The markets acted fairly well until the last hour. They sold off pretty hard, still ended in the green but well off their highs. The real fireworks started after the close. AAPL was halted pending their earnings report. They came out with “Blow Out” earnings….or so it seemed. The futures took off, especially NQ futures, along with QQQQ and QLD. But then word broke that Apple had changed their accounting method….dive, dive, dive.
It looked like a crash was taking place…futures dove hard. And then AAPL opened for trading…gapping down 10 dollars, draggging the Q’s and related stocks. But, just as fast, comparing apples to apples so to speak, AAPL still beat expectations using the new accounting, and everything reversed. AAPL, the Q’s and futures contracts returned to where they ended the cash day earlier. AAPL beat, but not as fantastically as first thought. 
So, stocks ended up after three days of losses, but there was bad news like existing-home sales tumbling and some not-so-bad rumors like support for Fed chief Bernanke’s reappointment. It was still a mixed bag.
As I’m writing this, futures are diving pretty hard. Over night trading looks very, very volatile tonight. U.S. Dollar taking off. We’re in for some ugly stuff. 
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 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.
Oh my, what a wonderful day. GS GG Jul 135 calls bought yesterday bumped me to another tax bracket today. 
GS gapped up in the morning and continued to move up. After gaining 100% I just had to take profits, and luckily it was near the top!
Besides the great play in GS calls, I also worked with DIA calls, DDM and QLD during the day. I was in the groove and had a totally fun , but tiring day trading. I got in and out of all, but still have my DYY positions, and a smidgeon of DDM.
Although I had a good day, the market was actually pretty crappy. It was a slow grind up and then a pretty quick fall into the close. Looking at how oversold the markets were by the end of day on Wednesday, you would think the bulls could mount a greater attack, much less peter out at the end. This market is very indecisive on which way to go, so maybe the bulls and the bears just need to get along for a while 
…you whipsaw market. I never did recover today from getting my shorts whacked…BGZ and TZA. But I did scalp using TNA and QLD …fast scalps…to get some of my money back. TNA is the inverse of TZA, both 3x ETFs of small caps…TNA the bull and TZA the bear. BGU is the inverse of BGZ…large caps.
Although my account is a bit smaller this evening, I still put today in the win column. Why? Because I obeyed my trading plan…I kept my stops in place…I let the loss go and didn’t dwell on it. Now I have reviewed it again this evening and it was greed that let me lose. About an hour before I was stopped out, in the pre-market, both my positions were green. I could have taken a couple hundred dollars, but greed said go for more and I end up losing several hundreds.
So then I started scalping TNA since the market was going up. And since I had just been burned, I did not take as large a position as I had lost. But for about 1 to 5 minutes of risk, I scalped $50 to $100 easily…and did it over and over. So I was happy…still in the red, but the process worked. Now the ironic part, if I had held my original position all day long, by the end I would have been deep into profits. 
So now what? Well, I’m 100% in cash and looking for the markets to go down….but only for a little while. The U.S. has a knack of getting bullish, on lower volume, going into a patriotic holiday weekend. So we’ll see.
Futures are trending down this evening, along with Asian markets. But we know this market turns on a dime…as in today. Be careful out there. 
How else can you explain the action in the markets today? Trend day up. I think non-believers were shorting in the first half of the day….and then covering in the afternoon….yes, I think it was a short-covering rally, but, as I had to change tactics today, it’s hour by hour in this market.
Today after markets gapped up, I went long QLD and found a few stocks that looked enticing: JRJC ARM ACAS. I bought all my longs because they were approaching or at the 8ema on their daily charts. They all did well. But as the end of the day approached and they took off, I claimed my profits and closed them out. And, since the market was looking like a 1999 blowoff, I nibbled a short position buying BGZ, the large cap 3x bear fund. Even if we get a continuing gap up on Tuesday, this was a quick up move and I’m looking for a quick move down just to compensate for the move up.
Now for the case of a continuing bull….VIX was down today, almost going sub-30. And, maybe last week was enough of a pullback to get all those money managers back in a buying mood. And, maybe tomorrow’s Building Permit report and Housing Starts report will be better than expected. So….I may be stopped out of BGZ real quick and getting into BGU. 
It was a down week for the markets, but an up week for my account. And I was trading the opposite direction of the market all week. I did come into the week fairly short with QID FAZ and QQQQ puts, making it a very successful Monday, but I didn’t think it would continue. So I started to get long by the end of Monday. It was QLD and BGU that made money by the end of the week. Every day held opportunities for the bulls and the bears. If I was a bit more nimble, I could have entered and exited faster to take advantage.
It was the worst week for the markets since the bottom in early March….and the S&P and Dow closed near the lows of the week. So I’m thinking we continue down. This notion is being confirmed with the futures this Sunday evening and a real poor start in the Asian markets. I’ll continue this week with the same tactics as last week…smaller positions and quick, small profits. Of course, just because it worked last week…how does that go….previous results do not guarantee future gains.
Looks like the worse the news the better the market performs. WMT did not have great earnings, first time unemployment claims increased, producer prices increased 3 times more than expected, and the car industry did not really give us good news announcing dealership closings. But did the markets care? Hell no…up, up, and away!
My underwater QLD turned a bright green during the day…several times. It was a definite “buy the dips, sell the rips” kind of day….getting in and getting out frequently with small profits. I used the 2x and 3x ETFs. I was left holding small positions in QLD and BGU overnight. And remember, Friday is the last day to trade May options. Options expiration day….ooooh….fun 
I missed most of the trading day due to a family emergency. I was able to check in a couple times during the day, but just didn’t have enough information to trade. I did make one trade in the pre-market after the sad retail numbers came out. I picked up a starter position in QLD, which by the end of the day was underwater 
I didn’t get out afterhours because the pain was not that great. I’m thinking that after a bit more down, it will be time to see if the rally continues, or at worst, a bounce. Cash is my big position now, but if I had hung on to the shorts I had yesterday….well, woulda, coulda, shoulda!
I’m gonna spend the evening reviewing chart after chart after chart, and checking on the news of the day. I hate getting out of sync with the market. 
Many companies looking for money by diluting their outstanding shares…thus making their stock price go down. And they all were going down…until about 2PM EDT when the bulls came back from lunch and wanted to skin the shorts. But boy, what an opportunity.
So, as I wrote last night, I had QQQQ puts and FAZ from yesterday, which were looking pretty ugly in the pre-market, but turned at the open and made for a very profitable day. I also picked up some IWM puts during one of the intraday rallies. I covered all short positions during the lunch hour and thought I was done until about 1:30 when the Dow and S&P500 charts showed some bottoming action. About 30 minutes later it looked like a confirmation and quickly picked up some QLD and BGU. I held on for about 45 minutes and cashed out again on the long side. Oh what a glorious day….well, profitable anyway.
Tonight I sit in cash trying to figure out something with the market. Being options expiration week, and tomorrow being Wednesday, usually the most bullish of opex days, I’m looking for some bull action. If you take a look at the S&P500 5min chart, you can see a cup and handle formation, usually a bullish formation.
I’m just going to see what the market brings in the morning.
Published on
January 17, 2009,
11:20 pm in
Tools, Trading and Weekly.
Tags: FAS, FAZ, QID, QLD, SKF, SSO, Tools, TWM, UWM, UYG.
Thursday and Friday were both nice green days, but the week still ended down in the red. It will be interesting if “inaugural exuberance” pulls us up for the next week
The first 2 weeks of the new year have been downers, but I’m thinking the markets need some relief before continuing their trek down. Although the S&P500 came close to the December lows, it never broke through and this 840 – 850 area is looking like support…much like the 940 – 950 area looking like resistance. So I’m thinking 100 points up and down for a while. We’ll see.
SInce the short and ultra-short ETFs ( QID, SKF, TWM) have been good the first couple of weeks, I’m thinking the long and ultra-longs should work out here for a bit (QLD, UYG, SSO, UWM)…. and don’t forget those new 3X ETFs like FAS / FAZ.
I’m spending the weekend experimenting with my charts and scans in TradeStation and converting some of my TCnet scans to TS to learn EasyLanguage. Of course, my early day experiments are more fruitful than my late day ones…hiccup….pardon me
…for me anyway. Lost the Internet about noon and didn’t get it back for 8 and a half hours! I’m still holding on to some QLD, DDM, SSO and UYG…but I’ll be holding them probably until next Wednesday anyway 
Time for a rest and to enjoy family and friends, and to be thankful for all of our many blessings! If I take a drink at every place I visit, hell, I can’t trade anyway
