamana Gold (NYSE:AUY) can close above 17, then 19-20 is a definite possibility. AUY has also been trending up nicely over the past 4 trading sessions, so a close below 16 would invalidate the price target and break the trend.
Saturday, January 05, 2008
Research In Motion Limited (NASDAQ:RIMM)
Summary
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I got spanked by Research In Motion Limited (NASDAQ:RIMM) today.
I bought @113.5, had my stop @111, but today it gapped below my stop, so I had to manually sell it @108. Lost $5.5/share on that trade. 
It's getting harder to make a case for swing trading RIMM. In fact, I see more and more stocks with broken trends (FSLR, GRMN, CMG, RSTI, ISRG, etc.) which means less and less opportunities to swing trade. Probably safest just to stick with playing the Aggies for now, although uranium is starting to look interesting as well.
On the other hand, many of the inverse ETF's are starting to look very interesting:
Most of them formed very nice bases during Nov-Dec/07. Furthermore, something interesting happened on Dec. 27/07, and most of these inverse ETF's turned around. When so many markets are reversing like that in such a coordinated fashion, you have to pay attention. It's too late to buy the inverse ETF's now, but on the next pullback, I plan to be ready.
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