Thursday 8 November 2012

Wall St.'s Hissy Fit.

Are We Closer To The Cliff?

Is it a repeat of 1987?

I have problem believing and following Analogs but I seriously do not like the market price action. In any case I am looking for a market correction of 15%-20% and my target date to short was around Mid-November. But what if the Christmas has really come early?  I will see the price action overnight and take a call tomorrow about when to go short. My cycles are up for few more days but the market price action does not support that and when the short term cycle tops in few days, maybe we will see the waterfall we are waiting for.

Today both VIX and Indices were down. May be we will see bit of bounce tomorrow. Today US$ was up marginally while gold silver and crude was up substantially. Nat.Gas is moving in a range and its cycle is close to a bottom. I have started scaling in Nat.Gas and I expect higher prices going forward. I think as of now it is a safer bet.

By the way, does anyone of you remember my call for Apple at $500? At that time it sounded ridiculous. But now it seems Apple may go down below $500. And Galaxy S3 is the most popular Smartphone in the world.  Some are calling for a bounce and maybe we will get a bounce but it is too early for bottom fishing. Like trying to catch a falling knife. I would stay away from Apple till we have a definitive bottom which we do not have today.  I just do not understand who those folks are selling Apple at $ 550 when they did not sell it at $ 700.

Coming back to market, gold and silver are showing some strength and although I do not think we will see the bounce from here, gold and gold miners may be good for a short trade. The strength in gold is another reason I have difficulty in accepting that there is panic in the market.

Apart from Natural Gas, there is another trade of the decade which I want to draw your attention. That is 3D printers and 3D printing technology. In the next 10 years, this technology will change the business world like PC and internet did 10-15 years back. Two stocks, SSYS and DDD are up even in this down market and may be something we should keep an eye on to add to the portfolio by the end of the year.

Today reader PM Hana sent a huge donation and my special thanks to him. My sincere thanks to all of you for donating to the blog. I cannot thank you enough for all your help and support.

Thanks for sharing my thoughts and reading the blog. Trade safe guys.


  1. I read your post yesterday and wrote nice long reply, but chrome eat it.

    I wanted to say that ambiguity and uncertainty that was observed in the market few last days (except today) was really an environment where money made. Very few people I follow through different sources believed what market was telling and pulled the trigger. When it's too obvious - it means you're late to the party (not to this one though).

    I think some names (like gold) were up because they just din't have enough time (and money) to whack it. I mean there were SO many opportunities to short that couple commodities could escape the massacre (although it's not real massacre yet, we shall see one later).

    Also, Aussie and kiwi are doomed, I think. You mentioned yesterday that aud is not confirming. Well, it is now :)

    I got stopped out of Aussie earlier this week, but shorted it again. This time with kiwi - both sackers! It looked to me like the second was going to take down the first one :)
    There was some stupid 'economic' number out of new zeland yesteeday. Deep ITM so far on kiwi.

    Btw, anybody was in apple casino yesterday-today? :)
    cheap 540 puts were available for .5 and they are 15 bucks now! Holly cow, I missed that but bought some december otm puts on amazon (and some other names).

  2. Yes, sounded pretty unlikely - but it happend and it cut my account in half. May I ask what particular aspect of the chart you used to foresee that such a thing was in the cards? Would appreciate it - thanks.

    1. I am sorry to hear that. If you hold the shares and have not sold it yet, may be you should consider holding it till April-may 2013. I don't know what is your entry but you will be able to recover the losses. So don't panic yet.
      As you know I am a cycle guy not a chart guy. So Unfortunately I cannot show you one particular chart. Like I am telling you about April/May of 2013 and there is no chart for that.

    2. BB,have you considered the possibility that your expected cycles are inverting? Now it seems more likely that the mid November top will actually become a bottom and then the market will rally till the end of the year or January next year and possibly even have a new high above 1475 SPX(like the March-May 2011 period). Only then, the expected 15-20% correction will materialize and the market will drop into April-May 2013. Just an option to consider.

    3. Yes, it is quite possible. The Forexes are not aligning with the indices and the top can become bottom sometimes. Thats why I wait till I am sure. There is no fear of missing out and lots of other opportunities out there.

  3. I commented back to you several weeks ago about my weekly cycle set up topping out about beginning of October with sell off to middle of December. I have decided in this market action of the past couple of years that if you wait for the obvious you are too late. I started scaling into SDS at the beginning of October per my plan and it paid off, unfortunately I only had 35% short on election day and sold at the 300 point selloff and am waiting for a bounce to short again which may have been just too cute to work. The way I see it we were at the top of a range and had I had no choice but to start getting short. Cycle brackets on weekly spy and monthly spy do not bode well for equities IMO. I have learned that I have to scale into positions in support zones or resistance zones. If I don't over commit I never get too uncomfortable because eventually the market always comes to where you need it to go. The market has been going up and down for years without really going anywhere. I rarely buy individual stocks anymore, for me it is just too risky for me. Of course all of this is my opinion, good luck to all.