Tuesday Wraps

Oh wow let me count the ways - none - now that was another boring day. Of course stocks went up and stocks went down but down was kind of the key to understanding the day.

The fund managers now have one day left to get their act together - Wednesday - because everything settles on Friday and counts in this quarter. Because of that I think tomorrow will be an up day and then we fail into April or fall into April - take your pick. Fortunately because the end of March is so weak April is setting up to be one hell of a month. But first the news -

I mentioned this morning that I lost CRVL to a stop and replaced it with MDRX based on the fact that MDRX was going up when the rest of the market was going down - and that's what happened MDRX went up and stopped and went sideways the rest of the day. Along with everything else. I added to my OI position this afternoon because that was another stock going up against the flow.

The model portfolio lost a little and sits at 7.39% which isn't too bad for 20 days. The Benchmark is at 1.70% which is awful.

GOOG caught a bid at the end of the afternoon which cut the loss a bit - MSFT didn't disappoint - at least not those of us who are calling it a "range-bound pig" (not to its face of course). From 1:30 yesterday afternoon to 4 P.M. today it went - nowhere - but round-tripped 60 cents in the effort. What a piece of crap. AAPL lost a few cents today and I still think it sees 90 again before it hits 100.

My FOREX friends - I hope you kept records on this morning's Con Con effect which was disappointing low. This should suggest some pressure on the Fed to lower rates and the various spots acted exactly as they should have if the Fed lowers rates on the buck - they became stronger against the dollar getting weaker. So now you have Con Con in your book.

The INDU ATR is way down this afternoon to 115.75 - that suggests that the exuberance for selling is waning and it's possible that it will support a boost tomorrow.

The VIX has already pulled back into the neutral zone and the up/down ratio sits at 27.86% and that is oversold to a capital "O".

This guy keeps sinking which is good -



So I'll repeat my forecast for an up day tomorrow.

The coin meanwhile, having another winner today calls tomorrow ... heads - up day also.

That makes the score Marlyn 23 - 19 and 8 and the coin is 24 - 18 and 8. The coin is all of a sudden doing better than Marlyn - imagine that.

Best Friends Forever (or Until Dawn)

Bought LQDT last Friday at 3:40 for 22.63 - sold this morning at 9:45 for 23.40 +77 cents for a trade I held about 35 business minutes.

A couple of years ago I found that the only way I could make any money consistently was to buy at 3:45 and sell at 9:45. Given the looks of the market lately we might be entering that sort of time period again.

Everything just looks way overbought or way oversold - there is no happy medium. When you have a stock such as LQDT that is just lollygagging along you can make what I call a "spike" trade and get some quick profits out of it.

Another stock that went up abruptly this morning was CIEN. I had considered taking this one as well on Friday afternoon but didn't - oh well - there's always tomorrow.

I might buy LQDT back again this mornng for a day trade if it keeps doing what it is doing - tagging the EMA 4 and going up. But for now I've made a good profit on the day and I'm happy and I may just take the rest of the day off. Less stress - happy Marlyn.

Looks like the market is going to take the rest of the day off too. SPY is down, Q is down and DIA is folding. Goldie (GS) is down, oil is down and VIX is up. A good day to just watch - I think.

KKD - A Trading Lesson

I mentioned in my wrap yesterday that I lost KKD on a stop loss and I wanted to show you some things about that stock that serve as warnings in general. In other words if you see this kind of action look out.

First last week I saw the unmistakable signs of a top in KKD as shown below but I was thinking about holding this stock as a short term investment so I ignored the sign and decided to wait it out.


This sign was followed by a down day and then several Doji candles. I was away from my trading station on 1/31 when the big drop occurred or I would have sold before I hit the stop (I always put a stop in when I travel).

But I did want to show you how you can use the VIX to inform your short term swing trading. The charts below link the KKD and VIX 2-hour charts over the past several weeks. You can see how the KKD reacts to the VIX even the VIX is more attuned to the major indices (SPX).


At point "a" the VIX, having just tagged the upper Bollinger in the first two hours of trading begins to fall away. At the same time KKD, even though it is at the top of the bands (a bad place to be normally) continues to rise. You can see the top clearly annotated on these charts and even though the VIX continues to fall after tagging the lower band KKD also begins to fall. This would be a good indicator that the run is over and if you aren't looking for a longer term relationship you should exit now ("b").

But then something strange happened - the VIX ascended and KKD went sideways. Then at "c" something even stranger happened, the VIX did a rapid descent and in the next two hour period KKD also did a rapid descent. If you didn't get the message initially, it should be clear now - KKD is done for awhile.

The message is clear - if the VIX does something and your stock doesn't react to that move correctly you probably need to review the bidding and take your profits and run.

Now both the VIX and KKD are moving sideways. I'll be watching KKD as it reacts to the VIX and if it starts behaving normally again I'll probably reacquire when the time is right.

Wrapping Wednesday

This is as funny as it gets - here is what I said about the magic coin yesterday evening - "But for tomorrow ... landed on its edge - just kidding - tails - bear market. Dumb coin" And damn if the market didn't wind up on the edge today. Way to go coin!

I followed the plan - on the jump I sold the half position of ORCL I bought yesterday afternoon for a little gain. Then I dumped ALTR for a little loss - wash out. And this afternoon I doubled up on SYMC for tomorrow.

I spent most of the morning watching MAMA (among others) trying to find a set-up but one never came - everything I was watching stayed as flat as the rest of the market. There were some nice ones that I saw this afternoon but they weren't on my radar this A.M. Oh well - looks like we'll rest now into the week after Christmas when there will be a little rally and then about the middle of January the money will start flowing again.

Anyway the up/down ratio is neutral at 43%, there were 523 new 20 day highs (a slight increase) and 443 new 20 day lows (a slight decrease) and the VIX is 10% below its 10 day moving average. The 4 major indices (DIA, SPY, QQQQ, IWM) we follow all finished the last hour strong white and GS, the proxy for the stock market for the 22nd century, finished with a doji. And, believe it or not, but it looks like a blow-off bottom for GS. As I said earlier I'd be surprised to see much more than the same as today for tomorrow.

The magic coin gets a bye for yesterday as I don't consider that either bullish or bearish more like dovish. So it stays 36 and 27 and for tomorrow .... authoritatively a head - bull market. Might happen - we'll see.

Here Comes Santa Claus

Although there is a lot of talk about a Santa Claus rally all I see are the indices rolling over and pointing down. This is expected from the INDU (DIA) of course - it has had a great run and needs a rest, but the SPY and IWM are also rolling. Where they go, generally, NASDAQ will also go.

I've been expecting an overall decline in the market for some time now (who hasn't) and wouldn't be surprised to see it slide down through December then start getting active again in January. If the last seven days are a clue there is absolutely no volatility left in this old beast at all. The VIX is signalling that the market ahead should remain largely listless. The other day (Friday) was the first sign of life the VIX has shown in a while. Of course it could go right back to sleep but I think it will start increasing here as a signal that some volatility will be coming back into the market come January.

We'll see.

Friday - Itsa Wrap

Lately nothing has been able to keep the Dow Industrials down. It poked its head above the close line around 12:30 as we predicted would happen. NASDAQ was down but not by much and the Q's actually closed on yesterday's number. The Q's are still returning more (on average) than IWM by the way and I will let you know when that changes.

This morning right out of the box I took a quick shot at a newbie called ID. This was written in my notebook and I didn't know why so I took a look at about 10 to 10 and it was up strong. Given the market was sort of floundering around at the time I took a position and 15 minutes later sold it for a 30 cent profit. If everyday was like that I'd be in heaven. Unfortunately after a short break helping out the wife on a project I returned and about the time the market started turning I saw an old friend - ATHR. Now ATHR as we pointed out in an earlier post was not a particularly good set-up and I am still holding ATHR because I think the market is going to go up on Monday and take ATHR with it. So it is no longer a trade but now it has risen to swing-trade status or, an investment - too bad it doesn't pay a dividend.

The market is going up on Monday you say - how do you know - well despite the obvious (rule 1 - nobody knows nothing including me) the up/down ratio is printing 42%, there are 575 new 20 day highs which is 400+ less than yesterday and even though the new lows are weak at 214 there is a new reason for that.

When the new lows stay low when the new highs pull back it means that the market is in a consolidation mode. What you want to avoid are really low new highs coupled with really high new lows as that means the market is on its way down. I think. As with everything else you read on this site keep in mind you don't know nothing either even after you've read this stuff.

The VIX is proving to be, as usual, less useful on the bottom as it is on the top and I need to take a closer look at that. I think we can use the VIX as a measure of trader sentiment and right now that is mellow - only because I hate the word "complacent" - fact is we passed complacency weeks ago and are in some world of trading nirvana where absolutely nothing is wrong and will stay that way for a long long time. Whatever dude.

What else - oh yes the three sisters (and for those new these parts they are DIA, SPY, and the ever lovely QQQQ) all finished the last hour strong white, as did the ugly step sister (IWM) and Goldie (GS) (the proxy for the market of the 22nd century) finished with a white doji - that means "I'm sorry I went down today - please buy me and I'll print a 2 handle on Monday."

So barring some freaking catastrophe that's my take.

The magic coin returns to its winning ways and now stands at 31 and 18 and for Monday .... tails - bear - who wants to listen to a stupid magic coin anyway? Only has a 63% chance of being right. (Based on past performance and as you all know in a binary situation the actual probability of any outcome is 50% regardless of the dumbass premise behind it - or you better know that at least).

I'll be back later this weekend with some other neat stuff I've been thinking about.

Monday Wraps It Up

Wow. What a day - I missed most of it. Had an appointment this morning and by the time I got back it was over. Everything was at its high of the day and nothing was coming off the floor - including HANS which gapped down severely this A.M. on an excuse. The excuse? That options backdating thing that's been going on. So far HANS is the only stock affected in this manner (severe drop) and they are only going to be investigating - no one has said that they actually had a problem. Thus it is an excuse not a reason. The institutions holding HANS wanted a reason to get out. How do I know? Almost double volume. Then there was no buying once it found a floor. Might be I've lost another momo stock and have to go fishing again. We'll see.

For tomorrow --- the three sisters all finished the last hour in the red as did the ugly step sister (IWM) as did the 22nd century proxy for the market - GS. Unfortunately the VIX didn't move, the new 20 day highs only increased by 17 and the new 20 day lows increased to over 600. The up/down ratio remains in neutral. You would think in such a booming economy that stocks would generally go up - well only some of them did.

This is truly a mixed message but I'm going out on a limb and suggest that tomorrow is going to be a down day because it is needed. I might be wrong but as I'm fond of saying - it doesn't matter because I'm going to play golf.

The magic coin is 26 and 14 because it called for a bear day and it obviously wasn't. For tomorrow the coin says ... heads - bull run again.

See you tomorrow after the market closes.

Wrapping Thursday

Missed most of today - thank God - but did play AMD for a brief time this morning - lost a dime and HANS for an hour or so and made 50 cents. I played AMD off a two white candle formation and it went one more increment and I thought, based on shaky price action, that I should sell it then but didn't - consequently the dime loss. HANS I played off the white hammer in the first 15 minute candle. The next candle was a red spinning top which generally means wait a minute I'm thinking and this was then followed by a white candle where I took the trade. I was out about the high of the day but I didn't know that until this afternoon when I returned to the office.

Tomorrow is shaping up to be an up day - the three sisters all finished with white candles in the last hour and the VIX is back in neutral territory. The up/down ratio still stays bullish at 36% and the new 20 day highs lost some more to 333 but the new 20 day lows put on over a 100 to 715. The last time the new 20 day lows were over 700 was over 60 days and 10 SPY points ago. Another thing is that the end of the month checks will have been in the process for over 3 days which means that they are now cleared for investment purposes and the funds can start buying everything in sight.

Magic coin is 26 and 12 having nailed today even though it wasn't so much a bear day as a pause. But I'll give him his due and put another in his win column. For tomorrow he says - heads - the bull is back - I agree.

I'll be back tomorrow morning with another screen shot of the IWM and friends and we will see what Marlyn's Curve thinks about all of this.

Manday Wraps Cheese

Awful day - I took a play in AMR and watched it go from my buy point .06 to .80 and then I had to leave for awhile. I didn't bother to stop it because the market was booming at the time - by the time I got back I had lost 30 cents on the share. Straight up - straight down - just like many others today and for absolutely no discernable reason except traders bought and traders sold. I'm so pissed I'm going to take a couple of days off just to get over it.

Tomorrow more of this crap market continues. Up/down ratio sits at 46% or neutral, VIX is more than 5% below 10 day MA which is bordering on who cares - there were 724 new 20 day highs and 222 new 20 day lows. Again much ado about nothing. Both the DIA and the SPY finished the last hour in the red but the Q's were white. Eventually we have to go down - it just is - I'm seriously thinking about staying on the sidelines until that happens.

I won't - but I'm thinking about it.

The magic coin, and this is getting boring, got another one right for 22 and 10 - and for tomorrow - heads - bull market coming once more. Who am I to disagree.