Market view and possible direction

[clarkrl2]

Whether using Fibonacci levels is a smart way to enter new short positions in a market that appears to be downtrending is debatable. However it gives me entry points and I can use recent market tops as exit points if the up trend continues. Also I can exit part of my position as the market nears the recent bottom. So I could buy to cover at SPY 135 for 1/2 my position and 137 for the remaining half. If the downtrend continues I can buy to cover at 112 for 1/2 my position and hold the remaining 1/2 until the market is too oversold. I just don't like to put on short positions without an entry and exit strategy in place.

Edit The first 1/3 filled at the 119 level today.

[ModE98]

Bad today ... my 12 mo. DJI chart showing 200 and 50 DMAs approaching a "death cross" so hope that it does not get much worse in the next couple of days or next week. We sure need some good news for a change.

[clarkrl2]

Right now I'm more worried about further losses than I am about not getting a good price. I sold MHLD (Maiden Holdings - Insurance). Closed a bull put spread on MSFT (Microsoft - Application Software) for a very tiny profit. Opened a bear put spread on SPY using 115 and 105 strikes with late Sept expiration. I have open orders to close a covered call position in SAFM (Sanderson Farms - Poltry) for a small loss. I have an open order to close a bull call spread on Apple for a small profit.
We may see a rally later today or tomorrow but I'm really worried about another 10% or so off the S&P 500 before another major rally. I rather err on the side of caution than try to stand tall and get knocked down. This morning's news was really bad.

[clarkrl2]

The open orders to close the MSFT and APPL spreads filled on Aug 18 and 23 respectively. The order to sell SAFM filled today although I had to lower my ask price. Barron's had come out with a negative article on SAFM this weekend. I dropped my ask from $42.5 to $41.

After the APPL news today I may have gotten lucky on that trade although the stock may completely recover by the OCT expiration date. I think for the next day or two this will have a negative impact of the $SPX (S&P 500 index on stockcharts or use $INX on MSN). If so it will also have negative impact on QQQ (etf which tracks the Nasdaq 100).

I think if there is a negative reaction to the AAPL news tomorrow SPY may fall to as low as 102 to 104 in the next week or two. One never knows but on the point and figure chart there is some resistence in that range.

[ModE98]

This darn market looks like it could become more bearish, unless something begins to pick up in the U.S. and European economies. There is not a lot of good news to expect given our politics and the state of many countries finances in the ECU. China is slowing too lately. Second shoe may fall at any time. Sold out my position in WFC for modest profit this morning during the early pop.

[ModE98]

Now the market has acted better the last few days. Still have a gut feeling we are far from ouu of the woods yet. It has all become a conundrum, and any guess is as good as another.

[clarkrl2]

The point and figure charts for SPY, QQQ, and DIA are all on the verge of turning bullish. stockcharts.com/def/servlet/SC.pnf?c=SPY,P&listNum=

If this happens I will start closing my short positions and buying stocks I like. The economic data doesn't look very good but I like to follow the point and figure charts for the etfs mentioned above.

[ModE98]

Clarkr, sure hope the P&F charts stay that way. Would guess the market, if it is going to go up, will have to climb the "wall of worry". The economic scene for U.S. & Europe certainly is not looking bullish to me, and now we have the aftermath of "Irene" to overcome. Egad, a few rays of sunshine would perhaps be a sign of improving conditions. We do not need a retake of 2008.

[clarkrl2]

The point and figure charts for SPY, QQQ, and DIA all turned bullish today. The nearest support on the P&F chart for SPY is about 114. For QQQ support is at 50. The support for DIA is at 108.

[ModE98]

This was a sub heading today...."Greece may not be able to keep the lights on much longer. The financially strapped nation is talking to European creditors today, hoping for another financial lifeline." What? Throw more money in the fire? Believe the ECU is teetering on the edge... with Italy, Spain, Ireland, and a few others in the pot.
Oh well, guess we can ignaore it all at our own risk. Anyone else worried? Watch the rear door, prepare for a quick exit from any catastrophy. Am I now becoming too much of a worry wart? Perhaps pure mayhem is trying to come and spoil our pipedreams of recovery and coming good times.
money.cnn.com/2011/09/19/news/international/greek_default/index.htm?iid=HP_LN

[ModE98]

Suppose the market may slog along, but here is an indicatiom that all is a mess in the ECU....
www.msnbc.msn.com/id/44587174
Next shoe to fall to add to the flames? So will this worry keep a damper on any rally?

[ModE98]

This may bode a bit of further reason for a weak market again next week....
U.S. Treasury Secretary Tim Geithner warned Saturday that debt and the banking crisis in Europe represents "the most serious risk now confronting the world economy."
Investors may be quite cautious, at least to start the week. So maybe the shorts will have another reason to smile.
Since the market often has a mind of its own and ignores logic, we will see what happens Monday. Good luck!

[ModE98]

Good grief, what a day.... saved in the afternoon.... but will the green last?
Who was it that said "if things so not get much better there could be rioting on the streets in America" (it was posted by someone last month). Folks are getting frustrated and blaming everything on Corporate America now. Perhaps we are just a step away from some pockets of nasty unrest?
Market trend direction looks like a bear has arrived on the scene..

[clarkrl2]

The point and figure charts for SPY, DIA, and QQQ turned bearish again. stockcharts.com/def/servlet/SC.pnf?c=SPY,P&listNum=

[safeharbor37]

Well, I'm back and know what happened during my absence - Nothing. I still have that feeling that we're due a low before the market moves up significantly, but currently there's no move evident, only continued volatility. Good for the market players but too iffy for investors, particularly value investors.
So, I'll sit back and see what happens; if any trends become evident, and/or if I receive any revelations. It seems that investors, institutional and otherwise, don't have enough conviction at this time to commit to more than short term plays. So I don't suppose I do either.

[ModE98]

When there is no clear trend to be your friend, it is time to bide one's time. Only fools rush in where angels fear to tread.

[rovo]

Sorry to go against the trend on this thread but I see the SPX breaking out upward this week and the Qs setting new 52 week highs. DJIA is not on my radar.

[safeharbor37]

The correction I predicted hasn't occurred and time is running out! I really don't think the "bottom" from 8/8 to 10/10 really reflected the reality of the market. I think there is something coming we haven't seen. Part of it seems to be that there isn't much else to do with your money at this time. Gold is looking iffy and is probably overbought, but tends to be a counter cyclical to stocks rather than a real value at current prices.
Stock valuations in terms of P/E look good but will E hold up? May be that we're in a "Bear Rally." I've been impatient in the past, but do not intend to be so again [so soon], but may have missed a buying [and selling] opportunity. It would be nice to be a trader and guess right.
Anyway, looks like the higher market at year's end is on schedule, but I wouldn't be surprised if there's a "correction" immediately following. I'm still sitting on it. May regret it later, but, then again, might regret it if I don't.
I just don't think the economy is set to support a bull market at this time.

[Value Buy]

Greek debt took a 50% haircut today, and Europe is off to the races, propelling the US markets upward and onward.
Looks like a short squeeze is going to occur at least for this morning....remains to be seen whether the afternoon will fade.

[ModE98]

Hmmm.....so far, so good. Think kadee will advance nicely today.

[safeharbor37]

This could be it. You think? Looks like the market is continuing to fall and the Euro appears shaky. When Germany can't sell its bonds, what does that say about the rest of Europe?
I suspect that the expectation that the US can just get through the recent recession and proceed as usual is faulty and people are beginning to get the idea. The question is, I suspect, where's the bottom and where do we go from here? It would be nice to believe that this will just be a "correction" and a buying opportunity and I think that is a real possibility, but, as usual, recognizing a bottom is a risky proposition.
I didn't think the "bottom" between 8/8 and 10/10 was real, but I don't understand what held the market up. There are no doubt factors beyond my purview which explain the aberration, but that is cold comfort to one looking for an opportunity. There is a chance that this "correction" will be shallow and short lived and we'll return to what I believe is an overly optimistic market. There seems to be too much volatility which indicates to me that the professionals don't know either and are on hair trigger setting.
Anyway, at least something is happening. I don't know what the effect of a failed Euro would be, but it's possible that it's already failed and is living on life-support.
So ~ I'll be watching and waiting and trying not to let cash burn a hole in my pocket.

[ModE98]

It is a tough one, Safeharbor. Have a feeling investors may be between a rock and a hard place for now. A "correction" through most of December followed by a wishful Santa rally may be a possibility. Would not be surprised with some weakness after the first week of January.

Just a thought, are things really so bad that the next Great Depression could "blindside" us as we look on in disbelief?

Next long term bull cycle may not start until late 2016 with a roller coaster market until then. Of course, all foresight is clouded, so it's anyone's call.

[ModE98]

Message deleted by ModE88.

[safeharbor37]

Just a thought, are things really so bad that the next Great Depression could "blindside" us as we look on in disbelief?

It's possible, but unlikely ~ but it's good to remember that because it's unlikely doesn't mean it's impossible.
I think a lot of market distortion is the result of "investors" entering panic mode at every bump in the road ~ I think that explains a lot of the volatility, but also day traders, market makers, etc. can make a bundle when Joe Blow [or stupid institutional investors] buy high and sell low.
Some of the volatility is due to investing on credit so that some have no choice but to trade when margins are approached. It's too risky for me, but it's meat and potatoes for some professionals.
Anyway, a depression would be a problem for those of us who are older ~ we have the perspective, but not the time. The youngsters have the time, but lack the perspective.
It'll all come out in the wash.......The thing to remember is that if the US economy goes to hell in a hand basket, we're all going with it and there's nothing we can do but go along for the ride. Might as well not worry about it.
All good things [as well as all bad things] come to an end, but things tend to repeat themselves ~ the problem is the timing.
I long ago gave up getting rich and just try to enjoy the ride ~ in a few years it'll all be moot anyway. Those with families to support and retirement to prepare for have a little more problem, but I try not to burden myself with the problems of others.
The purpose of my posts here are an attempt to understand what is going on and to keep perspective. It is usually obvious what is happening after it's happened and I suspect that this is not the exception. So, I'm not even bothered by the fact that others don't seem to have any better grasp of the situation than I do.
I'm still holding on the idea that we're due a "correction" before the market starts back up and had predicted that the upside would begin before the end of the year ~ My poor judgement in timing and the European situation has put that in question, but I am also of the opinion that we've seen the real lows and, although it's too early for another long term Bull Market, the trend will tend higher from now on, excepting some significant event ~ collapse of the EU, the Euro, a real depression, war, etc.
Carpe diem

[ModE98]

Safe, Hope you are correct. Do not care to see another "big dip" of several thousand points. Keeping my fingers crossed for good luck. We will likely need it. But, the market will just do "it's thing" no matter how we view it.

[safeharbor37]

[11/30/2011]
I just looked at the chart of the DOW and it's almost exactly where it was 12/1/1999, twelve years ago [11497 &11555]. It hit 7538 on 08/03/2002 and 7062 02/02/2009. It hit 13930 on 10/01/2007 and 12810 on 04/01/2011.
So ~ it's now about 1,000 points above it's average of high/low for the period. Since we're not going anywhere for the time being, it appears to me that we are actually over bought at this point.
Now ~ I hear that today is bullish because the US is going to assist the EU in resolving its financial crisis. Does that make any sense to anyone? It doesn't to me. I understand that collapse of the Euro or EU would cause a worldwide financial crisis, but can the US, with its own problems, actually assist someone else recover? It looks a lot like the blind leading the blind.
It seems that Ron Paul warned in about 2002 that the housing boom couldn't be sustained and I had actually felt that way in 1999 ~ but the US continued financing its spending binge on RE. That's dumb on a number of levels, but the policy today is to stimulate RE so we can go on spending money we don't have.
MF Global and Jon Corzine are symptomatic of the problem ~ multiplying money by currency manipulation and such ~ believing that one is as smart as Soros.
The question is whether there is really value in the market at its current price. Obviously, there are stocks with a future, but the question is the current value. It appears that we may actually be in a currency bubble. Note that there is concern that the Euro may collapse and yet it's worth more than the dollar ~ that's discouraging. MF was a house of cards. Perhaps the world economy is also...............
+490 today and rising at the end so we'll have to wait until tomorrow to see if the trend continues. I'm still sitting here waiting for some indication of what's going to happen. I wouldn't be a bit surprised to see a big pull back before the end of the week, but it's still possible that the short term bottoms are in and we're in for a ride upward. Still ~ I don't trust it, this seems different somehow, too volatile, too much reaction to things which ought to have been anticipated by those in the know.
Too much stuff going on; Middle East, Iran, EU on the edge of meltdown, huge and increasing deficits here at home, increasing retail sales with high unemployment which has all the characteristics of a bubble. The problem is that RE prices are as high as there is any justification to be and increases will be just blowing the bubble back up and creating money out of nothing.
Someone is making money, lots of it. I wonder who.
[12/06/2011]
Looks like I missed the "bottom" and we're in for a Santa Clause rally. Still, I think that there is a good chance that there will be rough waters next year. Normally we look for an artificial bull in Presidential election years, but the world economy is sufficiently fragile that that may not be the case in 2012. I've been relying on the cycle theory and it appears on schedule, but there are so many other factors which can influence not only the markets on a temporal basis, but the cycle itself [e.g., the Great Depression].
So, I guess I'll spend December and early January enjoying the season and pretty much ignore the market fluctuations. After all, it's only money.
[12/28/2011]
Looks like the market may end 2011 about where it was at the beginning and, everything considered, wasn't all that volatile. The external influences seem to have had more affect this year than in most ~ not just the EU/Euro "crisis," but the Arab Spring, oil prices volatility and problems in Iran and NK.
Seems like we're entering another year [2012] in which unusual influences are likely to affect the market, more perhaps than in most years. I hear the "talking heads" on business TV calling "cash king." That's what I've done thus far [although I don't have enough cash], holding in cash for a clear signal. I'm sure I'll miss some good stuff, but I have this feeling that things could go haywire anytime next year and things will be entirely different if Obama is reelected, which is as least as likely as not.
It looks at this point that I didn't see the reality of what has been going on ~ and I still don't know what to expect. I'm very uncomfortable with the prospects and plan a default position of sitting on it [which I may regret, but then again I might regret not doing so]. I'll do a new post about New Years [and maybe just give up ~ but probably not].
In the meantime, I'll wish a Merry Christmas [or whatever] and a Happy New Year [or whatever]. Just be merry and happy ~ they beat the alternatives.
FWIW: Cramer is advising waiting for a pull-back to get into even desirable stocks. Sound like good advice to me.

[Aman A.K.A. Ahamburger]

The long term investor thread has just gone crazy, which is great. I'm going to move my market views here...

Dec 12, 2011 2:29:55 GMT -5 Aman A.K.A. Ahamburger said:

Well xmas might have come early this year with this EU treaty. All the US economic news was good, and China's inflation was down. Which means that they can start easing, which they need to do badly.

The combination of rising wages, the slowdown in Europe, and increasing manufacturing in the US and Europe, means they need to increase domestic consumption to save their manufacturing. Oh ya and the riots are getting worse because the chinese ppl want more.

All this points to consumption and increase demand. Add that up with the growing US economy and their might actually be a decent rally in store.

I did say MIGHT when I said that Santa was coming to town over the EU. However, the biggest point that I was trying to make is that China is squeezed, and since the above quote came out, more confirmation that the USA's manufacturing is expanding and the Chinese are experience a deceleration. They have to increase domestic demand and that is exactly what they intend to do now, they have no other option, unless they want a civil war and all out collapse of their economy.

[safeharbor37]

The markets aren't closed yet, but isn't likely to make any significant moves in the next couple of hours so......
It seems that my prediction that the market would close the year up was mistaken ~ also the Santa Rally I expected didn't materialize.
On the other hand, I still feel the market is overpriced at this time. I can't figure out why the US market is holding up unless it's that it's the better of alternatives ~ which says more about the alternatives than the US market.
I notice that the larger cap stocks did better than smaller caps pretty much in order. That is a sign of a mature bull rather than a beginning bull and, imho, is a indication that caution is in order. It seems to me that the US economy is surviving largely because of stimulus programs which are debt based and will, in the long run, make matters worse rather than better.
It seems that the economy has to some degree adapted to a unemployment level closer to ten than five percent which is similar to the rates in the socialist countries in Europe for the last several years. It may very well be that we've reached the "tipping point" where our economic model is similar to other countries rather than being the bulwark of the world economy as in the years since WWII until recently.
This makes it difficult for me to project far into the future based on historical data. Everybody of course has their own way, but I've found that the "talking heads" deal almost entirely with short term, even day-to-day, terms which is useful for traders, but not so much for long term investors.
As I've noted, Cramer is advising to wait for pull-backs to invest so he too thinks that the market is overpriced today. Of course a lot don't think much of Cramer, but I try to listen to everyone. Some of my good moves were based on "minority opinion" and I've come to believe that following the trend is a recipe for disaster unless you're quicker on the trigger than I am or am likely to be.
So....I'm predicting that next year will be volatile and the markets will not increase appreciably. It may very well offer some "buying opportunities" for long term investment and I believe that inflation lies in the future so staying in cash long term is self defeating.
The problem is that government has become so pervasive that it has become a driver of the economy itself and that is discouraging. It is possible that there may be some reversal of this trend or that the economy is healthy enough to adjust to the new reality ~ but there's no way to know in advance.
Since foreign investment is currently down, there may some opportunity there at this time or in the immediately future whereas the US economy may be set for a fall. Still the EU is fragile and may not recover any more quickly than Japan has.
Bottom line is that the world economy is in turmoil and the light at the end of the tunnel may be a train rushing in our direction.

[ModE98]

Found this article on SA to be very interesting..... hope some others do too >
seekingalpha.com/article/341161-weighing-the-week-ahead-time-for-a-breather

[Value Buy]

I think we are on a verge of a market break out.
Of course, we still have Europe to worry about, but our markets are set to break out.
Even with five dollar gasoline.