Wednesday, March 21, 2007

Marlyn Wraps Wednesday

Anyone who predicted anything different than today's scenario is a moron and should go back to Fed 101 school. The only surprising thing is we actually did get the 120+ points. I told you that the market would be discounting a future rate cut and that's exactly what happened. The Fed couldn't allow the markets to continually see the down side because it is just too expensive for them - they had to pump the market from within. Couple that with the fact that this is an end of quarter for the mutual funds and you can understand everyone's hidden agenda all around. That's enough macro economics for this week - let's get back to trading.

When the market goes up 100 plus points and one of your holdings doesn't participate that's when you pull the pin and that's what happened to MPW. I'm generally bullish on KNOT so I'm keeping it for awhile more - besides I think it will go back up and get me even before I dump out so I'll keep it for another day at least. I'm still not sure who is selling but someone big is dumping out as much as they can. I wish they'd get done. Still it's volume is less than average so maybe it's not so much someone selling as no one buying.

IMCL, one I missed, just paused around 11 to 2 and then took off again. AFFX dropped like a rock for awhile and then took off at the announcement only to drop again shortly thereafter.

The trading portfolio consists of GGB, STD and KNOT at this time. I added to GGB at close. The model portfolio is at 6.85% (since Feb 28th) and the benchmark is 2.03.

Maybe tomorrow I'll have my head in the game and make some good day trades. I missed a couple of real great ones today. I did want to show you this however -

There are at least 4 entry points on this chart starting from yesterday afternoon and continuing through the Fed announcement. I missed 2 and passed on 2 others simply because I couldn't believe it. Next time I'll be a believer. The one yesterday afternoon - you'd have to already be watching IMCL at that time to pick up on that one. The three today however I should have had.

The three amigos (AAPL, GOOG and MSFT) all took advantage of the Fed rally and went up nicely - so did gold and gold miners based on the beating the dollar took this afternoon. I won't go into this to any depth because it really isn't very important but expect everything to come back to normal tomorrow even though the dollar will continue to fall. That's the whole problem with the theory - everything is a one day event even though the economy is a continuous happening. But enough - nobody knows nothing except that the market is now seriously overbought.

This guy is so overbought there is no way out but down -

And the VIX is 23% below its 10-period moving average. These do not bode well for the remainder of the week. I think we'll have a couple of calming days and next week we'll get the end of the month paint job on the mutual funds and all will be well.

The up/down ratio is at 70% which is a very high number. Last time we went over 65% we dropped 6 points the next day and three days later shed over 100. So we are not out of the woods at all my friends - watch your step.

For tomorrow I'm calling a down day.

The coin is calling for ... heads - another up day.

The score now stands at Marlyn 21 - 17 and 6 and the coin after calling today so perfectly is 22 - 18 and 6.

EDIT - Forgot - the INDU ATR went back up today (of course) and that is not a good sign either - it's at 138 even. I'm sticking to my forecast - down tomorrow.


Steven said...

Regarding Proshares double inverse ETF. You may have did this already but

When one is feeling long or short on the market is it better to buy the QID/QLD (or the other ultra ETFs they have) or short it?

Example: I think the market is going down I can either buy the QID or short the QLD. Which one is better?

My hunch is to short QLD because you avoid the management fee.

Can you filter that or use your fancy spreadsheet to see how they run togehter? I think I remember you did it before.


Ok anothr great review.