Wednesday, 28 November 2012

The "How On Earth" Factor.



How many of you were tempted to short or did actually short the market in the morning. It was as if the bottom was about to fall off. Exactly the stuff I wrote yesterday. Did you feel that you are going to miss out? If you did, you are not alone because I myself felt like that and that despite my own writing that such a thing is going to happen. So I just walked away from the trading desk for an hour.

Now all the talking heads, media of all kinds and of course ZH is attributing the rally to Mr. Boehner. But Mr. Speaker sure did not read my blog post of yesterday. Nor did I know that he would speak today or whatever he would say.  Someone has asked over email which chart / indicator predicted the sell off and subsequent rally. The answer is: there is no Technical Indicator which will tell you that there will be sell off tomorrow morning and bounce in the afternoon. It is much more complex than that and much more intuitive. At least it has helped some of you folks to stay out of harm’s way and I am glad for that.

So where do we go from here? My reading is that the bounce will continue tomorrow and tomorrow most likely would be a good time to start scaling in some short positions. My personal favourite is Crude. I am still debating about Silver. I am not sure if it will correct and how much. But Russell 2000 looks a good candidate and so does Facebook.  However please do your own due diligence and have proper stop loss in place for any trade you take. And please do remember, the market is not going to tank whatever ZH may say.

People who know the inner working of the Washington DC have started buying already. But they will want retail to sell out and drive the price down some more, so that they can buy cheap. I would suggest that you start preparing your buy list along with your Christmas present list. Consider this advice my Christmas gift! I am not saying that we buy now. I am saying that we should be ready so that when there is some fear in the market and things look bad, be ready to pick up the bargains.

Few days back I brought your attention to Coffee and identified JO as the vehicle of choice. Today JO gave the largest bullish wick in months from its long term support line. I will be scaling in JO on the long side of the trade with a tight stop loss.

My sabbatical will end in December and from next year I will be back to what I do for living. Crunch number. The blog posts will be irregular but we still have a month or so. Those of you who think that I can add value to your investment and trading, please email to be included in a select list. I will be sending personalized email to this group highlighting trading / investment opportunities every week. If you have been reading this blog for a while, you know that I will try to minimize risk and look for high probability trades.  Of course it will be a paid service and I am looking only a selected few. It will cost less than a daily cup of Starbucks' Cafe’ Mocha.

But those are plans for next year. Let us make some money with free advice this year and we will take from there. Thanks for sharing my thoughts and hopefully you will also share it with your friends. Stay frosty folks. 

9 comments:

  1. It was a very interesting day.

    My short NQs from the previous 2 days hit target nicely in the morning. I decided to add some more, who wouldn't? :) And of course got run over as many other day-traders. I've been playing this bounce mainly by shorting bonds, and let me tell you - they didn't bother even slightly about "rallying" stocks. Was quite mediocre performance there.

    Anyway, NQ, ES have closed just few points above yesterday's highs. What's the big deal?! This "rally" is such a joke anyway, especially taking into account gold, oil and bonds performance. Why the hell nobody talking about those reversals :)

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  2. Thanks for the post BB! I didn't follow your UNG trade but the coffee long trade you mentioned looks very interesting to me, I am still learning how to set up proper stops, do you set the stop loss level around $32.40 on JO as that's the 2008 Dec low and 2009 march low?

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    1. I think $32.40 should be OK stop loss level. Remember to scale in, may be 20-25 % in one week because this is going to be a long term one.

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  3. I didn't have time to post yesterday, that was a great cartoon, but I followed your advice and remained patient today. Oh what a relief it was.

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    1. Glad you stayed out of harms way. Our brain has been wired to short the market and we have to get that out of the head.

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  4. Today's action really changed many people's views, many blogs I read were so bearish last few days, after the market reversed this morning, they can't wait to change to the Bull's side, and now they are saying Santa rally coming and new high should be expected.

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    1. Now the market will slaughter the early bulls.

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  5. Can we email . I found your blogg a couple of days ago. Thanks suefurnell@yahoo.com

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