I decided to liquidate some of my positions in SPY and FFIV. SPY started to diminish due to time decay so I decided to sell my puts and I will buy November puts since the market is slumping down. I will see at the end of the trading session today.
Definitely the market broke thru its support today. Let’s see if it stays there. Before the end if we stay below its original support (now resistance) I will buy November puts to ride this market further down to $100 level where the next support is.
We are definitely breaking the consolidation pattern, so hold your breath & hats, we are going down.
FFIV doubled my money (investment) and I took 112% profit on this. It stalled at its support, time decay started working against me and in October there will be an earnings report published, so time to take profits. If it breaks support I might enter by buying new puts.
Happy Trading!
|
We all want to hear your opinion on the article above: 1 Comment |
Today’s trading will be crucial. The market opened at its support line at $112 level. Will it hold this support or will we break it? If we hold, we may spike back up and stay in the corrective pattern. If we however close below this support line, the market will be poised to slump down to $100 level. Watch today’s trading carefully!
Happy Trading!
|
We all want to hear your opinion on the article above: 2 Comments |
By CNNMoney staff October 3, 2011: 7:39 AM ET
Premarkets.
NEW YORK (CNNMoney) — On the first trading day of the fourth quarter, U.S. stocks were poised to fall at the open; following a sell off in world markets, as investors fret over Greece’s ability to avoid default and a slowing global economy.
Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were all lower ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.
Investors are watching closely as Greece attempts to deal with its debt crisis. Greece has slashed spending, reduced wages and raised taxes in an attempt to bring its debt under control.
But even still, the debt-ridden nation will miss key deficit targets for this year and next, according to the draft budget announced by the Greek cabinet late Sunday.
There isn’t a whole lot of optimism that Greece will pull though. Out of 22 economists surveyed by CNNMoney, almost all of them believe Greece will default on its debt by the end of next year. The third quarter is over. Good riddance!
Stocks were hammered Friday, with all three major stock indices shaving more than 2%, as investors remain worried about the debt crisis in Europe and the outlook for global economic growth.
The losses capped the biggest quarterly drop for the S&P 500 and the Nasdaq since the fourth quarter of 2008. The S&P 500 lost 14%, and the Nasdaq fell 13% over the last three months. The Dow fell 12% in the quarter, marking its worst quarterly performance since the first quarter of 2009.
In addition to fretting over the sovereign debt crisis in Europe, investors are anxious about slowing economic activity in the United States and around the world. The Federal Reserve and the International Monetary Fund both warned of increasing risks to the global economic recovery.
World markets: European stocks were sharply lower in morning trading. Britain’s FTSE 100 (UKX) fell 1.6%, the DAX (DAX) in Germany tumbled 2.3% and France’s CAC 40 (CAC40) dropped 2.1%.
Asian markets also ended lower. The Hang Seng (HSI) in Hong Kong plunged 4.4%, while Japan’s Nikkei (N225) shed 1.8%. The Shanghai Composite (SHCOMP) is closed this week for holiday.
Economy: Wall Street will get the Institute for Supply Management’s August manufacturing index, as well as construction spending figures from the Commerce Department.
Economists expect the September ISM index will fall to a reading of 50.5, from last month’s 50.6. Construction spending figures are expected to decrease 0.5% — coming in above last month’s 1.3% decrease.
Major auto manufacturers will also report auto sales for September at 3 p.m.
Companies: Shares of Eastman Kodak (EK, Fortune 500) dropped almost 60% Friday. Trading halted on the stock several times, amid rumors that the camera maker has hired a law firm for advice on a major restructuring or bankruptcy filing. The company later denied that it is planning bankruptcy moves. Shares rebounded 46% in premarket trading Monday.
Europe’s Debt Crisis
In response to a question following the China 2.0 conference at Stanford University — Jack Ma, the CEO of Chinese Internet conglomerate Alibaba Group, said that his company would be “interested” in buying all of struggling online media firm Yahoo (YHOO, Fortune 500). Shares of Yahoo rose almost 6% in premarkets.
Apple’s new CEO, Tim Cook, will take the stage at the Town Hall auditorium on Apple’s (AAPL, Fortune 500) Cupertino, Calif., campus Tuesday to unveil the new iteration of the iPhone. Rumors are swirling over whether there will be one new iPhone or two. Shares of Apple edged higher in premarket trading.
Currencies and commodities: The dollar gained against the euro and the British pound, but lost ground against the Japanese yen.
Oil for November delivery lost 81 cents to $78.39 a barrel.
Gold futures for December delivery rose $37.60 to $1,659.90 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury edged up slightly, pushing the yield down to 1.90%. To top of page
Source CNN Money
|
We all want to hear your opinion on the article above: 7 Comments |
As I wrote in my previous post, investors were just buying a pure wishful thinking, hoping for better times, improvement and trying to avoid recession (in their thoughts). Although some data from US came better than expected, they weren’t strong enough to offset bad data from Europe.
So watch the European debt crisis, since it will drive markets in the near future.
The debt crisis in Europe is “all that anybody cares about,” said Dan Greenhaus, chief global strategist at brokerage firm BTIG. “The worst-case scenario is a disintegration of the European banking sector.”
Concerns about government debt problems in Europe intensified in the third quarter. Investors are afraid that Greece could default on its debts, setting off a banking crisis similar to the one that occurred after Lehman Brothers collapsed in 2008.
In addition, economic activity in the United States and around the world has slowed. The Federal Reserve and the International Monetary Fund both warned of increasing risks to the global economic recovery.
“It’s been a very uncomfortable quarter for investors as news from Europe and now China has filtered into equity valuations,” said Lawrence Creatura, a portfolio manager with Federated Clover Investment Advisers.
Source CNN Money
Since we know what fundamental data drive the market down, we also can see that the market is in bearish trend from technical perspective.
The market (here represented by (SPY)) wildly broke thru the resistance of the pennant pattern, see the note #1 on the chart, a few days ago. It immediately dropped down to a long term support on $122 level (see large green arrow) and bounced back. On hopes and wishful thinking the market rallied up, shortly broke thru the pennant resistance line (magenta line) and long term resistance on $118 level (thin blue line at that level). Then the market could rally all the way up and re-test the short term resistance (see small green arrow with note #3), but it didn’t have strength to do that, reversed and fell back down (see the reversal pivot marked by a large red arrow). The wild fall following this short term reversal can now be another re-test of the support at $112 level or we will broke thru. However, in short term perspective, we are seeing new lower highs (see arrow with tag #2 pointing to the new short term trend), which confirm that the market is in bearish trend and there is no sign (yet) of strength.
With all bad news coming from Europe, economic slowdown, it is very likely that the market will continue down. We will see in the following weeks. Being said that, I am staying bearish and holding my put positions in SPY. The pre-market data point to another drop down opening on Monday (it can change by then, however), so wait for further slope down trading next week.
Happy Trading!
|
We all want to hear your opinion on the article above: No Comments |
As I expected, the market lost its steam. Seller stepped in and they were selling. Stocks struggled to rise. Durable goods orders slid as expected. Today morning I bought my SPY puts to ride this downturn. At this point it seems like the market is trading in a range within a bear market. We may re-test 112 level.
Happy trading!
|
We all want to hear your opinion on the article above: 4 Comments |
As I was expecting a few hours ago, this market wasn’t strong enough to sustain the gains and closed lower on intraday basis. SPY opened at $118.53 and closed the day at $117.55, not a huge loss, but an evidence of losing steam. Also periodicals are speaking about downside risks outweighing upside.
I will see what the market will do overnight and if it confirms itself in falling (the futures will point to a lower opening) I might buy SPY puts.
Happy trading!
|
We all want to hear your opinion on the article above: 2 Comments |
Investors are tired, exhausted and frustrated seeing the market tanking for this long time without any bright light at the end of the tunnel. Therefore they are literally buying any news and today is a great example of them trying to convince themselves that we are out of the forest and we will be growing or being at least neutral. Everybody fears recession and everybody wishes to avoid it.
But look at the chart. The market is clearly in defensive mode although Euro-commissars are claiming to find a way to get out of the debt crisis.
The first news which came out today morning was a creation of a special fund and the existing fund supposed to save the Eurozone will be backed up by more money poured in it. Markets in western Europe climbed up. But Spain denied such measure and all hopes were wrecked again. The markets eased their optimism.
The impulse for this rally were news released by CNBC that the special fund will be created by European Investment Bank and funded by European Financial Stability Facility (EFSF). The fund would be buying problematic bonds from troubled countries and issuing its own bonds serving as collateral for ECB. However, no one yet confirmed this plan or news and some other politicians consider this plan as bizarre.
Well, at least, even though this news was not confirmed and sounds unrealistic, it was enough to push markets up high.
When you take a look at current SPY chart, you will see that the market gapped up. At this point, at 12:30 MDT it is up at $119.33, but on a very low volume. The Bollinger bands are very tight today, so the market is poised for a move, spike, breakout. It doesn’t say which direction, but it says it will happen.
The market broke the pennant resistance as I spoke about yesterday and this morning, but on very low volume and it hit a downtrend channel resistance line. Also the gap was very large and on volume (once again).
When looking at today’s chart, overall trend, lower highs, fantasy news pushing the market up, I think this market will go down either tomorrow or on Wednesday. Therefore I decided to wait until the last ten minutes of today’s trading and then buy puts on SPY. I will wait where the market will most likely close today and make my decision based on this.
Happy trading!
|
We all want to hear your opinion on the article above: No Comments |
It is really funny watching what the market is doing these days. Optimism replacing pessimism within days. Last week we heard what the worst week for the markets it was since 2008 and today we see a great optimism again just to be replaced with a pessimism next week.
Today, the news are trumpeting how optimistic the investors are about the crisis in Europe being resolved. Then I found the following quote:
The plan — reported by CNBC — would allow troubled banks to swap bad debt for bonds backed by the European Investment Bank.
But doubts remain that the action, should it occur, would bring the crisis to a complete resolution given the continent’s extremely heavy debt burden.
Source: CNN Money
C’mon guys! Is this a reason for extreme optimism? You bet no! It will just move the debt from one pocket to another. It will solve nothing and the debt burden will be back again. Those doubts as mentioned in the quote will arise larger and stronger.
This market is poisoned to fall. Do not fall into a bull trap. If you take a look at my yesterday’s chart and look at the latest peaks, highs of the chart, they are lower highs. Let me post it again with the red dots indicating those new highs.
What trend do you see forming here? Of course, it can all change and the market can turn up and be growing, but it is quite unlikely at this point. And why do I think the market will continue down? What is that catalyst? It is European debt, which is far from solved.
|
We all want to hear your opinion on the article above: 2 Comments |
The market rallied (SPY) today and the rally was impressive after a week of fall. But what is behind this rally? Let’s take a look at fundamental reasons, at least, what I could see on the Internet:
That’s what Yahoo! says as its top story. And I think, investors believe it. It is however foolish to believe that Europeans fix something. The only capable country out there is Germany, but Germans are tired of bailing out irresponsible countries. Germans are no longer willing to pay for Greece.
But there are other PIGS countries waiting in the line! (PIGS stands for Portugal, Italy, Greece, and Spain). These are in deep trouble as well and they are already spending their chunk of help from EU funds and ECB. And we can go on listing other countries – Ireland, Island among others, who may need help.
Also there are other countries, such as Sweden and Slovakia, which refused to help at all (Slovakia blocked a help package to Greece twice in their parliament). Members of euro-zone are not united in willingness to help. Though all the proclamations we already have heard from ECB and Euro-zone leaders have only one goal: prolong the agony of inevitable – bankruptcy of Greece and huge issues of other countries in trouble.
European banks were, well, ordered or asked, by ECB to increase their reserves to handle potential issues and hardships which may come when Greece goes under. But ECB knows, that there are no more money to take to increase those reserves. Unlike FED, ECB cannot print Euros. No other country in Eurozone will be willing to print more money to bail out other country.
So fundamentally, this rally is weak.
Let’s take a look at technical aspect of this rally:
We are in bearish trend. We broke a head and shoulders and fell deeply down to $110 level (SPY). We stopped at the major support level formed in May and September 2010. Then we witnessed a creation of a bearish continuation pattern – pennant. On September 22 we broke down thru the pennant (see magenta lines) on heave volume and fell further down and stopped at the same support as in previous sessions on August 8-11 and August 19-23 (see green line on the chart). Now we bounced back up from that support. Well, where is our next stop? The previous support becomes a new resistance. Thus the previous pennant bottom line is our resistance.
Since I believe that this market heads further down, we may see a bounce from that new resistance and continue down, see the blue arrow. As a second alternative, we may see several bounces (see red arrow), but in my opinion it is very unlikely.
If that happens and we bounce from the pennant resistance (now resistance) I will consider re-entering puts on SPY and ride this market down. You can also sell SPY shorts if you like.
If that happens and we break the re-tested support, we may see the market slumping all the way down to 100 level and I hope will be already riding this downtrend.
|
We all want to hear your opinion on the article above: 3 Comments |
Recent Comments