Market Update for Thursday, 11/17

Still looking bearish.  Outlook from yesterday could not have predicted today's action any better.  Stock indices and currencies were weak, while energy (crude oil) was very strong.

The trend models are the same for tomorrow.  Correlating asset valuation has the S&P dropping much lower.  However, this is still a very much news driven market so be ready for volatility spikes. 

Keeping the same playbook for now!

Interview with Kyle Bass (link via Zerohedge).  Worth a listen!

Good read

http://www.zerohedge.com/news/jpmorgan-issue-cmbs-backed-defaulted-loans

I'll summarize the article for those who may not understand it: Creative greed.  JP Morgan creating another derivative that carries too much risk yet because of it's complication, few will question it.  Perhaps this newly created product will work for them as a successful investment, but that doesn't mean it's a good idea.

That's why it's best to manage risk on a smaller level and diversify your exposure.  Over complicated finance has a history of getting messy.

Market Update for Wednesday, 11/16

Trend model updated.  Like I said yesterday, a very mixed environment.  Did not get a pullback, but did not get extreme bullishness either.  There were plenty of opportunities to be a seller, and I think those opportunities will exist throughout this week.

Commodities continue to go up (pricing in of QE).  Meanwhile, currencies are pulling back nicely after all the rumors last week. Using the trend sheet, it's easy to pick the winners/losers and position accordingly. 

Looking longs: energy
Looking short: euro currencies

Market Update for Tuesday, 11/14

So selling came in today as we are in a midst of a pullback.  We are in a very mixed atmosphere as seen in the bullish/bearish sheet.  We have not gained enough momentum to drop fast, but it appears we will be in pullback mode for a good part of this week.  Of course, news out of Europe could change things, but if most of the rumors were bought up last week, we could see the sellers getting the upper hand this week.

Tech was very mixed today.  AMZN and GOOG were very bullish but AAPL was weak.  Overall, I will be looking more towards the short side.

So for now, looking short in the financials and S&P and Dow.

Market Recap for the Week Friday, 11/11

The markets rallied today to close positive for the year.  It's very typical to see big players push up the market on light volume holidays, especially Fridays.  Now the headlines for investors can make them feel comfortable over the weekend; keep them invested.  Good chance that selling will resume next week.  The Nasdaq was much weaker in this rally, which is not a good thing.  Tech is normally a leader.  Also, copper was not leading, which can be a nice tell.

Looking at the trend model, there is a lot of uncertainity in the market.  One can see this fundamentally through the huge gaps down by the Euro session followed by burst of rapid buying.  This buying appears to be by some of the central banks and major market players to pump the market up.  A lot of the run up this week was just caused by gunning a lot of the short's stops. 

Also through the bullish/bearish trend model, one can see that commodities have been doing much better than the rest of the market.  Crude oil and gold have continued to climb their way to their yearly highs.  I believe I blogged or tweeted about their relative strength just about every day this week.  Why are they doing better?  A lot of investors are starting to price in another round of quantitative easing by the US Fed and the ECB.  Quantitative easing is known for its inflation producing results, thus pushing commodities sensitive to such changes higher than the rest of the markets.

Still a lot of uncertainty out in the markets.  Euro-zone risks can still provide a lot of shocks to the market.  Be nimble out there.

Have a good weekend all!

Trading Notes for Friday, 11/11

Today is Veteran's Day.  Expecting light trading, generally a bullish bias.  The Bullish/Bearish sheet is projecting energy to be the most bullish today.  We should see some two way action, both buying and selling opportunities on an intra-day basis. 

Look long in energy sectors.

Short in financial sector.

Be nimble today with general market vehicles and currencies.


Have a terrific weekend!

Trading Notes for Thursday, 11/10

Definitely pays to be nimble!  Huge days down like today provided some nice swings in both directions.

High probability for more downside tomorrow.  The Bullish/Bearish hedge fund model is now updated, daily signals on most stocks/sectors now pointing down.  The size of today's pullback was a little surprising, but that is the trading environment we are in.  The Euro news shocks can cause big drops overnight, giving a gap and go scenario. 

Chances are that quantitative easing will continue causing the markets to rise and that this is just a pullback.  Nonetheless, many longs were trapped and late coming shorts could keep the market down tomorrow.  Momentum is down and there's no reason to fight it.  The Euro zone is a mess, but like today, it is mainly old news causing the shocks.  Italian bond spreads have been on a rise for quite a while. 

Tomorrow, looking short financials and short Aussie and Euro currencies.

A good read

http://www.zerohedge.com/news/kashkari-punks-cnbc-and-joseph-cohen-compares-business-tv-and-sellsiders-jersey-shore-and-despe

Guessing stock market prices is a fool's game.    We strive to manage our risk for the most highly probable scenario.

Bullish/ Bearish Model for Wednesday, Nov. 7th

Refer to the Doc below. I will update the Google Doc momentarily. Soon, I will put it on a separate page. I will also give a brief description of how each column should be read and any other useful notes I can provide at this time. One highlight tonight is that even though all the longer term models are "bearish" at the moment, medium term has been very strong since early October. We are now in a mode where we could break the long term bears and even test yearly highs. I see downside potential depending on how certain macro events play out, but when is a huge question. So focusing on the medium and short term for now!

Still looking bullish for tomorrow, at least some continuation of today's move.

Some people are calling for a pullback and have been for the last few days. While I see part of their reasoning in the weak melt up fueled by Euro news rumors and key resistance above, I don't agree to fight this trend. Good money is made in following trends. Let price action prove itself first.

Possible trade ideas: Long energy through stocks, futures, options and short volatility through the same instruments as well.

Please read disclaimer, this is for educational purposes only, not trade advice

Bullish Bearish Hedge Model Tuesday Nov 8th

So the general market turned bullish today on the models. Energy was up very nicely as well as the precious metals. Crude was really the stand out today as predicted on the model yesterday. While the second half of today's trading day pushed the market into buy mode, the signal really needs to see some follow through. So for tomorrow, the focus will be on going long energy again and possibly short volatility. Also, take a look at the general market etfs or futures (S&P, Russel, Nasdaq...etc). Financials still exhibit some weakness, but tech and again, energy, look appealing for short term buys.

Bullish/Bearish Matrix for Monday, Nov 7th

I will need to update tomorrow morning. Right now, the view is mixed, so I will need to update tomorrow morning. If anything, I will be looking long energy and short the yen OR I will be looking short financials, short Euro, and short the general market through the S&P. Not looking for any spectacular moves this week, but the Euro debacle should provide us with some good opportunity.