Freefall Friday

Ok, so washing and prepping a deck for staining is WAY more work than I thought it was going to be. It's like a real job. Onto the staining tomorrow, so much fun.

Strategy Session
The markets were dropping today when the bad jobs number came out. Even expectations that were lowered were missed. You know the story big picture by now.

My post on my short strategy (Short Takes) is getting closer to being triggered. What I wrote on 5/23:

The new market eats bearish ideas for breakfast and it will take the 1280 level for me to put this trade on. If I do make the move I will leave it until the S&P is around the target area of 1180, the FED starts trial balloons for QE 3.0, or a rebound happens up to 1360 again. This is not a quick move but a placed bet on an outcome I think will have to a happen. It would not surprise me too much to be way wrong here, but this is the play I have in mind going forward.

The first stop had to be S&P 500 going under 1307, and it did that today. My trigger remains 1280 and in this updated chart you can see where that is (still a ways away, this could be a head fake for a move back up to the top of the channel around 1360!). It is always good to keep a plan in place (click for larger view):

Enough stuff, on to the other stuff.

Friday Night Entertainment
What will we see tonight?

Captured Critter
So the deer that has been eating all the birdfood from the feeder keeps coming back, right around 8:20pm. My motion activated camera caught him a bunch more times, but one picture caught something else!!! The time stamp is right, but the dates are still messed up. This was two nights ago, see if you can spot the other critter (click for larger view):

Right above the rump of the deer you can see another pair of eyes! I cannot blow up the picture (clicking will make it bigger) because the camera software won't work with my computer. In any case, it seems like a coyote or fox, but it's hard to tell. I reset the camera today. Maybe we will catch more critters!

Funny Pictures and Stuff
This is so wrong I knew I was going to post it:

see more Historic LOL
NICE.

If my dog had courage he would do this to the cat:

see more Lolcats and funny pictures, and check out our Socially Awkward Penguin lolz!
But he does not.

Random Clips
Some stuff to watch.

Scotty Nguyen wins the 1998 WSOP Main Event and at the 3:10 mark he baits the guy to call his lock hand saying "You call, gonna be all over, baby!":


Thomas Hearns KO's undefeated James Shuler in round 1 for the NABF Middleweight title. Sadly Shuler, who had escaped death by not being on a boxing team flight that crashed in 1980, would die after this fight when he crashed his motorcycle. Thomas Hearns, always the greatest class boxing had, attended the funeral and layed the NABF title belt with Shuler at the burial:


Films?

Readers know that while Sean Penn is an annoying celeb, I consider him the finest actor of this era. His work in Mystic River is legend. One early Penn film, "Bad Boys", was an indication how powerful an actor Penn would be. This movie even has Clancy Brown, who would play The Kurgan in "Highlander". Check out the soda can work (note: very brutal!!!):


An all time classic, Snake Plissken gets a job offer in "Escape from New York":

HE ROBBED A FEDERAL RESERVE!!!! Too funny.

Trust me, see the film "Laurel Canyon", you wont' be disappointed:

Hee hee.

Rock Blogging
Moving the sound goalposts, one tune at a time, since 2007.

My man Watchtower caught this insane Red Hot Chili Peppers video at Slane Castle, must see this performance of "Zephyr":

I loved that, thanks.

Reader Gawains (who owes me a report on Texas real estate, lol) was looking for "Stone Blue" by Foghat:

I likey.

For The Idiot, a little "Paranoid Android" live from Radiohead:

Good one.

Going live I guess! How about Depeche Mode in Cologne with "Enjoy the Silence":


Ok, two songs left.

When Courtney Love was somewhat normal she could make tunes like "Doll Parts":

Unreal tune. The ending is so hard, but pretty. I know, makes no sense.

Last call! Grab a girl and a beer, or just a beer!

Lets close with Motley Crue's masterpiece, "Wild Side":

Love that one.

Have a good night.

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.