It's hard to say for certain after reading this last article, it's hard to believe. I think there's going to be some serious blowback on this one.
http://www.zerohedge.com/article/paralyzed-fed-defers-decision-monetary-policy-primary-dealers
The Euro has liked it so far it seems although it hasn't travelled as far as it seems.
Keep an eye this morning on those bounce and long trades.
9 comments:
Brandt, do you agree with the Zero Hedge guy? Should we exit short positions in the run up to the QE2 announcement?
It's hard to say, this may be the Fed measuring how much the market can absorb, their view is definitely biased, but whether correct or not, I don't know. the action today and tommorrow shouls be watched carefully, especially how the dollar reacts. If you feel ncomfortable, you can always hedge short positions with some Ultralongs and go kind of net neutral until it clears up. In the meantime, using risk management, I would still consider taking the trades that trigger. POMO seems to effect a handful of stocks and the averages, so if I were really worried, I'd reduce my exposure to the shorts on averages and hedge with leveraged longs to reach a sort of net neutral, you can always switch them back around quickly. In any case, I prefer to have at least 25% cash on hand always. If you feel uncomfortable with the market action, then you may want to raise cash levels. RISK management is always the key so take a look at your positions and try to get them in line with reasonable risk management. As always, I have a link to an article I wrote on the subject linked at the top right side of the site. It's no time t swing for the fences, but have good, practical risk management.
After yesterday's announcement, this one is strange, especially as it comes during the week long Fed black out (no speech) period.
All I know is I'm getting clobbered on shorts that gap up!
It depends on your shorts, 90% of the stocks will move with the market, the difference is the shorts (good ones) will decline a lot further on bad market days, but as I have stated before, in a bear market there are pretty much more up days then down, just the down days tend to be a lot bigger.
Try looking at your shorts on a 2-5 day chart to get a feel for their trend and cut out the noise. Also check your risk management-my article is linked above. If you are too big, you might consider selling some-position sizing is crucial, especially to a new position that hasn't solidly moved in your favor. You add to them as they come to you.
Yes, I'm following risk management. Yesterday it was LIFE, today it's CELG. They didn't move much since 10/4 but the gaps take out the stops and then some.
Sector rotation, some of the bios I've been seeing have been shaping up
You can always send me an email and double check or get a second opinion, I can take a look at 3C and conventional analysis for you.
a 5 min chart shows some not so favorable volume in CELG thus far on today's gap
CELG highest volume today since August. Regardless, it blew away my end of day stop so another big hit.
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