03-10-10 MARKET RECAP and Tomorrow's Trading Plan:

“Bullish engulfing pattern, caution”: that was my headline last night. This market is hated; this rally is hated. The bulls don’t trust it. We are climbing, again, the wall of worry. But we have 11 straight days up or flat in the SPX, NDX and 17 of 21 in the RUT, after the shorts felt cheated we didn’t get the 10% plus correction in every Index (we came close enough in my estimation). The calls, again, for a “correction” are all over the place. If you are short, you were early.


Blake Morrow, who by the way is a real pro, and brilliant...said he is short. He has made a subtle yet compelling case the last several days on Trading Views why this market should not be going up. And I mean he has run through all the currency correlations, international GDP reports, oil, gold, Fibonacci retracements, weekly and daily charts on the Indexes, unemployment reports and consumer confidence figures…he doesn’t miss much. I heed what he says because I play defense (my number one rule “Don’t Take Losses”).

I am bullish, and have been long since we corrected, very long. When I heard Tim Seymour on Fast Money proclaim a couple weeks ago, “we are as long as we have ever been” in response to Guy Mr. short Adami, I didn’t feel so alone. Now we are @ thee critical juncture…SPX 1150 and a new closing high for the year is on the horizon…easily seen with one more sunrise. Will we go on to SPX 1200, 1250? Yes. Maybe not right away, but we’re heading up, in my view. Tonight’s blog post is not the place to argue why, but an article will appear soon with my 2010 Outlook I posted in December on my site which I will update after one quarter of trading.

But, what about tomorrow? I dunno, that’s why they play the game. Today’s 15 minute chart in the SPX is instructive, zig zag up and down all day…but after yesterday’s bullish engulfing pattern, the bulls put another win on the board. Perhaps one tell, the Transports. OBV is pointing straight up and it has made a new closing high already, as has the NDX and the RUT. Its just the SPX and Dow 30 that lag. And now we have Financials leading. We are going higher is how I am trading. I’ve read we’ll test SPX 1150 and pull back, and according to Adami, fall to SPX 950 (Rain Man as he pronounced himself). I don’t think so. Sure “feels” like we’ll pop through sooner rather than later. To those who say we’ll test and fall back, my reaction is we did that in January, we corrected and now we make it through to higher highs.

What do I know? I listen to Blake Morrow and Scott McCormick and they are compelling. So, I have 20% CASH on hand, tight stops and I’ve rotated with the big money to Financials, like C, HIG, RF, MA and Retail like SKS, SKX and LVS (gambling is like retail to me, but leads). I will not be surprised to hit 1150, fall back to 1135 and then fight back and pop right through. So, I’m hanging in and expect the shorts to try to take my money. This is war and we expect a battle. If we get to SPX 1155 we may get some covering and a run to 1170 this month yet, maybe next week.

Also I read tomorrow is Futures contract rollover day, so we’ll have even more reason for uneven trading. If the shorts get some traction, I’ll take my stops and stand aside going to as much 75% CASH should they get rolling, but ready to go right back to the same stocks that are working so well. It only takes me one surge lower to admit I am wrong, even @ the Opening Gap. I had an e-mail exchange with a Pro Trader today who shouted at me when I told him he was biased, early on his shorts and wrong. This is going to be interesting. Also, after tomorrow, a lot of money managers are reticent to stay very long on a Friday into the weekend. That sets up for a pullback as well. Strap yourself in. IF we push higher, look for a lot higher

Nice heads up from Alan Farley on YUM which I had started Monday. It is going higher, clear breakout on the weekly chart.

Disclosure: Long BUCY, X, CLF, AGU, C, CLF, CREE, CSCO, DRIV, FFIV, FNSR, HIG, JOYG, LVS, MA, RF, RNWK, SKS, SKX, SNDK, STX, TSO, X, YUM.

Broke out of the box!

SPX 1147. New box, if close above 1145 could be SPX 1145-1155. Short buy stops come in around 1150?

WE did it. Close SPX 1145+. Nice base from which to assault 1150. Damn the shorts.

The gap up was not faded very hard:

Time to make money, looking to break out of the box between SPX 1135 and 1145. Tracking @ SPX 1145.57 now.

Good morning, its all about the Banks:

The U.S. may sell its stake in Citigroup (C) sooner rather than later, with media reports pegging a possible sale as soon as this spring. Federal officials had said they plan to unload the government's 27% stake in Citigroup over the next year, but hadn't indicated it could happen on such an accelerated timetable. Citi's shares rose 7.3% yesterday, in part because of strong demand for the bank’s preferred shares. C +1.8% premarket (7:00 ET).

03-09-10 Market Recap and Tomorrow’s Trading Plan:

The following is my first blog psot on Trading Views, pretty much what we do here. Except, we'll post here throught the day by blog or tweet and there once a day or so.

"09-10 Market Recap and Tomorrow’s Trading Plan:


Welcome to my first nightly blog for Trading Views, for whom I am honored to write. My profile discusses in detail my professional background...as a lawyer. I am now a full time investor and trader. Why both? Out of necessity, which I will address in detail in my first article.

For my blogs you need only know I do both, as most of you do: I have an active taxable account which by nature is more short term in its focus, i.e., I can’t afford to ride stocks down into a loss and wait for them to recover as I may need the money. I also manage personal and family funds in Retirement and longer term Trust accounts. Although not nearly as actively traded, I do use stops and Don’t Take Losses there either. This is my trademark…once a trade is established and my trade is green, I “Don’t Take Losses”, or at least try not to. I feel the same way about retirement funds and use stop loss orders for many of my holdings, except for smaller accounts which are invested largely in ETFs. even there I use stops if things get dicey, or just go to CASH.

My trading blog is directed at trading stocks long and ETFs long and short. I do not use margin, I do not short stocks, I do not hedge with or trade options and I consider CASH a position and my best friend.

Now, what happened today? Sheeesh, 3 days in a row we bang into SPX 1140. Will we burst through? I thought so, but know many short who are sticking to their guns. They won’t hit buy stops on their shorts until we close above SPX 1150. We are close. This week is like a football game, neither long nor short is winning the line of scrimmage. I closed today with 28% CASH and 72% long.

If we gap down in the morning, I’ll take fairly tight stops on 1/3 to ½ my position size in full positions and wait until the buyers come…whenever that is. If we gap up, I’ll wait for the gap to fill or be happy with 72% long. I usually can push some CASH long if we get some upside momentum as some stocks pause before they pop. So, I don’t feel the need to have all my money long although I feel the trend will continue up.

I have noticed again a money rotation which started Friday and has carried over, from Materials, Commodities and Energy to Consumer Discretionary and Financials. Tech has been the constant.

Consumer Discretionary and Materials were the losers today, but the former to me was profit taking. I’ve been adding to SKX, SKS and LVS. I let stops hit on JNY and F today; the charts are a bit extended and I only want so many positions. (I consider profits my money and don’t want to give that back either). Sketchers, Saks and LV Sands are working.

Tech was solid today (up a quarter % point), but many of mine were stalling: SNDK, RVBD, DRIV all have been really working. FNSR and JDSU are volatile but working. I have 3/5 positions in each. After hitting the upper Bollinger Band on March 1, I took 4/5 off STX and it has been falling and then consolidating for a week. I am looking to get back in, when the buyers come. If we get a burst through SPX 1140, this should pop. It is sitting just below the 20sma. I bought back some CREE mid day after some recent weakness (around 14sma), it doesn’t pull back much.



BUCY, CLF, X and JOYG are our Material stocks. We have placeholders in EP, and TSO but they are pausing. We sold CMI with a nice profit recently to get back into JOYG. CLF is balking, but with met coal and the buzz in steel, it should recover, so I’m trying to hang in. But I won’t ride it down to support. Meanwhile in the Retirement accounts we have huge profits in these same stocks and have very loose stops, but stops are in place for 1/3 to 1/2 the position size in those to protect the profits. If they get hit, then I have some dinero to spend when we get the next correction, which always comes.

Added some YUM yesterday, not enough! It caught an upgrade overnight, popped and held the gap.

Our Financials are C and MA, both hot. We nibbled on GS and had RF and HIG but took profit stop on HIG near upper BB, after expansion from a tight volatility squeeze. HIG and LNC had great reports and we’ll watch to jump back in one of those. RF was weak today so we dropped it as we caught C just right on Monday. Ka ching!

Tomorrow’s direction: Dunno. I expect the fight at the line of scrimmage to continue until we pop, up or down. But we could struggle for a couple days, or have it resolved tomorrow. We stand ready with some CASH and stops in place. We’ll watch the Index Futures an tweet on them late and early. I noticed a great article by Mark Likos on using Futures to enter stock trades, highly recommended:

http://tradingviews.com/b/articles/archive/2010/03/01/the-importance-of-using-leading-index-futures-in-active-equity-trading.aspx

Here is the Trading Pro's response, very interesting:

"The best part about the market

3/9/2010 12:37 PM EST

The best part about the market is that when you are wrong, the market lets you know clearly that you are wrong. I haven't closed my short positions, but I have large ones covered with April at-the-money or slightly in-the-money calls. This way, my losses are limited from this point; however, I can still benefit from a pullback. The deeper the better, obviously.
Position: Long Early Entry; short Correctness"

My letter to a market pro on a paid ntaional web site:

"Always love you and Rev. Wonder if you could be late admitting you are wrong, or early with the shorts? You seem out of sync, but I have no expertise. I just read all viewpoints and try to stay out of the way of the pros and the machines. Could this be a wall of worry, low volume scenario where the shorts cover with buys stops when we close over SPX 1150 and the melt up comes? The market may be discountng an Obama HC defeat and new jobs coming in next 3 months...I've noticed money rotation to Retail, Financials and other Consumer Discretaionay that seems real this umpteenth time. Your comments in a post on this theory would be great."

If he answers, I will post....

LVS (and others) breaking out:

Especially on a weekly chart, it has been in an extended volatility squeeze now expanding to the upside. Looks like it could sustain this move far higher over time (weeks not days). many charts looks this way, this type of set up is where we're putting our new money.

Tuesday's Economic Calendar

7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:30 NABE Economic Policy Conference
1:00 PM 3-Yr Note Auction
5:00 PM ABC Consumer Confidence Index

03-08-10 Market Recap:

A late post as I wanted to dwell on the market. Yes, Consumer Discretionary led the market, especially Leisure and Durables. Huh?

Tha markets were essentially flat. Most unsusal, very very low voilume on a Monday. Nobody wanted to buy. We passed resistance last week but we traded like we were @ resistance.

We've had a number of days when money rotated to Consumer Discretionary stocks and Financials. It was always a phoney move. I think this one is real: LVS, gambling; IMAX, movies; SKS, high end retail; X , rolled steel for appliances and cars; MA & V, credit cards; HIG, insurance, RF, regional banks; YUM, fast food. These were some of the best today.

For the first time in months we rotated with the Mutual Funds managers today. There was real buying in these stocks. we're pricing in a recovery including the consumer, to me, at lesast 6 months early. Okay, I'm on board. But still holding material stocks BUCY, CLF, TSO, EP and AGU, and tech like SNDK, RVBD, FNSR, JDSU etc. But I have more stocks, smaller positions and more diversification than I've had in a long time. Only way to trade a dull, low volume market where the only real buying was in the rotational lagards. I even added to C! We'll see how it all shakes out.

Interesting money rotation, gotta get in sync:

Mutual Funds are buying consumer discretionary (retail, entertainment), financials, some tech. Good examples: RIMM, YUM, SAKS, X (steel for cars and appliances, here and China), IMAX, C, LVS, RGC. Don't miss the rotation and get in positon.

Nice reversal down in Materials, added a bit:

JOYG, X, but stopped CMI and cut back CLF.

Futures a tick higher, but Commodities rocking.

X, BUCY way up pre-market. Looking for fade to add.

03-08-10 Sector Spotlight, Tech:

Technology is too broad an area, the QQQQ or XLK just cover far too many stocks in disparate areas. Even so, we use the QQQQ as a starting point. The XLK is down 2.7% YTD, while the QQQQ is up 1.4%, a 4% difference. The QQQQ mimics the Nasdaq 100. It is just approaching its upper BB on the weekly chart, which is turning up. On the daily chart it is riding the upper BB coming out of a volatility squeeze. We like it for a lot more upside but prefer smaller stocks in the sector for a better ride. With lots of cash, pristine balance sheets and corporate preference for productivity increases thru tech without the expense and risk of taxation/health care issues with new employees from this administration, tech is the early cycle place to be outside of Industrials and Commodities.

03-08-10 Weekend recap and Trading Plan, special Sectors Analysis, Spotlight on Metals:

Indexes: The markets are going up. No news there. After an 8% to 10% correction in the Indexes, we’re back to square one with the start of the year. We expect the uptrend to continue for another 20 points on the SPX and then we may pause or consolidate. But SPX 1200 and 1250 beckon. We tested the 200 week moving average in January and corrected. Now we’re right back to it and poised to break through. Its when, not if. Might we fall back into a double dip recession? Maybe, but my money is on a recovery, despite the absurd Health Care entitlement plan proposal, Cap and Tax and the rest of the non-sense proposed by those who want to redistribute all wealth. If we see the Health care plan defeated, we zoom higher. That’s our catalyst for SPX 1250. Meanwhile we try to hit singles with our trades and be in position to participate in a broad, big rally when it finally comes.

So, our task is find those stock that have juice and have something to prove.

Check-out Mr. Topstep, by clicking this link:

From the Floor of the CME Friday.

Stopped out of 4/5 of CREE, all of AUY:

Just Don't Take Losses. Patience is required, but I also need a better entry on AUY. Meanwhile, a lot of money was mande on CREE...will hopefully buy back lower. Its consolidating and will hit its 10sma in a buck or so. I'll be a buyer...stalking. No hurry to jump back in. Plus its Friday, need some weekend CASH to sleep well with.

AUY: Finally started with 1/5 position...

..caught two downgrades this am, been beaten. Down 6% in two days. Still, price targets are 60% higher. @29sma "support" (not strong support). So, taking a shot with 1% stop.

Low volume, wall of worry rally:

Could snow ball into big rally as shorts cover and doubters capitulate and buy. Time to make money and ride the bull, no doubt. Not doing ANY selling unless stopped.

Tim Seymor on Fast Money said two nights ago his firm was "as long as we've ever been". Wow. That stuck with me; very smart guy with great feel for market. Opposite Guy Adummie.

Buying, not selling. CASH...

...gave us a chance to evaluate the money rotation in advance of the jobs numbers. Metals, financials, tech and retail of all things. Started JNY, RF. Added RVBD, SNDK, HIG and early on STX but it will come. Also added to AGU when it filled its gap.

Greece, Jobs:

Greece sold €5B ($6.8B) in 10-year bonds yesterday, and received orders for three times that amount. Though the results of the sale suggest investors believe Greece will be able to avoid a default on its debt repayment, Greece had to pay the highest interest rate for a 10-year bond since it joined the eurozone in 2001. Currency strategists warned that such high rates are unsustainable.

Friday's Economic Calendar
8:30 Nonfarm payrolls
3:00 PM Consumer Credit

Market Recap and Trading Plan:

Just 9 minutes before the Close: We rallied from the dip to SPX 1116.6 this am to 1123 @ the close. Nice, after essentially 3 down to sideways days. All the talk of the Employment numbers in am...I expect them to be bad, the market does too (explains the 3 sideways days), yet traders may still act surprised and sell off in the morning. Be ready. Raise some CASH now.

Market now closed: Now 26% cash. The buying late was from shorts covering and traders who had just stayed away since Monday. We'll see what the number is tomorrow. In the end it is a big nothing, but we might girate 20 SPX points and end up nowhere.

Big rotation today away from Energy and Materials to Financials and Consumer Discretionary. Faux move. Metals, AG and Oil will be back. Got my eye on AUY (Yamana Gold, miner, down 5% or so today). Added some nibbles to SNDK and STX which had beeen taken out back and beaten almost to death. Have not jumped in however.

MRVL reports tonight. Kept half position as it has been beaten down for 3 days. Still, always afraid to hold full position over earnings...traders can be brutal, look at what happened to CIEN. Rest well, we'll need it.

Stupid Greece:

Excuse for more volatility. If this gets pushed down further, I'll stand aside. Can't take an elevator down. On guard.

Trading too much, but hanging in:

I Don't Take Losses, but also don't want to miss on upside. The market has been weak for 3 days coming into Fridays employment numbers which will be bad. I believe it is baked in and we jiggle, but then break through SPX 1125 to strong upside.

SO -  I am taking stops but buying back when there is some buying in a stock. Hate it, but as much or more risk in being out of the market.

Materials and energy selling off , a lot of tech too:

Taking stops, they were tight. CASH works here until we get above SPX1125...and we're not close yet.