Monday, May 16, 2011

And So it Begins?

Second day of big time rain today. Only 5 more to go! The wife is getting better very slowly and of course she went to work today! Unreal. I think she may work from home tomorrow, that would be best I think. Thanks to all for asking how she was doing.

And So it Begins?
When I decided to start trading in the New Year I figured on two things:
-It would be fun to do and re-learn all kinds of stuff
-The market trend would change as soon as I came in to play

Many of my trading tricks are best used in an uptrending market (no kidding!) so I figured when it changed over I was going to have to try other things or sit on my hands. While the market action since January 2011 has been weaker than most of 2010, it was still moving well until about 7 weeks ago. The last 3 weeks have been very poor for individual stock names and now the indices are looking a little sick too.

When silver crashed everyone broke their arm patting themselves on the back for being brilliant, but oblivious that the risk trade in silver is the same risk trade in everything else; oil, other commodities, and yes stocks. There is always a time delay to be sure but first commodities were getting hit, now the financials are going lower and equities are following suit.

I was stopped out on my position in OCLR today for a -4% loss and I closed my spots in LF and SOFO at even. What's next?

I don't know. I hate shorting individual stocks, I really do. The only short I ever did was TOL (Toll Brothers, a homebuilder) back in the day! At this point I want to find some ETFs (not leveraged ETFs!) that will allow me to be short commodities, financials and the small cap stocks. Why would I want to do that?

QE 3.0.

To get to QE 3.0 there is going to have to be some relief from higher priced items like oil and food. For cover purposes, assets that have been kept "higher than they would be otherwise" will have to give some back. I know it has been some time, but please do remember the Wall Street temper tantrums of selling of stocks to register displeasure over lack of accommodation.

iBankCoin's The Fly offered this today:
One could make a very good argument for lower equity prices, in order to flush money into treasuries. The only way to build internal/domestic demand for treasuries is to take away all available options.

I would point out that a rush into bonds will push yields DOWN and this would signal DEFLATION and thus the FED would feel compelled to do another round of easing.

Now if you want to play this game, and I am not sure I do, you have to be ready for nasty action. Unless you are at home all day the volatility going against things will kill you. You have to pick your spot, your target, and ride it out unless it is so clear you are wrong.

From last year, we saw the SPY:
-Peak at 117 on May 4th 2010
-Bottom out 1st time at 103 on July 6
-Bottom again on August 31 at 105
In August the FED offered QE lite and hinted that further policy action was coming down the pipe via full blown QE 2.0. Markets priced in QE 2.0 quickly and by the time it was rolled out in early November the SPY was at 122. We topped (maybe ) May 2nd 2011 at 136.

My back of the envelope work shows the 12% drop from May 2010 to the last days of summer in August. So we just apply that 12% to the recent high of 136 right? Wrong!

I do not think markets can handle a 12% route without a real chance of a run happening.. It will not take 12%. That said a 3-5% drawdown is not going to get enough attention. I will settle on 8% or so. I also feel that the time frame will be faster, with QE 3.0 starting as trial balloons, Sunday talk show drops, and Op-Ed's in papers by the end of July. It will be in effect by September I believe.

I need to flesh this out a bit more, but it seems pretty clear. If I do play this path it will be via short ETFs for the time spans covered in this post. I am not really that excited by this idea as snap back rallies and only an 8% downside are not overly attractive as bets. Maybe I will just sit out the summer and go fishing.

Have a good night.

29 comments:

Jennifer Hillier said...

Glad your wife is feeling a bit better!

Anonymous said...

First off I want to say awesome blog! I had a quick question which I'd like to ask if you don't mind.
I was interested to know how you center yourself and clear your
thoughts prior to writing. I have had a hard time clearing
my thoughts in getting my ideas out there. I truly do take pleasure in writing
but it just seems like the first 10 to 15 minutes are usually wasted
just trying to figure out how to begin. Any ideas or hints?
Appreciate it!

Feel free to visit my web site ... best diet plan for women

Anonymous said...

If you would like to get much from this paragraph then
you have to apply such strategies to your won blog.


Here is my web page ... diet plans

Anonymous said...

He has written educational booklets οn numerous health issues including weight loss,
nutrition, diabetes, аnd coronary artery disease. ңow ѡill you identify а true promise of ѕuch advertisements.
Soft drinks сontain notɦing Ьut еmpty calories and sugar thɑt can putt ɑn average of 15 pouunds
ɑ year.

Here is my web site ... quick weight loss

Anonymous said...

What's up too every , fօr the reason that I am geuinely eager
ߋf reading tɦis website's post to bbe updaed regularly.
Ӏt сontains goоd material.

Ңere iѕ my ƿage :: recommended Private health insurance

Anonymous said...

Désagréablement,soulagé mémoires au-dessus camp avec sous top eleven hack password free.

presser et pour cette top eleven hack full version 2013.


My web-site ... top Eleven hack gratuit

Anonymous said...

The saүing abs are made in the kitchen Һas a lot of truth to it.
By changing how you lift the weiǥhts уou have a
different routine that gives you the result yοu want.
I'm not saʏing that you have to become big and bսlҡy like
The Terminator but have а gоoԁ amount of lean muscle maѕs on you.


Here is mу web site :: turbulence training pdf

Anonymous said...

Its like you read my mind! You seem to know
a lot about this, like you wrote the book in it or something.
I think that you could do with a few pics to drive the message home a little bit,
but other than that, this is magnificent blog. An excellent read.
I'll definitely be back.

Also visit my site ... Kamagra bez recepty

Anonymous said...

Woah! I'm really loving the template/theme of
this blog. It's simple, yet effective. A lot of times it's hard to
get that "perfect balance" between superb usability
and visual appearance. I must say you've done a fantastic
job with this. Additionally, the blog loads extremely fast for me on Opera.
Superb Blog!

Feel free to visit my website aspirateur automatique

Anonymous said...

Hi, Neat post. There is an issue together with
your site in internet explorer, may test this?
IE nonetheless is the marketplace chief and a big portion of other folks will pass over your great
writing due to this problem.

my page - breast enhancement pills

Anonymous said...

Hello, after reading this remarkable paragraph i am too glad to share my know-how here with colleagues.


Also visit my blog post ... Discount Louis Vuitton

Anonymous said...

Hello! Do you know if they make any plugins to safeguard
against hackers? I'm kinda paranoid about losing everything I've worked
hard on. Any suggestions?

My webpage :: gnc male enhancement

Anonymous said...

Wow, fantastic blog layout! How long have you been blogging for?
you make blogging look easy. The overall look of your website is wonderful, let alone the content!


Check out my web blog: can i lose 10 pounds in a month

Anonymous said...

Wonderful blog! Do you have any hints for aspiring writers?
I'm hoping to start my own blog soon but I'm a little lost on everything.

Would you propose starting with a free platform like Wordpress or go for
a paid option? There are so many choices out there that I'm totally confused ..
Any suggestions? Bless you!

my web blog ... Replica New Balance

WHAT IS LEADERSHIP said...

When silver falls everyone broke their arms patting themselves on the back for being brilliant, but be aware that the risk trade in silver trading the same risk in everything else; oil, other commodities, and yes shares. There is always a time delay to be sure but the first commodities got hit, now finance will be lower and equities are following suit.

Jual Jilbab Bergo Murah said...

So cool your writing. Very inspiring and add insight and useful knowledge. I will go back a recent visit to this web again. To obtain the latest information

Din said...

Nice Post
Awasome
Ilike This

2018 Toyota 4Runner Redesign And Release Date

Blogger said...

Discover how THOUSAND of individuals like YOU are making a LIVING from home and are living their dreams right NOW.
CLICK HERE TO DISCOVER

Kumpulan BBM Mod, Game dan Aplikasi Android said...

What's up too every , fօr the reason that I am geuinely energetic ߋf perusing tɦis site's post to bbe updaed routinely.Ӏt сontains goоd material.

bang jul said...

Many of the solusi bahan bakar berkualitas dan ramah lingkungan tricks of my trade are best used in uptrending market (no kidding!) So I figured when they changed over I was going to have to try other things or to sit on my hands. While working in the market since January 2011 and was weaker than the more than 2010, it was still moving well until about seven weeks ago in. It was three weeks post Too bad for the names of individual stocks, and now the signs are looking a little sick too.

Indiani Octa said...

JualSmartDetoxdiTapanuliSelatan
JualSmartDetoxdiNias
JualSmartDetoxdiLangkat
JualSmartDetoxdiKaro
JualSmartDetoxdiDeliSerdang
JualSmartDetoxdiSimalungun
JualSmartDetoxdiAsahan
JualSmartDetoxdiLabuhanbatu
JualSmartDetoxdiDairi
JualSmartDetoxdiTobaSamosir

Anonymous said...

Nice Post.. thanks you for your information.

Broker terpercaya

Anonymous said...

I have read so many content on the topic of the blogger lovers except this
piece of writing is truly a nice piece of writing, keep it up.
here is my website....Good acne Cure

Manfaat, Khasiat, Dan Info Kesehatan said...

Information really really help me, because really as I hope to be found .. hopefully your future can provide more knowledge and useful info like this, thank you friends .. hope you always the spirit ...

Manfaat & Khasiat Bawang Putih Untuk Kesehatan Dan Obat Telinga
Manfaat & Khasiat Bawang Putih Untuk Wajah Berjerawat Dan Caranya
Manfaat & Khasiat Labu Kuning Untuk Bayi
Manfaat & Khasiat Labu Kuning Untuk Diabetes
Manfaat & Khasiat Labu Kuning Untuk Diet
Bahaya Bawang Putih Untuk Jerawat

Admin said...

Here are some hyperlinks to web pages that we link to mainly because we feel they may be really worth visiting.
Keterangan Lengkap Buff Pada Weapon Durango Wild Lands
Keterangan Lengkap Tentang Status Efek Buff
Pokemon GO Update Gift Dan Trading Pokemon
Cara Mudah Membuka Iphone Yang Terkunci
Tips Aman Mengatur Hak Prioritas Domain
Gmail Update Fitur Baru Dalam Swipe Action

Adeline said...

Thanks for sharing this wonderful post, blog comments without a doubt help us grow because we are constructing relationship with others and also it help us build search engine marketing and also comments makes our blog alive and google also index comments. I might appreciate if you include my weblog to your list of blog commenting sites.
=========================
[+] Jav Online -
=========================
[+] Jav Streaming -
=========================
[+] Jav Uncensored -
=========================
[+] Jav Streaming Online -

Anonymous said...

http://www.europaschulekoeln.org/dont-get-left-behind-read-this-article-on-vitamins-now

jasonbob said...

russell westbrook shoes
golden goose
pandora outlet
nike sb dunk low
pandora bracelet
curry 8
stone island jacket
golden goose
canada goose outlet
supreme hoodie

Anonymous said...

keren silahkan kunjungi

link
link
link
link
link
link
link
link
link
link