Some Charts

ATHN - Still running

FEYE Break out @ $77.00

GALT - broke out of base. Now has to pop all time high

GTAT - Clean breakout. Very liquid trader

TSLA - Popped the cup handle, but got repelled at all time high. Has to take out highs.

BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.

 

Never Mind

Last  Thursday my post was a classic of bad timing. I got carried away overemphasizing the bad and failing to point out the market's oversold condition which set up the possibility of a bounce or more. I also failed to point out the possibility of making some long trades. Lastly, I did not put the broken index support into proper short term, intermediate term or long term context.  Mea Culpa. Gilda Radner as Emily Littela on SNL said it best:

 http://www.youtube.com/watch?v=V3FnpaWQJO0

Then again, my next post on Friday essentially showed that being a flexible trader can save the day.  I may have sounded the ultimate "Market Busted" alarm prematurely, but I went with the flow and still made money. Nothing was lost even if one had listened to me and stayed in cash. That is because on a best case basis this market is still nowhere. And on a worst case basis the we still may not have seen the ultimate bottom. A cardinal rule is when in doubt stay out. And this market still has me in doubt.

Furthermore, even after this two day bounce, this market still is nowhere on the charts. No one can say that the market has bottomed and is off to the races again.  None of the major indexes have broken to new highs. Yes there is a possibility of another "V" shaped move to the old highs or more. There was money to be made by fast traders on the long side. In that respect, I did stick to my rules by taking profits fast, making some money and exiting some nice long trades before they could "get me" as I stated in my last post.

I do not have the capability to make long updates on my blog during the heat of battle while trading. But I do make several updates about many of the things that I am doing in my Twitter posts and on the private IV discussion board that I set up.  See the links that I just inserted on the upper right side of my blog. As one can see, I did make the updates about my trading in those posts. The posts are just about in real time - hey you try putting on a trade, concentrating on the action and posting at the same time. 

The most important thing in my view, is to have an investing or trading thesis and to be flexible enough to call an audible if conditions change.  In this case my failure to put the short term oversold market in perspective was the "condition" that changed. Stick to one's thesis until the tape and events proves one wrong.  And don't be stubborn by fighting the tape. The past two days, victory was snatched from the jaws of defeat by the bulls who pulled off the second day of an oversold rally. As a trader, I was flexible enough to check my ego at the door. If this market is choppy and calls for counter punching, so be it.

So let me set the record straight by putting things in context. The market put in a short term top in the first weeks of the year and then broke another support level last week. The market is not in an intermediate or long term down trend. The recent sell off may become something more, or it may just be part of a short term consolidation. The jury is still out as to that. 

I am still net long and ready to trade fast into Janet Yellin's comments on Tuesday. Hopefully I will catch some gap up openings or follow through on Monday and then get into cash. Then I will reassess things. Here are some charts:

Major Indexes Show Varying Degrees of Strength And Weakness:

$SPX I am still short a small position in the SPY for a losing trade / hedge so far. I'm just going to play this one by ear. If it looks like the most widely watched barometer of the market is hitting the wall at resistance created from the top it just broke down from - circled - I may trade around the position. If the SPY looks like it will break through and run to the old highs, I will cut my losses.  

 

 

$NDX The NASDAQ 100 is where the action is lately. As one can see it is the best performing chart of the major indexes. That is because the best momentum growth stocks are located here. These stocks, such as GOOG, NFLX & TSLA are the ones that have been getting most of the action. Is this a sign of a bifurcated tape of the "haves" and "have nots"?  Or will these few leaders gain more followers and lead us to the promised land? One caveat is that even this index is a mess, with stocks like SBUX and AMZN having been hit hard. If one is going to trade these stocks, one had better trade the ones that have great news or earnings, great guidance, and great charts.

$RUT The small cap Russell 2000 has lagged so far. This shows how the big money has stayed away from small caps more speculative stocks to date this year.

$INDU The big old lumbering non representative 30 stock Dow Jones Industrial Average has lagged the other indexes. This $INDU is a joke comprised of 30 stocks that typically get invited into the index just when their time of great growth is over.

$VIX  The $VIX turned around at the same resistance point that it did the last few times. It has now fallen back to a not scared level - circled on chart. So much for some real fear. Long live run of the mill agata.

Other indicators like the Standard and Poors Oscillator went into oversold territory at minus 6. Usually anything below minus 5 is means oversold, but I have seen this indicator get to really bad levels of minus 10 or more. That is when the oscillator works best. The oscillator is one of the great indicators. It used to be given out as a freebie back in the day.


ATHN - Blasted to a new all time high on it's fabulous earnings report. This stock has great growth and a low PE multiple. I grabbed it for a great trade on Friday and then got back in later in the day looking for some follow through on Monday.

DIS - I sold DIS on Thursday and will now keep it on my watch list for a break out. It was only natural for a big cap Dow stock to hit the wall at major resistance.

EOG - This asset rich shale play broke out of a nice base below its all time highs. Great company. Tight stops.

MU - Barely broke out last Thursday. I have been trading around this long.

TWTR - I am waiting for my shot at shorting TWTR. The key matrix was the shocking declining subscriber growth that was reported last week. The stock is retracing from it's break down.

YELP - broke out on another great earnings report. Great growth, but ridiculous high price. Bought back on Friday's dip and holding for some follow through.

As the last several days have shown, this market is trading in a psychotic manner. If one is nimble enough to scalp some day trades or short term trades, there is money to be made. If one is not fast enough, one can get killed. That being the case, cash is still king until this matter is settled. The questions are still: Is the market busted or breaking down? Will the market make another "V" shaped bottom to add to the many that were made last year? Is some longer term consolidation evolving? Will the market continue to remain choppy? And so on.

One thing is for sure. There is no answer yet and this roller coaster ride is no way to live as an investor. Right now, at best one can say that the market is range bound with a few anointed stocks like NFLX or special earnings or news driven situations like ATHN making highs. At worst this is a bounce back that is about to fall right back down. Its hard to make money in a market that is not trending higher. Right now, there are no indexes making highs and very few market leaders. So in my opinion opportunistic trading? - yes. Investing? - No.






BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.

I'll Get You Before You Get Me

Did I mention that I don't trust this market? This morning DIS and YELP were up on great earnings reports. DIS is a long term keeper and YELP is a great growth story with little earnings. I bought both pre market and sold both into the early whoosh up. I can always buy them back, but my credo is to opportunistically trade the momentum and grab the profits before Mr. Market lowers the next boom on us. This is strictly a stay in cash market unless one is very fast. And if the stocks go higher, so be it. I cannot be a pig in this environment.

Some charts:

SPY This morning the spy is bouncing a bit from its oversold condition. Is this the "fishhook of doom" begging the bullish chumps like Charlie the Tuna take a bite only to get hooked? Or is this just another oversold dead cat bounce. Real bottoms take time. In 2013 every bottom did not take time. Those "V" shaped bottoms may be last years news.

DIS popped to resistance on fabulous earnings. Can it break out. I may buy back with a tight stop if it does.

MU Pierced its old highs and fell back a bit. Lets see how it goes, but MU is very impressive having held up well during the sell off

YELP Another great growth report. Very high valuation and new high. We shall see if later in the day I can scalp another trade.

The question is do we trust this tape ahead of tomorrow's unemployment report. Not that the report is real. The chart below shows the real unemployment rate verses what the government reports. By "real" I mean the unemployment rate adjusted by the so-called discouraged worker effect. We all learned about the discouraged worker effect in college economics 101. The chart below shows what unemployment would be without labor force "drop outs."  Excuse my French, but "drop outs" my ass!

This time it really is different. The numbers are skewed up by epic proportions because chronic unemployment is not included in our unemployment numbers. Just because one is not entitled to unemployment benefits does not mean that one is "discouraged" and not unemployed. It really means that the government numbers are total BS. Hence it brings into question the true strength of our anemic economy. Look at this jump in so called "discouraged workers" To quote Mark Twain and Disraeli, "there are lies, damn lies and statistics."

And when our anemic economy has been propped up by the insane monetary growth under so called "modern monetary theory" AKA, same pumping, dressed in different clothing, what will happen to the economy when tapering continues. This punch bowl is going away. Can the economy grow without QE? Is the economy slowing right now just as the Fed cuts off the steroids? We still do not know. Tomorrow's report will give us some more clues.

Just look at this breathtaking growth in Fed stimulus! What has it done for the economy other than stave off death and created some asset booms in stocks, corporate profits, and housing? What is going to make the money go into real economic and employment growth?

BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.

Another Support Level Broken - Market Busted

There can be no doubt now. This tape is busted. And as the Seahawks have shown, defense wins. Something is really rotten about this market on all levels. Not even the few leaders like CMG & GOOG have held up. For all intents and purposes, nothing is working. How far down we go is not known. Throw out your retracement levels and kiss this baby goodbye. We have not reached that 10% plus level to chalk this down as a bear market yet. But whatever one calls it, the danger is still the same. 

I have been playing defense since the new year began and I'm here to tell you to play even more defense now. The Averages convincingly broke another support level today and no one knows just how far this market is going to fall. All the brave TV talking heads have been wrong and will continue to be wrong as long as they tell YOU to buy. The usual reasons about retracement levels, oversold markets, moving averages, value, "this industry or that industry should do well in this environment," etc., are going to come at you from all directions. There is no free lunch. Ignore the TV hucksters. The red light is on.

I say nothing ventured, nothing lost, until this correction or bear market phase is over. Call this whatever you want. I'm not in the business of losing money and this sell off is chump change so far in terms of the big historic picture. This decline may end soon or it may turn into something very destructive. I want to see how events unfold. The Fed doesn't even know if they are now pulling on the string they may have been pushing. We all need to see more evidence about whether this economy is starting to tank. that goes for China's economy, the various currency crises around the globe and so on.

Here are some rules to abide by until this sell off is over.

1 - Do not chase stocks up Don't get hooked into buying sucker rallies.

2 - Stay in cash unless you are a sharp day trader

3 - Day traders should short into strength. Even then day traders should play small. 

4 - Do not over trade. If you are a trader, trade less or this market will chew you up and spit you out.


Let's look at some charts:

Dow Jones Industrial Day Tic Chart.  Gap up and then death.

S&P 500 Broken Support. Not even the courtesy of a complete head and shoulders pattern was formed. Call it a head and pimple pattern.

S&P 500 Broken Trend line 2 Year Chart One can draw many trend lines on the $SPX chart. One has to start somewhere. So lets start with this broken trend line.

CMG so much for market leaders breaking out. Just like that, pfft, the break out fails

GOOG Another market leader fails. There is no place to hide

AMZN The wipeout continues. You catch the falling knife first. I insist.

Sentiment gets scared, but there is plenty further to go before this market is really scared shitless

$VIX is now up to a level where it and the market has reversed before. The only problem is that it can get much worse as the chart shows.

A big difference between a bull market and a bear market is that it is easier to make money in a bull market because human nature makes it easier for people to want to buy stocks. Thus every time the market rallies, people want to buy stocks before they miss the boat. As Joe Granville used to say, that is the hook. If people love CMG and see it start to snap back hard, they do not want to miss the boat. So they buy and then watch in shock as their stock suddenly collapses and liquidity dries up. Before they know what hit them, its too late. I saw that with ADEP today when it broke out and then failed. I almost saw this with FB today too.  And FB is just about the only market leader that is still holding up - so far.

BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.

Shock & Awe

Everything is a surprise these days. Unless one expects the unexpected. We can still be shocked and be prepared. We don't know where the next shock is coming from, but by playing defense one can avoid losing money and even make some money.  Playing small, fast, and reactively is the way to go. Until the international squall is over and the new monetary policy is fully digested, you have to tread lightly.

The Groundhog calls for another six weeks of winter

Peyton gets destroyed Who woulda thunk it?  Beaten yes, annihilated wow.

Philip Seymour Hoffman RIP Always a shock to see these kind of sad things

Market Gaps down, rallies & sells off all on the same day.  The only bottom fishers who make money are the fast day traders. After a 200 point gap down on some bad, but not relatively terrible news, traders and bottom fishers bought the extreme dip. As is typical, the market had to sell off in the last hour. After all, the market rallied too early, day traders took profits at the end of the day and ahead of the weekend unknowns, program traders exacerbated the move.

Strong Stocks Are Scarce. The only stocks that are working are the ones with extraordinary earnings or guidance that squeeze the shorts and surprise everyone.

CMG You have to do something great to get the mo mo

FB Speaking of greatness....

GOOG Our leader

Set Ups Are Rare. Strong relative strength stocks that hold up near highs close to break outs are the exception 

ADEP Nice volatility squeeze

BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.