Above, the 3 LRS study of the daily bars of my little ETF basket. All looking fairly similar from a technical perspective and all below the lower LR30 channel, despite today's surge. My guess, and that's what it is, for the short term, is continued trading range behavior with the lower LR30 channel band acting at a temporary mean reversion target. We came close to kissing the channel goodbye yesterday in the Qs and IWM, while XLE and XLF are showing more resilience at the channel band. The technicals have a lot of work to do before I could get upbeat about a sustained rally, although I have noted several fellow bloggers calling yesterday's action the bear market bottom, punctuated by a VIX 48.As a card carrying technical trader I'm ready to roll when the signals trigger, but the fundamentals just don't look that cheery, and you have to wonder what OTHER surprises are likely coming down the pipe. While the "rescue plan" may end the hemorrhaging, it's not likely to stop the bleeding and I don't want my trading account to become collateral damage to some really shoddy triage by our current admins.
Until the LR30 channel maintains a a level plane for several weeks, and/or begins to show upslope momentum, I'll continue to play the markets cautiously, trade small and be ready to hit the exits when the next revelation hits. Capital preservation is Job #1.
4 comments:
I've sized down position's and switched to a longer term outlook in these current market, the main reason so I don't get side swiped by the PPT.
George,
Copy that! The big unknown is whether the market will sell off hard when the rescue plan is finally approved, as the longer term implications sink in. The current intraday volatility is just plain freaky and the options spreads are frequently locked for hours on end, even with substantial moves in the underlying. Standing aside can't be faulted in these markets.
I am pretty set on the fact that our bear market rally's have been getting weaker the longer 08 goes on. Look at Tuesday's rally and the volume behind it. It is hard to judge with the elimination of short selling, though it could be said that markets are getting more organic by this elimination. To me the ban of short selling has just proved that short sellers just provide liquidity..... Intraday volatility is insane.. I remember when people got all freaked out because the VIX jumped above 30 for 5 minutes hahahah....
The thing about the news being priced in is that people still believe Bernanke and Paulson... They have zero credibility with me.. I say they have credibility with the market due to bernanke stating all the "implications" if this thing (e.g. massive unemployment) does not get passed.... A lot of people bought that stuff... He dosent have the same amount of credibility he had 6 months though. On a personal level I'm not gonna listen to anybody that has been dead wrong for the past 2 years and still sings the same old song same old dance.
People need to start talking about the real debate with this bailout bill, it is not CEO compensation, or changing account (changing accounting does not change the underlying fundamentals of a business).. But weather this will create wealth or not. The theory goes that this 700 Billion will free up credit.. for businesses to prosper.. If it dosent pass, massive tankage and "wealth is destroyed"
Wealth is not destroyed, wealth (defined as products of people's labor) is being destroyed when you devalue the dollar.....
I saw that screw people that get pissed off if their stocks go down in value, there is something called put options..... I gotta work on a paper so i have to keep it short and rambly like always...
George,
Also see this link from BESPOKE:
http://bespokeinvest.typepad.com/bespoke/2008/09/no-shorts-outpe.html
It describes how the "no shorts" have recently out performed the shortables.
Post a Comment