Wednesday, December 3, 2008

WED. DEC. 3- Where's The Manic Craziness?

On Monday, the S&P 500 fell almost 9%. The Dow and NASDAQ followed suit. Yet, there was no hysteria. No headlines on the nightly news. No CNBC specials. No stories about people jumping off of buildings. As recently as three months ago, a 9% market decline would have been treated as the story of the year in finance. But now? Ho-hum. Even weirder was the main reason given for the decline. Namely, the cadre of economists whom comprise the National Bureau of Economic Research – an organization which classifies business cycles- decided in their infinite wisdom that the U.S. economy has been in recession since December 2007. Really? We didn’t know that already? That’s what caused the Dow to fall 700 points? No. There were two reasons. First was a decline in the rate of Chinese growth according to a Chinese economic report- something which seems innocuous, but is not as it is the world’s fastest growing economy of the major world powers. Equally important was that we were coming off of the best week for the markets in 75 years. So, much ‘profit-taking’ was attributed. The take-away is this: an amazing statistic- the rate of intra-day volatility on the 50 day moving average for the S&P 500 is the highest in history: 3.8%. This means that the average daily range for the S&P 500 for the last 50 trading days has approached 4% per day! There is nothing to signal that the wild intra-day volatility will dwindle dramatically anytime soon. So, to clarify from Monday’s post, December is a bit more illiquid and calm, but it does not mean- as shown by yesterday’s wild gyrations that the volatility is going to decrease by a wide margin. Thus, combined with the increasing dearth of players as the month progresses, it will make day trading that much more delicate as the volatility continues without a lot of liquidity.

Overnight, stocks in Asia were up about 1%-2%, but stocks fell in Europe after Research In Motion (RIMM) warned at 10:30PM last night. Like nobody would see it at 10:30PM. Thus, futures are well lower here. Look for that 1% or so down open with more choppy illiquid trading to follow. The market will likely follow RIMM all day albeit not in the same manner in which GE was followed yesterday. There will likely be a weak rally at some point, but look for a narrower intra-day range with the market staying on the downside much of if not the entire session.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-

Good- The following stocks have good news and/or a strong technical pattern

MRVL- beat earnings estimates

MOS- after warning, closed near a high

IBM/AAPL – closed near highs

SLW- mentioned positively on “Fast Money” last night

SNDA_ closed near a high after posting great earnings Monday night

ETP- mentioned positively on “Mad Money”

MIR- closed near a high

PFG- up strongly and closed near a high

RAS- exploded on the last tick; will likely trade lower today, however

FCE/A- had short covering burst yesterday; if it opens unch or down, likely a buy thru 7 when/if it gets there

CEG- received rival takeover bid which could value company up to $52/share. Stock should be bought when/if it ticks above 26.50 and probably A-B-A2 all day

Bad-The following stocks have bad news and/or a weak technical pattern

OVTI- warned horribly for next quarter

RIMM- finished lower on a strong up day for the NASDAQ; likely to be weak anew today after warning badly, but from 6:30AM-7:15Am, stock gradually uptrended so don’t be stunned if this news is in the stock and it gets positive

GM, F, DAI- all asking for aid from government to fund operations for the duration of 2008

CLWRD- closed near a low post spin-off

BBBY- warned on its outlook

SWIR- closed near a low

FCX- warned and eliminated dividend

HE- issued shares at 23 in a share offering…should not trade below 23 thus if it opens above there, it is a short the first tick below 23







Good luck today.


At December 3, 2008 9:58 AM , Blogger ProTrading Network said...

The S&P s are just one index in the market , yet its the cleanest view of the whole market as a whole. Over the next couple days the S&Ps need to consolidate and hold the 817.00 8.13.00 level. Should they fail to hold there a retest back down to the 790.00 - 780.00 level.For the bulls on the 120 minute time frame we are developing a inverted head and shoulders pattern. A fulfillment of this pattern would be a break out on volume above 855.00. Three more days of inside trading which would see the market consolidate between 813.00-850.00 would be a bullish sign.Biege book at 2 o'clock today may move market. These thoughts are a culmination of all the different blogs, sites and technical analysis work I do every morning. I try to come in every day with out too many preconceptions and let the market tell me the story during the day. I find that taking a position before 10:00 am usually does not work. The first half hour gives a lot of information. It looks as if we are going to have a large gap down this morning. Waiting to see how far we trade back into the gap can tell us a lot. The odds are if we do not close the gap before noon , we will extend price in the direction of the gap. Today that means if the market does not get legs before noon we will head into the direction of the gap which today is down. Good luck , Regards Frank D

At December 3, 2008 12:03 PM , Blogger ProTrading Network said...

> _What It?d Take_
> _To Get Us Bullish_
>How would one know if the 7449 low recorded on November 21 is destined to
>become a major bottom? Already, a couple of our more technically astute
>colleagues have speculated as much, and one of them, Porter Stansberry, even
>thinks the low will come to mark one of the best buying opportunities of the
>last 30 years. Another, Peter Eliades, has sounded this spooky technical
A>note: The last time a market crash like Monday?s produced a positive
>McClellan Oscillator reading was on August 12, 1932 ? ?a month after what
>was perhaps the most important market bottom of the 20^th Century.? Peter
>says that although the jury is still out concerning the meaning of Monday?s
>+25 McClellan reading, he cannot rule out the possibility that history is
>about to repeat itself.
> [
>From a Hidden Pivot perspective, there is no evidence yet that an important
>turn is at hand. However, we can still offer a simple benchmark for
>determining when the Industrial Average would warrant our serious attention.
>The chart above shows how a thrust of just 329 points could turn us quite
>bullish overnight. Specifically, the Indoos would need to push past the
>three numbered tops without a correction lasting longer than a single day.
>The first of those peaks lies at 8331, and it doesn?t matters how long it
>takes the blue chip average to get there from current levels. But once the
>Dow has exceeded 8331, which you could view as a starting line, it must
>sprint past th
e remaining two peaks without pausing for breath. Any less
>would imply the rally is just a garden-variety bear squeeze.
>Information and commentary contained herein comes from sources believed to
>be reliable, but this cannot be guaranteed. Past performance should not be
>construed as an indicator of future results, so let the buyer beware.
>_Rick's Picks_ does not provide investment advice to individuals, nor act as
>an investment advisor, nor individually advocate the purchase or sale of any
>security or investment. From time to time, its editor may hold positions in
>issues referred to in this service, and he may alter or augment them at any
>time. Investments recommended herein should be made only after consulting
>with your investment advisor, and only after reviewing the prospectus or
>financial statements of the company. _Rick's Picks_ reserves the right to
>use e-mail endorsements and/or profit claims from its subscribers for
>marketing purposes. All names will be kept anonymous and only subscribers?
>initials will be used unless express written permission has been granted to
>the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved.
>Recent Commentary
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At December 3, 2008 12:24 PM , Blogger ProTrading Network said...


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