Friday, September 2, 2011

Hold confirmed. 100% cash.

Quick update: I'm back in line with my system, holding nothing but cash right now. On Friday, I nixed the idea of grabbing some TNA for a day trade when prices started to sink in the afternoon. And since the pop I was looking for in the afternoon never materialized I wasn't interested in TZA at the close, either.

For Tuesday, another down day will likely result in a buy signal, while a bounce, dead cat or otherwise, will almost assuredly produce a short signal. I have no clue which way it will go, although I'm hoping for the big bounce scenario so we can purchase TZA at a discount. I'm still liking the chart I posted Aug 31 and I think 1140-1150 is a given after the beating the market took Friday. I suspect 1100 is soon to follow. Anyway, here's to my system guiding us through these volatile times. I hope you are all enjoying the extended weekend and we'll see ya back here Tuesday afternoon.


  1. FTSE/DAX looking pretty bad. I wonder where are markets are going to go tomorrow and what your system will say. Others (you know who) are saying short, short, short...

    If we gap down tomorrow, would have been nice to be in TZA, but it has been a pretty relaxing week-end knowing I wasn't in the market; long OR short.

    Good luck everyone !!

  2. Also curious...

    When was the last time your system had you in cash this long?

    Thanks !!

  3. 10 trading days in cash once. A couple times it was 5 days.

    ES is down 32 which is good and bad. Good we're not long, bad we're not short. Oh well, like u said nice not thinking about the market over the long weekend.

    Prepare to go long soon. Prob not Tuesday but perhaps weds.

  4. Maybe, but I might short until then...

    There are a lot of people saying that the TA and fundamentals are all saying ~1000 on this leg down. I may try to short on the way down, or switch to long if your system reverses.

    Any ideas why your system didn't give a short signal?

  5. What is ES and what is TA? Please let me know.


  6. Nitin, ES is short for the E-mini S&P 500 futures contract. I don't trade futures but the ES is the best way to see what our market is doing while it's "closed". TA = technical analysis

    RMI, I agree 1000 is a distinct possibility, but I doubt it goes straight down. It could, of course, but odds are there will be big swings in both directions on the way there.

    I didn't get a short signal for a couple reasons. First, dumb money sentiment was too bearish at the time of the signal, which is contrarian bullish. Second and more importantly, my system still thinks we are healthy which in general makes it more difficult for short signals to be generated.

    If we had never flipped back to healthy mode in mid-Aug, we would've gotten a short signal on 8/29 when TNA was at 48.55 and we'd still be short!

    In hindsight the mode should've never flipped back to healthy. The old way I determined market health would've kept us unhealthy. :-/ Altering a system is a double edged sword. You take the good with the bad.

  7. If the SPX cannot break 1102 before you get a buy signal, it should be quite bullish for the intermediate term. If it breaks 1102 on volume but can't stay down, also bullish though not quite so much. The divergent buy signals will be legion in a context where all the noise is bearish. 1000 seems a lesser probability outcome, though low probability events must occur from time to time.

  8. 1102 SPX seems to me to be a reach right now. We are sufficiently far from oversold levels that a reversal might occur somewhat before then. Support at 1120 looks quite strong.

  9. Any thought we might have a large swing in the market today to possibly take advantage of a TNA play to the long side or buying TZA later at a better price (up almost 9% this morning)???

  10. Grabbed a small slice of TZA at 50 because I think we are going down and will close down much further. I saw the consolidation just before 10am with the ISM numbers coming out and once I saw the market heading down again, I put in a market order... would have liked 49.75 or even 49.50, but 50 is fine since it's currently at 51.90 and going up :D

  11. oops, back down to 50... lets see what happens :D

  12. Sorry - been away all morning. I'm sticking to my Aug 31 chart. Looking for a bounce up to 118.50. If the market collapses this afternoon, I will probably grab some TNA at the close with the expectation of a bounce tomorrow to at least fill the big gap. Then I might short.

  13. After the big drops we've seen the last three days, I believe there is more risk than reward to taking on a market short position like TZA right now. To be clear, I'm refering to holding periods of a day or longer. I don't do day trading.

    Big drops like we had right out the gate this morning are always vulnerable to retracement and that's just what's happening now.

  14. But why Michele, the economic news out there is horrible...
    Who the heck is buying to cause the retracement... sick :X

  15. "the economic news out there is horrible... "

    Overall yes. This morning however, the ISM number came out much BTE. With the VIX pushing 40, all it takes is one piece of news like that to send the market charging off in a different direction.

    Oh, ans sorry about deleting your comment the other day - I got two notifications and thought I was only removing the duplicate. Apparently, it doesn't work that way.

  16. No biggie on the comment, probably not important :D