The stock market is stealing everybody’s earnings lately (even mine). The stock market slump has been fast and brutal. Its current six week decline is the longest since 2001 and that is saying a lot.
I will be watching the SP-500 1250 levels. If that level does not hold I will become a perma-bear and go completely short. I still believe the stock market will revisit the highs of 2007. Otherwise, I will be buying canned food and an AK-47.
Below are the charts for the SP-500 in a daily, weekly, and monthly time-frame. It is my humble opinion that the uptrend that started in 2009 is still valid but at the same time is very close to failing. Watch that 1250 levels closely. I remain cautiously optimistic. (note: Today I started seeing some weak long signals on short etfs, I have not acted on them yet).
SP500 daily 6-10-2011
SP500 weekly 6-10-2011
SP500 monthly 6-10-2011
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I was gone for a while. I was writing and testing new systems (I wrote or improved about 12 stock trading systems). They run the gamut of short-term, long-term, trend following, and counter-trend systems. I also read upon the work of John Ehlers and began implementing some of his stuff (I sound like Doc Rivers). I am very busy with finishing the MBA and I have to admit that it has been challenging. I am carrying 12 credits during the summer. I read a book called “Where are the Customer’s Yachts” and will discuss some jewels I gleamed on the text about stock market psychology.
Over the last 6 months I gained exotic knowledge about the international markets, in particular the link between sovereign debt and the world indexes. I will be writing in the future about the PIIGS (Portugal, Italy, Ireland, Greece, and Spain). Many analysts feel that Greece will default on their debt in the near future. Spain was already bailed out by China. Any debt default will spread…
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Maximum Pain is one of those theories out there that can be characterized as unproven, anecdotal, sometimes true & awe/fear/anger-inspiring. It’s essentially a big middle finger to the option-buying public from the Market Makers/assumed option sellers/hedgers.
The theory mostly comes from the general assumption/old-wives’-tale that [make up a percentage, say 80%] of all options expire worthless on Expiration Friday. While this is patently untrue (the majority of options are traded – bought and sold, and not held, well before expiration), the myth remains. In addition, market maker trade hedged, that is, they can have puts and calls, and stock of the underlying to be delta neutral.
Most options are sold by the market makers who leverage them against vast quantities of underlying stock. If they wanted to truly manipulate the market, they could sell/buy the underlying as needed or sell manipulate the futures market (like on May 6, 2010). As net…
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After the stock market operators decided to croak some of our longs on 12/31/2010 we seems eager to declare that they are just playing games. We believe the stock market is going higher for the time being. We are also ready to change our stance if conditions change.
PBJ- PowerShares Dynamic Food & Beverage Portfolio (the Fund) seeks investment results that correspond generally to the price and yield of the Dynamic Food & Beverage Intellidex Index (the Index). The Index is designed to provide capital appreciation by evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. The Index consists of stocks of 30 United States food and beverage companies. These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies. The…
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We have to buy a stock for one of our four paper trading accounts (we continuously practice and experiment our craft). In this edition we feature Mosaic Corporation. Its entry point is 74.25 using the Darvas system (breakout). I do not think we can get in but we will try. It is clearly breaking out of a double bottom formation. If you are interested, and entry point can be obtained when Mosaic is close to the bottom of the ascending trendline.
In another note, the petroleum group (energy) is trending these days. I have been getting hits on different systems for that group. Anardarko Petroleum (APC) is up 6 percent this morning.
Mosaic (MOS): The Mosaic Company (Mosaic) is a producer and marketer of concentrated phosphate and potash crop nutrients for the global agriculture industry. As of May 31, 2010, the Company operated through two business segments: Phosphates and Potash. The Phosphates Segment produces phosphate-based animal feed ingredients in the United…
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Today we have three etfs for your amusement and edification. The stock market has been really thin on volume. We expect that as managers go on vacation and leave their evil minions (underlings) to play with their egos, algos and their little computers. However, price over volume and price action has been good. We take whatever we can get and run.
EWM: EWM broke the symmetric triangle on 12/22/2010. Volume is light. iShares MSCI Malaysia Index Fund (the Fund) seeks to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the aggregate in the Malaysian market, as measured by the MSCI Malaysia Index (the Index). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. The Fund invests in the sectors, such as financial, communications, industrial, utilities, energy, basic materials, consumer non-cyclical and…
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In this edition we feature four stocks that we are trying to enter positions with real money today. We are cautiously long but ready to switch to a bearish stance as conditions change. We stay vigilant due to low volume during the holiday season. We are concerned that some “window dressing” might be happening as stock portfolio managers like to play games. Be careful and set your stops according to your systems or personal risk aversion.
MIDD: Initially featured in this blog on 10/6/2010 at a price of 65.26. Rejoice, because we get another entry point. The Middleby Corporation (Middleby), through its operating subsidiary Middleby Marshall Inc. (Middleby Marshall) and its subsidiaries, is engaged in the design, manufacture, marketing, distribution, and service of a line of cooking and warming equipment used in all types of commercial restaurants and institutional kitchens, and food preparation, cooking and packaging equipment for food processing operations. The…
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We recently finished our first 15 credits of the MBA program and as Thomas the Train would say: Bust my Boilers, we feel crossed.
Anyway, we got stopped out of a position in TLEO today with a 2% gain and decided to enter two new trades: one for our real account and two for our paper account. For our real account with purchased AXTI and in addition to that we purchased STN in or paper account.
AXTI: AXT, Inc. (AXT) is a developer and producer of compound and single element semiconductor substrates, including substrates made from gallium arsenide (GaAs), indium phosphide (InP) and germanium (Ge). It manufactures its semiconductor substrates using the vertical gradient freeze (VGF) technology. AXT manufactures its products in the People’s Republic of China (PRC). It sells compound substrates manufactured from GaAs and InP, as well as single-element substrates manufactured from Ge. AXT supplies GaAs substrates in two-, three-, four-, five- and six-inch …
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According to investment theory, the markets are efficient. By efficient it is meant that all the information related to an equity is known by all investors and the price paid in the market is the correct price. In addition, arbitrage does not exist as all investors that see the arbitrage will trade to take advantage of it, that it will return
Stock-Market-Exchange-Bruxelles
the market price to equilibrium quickly. Efficient market proponents despise technical analysis because they do not believe that the stock market can be timed.
Anyway, in our opinion, efficient market theory is fine and dandy in a world of robotic trading machines. It ignores the
most fundamental driver of prices: fear and greed. In environments where fear and greed are at extremes, arbitrage opportunities will come to fruition.
If all investors are privy to the same information, then, why do some hedge fund managers have to buy insider information? All investors will never have the same…
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There is synergy in all the indexes. As shown in the following charts, there seems to be agreement between the 50% retracement line and areas of support. We guess that is where we are headed. A month ago we saw problems but we were way too early to go short. The indexes broke the ascending trendlines two days ago. We will be looking to go short with any bounce. These retracements give the stock market room to breathe. Do not sweat it. Key levels of support are 2400 for SP-500, 10,750 for the Dow Jones Index, and 1140 for the NASDAQ. Watch them like a hawk.
Nasdaq Stock Market Chart for 11-16-2010
Dow Jones 30 Stock Market Chart for 11-16-2010
SP500 Stock Market Chart for 11-16-2010
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