back at it - two years down that road

Been a whirlwind - lots of great exciting developments - some pertaining to the markets and my involvement in them...and some not having anything to do with the markets.  Back in a bit to fill in the details...

new highs!

So after another round of BTFD, we are right back at the highs in the Naz, S&P and DJIA and a good day away from a high on the RUT.

Two weeks ago the world was ending because the S&P had actually sold off 60 points or so.  Really? 60 points when the index is at 1600?   The doomsayers are saying when the stuff hits the fan we are going to be looking at S&P 600....not 1600 but 6.0.0.

So the media, the talking heads, the 'experts' start singing the old song and dance "ok this time it's on we're going to ZERO!!!!" whenever the major indices actually sell off for say....3 days out of 4, and then guess what, the buyers come in and take it to higher highs.

This is a strange world in which we live....Big Brother is runnin' the printing presses 24/7, keeping most every asset artificially inflated.  In 2000 it was tech/internet stocks.....in 2007 it was housing prices and the national real estate market....these days they have so many balls in the air the margin of error is getting increasingly small and when things go awry, not just one ball is gonna hit the floor, it is going to be a cacophony of popping bubbles hitting the floor with dead weight.  Of course this could be months or possibly even a year or two away but eventually this charade is going to end and end badly.

Loser Friday

The first negative Friday in 2013.  That is a remarkable statistic; here we sit in the middle of March and this is the first Friday in which the indices closed down.  This of course will be followed by a gap-up on Monday morning and away we go for higher highs.  And all this on absolutely anemic volume.

Closing numbers for the week:

Dow Jones  14,514.1
S&P 500       1,560.7
Nasdaq         3,249.1

Going over the cliff?

The VIX and the 3 major indices would tell you so.  The markets will plunge, congress will notice the vaporizing of billions of dollars in market capitalization and a deal will get done.  Along with that, the debt ceiling will get raised and we will continue along the yellow brick road, all the while kicking the can as we merrily head towards an eventual global re-set.

Happy holidays to you and yours as we turn the page to 2013.


Your closing numbers for this week:

DJIA        12,938
S&P           1,402
Nasdaq      2,960

Politically charged

What a week.  The markets (and much of the world) hung on the words of Obama, Boehner, Reid and others as they waxed poetic about the impending cliff...and with just minutes to go before the close, extreme volume rushed in to the SPX based instruments.

The markets overall had a 'good' week and thus there is cause for celebration by the perma-bulls as they are roaring for a steady strong ramp into the close of 2012.

We are 40% in the market (net short) and the rest in cash as we await the next move up or down.  The primary gauge used here is the $SPX.  The 50 DMA for the S&P 500 is 1421 and this week the index topped out at 1420.  Our short position will be confirmed by the index pulling back next week. Best case in a market recently characterized by making lower highs and lower lows, this market declines over the coming weeks and makes a lower low from the mark of 1343 hit in mid-November.  Support will likely be found around the 200 DMA at 1384 and that level will be watched closely for a bounce.

Given next week will likely bring more of the same (knee-jerk reactions to politician news conferences), we will keep stops very tight and will look to cover our short positions if the S&P moves much north of 1422 next week.

The VIX did briefly hit a 14 handle this morning, bottoming out at 14.89.  Ultimately a lower VIX print would have been better received but anything initiated to the short side when the VIX is in the 14s has historically done fairly well. 

Here are your closing numbers:

DJIA    13,025
S&P       1,416
Nasdaq  3,010

updating the FB picture and more....

So half the FB position was covered at $20 and the rest was covered earlier at $25 when it gapped up (our predetermined stop) and we quickly covered based on the fillable gap that we did not want to ride to the upside.

So now that we have logged out of FB, it is time to discuss the broader markets.

The VIX is close to reaching the golden 14 handle (that some use as a resounding 'sell' or 'short' signal and the markets (SPX/DJIA/Nasdaq) have reached, are reaching or will be soon reaching (from the downside) their 50 or 200 DMAs which just happen to be downward sloping at this point in time.

We are doing research on which stocks and indices to short if the markets find their moving averages to be resistance.  The stops will be tight and if the markets break solidly thru their moving averages to the upside and the VIX does not drop solidly into the 14s then we are out and will re-evaluate our stance on the market, likely then taking a near term bullish view and using the 50 or 200 DMAs as a stop based on support instead of resistance.  Trade nimble and trade quick.

Month end is tomorrow, the markets often go through a 'window-dressing' experiment on the last day or last days leading to a month or quarter end so as the close of tomorrow's trading day looms, we will evaluate how the market has reacted to key levels on the S&P of 1420 and 1430 and we will trade accordingly.

Keep your friends close and your stops closer.  All for now - carry on.

Catching the express train downtown

To miss earnings or say things on the conference call that analysts and investors don't want to hear and then have your stock price violate a long term upward trend channel is never a good thing. For Express Scripts, this exact scenario played out over the last few days.

Based on comments made by management after third quarter results were announced, the stock was hit hard yesterday and thus we initiated a position to the short side, our stop is the high of the day: $56.17.

shorting mark z.

FB, Facebook, one of the most disappointing IPOs in recent memory.  The hype. The media frenzy. The over-priced IPO.  The disappointment.

It recently gapped up to near term highs.  Now putting on a short position in FB and leaving the stop as the high from 2 days ago and/or the high from the gap down from late July.  Rounding up to $25 just for kicks.

There are also a boatload of shares that will be flooding the market as lock-ups expire in the coming months.

Stopped out

So that did not work out well.  TECL, the leveraged tech ETF would have done a bit better if Google had not released disappointing earnings (accidentally during yesterday's trading day) and then continued its downward slide today.  The position hit its stop at $53.47 and then continued to trade lower, ending the day at its lowest price, $50.50.

Paul Tudor Jones (PTJ) probably put it best: "At the end of the day, the most important thing is how good you are at risk control."  Cut the losers, let the winners run.  This was a loser, it was cut and we move on.

Here are your closing numbers.

Dow Jones

13,343.51

-205.43

(-1.52%)

S&P 500

1,433.19

-24.15

(-1.66%)

Nasdaq

3,005.62

-67.25

(-2.19%)

The indices are breaking down, trading at or below significant moving averages and making lower highs and lower lows.  CMG, GOOG, AAPL, INTC, MCD, and myriad other stocks are getting beat down.  Great short opportunities abound for over-priced shares priced to perfection that are either missing on earnings, revenue or guidance.

Catching a bid

Yesterday the SPX bounced off its 50 DMA and after the significant sell-off the technology sector had in particular over the last week, the 3X leveraged tech ETF TECL managed to find support on its 200 DMA.

Given the SPX might have a bit more room to the upside if it manages to trade near its other recent highs of 1474 and 1470, the tech stocks should have a bit of a run as well.  Given today's move in TECL, a run to 60 perhaps is in the cards. If not, the low of yesterday, $50.48 is the stop on the position.