Scylla and Charybdis

Scylla and Charybdis

I think this guy is right on!

Market headed up now..

I am fully long the market today.  with long TNA and Short TZA... In both wallstreetsurvivor.com and updown.com.

The daily LRCs are all pointed up after a back test, retrace.  60 minute just turned up today.  10 min is up, 5min and 3 min.  Everything is pointing up.  Although weekly is looking like a possible trend change to down (long term view) it has not fully crossed over yet.  also 200 dma has not yet been broken.  I would think the July highs will be taken out.  On the other hand, the unlikely scenerio of the debt ceiling not being raised could cause a major sell off.

I'm Back!

Back but not for long.  Just to say, I have been too elated with the market dropping to talk about it or too depressed with the recent market rally to talk about that... therefore nothng much from me for a long time.  I do feel a big drop is coming soon, any day now.  however, my indicators are now pointing up on a daily basis, and down on an hourly basis.  confusing?  yup .. and flat on a 10 minute basis.  go figure.  In my contest accounts I am long but about to bail.

102 week Rolling Returns Comparison (1928 - 2011)

I haven't been posting because this melt up market has killed me financially now for almost 2 years.  Watching the red get redder on my positions leads to a very unhappy boy.  I fought the Fed and the Fed won.   Turns out this melt up has been historic.  Here are charts pointing out that the only other time it has gone up this fast, a double since '09, is in the post 1929 crash rallies of 1934 and 1937.   This also shows the subsequent sell offs, some as large as 48% just one year later.

Here is another chart showing the "double" years.

TradeStation is an awful brokerage firm!

I have been with TradeStation now for over 3 years (actually I have worked with their software since 1992).  They have awesome software whereby I can program and test trading programs, indicators, showmes etc.   Their commissions are $0.01/sh then down to 0.006/sh based on quantity of shs.   In my first couple years I was trading sector baskets of stocks and ran up commissions of $35k.   then I got hammered and stopped trading in late 2009 and held onto (erroneously) my piece of crap "investment" TZA.  I continued to work on systems and indicators and practice with simulated accounts.  TradeStation has a policy that if you generate $50 of commissions in a month they won't charge you $100 for the platform.  Once I stopped trading they began hitting me with this $100/month regardless of the fact that I had paid for almost 700 months of platform commissions!  I didnt pay much attention to it thinking that any day now the market would sell off and I would be back in business.   It has now been 14 months of this and I am realizing what a royal ripoff this is.  I have asked them to give me back the $1400 in light of fairness however I have not heard back from them.  At this point all I can say is that I strongly DO NOT recommend them as a brokerage.  I knew Bill Cruz back in the days of Omega Research (which became TradeStation) and the company no longer has the integrity that it originally did.  If anyone would like to talk to me more about my TradeStation experience please post a comment.  In the meantime I am thinking of suing the bastards or finding out if there are many others that have had this experience with them and put together a class action suit.  And I am most likely going to move my account to another firm and make due with lesser platform/software.  Tdameritrade has a nice offer going right now and I may take them up on it.  Also it seems they offer a lot of tools.  Any suggestions?

I'm Baaaaack!

Well its been a couple months.  Almost correlates with the 7 consecutive up weeks in the market.  I feel this market is way overbought at this point (kinda like I have for the last 21 months).  In fact I am getting some indications that the long awaited correction is beginning now.  I have found that the small caps lead the way and therefore I follow the relative strength of the Russell 2k vs. SnP.  It has now turned down for the first time since early September '10 and in fact is breaking an up trend line since then.  The daily TRIN 30 ema has bounced off the bottom (around 0.90) where it usually hits at a top.  The dow has stopped at resistance in the 11860 area.  The SnP is stalling just under the 1300 barrier.  Weekly RSIs are way overbought and showing bearish divergence.  The VIX has bounced off its low point at around 15, up 9% today.   All these lead me to believe a correction is near.  How far, who knows and with the Fed still pumping the equities with POMO money and QE2, this could just go on at least till June.   Its insane.  I am insane for holding TZA for over 18 months now.  A triple leveraged inverse ETF shorting the small caps.  The same ones that have been leading the market up in the Russell 2k.  UGH!!  I have learned that the math does now work in ones favor holding these highly leveraged, inverse ETFs for long term.  It works against you.  In fact the best way; to play them is to short them.  I now can see that mathematically TZA will never be be where it was when the SnP (for example) was at say 800.   So this is my big mistake that has cost me dearly.  Also, I have learned .. don't fight the FED.  All logic has been out the window during this bull run.  The billions that the Fed has put into the system has simply been used to buy equities and ramp up the market.  And instead of going against that I should have joined the happy crowd of bulls.  They even told everyone how long they will continue to feed the market heroin.

Now on to my real reason for posting.. my next post.

Disgusting market

The employment report comes out with a huge dissappointment today, only up 39k jobs with the rate jumping to 9.8% and what does the market do?   open slighly lower then rally to positive territory.  Something is very wrong with this picture.  Manipulation, stupidity, CNBC hype, HFTs???   I don't get it.   TZA has been the biggest loser I have ever had the experience of owning.  Russel 2k is still off its recent highs yet TZA is well into new  low territory.  The math is totally against long term investing in leveraged ETFs, especially inverse ones.  I guess the days of the stock market making any kind of sense are now gone.

Its been a while..

I have been so crushed with this meltup of the last couple months that I have had no energy to make any posts.  My TZA is practically dead.  It was at just under 42 end of august and now its broken below 20.  Straight down for 10 weeks.  Whats really frustrating is that when the Russell 2k was this high back in April, TZA got only as low as 26.50.  TNA its bullish counterpart is also suffering as its over 10 points less than it was in April.  My only conclusion is that shorting these leveraged ETFs is much better than buying them.

I cannot bail here on the TZA however, since the market is simply way too overbought and in dire need of a correction.  Here are some bearish considerations:

1.  We are in the area of the April highs which is big resistance but have rallied 25% on the Russell since late August and 18% on the SnP which is a big jump in a short time.
2.  Last time we were this high the forward looking PE on the SnP was 100, now its less, like 95.  GDP was projected at 3%, now its 2.5%.   The market is forward looking, discounting, and news is less good now.. go figure.
3.  The QE2 is now been announced.  What else is there to look forward to?
4.  The economy is showing no striking improvement and is just limping along.
5.  Everyone is bullish!
6.  Everyone is bearish on the buck and long everything else.  Way too crowded.
7.  The VIX is in the teens.
8.  The PIIGS problem abroad is still very present.
9.  The mortage mess is still an issue even if the banks are trying to stuff it under the rug with the help of the newly appointed republican Attorneys General.
10.  Foreign holders of US buck denominated assets are not very pleased with what we are doing to the dollar nor are our trading partners.
11.  Real Estate is still in a downward trend, both residential and commercial.
12.  41 million people are on food stamps.
13.  Govt is now entering a two year gridlock where nothing will be done.  A complete standstill.

The only reason this market is going up is because the Fed asks Goldman how much free money they would like to keep buying the market up.. and they give it to them.

Downright ugly!

This is one fucked up market..IMHO.  Just a bunch of chaos.  I guess its cause there are a bunch of computers playing against each other with algorithms that are based on human nature, however, the humans are becoming more and more absent from this whole mess.  down 165 yesterday up 130 today.  WTF??   trendlines are broken then broken back again.  20 min indicators pointing up while 60s and 5s are pointing down.  I guess its simply not time to trade.  I'm hanging it up for a while until this nonsense subsides.  this is bullshit... probably a reflection of the fucked up mass consciousness in this country.

Some bearish signals happening

SPY RSI uptrendline broken today, along with the SnP 60 min. trendline.   Market stopped at the 200 week moving average and turned down.  DXY stopped its descent at trendline support 76.14  and big up candle today, way due for a bounce.  McClellan Osc. bearish divergence and has turned down at down trendline.  VIX bollinger sell signal was 3 days ago and these usually can take a week +-3 days to manifest the selloff.   IFT total buys vs. sells has been building a bearish case for a while now.  52wk hilos although choppy has turned bearish.   My 60 min relative strength indicator has turned down (small caps leading the drop)  but the daily has yet to cross bearish.  60 min LRCs are all in sell mode and dailys are headed that way .. whether this is a good correction is still yet to be known.  Also after these parabolic rises in gold, AAPL, EURO etc .. this market is way too frothy and overbought.  I think its time to get positioned for a downswing.  The financials, small caps and R/E could be shorted here.  FAZ, DRV, TZA.

Is it time to stop paying the mortgage all together?

here is a great article from zerohedge detailing the whole mortgage mess, how it got there and where it stands now.  The banks are totally vulnerable to a homeowner revolt by just stopping payment and asking for proof that the bank owns the note.  http://www.zerohedge.com/article/gonzalo-lira-second-leg-down-americas-death-spiral

Dow screaming past 11,000 ... Happy Dow is here again!

"About three dozen of the top publicly held securities and investment-services firms—which include banks, investment banks, hedge funds, money-management firms and securities exchanges—are set to pay $144 billion in compensation and benefits this year, a 4% increase from the $139 billion paid out in 2009, according to the survey. Compensation was expected to rise at 26 of the 35 firms." WSJ

Now a buy signal!!

Talk about being whipsawed.  Now the RelativeStrength indicators both daily and 60 minute are pointing up.  I probably should bail on all shorts and switch to long, but the market seems so overbought, the SnP stopped just above the 1160 target, which is also slightly above the 100% fib projection ... well maybe more than slightly, next projection would be 1202 ..hmmmm.  The RUT just slightly exceeded the 61.8% fib retracement and at some resistance 690 area.  ???   Geez, confusing as to bail or look for a pullback from here.  TZA has broken down to new lows.  the ETFs drop way faster than they go up.  While Rut high this year was 746 and its now 689!!  and TZA at all time low??  Whats up with that?

Plus all the LRCs for 20 min, 60 min and daily... are all pointing up.   Should I jump on board the bull train at these lofty highs or just stand aside after closing all loser shorts??   This market is incredibly difficult to figure.  Its all about the Fed pumping cash into the economy with its POMO.  Why can't they just leave the markets to find their own balance?

Sell signals again today

Lots of 60 minute sell signals for the market, including the RelativeStrength mentioned in the previous post, now fully in sell mode on a 60 min basis.  Daily in all cases has not broken to sell yet.  Lots of chopping around today in the afternoon.  Faz for a week now has been directionless chop crap.  TZA/TNA were all about straight up, straight down routine.. must be heavily traded by the HFTs

Mixed signals

this market dips into the 1150's then immediately falls back into the 1140s.  I am getting all kinds of opposing signals.   the 1150's is an area of resistance plus the market has been up for a month now so its hardly prudent to buy into this, on the other hand, many technical analysis methods have not been working lately.  The market seems to even go up on bad news.  56% of the volume is from HFTs, with only slightly over 10% from retail investors/traders.   So the direction it goes is not the result of mass psychology but instead the result of algorithms programmed into computers that profit thru huge trades on minor moves.  It kinda makes me sick.

At any rate... here is a new indicator that I find quite usefull and it is pointing to longer term continued bull moves, possibly after a bit of a pullback first.   The smaller caps seem to be leading the big caps therefore this is the relative strength between the SnP vs. the Russell 2k.  As the ratio goes up the market goes up and as it goes down the market goes down.   Russell moves up faster and down faster than SnP.

This first chart is on a 60 minute basis.  I am using a 21 period linear regression curve vs. an 8 period exponential moving average of that.  The lite blue is the LRC and the yellow is the ave.  The red is the actual Relative strength number.  Right now it crossed bearish lite blue crossing below the yellow, but the red has crossed above, which usually pulls the lrc and lrc mav.  so the yellow may have changed its mind.  On the other hand, with LRCs, generally when there is a trend change, the price (or in this case the relative strength number) pulls back to the LRC ave before continuing on down.   Its a bit confusing at this juncture.

The next chart is on a daily basis.  Now this simply uses a 10 and 50 exponential moving average of the relative strength to smooth it.  You can see the market has been in a down channel since mid May, confirmed by the 10 staying below the 50.   Now, not only has the 10 crossed above the 50 but it has also broken out of the channel.   this would tell me that there is a new leg of this bull move coming soon.  I am looking for the 60min to work its way down a bit maybe 2-5 days, close my shorts then move to long unless the daily falls back into the channel and the 10/50 cross back bearish.

With this next weeks unemployment numbers hopefully the market will get out of these doldrums and do something trendlike.

Sell signals coming in..

The 20 min. charts rolled over yesterday along with the relative strength (Rut vs SP), giving a sell signal on the mkt.  Today the 60 and 80 minute charts followed with sells.  the Q's are the strongest and havent quite rolled yet, but when they do, it should be a waterfall.. or not.  Tech is still strong.   Q's closed today where they closed yesterday, whereas the RUT was down 1.2%.  A key range of support is 1115 -1105, then of course, 1100.  We havent even broken 1120 yet.  I will be at the ocean tomorrow... so all hell might break loose.  :)

Greenspan .. contributed greatly to the mess we are in.

click the graphic to better read it.

Toppy indications here, finally.

check this video from perfectstockalert.com

I hope we're done with this move already.

I think this move up and sideways is DONE!  What a boring week.  Market stopped right at the top of its channel/trading range SnP 1131 area.  Volume was ridiculously low.. AGAIN.  Unless the bulls can create some enthusiasm from the public, this little run up is over.  OPEX week was a non event.  SnP closed up today 93 cents, yesterday is closed down 41 cents.  Is that excitement or what?

The SPY is at the top of its acceleration bands and stalling, its RSI bumped up against a trendline from last May, that it generally drops from.   My IFT scans of the entire stock market show the shift to more sell signals than buy signals.  VXX has stabilized and the TRIX on it has turned mkt bearish.   However, the silver/gold ratio is indicating rally.. hmm troublesome.  The relative strength of Russell 2k vs. SnP is still bearish but iffy, its either done with this move, or poised to break up.

At any rate.. I certainly hope the rest of this month is more trending than the last two weeks.  In fact this range has been going on since mid-May with only slight downside bias... and we are at the top of that range right now.

Who is buying this market???

ICI's latest data discloses that in the week ended September 8, domestic funds saw outflows of $2.2 billion, following last week's massive $7.7 billion. And yes, ETFs experienced outflows as well. So far September has experienced nearly $10 billion in outflows, even as the market has ramped by over 6%. Who is buying this shit? Just ask The New York Fed and Citadel: they may have a few pointers (wink wink). This is the 19th sequential outflow from US stocks, and amounts to $65 billion in redemptions for the year. With the market pretty much unchanged YTD, it means that mutual funds can not resort to capital appreciation as a substitute to outflows, and most are on their last breath (Janus: blink twice if you are still alive please). The kicker:the S&P is at the level it was when the outflows began back during the flash crash. If that doesn't restore all your confidence that Uncle Sam will be so good at managing the market (just like he has done with everything else), nothing else will. Throw in a little HFT, a little subpennying, a little Flash trading, a little DMA trading, a little quote stuffing, a little hedge fund clubbing, a little specialist front running, a little daily flash crash in big caps like Nucor Steel, and you can see why next week we will most certainly have our first inflow in 20 weeks. Or not. It doesn't matter. Nobody that is made of carbon, or who doesn't already have direct access to the Fed for zero cost funding, is trading stocks anymore. -- courtesy of zerohedge.com


My view... the market is at the top of its range that it has spent the majority of time for a year now.  so I'm not going to bail on my loser shorts, however, the LRCs are still pointing up so its been quite painful.  SnP has been up 9 of the last 11 days.  I am in the bottom 100 in the latest wall street survivor contest.  Could get a margin call any day now.  Its all quite depressing.  Todays nonsense was disgusting.  Bad econ news and it stayed down for 15 minutes then up the rest of the day.  And even that was jagged and chaotic.  Maybe the stock market is simply not the way to spend my time.