We got lower than expected jobs numbers today. Good manufacturing numbers, Chinese stimulus, and almost a Greek debt deal. So it's a lot out there and judging from price action the markets like most of it.
Below is a cute rising wedge on the Dow Jones Transports $DJT daily chart: Until it breaks to the down side I'm not trying to short this market again.
We got lower than expected jobs numbers today. Good manufacturing numbers, Chinese stimulus, and almost a Greek debt deal. So it's a lot out there and judging from price action the markets like most of it.
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It's huge! (that's what she said) You can say it's overpriced and you'd be right if your talking about facebook stock but what about the Zuckerberg stock? The world is this kid's oyster right now. The opportunities the sheer size of the user base presents is priceless. They're offering 10% or so of the company and will have a low float. None of this is to say it's a shoe in. We live in a world of prices so even the priceless things have one. And people have to be willing to pay it. Everything and everybody is on facebook. We all know that. We all know they make money off advertising. We all know they'll have to grow like crazy to justify the rumored valuations. What we don't know is how they'll do it. That uncertainty coupled with the dot com memories tell us to be cautious. That's important because I'm not gonna say "this time is different" but I will say last time is not this time.
Long term investors want facebook shares I think. They don't want to overpay for them no, but for them to sell them hard the shares would have to be up a lot higher than they open @. Zynga is a poor comparison so I won't. I'm just saying the buzz is worth a play *I promise not to be greedy or stupid*. It's risky but I know for a fact there are people out there who want every share facebook is offering and have the money to buy them. So I know there is demand for the shares. I don't have to marry them but that's just me, some people marry their stocks. And if I see them trading cheap down the line it's a good chance to buy Zuckerberg to me. People who don't work @ facebook want facebook shares in their 401k's some time down the line. One or two brilliant ideas and facebook adds value quickly & easily. facebook stores? The diversity of the world is on facebook so the diversity of opportunities helps facebook by allowing them to change easier. Right now they change too much. These recent changes better be value adding. There's a lot they can do to add value. facebook school? Whole other facebook accounts not connected to your personal account. "go to meeting" looking rooms on facebook where meetings and classes and webinars happen. Of course there's no free lunch. facebook has to grow... a lot..... fast. And that is never easy. The IPO has to do well or it dooms the rest of the social media co.'s that want to go public. Dooms might be a bit much to say but it might not be also.. so. Weather you like facebook or use facebook means nothing. There are tuns of people who do so.... yeah. We will see, but I'd bet on Zuck. The kid did it and "doing" is everything. I sent an email out this weekend to Tom Sosnoff founder of 'tastytrade' co-founder of 'Think Or Swim' and all round trading Juggernaut. Why? because I was watching the throne (and trying to see if I could get in where I fit in.) Whatever business or field you want to be @ the top of in life watch the people in that business or field doing it, and doing it, and doing it well... And don't be afraid to reach out to them, they're only human.
So, the fact that he emailed me back was #Gshit. That grounded attitude that allows you to respond to emails on a weekend no matter how high up on the food chain you are probably has a lot to do with why he's so successful. I wrote him with a suggestion and a pitch to get down with tastytrade. If you don't know what tastytrade is it's a good ass network centered on investing/trading. it's a new network less than a year old but the info is top notch. You can learn a lot from how someone tells you no. Here's the exchange: "Thanks Rasool! Appreciate the gesture and the very nice note. I am very familiar with Stocktwits, although I like when people come directly to us, they do have a small but interesting market share. In any case, I would be happy to review ideas from time to time and please continue to stay in touch, Tom Sent from my iPad On Jan 29, 2012, at 11:30 AM, Rasool Cunningham <[email protected]> wrote: > there's a screen cast feature on stocktwits where you can record 5 minutes of your screen per recording. If you did this once or twice a morning you will soon dominate stocktwits. the stocktwits platform is full of people looking for the info you all share on your shows everyday and they don't even know it exists. > > I'd like to work for you in some capacity, (preferably tastytrade social media guy) but I also like to help people. So I'm gonna send you ideas I have on ways you can reach and teach and help more people and If I never get a to work for you if you use the ideas @ least I'll have helped more people through you than I could have on my own (help leveraged).... I'm confused by what he says here: "I am very familiar with Stocktwits, although I like when people come directly to us, they do have a small but interesting market share." And it's not just him, this is the prevailing bias right now in startups ran buy seasoned vets. They don't really want to use other company's as stepping stones. It may be a zynga stigma. Either way I don't understand this but you could fill the moon up with stuff I don't understand. Me personally I would use them all, but there must be something that makes the vets feel this way. I could chalk it up to hating on each other but not in this case because I've seen Howard Lindzon, creator of Stocktwits on tastytrade and I saw no tension infront of the scenes nor heard anything about tension behind the scene. Not like I'm connected enough to hear everything that goes on but I keep my ear to the ground. I see traders on twitter putting "%" in front of tickers and not the "$" which would send the tweets directly to Stocktwits. Some of these traders have their own companies or premium services. Why they don't use stocktwits is beyond me. With 406,000 people visiting stocktwits this month (according to Quantcast) why wouldn't you? It's hard to find traders as it is. I've yet to bump into someone who trades just out and about. You may have better luck in NY or Chi-town but social network sites mitigate geographical barriers to potential customers. If Stocktwits was bullshit and they never improved on the platform or it was just a bad experience I could see not wanting to use it. But stocktwits is tight work. The chart sharing and screencast feature is really good stuff. With the user base growing what's not to like? I racked my brain (which isn't too difficult) and the biggest con I can come up with is you don't own the content you post to stocktwits or any other social media site for that matter. That shouldn't be a problem as long as the content you do own is good. If 400k people are using stocktwits and your on stocktwits your goal there should be to have 400k followers on stocktwits. The same goes for twitter. According to Quantcast twitter had 87 million visitors this month. Compared to facebook it's not competition and stocktwits' 400k looks light, but compare that to your site's traffic. If tastytrade has over 400k viewers or 400k subscribers or even close to that then yeah it doesn't make sense to use too much energy trying to dominate Stocktwits. I don't have access to tastytrade's numbers so I can't say. What Stocktwits does is pull the traders out of that 87 million twitter users and put them in one place. @ that one place they give you tools to show your worth to potential customers if your selling or gives you someplace to see the worth of potential services if your buying. Or just information if your just a trader trying to trade. As a brand you should want to meet your customers & potential customers where it's easiest to find them. Mr. Sosnoff most definitely knows somethings I don't know, so I can't flat out say he's wrong. What I will say is I believe he's mistaken. 'tastytrade' is a good good network and Tom Sosnoff is a good good trader. Together they could dominate stocktwits, or @ least have a good shot @ dominating it. They should have @ least 10,000 followers on stocktwits I think. With the quality of the information they give that would be easy if they tried. He said he likes them to come directly to tastytrade, I think the goal is just to get them there and getting them there cancels out whatever negatives there are in using Stocktwits or another site to do it. At any rate, Sosnoff is a beast and 'tastytrade' is tight work so none of this is a knock, just an observation. If I'm missing something which is possible as hell, please feel free to leave a comment pointing it out..... Bruce was the shit! You hear a lot of Chuck Norris jokes, and nothing against Chuck, but you know why you never hear Bruce Lee jokes? Because Bruce Lee was no motherfugging joke my friends!
These 5 quotes can be useful to anyone in any field but they ring very true for traders. #5: Be always yourself and to express yourself, have faith in yourself... Traders, this can't be a better quote for a trader. Even if you buy a trading system make sure it suits you. You shouldn't have to conform to a trading system or style. The trading system should feel like it's made for you. With so many trading styles it's impossible that one won't fit. You will never be successful until your trading style/system is a reflection of you. And once you got it down pat have faith in yourself. How many times has second guessing yourself costed you money? #4: Don't think! Feel... Don't concentrate on the finger or you will miss all that heavenly glory. This goes to the first point a little, trading a system that fits you becomes almost second nature. you shouldn't have to think much about what to do in a given situation i.e. when you don't know what's wrong get out of the position!! You'll think much better once your out of the position. If you try to think in the middle of a bad trade you will miss all that heavenly glory. Because 9 times out of 10 you will lose money, get out of the trade and a lot of times you'll instantly see what you should have done, or what the problem was. When money is on the line don't think, act. And if you don't have the system down pat to where you can do that, don't trade until you do. #3 I do not believe there is a Chinese way of fighting or a Japanese way of fighting... Styles tend to not only separate man because they have doctrine that became the gospel truth and you can not change. Don't be a bull or a bear traders. be a successful trader. Don't be a Keynesian or Austrian economists. Don't be a system traders or a discretionary trader, be a successful trader. These labels are toxic in this ever changing market traders. George Soros called his book 'The Alchemy Of Finance' because he had to fuse together so many different aspects to be successful. This is true of all trading because no one system works forever all the time. #2 You know what I want to think of myself as? A human being.... Under the sky, under the heaven there's but one family... When looking @ macro events traders it's easier to figure out likely outcomes if you keep in mind that it's a person somewhat like you on the other end of the situation. Ask yourself what would you do and why. If you were stuck in a shit load of long US bonds with the market changing to an equity friendlier market, what would you do and how? If counter party risks are reduced like crazy would you stay long volatility? No.... Chances are no one else will either traders. #1 Be water my friend When it's a bull market be a bull traders, and when it's a bear market be a bear traders. When Keynesian-ism is working traders trade accordingly and the same goes for any other market condition. The market is gravity, be water my friends. You never see water fight gravity so you should never fight the market. It's a losing proposition that goes against rule number 1 of trading, don't lose money. (I said extended oversold readings, when I meant extended over bought readings @ the beginning of strong up moves, the same does go for oversold readings in the beginning of strong down moves) To expound on that and repeat some of it, everything is pointing to a pull back. Every indicator from MACD to the $vix points to a pull back. These are not to be taken lightly. @ the same time, price, volume, and time tell us the pull back may be a buying opportunity. This market is changing it's posture and while this change happens traditional indicators may give us false readings. I should say we may read them falsely because the readings aren't false we just take the wrong signal out of them a lot @ these times. I've been talking about major overhead resistance in the $spx for a week or so now... Here: The sky blue line is a trend line from the 2007 highs to the 2011 highs and extended right. It's @ 1330 right now but it's sloping down so as time passes it gets lower. I didn't want to see us run right up to it without pulling back and basing a bit because it may make the pull back a bit more severe. But the more I look @ this market the more it looks like that won't matter. We'll still get a pull back if we run right up to it and it still may seem sever but it looks like money wants to get into this market and a pull back where many are selling is perfect for that. With housing numbers picking up (existing home sales up 5%, number of houses on the market down 9%, median home prices up 2%) and financial stocks leading us higher the pull back looks like a buying opportunity. None of this is to say the American economy is going gang busters, but it is to say that it's not as bad as it seemed only 60 days ago. The slowdown in China points to more Chinese easing, so, bad is good there. Europe is not completely out of the woods but paths leading out of the woods are widening. The Iran situation is of concern but even there we see some light. Recent German and UN security council statements point to openness to talks on Iran's nuclear program. It's not pretty but it is what it is. you can point to a bunch of reasons the market will go down but most if not all are priced in. Markets are a discounting mechanism, @ least that's what they tell me, and right now it's pointing up for the world economy. The stock market is anything but crowded here so the pull back shouldn't be too crazy. The old winners are giving way to new ones and so far financials are filling the bill. There's nothing more bullish in our markets than seeing the financials lead this market higher. As always the longer the market goes without a pull back the harsher the pull back when it does come so buying those pull backs are tricky and one should maybe even wait for the market to turn up a bit before buying. If volume pics up during the down turn the volume should pic up even more when it turns back up, this will be a buy signal. And since not many are in the market any crazy down volume points to some short selling. Too much of that and reevaluation is a must. It goes without saying, but I'll say it anyway, a shock also changes everything... Oh, and remember traders, if it was easy traders everyone would be doing it... Happy hunting!!! "All a trader needs to know to make money is to apprise conditions. The big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend. And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting." ~ Jessie Livermore I googled "Jessie Livermore quotes" just to find this quote. I also found a lost interview conducted by Edwin Lefevre on @crosshairtrader's blog here. I did all this because this is exactly where we are now I think. The broader market (S&P 500) gave a major signal yesterday on low relative volume breaking through resistance from the 2007 top. Today it tested it and held. But since no big money is really in this market it's all on low unconvincing volume. Where has the big money gone? Here: "Washington, DC, January 11, 2012 - Total estimated outflows from long-term mutual funds were $5.59 billion for the week ended Wednesday, January 4, the Investment Company Institute reported today. Flow estimates are derived from data collected covering more than 95 percent of industry assets and are adjusted to represent industry totals." The masses are yanking money out of this market as usual @ exactly the wrong time. So it's no ominous sign it's the masses wrong again! But I'm seeing us so called pro's doing something even worse.... Over analyzing, over indicating, over trading, over EVERYTHING! If your in winners just sit in them!!! The sea-saw of the past 6 months has traders stuck in action mode. Every blog I read is saying "Watch this" and "Do that" when it's really time to do nothing... But sit......... We owe it to Jessie Livermore! The original trend follower, the Boy Plunger himself did not leave these jewels in vain. Everything he said still apply's and is as relevant if not more today!
Sure, the guy blew his own brains out in a hotel bathroom but that doesn't take away from his trading knowledge. I'd go as far as say it adds to what he left. How many times have you made a trading mistake and felt like eating a 45 caliber live round sandwich? Well, he had the heart to do it! We don't have to go that rout, we can learn from his mistakes. Our names may never be etched in stone like his but frankly I wouldn't want that. I want to make money off consistently good trades and that's it. Another livermore quote I love is this: "It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level, which should show the greatest profit. And their experience invariably matched mine –that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn" And he never lied right there traders.... He never lied! 9-13-12 Adding to this post traders it's time to be rare. It's time to be that rare man that Jessie spoke of. There will be a lot of news out ringing the sell alarm because there are powerful people outside this market. They want in and they want in at lower prices. For them to get in at lower prices you need to sell. Some will fall for it, don't be one. If you have good stocks at good prices HOLD THEM! Monster price gains take precedent over everything... No matter how bearish or bullish you feel price must confirm it. If it doesn't then your wrong. You might be right in the future but unless your trading out month futures contracts or options you must trade in the present. The $spx daily chart went bonkers today. Good housing start numbers and a good Spanish bond auction coupled with good German sentiment numbers sent the markets screaming higher. Yesterday I was leaning bearish and now I'm not and here's why... Bond traders in my opinion are the most informed traders in the game. This is even more so for those that trade the European bond market. With talk of on again off again hair cuts they have to be. If they're buying Spanish debt I'll be damned if I'm not buying American stocks. Don't get me wrong, there's a husky ass 200 day moving average that must be dealt with and by no means is a housing bottom in with certainty but price moves before certainty comes a lot of times. There are problems for this market and they're not small yet they can be solved. It won't be easy but they hardly ever are. The single most bullish thing from today to me is the move in Apple. Look @ the trend day on this puppy! This market has been lacking it's fearless leaders for some time now. Not today. Up 3.59% on strong volume $aapl displayed the leadership we've come to know and love.
This is a "find good stocks using your good system and buy them" type of signal we got today. Not laggers that didn't move with the market today but the ones that are leading in their industries. The ones that showed you today that they want to go higher. If you didn't participate today don't feel like you've missed anything because you haven't. This market is over due for a test of the October highs I think. I had a talk a few weeks ago on twitter with a super capable trader named Linda Finelli (@justcharts follow her NOW! if you haven't already.) about how hard it is to change your mind on blogs after blogging about feeling the opposite way about the market. Some call it flip-flopping. I'll tell you like I told her in so many words, any trader worth their weight in chocolate chip cookies can and WILL change their outlook on the market in a heart beat. No one knows what tomorrow's market holds. If you were bearish yesterday you had good reason to be, and if your bullish today you equally have good reason to be. Pride and ego are the enemy. I don't care how loud you've screamed from the top of the mountain, you go right back up there and scream the opposite if price tells you to! This market has been bipolar so I expect traders to be just as bipolar. Your trades shouldn't be. That's the key. You can't make huge trades one way and then make huge trades the other way and then make huge trades back the original way whipsawing yourself. That's the easiest way to lose confidence in your trading as the bigger your trades the more emotionally attached you'll be. When your thinking goes from bearish to bullish or vise versa your trading should go from bearish to NEUTRAL to bullish or vise versa. That means no trades for a bit and just watching while your emotions come back to neutral and your setups can develope or not. For me personally it means super small trades @ first. Trades so small I can't make real money on them but I can't lose real money on them either. For me they build confidence. If I'm right I'll add, if not I'm out... One of my many flaws is that it's really really hard for me to do nothing. So when I'm trading bad and my emotions betray me I trade super small. I'm talking 5 or 3 shares of a $10 or even $5 ETF, ETN, or stock. If I do this once or twice and get burned it usually kicks my ass enough to just sit on my hands. You get real moves and make or lose real money but you can't put any real emphasis on the moves in holiday markets.. That said, with the year most big funds have had it's any wonder that anyone went on vacation and many probably haven't. If you look @ the $spy volume for December 2009 (2.884 billion) and December 2010 (2.723 billion) we've already traded more shares than both @ 2.977 billion this December already, so somebody is still in the office. So I'm giving this market action more emphasis than I usually would. The $spx is having a bit of a rough holiday season. A look @ the S&P 500 daily chart says it loud and clear. We couldn't hold support if our lives depended on it.... The good econ data is of little or no consolation with recent market action so weak. The Shanghai index comes to mind here. Down over 20% while the real economy grew 8 or 9%. So we know you can have a divergence between the the real economy and the stock market. People say the China numbers are fudged and this is the blame but what about our own stock market and economy between 2000 & 2010? The economy grew while the stock market was flat.
Thing is, people have to eat, go to work, clothe themselves, be born and die which all cost money. People don't have to buy stocks. The defensive sectors are the best performing stocks right now and this should be duly noted. It can all be boiled down to the ECB being the lender of last resort.. Until this is unequivocally the case this market will go down or side ways. We're not tanking precisely because we have the Fed as lender of last resort. As a matter of fact our Fed right now is the reason European markets aren't tanking @ this moment. The liquidity measures they put in place was a preemptive strike. It was played down but crisis need a lack of liquidity to really get the snow ball rolling down hill. It's understandable to a degree why some in the EU don't want the ECB to be that lender of last resort because there's no policy cohesion so in effect the ECB would have their foot on the gas while individual nation states have control of the steering wheel and the break. The later of which they've forgotten how to use when it comes to their spending and there in lies the problem. In some ways the liquidity measures are not helping the cause as it gives EU leaders a super false sense of security and a warped sense of of how close to the abyss we really are. Think the warning in your rear view mirror "Objects are closer than they appear to be" @ the same time countries don't want to give up sovereignty understandably. But either there won't be any country left or they'll be giving said sovereignty to lenders in exchange for a bailout... so.. yeah. It's become apparent to me that these blokes don't understand that without a lender of last resort and growth nowhere to be found in vast swaths of the EU they won't be able to raise enough money to even kick the can down the road. This gives the market it's bearish tent. I think we can put the Santa clause rally to rest. No one will bid this market up knowing slow or no world growth is we'll see for as far as the eye can see. It takes some type of optimism for the future to get upside movement while it only takes uncertainty to get downside movement. And if we don't have anything else we have uncertainty... We have uncertainty coming out of our ears! So I'm playing this market to the downside. The European debt crisis is kryptonyte to the Fed's super powers until they realize they're stuck between a rock and the abyss. I think that won't happen until the European markets are in full death spiral which should be a good time to cover a short... good luck traders, and best wishes for the holidays! This market is breaking before our eyes. Leaders earnings guidance is coming in weaker than I expected. The Intel thing wasn't demand but a supply problem but it really doesn't matter. Lower earnings are lower earnings. The $cat guidance was the bearish icing on the cake.
I'm not gonna try to short this market yet but I'm not going to try to go long yet either. I started looking for entries to start building positions but it felt like I was trying too hard because I was. I've only made one trade the past week & a half and got shook out of that from trying too hard. I only have one trade on and the catalysis for that trade is coming Friday. If it doesn't move as expected I'm out and will be flat going into next year. Republicans are hell bent on using the economy to make President Obama look bad no matter who else gets hurt. On the other side President Obama missed his chance to really bolster the economy early in his presidency when he had a democratic house & senate. Instead of focusing all his energy on the economy he wasted a huge amount of political capital on the health care bill. This was because he felt that once republicans got one of the branches back his chance for health care reform would be gone forever. What he & his advisers missed was the fact that republicans can & will dispose of the bill when they get a chance be it now or 4 more years from now. The economy on the other hand looks to be on the verge of another pull back that could lead to a full fledged recession. With the S&P 500 trading @ a 20 p/e ratio and earnings cooling off this has the potential to get ugly really quick. Even with the US being the prettiest girl in an ugly contest it's no consolation if we're only down 40% when the world is down 65%. Absolute returns rule now. That relative performance stuff means little these days. People are raising cash and that's it. I'm not shorting because it wouldn't take much to move this market. A headline out of Europe, rumor or truth can send us flying. Thing is, those blokes seem not to have a clue. Larger ECB bond purchases is the key @ this point but it seems like it's a no go. Without the cooperation of the EU the Fed's ability to prop up the economy is limited as hell. The EU combined is the biggest economy on earth, if it goes into free fall we mine as well let it all fall and start from scratch. Let the market find a level on it's own. This would hurt a hell of a lot @ first but after the smoke clears a lot of problems would be gone. They would flow into the sewer with the blood and cartilage. There would be no more Occupiers, no more bickering between republicans & democrats, no more too big to fail banks, no more 99% or 1% just all of us 100% fucked, and best of all no more EU debt crisis. A clean slate and nothing but opportunities left..... Friday's close was ugly on the $spx. Here's a daily chart of the index. That inverted hammer shooting star looking two day pattern gives the market a look of weakness... something to keep in mind tomorrow (monday 12-5-11). I'll be looking for big buyers to start building positions. There are good stocks everywhere and if they don't start now then I have to start looking for more reasons why they wouldn't. There's a upper level of highly informed, highly talented, high net worth traders and that's the "they" I refer to. I need to see volume go up from these investors/traders starting to build positions.
They don't call it Hedge Fund Monday for nothing... Without these market participants I think the $spx get's range bound between 1250 and 1220. And the rest of the market will do the same. Side ways action until find direction again. Watch List TRGP KEX GPI EGO ABD ABMD CASC HITK TRID UBSI VICL KOG MELI ACN FFIV FRT These are a few good looking stocks I'll be watching. I chose them using a combination of technicals & fundamentals leaning towards fundamentals for some and technicals for others. All the charts are strong though or they wouldn't be on the watch list, so... Do some home work and make some money. Also, I came across a link on twitter to a good post. It was retweeted by @eradke originally from @EminExecutors . The name was so gangster I had to check the link out. It's their December newsletter and it's dope. It has charts that you can enlarge on it that are great. There's a Dow Jones Transports index ($DJT) chart on it I'd like to point your attention to. It's special because it shows a trend line break of a trend line found on the other indices but the rest haven't broken it. This stuck out to me because if you know anything about Dow Theory you know that it uses the $DJT as a leading indicator. The fact that it's breaking trend lines first is a bullish sign. This is rudimentary Dow Theory as many other factors need to be taken into account but it is a clue.. so... yeah. Here's the link> EminiExecutors December 2011 News letter |