Thursday, March 13, 2008

Bipolar Market Continues

Posted by TraderMark at 2:43 PM TweetThis
Today's move won't get the press Tuesday's did, because Tuesday was straight up, but the intraday swing today from the low 1280s on the S&P to 1320 is 3%. Which is near the "once in 5 year move" we saw Tuesday. Truly amazing times, and the volatility is off the charts. I have never seen a time when a rumor, innuendo, or comment moves markets so quickly and severely, literally on a daily basis. For those who cannot sit at a screen and watch the movement tick by tick, it is a futile market... I am not sure if this sort of action signals greed, fear or just outright confusion. Or the vortex between denial or acceptance. Or the "Invisible Hand" making every effort to make sure the market is not allowed to go off the cliff... who really knows.

For those newer to the market, this is not the way things have been over most of the past 5 years - I remember reading statistics about 1 year ago at this time how the S&P had not fallen more than 2% in any 1 day for something close to 2 years (I don't remember the exact time frame but it was some incredible length of time). Just imagine that... now we get that sort of movement nearly every day, and certainly every week.

I am going to use this spike to add to some short exposure, and sell off some of my coal exposure - the coal stocks are rebounding nicely today but have broken some key support levels. I got my coal exposure up to a 10% or so allocation a bit too quickly, so I'll look to add back lower, or if they just continue up I still have a very large allocation to the group.

Posted by TraderMark at 2:43 PM Comments (2) | Edit This Post | Create A New Post

2 comments:

kb said...

Trader Mark.. how will you trade your short exposure when S&P again tries the 1270 area. Do you once again cover that position when it goes to 1270 or hold for futher decline. I have been short from 1310 area but have held position only to see it bounce off 1270 and back to 1320. Would you add to your short exposure if markets moves back to 1320-1330?
KB

March 13, 2008 9:07 PM  
TraderMark said...

Hi kb,

I am pretty maxxed out on my short exposure per my own set rules of not going over a quarter of the portfolio. It is hard to answer your question because going into the Fed cut a lot of rules are thrown out. In fact this market is so nervous for both bulls and bears it is hard to trade on technicals of late. News events dominate. Technicals work best when a rumor on TV doesnt move the market 300 points. Right now any whisper can whipsaw this market up or down 200 points so it is just hard to sit here and say I will do this or that.

If we were in a normal market, I'd say I'd get more bullish on a move above S&P 1370 and bearish on a move below S&P 1270. Each time we retest 1270 it will become weaker and eventually fail. But right now a case could be made that we had a "double bottom" and that a big move could be made off that level. With all this uncertainty I simply and sticking to my hedged strategy - which means I won't win as big if the market takes off nor lose as big if the market fails. I prefer markets that have a trend to them; this market is completely direction-less and prone to constant rumor and hope and CNBC reports. Makes it difficult to predict anything out more than 30 seconds.

March 14, 2008 9:44 AM  

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