Saturday, December 31, 2011

Happy New Year!

That eve once again is upon us.

Market Themes for 2012
After 2011, I am going to skip the "this will happen" sort of thing for 2012. I think it will be best to be ready with an open mind. It is likely several things will present themselves in the first 3 months of 2012 which will be important for the entire year. I want to be ready to see them.

As for my own ideas for the New Year there are three things I want to be more diligent about which would have made a big return difference in 2011:

-Allowing runners to run. It was reactive to jump out with a small to medium gain in a trade that was working. Not many, but several of these trades became longer term winners if held through a bit of volatility. Identifying the most sound moves up will extend gains.

-Focus on extreme sentiment inflection points and place the correct, forceful bet when the time comes. If the manic market continues, these spots may prove to be both somewhat common and very profitable.

-Do not trade so much. The first half of the year I would open my best 2-3 ideas, and then add on 3-5 other ones I felt had promise. I will work to stick to my best 3-6 ideas at a time (usually in short term account looking to play a 2 week resolution of a pattern or target) and give them the right amount of attention.

I feel very fortunate to have broadly expanded the readership of Economic Disconnect in 2011. I have to thank many people for all the links, ReTweets, and kind words that allowed this to happen. It's amazing really.

Let's keep it running in the New Year.

Happy New Year
In the New Year try to do one thing that I suggest; email, leave a comment on a blog, or talk to someone you have wanted to. Take a chance and you never know where that may lead you.

Evening Music
Going to load a few of my favorite songs of this year (I heard them for first time, maybe older than 2011) and a New Years Eve performance.

"Two of the Lucky Ones" by The Droge and Summers Blend:

Nightwish's tearfully pretty song "Sleeping Sun":

I tend to spend New Years right in my living room, its just safer and more fun. In 2006 The Bangles did a performance of "Hazy Shade of Winter" that just rocked the house:

Have a good night.

Thursday, December 29, 2011

My Blog Roll and Why

Getting right after my to do list from last post, updated blog roll and a few notes on why I stop in the same places first thing all the time.

There are some new additions and readers should know that Twitter has been a major factor for me. The idea and news flow happens so fast now, Twitter offers the best way to see it all happen.

My Blog Roll and Why
Last night a great series of posts on Twitter by Trader Stewie (covered below) made me really want to get my blog roll updated. Here it is, going by alphabetical order, it's just my thing.

All Star Charts
J.C. Parets is the real deal. A real professional with plenty of background. When he posts, I read and make notes. Besides, an excellent person when I met him as well.

The Big Picture
What can be said? Barry Ritholtz is one of the best minds out there and also does not gloss over the bullshit.

Business Insider
Look, this crew never sleeps. Breaking news? They are on it. Joe Weisenthal is a machine and the writers at the site are tireless in their efforts.

I used to trade quite a bit from 2001-2006. I moved away from it when I saw things were getting, well, bad. A link at The Reformed Broker brought me to the site of chessNwine and I am glad it did.

Chess is the best chartist I know. If you can see his operation in the IBC PPT and 12631 it's very special. The coolest cucumber I know in any market condition, he is my go to guy.

He sort of retired but now he's back. Revealing charts that make confusing data easy to get a handle on, Jake is a must read. Plus he likes good music.

Best free charting options out there. The heat maps are great.

The song "Smooth Operator" was made early for this guy! He can do it all, and never has any bias. Blog is great, but to see GTO operate in real time on Twitter is something else. Huge metal music lover to boot.

Illusion of Prosperity
My friend Mark is one of the smartest people I know and he uses the medium of sarcasm for his work. The charts he comes up with you just will not see anywhere else and the insight he offers is top flight. Must read.

Jesse's Café Américain
A measured look at gold and silver as well as the money system. Always calm, always sharp.

Kid Dynamite
You might get a chicken story. You might get the best dress down from a former insider on arbitrage. You might get schooled on silver. Or maple syrup. In any case, you need to stop in.

Leigh Drogen
I don't really have the best grasp on new trends and new era ideas, I am an old school fart. Leigh has it all covered. So I make sure to stop in. Do you know Estimize?

Macro Story
My man Tony gets it. His macro view is worth a price of admission.

Market Anthropology
This man creeps me out with the uncanny reads on market direction. Just follow along, it's worth your while.

The Mess That Greenspan Made
An old school read, Tim is the best.

Macro can be important, and Mike has a great read.

No Excuses BBQ
You got to eat right? I take all my tips from this guy.

Pragmatic Capitalism
I don't agree with maybe 99% of the MMT thing, but I learn and think a lot. The comments section is great too.

Slope of Hope
If you find you are getting too giddy on the long side, Tim and the crew can fix that.

The Automatic Earth
Bearish? Yes. Spot on? Yes.

The Golden Truth
My man Dave knows metals.

The Reformed Broker
What can be said? Market smart, sharp as nails, speaks to and for plenty of us. And a good friend.

The Stock Sage
Strong where I am not (currencies and Europe) plus so many actionable ideas. One to watch, if you want returns.

Trader Stewie
As honest as they come. If you are not on Twitter you are missing a real show with live trades and market observations.

Zero Hedge
Still a must read for stories no one wants to talk about.

So many more, but I will feature those guys in blog posts in the future.

Have a good night.

Wednesday, December 28, 2011

Wills, Will Not's, and To Do's for 2012

Everyone at the house and my Mom are super sick with a bad stomach bug. It's hydration duties here. I am feeling a bit tired and light headed off and on, but nothing too bad.

Market Operations
Last Thursday I bought the 3X short fund TZA. This was based on a sentiment indicator done by Robert Sinn, the SMS score. Things looked a bit poor as the rally went on, but limited volume and limited downside in TZA made me think the short idea would play out. Today was a solid correction to the downside and I closed the TZA trade for +4%. I think there could be some more weakness tomorrow but the Overbought cycle may be played out near term. We shall see.

As a side note, Robert will most likely be moving his market letter emails and SMS commentary to a paid service on his site. If you have been following along during the free trial you know the value his work provides. I will be subscribing in the New Year and this would only be the second paid service I have ever wanted to put my money down for (iBankCoin PPT and 12631 the other) so you know I feel there is actionable, quality work by Robert.

Wills, Will Not's, and To Do's for 2012
Some notes I have made over the past few weeks on my ideas for the New Year.

Will Nots
-I will not rule out taking a trade good traders put on because I don't want to "steal" their idea. There are some serious smart people out there and it's no crime to follow on an idea if I find the merit in it.
-I will not buy Chinese Burrito stocks. (easy)
-I will not buy Banks. (usually easy)
-I will not buy metal miners. (failed a few times this year)
-I will not take things too personal if I can in any way help it.
-I will not allow fear to keep me away from medical attention if I am in need. (summer intestine infection)
-I will not allow Twitter sniper's to make me jumpy in positions.
-I will not use leverage.

-I will pay more attention to sentiment/momentum indicators when buying positions. Maybe 10 times I bought names ready for a move up, but a quick check in with something like the iBC PPT hybrid score would have flashed caution. Getting shaken out quickly only to see the pattern you were looking for to resume is annoying. Costly in lost opportunity as well.
-I will get back to each and every person that asks me a question via any medium (blog, email, twitter).
-I will expand stop ranges to deal with volatility.
-I will ride winners until they prove it's all over, not just a hiccup.
-I will keep looking for hole in the wall sites that no one reads as some of the sharpest writers I know most don't even know about.
-I will work to improve my writing.
-I will be better about leaving comments on blogs.
-I will work to morph my longer term trading style with my short term style. One did far better than the other this year.

To Do's
-Update blogroll and improve site.
-Figure out if moving the blog to another medium has any merit.
-Lose weight
-Be ready for fishing season
-Be more concise with blog posts
-Go to The Big Picture Conference if it's held again
-Meet more people for lunch or dinner

Have a good night.

Sunday, December 25, 2011

Merry Christmas Prime Rib

Merry Christmas everyone! Enjoy the day and look forward to next year. Here is today's big cook.

8 pound prime rib. Nothing fancy, just sea salt, pepper, and rosemary rubbed roast. Light coating of olive oil. On the Big Steel Keg at 250 degrees for 4 hours. Perfection for the holiday.

About an hour into the cook:
Final 20 minutes:
Allow to rest for 20 minutes in foil. Put on the cutting board:
Perfectly done!:

I hope you all are having a great day.

Friday, December 23, 2011

Friday Night Holiday Festival

It's almost Christmas!! Picked up a prime rib today for the Big Steel Keg smoker treatment on Sunday. Looks good, and there will be pictures.

My very best wishes for all the readers over the holiday and into the New Year. Great readers are what make me continue to work harder all the time. I appreciate it.

Market Observation
Not much to add. Still right where we were yesterday, only a little higher. No where near stopped out on the TZA position I have and will hold into next week.

The Megabucks Christmas
My last two Christmas tales were not meant to be sad. They were just memorable ones that I wrote about. How about a feel good story then?

One year when the Massachusetts Lottery came out with Megabucks, my parents won one of the smaller prizes! I think it was around $3000, which was monster money for our family. I believe it was 1985 but I get years mixed up sometimes. They won in November and I think they blew it all on Christmas presents. It was insane.

I got the biggest Transformer toy ever made, Omega Supreme:
And best of all, I got my first BMX bike, a Columbia Pro Am! I was able to find the exact bike with a picture search in Google:
I had a longer post in mind but no one can compete with Brian Lund's post from today The Greatest Gift I Have Ever Received so check that one out.

Friday Night Entertainment
Getting you ready for the big holiday weekend.

Fun with Pictures
Get you laughing.

Black Bart is in trouble now!:
epic fail photos - Sketchy Santas: All You Need For Christmas on One Shelf
see more epicfails

Scottish folded ear kitty!:
funny pictures - *SOME JUST AREN'T THAT INTO IT!*
see more Lolcats and funny pictures, and check out our Socially Awkward Penguin lolz!

Film Clips
Holiday edition!

A classic comedy film that is set around Christmas time is "Better Off Dead". Sorry for the poor quality but you have to see the face squeezing CHRISTMAS part at the end:

A new era holiday classic is "Elf" and here is a great scene:

"You smell like beef and cheese, you don't smell like Santa", LOL

I never saw "It's a Wonderful Life" until high school and I think that was better because it meant all the more by then. Here is the Potter speech:

No equal. Nothing like that Stewart fellow.

Rock Blogging
Some tunes to send you on your way?

Got a request for "Call and Answer" by Barenaked Ladies and I am glad I did. Never heard it before and it's mighty fine:

Amazing tune, love it.

Twisted Sister and "Heavy Metal Christmas":

Ozzy tattoo! Nice!

This is great! Metallica's "Enter Sandman" to Christmas lights!:

Feeling a Pokemon seizure coming on.

On this holiday I would be wrong to not be in the mind of my dear friend, that I miss so much, Soleil. I miss you my friend and I miss all the help you gave me. Wish I could have helped you more. Florence and the Machine with a really nice acoustic version of "The Dog Days are Over":

Miss you.

Back in college a bunch of scientists formed a band. This tune rocks! I have zero music talent but I did help them set up. Who else had a T4 phage picture on the drumset? Man Bites Back and "Ghetto Starlight":

Last song! Grab a girl, a drink, or anything else!

My favorite by far Christmas song is Bob Seger's "Drummer Boy". Just so perfect:

Tear every time.

Have a good night.

Thursday, December 22, 2011

The Long and Short of It

I hope you are all getting ready for the Christmas weekend! I am going to have some company coming soon so just a few quick notes.

The Long and Short of It
I could run through more charts and all that, but we have been looking at the same things for a while. Today was an important day I believe, and any confirmation to the upside will be very constructive going forward. That said, markets are at key inflection points that have proven difficult for some time.

The Pros:
-S&P 500 close over 1230 this week
-S&P 500 close over 1250 today
-Headline danger has abated from Europe
-Low volume implies lack of selling pressure going forward

The Cons:
-S&P 500 at key resistance level
-Low volume could cause run up to rapidly deflate should volume return
-Overall bullish sentiment surge last two days

As I planned, I took a full position in TZA (3X bear fund) when the S&P 500 hit 1250 this morning for the second time. I am flat on the position even as the S&P closed at 1254. This is a pure overbought short term play, nothing more. Overall I am constructive on this market and more upside confirmation going forward will mean it's time to be playing the long side.

Have a good night.

Wednesday, December 21, 2011

A Rally Some Stocks Forgot

It was my last day at the scientists job today until January 3rd! Can you say vacation? Seems I will be busy next couple of days so I don't know the posting ability. I imagine there will be Friday night blog though, so don't forget.

Also, if you know much about the benefits of Wordpress over Blogger let me know in the comments section.

A Rally Some Stocks Forgot
Like I said, I am off for a bit and I am not sure how active I can be in markets if I am running around doing stuff. That said, a few observations.

Tuesday's huge rally was on the usual suspects of low volume and select names and indices plays. The low volume I have come to terms with because so much money left stocks over the past 3 years maybe it is the new normal. In any case today started off weak, but after lunch another ramp up came in.

I have been long AMZN (as discussed last Wednesday) and I sold out today at breakeven. Why? After a great hammer print and a ripper rally day Amazon has not shown any energy or any inclination to go higher. Today, even as the general market reversed, AMZN was going the other way. Down (click any for larger look):
Not what I was looking for. The price has not violated the $171 mark but if it has not moved as yet, I was moving on.

I also sold out of Kinross Gold (KGC) at breakeven ($11.80) for the same reasons, just no lift a all over the past 4 trading days.

As markets near the same top they have been rejected from so many times, a tech sector blow up was in full force. Oracle (ORCL) came in light and had weak guidance and this firebombed the entire cloud/storage services sector today. Readers know I have traded Commvault Systems (CVLT) in both trading and long term account this year and look at the carnage today:
An entire range of gains gone in one day.

Maybe this is the big change for the market. New leaders will come forth and some old ones will fall. Maybe the year end rally will come. Lots of maybes.

I am staying light part out of a wait and see attitude and part I won't be able to actively trade into weeks end. Should the S&P 500 make it to 1250 tomorrow, I will be going index short in case it's going to be more of the same.

Have a good night.

Tuesday, December 20, 2011

Patience and the I.O.U Christmas

I went out last night and had a great conversation, drinks, and food with the creator of Estimize, Leigh Drogen. Plenty of things to think about after that meet up, thanks for the great time!

Below is a quick market observation section and then another holiday memory themed post that can be useful as a lesson.

Market Observations
Yesterday's market action was very negative. In a post last week I highlighted a trading box range that I felt could serve as a slow built base. It really dropped out yesterday and I was thinking maybe just hang it up until after the holidays.

And then today happened.

A massive gap up kept swelling all day and now the S&P 500 is back inside the basing box and over 1230 again! You can't make this stuff up. Things turn so fast now, you just never know. Monster rallies like today only happen in BEAR markets AND at major inflection points. All of a sudden this throw away week becomes very important.

Patience and the I.O.U Christmas
A few years before the Christmas Branch Christmas I got a lesson in patience and money during the holiday season.

My Dad's railroad Union went on strike for a good part of the Fall into November so he had been out of work for weeks. My mother was in between jobs. The family van (deathtrap!) needed 4 new tires as the cords were showing on the old ones. It was a real strain on non-existent finances.

On Christmas morning we kids awoke and went out to the tree in the parlor (my parents never called it a living room) and there were no presents. None. No wrapped packages, no stockings, no bows. Empty. There were envelopes on the tree, each with our names on them. It was written in my mother's writing so it was not as cold as this example:
Time has worn away the exact wording, but as I recall the note explained that things were very hard right now and money was tight, so please accept the I.O.U until the Spring tax time. Tax time used to be like bonus time for my parents. I guess all the deductions for the kids and the mortgage added up. Maybe they scammed the IRS, I don't know!

My mom was really upset and tried to apologise to us. My dad disappeared into the basement workshop he had. I imagine he was having a few drinks (he had that problem). I was a bit angry at first but then it started to dawn at me this was about more than the presents. This was a big deal.

Money was important. As a kid if you have a quarter and some dimes, you got all you need. Parents have the five and ten dollar bills! How could there be money problems! That was all the money in the world. I knew that was not true now. And I knew it troubled my parents. It was a serious strain for them (they would divorce later on).

Things do not always happen when you want them to. Christmas without presents is still Christmas to an adult, but to a young kid it's just not. This would be a recurring theme, things just don't always happen right when you want them.

My mom spent a lot of time teaching me about planning for things after this Christmas. Planning ahead several steps to get to a place you want to go. It takes time, and it takes effort. It takes patience. I have often been accused of being too patient, that time does not seem to pressure me like it can others. I don't know, it is just the way I am.

I think about this lesson as I watch the market over the past 4 months. Save for a week or two here and there, it's just has not been a constructive market on the swing long side. I can wait.

Have a good night.

Sunday, December 18, 2011

The Christmas Branch

Seems Tebow time was cancelled today after the New England Patriots crushed the Denver Broncos. I saw Tebow seek out at least 10 Patriot players and congratulate them. That's real class and safe to say I am a fan now. That kid is tough and can lose without being a loser.

Looks to be a light week for me and instead of heavy market posts I will try to offer up some more philosophical takes on things.

The Christmas Branch
I have not thought about what I am going to write about in a long time.

I was in third grade. It was the start of December. Christmas was on the way. No better time for a kid, just none.

And then my Mom got an idea.

My mother is a "leaf peeper" (so annoying) and on a trip in the fall she found this white birch branch that captured her attention. I guess I should have known. She decided that this branch would be our Christmas tree for that year. It was no huge green tree but what did me and my two sisters and brother care? It was all about the presents!

My Mom was a huge coffee drinker and that year Maxwell House included these clear plastic ornaments in anticipation of the holiday season. My mother also bought a ton of glass icicles from a thrift store. The barren tree was dressed with these all white decorations. My Mom loved it! I guess it was artsy or what not. I thought it was a bit weak, but whatever.

And I think it would have been fine if some friends had not stopped over.

I forget what we were doing but 3 friends came over to hang out and they saw the new era work of art Christmas tree. A branch with plastic ornaments. It went from there.

The next day at school I noticed the pointing fingers and the laughs as I walked by. Obviously this was before I found beers so it made no sense, I had not made a fool of myself.

The next two weeks were a cacophony of "you are so poor" and "all you have for a tree is a branch". Even my teacher pulled me aside and asked me if things at home where OK. Can you imagine?

We were poor, more than I think many big players can realize (I will cover this in my next post) but this particular time it was by choice we had this tree. My mother loved it. She really did.

And so I never said a thing.

But I did fight. Oh, did I fight. I cleared out the 4th, 5th, and half the 6th graders before people just stopped crapping on me over that tree. I never had another fight until junior high after that, I took them all on. Even in high school the freaking tree would come up!

I love my mother, she has been a beacon and a source of strength for me for so long. I told her about this story maybe 8 years ago and she was crestfallen about it. She need not be. I know how much she loved that tree and I would protect her from the petty things that make the rounds at that age.

Is there a point here? I hope so.

Have a good night.

Friday, December 16, 2011

Fade the Week Friday

I know I need a pick me up after this week. How about you?

Market Observations
Overall it was a week that was lacking in any real conviction. Most rally were tepid and also were faded for the most part. Between yesterday and today another credit agency downgrade parade made the rounds and things reversed in today's session violently.

That said, there are some pockets of promise. I am still long Amazon (AMZN) which has confirmed the hammer print on Friday. Yesterday I added a small position in Kinross Gold (KGC) (noted in 12631 trading room) which held up today as well. The best spin going forward I can think of is that just about all the downgrades are in. All the bad news has been hammered into the collective heads of everyone. Many have called it a day and moved on for the holidays. Perhaps this is the end of the "shocker" phase. Chart wise, single names are better looking that the indices but I would point out one small thing that may be nothing:
No move up since August has begun in such small steps. It has usually been monster jumps. Is this anything important? I am not sure, just noting the difference.

I don't want to spend much time on this. I judge content by the quality of the work and what I gain from it. I don't mind if I don't know a writers real name or what they look like. I have my own reasons for seeking to keep those things to myself. In any case, for the holiday season I will be using one of my favorite pictures of me as my new avatar on the blog and on Twitter. Long time readers have seen it before. The picture is of me fishing at the Quabbin Reservoir, and no it's still not a clear on shot!

Friday Night Entertainment
Some items to interest you and get the weekend off right.

Operation Plumbbob and Space Travel
(Note: Clearly any person of sound mind is against and aghast at the nuclear testing done by the United States in the 1950's-1960's and all the contamination it resulted in. It is still historical record and in that vein I discuss it here.)

Operation Plumbbob was a series of nuclear tests in 1957. One of the more exotic angles of the testing was using a nuclear detonation to shoot a 2000 pound metal plate out into space:
Before the test, experimental designer Dr. Brownlee had performed a highly approximate calculation that suggested that the nuclear explosion, combined with the specific design of the shaft, would accelerate the plate to six times escape velocity. The plate was never found, but Dr. Brownlee believes that the plate never left the atmosphere (it may even have been vaporized by compression heating of the atmosphere due to its high speed).
Ablation effects can be minimised using lubricants and the entire idea was incorporated into Project Orion, which in theory could travel interplanetary distances much faster than anything in existence today.

Picture Pages
Candy for the eyes.

Why I hate taking pictures in the Caribbean:
photobomb that guy - Fruit Basket
see more This is Photobomb

I have a fawn pug dog (Norman, he is 10 years old) and I knew of black pugs, but all white pugs? I had no idea:

Film Clips
Save Netflix and stream some videos!

Guilty pleasure, I love the film "Cannonball Run". It rocks, it's fun, I love it. Here is the final 13 minutes and there is too much fun stuff, cameo's, and comedy to recount:

I have featured this before, but with all the new viewers it's a must see. The Library scene from the Bradbury classic "Something Wicked this Way Comes". If you don't want to watch the whole thing, go to the 4:00 minute mark on:

Rock Blogging
Some tunes to start you on the right path for the weekend.

Loyal reader Watchtower (years!) was looking for some Judas Priest and "Hot Rockin" and I do so love metal:

Nice pick.

Twitter handle @CaseyLConley was working to be the 400th follower of mine and came away 1 away! Her song pick, "Open Book" by Cake:

I like that tune.

Number 400 was by @nascar_29er_fan and he was looking for Kid Rock's "Born Free":

I love metal, but I love plenty of country and bluegrass. A walking paradox. Anyway, please take a look at The Highwaymen with their signature song:

Just wonderful.

My man @bclund reminds me how cool "Live Wire" is by Motley Crue:


A little Alice Cooper? How about the newer hit "Poison"?:

Lips are venomous!

Last call! Grab a drink and a girl, or what ever else is nearby.

How about a little Hoobastank with "The Reason" to close the show?:

Have a good night.

Thursday, December 15, 2011

The Road Ends the Same

It can be a stretch at times to meld molecular or biological themes into a financial post, but here I go again.

Convergent Evolution:
Convergent evolution describes the acquisition of the same biological trait in unrelated lineages.

For the visual example, class Aves has no real relation to class Mammalia yet we see this:
From the picture narrative:
These two distantly related predators share keen, night-time binocular vision,directional hearing (via mobile ears in the cat and asymmetric ear openings in the owl, sharp claws for prey capture, and
the ability to move silently.

It's the guy that does all his tests, gets all the certification. He has seen it all on the sell side and how to move it: the dot coms, the MBS, the IPO. Studied under a wonderful market operator. Maybe he turns his back on it, maybe it was too easy.

And the guy on the other end.

Seen all of the same, reversed. He has been busted 2 times in a decade. The information age has shown him how silly and careless he was. Real time quotes are at the finger and a broad base of information is readily available.

Time frames of "investing" go down. Everyone is a contrarian, but to whom? CNBC guests? When a new IPO gets rated as it should be, a "neutral", it is only because it is a known issue.

Convergent evolution says that through the same pressures diverse players can end up in the same place. I think this is something that needs more discussion.

Have a good night.

Wednesday, December 14, 2011

The Curious Incident of the Hammer in the Tape

(Note: I borrowed from the title of this great book for this post; The Curious Incident of the Dog in the Night-Time)

It was another ugly day for stock markets. Gold and silver look like they are being unwound in size along with many commodities. Long term leaders like AAPL are having trouble finding any real footing. Various key levels have been breached seemingly without end. The swing from Santa Rally to years end to going to zero took about 3 days total.

It's dangerous right now. Crashes come from oversold conditions. The ONN/OFF switch may not get flipped one of these times.

And in all that, there was the curious incident of the hammer in the tape by Amazon (AMZN).

While 99% of the data flow I was watching was all about gold and silver, there were some other stuff. Mostly about either the Kardashians or year end predictions. One piece of news I saw that jumped out was from my friend @gapandyap (twitter handle) who was keeping an eye on some action in AMZN. I am glad he was.

From a low of $170 AMZN rallied into the close to $180. A tremendous intraday reversal. This kind of move results in the classic candle, "the hammer":
This kind of print can signal a strong trend reversal. I took a position in AMZN at $179 before market close..

The August low for AMZN was right there at $170. This level held again today. Should general market tenor improve I would expect a rally in this stock higher. The long tail of the hammer provides a no questions asked stop loss, $171. As the markets have been moving very fast I am getting in ahead of confirmation of this candle. This is my only long in trading account, the rest is cash. I like the defined risk/reward here should a bounce occur going into weeks end.

Have a good night.

Tuesday, December 13, 2011

A Look at Longer Term Charts

The weekend cannot come fast enough!

Market Observations
It was perfect that I wrote a post last night defending market action as slowly basing and today that idea gets pushed to the very max. The S&P 500 closed below 1230 and that is a key number to me. The close was at the very bottom of the upper rectangle I charted last night. The very bottom. A lack of more help from the FED and plenty of rumors of bank downgrades made the session very nervous. Important end of week coming up.

A Look at Longer Term Charts
Tonight I wanted to post a bunch of weekly charts with the very minimum of commentary. For most shorter term trades I will ONLY use daily charts. I find them the most predictive in the near term. Weekly charts are better for trying to see long term trends as well as key moments and price points for any index or stock.

20 MDA = GREEN Line
50 MDA = BLUE Line
200 MDA = YELLOW Line

Click on any chart for a larger view.

Gold (GLD)
Gold is coming down to the 50 which is around $1550 or so in price. No terrible damage as yet, but that is some pocket to the 200. (Disclosure: Long gold in long term account for many years):

Silver (SLV)
Silver has been badly damaged, dropping below both the 20 and the 50. What's worse is the 20 has crossed below the 50 which usually hints at more weakness ahead. Support is way down in the $23 range. (Disclosure: Long silver in long term account for many years):

SP 500
Coming down to the downward sloping 200. The cross of the 20 past the 50 is a bad sign and the recent touch of the 200 mirrors the action from 2008-2009. Very dangerous right here:

The Nasdaq is showing the same 20 cross past the 50, but this weekly is no where near as dangerous as the SP 500:

MacDonalds (MCD)
This one does not seem to be moving like a stalwart but more like a Dot Com stock! I think this has to slow down, right? (Disclosure: Long MCD for many years in long term account):

Amazon (AMZN)
The ultimate retailer. I buy almost everything from this place. On the weekly the abruptness of the recent drop is only matched by the drop in late 2008. This is a favorite stock of many so the selling more disturbing. The 20 has just torqued down very hard:

Apple (AAPL)
The world's favorite stock is showing that discussion of it's death may be very premature. AAPL could drop to $360 before I would get worried:

Google (GOOG)
Plenty of eyes on this one as of late. Solid weekly chart here. (Disclosure: Long GOOG in long term account since 2008, and yes I held from $500 all the way to $250 and back):

Lululemon (LULU)
Note this is an expanded DAILY chart as most of the action for this name has come in recent years. This one is showing signs of serious trouble, breaking under the 200. LULU is now tracking the 20 lower and has been rejected there twice in a little over a week. Former high flyer will need a bid soon and hold $42:

It's a mixed bag. The SP 500 is the most concerning as far as general market direction near term. There is still plenty of strength in the market as well. What are you looking at going into years end?

Have a good night.

Monday, December 12, 2011

The Mean is Sensitive to Outliers

Another Monday. Yeah, you know.

Market Operations
I was home on Friday and the huge rally felt wrong to me. Sentiment was flipping so bullish I was a bit surprised. Friday afternoon I bought small spots in FAZ and TZA to hold going into Monday. Today did not disappoint. I closed out FAZ +4% and TZA +5%. They both ran a bit higher during the day but I was glad to grab a few bucks out of the trades. You do not play with 3X type funds, you don't.

The Mean is Sensitive to Outliers
The most frustrating thing about markets since summer is that events happen both much faster than normal and slower. That makes no sense right? It does.

In statistics there is an axiom that the mean is sensitive to outliers. Simply, large outside deviations from the mean can cause disruptions to the data that may or may not be artifacts. We are seeing it plenty. Headline driven panic moves both to the buy side and sell side are clouding charts and technicals. Let's play pretend for a few minutes and see what we come up with.

Here is the chart I worked up for this post (click for larger view):

I submit that aside from all the drama of rips and dips, the S&P 500 hammered out a nice base during the early August to mid October span. It was gut wrenching, it was volatile, but the range held up on both sides.

The move to the highs of late October roughly matched the rectangle width to the upside (70 points). Basing occurred into mid November and then the big sell off. But do me a favor.

Ignore that drop.

Take out the headline driven drop in late November and look at the chart again. The S&P is basing well once more. The rectangle is smaller and the move up, should it come, looks like to the 1320 area.

This is my point. One cannot just ignore price moves, we all know price has memory. That said it's hard to ignore the patterns seen here. The pacing of the basing (tm) has been molasses slow while the spikes both lower and higher have come fast. Like I intimated above, there is the fast action driven by emotion and headlines and then there is the overall action which moves ahead slowly.

Keys for me are the 1230 level, and that the 20 MDA (green line) does not cross back below the 50 MDA (blue line). Should that hold up, it's still a constructive market. We have all become renters of positions or as I like to call it, owning adjacent timeshares, but the trend and pattern is holding up for a higher move.

But I am sure there will will more outliers. They will happen fast and slow down the trend. That said, a few steps back and things are not as dire as one may think watching every day action.

Have a good night.

Sunday, December 11, 2011

Sunday Night

It was a nice weekend. Did not really do too much, but that can be a good thing.

There is a general sense out there that markets are set up for the "Santa Clause" rally. Better bases and a lack of serious down moves (forget Thursday, was wiped out Friday) so close to major resistance has shifted the tenor of participants.

As for this market observer, I was very positive on things last week going into the Euro zone summit. Thursday threw me for a loop, as did Friday. Seems every time I get constructive on the market things fall apart. Will this time be different? Let's hope so.

I have two index shorts on in a small way and over 90% cash ready to work. I am doing screening tonight to get a better feel for individual names for the week. Maybe this will be the rally that sticks the landing.

Have a good night.

Friday, December 9, 2011

Thursday May Have Disappeared, but Friday Never Does

Had a great day off and took care of a ton of things around the house. Got to watch a bit of market actions as well. Pro Tip: take a mental health day every now and then.

Missing Day in Markets
On Wednesday going into the two days of Euro news cycle the market was poised and ready to roll higher. Then Thursday happened, and things looked like a return to the bottom end of the trading channel. Today that's all over and gone, Thursday may well turn out to be a "just kidding!" kind of signal. I got stopped out of two small longs on Thursday. Looking over the markets today I entered into two small short positions because I think that things were a bit overdone. Full homework night Sunday night and I think a bunch of things look good to buy. Hence the small short for a bit of surprise protection. This market keeps one guessing.

Thursday May Have Disappeared, but Friday Never Does
A whole day may have gone missing, but the Friday Show never does.

Voyager 1 to Enter Interstellar Space
As if the space news could get any better, Voyager 1 is about to get free of the local environment where our Sun affects space, and into the open interstellar space. Some visual cues for what that means:
The space probe will be able to send limited data back until the year 2020.

Picture Pages
Some funnies for laughs.

I don't think this will end well in the snow:
epic fail photos - There I Fixed It: Plow Jester
see more epicfails

About right:
demotivational posters - FIRST WORLD PROBLEMS
see more Very Demotivational

Film Clips
My friend Josh Brown, The Reformed broker, has been sick this week and it was a bit scary as he dropped off the map for a bit. Luckily Josh is doing ok, you can leave him a message on this post. One of the comments mentioned they were going to start a "save Ferris" movement and of course it put me in mind of that great film.

My favorite scene (of many) in "Ferris Bueller's Day Off" is the Abe Froman scene:

So classic.

I really like the new version of the film "Get Carter" and a great exchange happens at the 0:45 mark of this clip between Stallone and Rourke:

Rock Blogging
Melodies on free flow.

Reader Gawains was looking for some U2 and "Vertigo" from a Live 8 show in 2005 and this one is hot!:


I was in the mood for a little Bruce Springsteen and "Radio Nowhere" will do just fine:

How about "Rhythm of Love" from the Scorpions:

Who is that model in the video?

Arsenio Hall had some great shows when he was on. How about Anthrax doing "Only"?:

Ok two to go.

My Dad would always play this song last at night before going to bed. Kenny Rogers with "She Believes in Me":

Close the show with Robert Tepper's "No Easy Way Out" as it sums up the trading range:

Have a good night.

Critter Capture

Taking a vacation day. Here is something different.

These are the motion camera best catches from last week in back yard woods. That fisher cat is still elusive! Click any for larger views.

Squirrels cleaning out bird feeder:
Coyote looking around:
Deer at night:
Close shot of deer in day, great picture!:

Have a good Friday. Usual post later tonight.

Thursday, December 8, 2011

"Hit Puree'"

Remember that tomorrow night is Friday Night, so get those requests in. Music, books, films, or whatever is a good time.

"Hit Puree'"
May I offer what this market feels like for the 99% of participants (key point at 1:19 mark):

It's a blender for sure.

Not much to say tonight. I was long two half positions going into today. Let me share an exchange with a good friend Robert Sinn on his site:
In trading account I was found guilty of having two half positions long in names I thought would bounce IF the Euro folks got something done. I was wrong, and while I was not blind to the news I guess have just been so conditioned over past two years to expect some kind of bailout/agreement etc. Took two years to get that way, now I guess it will go the other way!

And Robert Sinn's response:
It seems that many market participants felt that they had to be long in front of the ECB announcement because they couldn't stand the thought of missing out on a QE/intervention rally. Today's market action was an expression of this disappointment, however, I think the S&P would have been down 5%+ if the market did not still have a great deal of hope in ECB intervention in the near future.
And he is right.

For anyone but the most nimble of traders this market is a mess. Everyone is frustrated. Nothing breaks to new lows, moves to highs are false. There is emotion pouring out and it's hard.

Know where you want to get. Know how. It's probably not now.

Have a good night.

Wednesday, December 7, 2011

Weaving in Traffic

It's going to snow a little here tonight. Yeah, I am not happy about it.

It's all a wait and see right now going into weeks end. The Euro Summit is going down and who knows what is going to happen. Plenty of knee jerk reactions and headlines until something solid comes out. Until then I figured a more broad market based commentary was in order.

Weaving in Traffic

We have all been there. On a major highway and it's just loaded up with traffic. Moving at a crawl you know you are not going to get anywhere fast. When that happens I like to look around, take things in. There are two reactions I see that are both amusing and a total waste of time.

Furious Driver
This driver is honking. They are holding the wheel so tight you can see that the knuckles look ready to come out of the skin. They are swearing and yelling at themselves and other drivers. You can see the frustration. They are thinking "all I wanted to do was get to where I am going and this is in MY WAY!!".

The Weaver
The more annoying driver to me is the one that constantly risks accidents by weaving in and out of lanes, trying desperately to find that one lane that is moving. I think of that traffic scene in "Office Space" when I see this. For all the the juking and moving, they don't get anywhere any faster, it's a complete waste of time and effort.

So what does this have to do with anything financial?

The S&P 500 is about unchanged for the year.

It has been a difficult trading year, especially since August. The failed breakdown of early October. The failed breakout of late October. The return of the Euro headlines. It's a nasty snarl of traffic creating a jam in the way of much progress either short or long. (I know the faster traders are having a field day with this market and I enjoy watching them work, just not my trading style.)

So the questions are:
-Are you angry about the market? Are you screaming at the screen? At yourself?
-Are you changing your trading style every other day? Are you weaving long, then short at all the wrong times?

Know that no one is immune. I have felt the above to some degree at various times over the past six months.

One can always take the next exit ramp and get off the highway. An alternate route may provide an adaptable way forward. It's always fine to wait until the traffic dies down as well before getting back on the highway. You do not always have to be on the highway at the highest traffic times. Sooner or later, it's open road again.

Have a good night.

Tuesday, December 6, 2011

Failed Move Frustration

At this time of year I just start counting off the days until holiday vacation. Anyone else do that?

Failed Move Frustration
Since August the markets have been jerked around. Violently. One of the more frustrating catalysts for traders has been the failed moves both below and above support. It's clear in the indices as a whole, and even worse in single names across many sectors. I have prepared this very scientific chart to try and capture reactions at various points over the past 4 months (click for larger view):
I want to talk about the two moves that have been the most disappointing, at least to me.

The Failed Breakdown of October 3
Busting through a very tested bottom, this looked for all the world like the big flush out. Had it really accelerated that would have been THE event that set up a solid run later on in my opinion. Not sure if it was technical buying there or if the Ghosts of V-Shaped Recoveries came into play on intervention hopes but the reversal of the breach was sudden and clear.

The Failed Breakout of October 31
I had outlined my reasons for a move up in markets around mid October. It was working well. As the top of the trading range loomed all eyes were focused. The S&P pierced 1265 and things looked poised to base and move higher. That was an ephemeral (told you I would work it in to a post!) belief as again, the reversal back down was pronounced.

And here we are again.

The failed moves are what keep me from really deploying much capital. Trading sentiment now has shrunk time frames to hours or maybe a few days at most. Technicals are all the rage. Thursday into Friday promises to be a very volatile environment as the news will be flowing fast and furious. Unless the Euro powers get something done, all the forecasts for much of anything are not going to amount to much. I opened two positions today that will surely get stopped out unless progress is made over the S&P 1260 range.

Have a good night.

Monday, December 5, 2011

Getting Gap Blocked!

Another Monday in the books. I had meetings most of the day. I don't like Mondays.

S&P Reviews Ratings on Europe
I will cover the gap up open again that happened this morning more in the below section. Late in the day stocks weakened as a report came out that the ratings agency, S%P, was going to possibly downgrade the debt of up to 6 countries from the Eurozone. In this way Twitter is amazing because you could have seen it all happen in real time. After the close here was the headline (via Zero Hedge):
Rumor Meet News: S&P To Put All 17 Euro Nations On Downgrade Watch
So it was not 6, but 17!

I have two thoughts on this.

One is that S&P put language in the release that makes the possible downgrade very contingent on the results of the Euro summit on December 9th.

Two, this was certainly known by the big players and now the pressure on anyone not on board a total rescue agreement is enormous. A debt downgrade will kill most efforts to get a handle on the crisis.

Is this the big homerun setup market players have been hoping for? It certainly fits!

Getting Gap Blocked!
(Note: I posted this on the iBC Blogger Network and would appreciate if you would swing over there and drop me a vote and a comment. Twitter folks can RT for big points! See it here.)

I usually will do stock screening on a Sunday night to get set up for the week. I use the PPT and screens I built to look for ideas. I then discuss them with the Pelican Room in 12631. As I was screening it was becoming more and more clear that after the huge run over the past week, things needed to slow down. Various indicators (PPT Hybrid and others) were showing some caution was warranted. I went ahead with a full night of work anyway so that I would have some ideas should markets come in a bit.

Whenever I am looking to open positions I never want one thing: a gap up open. Gap ups distort pricing and can add a layer of noise to a pattern you may be looking at. Depending on your targets for a particular stock, a gap up can sometimes eat some or all of what you were looking to capture. Looking at my Twitter stream this morning I could see what was coming, a gap up open again.

I wait for the first half hour to pass when the market opens before I will get involved. When I took some time around 10am to look things over from my list, this was the first one I saw. CSOD (click charts for larger view):

CSOD came from a screen looking for buying accumulation. I liked the chart and was very interested. The stock opened up 15% or so and closed up 12% on the day. One day. Clearly there is something going on in this name and it's run away before I could do anything. Gap blocked!

Last night in 12631 I highlighted a pattern I like to play when I see it. The stock TXI printed a monster wick on massive volume on December 11. When this happens many times price will migrate back to the limits of the wick (both up side and downside) so when I saw this one I knew I was going to be interested. TXI after today:

The stock closed up 6.4% just today! Gap Blocked! To be fair, if the wick play holds this name could run up to around $35-$36 so I am still interested in this one.

As if trading in this market did not demand the very best execution already, gap up openings make things that much harder. Over the course of the day the big morning gains were given back by the indices (though not these stocks) which added to frustrations all around.

Have a good night.

Saturday, December 3, 2011

The Times I Almost Lost a Finger

I think last night Friday night blog was the most viewed of all time! Thanks to all for stopping in.

The Times I Almost Lost a Finger
Back when I was 20 I had to have all four of my wisdom teeth out. I was always getting sore throats and they got infected, it was nasty. They put me under for the procedure so I don't remember much, but the pain afterwards was terrible. The dentist prescribed the pain killer percocet for me and the day after I was glad to take one. It was great.

I had this piece of crap Hyundai Excel and the oil pan had been leaking. I had a new gasket ready so I figured I would change it. Two days after the dentist and armed with another percocet I went ahead with the job. There were about 12 bolts around the oil pan, it looked just like this one:
Two of the bolts were really stuck. I was giving it my all on the first one when it finally gave way. When it did my right hand smashed into the underside of the car, hard. It didn't really hurt. I saw a bit of blood but I figured if it did not hurt, what's the big deal? I just didn't care really, due to the pills. Just no feeling at all. The second bolt gave way very quickly, it must have known how serious I was. The whole thing took about two hours and I was glad when it was not leaking after I changed the oil.

I went inside to wash up, my hands were a oily mess. As I was washing them I turned my right hand up and looked.

My middle knuckle of my right hand index finger was almost totally exposed.

I sort of had a panic attack. I will not gross you out with all the details, but lets say seeing your knuckle work under the skin is not recommended. I did the best I could to disinfect it and get the flap of skin to go back in place. I went to the doctor but he was not willing to stitch it up due to how much time had passed, and he was concerned about infection. He said to me if it got infected, it would be deep and would be "an issue". I was terrified.

Long story short, it healed up well with no issues except a really bad scar. I also have never taken any pain killers of any sorts since then. Alcohol does not count!

The second time I almost lost a finger was not in the literal sense, but a trading sense. It happened last April.

I had been doing very well since the new year started when I began really trading shorter term again. Gains were good and things were going well. I got caught leaning very long when the Fukushima Disaster happened and that trimmed gains quite a bit. Later March and into April were not good times as my ideas and picks hit a cold streak. I was going on vacation the last week in April and I was in a state of not really caring. I had almost no positions and was re-thinking the whole thing.

All year I had been in and out of the stock KCG (Knight Capital Group). They had earnings coming up on April 20 and I had a gut feeling they were going to have good numbers after all the volatility of the spring. I was going to grab a usual sized spot the Monday before the 20th, but at that point even if my idea panned out (this was not chart based at all) what was the upside? I was in a state of ambivalence. To this day I cannot believe what I did.

I put 60% of my trading account in KCG before earnings.

And again, I was ambivalent. If it worked I would get ahead again. If it did not then I would take a break for a while after losing a finger on a trade. I did not even write about it (I mentioned a gamble way after) because I knew how stupid it was. Yes, your level headed, patient writer had a moment of crazy. It happens.

Long story short, KCG looked like it would collapse into earnings on Tuesday (yikes) but came out with a good report Wednesday and I cashed out for 6% gain. Not huge, but with that position size it was a big winner compared to usual 5%-8% part of account.

I went on vacation and I have been executing all my trades with the utmost discipline since that one trade. Looking at how the summer into fall went, maybe my lapse was a good thing because sticking to sound fundamental trading has saved my behind during the doldrums of credit crisis part 10 or which ever part we are on now.

I had not really thought about this again until I read this post by author BCLund:
Avoiding The Suicide Trade At All Costs
All three rules he went over brought the whole episode back into my mind. I won't do that ever again.

Have a good night.

Friday, December 2, 2011

Getting Dizzy on a Friday

Friday at last! It has been a long week on many fronts. I need a break and maybe you do to. Finally saw the new roof tonight as I got home before dark, looks most excellent.

In my last post (Late Night, and a Favor) in which I asked readers to check out my second iBankCoin Blogger Network submission (my two posts currently the two most viewed blogs on the network FWIW), I got a comment from a long time reader (4 year anniversary!) known as Watchtower. It's the kind of thing that really makes blogging worthwhile, and I am humbled by the kind words. Thank you, keep coming back!

Market Observations
It was an insane week. I am still digesting it all. I would say I am more constructive on the market here. I will get more specific over the weekend. Main take home point is that the meat of the big rally is intact and the doubt out there about is still large. This could still run higher than many think. Of course I write that and this weekend who knows what the headlines will be!

It would suck big time if Kevin Depew's latest article got lost in the shuffle of the week. I cannot tell you how important I think this post is so bookmark and spend a solid time reading it over this weekend:
Investing Is Back: What to Expect in 2012 and Beyond
Important things here.

Friday Night Entertainment
Fun can be free, right?

Wikipedia Plug
You all know I am a Wikipedia addict and will read over 100 articles a day if I get the chance. I have donated to the site for their fund drive and I would ask you give a few dollars to the single greatest resource on the web. I mean, where else can you learn all about Aerogel anyway?:

Fun with Images
In the words of Princess Leia, "Here they come!"

No worries ladies, I am drinking it up:
demotivational posters - LIQUOR
see more Very Demotivational

He ate a whole person?:
photobomb that guy - Classic: You Have a Serious Defect
see more This is Photobomb

Film Clips
A few rental ideas.

With all the DEFCON furor this week, why not go with "Wargames" when DEFCON 1 came into play due to computer glitch:

Love that film.

I don't know what this movie is, but I think it's an early Jackie Chan film. Stumbled on it looking for vids tonight and this is hilarious:


Rock Blogging
Bringing the tunes since 2007.

Pink Floyd has always been an enigma to me. I like some of the songs a ton, other almost none. I do like "Wish You Were Here", no doubt about it and author Jennifer Hillier won the right to first song so here it is:

Who remembers Marcy Playground and "Sex and Candy" and whatever happened to them?:

My obsession with Nightwish continues! I have no idea what she is saying but this vocal performance by former lead vocal for the band Tarja Turunen (with Harus) of "Varpunen Jouluaamuna" is killing me as great tonight:


Ok, a little more randy? No problem. Why not Iron Maiden's ode to the R.A. Heinlein classic "Stranger in a Strange Land"? Live no less:

So great.

Two left.

I have not listened to a song by Florence and the Machine since a dear friend of mine died in September. I do love this song, "The Dog Days are Over" and live is the only way to go:


Last call! Grab a girl, a drink, and whatever else you may need. Lighters up!

Sorry, but seemed most fitting to play a song by a band called Europe that had the vision to make a tune called "The Final Countdown":

Should have worked bond sales into that tune!

Have a good night.

Thursday, December 1, 2011

Late Night, and a Favor

Hey all.

Friday Night show is on, so get those requests in.

As a favor to me, I posted my market based section on iBankCoin tonight and if you would go and check it out I would thank you. Vote on it and leave a comment gets you my very special thanks. Here it is:
Smoking or Non-Smoking?

Have a good night.

Wednesday, November 30, 2011

Daisy Cutter Wednesday

Insane day today as news came hot and heavy before the market open. I will discuss below, but I did want to take a second to say a few things. Much more so than on a blog where I think writers put things out that are more calm, Twitter allows for instant transmission of what people are thinking. Obviously this has great advantages, but along with that the avenue comes one where emotions and words can pour out pretty fast. That can be a bad thing at times. I saw some things today that disappointed me very much, and I gather my questioning the actions this morning of all the intervention going on was none too popular either. It is what it is. As always, my email is at the top right and I will discuss anything with anyone at anytime.

Daisy Cutter Wednesday
Major bombs dropped today on the market!

What's easy tonight is that I have already covered the helping hands lent to the markets. All the major Central Banks agreed to currency swap lines with open ended commitment. Of course this happened before on September 15, 2011:
Central banks to provide dollar liquidity

I dubbed this "The Unlimited Dollar Funding Machine" and covered what it meant in this post:
Hope is Not a Strategy, But is it Tradeable?
This move allows Euro banks access to basically free dollars and as they are ready to lend out into the economy (snark) this will help them in that effort. All in all, it buys time for them with less stress in finding overnight funding. It's possible a major bank was in serious trouble, but it matters little now.

Today the Bank of China also eased on money rates, first time in three years. The reason is probably that China is seeing inflation there fall below target and want to heat things up with loans for more ghost cities(snark). The key word is easing.

Economic data has started to come in not only better than expected (small beats meaningless to me), but significantly so. Home sales (pending is dangerous but ok), jobs and some PMI numbers have come in well over expectations.

And last, I discussed the final piece to the puzzle Monday night in the post:
Ghosts of V - Shaped Recoveries
If this is not the picture you want to set up a year end run into next year then it's just not going to happen.

Markets are extreme overbought here. Overbought can be worked off by meandering sideways for a bit, but with jobs numbers on Friday any beat may well push this higher again. Tough spot.

Robert Sinn, who is just killing it with his writing, hits the right notes after a day like today so please stop on by:

The Three Reactions to a Massive Rally
A little fun?

Already long:

Neutral/No spots:

Short, maybe since Friday:

Have a good night.