Friday, December 5, 2008

Missed The Boat

Here's a snapshot of some of my orders for today:

Pretty much, I was going to close out all shorts at SPX 792~ and immediately turn long. Looks like that 792 number should have been SPX 822, the initial line I drew in my previous chart below. Sums up the day- missed opportunities. I have a lot of re-thinking to do over the weekend in terms how I'm trading this market.

Haven't had time to look at the charts yet, but from just a quick glance at today's close, we should have put in a higher low. Higher low, next is higher high? If we put that in, things are looking extremely good on the long side. I ended up buying that SSO position at end of day today in case we just blow through the gap area on Monday (from the last Monday's gap), but I suspect a pullback will be in play. I will likely update Saturday night with a chart of where I will add to SSO/UYG/QLD. For the time being, I will not be entering short positions as I feel the momentum has temporarily significantly shifted towards the long side.

I just had to show this to you guys. Seriously, is this what the 52% of the people that voted for Obama believe? If so, we're in deep sh*boop*, because what we don't need is people still thinking that things are getting better before they get worse. Why? Then we are ignoring the problem, because the problem doesn't exist in their minds.

Has any body noticed the market reacts the opposite way from the general thinking. Oil, houses, commodities were reaching new peaks not too long ago; newspapers, cabdrivers, barbers every one was following the trend of S&P 500 reaching new highs, every one was buying stocks. They all over reacted as the past 3 months have shown. Now there is gloom and doom every where. This will change with President elect Obama assure office. From what I have heard from him, he will be a Peoples' president, common man and main street will thrive, so will the economy. The gloom days will end in a few more weeks, look for the rainbow soon. Shorting at these levels can prove to be worst then being long in November 2007. We will see a new and prosperous USA emerging soon.
Edit: Back with my weekend charts:

Alrite, the bad unemployment numbers managed to be shrugged off and the market rallied on Friday. What gives? A lot of people are whispering about a Christmas rally, which would coincide with things in terms of Fib series and EWs, which I do not know enough about to comment on; but looking at my own charts, it would pay to continue to be very cautious on the short side. Yes, we are in a primary downtrend (aka bear market), but as they say, bear market rallies are the fiercest and fastest of all rallies. I've decided to not enter any more short positions for the time being as I feel the market is sending a message that it wants to go higher. I'd consider easing into some puts again if we get to SPY 95-96 (although will likely wait for 100), followed by SPY 100, followed by SPY 106 of positions.

There's a lot going on in this chart, but bear with me. Once again, we're coming into that gap zone from Monday's gap down, where it looks like we're right under the 25DMA as well as the middle line of the upper and lower channel. If we break this 88-90 gap, it would clear the way for a test of 95, where we first met resistance on a bounce, after the election highs. On a move up, especially with the Christmas cheer rally spreading, a run to 100 in the next couple weeks seems very viable. Above 100 though, would require us to break out of this channel we're in, and IMO not very likely as of this point. But, things will change if/when we get closer to those prices.

So, where does this put me in terms of trading this market? I'm looking right now to buy the dips, rather than short the rips. If we get a pullback next week, I would be a buyer at the 85 resistance/support that we've had a lot of fights over, these past 5 days. Any lower, I would be buying at the 82-83 low that we've held onto this week, with a stop right below at ~81.

All that being said, I am still in short positions, mostly Jan/Feb/June put options, that have time to work out, but I have one IWM Dec puts that will be begging for a pullback to exit out of.

The bigger picture:

We will likely test that 50DMA on any move up, but the 200DMA is well above us, and is continuing downwards.

Finally, a spotlight on one of my old-time-favorite stock, LDK:

LDK has been one of the most controversial solar stocks of the past, and perhaps of all solar stocks. They had some previous trouble with allegations of fradulent accounting pratices, which were eventually cleared- but the bias against them (IMO), never really faded. Anyways, LDK is one of the only solar companies that reported solid 3Q earnings, while maintaining FY08 earnings, and upping guidance for FY09. Which, is why I would like to dump my position in JASO as soon as a decent rally appears. It's a long term position, so I will have good tax treatment on that (0%!), so I'd really like to get something out of it, and not have to pay taxes to the next administration to give away as welfare.

So, LDK is seeing overhead resistance at the 15.50-16, where it's been unable to overcome that resistance twice now. A rally in the markets could easily spike LDK past the resistance and towards the 38.2 RL (~$25), which is also a level that corresponds to the gap down on 10/06. I may add LDK to my list of stocks/ETFs that I will trade if we get a rally moving. Currently looking at SSO, QLD, and I suppose LDK, for stocks to buy on dips.

Lastly, more of me trying to read into what happened in Taiwan, and infer from that the U.S. Markets' future:

Again, there's really no basis for this other than the fact that there have been a lot of similarities between what happened in Taiwan and what is happening in the U.S. in terms of politics, presidential elections, and stuff to do with that. Check this post for more information on that.

So, days to watch for if U.S. plays out like Taiwan:

Dec 16 - temporary high?
Jan 9 - temporary bottom?
Jan 19 - temporary high?

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