Thursday, October 02, 2008

Kissing the channel goodbye

Today the Qs and IWM decisively kissed the LR30 channel goodbye. The XLE looks like it might be next to follow suit, but one of my trading survival mantras is to never underestimate the power of big oil to foil the markets. The XLF is actually looking rather bullish relative to the other sectors, perhaps buoyed by positive expectations of the bailout. So far, reaction to the bailout plan has been very neagtive. With the ball in the House's court, expect renewed range expansion.
I didn't know whether to laugh or cry when I read that Al Fishman was paid $19 million for 3 weeks of work as WaMu's CEO, Sept 8 to 25th, while shareholders got zip when WM went down.
Also turns out WM did a little fiddling with the numbers before they went under, so their real asset base is even more dismal than JPM had figured. Hey!!!. Don't you guys ever use accountants to look at the balance sheets before you buy these turkeys?????? Amazing, and an insight into the rampant incompetence and scoundrel mentality that has finally come back to bite Wall Street, with you and I as the long term collateral damage.


Will said...

Hi Bob,
The currencies and commodities are showing serious signs that the debt deflation spiral is taking hold. (Something I wrote about the danger of many times, probably the most coherent version being in this article in Sept 2007.)

The only hope left is an unprecedented inflationary expansion of the monetary base, and that in itself has its own dismal consequenses. The Fed is already trying that, quietly (see where the "target" Funds rate is and where they're actually flooding it down to, still with little/no success in curtailing the contraction).

So we'll look back at the $700B figure years from now just like we look back at the "< $100B" original price tag for the Iraq war. It will seem absurd.

I'm trading very strictly (but doing very well-- hey, off-balance strangles work great in these wide-ranging markets), but am anticipating one 6.5-hour period in the near future where we will have the opportunity to make a decade of profits in One Single Day, assuming we're prepared and that we get a decent signal (head fake or otherwise). One of those chances of a lifetime.

The entire U.S. economy has had its guts removed, not unlike a Halloween pumpkin (it's that time of year!), but is still retaining its shape for the time being. Just like the UAL "news" was blamed for being the seed crystal of the '87 crash, some "news" or other is liable to trigger the pumpkin implosion presently. I don't think it'll be the whole "bailout" crap (unless they vote it down!), but some piece of major bad news somewhere in the near future.

Ok ok, enough doom. One strategy I'm using is a system I developed starting with ideas planted by your GS and others, and it's been the most wonderful period of my trading career. Thank you again, and if my trading account ever gets one more digit on it, you need to let me know your favorite charity, I'll make a big donation in your name.

bzbtrader said...

Way to go, Will! Glad you found some value in the Grand Slam, but don't overlook the %R and KOP10.
I agree that 700B will probably be gone by Christmas, with zip to show for it other than some poorly finessed rescues of yet to be exposed big-time liars.
Unless the markets show strength in the face of the current channel kiss-offs, that day of reckoning of which you speak is probably not far off. Thanks for sharing. Are you trading daily bars or intraday timrframes?

Will said...

Bob- Entirely using daily timeframe for general setup, but still use intraday experience to "finesse" entries and exits. For example, say it's 3:30 EST and we're clearly going to have a Long Entry on the close, I may watch for the 3:30-3:50 selling, then enter when the 1min or 3min bars show we're starting that EOD counter-blip.

Or if I went long w/ options for a quick play due to the oversold daily situation near EOD (like yesterday, Put/Call "somewhat" and VIX "very", bought some QQQQ Calls), then we gap up and rise the next morning (like this AM), I'll use standard intraday targets like Pivots to select my exits. Exited the small lot of QQQQ Calls at R1 this morning.

That's occasionally when things set up. Often I just sit and wait for days, and enter UWM or TWM near the close when the RSI, CCI etc. are showing that it's time. (I take signals from IWM, but place the trades with the Ultras).

Will said...

Oh, and the %R and KOP10... can't run with 'em yet. I'm still straggling along with AMTD, cleaning up the last of my leftover capital loss carryovers from the Old Days. That means I'm limited to StrategyDesk, which can do anything you like as long as you don't use any variables, cross your eyes and hold your tongue just right, and can put it all into one long Boolean expression :-0

Next step is either TS or Multicharts/IB. Hopefully the backlog will be cleared out in a few more weeks. At that point, I'll be exploring more and will gladly join in the team backtesting.

LP, who comments on here occasionally, is becoming the Neoticker guru, and will be testing various stuff with that platform (including some of your suggestions). He and I have tried repeatedly to get some collaborative projects going with a few other serious folks, with very little success... as I'm sure you've noticed, when it comes right down to putting in the hours, the eager beavers tend to take a step back.