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Steve 7

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  • October Rally Keeps S&P 500 On '07 Recession Pace [View article]
    The short-term pattern has been that the smart trading money - the trading desks of the 22 largest financial institutions who deal directly with the Fed - has bought around S & P 1100 and then sold around S & P other words, I cannot speak an opinion about comparing different years that are years apart, but the short-term pattern is pretty clear...

    This pattern would mean that now that we are above S & P 1200 the smart money will start to exit and take its eight to ten percent gain it has achieved in just a few weeks...also of course, we are short-term overbought so this would make sense...

    It might also be argued that there is a good chance selling might be muted because it is earnings season....

    Recently - in the past nine weeks or more depending on when you start your count - the S & P going between 1100 and 1200 has happened again and again and again...

    So - untrusting investor - if we start to go down now back toward 1100 and we do not break above 1240 on the S & P and never look back after we break above 1240 - it would confirm your idea about a bunch of trading desks and HFT computers trading the same amount of money between each other within a trading range...

    I should add - I agree with the above idea - it looks like it is taking place - but I might add that this time - like in March 09 - there is a small chance that the trading desks will let their trades turn into investments and instead of taking a quick profit, might wait months while retail investors wade into the market. The trading desks would then take their profits next year and therefore will have let their trades turn into investments (with the idea being a trade is held for days or weeks and an investment is held for at least a number of months).

    If they choose to let their trades turn into investments, we saw the low of the year on Tuesday a few weeks ago.
    Oct 15 01:13 AM | 7 Likes Like |Link to Comment
  • Where Did The Risk Go? 8 Domestic Factors That Can Roil Stock Markets [View article]
    First - let me say I partly embrace the following idea but I definitely do not wholly embrace it - it goes to the conspiracy theory of controlled government markets.

    Bernanke, Obama and company want to assure they are in power for another four years, and so for them - timing is everything related to making sure equity prices are as high as they are now or higher come October/November of this year.

    The only natural way to assure this takes place is for some correction to take place followed by a sideways movement - or sideways movement followed by a correction - sometime over the course of the next three - five months. This would set the stage for a massive fall rally. The most logical way the fall rally might take place is the announcement of a QE3 program sometime during late summer or maybe slightly before. Going to the idea that equities need to be lower and commodities need to be selling off (especially oil) before QE3 can comfortably be embraced - it means there is some chance that James' call of weakness beginning sometime in April (believe he said it will start by the end of April) will take place.

    While I believe the correction will probably not be as harsh as James says it might be - if it is - it would obviously be even more motivation for current critics of another QE program to change their viewpoints and embrace another QE program.

    In the meantime - it is difficult to say when the correction will start to take place. Perhaps the market consolidates in an S & P trading range between 1375 and 1425 for many weeks before breaking lower. Or maybe a correction starts to take place in earnest starting sometime in the next few weeks and when it is over it leaves the market in a trading range between 1325 and 1375 for a while before breaking lower before a QE 3 announcement. Regardless of what happens, it will be interesting to see what happens once the current momentum starts to stall and most if not almost all shorts have covered...I mention the last part about the shorts because it might be argued that once most shorts are out, once the market starts to fall it can fall rapidly because there is not a "short-covering rally" safety net...
    Mar 26 10:05 PM | 6 Likes Like |Link to Comment
  • U.S. Stock Market Outlook 2012: Down Hard, But Not Out (Part 2) [View article]
    This is a copy of a comment from another article but it seems worth it to copy it into this thread...

    A well-known saying is "never short a dull market" and the lack of volume and huge moves either way (except positive moves overnight) make this a dull will likely remain dull until the Fed releases its thoughts on Wednesday afternoon. If the market does remain dull, it means it would probably not be wise for a person to short until Wednesday afternoon if he or she is itching to short...

    As far as where the market is going, here is a short, possible prediction - and of course - one thought about predictions - once you make one it means the prediction is less likely to take place...

    The market continues to remain overbought and will probably continue to be that way until the Wed. afternoon Fed huge investing/trading desks would want to be short and/or sell before a possibly huge bullish announcement...

    Regardless of the announcement, the market will headfake to the upside between 2:15 and 2:30/3:00 as those who went short before the announcement cover their bets and institutions make small buys just in case the announcement was in fact "well-received'....

    At this point, the market will have reached a huge overbought state and institutions who were "the first in" since the middle/end of December will start to take their profits and continue to do so until at least late Thursday morning...the selling might start Wednesday anywhere from 2:30 to 3:15 after the initial headfake up....

    The selling will simply be profit-taking and will probably result in a 2 - 3 percent decline, maybe more...the media will look to create a headline by saying the selloff has to do with the Fed's announcement and/or investors and traders are growing increasingly uneasy about the situation in Europe...

    Many investors/traders who write blogs will immediately begin publishing ideas that the market experienced a major reversal and that many days of selling might be ahead and that January might have been the high point of the market for the year.
    Jan 24 01:08 AM | 6 Likes Like |Link to Comment
  • 4 Ways To Trade The SuperCommittee Relief Rally [View article]
    CAT and many other cyclical stocks have been "in favor" for the last month...CAT has rallied around 30 percent (or more than 30 percent depending on how you interpret the chart) from its October 4 low...

    The time to buy badly-beaten stocks was during the beginning part of October when the bear crowd predicted 2008 all over again...most "badly-beaten" stocks are already up 20, 30, or 40 percent from their October lows. For an example of the 40 percent crowd - Joy Global.
    Nov 20 12:22 AM | 6 Likes Like |Link to Comment
  • Bulls Losing Grip On Trading Range [View article]
    Above all, the market usually catches people by surprise and separates the majority of retail investors/traders from their money...

    For example, the last "great surprise" was when the indexes lost five percent of their value in about 45 minutes...a two percent selloff occurred on Wednesday after the Fed meeting about a week-and-a-half ago during the last forty-five minutes of trading and this was followed by a gap-down open of 3 percent the next day...

    If the market is going to tank this next week - which is possible since major, credible think tanks and people are now firmly saying recession is inevitable in the U.S. and using facts to back up their claims - chances are it will come with a dramatic gap-down open on Monday or a giant last-hour selloff on Monday followed by a giant gap-down open on Tuesday...

    Of course, this would mean those who are not already short would immediately miss about seven percent or more of the possible fifteen percent or more down move over the next few weeks...

    If it does not happen Monday or Tuesday of this week - it will likely happen in the next few weeks in a similar fashion - a giant sell-off into the close followed by a giant gap-down open...

    A selloff in the next few weeks would actually be healthy for investors and institutional managers...they could raise a bunch of capital and then be in a position to re-align themselves when earnings season starts in earnest in a few weeks...

    It would also leave the market in a position to rally during earnings season...
    Oct 1 11:49 PM | 6 Likes Like |Link to Comment
  • Signs Of A Stock Market Top? [View article]
    To add the political element to it - while again I am not in complete agreement of the "government officials help to shape the market in order to maintain their power positions" argument but can see some validity to the idea - it seems that Ben and others need to set up a situation where the market is as high as it is today or higher around the time "the powers that be" are seeking reelection in earnest which would of course be the beginning of the fall of 2012.

    With that in mind - a sideways movement followed by a fairly big or big correction or vice versa over the coming months makes sense because it sets the stage for the acceptance of another QE program. At the risk of stating the obvious - if it is timed well, a QE program promised in the summer and then implemented in the fall sets the stage for the equities market to be doing well at the key moment it needs to be doing well for Ben and others - that time being in the fall of 2012.
    Apr 21 07:38 AM | 5 Likes Like |Link to Comment
  • Is Netflix A House Of Cards? We Will Find Out Monday After The Close [View article]
    At the risk of stating the obvious, if a trader believes "the short side seems like the best play, but I can still see how I might lose big time because there is a possibility of a blowout on the long side" - he or she should play a put-weighted strangle - before earnings, buy calls and puts with more capital allocated to the put side.

    The last two quarters NFLX has handsomely rewarded strangle players and for years and years NFLX has been one of the few equities that has paid strangle players well after the majority of its reports.
    Jul 21 09:31 PM | 4 Likes Like |Link to Comment
  • Dow Theorists tell you a lagging Dow Jones Transport Average is an ominous sign for the future health of the stock market, says Mark Hulbert. Unfortunately, for the moment at least, that's what's happening right now. As the story goes, the transports are usually more sensitive to changes in the market barometer, so weakness, even just relative weakness like we're seeing today, could hint at bigger trouble down the road.  [View news story]
    And I might add, I am ready and waiting to trade the swift correction either late tomorrow/Thursday or sometime next week as intermediate-term the markets are extremely overbought...

    Of course - will wait until it actually starts to take place and then follow it down rather than to try and predict when it will happen...

    My belief is that it will not be the start of a downtrend, but rather funds "taking profits just to be safe"...look forward to read what reasons the media gives for the profit-taking...
    Feb 7 10:25 PM | 4 Likes Like |Link to Comment
  • James Kostohryz Positions For 2012: 100% Cash The Only Way To Play This Market [View article]
    Tony P4,

    I agree with you about luck, although there is one interesting definition of luck you might have heard: Luck is where preparation meets opportunity.

    A lot of professional athletes - like professional investors - are called "lucky" early on, but when it becomes a theme people begin to realize they are often times prepared to take advantage of great opportunities.

    Michael Jordan was essentially always "on his game" even in practice because he treated the practices like games. Therefore, he did not have to get into "game mode" - he was always prepared to take advantage of the opportunities on the court.

    However - dialogue aside - I do agree with you that luck does play a part. A person might be the greatest stockpicker in the world and he or she might wake up to find a disaster has hit a company he or she owns multiple shares in. Or a person might not even know what he or she is doing and wake up to find out they just purchased shares in a company that is being bought out.
    Jan 25 10:02 AM | 4 Likes Like |Link to Comment
  • Upside Window Closing: Initiating Shorts Now [View article]
    I might also add that there is one main statement that many professional money managers believe trumps any bearish arguments:

    Money managers are sick and tired of worrying about Europe, and with less than forty investing/trading days left this year they are in competition with each other to make money on the long side before December 31, 2011.

    Many people believe the above information - combined with computer short-covering - is the main reason dips have been bought furiously since the beginning of October.
    Nov 5 09:57 PM | 4 Likes Like |Link to Comment
  • October Rally Keeps S&P 500 On '07 Recession Pace [View article]
    untrusting investor,

    I should also add - related to your other comment from a few days ago about retail investors...I am well-aware that retail investors account for a very small percentage of the market...I would figure you would know that I know this so I am surprised you mentioned it related to my comment about Chipotle on the other message point was that retail investors - who make up five percent or more of the market - are usually wrong otherwise the majority of these retail investors would be rich and they are not..

    On another note - what I also mean by retail investors are those who actively manage their 401K's/403 B's and switch money into equities (when stocks are doing well - usually they reallocate near a top) and take money out of equities when they are doing poorly (usually they begin moving their money out of equities when equities are near a bottom).
    Oct 15 01:26 AM | 4 Likes Like |Link to Comment
  • Why I'm Expecting A Research In Motion Earnings Surprise [View article]
    Remember, there is a reason the highest volume of the year occurred the day after last earnings report...funds and investors wanted out, and most of them were happy to get out at around 27, 28, and 29 dollars.

    My thought is that most people who recently "bought the bottom" around 21/22 or even bought around 25, 26, and 27 are actually "renting" the stock until after the earnings report...they hope the report pops it into the mid-30's and then they can sell for a great profit.

    These two ideas combine to go to the idea that RIMM might bomb after its report...institutions getting out on as much volume as last report means funds have dumped for a long time. When people looking for a pop are disappointed (they probably will not get one since there probably will not be institutional buyers) they will probably dump and still get a 10 - 20 percent gain even if RIMM sheds 15 to 20 percent after its report.

    Funds probably will not want in again unless RIMM essentially comes up with a completely new development and then also proves - with numbers - that people are buying the new technology. At best, this might happen the middle of next year - at worst, RIMM will be sitting on a large stash of cash for years while they try and figure out a profitable new toy.
    Sep 14 11:27 AM | 4 Likes Like |Link to Comment
  • Smart Investors Shouldn't Even Consider Selling Now [View article]
    A smart investor might consider selling if he or she understands and sees the trends of the market.

    Whether or not an investor should sell his or her equities portfolio and sit in cash for a period of time should be dependent on how much he or she knows about the stock market and his or her comfortability related to entering and exiting the markets with large sums of money. If he or she is "scared" to sell large positions or his or her broker convinces him or her to not sell, he or she will most likely not lose a lot of money but also not make a lot of money.

    Let's look at three examples:

    1. You might know many investors who were comfortably selling their entire equities portfolio when the DOW went below 10,000 in the fall of 2008. These investors saw and feared a big selloff ahead and benefited from their fear. A lot of these investors put half their money in gold (and might still have it - it is worth a lot now) out of fear, and then started re-investing in equities around DOW 8,000 - 9,000 - once it was clear the DOW bottomed-out and might have put in - as referred to by Doug Kass - a generational low. These investors made out very well.

    They made out well because they considered selling when the market flashed signs it was ready to begin a long period of decline.

    2. Many investors refused to sell no matter what in 2008 and 2009. These investors are basically where they were three years ago, with a small loss when you factor in the recent decline in equities combined with inflation.

    3. And of course, there are the investors who sold out of panic in the first few months of 2009. Unless these investors reinvested their money just a few months later after the markets bottomed out, they definitely lost a good portion of money. Chances are - if they did reinvest in the equities market - they did so in late 2009 or in 2010 and missed out on most of the giant rebound after the bottoming of the market.

    As I am a trader and not an investor - on a very short-term level it appears the market will selloff dramatically today (Tuesday) and probably rebound after a morning selloff on Wednesday.

    If the selloff today is in excess of five percent for each of the major indices, it increases the chances there might be a significant gap-up and a few-hour relief rally starting Wednesday morning. The media will say this is because of the President's impending speech.

    If the indices each go down 3.5 percent or less today (Tuesday), it increases the chances of a dramatic gap-down Wednesday morning to really shake the weak hands out of the market and to give dip-buyers the opportunity to try and call a short-term bottom in the market.
    Sep 6 01:56 AM | 4 Likes Like |Link to Comment
  • Tesla: The Short Squeeze, Rather Than Short, Of The Decade? [View article]
    ??? AAPL's P/E is currently less than 20 and it has been less than 20 every trading day for years.
    Aug 31 02:54 PM | 3 Likes Like |Link to Comment
  • Here's What You Need To Know About Coach [View article]
    Kind of confusing that this article came out after a person might be in a position to make a decision as to whether to hold Coach through earnings or sell it before earnings...unless a person reads this article within the hour-and-a-half window that afterhours trading is still open, he or she will be reading this article after it is possible to use the information in the article to maybe change his or her mind about his or her position.

    Maybe it was just a coincidence the article came out when it did and it was actually scheduled to come out at an earlier time.
    Jan 21 07:11 PM | 3 Likes Like |Link to Comment