Quick Cleaner and Strategy Thoughts…

Berk here:

Quick little view of the working (not anymore) trendlines in $INDU. The reason I am showing $INDU is because if it does not fall of the plate shortly, it will likely push up on last time. The reason I say this is due to the massive amount of overlap that allows the only working bearish count to be I-II, i-ii. That said, keep an eye on the $INDU, if it fails to break lower, we may likely see one last high.

Enough about that though. It’s all mental masturbation right now with the Fed meeting coming, and a lack of clear resolution. We will know shortly which of us is correct. In the meantime, notice the lower highs and lower lows in the markets…

Next, I am sure some of you have noticed my little bags of tricks I let leak occasionally. Right now I have reverted back to my TREND TRADING system. Why? Because we are about to be trending (nice fast current) and I am going to position myself in equities that are preceding the trend. I am looking to purchase far OTM options mostly in Jan and Apr to capitalize on both price move and volatility, and also minimize theta burn. That said, I am not looking to wiggle in and out of these stocks, you will see more on that when MA, FSLR, and BIDU, all convincingly drop lower. I am not using stops either, just a pyramiding entry system based on long term BBs. I cover more on the system I am trading later, but for now, here is a sneak peak of one that I got on board of yesterday….

I purchased a single unit of GNK Jan ‘10 15 puts for .70 and am up 20% right now. Should we get a decent move lower, I will be adding to my position (TT vs. Swing trade). This set up still looks pretty good…

That’s it for now… I will be back with an update in a little bit.

The two working counts on NDX…

NDX working counts...

This entry was posted on Tuesday, November 3rd, 2009 at 11:29 am and is filed under Market Outlook. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

randomwalker

Story in National Post that RIMM is a possible takeover candidate at this price level, possibly MSFT interested

molecool

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berkshire

Since there is not much action going on... I am looking to reshort NIHD, X, FWLT, RIMM tomorrow or Thursday depending on how long this rally lasts...

Skål!

gregn

It's funny that we are considering this action a rally when SPX is at -.76 and DJX at -.32. I am skeptical of a rally tomorrow -- perhaps a shortlived pop.

LostIllini

Bill & Melinda Gates Just bought some Autonation.....

LostIllini

and sold 114 million worth of Microsoft, not a big fan of windows 7 I guess...

bergs

Berk this would resolve the hard to count parts?

Waiting for b of subminuette to complete; then c down for minute wave {i}

http://screencast.com/t/dtJ31bMdl

or minute wave one is complete.

http://screencast.com/t/2mMF6YibH7h

berkshire

Agreed. What worries me though is the $INDU counts... Right now I am working with a truncated 5th of P2, an expanded flat in ii back up. (as shown). Not real confident in that count...

http://screencast.com/t/OBmqLeqfSc

Skål!

bergs

just a thought on $INDU

http://screencast.com/t/C8V5RDRI9A3L

berkshire

You know, I am not a huge fan of diagonals, but that is one of the few counts that seems pretty legit right now. I'll keep it in mind. I totally appreciate your thoughts because $INDU is pissing me off...

Skål!

bergs

Yea, you and me both.

Just seems to fit and would give the boost into the fed bullshit.

Every time I have counted 1-2's in the past I usually get screwed.

berkshire

Completely agree. The only time I have seen a 1-2, I-II, i-ii come true was minor 3 in intermediate 3 of primary 1. Which in it's own right makes me think...

Skål!

Stainless_Steel_Hamster

because in SPX:GOLD that count looks PERFECT

will you go see it or do you want me to post a link (low res)?

berkshire

Link is always preferable as we are all busy folks...

Skål!

BloodWine

Hi Berk :)
On your chart, is "v of 1" the end of Intermediate 1 or Minor 1?
Thanks for posting! The Dow is still driving me nuts... lol

berkshire

Neither minor or intermediate. It should be minute or minuette. There is a very small chance that it is minor, but I can't confirm that yet.

Skål!

BloodWine

Thanks :)

CorporalCarrot

Todays action is really choppy but I'm surprised the indices haven't broken down. Then again, as I mentioned earlier, the transports and WB have undoubtedly had a stabilising effect.

While I continue to hold my shorts, I think Bobthehorses warnings about FOMC tomorrow could prove to be quite prescient. Who would be truly surprised if they announced some new liquidity fest mana from the gods for GS & JPM????

Being comfortable with my position, and not fully deployed, I will take an FOMC bounce as another opportunity to short & fade, hopefully like the 23rd september, but traders who are fully deployed might be wise to cut positions before then if you can't take the swing.

LostIllini

If you want to play the weak dollar C looks like it has a double bottom in....

LostIllini

Plus all Theta is out of the options now..

Croozer

short term bullish wedge on Dow ?......

CorporalCarrot

Folks was driving for a while there. What caused the big 50 point dow spike at 12.30?

Croozer

nothing in particular or certainly nothing I can see, just a technical bounce......

centerline

Call me an idiot - but today looks all about distribution. Way too orderly so far.

berkshire

Quiet day awaiting Fed-speak... Simple as that...

Skål!

innatedc

You know I am liking that GNK trade you have....its sitting on the 200MA right now however and I think I'm gonna wait to see if it closes below it by EOD....do you ever consider the MAs as support or resistance, Berk? Just curious..

berkshire

Yes, but to each it's own. 200 MA works much better on stocks that big boys are watching (AAPL, GOOG, GE, etc.) Smaller stocks can sometimes slip under the radar and use different moving averages as support or resistance. Normally, I don't use MAs for much except during crossovers, and to analyze longer term trend indicators.

Skål!

thunda72

iPhone sales in China are disappointing. Bloomberg reports they've sold only 5,000 units since the roll out last week. Projections are for 500,000 units.

kanur

That might be a good thing:

http://www.reuters.com/article/technologyNews/i...

thunda72

Metrotextuality???? LOL!!!!!

Croozer

A property market recovery would depend on credit availability.....Not sure huge amounts of credit is going to be extended until there are signs that existing outstanding credit is coming down.....that will take years.

Banks aren't about to start to add to existing problems.

omelette

job market doing well too:
http://blogs.ocweekly.com/stickaforkinit/our-ta...

LostIllini

AUY [NYSE]
Yamana Gold, Inc.
Basic Materials - Gold - Canada

Want to go Long...$11.39 a share

I'm done for today, I hope you feel better Mole

LostIllini

BXP [NYSE]
Boston Properties Inc.
Financial - REIT - Office - USA

$60.42 a share, Plenty of meat on this bone....Why are you shorting Amazon. Put another way, Which company sucks more Amazon or Boston Properties?

amokta

what if the property sector recovers, at we start to party like its 2007 !
could happen?

gmak

I don't think that that is the issue. The issue is more that the games being played by the FED in terms of ignoring bad assets against equity, and the possible guarantees /lquidity for CRE debt, suggest that those POSs will likely keep their value except in a general sell off (when margin comes to rule).

amokta

yes - i suppose cre/property stokcs have already fallen, so current valautions could be propped up (but i thought govt was only propping up financial instituions 'too big to fail' and not real-esate/reit companies)

LostIllini

Put a stop in.

amokta

cheers - thanks for info. I am currently only trading the cash-settled index puts, as dont want 'contingent liability' of assignment if i forget to close equity-puts or do something daft (my nightmare is that i may be asked to supply pork-bellies, or end up with a ton of wheat on my drive !)

Croozer

A ton of wheat would be easier to deal with than a several million cubic metres of Nat Gas......they just don't make balloons that big !!!

berkshire

Probably not as the credit market is totally in shambles. We never would have had this bubble if it weren't for haphazard lending standards in the first place.

Skål!

berkshire

Updated the post with working $NDX counts...

Skål!

roncofooddehydrator

FAZ keeps getting rejected by the 200 period EMA on the 2hr chart. I'm in FAS looking for a rebound of FAZ back to the 30 period EMA.

anotherone

On the SPY hourly it looks like it's drawing a very tight wedge that will have to resolve one way or another.

Hope you get to feeling better, Mole.

Blind_Squirrel

Bob Precther on Bloomberg 5pm

Croozer

I make this a B close to complete if this is a 2nd wave......should get a pop up for a C.....may end up being a weak one though........Dow Index.....

amokta

not been able to post today, as was busy saving the banks in the UK
is RBS (or any bank) a good buy at current prices, or is there more pain to come for banks
Also, are we in P3 now - please confirm !

Stainless_Steel_Hamster

Confirmation of disconfirmation

All banks are good buys, except thosethat aren't, and things might reverse without notice to any and all.

P3 has started, or not, may exist though there are those that would state the opposite-

MOLE ! BRING THE CONFIRMATION AXE FAST!

berkshire

Just told my dad. If $SPX cannot break the candle from 10/29 then we drop hard and fast. If we can push up to it, or above, then we may need to push 1075 before dropping.

Skål!

LostIllini

Nobody knows how the banks are doing, all their assets are off balance sheet. And by assets I mean liabilities. I wouldn't buy a bank as anything other than a lottery swing trade till this changes.

Here's a thought... I hear Harley Davidson makes the best motorcycle in the world....

amokta

cheers - i tried to do some day trading on RBS, but ended up losing money. Difficult to day trade in a downward trending market. Knew i should have shorted a few weeks ago it but i dont do spread-bets, or futures, or CFDs, or equity-options yet (yet)

Whats up with Harley - dont get it ?

LostIllini

It's a good company to go long on.....

Here is a good company to short.....Toyota (TM)

DoubleNaughtSpy

Pardon my ignorance (maybe), but why would anyone be buying a Harley in this crappy economy? I fail to see how this company can do well with a deteriorating economy (and yes it is not getting better no matter what the cooked gov books say). Maybe I am failing to see the sarcasm in your statement?

LostIllini

Actually Harley will be just fine, the dealerships might be another story....

Harley is worldwide brand, weak dollar is good for Harley I think it will more than make up for flagging US Sales.

centerline

Harley dealer near me (one of the really big ones btw) has been dead for a year. Before the crash, it was like a party over there.

amokta

thanks !

ultra

mini-H&S on /ES 5 min but Herr Zero he still passed out on the floor from boredom.

innatedc

I forgot that the trannies are exploding on the back of that Buffet for BNI deal....oh Warren, I hope you thought that through.

itsgold

I'm temporarily 100% short with 8% stops on 65% of my position at this point.

Croozer

you're short on what ? USD, gold, equities ?

itsgold

Just Equities - SPY, AAPL.

Croozer

Thanks, didn't want to make an assumption that you're vertically challenged based on a vague comment !!

nakedoptions

EURO support holding.

http://www.screencast.com/users/nakedoptions78/...

fuw

In my mind more important longer term trendlines we have broken today, so I'm not putting much emphasis on that level, but maybe you're seeing something I'm not.

For horizontal support I would look at the wedge breakout in the 1.44-1.45 area, and otherwise there are two trendlines coming in at around 1.455-1.46.

nakedoptions

Actually I just sold out. Not liking the action. Lower low 145.2 possible today.

nakedoptions

I agree. This intraday support for Day Trade Only. Short term target 148.50 max

fuw

ok, then we're on the same page. It feels very undecided right now, and could go either way in my mind. I wouldn't target more than ~1.47-1.475 for the upside though (that would be retest of the trendline we broke through and horizontal support at ~1.470).

nakedoptions

I'm just a spectator for now.

gmak

Citi has recommended closing out EUR shorts (not intraday but longer term) based on the fact that the 55 day moving average held at 1.4624. They apparently have gone long with a stop below 1.4555;

nakedoptions

Looks good for a bounce, but I won't hold for long.

LostIllini

Concerning Amazon:

You all have noticed that nice, big fat juicy gap from before earnings. In order to benefit from it closing that gap you have to be short in some fashion. Don't do it, just don't. I have a new trading rule that you would be wise to follow:

When wanting to go long pick strong stocks, when wanting to go short pick shit Stocks. If the position moves against you it won't result in a mauling.....

For Example: Think about going long on Coke or Short on CIT....

berkshire

Typical rule... I.E. the trend is your friend. Sometimes though, the explosive reversals can generate much better returns than any other type of trade. As long as you have a good stop and are quick on your toes, you can do alright.

Skål!

LostIllini

Same traits as found in a good pickpocket...

CorporalCarrot

Except if you went short well north of $120 and have longer dated puts :)

LostIllini

Is there some shortage of over valued shit companies?

gregn

AIG is very undervalued. I see 300 by Christmas.

z12run

If that's the case, look for Buffett to buy it out at $400. ;-)

gregn

Hahah

ultra

LOL +1

Onorio

EUR might have bottomed with a breakout of a falling wedge, might be a truncated 5.

CorporalCarrot

Couple of observations.

1) The Dow 1 minute chart today must have the longest average candlestick length I have observed in some time. The chop is incredible.

2) Considering the fact that the trannies are up so massively, today is actually a much worse day for the bulls than it appears. One merger does not mean a sector is going to do well.

innatedc

Yes agreed on point 2 and also point 1....I got chopped out big time trying to scalp the ES...so I am done and will try again another day.

dreadwin

Possible head and shoulders forming on IYR daily chart.

Wave_Surfer

Sigh...
Isn't this thing supposed to bounce, to fool people into thinking P3 has not started yet?
IWM - especially - has not been bouncing the last 2 or 3 days.
Or is this constant melt down supposed to fool people like me that P3 has definitely started when there is 1 more whizz-bang left?

Looking for a nice healthy bounce to move back in on.

Croozer

I think this is the bounce but it's very weak as selling is absorbing the buying.......when the 3rd starts it's going to dump hard and fast.......imo...

fuw

... or (3) the slow melt down makes people cautious that P3 hasn't started, at the same not bouncing to allow for easy entries, so most people stay away and miss out on the entire thing.

molecool

Always remember - it's better finding yourself wishing you were in a trade as opposed to wishing you were out :-)

It's funny how our feeble human minds keep playing mental masturbation games.

Stainless_Steel_Hamster

talking of my favorite... spx:gold broke 200ma

innatedc

Is there such a pattern as the two headed, head and shoulders.....trannies?

catracho

yes..multiple head and shoulders or complex head and shoulders..(Edwards & Magee)

Stainless_Steel_Hamster

multiple head and shoulders...was finding the patern fascinating... until you mentioned the names (Edwards &Magee). was expecting (Angeline & Scarlet)

call me old fashioned

innatedc

Thanks.

bshah

what's up with AMZN...? It doesn't want to drop that hard like past two times after earnings... Is it gonna stick up like this? Come on baby... 20 day WMA is around 110, gap of 110-94 = 16... When are you making me rich...

ultra

BIDU and FSLN drifting north too.

CorporalCarrot

Sorry repost

molecool

Yes - I'll be able to afford that gold encrusted coffin.

nepharis

Cautiously optimistic here, as we've got a nice start to a possible trend day down -- small gap, closed gap but did not go positive, and now falling away. Volume is a little iffy right now though....

BigHouse(Aka Mr Vix)

LVS

http://screencast.com/t/1P0cbuyuo

dreadwin

Got out of DRN at 108, +4.6%. IYR was green while the SPX was red. It couldn't hold on forever...

Tronacate

nice.......SRS starting to move up now

molecool

In case anyone misses me - I'm still in bed - not feeling good.

innatedc

oh, oh...the swine got the swine....;) oink, oink....

insite

we do miss ya, mole. did you eat your chunky soup?

molecool

No but I threw up some - does that count?

BigHouse(Aka Mr Vix)

Sound like your body is giving us a signal for what the market is going to do in the next 6 months

molecool

Yes - throw up green shoots.

AS2009

What happened Mole ?

berkshire

You could always cut you X and look at something that has already retraced in the same group... such as ZEUS...

Skål!

molecool

One of the ten beers I had must have been bad.

(j/k) no idea - might be a stomach flu.

nyxjf

Feel better!

berkshire

Yeah, you foreigners not cooling your beer... Silly folks...

Skål!

molecool

You obviously don't know a thing about German brew - I'm no damn limey!!

berkshire

No, we've had this discussion... I prefer Belgians myself... :-P

Skål!

molecool

Mrs Evil is quite partial to Belgian brew.

tradejane

I've 3 humongous bottles of Belgian Trappist beer. Will exchange for some Southern Comfort.

berkshire

Yeah, that might be the worst pairs trade I have ever seen...

Skål!

ultra

Jane - are you in fact 15 years old or have you taken leave of your senses?

LOL

tradejane

I know, I know. They were a present from a very well-meaning Belgian friend but I already live close to the best breweries in the entire world so I won't drink anything else.

PS. And you are right, that was a silly av. Thanks for pointing it out.

gregn

+1

BigHouse(Aka Mr Vix)

is the TRAN up 168 points ?

innatedc

Yeah wow...this can't be good for the bears unless its a relief bounce.....keeping a close eye.

catracho

yes..watch out if cannot hold gains..

berkshire

Buffett's BNI purchase?

Skål!

momac

Newbie question, I have BNI Jan puts, will these go up if the market goes down, or are they worthless? Thanks

berkshire

Depending on the strike price and month. BNI got a big boost, and normally this subsides. However, being bought by Buffett, could propel it up for some time. Your best bet might be to jump ship on the BNIs and find a transport that didn't get bought by one of the world's best investors to go short...

Skål!

BigHouse(Aka Mr Vix)

ok i see that

itsgold

KD thinks their are signs of a credit dislocation coming. I don't see it though, but then again, I'm not nearly as astute as the guy.

AS2009

X - should retrace now to 34.80 - lets see where it goes from there ...

gregn

You got your retrace ;)

AS2009

Yep :) - the q is get out now or will this go down more ?

AS2009

Almost there :)... now do we bounce ...or continue lower ...

I f we break 34.86 ... next stop 34.48 - though there is strong support here .. .so I would like to see a bear flag form and then break ...

BigHouse(Aka Mr Vix)

looks like wave (v) could be extending. Surprises will be to the downside. Its important that you own long term puts.

berkshire

Agreed.. and I do... Teddy starting to wake up??

Skål!

BigHouse(Aka Mr Vix)

Teddy not happy with that resent green candle for LVS.grrrr

berkshire

I concur. Getting much above 15 will not be looking pretty for us...

Skål!

molecool

LVS always has been a bitch to trade. Which is why I only touch it in very clear setups. It's a mover though and when you're right it can be fun.

Nightwind

spx looks like its tracing a bear flag on the 5 min. Not bullish IMO unless it breaks above upper trendline

defenderyou

LONG MTL, RSX, and RBY - RBY looks real good and lots of vol

bobthehorse

you are looking at gold in the wrong currency. Try looking at the chart in AUD or BRL or EUR. I chart it as a ratio vs. the DXY. It's just a very basic uptrend, currently about to retest the high.

gmak

Thanks bob.

fuw

Agreed. The uptrend in gold is much clearer in other currencies. My preference is in euro, but that because I'm eurotrash.

Guest

berkshire

BTW, do I get a gold star if FWLT hits 30??

I want my gold star damnit!!

Skål!

Tronacate

No way man.....a swift kick in the ass.......lol

gmak

Something fundamental has changed in the market's emotional make up, IMO. The EU has raised their 2010 GDP forecasts. could that be it???

tradejane

I'm seeing no big reaction in the DAX. It's still trying to bounce but very uninspired. The two banks still very weak. Hmmm, I would have expected a bigger drop in USD/bonds in response to this vertical move in gold.

gmak

Look at GOLD!!

Yet Treasuries are falling and so is USD.
This isn't panic buying. A shift into risk assets and GOLD. But commodities don't appear to be folowing suit.

Stainless_Steel_Hamster

yes, and $SPX:$GOLD took 0.97 out... 0.9599

following expected w5 down, though late, as in 2005

didn't you see my rants on real s&p? and my graphics?