Post: #51

robreke 2016 weekly market update # 2.


The indicators I follow are still strongly on a sell signal. Things look ugly at least short term. There is typical market correction behavior today; that is the market starts up strong in the morning, ends barely up on a whimper.

Some of this will kind of be a recap a few things from last week as conditions are persisting:

Looking at nasdaq composite - The picture of distribution ( market having bigger higher volume down days ) has not changed much. There are lots of distribution days piling up. Even if we get some accumulation on the up moves, it’s met with immediate distribution.

Ideally, if we're beginning a credible rally, you'd want to see accumulation with light to no distribution for at least the first 1 to 2 weeks. we’re seeing the opposite now. That is, distribution and weak to no accumulation.

My sell signal has been effective since december 10th.

We’re down 1600 points on the Dow since then.

The Russell 2000 ( small cap stocks ) is underperforming worse than large caps. There is a classic 'Head and shoulders' top where it broke below it’s “neckline” Not a good technical sign. The head and shoulders is a bearish chart pattern:



The value Line Geometric Index, which is a broad based index containing many stocks from mid cap to large cap, is in a full fledged bear market. It's down over 25%

Only 15% of stocks on the nasdaq are above their 200 DMA now. This is representative of a good wash out so far, but by no means indicative of the bottom.

I mentioned this last week, but anytime the ECRI weekly leading index, has gotten below -5 it has portended a recession. You can see how far below it pierced during 08/09:

http://www.advisorperspectives.com/dshor...e-2000.gif


^ The key now for this index is watching the recent lows which occurred twice in 2015 ( approximately -2.5) As long as the indicator holds above this level, it appears the possibility of a severe recession is limited.

If, however, it pierces that 2015 low or worse yet, the -5 red line, a recession and bear market are quite likely.

In summary:

* A market bounce is quite imminent
* Volatility likely to rise
* Fed tightening
* Poor stock setups/no stock set ups.
* Cash is king!

For those that want to trade individual stocks ( or like doing options ) I think the key to good trading is to operate in a vacuum and go to the beat of your own drummer. Find a trading system that works for you that you're comfortable with and ignore what everyone else is doing or how much more money they’re marking than you at any given time. That will get you distracted, doubting your system that has worked for you and you'll start trying to "tweak" things. At that point, what usually happens is the wrong picks become bigger losers and the account value starts to suffer.

At this point, I'm expecting a shorter lived sharp decline that causes some fear but not a full fledged bear market nor a catastrophe like 2008. That said, things can change if some of the indicators I've alluded to go sideways.

The Nasdaq is coming to a support area so we’re due for a bounce. Recent low a few months ago is 4294. Look for potential bounce here.

At the same time, who’s to say these support levels will hold?

Option puts can often be a good indicator of sentiment when reaching a bottom. The current put numbers do not seem to indicate a bottom. There is an indication in this indicator that we’re seeing some bearishness ( good contrarian indicator) however.

As mentioned last week, the Conditions for a major bear market are:

Extreme deflation
Rising inflation
Inverted yield curve - fed tightening
Overvaluation - very high PE ratio SP

1 or all of these have existed in major bear markets.

We don’t have extreme deflation but we are starting to see deflating of the economy. Also,there is no inverted yield curve, however, with the QE manipulation, who's to say interest rates are "real" right now.

Another indicator: When Industrial Production gets below -1 historically, it has been the trigger point for market tops/bear markets. We’ve tripped that in the last reports for the first time in a very long time. I don't have a chart for that one but it can be googled.

This indicator hasn’t gotten a market correction wrong since 1919. At this point it appears the market is discounting the possibility of a recession.

Time will, of course, tell. For now I prefer to be happy with cash and wait for the washout to occur, new constructive stock patterns to emerge and new leaders to eventually begin their advance once the next rally is in place.

Post: #52

For guys in the accumulation phase who don't intend to start withdrawing their investments at least in the next few years (most of us), a significant market drop is a good thing. It's a buying opportunity because stocks are on sale.

Consider two market scenarios for the next 10 years from now on. Let's assume you invest in a low cost mutual fund or etf which tracks the S&P500, such as VFIAX from Vanguard, and dollar cost average $1000 into this fund every month over 10 years. You don't plan to start withdrawing money at least 10 years from now.

Scenario 1. S&P500 constantly grows at 4% per year. Small fluctuations, but no significant drops. At this rate, it goes up 42% in 10 years.

Scenario 2. Over the course of 10 years, S&P500 drops 50%, then bounces back, then drops another 30%, then bounces back again. By year 10, it is at the same level as in Scenario 1: +42% above the current value.

Which one would you prefer? Assuming other things being equal, I would prefer Scenario 2, because the same 1K/month will buy more shares when the index goes down. In the end, you'll end up with more shares/units of the fund you're consistently investing in and therefore a higher net worth as long as you don't freak out, sell low or try to time the market, but instead just keep dollar cost averaging consistently.

Granted, there is no guarantee that the index will be much higher in 10 years or even that it won't be below its current level. Also, significant drops in stock prices may be caused by or occur around the same time as recessions. Recessions tend to cause many people to lose jobs and not be able to invest consistently. However, the purpose of this illustration is to show the math behind long term investment. Also, people are more flexible than mathematical models or excel spreadsheets. For example, if there is another market drop 10 years from now, an intelligent investor will know that it's not a good time to retire and start drawing down his savings. He will just keep hustling until the market goes back up again, let's say another couple of years, and then retire and adjust his asset allocation to be more conservative and less dependent on market swings.

I have not sold any of my investments and not planning to do so in the near future even if the market drops by 50%.

Post: #53

If SPX 1850 breaks, and it seems likely at this point, the next stop is around 1780. Maybe there we'll get the big bounce to fill those two weekly gaps still dangling above in the upper 2000's

Even if we fill those gaps above, this baby is going down to 1600 eventually and if it keeps crashing through the 1500's then it's lights out, on the way to 500 or whatever.

I wish I had the extra cash to short this shit, but I'm going to wait instead for 1600 to try out the long side. By then, I should have enough money to speculate with.

Post: #54

Good stuff guys. I hope you guys share once you feel it might be time to get back in. Obviously, you are not responsible if anyone chooses to act on it but I might go into some mutual funds or something once the market stabilizes. Whenever that may happen. Thanks.

Post: #55

(01-19-2016 10:38 PM)samsamsam Wrote:  Good stuff guys. I hope you guys share once you feel it might be time to get back in. Obviously, you are not responsible if anyone chooses to act on it but I might go into some mutual funds or something once the market stabilizes. Whenever that may happen. Thanks.

Ugh, mutual funds.

Post: #56

Dow futures at 16552, down 260 points.
WTI under $28.

Everybody get your popcorn ready, tomorrow's going to be a doozy.

Post: #57

SPY breaking 182

Post: #58

So I went balls deep today gents,

I shorted the market hard core. Hit up all the major indices (large, mid, small), got in on DWTI (holy crap that bugger ran), and a few other inverse etfs.

Going to see how all this plays out. Hopefully my gamble will pay off!

Post: #59

^Nice work! I couldn't help myself either. Went short via TZA for a nice profit this morning. Currently in cash and waiting for a bounce to reload on shorts

Edit: At this point if the low of day holds and we close above 1837 I'll be waiting for the 1950-2000 area to short again

Post: #60

(01-20-2016 01:25 PM)Onto Wrote:  ^Nice work! I couldn't help myself either. Went short via TZA for a nice profit this morning. Currently in cash and waiting for a bounce to reload on shorts

Edit: At this point if the low of day holds and we close above 1837 I'll be waiting for the 1950-2000 area to short again

Here's what I'm all in at the moment:

Labd, edz, ery, midz, spxs, tza, tecs, dwti

The only loser I have right now is LABD the biotech inverse etf. Stupid thing did a complete 6+ to -6 percent swap in a single day. I've never seen that before. Everything else is healthy in the green however.

Hoping that bastard flips. I doubt biotechs will be able to weather a general market downturn.

Post: #61

(01-19-2016 11:30 PM)WeekendCasanova Wrote:  

(01-19-2016 10:38 PM)samsamsam Wrote:  Good stuff guys. I hope you guys share once you feel it might be time to get back in. Obviously, you are not responsible if anyone chooses to act on it but I might go into some mutual funds or something once the market stabilizes. Whenever that may happen. Thanks.

Ugh, mutual funds.

Haha, I just don't have the expertise to make more precise moves such as individual stocks. However, speaking of individual stocks, what do you guys think of KKR and Apollo? There is already and will be more distressed assets, I wonder if those companies will be good at turning them around in a couple of years. I have a long term view so I don't need things to turn around in a month.

Post: #62

Mother of all rallies!!!!

Post: #63

And that's why I'll never sell them in a hole!!

Post: #64

What the fuck just happened.

Post: #65

(01-20-2016 03:10 PM)samsamsam Wrote:  

(01-19-2016 11:30 PM)WeekendCasanova Wrote:  

(01-19-2016 10:38 PM)samsamsam Wrote:  Good stuff guys. I hope you guys share once you feel it might be time to get back in. Obviously, you are not responsible if anyone chooses to act on it but I might go into some mutual funds or something once the market stabilizes. Whenever that may happen. Thanks.

Ugh, mutual funds.

Haha, I just don't have the expertise to make more precise moves such as individual stocks. However, speaking of individual stocks, what do you guys think of KKR and Apollo? There is already and will be more distressed assets, I wonder if those companies will be good at turning them around in a couple of years. I have a long term view so I don't need things to turn around in a month.

I'm a fan of KKR, however, I stay far far away from Apollo. Inter-industry reviews of them are horrible, and I'm not the biggest fan of their management team along with their policies/strategies.

But do your own research, don't trust me haha.

Post: #66

KKR and Apollo alongside the rest of the PE industry got sucked into overpaying for companies and now are yielding negligible returns. Do your DD before investing with them.

Post: #67

(01-15-2016 09:08 AM)The Beast1 Wrote:  When you have spare time Omad, i'd be interested to read more about your trading philosophies and tricks.

Pop up a datasheet on the subject in this section of the site. Welcome to the forum!

I'll put something together when I get a chance. Do data sheets follow any sort of fomat?

I was thinking about starting a trading thread to post the trades I'm doing each day if there's any interest for it? I could tie it in with that. Others could post what they're trading too, it's always good to get different ideas.

Post: #68

(01-20-2016 03:33 PM)TheFinalEpic Wrote:  What the fuck just happened.

The Fed's Plunge Protection Team strikes again...

Post: #69

@Omad: I have thought about posting my stuff but for the time sensitive ones I'm not inclined to share while I'm working orders. The longer term stuff I do post here mostly. The shorter term stuff, well no one's gonna follow me when I'm flipping ES for 2 points.

Post: #70

(01-21-2016 08:51 PM)Omad Wrote:  Do data sheets follow any sort of fomat?

http://www.dangerandplay.com/2015/11/05/...-to-drama/

I had a problem --> Here is how I solved that problem --> Here is how you can solve that problem

Post: #71

(01-21-2016 09:25 PM)jj90 Wrote:  @Omad: I have thought about posting my stuff but for the time sensitive ones I'm not inclined to share while I'm working orders. The longer term stuff I do post here mostly. The shorter term stuff, well no one's gonna follow me when I'm flipping ES for 2 points.

I'd love to post the trades I make at work. Unfortunately, my head would be chopped off.

Post: #72

(01-21-2016 10:59 PM)WeekendCasanova Wrote:  

(01-21-2016 09:25 PM)jj90 Wrote:  @Omad: I have thought about posting my stuff but for the time sensitive ones I'm not inclined to share while I'm working orders. The longer term stuff I do post here mostly. The shorter term stuff, well no one's gonna follow me when I'm flipping ES for 2 points.

I'd love to post the trades I make at work. Unfortunately, my head would be chopped off.

If the people at work knew I was day trading, my head would be chopped off.

Post: #73

(01-21-2016 09:25 PM)jj90 Wrote:  @Omad: I have thought about posting my stuff but for the time sensitive ones I'm not inclined to share while I'm working orders. The longer term stuff I do post here mostly. The shorter term stuff, well no one's gonna follow me when I'm flipping ES for 2 points.

Yeah I wasn't thinking about future scalps, just my option trades which are usually 20 -60 days out. So right now I'm trading Feb which have 28 days to go, next week I might still trade some Feb but more March, 56 days, and the following week will be all March.

The idea is not so much for people to do the trades, although they can if they want, it's more just for people to see how a reasonably active option trader trades. Seeing how bad trades are managed can be an eye opener for people.

I'm always looking for trades so it's nice if others are putting stuff up too, if it fits by portfolio I might jump on board. Or fade it!

Post: #74

(01-20-2016 02:43 PM)The Beast1 Wrote:  

(01-20-2016 01:25 PM)Onto Wrote:  ^Nice work! I couldn't help myself either. Went short via TZA for a nice profit this morning. Currently in cash and waiting for a bounce to reload on shorts

Edit: At this point if the low of day holds and we close above 1837 I'll be waiting for the 1950-2000 area to short again

Here's what I'm all in at the moment:

Labd, edz, ery, midz, spxs, tza, tecs, dwti

The only loser I have right now is LABD the biotech inverse etf. Stupid thing did a complete 6+ to -6 percent swap in a single day. I've never seen that before. Everything else is healthy in the green however.

Hoping that bastard flips. I doubt biotechs will be able to weather a general market downturn.

I'll be the first to admit my own folly,

Got @$$ raped by the mini rally since oil got back up. 1300$ in the red ouch.

Going back out and licking my wounds. Got stabbed trying to catch a falling knife.

Post: #75

Anyone shorting is a fucking moron.

These central banks are acting so capricious right now, you better cover your ass well. Soros and others can do these things because they're insiders. None of you are. Soros owes so much taxes and how much pressure has he received from the IRS? None. The rest of us would be in prison right now.

The bottom line is if you go short and you don't have a major cover on your ass, you're betting that the central banks sit around and just watch the collapse. Now, when have they ever done that in the last twenty years?