Tuesday, October 12, 2010

When Cramer says "don't worry" you better start worrying

I don't usually watch Cramer, but I happened to catch him this evening declaring victory after today's big 10 point rally lol

He was telling his fans not to worry, and that the people who are worried - like myself - I suppose - (because I attempt to keep my members out of harms way)- have missed the boat, and caused others to do the same, and about to lose their clients. The truth is I'm happy to miss a 120 point rally on the Dow, when the risks far out way the reward. It's not the 10 point Dow rally I'm worried about it's the continuation of the flash crash (wave 3).

I believe there is good reason to be worried, when the pied piper of stock land tells you not to worry. The fact that someone would say such a thing should alert you to the fact that he is worried. After-all people who aren't worried don't usually feel like they have to go around announcing it to everyone.

If my record was less than 50% accurate as "By most measures (in 2009), Jim Cramer did worse than the market" (Source Barrons) I'd be worried too. Cramer had a good record during his hedge fund days, but I believe a stock picking monkey would have done at least as well during the 1990's bull. I would give my left nut if I could go back in time and trade in the 90's - knowing what I do now - but I have to trade the market we have.

As long as Obama's darling General Electric continues to pay Cramer's salary, while giving him a public voice via CNBC cable television, the poor retail investor will continue to be led down primrose path, and whether they win or lose Cramer is sure to keep his cushy job.

I on the other hand would expect to lose at least 50% of my membership if I'm wrong even 40% of the time. I feel I'm already on thin ice, after calling the top again today, but the evidence is indisputable, take it or leave it.

I suppose, because Cramer used to make his living crushing the same investors he now claims to help, he feels like he has a bone to pick with the shorts, but I think most shorts don't behave unscrupulously. After all the crash of 08 (wave 1) was mainly the result of longs liquidating their positions, in the form of fund redemption's, and the shorts who sold certain banks to 0 (zero) only did so, because they are in fact bankrupt.

I get the feeling many hedge funds are afraid to short this market, because they saw what happened in 09; rules can be changed to prevent shorting regardless of valuation, and to be honest it's a crowded trade, because of the recent emergence of the retail short. Short selling used to only take place on margin, but since the emergence of the short ETF, everyone thinks they have the wherewithal, and the determination to be a short seller. The bears have always been traditionally out-numbered 10-1, so this has never been an easy business, and just as it is in Las Vegas, when you're shooting from the don't pass, all the players who are betting on the pass line, are out to get the don't-better.

Monday, October 4, 2010

We made the Hall of Fame!

I didn't want to announce it until I had confirmation, but I just got
the email from stockcharts.com. I'm psyched!

We should have confirmation of wave 3 tomorrow. The bulls are in love
with the upside, but the smart money has already sold and gone short,
while the MM's were forced to put money to work over the past couple

The market does what it will on its own time line

Sent from Gmail for mobile | mobile.google.com

Sunday, July 4, 2010

Targets, and time-lines

Re: Targets: I am often asked, "where do you see the S&P 500 going over the next year, or what are you long term projections"? This question screams, "I want it all and I want it now, and if you don't give me the answer I want, I'll find somebody - else - who will. 

I'm not one for Bullshitting my clients in order to keep them, so I gave him this answer - paraphrasing:

"I keep several valid long term projections, because no matter how good of technician you are; nobody knows where the market is going 2 weeks from now. This is why the charts need to be revised continuously." 

Of course this isn't the answer an impatient person wants to hear, so I suppose he's off chasing unicorns somewhere... 

If you want to hear the bear truth on how it's going to be, read Prechter, but realize the market trades on it's own time, not yours!   

Re: Timelines: Timelines are hard to predict, but generally, after a period of selling it's reasonable to expect a much longer period of consolidation. Timelines also vary according to individual wave characteristics, as well as the larger wave sequence. Wave 4's tend to consolidate for longer periods of time - naturally - because wave 3's are typically more powerful and longer, and sideways triangles - many stocks continue to trade in. 

In a high volatility environment you see timelines speed up, and this is why we call it a traders market. The secret to beating the market consistently is to avoid sideways markets, and to not trade when direction is unclear, but most traders don't have the patience to wait for golden opportunities.

Saturday, June 26, 2010

Re: Market Manipulation

I tend not to believe in manipulation until I see it, because if it could be proven that the free market was no longer free, but being manipulated; no long term investor, in their right mind would continue to invest in it, but I've been seeing some things in the charts, and from the media over the past few years, some of which can't otherwise be explained away, nor should they be ignored.
1. The $VIX selling off methodically & un-naturally - from the Christmas Holiday of 08 through May of 09; during a time when the market would have normally been covering it's back - buying put protection. We also saw the $SPX rally over the same period, on low volume, and with no normal standard Fibonacci retracement, while CNBC pundits' continue to argue - all day long - that 10% corrections are all that are required in a "Bull Market", while 10% is merely a pullback.

2. I witnessed the China Chart $CZH paint all zeros over-night, and then reverse course (short term bullish); this was just before china released it's latest manufacturing numbers, soon after Hillary Clinton and Tim Geithner were seen visiting China. This was the same day Jim Cramer - of Mad Money fame - pumped Exxon Mobil, and China. Telling his fans that a "soft landing" in China was a buy, although up to this point he had recommend holding any china stocks - other than BIDU.

3. The financials ($DJUSFN), the $SPX chart tends to hold up better than the $INDU, and tech ($DJUSTC) (when normally tech leads the market). I've also seen CNBC repeatedly tell their audience, that traders "watch the $SPX, not the $INDU".

4. We also recently witnessed the media's poor attempt at damage control when the market finally did reverse course - on the day of the so called "flash crash". Markets have crashed throughout history, yet they want us to believe than some sort of technical glitch, or electronic markets is to blame for this latest downturn, while there is no evidence to support such a claim.

It's a well known fact that NBC is owed by GE, who is part of the current administrations economic dream team, so much of the above can easily be explained by a carefully coordinated conspiracy, perpetrated against the American people, by the corporate/government/media complex, in order to keep the public hopes up. They know as well as I, that recovery isn't possible unless public sentiment turns positive, and if capitalism fails, they all lose their jobs, including the politicians. When people get hungry; there will be social unrest, and governments will fall, as we see this already happening in Greece. These are the green shoots I believe we need to pay attention to. I don't hope for a terrible outcome, but I also know that markets will correct, and that manipulation can do nothing to prevent it. Risk will be priced in, and with over $100 Trillion in outstanding U.S. liabilities, we are a bankrupt nation.

Granted: Most of the above may also be explained by herd mentality, but there are other things which can't.

Case in point: The REIT: Annal Capital Management (NLY): I have the chart posted on on my blog, and in my public charts. Yesterday I saw the predicted "island reversal" with my own eyes, but when I loaded it into my ticker I was surprised to see NLY up. I checked the chart again a few minutes later, and the candle had clearly gapped-down - below the island formation - and was slowly rising. I was busy charting Friday morning, so I figured there must be some simple explanation, and didn't think much more about it, but when I looked at the chart later that evening; the candle I had seen earlier in the morning, is now grouped together with the others at the top, just as the zeros painting on the china chart, and gaps down on the $VIX, are no where to be found.

Today: Yahoo charts show the NLY gap down on Friday, but yahoo ticker shows the stock ended up at the end of the day, as well as after hours. yahoo "profile" information: Index Membership: N/A

Here's the screen shot:

And here's the screenshot from my public charts (daily candles) Index NYSE:
NLY - Daily Candlesticks: "

via StockCharts.com

If I'm missing something here; please respond here, or contract me though my public charts link.

I'll cover next weeks game plan, in a separate post, so check back later this weekend, or before Monday's open.