Saturday, March 14, 2009
Friday, March 13, 2009
Daily Musing
I am expecting a range bound day today.
I am tracking GS very closely. I was expecting a reversal following a jump in the early morning trading which happened. I did not trade because my fingers are not that agile. Was tracking to go to 96.0 at 9:42am given the strong resistance (bollinger, fibonannci and previous day) but I MISSED THAT AGAIN.
The stock rallied strongly (I think on the back of OK Michigan number) and given the rapid up moved, it looked like lot of short covering after 98.2. I saw some stability around 99.0-99.5. At that point there it was over-bought on both 1M and 5M charts. Shorted at 99.02 becuase 1M candles were showing down-trend (had limit 99 but got executed because only a hanle-of-a-hammer triggered it) but had to cover at 99.69. This was risk reward trade because the chance of down was lot bigger than up.
Tried again. This went LONG. Bought at 98 but again got covered at 97.14.
More late...
The classic mistake was not looking at the 5M chart.
.JPG)
I am tracking GS very closely. I was expecting a reversal following a jump in the early morning trading which happened. I did not trade because my fingers are not that agile. Was tracking to go to 96.0 at 9:42am given the strong resistance (bollinger, fibonannci and previous day) but I MISSED THAT AGAIN.
The stock rallied strongly (I think on the back of OK Michigan number) and given the rapid up moved, it looked like lot of short covering after 98.2. I saw some stability around 99.0-99.5. At that point there it was over-bought on both 1M and 5M charts. Shorted at 99.02 becuase 1M candles were showing down-trend (had limit 99 but got executed because only a hanle-of-a-hammer triggered it) but had to cover at 99.69. This was risk reward trade because the chance of down was lot bigger than up.
Tried again. This went LONG. Bought at 98 but again got covered at 97.14.
More late...
The classic mistake was not looking at the 5M chart.
.JPG)
Has Cramer gone "Mad"?
Following 3 days of strong gains in the broad market indices people are starting to get comfortable with the market rally. Chief among them is the "Mad Money" Cramer. He argues that this Rally is Real. He gives 7 reasons why (a) consumers have risen from dead because of better than expected retail sales in February (2) Bank of American and Citi are making money in 2009 (3) GE rallied on bad news i.e. S&P downgrade (4) M&A activity (Merck buying Schering, Dow reconsidering Rohm & Hass) (5) upside surprise in the tech sector i.e. Taiwan Semi (6) rise in mortgage applications as rates fall and housing appear to be closer to the bottom (7) GM does not need $2 billion assistant from the government.
I am skeptical than Mr. Cramer about the sustainability of the rally for a couple of reasons.
(a) The past 3 days move look like a classic short-covering. Just look at GE, it has gone up more than 50% from it's intra-day low last week. Broadly speaking investors/speculators were shorting the market because all the talking heads were saying S&P500 at 650 or 600 or even with 5-handle.
(b) His 7 points are not fool-proof. They can be argued either way. (1) I have followed retails sales data to know that it's based on survey by Census and it can always be revised down. It is hard to believe in sustainability of retail sales growth when unemployment keeps going up - just yesterday initial claims hit 600k mark. (2) I am not sure what the comments by BofA and C mean - of course they have to make money. The issue with them is not their "operating income" but their toxic assets. (3) GE rallied probably because investors were expecting the worst. I am expecting it to consolidate going forward (4) One or two M&A deals do not not make a trend (5) I think tech was the best positioned sector in this downturn so I don't understand Mr. Cramer's argument (6) mortgage applications are rising because people are finding difficult to get mortgages and thus making multiple applications, duh! (7) the first positive news from GM does not take away the overwhelming problems the company and the industry is facing.
In my view, the market has to consolidate to take stock of the strong rally of the past week. Yes, it has broken above the critical 740 level but a sustained rally is not in offing. Also the market will wait for confirmation of some the positive economic news that Mr. Cramer highlighted. The market generally moves ahead of positive economic data/trend BUT the flip-side is that when the data/trend do not materialize it will come down crashing. I think it is still pre-mature to call for the bottom in the economy - the Wall Street economists have been too bullish in their forecast and I think they still are.
I am skeptical than Mr. Cramer about the sustainability of the rally for a couple of reasons.
(a) The past 3 days move look like a classic short-covering. Just look at GE, it has gone up more than 50% from it's intra-day low last week. Broadly speaking investors/speculators were shorting the market because all the talking heads were saying S&P500 at 650 or 600 or even with 5-handle.
(b) His 7 points are not fool-proof. They can be argued either way. (1) I have followed retails sales data to know that it's based on survey by Census and it can always be revised down. It is hard to believe in sustainability of retail sales growth when unemployment keeps going up - just yesterday initial claims hit 600k mark. (2) I am not sure what the comments by BofA and C mean - of course they have to make money. The issue with them is not their "operating income" but their toxic assets. (3) GE rallied probably because investors were expecting the worst. I am expecting it to consolidate going forward (4) One or two M&A deals do not not make a trend (5) I think tech was the best positioned sector in this downturn so I don't understand Mr. Cramer's argument (6) mortgage applications are rising because people are finding difficult to get mortgages and thus making multiple applications, duh! (7) the first positive news from GM does not take away the overwhelming problems the company and the industry is facing.
In my view, the market has to consolidate to take stock of the strong rally of the past week. Yes, it has broken above the critical 740 level but a sustained rally is not in offing. Also the market will wait for confirmation of some the positive economic news that Mr. Cramer highlighted. The market generally moves ahead of positive economic data/trend BUT the flip-side is that when the data/trend do not materialize it will come down crashing. I think it is still pre-mature to call for the bottom in the economy - the Wall Street economists have been too bullish in their forecast and I think they still are.
Wednesday, March 11, 2009
GE - The Key Resistance/Support Points
I expect GE to consolidate over the next few days at least until there is some clarification about its financial arm on Monday.
If the stock price falls below 7.40 then it might re-test the lows i.e. 6.60. My guess is that it will likely consolidate at 7.40 - 8.40 band. If it passes 9.30 then the next critical levels are 9.80.
The critical levels for GE are,
9.80
9.30
8.40
7.40
6.60
If the stock price falls below 7.40 then it might re-test the lows i.e. 6.60. My guess is that it will likely consolidate at 7.40 - 8.40 band. If it passes 9.30 then the next critical levels are 9.80.
The critical levels for GE are,
9.80
9.30
8.40
7.40
6.60
Daily Wrap
I AM SERIOUSLY STARTING TO LOSE CONFIDENCE IN MY TRADING ABILITY. NOT GOOD.
I am quitting trading GOOG because I am not able to understand it's dynamics. Also I think the volatility is greater than my risk tolerance thus I get STOPPED all the time. I did not make a single penny on GOOG trades although I had been right directionally couple of times (of course I got STOPPED-LOSS at the peak of the reversal. May be I'll get back to it later.
I went back to my old hunting ground, GS, but instead of hunting, I got hunted. It seems that I have lost my midas touch. I am slightly superstious and I have inkling that my bad days are due to a curse of a Fidelity rep whom I scolded badly last week for his incompetence but whatever the reason since then I have not made a single penny on my day-trading account. My account balance has been saved by timely investment GE. I exited out my remaining GE positions yesterday assuming that the run-up was to too much too quickly. As usual, I could have waited for better exit point but in swing-trading I am not trying to time the daily move. Anyway, GE closed below my sale price. If I am right, it will go through consolidation as the market waits for the big news on Monday - that'll be the time to get in or out of GE.
Back to GS:
(1) I sold short at 89.66 because I thought that it was resistance at 89.50. Bought stop-loss at 90.97. My main mistake was that there was strong uptrend both in financials and the overall market I should have waited for the confirmation of the resistance. Moreover, I should have covered at 89
(2) Again sold short at 90.77 because of strong resistance at 91.00 BUT again stop-loss immediately at 90.85 because of my mistake in the order (instead of STOP-LOSS, I had LIMIT). Anyway, the I kept fighting the up-trend in the GS stock. GS had relative strength to the market and I thought that it would move with the market. I think I got too emotional.
(3) Finally, I make STOP order above 92.00 beliving that if GS was trading strongly relative to the market, any rebound in market will cause pierce through a strong resistance at 92. Instead, it just reversed immediately and I had to close it at 91.5. The mistake was that I should have waited for confirmation. This did happen later in the day. BUT I DON'T REGRET THIS TRADE BECAUSE IT WAS CONSISTENT WITH MY STRATEGY (favorable win-loss ratio).
(4) Finally, the trade I did not make which I should have was buying at 90.50. The 1M chart showed that 90.40 was the low-side. In risk-reward term, it would have been the best trade.
The lessons of the day are (1) not be too emotional (2) wait for confirmation.
I am quitting trading GOOG because I am not able to understand it's dynamics. Also I think the volatility is greater than my risk tolerance thus I get STOPPED all the time. I did not make a single penny on GOOG trades although I had been right directionally couple of times (of course I got STOPPED-LOSS at the peak of the reversal. May be I'll get back to it later.
I went back to my old hunting ground, GS, but instead of hunting, I got hunted. It seems that I have lost my midas touch. I am slightly superstious and I have inkling that my bad days are due to a curse of a Fidelity rep whom I scolded badly last week for his incompetence but whatever the reason since then I have not made a single penny on my day-trading account. My account balance has been saved by timely investment GE. I exited out my remaining GE positions yesterday assuming that the run-up was to too much too quickly. As usual, I could have waited for better exit point but in swing-trading I am not trying to time the daily move. Anyway, GE closed below my sale price. If I am right, it will go through consolidation as the market waits for the big news on Monday - that'll be the time to get in or out of GE.
Back to GS:
(1) I sold short at 89.66 because I thought that it was resistance at 89.50. Bought stop-loss at 90.97. My main mistake was that there was strong uptrend both in financials and the overall market I should have waited for the confirmation of the resistance. Moreover, I should have covered at 89
(2) Again sold short at 90.77 because of strong resistance at 91.00 BUT again stop-loss immediately at 90.85 because of my mistake in the order (instead of STOP-LOSS, I had LIMIT). Anyway, the I kept fighting the up-trend in the GS stock. GS had relative strength to the market and I thought that it would move with the market. I think I got too emotional.
(3) Finally, I make STOP order above 92.00 beliving that if GS was trading strongly relative to the market, any rebound in market will cause pierce through a strong resistance at 92. Instead, it just reversed immediately and I had to close it at 91.5. The mistake was that I should have waited for confirmation. This did happen later in the day. BUT I DON'T REGRET THIS TRADE BECAUSE IT WAS CONSISTENT WITH MY STRATEGY (favorable win-loss ratio).
(4) Finally, the trade I did not make which I should have was buying at 90.50. The 1M chart showed that 90.40 was the low-side. In risk-reward term, it would have been the best trade.
The lessons of the day are (1) not be too emotional (2) wait for confirmation.
Tuesday, March 10, 2009
Daily Wrap
Another bad day for my trading. While my swing-trading account has been a savings grace, my day-trading account need much improvement.
The only saving grace was the profit I took from GE. As I had anticipated, GE rebounded from inverted-hammer on a big volume day. Although my timing for the sale (like my timing for the purchase) could have been better I am glad that I realized the gain. GE has gained 33% in the last 3 days and the likelihood of consolidation is greater than another break-out move.
The only saving grace was the profit I took from GE. As I had anticipated, GE rebounded from inverted-hammer on a big volume day. Although my timing for the sale (like my timing for the purchase) could have been better I am glad that I realized the gain. GE has gained 33% in the last 3 days and the likelihood of consolidation is greater than another break-out move.
On the "day trading" side of my business I still have not made money on GOOG. I used to trade GS and I had a very good track record until a mistake by Fidelity system and a rep made me so upset that I decided switch to GOOG. Anothe reason was that higher share price of GOOG lowered trading cost.
(a) Shorted at 300.15 and had to cover at 301. Basically, I was calling for a reversal after a big inital rally in the morning BUT instead got swept up by the up-trend move.
(b) Shorted again at 302 but had to cover at 303.8. My thought was that 302.5 was forming a resistance and put stop at level higher than higher resistance (303.5).
(c) Shorted again at 303.26 but had to cover at 304.28. My reasons were that there as resistance 303.5 and 304 was the stop-loss but because of order-flow reasons, I got covered with a loss. I WAS PROVEN RIGHT SOON AFTER I GOT COVERED but that was no consolation for bad trade.
The bottom-line is that I need to be vigilant about the risk-reward ratio of my trades. There are couple of problems with my GOOG trades (a) not assessing risk-reward ratio properly i.e. being emotional and NOT being PATIENT (c) kind of getting lost in the direction of the moves (3) not putting stops properly. to try GOOG.
Another problem for me in trading today has been NOT being able to gauge the movement of the market. Given the strong start in the morning, I was counting on it to reverse. I was betting that GOOG would also do the same i.e. reverse BUT that bet never materialzed and got stopped before accruing losses. I should realized my mistake and waited for stock to consolidate.
GOOG - Critical Levels
For GOOG these are critial points
288.40 Pivot S2
289.45 Intra-day Low
290.75 Fibonacci 161.8%
294.25 Intra-day Low
298.48 Pivot S1
302.06 Intra-day Low
304.34 Pivot
306.57 Intra-day High
310.19 Intra-day High
314.42 Pivot R1
315.38 Intra-day Low
319.08 Intra-day High
320.28 Picor R2
324.05 Fibonacci 150%
329.00 Intra-day High
Intra-day High-Low
Mar-09 306.57 289.45
Mar-06 310.19 294.25
Mar-05 319.08 302.06
Mar-04 329.00 315.38
288.40 Pivot S2
289.45 Intra-day Low
290.75 Fibonacci 161.8%
294.25 Intra-day Low
298.48 Pivot S1
302.06 Intra-day Low
304.34 Pivot
306.57 Intra-day High
310.19 Intra-day High
314.42 Pivot R1
315.38 Intra-day Low
319.08 Intra-day High
320.28 Picor R2
324.05 Fibonacci 150%
329.00 Intra-day High
Intra-day High-Low
Mar-09 306.57 289.45
Mar-06 310.19 294.25
Mar-05 319.08 302.06
Mar-04 329.00 315.38
Monday, March 9, 2009
CSCO - Consider shorting if it remains below $14.20
If CSCO does not break the resistance at $14.20, it may be the time to short the stock.
Daily Wrap
Had an appointment with a trading company so could not trade in the morning. So started the day around 1.00pm.
I decided to play GOOG because of stock price. Since I was buying in the rounds of 100/200 it made sense to buy stocks priced $300 to save on Fidelity's transaction costs.
Obviously it was a range-bound day. SOLD-SHORT at $296.72 at 1.38pm because (1) resistance at $297 (2) top-end of Bollinger band (3) MACD was over-extended. But I had to BUYat $297.50 because of STOP-LOSS at 2.06pm. This was very unfortunate because had the stock not reached that stop-level, it have generated a very nice profit.
Decided to BUY again at 2.28pm $295.40 because (1) strong resistance at 295 (2) MACD showing potential reversal. Had to SELL AT $295.05 because STOP-LOSS got triggered at $294.90. The mistake was that I should have waited for Bollinger to confirm..
Again BOUGHT at 3.41pm for $291.50 because (1) strong resistance at $291.5 (2) at the lower end of Bollinger band (3) MACD potentially turning around. Again had to SELL at $290.86 because STOP-LOSS kicked in at $290.90. It is was an ok trade because the stock did reverse but had to sell because or risk management
All in all, bad day although the strategy was ok.
I decided to play GOOG because of stock price. Since I was buying in the rounds of 100/200 it made sense to buy stocks priced $300 to save on Fidelity's transaction costs.
Obviously it was a range-bound day. SOLD-SHORT at $296.72 at 1.38pm because (1) resistance at $297 (2) top-end of Bollinger band (3) MACD was over-extended. But I had to BUYat $297.50 because of STOP-LOSS at 2.06pm. This was very unfortunate because had the stock not reached that stop-level, it have generated a very nice profit.
Decided to BUY again at 2.28pm $295.40 because (1) strong resistance at 295 (2) MACD showing potential reversal. Had to SELL AT $295.05 because STOP-LOSS got triggered at $294.90. The mistake was that I should have waited for Bollinger to confirm..
Again BOUGHT at 3.41pm for $291.50 because (1) strong resistance at $291.5 (2) at the lower end of Bollinger band (3) MACD potentially turning around. Again had to SELL at $290.86 because STOP-LOSS kicked in at $290.90. It is was an ok trade because the stock did reverse but had to sell because or risk management
All in all, bad day although the strategy was ok.
Sunday, March 8, 2009
GS - Touching multiple resitance points
GS broke through the lowest resistance point, $78.5 from my earlier post, and is now reaching a critical resitance point defined by fibonacci, channel and bollinger bands. Let's see if the prices over the next few days because MACD line is not showing a convinsing reveral. We'll see.
Saturday, March 7, 2009
Bear Market Charts
Four Bear Market (Great Depression, Oil Crisis, Tech Bust, Current Episode)
Dow Jones Index Since 1900
REAL Dow Jones Index Since 1900
Dow Jones Index Since 1900
REAL Dow Jones Index Since 1900
Friday, March 6, 2009
Daily Wrap Up
It is just 1:00pm and I am done for the day. Lost all the gains for the week and some more in just one trade because of screw-up by Fidelity and it's much vounted ATP system. Apparantly the customer service representatives that answered "trading section" chat line were not versed in trading afterall - they were pretty much clueless. The main culprit was the stop-loss which did notk work when used as one-leg of a 2-part conditional order - the failure of stop-loss to act cause my loss to baloon from 0.5% to a whopping 6%. I was pissed with Fidelity.
I was surprised by rather upward-move in pre-market S&P500 following another dismal employment report. Looking at the early morning trade, it suggests that investors were betting on even worse results and when it did not pan out were rushing to close their short position which caused a spike immediately following the opening and through the rest of the day it was slow and steady sell-off.
GS also showed similar trend. And basically I was hoping for upward reversal and when that did not happen, kept getting stopped except for one time when the stop did not work I got killed. The mistake was that I mis-read the market sentiment today. I was hoping that it would hold at 780-82 level but it didn't. Instead, it is currently trading at 770-775 range.
In summary today's mistake was (1) Fidelity (2) not knowing the market direction (3) USING OSSILATOR (Bollinger, MACD) to go long rather than stay in short positions.
I was surprised by rather upward-move in pre-market S&P500 following another dismal employment report. Looking at the early morning trade, it suggests that investors were betting on even worse results and when it did not pan out were rushing to close their short position which caused a spike immediately following the opening and through the rest of the day it was slow and steady sell-off.
GS also showed similar trend. And basically I was hoping for upward reversal and when that did not happen, kept getting stopped except for one time when the stop did not work I got killed. The mistake was that I mis-read the market sentiment today. I was hoping that it would hold at 780-82 level but it didn't. Instead, it is currently trading at 770-775 range.
In summary today's mistake was (1) Fidelity (2) not knowing the market direction (3) USING OSSILATOR (Bollinger, MACD) to go long rather than stay in short positions.
GE - Taking a position
I put my money where my mouth is i.e. I bought some shares of GE.
My reasoning were quite simple (a) when the market was down 4% and financials down 10% GE held up well (b) on the candlestick chart on the previous day it showed a "hammer" on a "big volume" (c) there was strong long-term resistance at $6.60-$6.65. My strategy was that the day's trade will confirm my intuition that GE stock will hold up no matter happened to the market. So I waited until end of day to put in the trade although my price-point was at the high end of day's range.
So what now? Well payroll numbers came out this morning - it was bad but the future is off it's pre-market lows. Moreover for S&P500, there is a strong resistance at 680. GE is up in the market but I have to be watchful for key trading point.
RESISTANCE
$7.20 (very strong)
$6.85 (very strong)
SUPPORT
$6.60 (very strong)
$6.45
$6.20 (strong)
My reasoning were quite simple (a) when the market was down 4% and financials down 10% GE held up well (b) on the candlestick chart on the previous day it showed a "hammer" on a "big volume" (c) there was strong long-term resistance at $6.60-$6.65. My strategy was that the day's trade will confirm my intuition that GE stock will hold up no matter happened to the market. So I waited until end of day to put in the trade although my price-point was at the high end of day's range.
So what now? Well payroll numbers came out this morning - it was bad but the future is off it's pre-market lows. Moreover for S&P500, there is a strong resistance at 680. GE is up in the market but I have to be watchful for key trading point.
RESISTANCE
$7.20 (very strong)
$6.85 (very strong)
SUPPORT
$6.60 (very strong)
$6.45
$6.20 (strong)
Then I heard something TheStreet.com.
Thursday, March 5, 2009
GS - The Key Resistance/Support Points
GS is down 1.7% to $84 in the pre-market today very similar what the futures on S&P is saying. So it ain't so bad. The key is anticipating today's moves on GS and possibly over the near future. Here is what the chart says:
Fibonacci Point
$86.6 150%
$77.5 161.8%
Resistance & Supports at,
$88.7
$87.6
$83.3
$82.1
$81.9 (very strong)
$78.5
Fibonacci Point
$86.6 150%
$77.5 161.8%
Resistance & Supports at,
$88.7
$87.6
$83.3
$82.1
$81.9 (very strong)
$78.5
Wednesday, March 4, 2009
GE - Swing Traders' Dream?
GE fell below $5 at one point today on a big volume but closed at $6.69. Although there are stories about investors betting on GE's fall with massive volume around $5-put there is a big chance that it will rebound for at least couple of days from the current low. GE is forming a typical reversal pattern on candlestick chart at a long-term support level but this has to be confirmed by moves over the next few days.
On a long-term chart, there are resistance at $6.65, $7.50 and a big one at $9.20. On the negative side, there is support at $5.70. If that gets broken then we are looking at $4.20.
Lets see how this plays out.
On a long-term chart, there are resistance at $6.65, $7.50 and a big one at $9.20. On the negative side, there is support at $5.70. If that gets broken then we are looking at $4.20.
Lets see how this plays out.
Sunday, March 1, 2009
Welcome
Welcome to my "Random Musing" website. My musing will NOT be about personal life, event, celebrities or politics. It will strickly be about markets and investments.
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