Thursday Wraps

What a mean, miserable day. The market players couldn't make up their minds whether they wanted it up or down. This is standard procedure after the beating Tuesday - every body is playing scared. As a result stocks are round tripping and we spend all day long bumping against the pivot point on the Q's -



Five times in six hours it hit the pivot (black line on the chart) - each time to rebound strongly. But as you can see yesterday was the same thing - inability to move through the pivot point. That suggests a difficult day for today.

I bought PAAS this morning and watched it go up and then it round tripped on me and I sold it off for a small loss this afternoon. That was the very first and very last time that I will buy a silver mining stock - I've always considered them to be a waste and I think this one is the biggest waste of all.

I bought TRA this afternoon and GRA and I may scale into DLX and RYI tomorrow. All I will do now is add to the portfolio on dips and let it run for awhile. Tomorrow I think I'll go back to day trading. TIE pretty much round tripped on the day too and if it doesn't get some steam tomorrow I'm going to dump it. I'd rather put the money into winners like AKS or RIO. XING came all the way back to where I bought it but I'm going to hold on to this one for awhile but I won't add to it. It has to prove itself and it couldn't even get to the pivot point today.

The model portfolio is now returning 1.23% and the SPY is returning 1.01% since inception.

The three guys (MSFT, GOOG, and AAPL) went their separate ways today. AAPL did real well, up 2.45, MSFT recovered from being down early and GOOG stayed down. I'll reiterate my message from the past couple of days in various posts - AAPL is going up, MSFT is range bound and will be forever, and GOOG is done. It had huge volume today and went nowhere.

The small caps are back - IWM made it into the green today.



That isn't unexpected the small caps have been taking the brunt of the beat-down because they have been so far ahead of everything else. But once again the pivot point was the line of demarcation. We need a break over the pivot point tomorrow and then we'll see what happens next.

The INDU ATR is above 144 which is always a good sign. I use the ATR as a proxy for volatility. When it is below 80 for the INDU the Dow 30 goes down and when it is above 120 the DOW 30 goes up. Not immediately but within days.

This indicator, NewMoMo is behaving normally - it is now officially really far down -



Any upward movement in the market tomorrow will spin this around on a dime and give 9 cents change.

The up/down ratio retreated to 33% which is violently oversold and the VIX remains more than 10% over its 10-period moving average. It must go back.

I'm calling tomorrow up. Although to be honest I prefer days like today for day trading.

The magic coin meanwhile, fresh off its success in calling today's market, calls tomorrow ... heads - bull market.

The score is now Marlyn 16 - 13 and 5 and the coin is 14 - 15 and 5.

Look at WLT Go

My biggest problem and I've written about this before is my impatience. I could have had some serious profit in WLT if I had just held on to it. It is up .84% today! Sometimes it just doesn't pay to sell.

Of course the people who listened to Jimmy Crack Corn Pone a couple of weeks ago about BHP are looking at this now -



I have a feeling that they are cursing their patience.

I added to my TIE and RIO positions and bought PAAS off the tweezer bottom this morning and XING too. I've been thinking about TRA but I'm going to wait until the DIA breaks through it's pivot point - 35 cents from where it is this minute (10:43 EST). The DIA bounced off its Support 2 this morning after about 20 minutes and is now going sideways up. It would have been an excellent pivot trade.



It looks like it is done for the moment - from here it is setting up to go down or up so if you did buy earlier you might want to set your stop real close.

Tweezer Bottom

A reader wanted to know the code for "tweezer bottom" - here is what I use on Quote Tracker

If bar low = bar low[1] and bar close > bar open and bar open < ema(21) set color to $70106D

The color is kind of a purplish black - I use an arrow under the candle to point it out. I like using this one on 4 minute charts but it works well on 15 minute too.

Here is an example - you can see where PAAS put out the tweezer bottom on the 4 minute charts -



You can see the little arrow on the chart.

A bonus indicator is also being shown - the lines are Pivot Points. You can see where PAAS bounced off of support 1 and ran right up to its Pivot.

Two For Thursday

I've had my eye on XING for some time looking for an entry and it printed a BOB formation yesterday. If market conditions are good today I think I will add it to my trading portfolio for a swing trade (4 days+).

I won't add it to the model portfolio - that one is fixed with the 12 stocks I shared yesterday. Of those I'm considering adding a position in PAAS to my trading portfolio today as well.

Not an invitation to speculate - just some thoughts I'm willing to share.

The Edge

Let's say that the fundamental nature of most of the stocks that were crushed yesterday had nothing to do with their crushing - just that when a beat-down happens during a riot everything gets beat and names are taken afterward.

Let's also posit that the crushing was a bit overdone - as seems to be the sober consensus this morning.

And even though Europe and Asia are still being crushed - Europe is looping back up and the futures are massive green. What does that leave us?

Well let's say that you were to write a filter and what you would look for were stocks that up until Monday had appreciated more than 25% in the past 66 days and dropped more than 5% yesterday. (All of these numbers are totally arbitrary). And if you did that what do you think you would find? A long list of stocks that up until yesterday most every body wanted to own.

Then let's say you then went through these stocks looking for ones with smooth, ever-rising closing prices for the past 6 months or so in the range of 15 to 35 dollars with high average volume and ones that you'd want to own too or maybe even ones you'd owned once in the past - what do you think you'd get out of that? About 30 matches among which we find -

AKS, RIO, TIE, TRA, GGB, PAAS, SINA, RYI, GRA, SSRI, ICON, DLX

And I'm calling this short list "my recovery portfolio" and let's see where it goes.

And if you think I am the only person who is doing this at this time of the morning (4:30 A.M. EST) you are nuts. There are 8500 fund managers out there who have ordered their minions to do the same thing - because we are all after the same thing - the edge.