I took about a 35% stake in SDS just before the close today. While I had expected an up market today and possibly Monday this market simply appears too weak to rally. I expect to be in at a 100% level soon as I expect the next 2 weeks to see the stock market drop well under the 11,000 level.
--Fred
Friday, November 26, 2010
Nigel Farage Speaks The Truth About The European Union
How long has it been since you've heard the truth? Wow! It's awesome! Watch Nigel Farage, ask the Euro fools, "Just Who the Hell Do You Think You Are?"
AWESOME, Mr Farage, the truth is awesome.
--Fred
AWESOME, Mr Farage, the truth is awesome.
--Fred
Thursday, November 25, 2010
Seasonal Bias?
Normally I am a big believer in seasonal bias but I also believe that we are in a long term secular bear market and that should take precedence over all else. This means that we should be extremely careful in guarding our capital as a secular bear market will strike when we least expect it and in ways that we least expect.
A major theme for me is that we have only seen one other true secular bear market in U.S. Stock market history and that started with the crash of 1929 and bottomed in July of 1932. This time will be different, of course, but will use the same tactics.
One difference is that it will be longer in duration. The run up to 1929 with 8 years; the run up to 2007 was at least 25 years and possibly 33 years, if you consider the secular bull market as having started in 1974. This suggests a minimal bear market of 7-8 years with a possible 10-11 year correction. But I believe we can also take a longer term view of the secular bull market as having started in 1932 and that we may see an extended slow growth period that lasts until 2030. This fits in well with our demographic issues.
But back to the seasonal issue: If you look at the decline from 1929 to 1932 you see that there really are no clear seasonal biases. An argument to that is that because the decline was so steep over such a short period of time that the stock market simply did what it had to do to get where it had to go while this time around the decline is much more leisurely. The counter to that is that the stock market must use everything at its disposal to destroy wealth and that it seems that we are starting to see unusual seasonal moves. The low in July makes sense but prior to that and since then we have seen the market move in seasonally unexpected ways.
They only answer up front is to protect your capital. When you take a shot at a short or a long, make sure you have a clear exit strategy.
--Fred
A major theme for me is that we have only seen one other true secular bear market in U.S. Stock market history and that started with the crash of 1929 and bottomed in July of 1932. This time will be different, of course, but will use the same tactics.
One difference is that it will be longer in duration. The run up to 1929 with 8 years; the run up to 2007 was at least 25 years and possibly 33 years, if you consider the secular bull market as having started in 1974. This suggests a minimal bear market of 7-8 years with a possible 10-11 year correction. But I believe we can also take a longer term view of the secular bull market as having started in 1932 and that we may see an extended slow growth period that lasts until 2030. This fits in well with our demographic issues.
But back to the seasonal issue: If you look at the decline from 1929 to 1932 you see that there really are no clear seasonal biases. An argument to that is that because the decline was so steep over such a short period of time that the stock market simply did what it had to do to get where it had to go while this time around the decline is much more leisurely. The counter to that is that the stock market must use everything at its disposal to destroy wealth and that it seems that we are starting to see unusual seasonal moves. The low in July makes sense but prior to that and since then we have seen the market move in seasonally unexpected ways.
They only answer up front is to protect your capital. When you take a shot at a short or a long, make sure you have a clear exit strategy.
--Fred
Patience No More
I will be all in on the short side here within the next few days...just looking for the best entry point(s).
--Fred
--Fred
Wednesday, November 24, 2010
Waiting...
It is looking like Friday or even Monday will provide the strike I've been waiting for as the stock market seems to have set up this little counter trend rally perfectly.
I expect sentiment to rise once again with the holiday cheer and stock market bounce and we will then have a perfect two week window in which to pull off the real counter trend retreat back below 11,000 on the Dow.
Whatever position I take I will likely keep a fairly tight stop on it; more on that when the trade is actually made.
--Fred
I expect sentiment to rise once again with the holiday cheer and stock market bounce and we will then have a perfect two week window in which to pull off the real counter trend retreat back below 11,000 on the Dow.
Whatever position I take I will likely keep a fairly tight stop on it; more on that when the trade is actually made.
--Fred
Sunday, November 21, 2010
The Week Ahead
I expect to take a position in SDS if and when the S&P hits 1,218, with a two percent stop.
--Fred
http://www.acclaiminvesting.com
--Fred
http://www.acclaiminvesting.com
Friday, November 19, 2010
Staying Focused & Solvent
At this time I am out of the stock market and simply waiting...
I believe that to become a good stock trader one must hone their skills just as an athlete or salesman would. One of the most important traits on the road to success is being focused and when dealing with the stock market it is easy to become distracted by those who truly believe in a particular stance and those who simply have been trained to keep you bullish on whatever they are selling.
A year and a half ago I stated several times publicly that I believed the stock market would likely "close the gap" up to the July 2008 lows around 11,000 on the Dow. At the same time I continued to trade with a bearish bias; why did I do so? There are a number of reasons but the main one is that I knew that our troubles are long-term and when someone would state a bullish stance I felt the need to correct them...BIG MISTAKE because this got my ego involved and got me distracted from the trade.
Another reason is that I listened to too many smart people who make a living out of voicing their opinions. I don't mean Jim Cramer, I mean Richard Rusell and Gene Inger, both people I respect but I have found out that neither are good for me as a trader because they are selling a service and that service really has little to do with stock trading.
To make a long story short I now make every effort to look at the stock market with total objectivity and I always keep in mind that, "the market can remain irrational longer than I can remain solvent."
--Fred
I believe that to become a good stock trader one must hone their skills just as an athlete or salesman would. One of the most important traits on the road to success is being focused and when dealing with the stock market it is easy to become distracted by those who truly believe in a particular stance and those who simply have been trained to keep you bullish on whatever they are selling.
A year and a half ago I stated several times publicly that I believed the stock market would likely "close the gap" up to the July 2008 lows around 11,000 on the Dow. At the same time I continued to trade with a bearish bias; why did I do so? There are a number of reasons but the main one is that I knew that our troubles are long-term and when someone would state a bullish stance I felt the need to correct them...BIG MISTAKE because this got my ego involved and got me distracted from the trade.
Another reason is that I listened to too many smart people who make a living out of voicing their opinions. I don't mean Jim Cramer, I mean Richard Rusell and Gene Inger, both people I respect but I have found out that neither are good for me as a trader because they are selling a service and that service really has little to do with stock trading.
To make a long story short I now make every effort to look at the stock market with total objectivity and I always keep in mind that, "the market can remain irrational longer than I can remain solvent."
--Fred
Thursday, November 18, 2010
What's Really Happening in the Global Economy
Too many people are willing to delude themselves into believing that things can be different this time and from what I can see, nearly all of them are running the governments of the world or are still trying to sell us stocks via CNBC.
If you want a great perspective on exactly what is going on I suggest you read books about the economic crisis of the 1930's that were written in the 1930's. I am currently reading "A Bubble That Broke the World" and it is fascinating to see the powers-that-be making the EXACT SAME MISTAKES. They throw good money after bad believing that all they need is time and things will get better, just as they have for decades and decades. The problem, of course, is that for all of those decades we have slowly been blowing the greatest financial bubble in the world and there is simply no way to stop it from deflating.
BTW, the very best investment you can make these days, assuming you're pretty much an average person, is to stockpile food and drinking water. I also suggest you make sure you can defend yourself and your loved ones, though I don't necessarily believe it will get that bad for most Americans, but better safe than sorry. Having a bit of gold and cash may come in handy but keep in mind what you will want the gold and cash for.
I am stockpiling soup and other basics. I like soup because all you need is a can opener, no water, no milk, even the heat of a stove is optional. If I never need it for an emergency (such as a breakdown of trade that causes food shortages) I can still eat it or give it away to the needy.
...and no, I am not a nut, I am a student of history. ;-)
--Fred
If you want a great perspective on exactly what is going on I suggest you read books about the economic crisis of the 1930's that were written in the 1930's. I am currently reading "A Bubble That Broke the World" and it is fascinating to see the powers-that-be making the EXACT SAME MISTAKES. They throw good money after bad believing that all they need is time and things will get better, just as they have for decades and decades. The problem, of course, is that for all of those decades we have slowly been blowing the greatest financial bubble in the world and there is simply no way to stop it from deflating.
BTW, the very best investment you can make these days, assuming you're pretty much an average person, is to stockpile food and drinking water. I also suggest you make sure you can defend yourself and your loved ones, though I don't necessarily believe it will get that bad for most Americans, but better safe than sorry. Having a bit of gold and cash may come in handy but keep in mind what you will want the gold and cash for.
I am stockpiling soup and other basics. I like soup because all you need is a can opener, no water, no milk, even the heat of a stove is optional. If I never need it for an emergency (such as a breakdown of trade that causes food shortages) I can still eat it or give it away to the needy.
...and no, I am not a nut, I am a student of history. ;-)
--Fred
Wednesday, November 17, 2010
Starting a Business?
Stole another one from Mish today:
Next time you support some government project or regulation stop to think about the damage it will do along with the supposed good it will do.
--Fred
Next time you support some government project or regulation stop to think about the damage it will do along with the supposed good it will do.
--Fred
Neutral on Market Short Term - Exited SDS Position
The Investor's Intelligence newsletter today painted a very bearish picture as bullish sentiment has risen to heights not seen since early May, two weeks after the market top. The balance to that is a very bullish short term picture painted by the Quantifiable Edges newsletter and the seasonal affect heading into the Thanksgiving holiday.
This morning I exited my short position with a small gain with the intention of reevaluating prior to Thanksgiving or the following Monday. I believe the stock market is likely to struggle off these levels and stage a rally for the next week, but regardless, I plan on letting the stock market clarify it's position before I take another position.
--Fred
This morning I exited my short position with a small gain with the intention of reevaluating prior to Thanksgiving or the following Monday. I believe the stock market is likely to struggle off these levels and stage a rally for the next week, but regardless, I plan on letting the stock market clarify it's position before I take another position.
--Fred
The Winds of War?
A very interesting article from CNBC at http://www.cnbc.com/id/40229609 that shows an increase in tensions very similar to what has been seen many times throughout European history. If you disagree I suggest you read the very informative and timely, 'A Bubble That Broke The World'.
--Fred
--Fred
Tuesday, November 16, 2010
Added To Short Position
I've added to my short position at the 11,000 level on the DJIA. The stock market toyed with that level much of the day but showed little ability to bounce and the trend remains down until it doesn't. Therefore I have increased my SDS position to 100% with no stop but I will likely sell all on a strong open tomorrow morning. A weak gap up will not impress me; I will need to see a strong, across the board rally to exit this position.
--Fred
--Fred
Monday, November 15, 2010
Quantifiable Edges?
I've been getting a free subscription to the Quantifiable Edges newsletter for at least a week now and I really like it. Right now they are suggesting a very strong upside potential and I have to say that, along with some other seasonal evidence I've been exposed to, I do believe there is a chance we see a continuation of the rally up until Thanksgiving, and possibly a strong rally as volume lightens.
While my trade from earlier today turned positive quickly I will be looking at the stock market closely tomorrow and may exit this position and wait for a better entry just before or after thanksgiving.
I would also like to add that another leg up her would be the icing on the cake and would create an almost perfect short setup.
While my trade from earlier today turned positive quickly I will be looking at the stock market closely tomorrow and may exit this position and wait for a better entry just before or after thanksgiving.
I would also like to add that another leg up her would be the icing on the cake and would create an almost perfect short setup.
NY Fed Manufacturing Index Takes a Dive
http://globaleconomicanalysis.blogspot.com/2010/11/ny-fed-manufacturing-survey-new-orders.html
The above report on the NY Fed Manufacturing Report came to me from Mish's blog, always an excellent source of information.
But how does this factor in to the trade? For a long time now it seems that the stock market has been levitating way above where it should be. Yes, I expected the DJIA to reach the 11,000 level before resuming the secular bear market and it did so right on cue, but since August of this year the stock market has been on a tear that made little sense, except, of course, for the affect of Quantitative Easing.
But now that that has been front ran and all the little guys have been suckered in it seems like all the dominoes are lined up perfectly and even the slowdown warned about by Consumer Metrics seems to be finally showing up in the official economic numbers.
LOOK OUT BELOW!
--Fred
The above report on the NY Fed Manufacturing Report came to me from Mish's blog, always an excellent source of information.
But how does this factor in to the trade? For a long time now it seems that the stock market has been levitating way above where it should be. Yes, I expected the DJIA to reach the 11,000 level before resuming the secular bear market and it did so right on cue, but since August of this year the stock market has been on a tear that made little sense, except, of course, for the affect of Quantitative Easing.
But now that that has been front ran and all the little guys have been suckered in it seems like all the dominoes are lined up perfectly and even the slowdown warned about by Consumer Metrics seems to be finally showing up in the official economic numbers.
LOOK OUT BELOW!
--Fred
Investor Sentiment at Extreme Levels!
I was surprised to see the ISE Sentiment Index (ISEE) at 161. That's 100 points above the 52 week low and only 24 points away from the 52 week high. This indicator is very volatile, from what I've seen, but considering the late day plunge I am very surprised. At Friday's close it was 84.
Short Position Taken
Investor's Intellegence reported today that Buying Climaxes took a big jump upwards and so that adds the last straw to the camel's back. Sentiment is very high according to AAII also and it appears that all the smart money that front ran the Fed's Quantitative Easing Program is now selling (everything) and the typical investor is panic buying, afraid of missing the rally to new highs. This is a classic stock market top, ripe for the picking.
Investor's Intellegence has also reported strong insider selling for some time now and let's face it, this rally is long in the tooth, even if you are long-term bullish, which I am not.
I took a 50% short postion in the stock market via SDS. I won't use a tight stop but instead will allow the market some leeway as the next 6 days up until Thanksgiving may provide a bit of seasonal support.
Investor's Intellegence has also reported strong insider selling for some time now and let's face it, this rally is long in the tooth, even if you are long-term bullish, which I am not.
I took a 50% short postion in the stock market via SDS. I won't use a tight stop but instead will allow the market some leeway as the next 6 days up until Thanksgiving may provide a bit of seasonal support.
Sunday, November 14, 2010
Friday, November 12, 2010
Stopped Out - Flat Trade
I was stopped out of the SDS trade initiated earlier today, resulting in a flat trade, with no loss and no gain to speak of. My sale was a bit higher than the buy but just barely made up the commission.
I'm prefer that as I do not want to be in the market over a weekend unless we are really building to a panic and the price action today suggest we are not quite there.
I will also point out that historically, buying about two weeks prior to Thanksgiving offers a positive bias, so let's see how next week goes.
--Fred
I'm prefer that as I do not want to be in the market over a weekend unless we are really building to a panic and the price action today suggest we are not quite there.
I will also point out that historically, buying about two weeks prior to Thanksgiving offers a positive bias, so let's see how next week goes.
--Fred
Stock Market Trading: Short Via SDS
I've decided to start fresh on this blog now that I've moved from my hosted site to blogger.com.
Today I took a 50% short position in SDS at $26.40 with a stop loss order at $26.20.
Reasons: Extreme bullish sentiment according to Investors Intelligence and AAII; entering the weekend with a potential panic developing over the European debt issue and currencies wars; over extended stock market; longer term bearish expectations in the macro economy based on Consumer Metrics Institute data.
Adjusted stop loss to $26.45 at 11:26 PST.
--Fred
Today I took a 50% short position in SDS at $26.40 with a stop loss order at $26.20.
Reasons: Extreme bullish sentiment according to Investors Intelligence and AAII; entering the weekend with a potential panic developing over the European debt issue and currencies wars; over extended stock market; longer term bearish expectations in the macro economy based on Consumer Metrics Institute data.
Adjusted stop loss to $26.45 at 11:26 PST.
--Fred
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