Traders Corner   44 comments

Bill the Cat

Was yesterday’s move a dead cat bounce? I am rather torn over the question. Unless we get a large upside move today, I would say the market’s upside seems limited. With QE being tapered, and the dollar already trading near lows, I just don’t see a lot of upside. Add in a few technical reasons, like the weekly technicals back to overbought after yesterday, and the daily MACD still pointing down, and it is hard to buy a strong bullish argument. On top of this, the S&P 500’s Bollinger Bands are starting to narrow, which usually precedes a large move, although that doesn’t give a direction.

My guess is we either go down or sideways for awhile. I will state this isn’t a “high confidence” guess.

The S&P 500 levels to watch today:

UPSIDE: 1843-1845 (4 data points), 1849 (December’s high and the all-time high), and 1862 (top of the Bollinger Bands).
LAST CLOSE: 1838, inside the 1837-1840 (5 data points) range.
DOWNSIDE: 1827-1832 (6 data points and the 20 day moving average), 1823 (January 6th’s low), 1821 (January 14th’s low), 1815 (January 13th’s low), 1813 (November’s high), 1802 (50 day moving average), 1775 (October’s high), and 1791 (bottom of the Bollinger Bands).


44 responses to “Traders Corner

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  1. Hi Ed,
    New poster here. Really enjoy your site. Actually I have followed your site since you first started it. I’m more the type who likes to listen and learn. How does that saying go; “Remain quite while others think you a fool or speak up and..” ; well you know. Actually my day job hinders me from posting. I also can’t trade stocks during the day or follow the market except for getting brief updates. By the time I am able to sit down in the evening an get online uninterrupted, posting has ended. Today I am off work, preparing to hit the road for a funeral.
    Ed, I value your insight when it comes to fundamental analysis. When I get past some of the basics like P/E, P/S and such, I seem to have trouble wrapping my mind around it so your take on company financials is good. I have also learn quite a bit on options from Trader, W Seattle and others. In fact, I made my first foray into options last spring after reading many of their posts; some of which I have saved for future reference. I have had good success so far. Placing limit orders after hours has it’s downside, but it still works. So Trader and others keep posting those option plays.
    Well, time to hit the road. Hope I can post more often in the future.

  2. I have a twelve trading day countdown on NUS. This stock makes me as nervous as a long tailed cat in a room full of rocking chairs. On February 1st, I will hit my one year hold and get to take my gain as long term. For some reason, it is down 6% at opening. Not sure why. Rest of portfolio is doing very well. My BAC warrants are up 3.8% today and now up 36% overall. INTC has also made a very nice move this week (up over 5%). Finally, did people see that ML/BAC put a $7 price target on TC. Whoa.

    • BAC is a bright spot on my portfolio. Bought 2.5 years ago at $10.27 and it is currently selling at $17.29 for an increase of 68%.

    • Wouldn’t it be nice if we end up with a short squeeze on TC.

    • I bailed on my NUS at 116.59. Great stock for me, bought at $41.94 last February. I am concerned that the recent allegations are not coming from a short seller, but rather a newspaper. Too bad they could not have waited three more weeks to publish that story! πŸ™‚

    • Sold my BAC warrants at 7.25 this am. Got a nice 15 % gain in a month and Wanted to keep it. I think the current price has most good news built in and I will buy again if it gets back below 7

    • Marshall,
      If I recall you also own INTC Thoughts on it before earnings? It’s been one of my better plays for 2013, but i’m really not seeing much more to it after this run on a fundamental basis. Technically resistance needs to be broken at 27 from April 2012. Either its going to break through it or break down. I know you’re not much of a technical analysis guy but my charts are all flashing overbought, but not exteme yet

      • Md – INTC is one of my larger holdings. It is pretty much buy and forget for me. If they drop 5%+, I will often look to add shares. I really have no view on the current quarter. Instead I focus on longer term, where I think their R&D and shear size, giving them economies of scale, will make them successful. Not a get rich quick stock. Get rich slowly.

      • Thanks for your view. I’m going to see how the earnings come out. Def a lot of excitement in the market for them this quarters. I planned on holding it awhile,but I always get greedy and sell when its up. I’ll try your patient approach on this one and besides that dividend is very nice each quarter. I’m looking to buy longer dated calls on a 5%pullback myself.

  3. Looks like Mondays dip was just an opportunity to buy. Making decisions on a single days move is very risky. Wait a few days to see how it shakes out. Doubled my position in ANGI this morning. Have January 15 covered calls on my first buy. Not selling calls yet on the other half. Looks like oil may break out. Not selling calls yet on UCO.

    • Not sure I understand why UCO is up almost 3% but XOP is down a hair?

      • John, not an apples for apples comparison. UCO is a pure play on wti. XOP is not, although you would expect the trend to be similar. I believe there is less risk with UCO. Don’t have all of the stuff that effects individual stocks.

  4. Forgot to mention I didn’t buy XONE at 65. I didn’t like the chart when it got there. Will watch for now to see if it is bottoming.

  5. I doubled SPXU at $15.06, lowering my dollar cost average to $15.40. I will sell it at $15.44 today.

    • Ed, Why not follow the trend and buy upro? Keep your spxu just don’t keep adding to it till the trend changes. Right now 1855 should be tops, I think…..

  6. Trader, uco gosh talk about timing. Bought @28.34

  7. Sold February 31 covered calls on half of my UCO for .60. Don’t want to press my luck after a big move like this.

  8. Ed, in looking at the daily chart of the MACD you have to wait for the market to close before it tells you anything. Have to use intraday for daily help.

    • Trader,
      Actually, does show the MACD for the current trading price, obviously with the assumption “if the market closed today right now” since it is a daily-based technical.

    • What I am saying Ed , is if you are going to make daytrading decisions useing the MACD you have to use the intraday charts. The MACD is one of the indicators I use for all trades including daytrades. I use the 3 and 5 min intraday charts for day trades and the daily and weekly for swing and longer term plays.

      • A 3-5 minute chart wouldn’t do me a bit of good on a day-based trade. That’s like trying to determine where a road goes for the next mile by looking at one yard of it. πŸ˜‰

      • Ed,

        I use 3 & 5 min charts for my day trades also. I have found them the most useful. Maybe give them a shot and see what other information you can glean from them. Never hurts to learn or try something new.

      • I have tried them before. Unless you’re sitting with your eyes glued to the screen, they have limited usefullness.

      • Not true Ed. You can use them as an entry point. Set a limit sell price for the day and walk away.

      • Trader,
        Again, I have tried it, and it doesn’t work for me, because I can’t sit here and babysit it. Using it to pick a buy point doesn’t help, if I suddenly get called away for a meeting 5 minutes later. Come back in an hour, and watch it having turned south on me 30 minutes ago. I know it works for you, and that’s great. But I have to look at longer technicals to daytrade.

      • Understand Ed. I don’t know how you can daytrade without using intraday charts. Maybe best not to even try to daytrade. Stick to swing and longer term. Daily and weekly are helpful there.

      • Trader,
        That’s why the bulk of my cash is in those areas. πŸ˜‰

  9. I decided to split up my SPXU order into 3 parts, since there were 3 orders. I sold the last part I bought today at $15.10, and a 0.27% profit.

    That leaves me with 2 more parts, each worth $15.81 and $15.66. I am watching what the market does the rest of today to decide what to do with the last 2 parts.

  10. I sold the last 2 positions of SPXU at $15.05, for a 4.8% and 3.9% loss on each. While they were small positions, that one still stung.

    Moral of the story: Avoid momentum plays that last longer than a day.

    • yep spxu is not a toy! sorry about your loss! Watch the e mini before you trade spxu again you may see what I see. I just can’t explain it.

    • I am not sure that is the moral of the story. You have followed the double down when the SPXU trade isn’t working a couple times the last couple months and I feel more times than not you got out with a profit (if sometimes a meager one). I would look at your previous day/swing/momentum trades and see how many times you doubled or tripled down and how you did rather than look for a lesson from from a single trade. Seems like you should be trying to find strategies that work for you not individual investing moments.

      Now that you are tracking these trades monthly/quarterly/yearly that should also give you a better idea of the viability of your strategy.


      • Robb,
        Looking at this month and last, when there was a clear market sentiment in favor of the trade, the momentum trade seems to work much better. Playing it just on momentum, without a clear-cut sentiment, is riskier.

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