Today's lift makes for a nice easy day with a full exhale and unclenching.
It does however feel very manic and frantic. If this assessment stands up I think we will have more up and yes down to come. Chances are your portfolio is up a lot today. If you freaked out at any point during the last week you might want to take advantage of what the market is giving you now to make changes.
To be clear I am not talking about trying to game what's next, I am saying if you could not handle last week now could be a chance to fix a couple of things and to be even clearer I am not making changes. To me this was down a little. I don't really want to try to game market events that really are well within the norm of market volatility.
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24 comments:
I think all the so called pros like Tom K went short yesterday and are feeling the pain. I think we will test new highs by the end of the month. Too many people are caught leaning short with fear of losing alot when we continue to climb.
Disclosure: started a QLD position this afternoon.
I don't know about "so called" pros but no real pros would have put out shorts yesterday. They'll wait for the oversold bounce; just like the one we got late last May before the next leg down in June.
O contraire mg,
I had been buying since last Tuesday to get back up to 60% long and actually closed my UCPIX 2x short position on Friday for a nice gain. Read my posts since 2/27.
Today I did a turnabout of sorts and sold some of my long positions based on developments in my timing model, mostly Profunds Ultra Sector funds which are based on closing indexes...today's close. This morning I believe I posted that I would be selling into strength and voila, today we got strength. I am now at roughly 45% long.
Understand I am not a short term trader, but I'm trying to stay in sync with my model as best as I can. I'm officially a fence sitter but I think we're going to see lower prices over the coming weeks, not higher. What I think doesn't really matter though. I just need to follow my model.
From a short-term tactical perspective this looks more like an oversold bounce or, as OldVet commented on another of Roger's posts, a bear squeeze; in the latter case it's a matter of big money wanting to sell at a better price so the first step is to beat the shorts out (force them to cover).
It will take more confirmation through this week and into next before we can dismiss the return of volatility, this recent downdraft, and return to happy days are here again. Lord, even the busted subprime mortgage lender NEW was up strongly and they are not only close to bankruptcy there's a fair chance top management will be criminally prosecuted (e.g., http://tinyurl.com/2m5uhc).
IOW no particular reason to radically change a portfolio mix today vs. yesterday unless your discipline requires it (you go TomK) and/or the additional volatility revealed more risk than you thought you were taking. As J.P. Morgan famously commented, "prices fluctuate" (e.g., http://tinyurl.com/ytfrs4) and it seems probable they will do so even more in future; gird thy loins accordingly (or loin thy girds if that's your mood). JMO
I recently loaded up on 2x inverse funds yesterday aftenoon in fear and now I am missing out on the gains. I give up on this manipulated crap.
GogGold
"The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries." ---
W. Churchill
With all the maddening ups and downs, I believe most of us prefer opportunity with risk to the alternative.
Roger and All,
What are your exit strategies? Sell at a percent down? Sell when you think the econommy is turning? Sell just to balance an asset allocation? Sell when a stock goes down past the 50 day moving average? Share your exit strategies and share how you decide to come back after you sold.
On a seperate note: I can not believe the market went up when manufacturing orders went down, worker productivity went down (indicating inflationary pressures), subprime borrowers are defaulting at a higher rate, and home sales are slowing. It boggles my mind. Then government officials are saying there is no problem with the economy?! Is it my imagination or have government officials and market pundits come out more than usual proclaming that everything is just fine?
Glen
I agree with RW, and would argue that volatility of this sort in the market is not a good thing, nor is it a good sign. QLD is up 3.75% today, but as RW so astutely pointed out, NEW was up even more, and they are facing possible bankruptcy. I must admit that I also was tempted to buy an old REIT holding of mine, IMH which is up over 20% today, and still is about half off it's recent high, but I didn't pull the trigger. It might still be a good buy and hold stock now, but the sector stinks.
I have heard Jim Cramer say before about forcing up stock prices to weed out the shorts and make then suffer. I'm still not convinced that stock buying now is bargain hunting even with today's rally. I am going to wait until the dust clears myself.
Tom K did mention last Friday that he had sold off his bear funds too BTW. Good job Tom.
I bought Goldcorp (GG) calls Monday for a trade.....
Did I hear the stallion say emphatically, " the lows will be tested rest assured I am certain, sorry to talk technical but that is what this market is about"...something like that, I believe? Indeed, that is what the technicians expect,just like the bounce was expected yesterday and today...one day late to goose the shorts by buying overnight in asia and europe. In this market you can feel like you're doing the right thing one moment, like embrace opporunity with risk i.e, buy and hold, and stupid stupid the next, and then suddenly redeemed the next, around around she goes, where it ends nobody knows. We're under the big top playing at the biggest casino in the world.
Roger, is your gloating trading brother gonna buy ya dinner? You guys are different. What about a guest for your weekend video blog? Test the waters. Could be an interesting audition.
Glen,
TAZ Trader (www.swing-trade-stocks.com) explains one approach to swing trading. I follow a slight variance for lots of my trades. I try to exit when a stock drops below the 50 day MA. The problem is that stocks often get pushed below the 50 day MA to take out the stops and then they close above it. So, i try to make a habit of not placing a hard stop and simply closing a position the day after it closes below the 50 day MA.
Then days like last Tuesday come along and the stocks end up way below the 50 day MA on panic selling. I do not like to sell on panic selling days, i'd rather wait for the eventual bounce and sell on strength.
But weeks like this tests the hardest of wills while waiting for the bounce. I ended up selling a bunch of my longs yesterday morning and the rest today. I do not see a reason to hold a long in the market at this time. I'd rather be on the sidelines wishing i was in, rather than be in the market wishing i was out.
I also bought BRCD puts and shorted FMD today... small positions, just to test the water in case this turns out to be a dead cat bounce.
I was thinking of going bottom fishing in IMH on weakness, i had a limit order below yesterday's close and the thing rocketed 20% today, so i did not chase it. I see somebody else had the same idea too. I had detailed in an earlier comment how i lost a bunch of money selling IMH naked puts, so this would've been a quick trade on a small position... but did not happen.
I do my research, watch cnbc and bloomberg on tv, make my decisions and then do the opposite. I now make about as much as I was losing before.
GG? What were you looking at there Larry? It's bounced off it's lower bollinger band but has broken below its 200 MA and RSI doesn't look promising; just interested in the analysis, not trying to P on anyone's shoes like some of the new posters here appear to be.
I doubled down on a couple mortgage lenders today including NEW as I think the fundamental weakness in the group is serious and very real but am not making any really significant plays in this mess much less any major portfolio changes. It's really starting to look like some fairly serious chop and slop coming but there is of course the distinct possibility I could be entirely wrong and everything just sort of smooths out for awhile after here; preparing for the unexpected becomes the only rational response (shrug).
I close my eyes and press four letters on my keyboard. Whatever stock symbol appears is the one I buy for the portfolio. I am pleased to say that so far it is less emotional and has made me 21% returns each of the last two years on a 90k portfolio. Wall street is built on tactics like this. Why do research and get emotional when the stock always goes the opposite way. I may also start a investment workshop. If anyone is interested please leave your name and number on the blog.
neia...
"Roger, is your gloating trading brother gonna buy ya dinner? You guys are different."
I do very ltttle trading. I just threw my two cents in. Means little......
Larry,
You should buy Roger dinner just on general priciples. I recall the discomfort my older brothers put me through at a tender age.
Roger has been pointing to the very real statistics of how long a typical bull market should run for about a year (I don't know the exact amount of time). He has also advised trimming volatility out of our investments. Humility can be profitable if you listen to the right people. I moved a large part (>30%) of my portfolio into berkshire hathaway in late January. Putting 30% of my retirement account into one stock is not a normal thing for me to do. But I looked how that stock had done in previous corrections and was pretty satisfied. Besides, who am I to say that I know more about how companies are run than Buffett, Munger or Nusbaum for that matter. I'll be the first to admit I don't. My total asset value has broken even in the last month with < 2% varience +/-. Thats some volatility I can live with. Tom in Indy
Well the S&P is down about 4% in the last month and you are break even. I would say that is great assuming you don't have many bonds.
boss
neia,
Wasn't there a rather famous trade based on 3 darts thrown into the stocks page of the WSJ once a year?
boss, no bonds, all long positions on US stocks with the exception of SDS which was 3% of the net worth and I sold it on 3/5. None of the positions I held were my own ideas, all came from Morningstar stock screening. I'm not smart enough to pick stocks. I have proven that to myself time and time again. Tom in Indy
Sami commented: "I'd rather be on the sidelines wishing i was in, rather than be in the market wishing i was out."
I also believe that the possible near-term downside here in the market is not worth what might be gained by being in at this point.
And it's too bad your order on IMH didn't go in Sami. It's up again another 18.07% today.
Sami,
Thanks for pointing me to www.swing-trade-stocks.com. What kind of results do you get? Do the times that you swing in and out of a stock eat away at your profits? Then there is always the problem of knowing when to come back in.
Right now I am using puts to completely hedge my portfolio. If the market stays in a tight trading range, I lose.
Sami,
Thanks for pointing me to www.swing-trade-stocks.com. What kind of results do you get? Do the times that you swing in and out of a stock eat away at your profits? Then there is always the problem of knowing when to come back in.
Right now I am using puts to completely hedge my portfolio. If the market stays in a tight trading range, I lose.
Sami,
Thanks for pointing me to www.swing-trade-stocks.com. What kind of results do you get? Do the times that you swing in and out of a stock eat away at your profits? Then there is always the problem of knowing when to come back in.
Right now I am using puts to completely hedge my portfolio. If the market stays in a tight trading range, I lose.
Glen
Sami,
Thanks for pointing me to www.swing-trade-stocks.com. What kind of results do you get? Do the times that you swing in and out of a stock eat away at your profits? Then there is always the problem of knowing when to come back in.
Right now I am using puts to completely hedge my portfolio. If the market stays in a tight trading range, I lose.
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