Thursday, January 17, 2008

Continued Ugly Action

Posted by TraderMark at 3:26 PM TweetThis
Again, feels like groundhog day but for the first time it just feels like a total vacuum out there. Total lack of buying interest as every sector is shown its time behind the woodshed. This is a "rotational" correction if I've ever seen one. In a backwards way as of 3:27 PM, I'd say the most healthy thing for us would be a total breakdown here in the last 30 minutes, instead of Dow -250, maybe Dow -400

While it would stink, it would create conditions that would lead to finally a tradeable bounce as people just give up the ghost. You can almost hear people turning off the computers across America in disgust and not wanting to look at their Etrade accounts.

Last, I cannot remember a time when the Fed Chief's words were so ineffective. Last week when we basically were assured of a big cut or series of cuts by Ben, we rallied for a whole 10 minutes before sinking. Today, whatever Ben said, was essentially ignored. Crisis of confidence in leadership. From top to bottom.

Posted by TraderMark at 3:26 PM Comments (7) | Edit This Post | Create A New Post

7 comments:

thetechnicaltake.com said...

Mark:

My approach is more quantitative and I don't trade stocks but markets. I got about 80% long this week as per strategies and obviously has not worked. However, it is still within the realm of past drawdowns. It is just difficult to identify any data point or series of data points that can reliably pick the bottom. At some point -like now - all strategies will break down; no matter what market you are in. Fortunately, draw downs (per the strategy) don't last too long.

January 17, 2008 3:50 PM  
cm202bc said...

Speaking of which, anyone see support on the S&P above 1250? I don't. At this point I would be surprised if we didn't make it there before the State of the Union/Fed week.

Only thing working for me right now is buying far out of the money options and moving them quick. Really small gains tho.

January 17, 2008 3:56 PM  
thetechnicaltake.com said...

Another thing....many folks have said we are in a bear market. The question I would ask is how do you define a bear market? This is what I do....I will attempt to define technically if you will what that means. By my methodology, which is not too complicated but reproducible, the SP500 is in a bear market. The Dow is likely to find support at previous breakout (July, 2006) and NASDAQ is just a failed breakout and will probably find support around 2340. By the methodology, we had financials breaking down 7 months ago and Transports 5 months ago. Although not a great strategy, there is hope that the selling is over done.

January 17, 2008 4:00 PM  
cm202bc said...

Anyone wanna laugh?

Go check the option chains on EEV and FXP.

January 17, 2008 4:01 PM  
TraderMark said...

I think a bear market is like defining a recession - when it hits your account its officially a bear market - just like if you lose your job its officially a recession :)
I guess technically its a 20% correction for a bear market but we've had a sector by sector bear. Financials, retail, restaurants, and transports have been in a bear for a long time.

This stage is everyone else getting hit too.

I am a bit peeved at self though - after calling for January 08 to be ugly I changed course too early and tried to be cute by expecting a bounce, even though I've been pointing to this earnings season as a time of adjustment of expectations with slashed 08 guidance for a long time. So I outsmarted myself big time. I though these selloffs would happen due to preannouncements and actual cutting of guidance... but the market seems to have sold off even in advance of the actual news (we have only had a handful of companies actually report in the big scheme of things).

The worst thing is to be intellectually correct but wrongly positioned. They do need to come out with specific Ultrashorts such as Agriculture or Solar - would help in times like this!

Bah, I hate giving back so much good performance in such a short amount of time. And Humbug.

January 17, 2008 4:21 PM  
W. P. Thatcher said...

In markets like this one, you've got to have some hedges, just to take the sting out of the general collapse. I've been loading up on the ProShares UltraShort ETFs for the last few weeks. I do see some opportunities for buying though. I am buying oil services like NOV on weakness.

January 17, 2008 4:59 PM  
TraderMark said...

Yep, I did have a large swig of those since August. I unfortunately tried to be a bit too cute and anticipate a temporary bounce and lightened up. That said some of the Ultrashorts I sold are below where I last sold them so they would not of helped that much. I sold SRS Ultrashort Real Estate last at $140, it is now $132. The sectors that are taking the biggest hits now don't have a specific ETF short to work against them... but I should of held the index shorts throughout in some quantity. However I would of needed a 40% weighting to offset some of the carnage seen this week.

January 17, 2008 5:04 PM  

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