In 2001 my financial adviser advised that the people running my IRA would never allow the type of losses that I myself would suffer by trading. Ehhhhhh… wrong! -50% in a heartbeat. Thanks MFS. My wife got a 60% haircut compliments of Putnam.
I spent some time calling these fund companies pulling money out and putting it back in the markets. In other words, I day traded them successfully, taking advantage of the bear market until finally I yanked every last penny from said financial adviser and his lame mutual fund companies and went DIY. A couple years later biiwii.com happened and the rest is history, and a gain of several hundred percent on that IRA.
Anyway, preamble aside, this market has the potential to be like that phase where you successfully short the market, buy the market, short the market; i.e. trade the swings. Take the QQQ chart for example…
Well, my patience was tested this morning but I not only held the SPY puts, I also added more shorts while that thing mocked me this morning.
All those indicators I posted yesterday plus the BKX-SPX ratio this morning along with these charts not having broken my parameters kept the bear trades on. I was gritting my teeth this morning though.
DIA turned down from resistance.
Okay, one more hump for the bear case and then I’m going to go play chess with my daughter, who’s been snowed in all day and is B.O.R.E.D.
You have probably been around here long enough to know what a lousy bear I can be. Wrong psych makeup for it or something. It must be my sunny personality. ← Yes, that’s a joke. But I not only held the puts on the SPY, I also added another index short position (speculative and going unidentified for now so no one else tries it) to go with the Emerging Markets bear fund EEV. Anyway, furthering the bear case…
DIA is at resistance and recovery volume has been lame, really lame.
Yesterday we reviewed 3 charts, the 60 minute versions of DIA, SPY and QQQ with their respective decision lines. Well, here’s a view of the Cube after it cut its line to shreds.
You know, when you think about it you really can’t blame the Vampire Squid. It issued its analysis about a very over valued stock market on Monday. You cannot cry that Goldman is in cahoots with Bernanke toward an evil bullish plan. At least not now.
You can however blame the runaway greed of the least sophisticated investor sponsorship since this bull began in 2009 (actually, the NDX low was in Q4, 2008 if I am not mistaken?). Remember the sponsorship for silver in 2011? That was dumb or emotional money getting gung ho for the ‘Silver to $100!’ pitch amid rising inflation expectations. Not to say it can’t get there one day in the far out future, but in spring of 2011 that was pure hype.
In early 2011 the risk marker (to commodities) – as we noted back then – was as it is today in other areas; the TYX ‘Continuum’ chart was at a limit and so were inflation hysterics. Silver was one of the inflated assets that bubbled up back then. Now it’s a different animal enjoying the spirits.
These 60 minute charts seem to think the answer comes down to a very fine line for the 3 big boys of the US stock market…
QQQ and SPY look set to bounce with a couple Hammers formed at around the 38% Fib retrace levels. The 50 day moving averages look good right now as a limiter if bulls can manage to get a bounce going.
QQQ & SPY daily
The NDX led the SPX out of the 2009 bottom. The bottom panel shows QQQ in relation to SPY rolling over since the spring of 2012.
The most recent rally out of the summer was led by the emerging markets. The top panel shows the EEM-SPY ratio threatening to break down.
What’s it mean? Maybe the S&P 500 will just keep going up with a flight to equity safety tout, but as of this moment it is losing its leaders. Oh for a hard correction.
Is the NDX (QQQ) in a progression of higher highs and higher lows (yes, so far) forecasting new highs or about 80% of the way through completing an H&S top? I ask because I really don’t know. I’d say that the H&S is just conjecture and speculation while the series of higher highs and lows is fact. So there, I guess that’s the answer.
I’ll not stand in the way of it uttering ‘but but but… it’s not a Hammer’ all the way to a significant loss. It’ll be limited by this boundary.