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Market Recap: Somewhat Predictable, Low Came Where I Said Was Likely

I said near the open that if we were going to contain the selling, it is likely to come near the short term sma lines, which were about 868 at the time. By the time it got there, the line was about 870…. it reversed off that line with a low of 869.88. Once the shorts couldn’t reverse it, it made new high after new high.Well, until they cleared Thursday’s high. Then it became a “close day” and I knew trouble was possible.

I then said “if we clear yesterday’s high they better keep it going or the shorts will come in” It cleared it, and made a Doj at the high that appeared vulnerable. I then said “it looks like we need to clear 906 here to get the ball rolling to the downside”. It cleared and down she went into the close. I was hoping for a firm rejection of a high and if we got one, I figured the shorts would come in big. While a doji isnt as firm as I prefer, it was close enough. Once that doji low cleared, the shorts had the number to be short - 916.88 and they attacked it and it fell 40 points, 400 on the Dow, in the last 45 mins.

The longs should not have cleared yesterday’s high as once that happened the market HAD to break big into the close. Well, at least it was very likely. They forced the issue - big mistake. I mentioned several times “ok, yesterday’s high has cleared, expect big volatility into the close now”. And we certainly got it. If the market was open another 10 minutes the day’s low would likely have cleared. It was most likely saved by the clock.

This is why I mention “close days” almost daily. Once a day becomes a close day, expect huge volatility into the close and you have to be very, very careful.

Morning Call: Unclear, Risk Is High

Odd opening as it attempted to hold the early gap down, basically filled the gap, and down it goes. No idea where the low may come in today, but I personally have zero interest in being long this, as i mentioned last night. The risk is just too high, as i see things. This may take days to sort out because of the huge nonsensical move, IMO, of yesterday. The move dramatically increased the risk and I just have no interest taking the risk. But that’s me, I avoid as much risk as possible. If it goes straight up, then it does. But I won’t be on the ship.

My guess is that any attempt at reversing the selling will come in days ahead, but not likely today. But what do I know, up 900 off the low on near depression news. Uh ok.

My guess is if they are going to contain the selling today, it may come above the short term moving averages which are currently near 868 or so. I still have no interest in it, even if it does hold that as dropping all the way back to the low seen in the next few days is not impossible. In fact, it may even be likely as the move yesterday was short covering that completely got out of hand near the close, IMO. But again, I just do not know and the risk is very high, as i see things.

Market Recap: Close Day Craziness

Well, I said one of two things were possible if the SP lows cleared - we were either going straight down and close at the low of the day or reverse and go straight up. Those were the only two possibilities. Why? Because it was a close day off a new low on the SP. I was hoping we would stay negative today and then be long above the Dow low tomorrow, which I have said should not clear or at the very least HAD to hold. Did they make it that easy? Uh no.I saw the low at 818 and said “this is a pretty strong rejection of the low”. I just wasn’t sure if we could close positive, which we had to do as there was still over 2 hours left in the day. Obviously we did.

This is why I continue to mention close days. They are extreme risk/reward days. You either win big or lose big, there is nothing in between. Today was even a more critical close day because the SP low was taken out. This is what led to the massive rise into the close. Close days that make new lows or highs are the most extreme. Once traders saw that today was going to close positive, all shorts covered and we went straight up.

This is what i was hoping for yesterday and why I went long. I was hoping for a close day homerun. I picked the wrong day. Anyhow, know the close day risks and possible reward. Those are the critical days when huge moves are made.  Close days tend to make their high or low in the last 5 minutes of trading. That is why I said, “it looks like the only thing to stop this higher is the clock”. Another 15 minutes and we may have been up 800 today as shorts scramble to cover and nothing can stop it.

We now have in place a very clear SP low. I was extremely critical of the previous SP low, and said it was complete nonsense. I also said the Dow low was important, the SP low was not. If we get lucky, we will retest this low in coming days. Chasing this higher is exceptionally risky as we have exactly one low to hold - today’s low. Therefore, it could drop 800 points. Personally, I am going to sit and wait as long as it takes to be long this as close to todays low as possible. I just don’t know where the likely low will be. It is also “possible” we could go straight up here, I am not sure. My guess is if they do that, they have just increased the risk to the downside dramatically. Just going to have to wait this out and see where the place to be long is, with as little downside as possible.

Another thing that led to trading positive was oil. I was convinced that the low of the market would likely be seen once oil makes a firm low. Today was the day. It spiked to a 22 month low at $56.35 and reversed. I saw the action in oil and should have known to be long. This is because it would likely lift all of the energy stocks, and therefore, the market.

The other clue should have been AAPL. The low of $85 was one of the best lows in the market. It hit a low of $86.02 today. The trade there was obviously long above $85.00. I had thought before that the low of the SP might come when $85.00 on AAPL was challenged, but forgot all about that until looking at charts tonight.

Morning Call: Uncertainty

I have not seen a firm low this morning as of yet. We are currently at 849 on the SP. Today might be tricky as it may try and hold the SP low without warning. Personally I am very skeptical the SP low can hold as i have long mentioned. We will see.

There are likely to be buyers above the SP low just to see if it holds here. So today is going to be difficult. We could break either way. If the SP low clears, then we either are going to reverse and go positive or close at the low of the day.

Market View: Not Sure, Skeptical At Best

I have been warning for a week that we had exactly zero lows on the SP all the way to the low and that once the trend turns, there is nothing to stop the fall. I also said that 900 was “buying on a big number” and was simply not believable. Both of those views have been proven correct.

However, I am not sure beyond this. Many people believe in the SP low put in. I do not and have said so since it was put in. The Dow low is important, the SP low is not, IMO. On one hand the Dow low should try and hold. on the other I believe we need a new low on the SP. The problem is that if the SP low clears many people will get very nervous. In addition, the monthly charts  -  and history - strongly suggest the lows have not been seen. I have also said this day after day. Looking back at history, it would be very unusual for the ultimate low to be made when the monthly chart strongly suggests it is not the low.

Anything is always possible, as I like to say. But the markets tend to follow history. It becomes a self fulfilling prophecy. For instance, if we clear the lows put in, in November, is it likely that we have seen the low if we once again reverse? No. November opened at 968 and we would need to close out November above that to maybe have the low in place.  That would seem very unlikely if we take out the lows here, but possible. i said that I believe that the low will be put in, in January at the earliest, and I will stick to that view, regardless of bounces. I also said i believe the November high was already seen, and I will stick to that view also.

As I mention about 100 times a week, managing risk is essential in this market. If you are wrong, in whatever reasoning you have, then exit. Let others guess. Your trade may become a 5 year investment in this market. Like today, i thought 865 would hold and we “might” rally into the close. Did it hold? No. Did I exit once 865 cleared? Yes. I have no interest in guessing on this. I was wrong, I hit my head against the wall - so to speak - took the loss, and moved on. I took a 70 cent loss on SSO on that trade and live for another day. Could it have reversed again and shot up to positive? Yes. Was it likely? No. Time was running out on the day. Could we gap higher tomorrow and make my move appear stupid? Yes. Is it likely? No.

Trading the market is educated guessing.  People also have a large variety of trading styles in what they believe. That is why there are always buyers and always sellers. People disagree. Someone is right - and someone is wrong. That is the market. Every single trade someone is wrong. Either certain lows will hold - or they won’t. Being long 865 on an intraday chart appeared to be the correct call. The problem was that it was a risky trade, to say the least. I knew we had to close positive on the day, or at least above 877. I knew the risk, I knew what had to happen, and decided to take it. It obviously proved to be the wrong call.

At any rate, enough crying about my stupidity today. Let’s look at the future. Will the SP lows hold or not? I am not sure - now that helps a LOT, lol. I just do not like the SP low, it is as simple as that and will not change my view on it,  but others do.  Who is right and who is wrong is the question. Considering I am just some dude that likes to watch the market, well unless I am wrong, then I hate the market - ha, perhaps they are right. Then again, every single person on TV was saying 1200 was the low on the SP. What did I say? No way, they are wrong. That’s why we have a two sided market.

Let me close this post with this. Look at the SP. Does it appear that the low is more of a double bottom than a clear rejection of price? I say yes.The October 28th low was just above the SP low, which was just below the lows of the previous two days. This is simply not believable as I see things. But again, I differ than most anyone as I do not believe in double bottoms, on any level. Others do. All that double bottoms tell me is that the market is trying to clear that price, but cannot - for now. Others see them as”support” and a successful retest of a low. I strongly beg to differ. Lows that need to be retested means they aren’t the lows. If they were the lows there would be no reason to retest them.

But again, my perspective is far different than most on this issue. My only suggestion in this market is this. Whatever you believe, and whatever method you use for being correct - or not - use it. If you are wrong, and you know it, hoping it will “come back” is dangerous at best. This is exactly why almost all day traders went poof after the bubble. They were confident it would come back. It never did. Know when you are right, and know when you are wrong. You will NOT be right all the time, nor will anyone. Be cautious, use stops, manage risk and ignore TV and analyst hype.

Market Recap: Guess Wrong On A Close Day - You Get Torched

Well, I guessed wrong - twice -  today and got the torch handed to me. This is what happens on close days - when you are wrong. The market will either reverse and go positive or be bombarded with late selling. We got the late selling today. If I had just listened to myself when I said at the open ” the odds favor a reversal tomorrow, not today, as these trends tend to last 3 days.” Duh. I get the dunce hat award for today, obviously. At least I am posting for all to see that i was wrong - and lost. I knew today was risky and took a shot. But was i long at 1000 on the SP? No way. I was sitting and waiting and waiting as i have been advocating. Not long enough, obviously. Today was the first day I took a swing long since the the SP made it’s short covering rally on Oct. 28th which I considered total nonsense. I was wrong.

At any rate, i was going for the possible homerun and knew it was either going to go positive or likely close at or near the low of the day. It was going to be one or the other and i knew it going in. We got the other. At least I said early this morning that if “the early low cannot hold, we are going down”.  It cleared and down it goes.

My personal guess is that the SP low is not important here. I have said the low on the SP was total nonsense since it happened. The only low i consider important here is the Dow low of 7773. I believe that has to hold on further weakness. If it cannot, we have the 2002 lows and that is all. Personally, I want a new low on the SP above the Dow low and that “may” contain the selling.

However, the news is getting uglier by the day. There has not even been one piece of good news anywhere to be found.  Best Buy came out this morning and said it was the worst it has ever seen. That’s probably not a good thing.

Tomorrow should get very interesting. Any bounce I still consider nonsense. We need a very strong rejection of a low, IMO, to contain the selling and give the longs even a glimmer of hope here. It is possible that we may see a bounce above these SP lows, I am not sure. However, i would be very, very skeptical of it. I also mentioned last night to watch the low on Goldman (GS). If we were to contain selling today, that low should hold. It didn’t.

Now if I would just take my own advice and not try and guess at a close day rally, I might actually have enough for Christmas to buy a bigger piece of coal. Anyhow, i took a big swing today on the chance of a late reversal. Didn’t happen and I knew what would happen if I was wrong. That’s the way it goes. At least I exited when saw that I was wrong. I may make dumb trades, but I am not totally stupid. I would rather take a loss and move on than be an “investor” in this market.

Hey, at least I was right on Electronic Arts (ERTS). I said it was a strong sell. Down almost another 12% today. I am correct once in a while. Never, ever buy gap downs that are sold, IMO.

In addition, I have repeatedly warned being long up near 1000 on the SP and have said patience, patience. I am guessing that many others were screaming their bull horns - I was not. What do I know, I am just some amateur typing my thoughts “out of his garage” for fun and they are the professionals - i guess. To be fair to all of the talk shows, this is easily the most difficult and risky market we have seen in over 10 years. It is virtually impossible to be correct for more than a few days.

The reason i do this site is for fun, and am not a professional on any level, as i have mentioned many times, and so i can go back and look at my thoughts and see where i messed up.While I was wrong today that 865 “appeared” to be a good low, i knew the risk and what had to happen today. It was either going to hold and we would likely see positive or it wasn’t. It was as simple as that. Sorry, I beat myself up when I am wrong, plus it cost me money, lol. As Cramer likes to say “where is that cheap scotch”.

Market Update: Early Reversal Failed (see comments)

Well, I posted that they tried to reverse it early but I also said “this smells a bit fake”. It seemed premeditated to open it lower and reverse it. I said to be either long above 8481 or avoid and that 8580 needed to clear to “confirm” the low and go positive. it backed off just under that, then cleared the early low. I said once that low cleared “we are going down”. It spiked another 100 to the downside.The early low was a direct hit on the daily trend. Once that cleared and the early reversal attempt failed, I was very confident we were in trouble right then and there.

I am not sure how low we will go today. The lows put in on the financials is just below. Whether that is critical here, i am not sure, but it certainly will raise eyebrows, at the least. There is a lot of support in this 8400 range. But I am not a fan of support trading. We either make a firm low and reverse, or I consider it nothing more than a support bounce.

Keep in mind this is a close day. I did mention that last night that many of these trends go three days and a reversal attempt was far more likely tomorrow, not today. However, if we can get a firm low today, positive is not impossible, but better be careful as i do not like the fact that the reversal attempt could not hold and the trend broke. This doesn’t look good.

11:48 Update: We have what appears to be a firm low at 865 on the SP. I believe this low has to hold. If it does hold and that is the low, closing positive appears possible. If it does not hold, especially near the close, watch out as complete panic is not impossible.

Close Update: Close days are VERY risky. You either win big or get crushed. That is why I always mention “close days”. We had to close positive today. Either the lows were going to hold and we would make a huge rush to positive into the close or we would likely close at or near the low. The safer trade, IMO, is to wait for close days to confirm a low, then look to be long above that low. Anyhow, if you attempt to trade a close day, know that one or the other is very likely. So it is important to understand that.

Open Update: Lower Open Reversed As I Suspected (see update)

It is still a little early as we haven’t been open for 30 minutes, but this low HAS to hold. The Dow low was 8481. We should see positive today at some point, IMO. The trade is long above this low, in my humble opinion. This feels a bit orchestrated however, but it is what it is.

10:30 Update: The low was never confirmed and taken out. We HAVE to have a firm low to be long this. This could get ugly today, I am not sure, but this attempt at reversing the selling near the open failed. This is a close day and we HAVE to close positive or any strength is meaningless. I also mentioned in comments that if this low cleared the market was likely in trouble.

Market Recap: Rally Fails

Today was a typical gap day down until late afternoon. We had zero decent lows, a trend break, and I mentioned that if 896 cleared some shorts would cover. Cover they did as it shot up all the way to 905. I then said “if 905 clears, we should see 917″. 905 cleared and it made a high of 917.15 before reversing.

The attempt at a late rally did not surprise me, at all as it was a close day. What I did not like, on any level, was the lack of a low. The move was entirely based on a trend break and short covering that got out of hand. I still believe we have to clear 884 and reverse if we are too make a low to attempt to take out 1044. We STILL have no decent lows above the low on the SP - zero. This thing is a complete house of cards.

If you notice all of the volatility came in the last 2 hours. Before that it barely moved. It was a “close day”, and everyone was waiting to see if it would reverse. The key to understanding today was once 905 cleared, we would likely see 917 or higher. Point being, just because a gap is filled does not mean it will rally from there. It means it could. There were two problems - it strongly rejected 917 and we had no firm low - the move was not supported by anything.

I view all moves above 884 as nonsense and non supported. However, it is possible the market will continue to trade on trend lines here. I do not like trend lines, on any level. They are the same as moving averages - temporary. We will see.

The market appears to be at a critical stage in the next few days. We are either going to break to the upside or it is going to challenge the lows. Considering we have no rejection of any low, of any kind, my personal guess is a breakdown. But I am not sure and my guess is the traders are not sure also.

We are near the low put in on the financials, so there should be an attempt to hold this area. This is possibly why the downside was limited today. Traders are most likely watching the low put in on financials and we are very close. In addition, Goldman made a reversal attempt today. If we are going to move higher here, the GS low has to hold I believe, so keep an eye on it. That should be the “tell” on where we are going near term. If this GS low is taken out, then we will likely take out the lows put in on financials and the market is likely in trouble.

Therefore, if you think we are going up here, then the trade should be long GS right here above 66.68. Personally I am very skeptical of the market and even more skeptical of the SP low put in and I do not believe the SP low will hold long term. What I would like to see to be long this train wreck is another gap down tomorrow and then have the gap bought and make this simple for a change.

Market Recap: Half Right

We made exactly zero firm lows today. I mentioned that we might see strength on a trend break and if 8654 cleared on the Dow, shorts should cover. They did. It spiked to 8864 before reversing. I then said” if we clear 905 on the SP we should see 917″. We did. I then said “896 HAS to hold to take out 917″. It didn’t, and we closed weak. I dislike “close days” in a huge way as short covering can dictate the action and often will. It tried today, but failed.

I still see zero lows of importance above the ultimate lows seen These moves have been based on moving averages and trend breaks, nothing more. I personally consider both to be complete nonsense and guessing. If you want to guess at this market, good luck with that. The World Series of Poker ended last night and you should have entered. Not my thing but fun.

At any rate, if they want to make this CLEAR, they will open tomorrow below 884 and that low bought. If that happens, the trade is long. If they open this flat to higher, I am once again very, very  skeptical.

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