Published on
November 2, 2009,
3:29 am in
Trading and Weekly.
Tags: BGU, BGZ, ES, QID, QLD, Russell, SP500, TNA, TZA.
If you had slept through Thursday, the markets only went down a little bit on Friday. But if you got suckered in on Thursday’s trap, you probably got upset.
Remember that many mutual funds had their year end take place on Friday, which surely contributed to the selling pressure as they locked in gains and reallocated their portfolios. But Monday starts the historically strongest 3 months of the trading year. Of course last year wasn’t very inspirational. 
Reading articles and blogs over the weekend, it sounds ominous out there. But, when everyone gets scared, it may be time to pick up some cheap stocks. Looking at some charts, we look to be close to support in the S&P500, around the October lows.
The Russell has already cut through its October lows, after putting in a double top, and is approaching its September lows.
FOMC meeting this week and lots and lots of economic data with the monthly Non-farm Payroll report on Friday topping it off. The futures this evening have already put in a 10-point range and looking up. Should be the start of an exciting week. I’m going to concentrate on the ES futures this week and also watch the 2x and 3x ETFs like TNA / TZA, BGU / BGZ, QID / QLD. I’ll let you know how that pans out. 
The bulls were corralled today, letting bears play, but they came out to play several times. I spent my day looting the market, sometimes known as scalping, grabbing counter-trend moves during a trend day down. Using TNA BGU SSO I was able to spend a few minutes at a time just grabbing some pocket change. What the hell, a profit is a profit! ESZ9 was also fun but I traded the e-mini in the direction of the trend….down that is.
Financials should move around on Wednesday as WFC MS USB report before the open. BA should have some impact also. But the play to watch is the U.S.Dollar, at least for now. If it continues up, the market should confirm a down move.
For your reading pleasure, a short one and a long one:
Despite Bullish Momentum, Could Bears Be Regrouping?
Tenacious G – Inside Goldman Sachs, America’s most successful, cynical, envied, despised, and (in its view, anyway) misunderstood engine of capitalism.
…makes for a bullish recipe. The action in the markets today came after the close when earnings reports made the bulls run the markets up. Gee, at this rate maybe we’ll see new all-time highs by the end of the year. 
Back to reality, would be more of a topping process with a correction to come soon…..and maybe a big one. But I guess we won’t know until it happens. So today I scalped a few points with TZA and BGU, going both ways again.
Futures are up this evening, but it looks a bit suspicious that S&P futures could not make a new high after those AAPL and TXN reports. And the Russell is still lagging behind the other indexes. So is the RUT leading down or lagging up? Tomorrow should tell. Perhaps a little of that AAPL sauce will perk it up. 
The markets didn’t do anything today until the last 5 minutes, when it finally showed us some downward direction. Yes they were all down, but not by much. So I’m really wondering about direction for the remainder of the week. Generally the markets are bullish going into a holiday weekend….traders are a patriotic bunch.
Because of my indecision I didn’t trade equities today….I confined myself to S&P e-mini futures, and even then not much. I scalped for a couple points in each direction, shorting at 997.50 and going long at 995.50….2 points up, 2 points down. It pretty much stayed in that range much of the day.
Volume was down quite a bit today as compared to yesterday. Looked like we had plopped back to the middle of August. Even AIG got goofy again and couldn’t decide which way it wanted to go.
And gold really took off today.Gold was lock-stepped in with the markets, but smashed that thought process today. I’m wondering how fast the trip to $1000 will be?
I was preoccupied with downloading and using StockTwits Desktop today. I like it. I feel it is better than TweetDeck with all the amenities for tracking tweets about stocks. I had got comfortable with Tweetdeck, so it may take me a while before I am completely weaned off of it. But I really like the Watchlist and Groups features. I especially like when you click on a URL it opens within Desktop. The StockTwits TV feature is also very nice. So another tool to play with.
Well the plan for holding BGZ overnite worked great….sort of. I exited half the position in the premarket for a nice 8% just “knowing” the other half will double that in today’s crash. I mean Asia and Europe dumped….we would do that also, wouldn’t we? Duh! No! The markets gapped down at the open and trickled up the rest of the day. I let go of the other half of BGZ for about a 3% gain….still nice, but not what I was envisioning in the morning. 
That is one of those psychological hurdles I’m still wrestling with. Rather than be happy with a trade that provided me a profit, I mope about what I could of had if I had closed the entire position near the top. A variation of that is when I close a position that has hit my profit target and then watch it continue up. The burn keeps getting hotter as it continues to go up. AXL is a good example of that this week. It actually doubled after I got out. But I digress. You don’t need my personal demons. 
After letting go of BGZ, I played some scalps with TZA and BGU, yeah the opposite of BGZ. I got in and out of both with some cash in hand and then finished the day grabbing some more TZA to hold overnite. I’m really testing fate now…I’m 3 for 3 on my overnite holdings and going for 4. My chances are decreasing, but I don’t know if China is done dumping. If not, we go down. If yes, well I’ll be correcting myself in the morning.
Another big tell in the morning will be Initial Jobless Claims. Remember last week when they were a bit worse than expected? Yes the day ended up, but only after a bunch of down. Oh, and of course, it’s the day before OpEx. Wild is in the cards!
Happy Trading
No matter what side of the market you are on, there is no follow-thru in either direction…and there hasn’t been for a couple months. We are at the same place we were in early May. We’ve been stuck between 880 and 945….and this week it’s been 915 to 930. My, how exciting 
Economic reports today were worse than expected. You still have to wonder why we are up after reports that mortgages applications are down and a half million people lost their jobs? I think things started to weaken in the afternoon when traders noticed no one was selling cars and that several states were having budget problems.
I thought I was going to be happy when I heard that mortgage applications were down. And then I was almost ecstatic when I heard that ADP Employment report sucked…but no! Markets moved up, I couldn’t see why, but they did. I did shave shares off as the markets went up for a loss, taking almost half off. But I also scalped some long ETS like TNA and BGU, taking $50 here and a $100 there several times. It soothed the pain from my short positions, but I never recovered all.
I’m still in small short positions using TZA and QID. I’m looking for a spike after the Employment Report comes out at 8:30AM EDT to maybe come out breakeven for the week. After I unload my remaining shares, I’m looking to go out and buy enough beer to last the long holiday weekend
Up and down, but basically unchanged for the day. I got out of the BGU position on the early pop and then played it a few more times during the day….quick trades, none lasting much more than 10 minutes, but 50 bucks here and 100 bucks there, ended up a good day. I also took 2 positions in ES, S&P emini futures late in the afternoon. They were real fast plays but ended up with 4 points, aka 200 bucks.
I ended the day getting into TNA thinking that small caps didn’t do so well today and that a bounce would help them out the most. Usually the morning of an FOMC announcement meanders to the upside, but we also have some housing news and durable goods news in the morning. So it is a risky play but played with recent profits, so I’m comfortable if it fails…a little pissed maybe, but comfortable 
The global economy is not doing so well. Did you guys hear that?
The World Bank now expects the global gross domestic product (GDP) to contract by a record-setting 2.9% in 2009, compared to its earlier forecast for a decline of 1.7%. “Unemployment continues to rise throughout the world, housing prices in many countries are still falling… bank balance sheets are fragile, and much more consolidation and recapitalization required,” said the World Bank in a statement. “As a result, the timing and strength of the eventual recovery in the global economy remain highly uncertain.”
Wow! Unbelievable! I would never have guessed that, at least not by the way the equities markets acted the last several months. And everyone must have thought the same thing, because the markets took a dive at the incredible, totally unexpected news!
And after that initial drop in the morning, it was another boring trading day, much like the last couple weeks. I wasn’t holding anything over the weekend, so I couldn’t take advantage of the gap down. I did though get into some DTO just before the open, which continued down all morning because oil continued down all morning. After making $2 a share, I was flat again.
Near the close I nibbled on some BGU, looking for the large caps to have a relief rally some time this week. Also, traders seem to be very patriotic, so after this pullback, I’m looking for a rally into the July 4th weekend.
Sometimes it is easy to see what and how you should be trading, and sometimes you’re not really sure what to do. The last couple of weeks fit the latter bill, so my positions have been smaller and fewer. Don’t try for those home runs in this environment. Stick to base hits and take profits often
The indexes closed unchanged after an up and down day…so both the bulls and the bears are mad! I traded a lot of BGU and BGZ today, and they both closed near unchanged.
These markets are still consolidating. No technical indicators were violated. I’m going to bed early
Want to leave you with a quote from Art Cachin on CNBC:
Some of our “green shoots” may be poison ivy!
After the initial shock of the market being up first thing in the morning…and my short ETFs being underwater…a little patience paid off big time. Wow, 2 days in a row with a good pay-off! EDZ FAZ and DUG all recovered and turned green.
After unloading, I worked the market with BGU, getting in and out a couple times…adding to the coffers. I also ended the day opening another small position in BGU to catch an anticipated updraft tomorrow morning. I didn’t have conviction to buy a full position, so I just picked up a couple hundred shares. 
Is the pullback over? I think not. But trading fast, both up and down, makes for a busy day…and fruitful. After 2 down days of about 290 points in the Dow, we could see a little jump up, just like today. I would not be surprised to see 890 on the S&P500 in the next few days or weeks. The scary thought is, what if it continues down?
And did you see the talking head on CNBC….he said he expected the 
