7 years ago
Tuesday, June 29, 2010
Here's why we are waiting
The 1 min has gone positive, the 5 min has been positive, so we ar watching for late day strength, we only want to add the rest of our short position (bring us to the 75% short area) if the SPY CLOSES above $104.30, otherwise this may be another volatility false breakout. Don't worry if you miss a few points waiting, it greatly enhances your risk / reward relationship
Update
We are under our trigger, try to wait until the close (as close as possible to the close), if we are under the trigger or $104.30 go ahead and fill out the short positions using either shorts listed or the core positions mentioned earlier today. We want to wait a bit and see if the late day rally materializes, if not, then we complete our top plan.
Update
As of now, the 1-min hasn't showed any real divergences other than the one I mentioned earlier, for the most part it has been in lock step confirming today's price trend, however, the 5-min chart fell and quickly recovered in 4/5 charts. As I said last night, I was looking for strength later in the day, so it appears that is what we have as of now. I will continue to update, we should get a 1-min positive divergence before any move up, when it appears or "if", I'll let you know.
Update
It's way too early to say, I have to admit the size of the gap may is big and this may not be the best time to update a it may be effecting my analysis as we're still somewhat blind. The 5 min is moving down, which is expected, it's not in a negative stance yet, but could be. It looks like a very short term bounce is brewing. The trend could continue down after that, this is why I want to wait until late a.m. to decide with more clarity. But you may want to take advantage of any short term move up to reposition anything you may want to.
Clear my Eyes
It's always interesting to wake up, see a huge gap on the charts and keep rubbing your eyes until you are convinced what you thought you saw is really there.
I said last night that I didn't think we'd see strength in the a.m., but this is a whole different ball of wax we are looking at. This is why I had an ambiguous tone last night to my charts and analysis here and at Trade Guild, not because I foresaw something like this, simply because in the short term, I had no visibility whatsoever. That can happen for a couple for reasons, one of them can include as I mentioned last night, the Byrd passing may have totally changed the game, I didn't think so, I'm inclined to not think so, but maybe it did. In that case, if that is what happened, then Wall street is deconstructing the position they took last week as fast as they put it together, thus we have short timeframes following them in the other direction and the longer ones are like a tail or a ship with momentum, it takes them longer to turn.
Another scenario.... we are back to the crazed volatility game in which we see a huge gap down and then a rally back up, this would be one of the bigger volatility moves we've seen and we've seen some big ones.
The final scenario is kind of the same as the first (although there really is no end to the scenarios), the market is not bluffing and this market is ready to move down. In this case, we do the same as we have been planning on doing since we established the core short positions which are on the list 6/3/2010. We are at 50% of portfolio in these positions, (if you have been around awhile, were bought long before 6/3 at much better pricing) but the idea has been to add the final 25% and leave 25% in cash, as the market moves below the $104.40 area on the SPY. So be ready for either scenario. If you are long any stocks from yesterday, you should also have core shorts in place as those are the priority, so you should be largely hedged and not be in need of desperate action, meaning I would not just sell on this gap opening. Try to wait and see if this is a shakeout, if it continues down, then you have to do what you feel comfortable with, but if it goes below our bear trigger then be quick about adding the rest of the shorts to your position.
If visibility returns, then we'll have a good idea of which way to play this, I would guess it wouldn't be until late morning before we see what the 2 min chart will do.
Stay tuned today. Checkout any of the limit shorts that have been on the list that have not triggered as well, and even longs if they do trigger (some may).
I'll update as soon as I see something definitive.
Aren't tops fun?
I said last night that I didn't think we'd see strength in the a.m., but this is a whole different ball of wax we are looking at. This is why I had an ambiguous tone last night to my charts and analysis here and at Trade Guild, not because I foresaw something like this, simply because in the short term, I had no visibility whatsoever. That can happen for a couple for reasons, one of them can include as I mentioned last night, the Byrd passing may have totally changed the game, I didn't think so, I'm inclined to not think so, but maybe it did. In that case, if that is what happened, then Wall street is deconstructing the position they took last week as fast as they put it together, thus we have short timeframes following them in the other direction and the longer ones are like a tail or a ship with momentum, it takes them longer to turn.
Another scenario.... we are back to the crazed volatility game in which we see a huge gap down and then a rally back up, this would be one of the bigger volatility moves we've seen and we've seen some big ones.
The final scenario is kind of the same as the first (although there really is no end to the scenarios), the market is not bluffing and this market is ready to move down. In this case, we do the same as we have been planning on doing since we established the core short positions which are on the list 6/3/2010. We are at 50% of portfolio in these positions, (if you have been around awhile, were bought long before 6/3 at much better pricing) but the idea has been to add the final 25% and leave 25% in cash, as the market moves below the $104.40 area on the SPY. So be ready for either scenario. If you are long any stocks from yesterday, you should also have core shorts in place as those are the priority, so you should be largely hedged and not be in need of desperate action, meaning I would not just sell on this gap opening. Try to wait and see if this is a shakeout, if it continues down, then you have to do what you feel comfortable with, but if it goes below our bear trigger then be quick about adding the rest of the shorts to your position.
If visibility returns, then we'll have a good idea of which way to play this, I would guess it wouldn't be until late morning before we see what the 2 min chart will do.
Stay tuned today. Checkout any of the limit shorts that have been on the list that have not triggered as well, and even longs if they do trigger (some may).
I'll update as soon as I see something definitive.
Aren't tops fun?
Monday, June 28, 2010
Sticking to My Guns for Now
If this pans out the way I think and have advocated it will for the last several trading days, then we will have to take a look back and really learn something about Wall Street and just how far ahead of the information curve they really are. In this case, it seems the rally was based in large part on bets that a Senator would pass away before the vote on financial reform.
I'm still behind the positions listed in the last several days-Gold seems to be working out, some embers took the short on GLD a step further and made some money today on short/leveraged inverse Gold ETF's and made a nice gain in a few hours.
Today was a "nothing day" in my opinion, you can see the charts at Trade guild tonight.
I will just say for those who haven't taken positions but want to, our idea was to add some of these longs today on weakness-better pricing, better risk profile, but we don't want to get too aggressive until we see proof. What's proof? The SPY breaking above it's base around $108.50, certainly a move through gap resistance from the 23/24th of June around the $109 area, that would be enough for me to get pretty aggressive on filling out these positions.
Now the alternative to what I laid out on Trade Guild tonight is that the Byrd event changed the game, that it was an unknown. I doubt this to be true, I wouldn't be surprised if his caretakers were on the phone with Wall Street giving them updates on his health. So for now, nothing has changed yet and the plan remains the same, but we also have enough good trades there that I don't think it's wise to stretch the charts looking for more trades to fill out the list, although I did add a few to the list tonight-be careful as they are all in the same industry group, you don't want correlation, however a short and a long will work. If they aren't trades we are investing in or would invest in, I'm not listing them. Patience is your edge over Wall Street, it's a tough edge to take advantage of. Emotionally and logically we have the idea in our heads that if we are not working or doing something, we are not making progress. This simply is not true in the markets-it's your single greatest advantage.
Another misconception is the "I have to get a 70% to pass". Not in Trading, think of it like baseball, would you be happy with a 400 batting average (40%)? I think so. Risk management is so very important and it allows us to have a 300-400 batting average and still double our portfolios. Get over the "I have to be right more then I'm wrong" attitude, get over the "70% is a passing grade" and get over the "I don't want to take a loss".
If you can't take a loss, while it's small, eventually you WILL take a loss that will cost you dearly. This isn't about being right, it's about making money. So for now, observe, watch the markets, be ready to act, understand that you are not in a battle of wits with Wall Street, you are in a battle for cash and you don't have to outsmart anyone or be right more than you are wrong. Like they say, "Do you want to be right or do you want to make money?" It seems like a simple question to answer, but i think we've all been in the, "I don't want to be wrong, I don't want to take this loss" camp before. your job to be a successful market participant is to retrain your thought process, rid yourself of ego, and do the things that just do not come naturally.
As for tomorrow, yesterday's trades could be pretty nice trades, I think it won't happen first thing in the morning, but you'll want to watch for updates and add at those tactical levels I laid out above.
Finally, Welcome new members, thank you to our members that continue to support team Wolf.
Have a great day, and lets see if we can't take some money from some sheep.
I'm still behind the positions listed in the last several days-Gold seems to be working out, some embers took the short on GLD a step further and made some money today on short/leveraged inverse Gold ETF's and made a nice gain in a few hours.
Today was a "nothing day" in my opinion, you can see the charts at Trade guild tonight.
I will just say for those who haven't taken positions but want to, our idea was to add some of these longs today on weakness-better pricing, better risk profile, but we don't want to get too aggressive until we see proof. What's proof? The SPY breaking above it's base around $108.50, certainly a move through gap resistance from the 23/24th of June around the $109 area, that would be enough for me to get pretty aggressive on filling out these positions.
Now the alternative to what I laid out on Trade Guild tonight is that the Byrd event changed the game, that it was an unknown. I doubt this to be true, I wouldn't be surprised if his caretakers were on the phone with Wall Street giving them updates on his health. So for now, nothing has changed yet and the plan remains the same, but we also have enough good trades there that I don't think it's wise to stretch the charts looking for more trades to fill out the list, although I did add a few to the list tonight-be careful as they are all in the same industry group, you don't want correlation, however a short and a long will work. If they aren't trades we are investing in or would invest in, I'm not listing them. Patience is your edge over Wall Street, it's a tough edge to take advantage of. Emotionally and logically we have the idea in our heads that if we are not working or doing something, we are not making progress. This simply is not true in the markets-it's your single greatest advantage.
Another misconception is the "I have to get a 70% to pass". Not in Trading, think of it like baseball, would you be happy with a 400 batting average (40%)? I think so. Risk management is so very important and it allows us to have a 300-400 batting average and still double our portfolios. Get over the "I have to be right more then I'm wrong" attitude, get over the "70% is a passing grade" and get over the "I don't want to take a loss".
If you can't take a loss, while it's small, eventually you WILL take a loss that will cost you dearly. This isn't about being right, it's about making money. So for now, observe, watch the markets, be ready to act, understand that you are not in a battle of wits with Wall Street, you are in a battle for cash and you don't have to outsmart anyone or be right more than you are wrong. Like they say, "Do you want to be right or do you want to make money?" It seems like a simple question to answer, but i think we've all been in the, "I don't want to be wrong, I don't want to take this loss" camp before. your job to be a successful market participant is to retrain your thought process, rid yourself of ego, and do the things that just do not come naturally.
As for tomorrow, yesterday's trades could be pretty nice trades, I think it won't happen first thing in the morning, but you'll want to watch for updates and add at those tactical levels I laid out above.
Finally, Welcome new members, thank you to our members that continue to support team Wolf.
Have a great day, and lets see if we can't take some money from some sheep.
Update
There is nothing new, the 1 min is in line with price for the most part and the 5-min is still showing a positive divergence. At this point I still expect to see a move higher in the days ahead.
Update
Here's the 4C chart , there was a negative divergence out of the gate, but we still have a positive divergence into the lows intact. Go easy on the longs, we are adding them cautiously right now, above the open you can be more aggressive and above SPY $109 I think you can be more aggressive in adding the long positions.
From Trade Guild Today
He had a voice that was all his own, in fact, his voice was so recognizable, it was easily identified when some government eavesdropping was discovered, ease dropping on one of it's own senators. The man who went from the KKK to a tearful champion of dogs that couldn't defend themselves. There's a lot you can say about the Senator, he was an unique man.
However, this isn't political commentary. The financial reform bill that Wall Street applauded with huge bank rallies on Friday is now in jeopardry of being 1 vote short of the 60 needed to move it through the Senate. Scott Brown who initially supported the bill is now in the "toss-up" column.
I mention these things only because 3C tracks what the market is doing, however rare events like this that can not be foretold (yesterday I read he wasn't well, but I didn't get the impression he was going to pass the next day) can change the landscape very quickly. Luckily, as I posted last night, 3C can change quickly as well (it picked up a 30-min positive divergence which is substantial in a day, almost turning on a dime). I fully expected a rally, apprently fueled in some part by the financial reform bill that Wall Street seemed to like, (as I mentioned, they may have discounted the worst case scenario and it came out of conference a lot tamer than what had been discounted).
So today's 3C readings will be important to judge the viability of this rally/bounce. Keep an eye on Trade-Guild and of course members of Wolf on Wall Street (you can login from Trade-Guild) you'll see them with any analysis and actions I feel may be prudent in considering.
RIP Senator Byrd
However, this isn't political commentary. The financial reform bill that Wall Street applauded with huge bank rallies on Friday is now in jeopardry of being 1 vote short of the 60 needed to move it through the Senate. Scott Brown who initially supported the bill is now in the "toss-up" column.
I mention these things only because 3C tracks what the market is doing, however rare events like this that can not be foretold (yesterday I read he wasn't well, but I didn't get the impression he was going to pass the next day) can change the landscape very quickly. Luckily, as I posted last night, 3C can change quickly as well (it picked up a 30-min positive divergence which is substantial in a day, almost turning on a dime). I fully expected a rally, apprently fueled in some part by the financial reform bill that Wall Street seemed to like, (as I mentioned, they may have discounted the worst case scenario and it came out of conference a lot tamer than what had been discounted).
So today's 3C readings will be important to judge the viability of this rally/bounce. Keep an eye on Trade-Guild and of course members of Wolf on Wall Street (you can login from Trade-Guild) you'll see them with any analysis and actions I feel may be prudent in considering.
RIP Senator Byrd
