Out

I just sold my 2 unit long position at 980.

Added Again

I just repurchased at 958.50 the unit that I sold at 951 earlier.  

Out Half

I thought the e-minis were headed quickly for 970 but the market didn't even get close before dropping below 950 again. So I just sold one unit of my longs at 951. I still think we have seen the day's low but weakness below 940 would be very bearish. 

Added

I added a second long unit of the e-minis at 952.50 for an average on the two units of 950.75.

Long

I just bought one unit of the e-minis at 949.00

Guesstimates on October 31, 2008

Spiders - December S&P  E-mini Futures:  The S&P’s are headed into the 1050-1100 range. Support today is again at 930. 

QQQ: The Q’s are headed for 36.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The euro has resistance at 135 and will probably be trading in the 122-135 range for a while.   

Dollar-Yen: The yen has rallied to resistance at 99 but my best guess is that it will reach the 101 level soon. The market rejected the 91 low decisively but the odds are that it will break to 89 before a rally well above the 100 level can start. 

XLE - OIH - USO – December Crude: Resistance above the market stands in the 73-75 range. 

GLD - December Gold: I think gold will drop to 600. Resistance is at 810. 

SLV - December Silver: Resistance above the market stands at 1125. 

Google: Google should rally to 425. Support remains in the 310-30 range. 

Out

I thought the market would rally right from the open but instead it has dropped below 950 which should have been support after the open.  I sold my one long unit at 947.50

Long

I just bought one unit of the e-minis at 957.75.

Guesstimates on October 30, 2008

Spiders - December S&P  E-mini Futures:  The S&P’s are headed into the 1050-1100 range. Support today is again at 910. 

QQQ: The Q’s are headed for 36.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The euro has resistance at 135 and will probably be trading in the 122-135 range for a while.   

Dollar-Yen: The yen has rallied to resistance at 99 but my best guess is that it will reach the 101 level soon. The market rejected the 91 low decisively but the odds are that it will break to 89 before a rally well above the 100 level can start. 

XLE - OIH - USO – December Crude: Resistance above the market stands in the 73-75 range. 

GLD - December Gold: I think gold will drop to 600. Resistance is at 810. 

SLV - December Silver: Resistance above the market stands at 1125. 

Google: Google should rally to 425. Support remains in the 310-30 range. 

Out

Covered my one unit short at 942. 

Short

I just shorted one unit of the e-minis at 930.50.  I don't expect to see the market above 941 for the rest of the day. 

Out

I just stopped myself out at 940. Now flat but still bullish.

Added

Just bought a second e-mini unit at 942 for an average on 2 units of 939.50. 

Long again

I just repurchased at 937 one of the long units I sold.

Out

I just sold my two long units at 928.50.  I thought the market would go up from the low near the open but we have given up almost all of the initial rally. I am still bullish and looking for another chance to buy. 

Added

I just bought a second long unit of the e-minis at 941, making me long 2 units at an average of 934.

Long

I just bought one unit of the e-minis at 927. 

Guesstimates on October 29, 2008

Spiders - December S&P  E-mini Futures:  The S&P’s are headed into the 1050-1100 range. Support today is at 910. 

QQQ: The Q’s are headed for 36.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The euro should reach 121.50 before the next rally sets in. 

Dollar-Yen: The yen has reached its 93 target but will probably continue down to the 89 level before a substantial rally can start. Meantime resistance above the market is 99.00 

XLE - OIH - USO – December Crude: Crude has reached the 60.00 – 62.00 target zone.  A rally of 10-15 dollars should be the next development.    

GLD - December Gold: I think gold will drop to 600. Resistance is at 810. 

SLV - December Silver: The market has reached the 900 downside target but will probably continue lower to 810 or so before a big rally begins.    

Google: Google should rally to 425. Support remains in the 310-30 range. 

Upside Breakout

The cash S&P 500 just moved above yesterday's high. I think this is significant and means that a move to 1080 has begun.  If I am right about this we won't see the cash below 870  anytime soon.

Down to 800-810

The S&P couldn't hold 860 this morning so I think the market is on its way into the 800-10 zone. From there a rally to 1050-1100 should develop.

The fact that the cash S&P is making new lows while the 5 and 10 day moving averages of the advance issues number are not is a bullish divergence. I think it is telling us that the move down into the 800-10 zone will be quick and will be reversed even more quickly. 

Guesstimates on October 28, 2008

Spiders - December S&P  E-mini Futures:  Yesterday’s late weakness dropped the S&P’s to 827, just a shade above the 825 low reached early in the day. Buying in Europe this morning has produced another big rally to 878, so we are back to where we started yesterday morning. The latest rally does look like a second rejection of the 830 level so I am bullishly inclined this morning. No matter what the market does over the next few days I think that a 300 point rally is imminent. 

QQQ: The Q’s are headed for 26.90 before the next rally can start. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The euro should reach 121.50 before the next rally sets in. 

Dollar-Yen: The yen reached its 93 target Friday but will probably continue down to the 89 level before a substantial rally can start. Resistance above the market is 99.00 

XLE - OIH - USO – December Crude: Crude has reached the 60.00 – 62.00 target zone.  A rally of 10-15 dollars should be the next development.    

GLD - December Gold: I think gold will drop to 600. Resistance is at 810. 

SLV - December Silver: The market has reached the 900 downside target but will probably continue lower to 810 or so before a big rally begins.     

Google: Google should rally to 425. Support remains in the 310-30 range. 

Out

I just sold both my long units at 867.50.  If the market starts to show a preference for trading below 860 I think it will continue downward into the 800-10 zone. If we can hold above 860 I shall try to get long again tomorrow.

Added

I just bought my second e-mini unit at 872.50,  making me long two units at an average of 873.50.

Long

I just bought 1 unit of the e-minis at 874.50.

Guesstimates on October 27, 2008

Spiders - December S&P  E-mini Futures:  The market will probably drop into the 800-10 zone before staging a 300 point rally. Strength above the 860 level today will mean that this big rally is already underway. 

QQQ: The Q’s are headed for 26.90 before the next rally can start. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone.

Euro-US Dollar: The euro broke below 127 support and now should reach 121.50 before the next rally sets in. 

Dollar-Yen: The yen reached its 93 target Friday but will probably continue down to the 89 level before a substantial rally can start.   

XLE - OIH - USO – December Crude: Crude has reached the 60.00 – 62.00 target zone.  A rally of 10-15 dollars should be the next development.   

GLD - December Gold: I think gold will drop to 600. 

SLV - December Silver: The market has reached the 900 downside target but will probably continue lower to 810 or so before a big rally begins.   

Google: Google should rally to 425. Support remains in the 310-30 range. 

Away From My Office

Folks:

Personal business will take me away from my office for the rest of today and all of tomorrow. No guesstimate tomorrow.  I shall resume my normal posting schedule Monday.

Guesstimates on October 23, 2008

Spiders - December S&P  E-mini Futures:  The market dropped 18 points below my 890 target late yesterday, then rallied 50 overnight, and has since dropped 40.  I think we shall see an 860 print today but from there a rally to 1080 should begin. I think there is a good chance that the October 10 low at 837 will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: The Q’s are headed for 28.50 before the next rally can start. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: Support in the Euro is now at 127.  From there a rally into the 135-37 range will become likely.   

Dollar-Yen: I now think the yen will drop to 93. Resistance above the market is still at 104. 

XLE - OIH - USO – December Crude: Crude has spent several days below 70.00 so I think it will drop into the 60.00 – 62.00 zone before we see a rally of 10 or 20 dollars. 

GLD - December Gold: I think gold will drop to 600. 

SLV - December Silver: The market has reached the 900 downside target. Resistance is at 1180.    

Google: Google should rally to 425. Support remains in the 310-30 range. 

Guesstimates on October 22, 2008

Spiders - December S&P  E-mini Futures:  I think the market is headed for 890. Resistance today is at 950. I think there is a good chance that the October 10 low at 837 will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: The Q’s are headed for 28.50 before the next rally can start. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: Support in the Euro is now at 127.  From there a rally into the 135-37 range will become likely.   

Dollar-Yen: I now think the yen will drop to 93. Resistance above the market is still at 104. 

XLE - OIH - USO – December Crude: I still think the market will rally to 81.00 and possibly to 88.00 before the downtrend resumes.  

GLD - December Gold: I think gold will drop to 600. 

SLV - December Silver: The market has reached the 900 downside target. Resistance is at 1180.    

Google: Google should rally to 425. Support remains in the 310-30 range. 

Hmmm...

Let's see if I can describe today's e-mini action starting from yesterday's close: 25 points down, 25 up, 30 down, 30 up, 30 down...  Doesn't seem like anyone has any convictions about this market.

In any case I am sticking with my view that the S&P is headed for 890. 

Out

I just covered by two short units at 971.50.  The market has rallied much more than it should if we were about to go a lot lower so I don't have any strong view now about the very short term direction. 

Added

I just shorted a second e-mini unit at 954.00 on what appears to be a high volume breakout to new lows for the day.

Short

I just shorted one e-mini unit at 964.

Down

The drop from 986 to 956 so far this morning occurred on high volume once the market fell below 968. I regard this action as very bearish for the next few days and think it means that the e-minis are headed for 890.

Out

The drop from the day session high at 986 has been much bigger than I expected to see so I sold my two long units at 969.50.

Added

I just bought a second unit of the e-minis at 972.50.

Long

Floor trading hasn't started yet but the market has dropped down to my 965 support level so I just bought one unit of the e-minis at 965.75.  I don't expect the market to spend much time below 960. 

Guesstimates on October 21, 2008

Spiders - December S&P  E-mini Futures:  I think the market is headed for 1080. If it is support today should be found around the 965 level. I think there is a good chance that the October 10 low at 837 will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: Support remains at 30.50. The next upswing should carry to 38.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The Euro should rally back to 139 or so. 

Dollar-Yen: My 99.00 target has been reached. Short term resistance is now at 104.00. 

XLE - OIH - USO – December Crude: I think the market will rally to 81.00 and possibly to 88.00 before the downtrend resumes.      

GLD - December Gold: I think gold will drop to 600. 

SLV - December Silver: The market has reached the 900 downside target. Resistance is at 1180.   

Google: Google should rally to 425. 

An Encouraging Day

It looks like we are seeing the kind of "no news" rally that I mentioned two weeks ago in this post. It appears to have started from the October 16 low at 865. I think this phase will continue up to 1080. 

The late break last Friday faked me out and the move above the 970 level this afternoon means that we should now see a series of bullish days until the 1080 level is reached. I still think the odds are better than even that the 837 low of October 10 will hold, but even if it doesn't I think it will prove to be close to the ultimate low.

I also believe that 12 months from now current prices levels will look low by comparison.

Out Again

Today isn't my day, at least not yet. I covered my short unit at 964.  A move above 970 at this juncture will mean that Friday's late break was a false alarm and that the market is headed for the 1080 level. 

Short Again

I still think the day's trend will be downward so I again shorted one e-mini unit, this time at 950.50.

Out

I just covered my short unit at 964.  I am still not convinced that the day's trend is upward, but strength above the 975 level would be very bullish.

Short

I just shorted one unit of the e-minis at 951.

Guesstimates on October 20, 2008

Spiders - December S&P  E-mini Futures:  Friday’s late break makes me think the market will head lower before resuming its rally to the 1080 level.  I am expecting to see  a 890 print over the next couple of days. I still think there is a good chance that the October 10 low at 837 will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: Support remains at 30.50. The next upswing should carry to 38.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The Euro should rally back to 139 or so. 

Dollar-Yen: My 99.00 target has been reached. Short term resistance is now at 104.00. 

XLE - OIH - USO – December Crude: I think the market will rally to 81.00 and possibly to 88.00 before the downtrend resumes.  

GLD - December Gold: I think gold will soon drop to 600. 

SLV - December Silver: The market has nearly reached the 900 downside target. Resistance is at 1180.   

Google: Google should rally to 425. 

Out

The market took a dive below 956 and I just sold my longs at 959 on the subsequent rally.

Long Again

I just replaced my two long units at 964. I expect the 956 level to hold. 

Out

I sold my long position at 951 but will look to get long again later today.

Added

I just bought a second unit at 929.

Long

I just purchased one unit of the e-minis at 923.  I am betting that the 908 morning low will hold. 

Guesstimates on October 17, 2008

Spiders - December S&P  E-mini Futures:  The e-minis dropped almost 50 points in European trading this morning to a low of 908. The market has rallied from there and is now trading near 928. I expect the 908 low to hold and think the e-minis are on the way up to 1080 over the next few days (!). I think there is a good chance that the October 10 low at 837 will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: Support remains at 30.50. The next upswing should carry to 38.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The Euro should rally back to 139 or so. 

Dollar-Yen: My 99.00 target has been reached. Short term resistance is now at 104.00. 

XLE - OIH - USO – November Crude: I don’t think the market will spend much time below 70.00 before it rallies to 88.00 or so.     

GLD - December Gold: I think gold will soon drop to 600. 

SLV - December Silver: The market has nearly reached the 900 downside target. Resistance is at 1180.    

Google: Google made it back into the 310-30 zone and should now rally to 425. 

Out

I just sold my two long units at 933.50 on a move to new highs for the day.  I think the market is headed for 1080 but I don't want to deal with overnight volatility.

Long Yet Again

I just repurchased by 2 long units at 903.25.  I expect this market to go straight up from here but if it doesn't I'll get out. 

Out

I sold my remaining one unit long at 896.50.  I still think this market is headed up but it looks like 880-890 is likely before it does. 

Out Add

I just sold one unit at 899.00 but am still long one unit too.

Added

I just bought a second unit at 903.00.

Long Again

I just replaced my one unit long at 898.00

Yikes!!!

Out

I thought that the 899 low would hold, but it didn't so I sold my one unit at 897.50. I am still bullish and am looking for a chance to repurchase my long position.

Long

I just bought 1 unit of the e-minis at 913.00.

Guesstimates on October 16, 2008

Spiders - December S&P  E-mini Futures:  The e-minis dropped more than I expected, all the way down to 880, but I think the market has turned upward and has started a rally which should carry it into the 1080-1100 zone. I think there is a good chance that last week’s 837 low will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: Support stands at 30.50. The next upswing should carry to 38.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The Euro should rally back to 139 or so. 

Dollar-Yen: My revised 99.00 target has been reached. I think this market will stabilize and the yen will soon begin a big rally. Short term resistance is now at 104.00. 

XLE - OIH - USO – November Crude: Downside target at 75 was exceeded yesterday. I don’t think the market will spend much if any time below 70.00 before it rallies to 88.00 or so. 

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google has nearly made it back into the 310-30 zone and soon should rally to 425. 

Guesstimates on October 15, 2008

Spiders - December S&P  E-mini Futures:  The e-minis drop into the 910-30 range before the next rally starts. I think there is a good chance that the 837 low will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: Support stands at 30.50. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The Euro should rally back to 139 or so. 

Dollar-Yen: My revised 99.00 target has been reached. I think this market will stabilize and the yen will soon begin a big rally. Short term resistance is now at 104.00. 

XLE - OIH - USO – November Crude: Downside target at 75 was nearly reached Friday. I expect crude oil to begin stabilizing near 75. Resistance above the market is now at 88.00.  

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google will probably drop back into the 310-30 zone and then rally to 425. 

Covered

I covered my 2 short units at 985.50. I am still bearish but I think we are close to today's ultimate low. 

Added

I just shorted a second unit at 1013.00 

Short

I just shorted on unit of the e-minis at 1017.00

Guesstimates on October 14, 2008

Spiders - September S&P  E-mini Futures:  The e-minis have nearly reached the 1060 target. The next big move will be downward to 900 or so. I think there is a good chance that the 837 low will hold for quite a while, but even if it doesn’t the 810 level probably will. 

QQQ: The 37.50 level looks like pretty strong resistance.  From there a drop to 31 is likely. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The Euro should rally back to 139 or so. 

Dollar-Yen: My revised 99.00 target has been reached. I think this market will stabilize and the yen will soon begin a big rally. Short term resistance is now at 104.00. 

XLE - OIH - USO – November Crude: Downside target at 75 was nearly reached Friday. I expect crude oil to begin stabilizing but 75 is still likely soon. Resistance above the market is now at 88.00.   

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google has rallied past 380 but I think 405 is likely to be the top of this swing. Next move will be downward to 330 or so.  

Scared?

Guesstimates on October 13, 2008

Spiders - September S&P  E-mini Futures:  The e-minis have probably started a rally to the 1060 level. Support today stands at 890. 

QQQ: Support remains at 29.50 and the initial rally will probably carry to 34.00. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The Euro has dropped as low as 132 and now should rally back to 139 or so. 

Dollar-Yen: My revised 99.00 target has been reached. I think this market will stabilize and the yen will soon begin a big rally. Short term resistance is now at 104.00. 

XLE - OIH - USO – November Crude: Downside target at 75 was nearly reached Friday. I expect crude oil to begin stabilizing but 75 is still likely soon. Resistance above the market is now at 88.00.    

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google has so far held support around 315 and will probably rally to 380 soon.   

A Day for the History Books

I have NEVER see such big, fast intraday movements in the market averages. Maybe they occurred in 1929, but not since then and I have been watching since 1966. Today we saw four separate moves, two down and two up, each of between 80-100 S&P points. These are moves, each of about 10%. Yikes!

Still, I have survived the day with a modest profit, and I think a period of more normal markets will slowly develop over the coming weeks. 

As I said earlier, I think we shall see the S&P at 1060 or so within a few days. 

Out of Everything

I just sold my two units long at 861. What happens next is anyone's guess. 

Added Yet Again

I just bought a second unit at 872. I am looking for fast results and if I don't get them I will get out of this add. 

Long Yet Again

I just replaced my one unit long where I sold it, at 859. 

Out

I stopped myself out at 859 of my one unit long  in the e-minis. 

Out of Add

I just sold at 872 the unit I added a while ago.  I had been expecting the market to rocket upward but that didn't happen.  I am still long one unit and I still think the market will hold 860.

Added

I just bought a second e-mini unit at 873.  I think the market will now hold 860. 

Long Again

I just repurchased my single long unit at 871. 

Right or Wrong, Part 2

Here is an exchange of comments I had this morning with one of this blog’s readers: 

Carl

You were very scathing about the wine man and other bears like myself. We were predicting 1070.
My goodness, we were out as well but at least we got the main trend right.
How did you miss this?
I am not being critical just asking why your analysis missed the biggest move of the last 20 years. 

Catherine 

Here is my reply: 

My dear Catherine:
You accuse me of being "scathing". Please point me to the post or comment in which I used unkind words to describe you or your market views, or anyone else's for that matter.
Perhaps you take disagreement between us about prospective market direction a bit too personally?
In any case, I recall that you made a blog comment when the e-minis were trading around 1130 on October 1 or so. You asked me not to publish it and I didn't. In this comment you cited your 1070 target and said that you thought the market was probably making its low, at least temporarily at that level.
So I ask you - how could you have missed the 22% drop below your target during  the past 10 days? You have been about 22/47=47% as "wrong" as I have been!
Of course, the fact is that I believe the market is about profit and loss, not about right or wrong.

Respectfully yours, 
Carl 

Again I think it is important to remember what we are here for.  An investor’s results can only be measured by the standards of profit and loss, perhaps after adjusting for risk. An investor gets paid by his net profits, not by being"right".  See this post for my earlier thoughts on this subject.

Out

I just accepted a gift of 40 points and got out of my one long unit at 884.  I am still very bullish on the day and expect to take another long position in the 850-65 zone.

Long

I just bought 1 unit of the e-minis at 844.00

Global Chaos - All Signs Pointing To Panic

Here are images of the front pages of this morning's Chicago Tribune and The New York Times. I think the S&P futures will hit 860 today and then rally to 1060. 

Guesstimates on October 10, 2008

Spiders - September S&P  E-mini Futures:  The e-minis dropped well past the 930-40 range late yesterday and reached the 873 level when trading in Asia began. This morning’s newspapers aptly describe the market situation as one of chaos and panic.  I think the e-minis will hit 860 this morning and then will start a rally to 1060. 

QQQ: The Q’s should find support at 29.50. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend has reached the 135 target level. A rally to 139 is the next likely development. 

Dollar-Yen: My revised 99.00 target has been reached. I think this market will stabilize and the yen will soon begin a big rally. Short term resistance is now at 104.00. 

XLE - OIH - USO – November Crude: Downside target is 75. Resistance above the market is at 93.00.    

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google should find support  near 315 after which a big rally can start.  

Guesstimates on October 9, 2008

Spiders - September S&P  E-mini Futures:  The e-minis will probably drop into the 930-40 range before a rally of 200 points or so begins. For the moment the market is stuck in a 963-1045 trading range. 

QQQ: The Q’s should find support at 31. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend has reached the 135 target level. A rally to 139 is the next likely development. 

Dollar-Yen: My revised 99.00 target has been reached. I think this market will stabilize and the yen will soon begin a big rally. 

XLE - OIH - USO – November Crude: Next downside target is 75. Resistance above the market is at 97.00.    

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google should find support  near 315 after which a big rally can start.  

Trend Indentification

kleenup2 said... 

Carl, you are kidding when you asked how will we know when the trend is up aren’t you? Anyone with even the most primary knowledge of trading or basic chart reading knows how to draw a trend line on a chart. A downtrend is considered valid until a higher low forms and the ensuing advance off of the higher low surpasses the previous reaction high. As long as prices remain below the downtrend line, the downtrend is solid and intact. A break above the downtrend line merely indicates that net-supply is decreasing and that a change of trend could be imminent. But simply stated an uptrend is defined as a series of higher swing highs and higher swing lows on whatever time frame that you happen to be following. The greater the time frame the greater the relevance of the trend. The trend on the monthly, weekly, and daily charts is down. I do believe you are letting your detractors get under your skin and you are letting your emotions and pride cloud your judgment. I used to have a blog as well and the nay-sayers can effect your objectivity. 

My dear Kleenup:

Thanks for instructing me on methods for trend identification. I’ve be trading markets for forty years and don’t understand why I haven’t heard of them before.

Thinking about the methods you describe has led me to a number of questions for which, perhaps, you may have answers too:

1. How do you recognize a high or a low on the chart in a way you could program for a computer?
2. Having found a way to define highs and lows, which ones do you use to draw trendlines?
3. What do you do when the market breaks a trendline or moves past a previous high or low?
4. Why do you believe that you can make money using the answer to question 3?

Cordially,

Carl

Panic Volatility

Here is a weekly bar chart of the VIX options volatility index. It is  higher now than at any  time in the past 10 years, including the Long Term Capital Management panic in 1998 and the 2002 bear market low. As a rule it pays to be bullish when volatility spikes upward like this. 

Even the Bears Are Scared Now

I do a lot of cruising on the Internet, keeping track of market opinions and conditions. One thing I have noticed is that during the past 24 hours even the bearish commentators are in full panic mode. This is also reflected in the slow pace of comments on this blog.

This is a typical situation near low points.  Even people who have foreseen the debacle are afraid to step in and turn their wisdom into a market position.

Daily Dose of Distress

Here are images of the front pages of today's Chicago Tribune and The New York Times. The financial crisis of 2008 is one for the history books. Most crises last a few months at most, but this one has gone on for 14 months and still counting. It has been accompanied by headlines like these, but generally this sort of headline occurs very close in time to an important low. 

Watch For the No-News Rally

Virtually every rally we have seen during the past two months has been triggered by news of some bailout plan, rate cut, or some other central bank/treasury action. And after some temporary euphoria the market turned right around and fell to new bear market lows.

How will be know that a longer lasting low is in place?  I am looking for a rally that develops without any news for an excuse. Such a no-news rally would be the first sign that the panic selling has dried up.

This morning the market hit 963, rallied to 1045 on the news of central bank rate cuts, then fell back to 968, and is now on its way up again. This second leg up is of the no-news variety, but not in a very convincing way. So I think that the e-minis will probably have to drop into the 930-50 zone before a real no-news rally can start. When it does I think we shall see the average rally 15-20 % in a few days. 

Guesstimates on October 8, 2008

Spiders - September S&P  E-mini Futures:  The e-minis dropped as low as 963 early this morning, then rallied to 1045 on the central bank rate cut, and are now dropping back near their lows with 986 being the current print. It looks like the market will drop further to 940 or so before staging another rally. 

QQQ: The Q’s should find support at 31. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend has reached the 135 target level. A rally to 139 is the next likely development. 

Dollar-Yen: My revised 99.00 target was reached this morning.  I think this market will stabilize and the yen will soon begin a big rally. 

XLE - OIH - USO – November Crude: Next downside target is 75. Resistance above the market is at 97.00.   

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google has dropped to 350 and as will probably continue down to 315 before a big rally can start.  

Out

I expected the 1030 level to hold but instead the market has dropped substantially lower. So I sold my 1 unit long at 1023.  Right now it looks like the market will break yesterday's low, dropping into the 980-90 zone before it can try to rally once more. 

Long

I just bought one e-mini unit at 1033.00.

Banking and Housing

Here are the latest covers of Business Week and Harpers.  Despite panic in the public arena, the bank spiders and the homebuilders spiders are each trading above their July lows. In fact, the homebuilder spiders are also trading above their March lows.  I think these are the first concrete signs that the crisis will soon ease and that the housing sector's troubles will be controlled. 

Today's Headlines

Here are today's front pages of the New York Times and Chicago Tribune.  The stock market and credit crisis have become the primary focus of great public attention.  The next big move from current levels will be upward and a new bull market is imminent.

Guesstimates on October 7, 2008

Spiders - September S&P  E-mini Futures:  Yesterday’s late, high volume rally makes it likely that the low at 1009 will hold for a while. First upside target for this rally is 1110. Support today is centered around the 1035 level I think this market is very near its final bear market low. 

QQQ: The initial rally in the Q’s should carry to 36.50. 

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend has reached the 135 target level. A rally to 139 is the next likely development. 

Dollar-Yen: I am revising my dollar-yen target upward a little to 99.00.  Resistance above the market is at 104.00. 

XLE - OIH - USO – November Crude: Next downside target is 75. Resistance above the market is at 97.00.   

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: Google has dropped to 360 and I think it is about to begin a big bullish trend which will carry it to 750 or higher. 

Rally

The move up from today's low in the e-minis at 1009 has developed very high volume. I think this means that the market is headed for 1125 and eventually higher. 

Out Again

I just sold my one long unit of e-minis at 1024. 

Long Again

I just bought one e-mini unit at 1037.  I think a big rally is imminent but we may take a brief peek below 1031 first. 

Out

I just sold my  one long unit at 1055.  I was looking for a good upmove from the 1060-65 range but it did not develop.

Long

I just bought one unit of the e-minis at 1063.50.

Guesstimates on October 6, 2008

Spiders - September S&P  E-mini Futures:  The e-minis have traded for most of this morning below the 1090 level so I think the market will drop into the 1060-65 zone. From there a rally of 100-150 points is likely to start. I think this market is very near its final bear market low. 

QQQ: The Q’s should find strong support near 35 and then rally to 42.    

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend in the euro is downward and I think the market is headed for 135. Resistance above the market is now at 149.40. 

Dollar-Yen: Resistance is at 108.50 and I think the market is headed for 98.00. 

XLE - OIH - USO – November Crude: Next downside target is 75.   

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: I think Google will make a low near 375 and then begin another multi-year bullish trend. 

E-mini Update

The fact that the market couldn't hold above the 1140 level after hitting 1161 means that we shall probably see it trade at 1090 early next week. I think that will prove to be a good buy spot for a rally to 1200 and eventually higher. 

Out

I just sold my two long units at 1144.  The market has reacted from the 1161 level more than at any time today. 

Added Second Unit

I just bought a second unit of the e-minis at 1140. Now I am long two units at an average of 1138.50.

Long

I just bought one unit of the e-minis at 1137.  The early move above 1140 means that the market is probably headed for the 1200 level over the next few trading days. 

A Comment On Comments

A number of you have asked me why I allow rude or insulting comments on this blog. 

The answer is simple. I think these comments provide useful and important evidence for the state of the crowd's mind in the stock market.  As I have noted in the post you can find here, a sure sign of a strong consensus about the market's future direction is the intolerance of people who hold this consensus view towards those who do not share their opinions.

I include some (but by no means all) of the comments of this type because I find them helpful in forming my own views and because I want to document in real time the intolerant nature of crowds.

You will notice that as soon as the market starts to rally comments of this sort virtually disappear from this blog. This happens because the people who make them only gain confidence when the market is going their way. And when they are supremely confident, as they are now, it is a good bet that a big reversal is at hand. 

Added at 11:23 am: Note how quiet the comments section has become as the S&P has rallied 40 points from yesterday's low!

Guesstimates on October 3, 2008

Spiders - September S&P  E-mini Futures:  Yesterday the market dropped nearly all the way back to its 1112 low. Today the 1140 level is key. Strength above there will mean that a move into the 1200-25 zone is underway.  Failing such strength I shall be looking for a move to 1090 and then a big rally. In either case I think that the 1112 low either ended this drop or is very near the final low point. 

QQQ: The Q’s will probably act worse than the S&P for a while and eventually drop to 35 before a solid low is in place.   

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend in the euro is downward and I think the market is headed for 135. Resistance above the market is now at 149.40. 

Dollar-Yen: Resistance is at 108.50 and I think the market is headed for 98.00. 

XLE - OIH - USO – November Crude: Next downside target is 75.    

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: I think Google will make a low near 375 and then begin another multi-year bullish trend.

Out

I just got out at 1121.75 after the market gave up most of the 10 point rally from 1119.50.  

Long

I just bought 1 unit of the e-minis at 1127.00.  I am looking for a strong close. 

Guesstimates on October 2, 2008

Spiders - September S&P  E-mini Futures:  It still looks like the market can extend its rally from the 1112 low during the next few days.  Support today remains in the 1140-50 zone and resistance above the market stands at 1200. I think that the 1112 low either ended this drop or is very near the final low point. 

QQQ: The Q’s will probably act worse than the S&P for a while and eventually drop into the 34-35 zone before a solid low is in place.   

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend in the euro is downward and I think the market is headed for 135. Resistance above the market is now at 149.40. 

Dollar-Yen: Resistance is at 108.50 and I think the market is headed for 98.00. 

XLE - OIH - USO – November Crude: Next downside target is 75.   

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: I think Google will make a low near 375 and then begin another multi-year bullish trend. 

Out

I just sold my one unit long at 1165.50.  The market has rallied back to nearly unchanged on the day after being down 25 points. When this happens the next development is generally a substantial reaction. I am still bullish but in a market like this I only try to hit singles, not home runs.

An Open Letter to the Bears

Folks:

Well, the averages are down nearly 30% from the highs they reached last October. Congratulations on your foresight!

Now what? I know that most of you are expecting prices to move a lot lower. The most optimistic bearish projection I have heard is 1050, but most are looking for a move below 1000 in the S&P. 

I have a question for you. Suppose the market does get to 1050, 1000, 950, .....  What will you do then? Will you step in and buy when the S&P hits 950? At this point in time you may think you will, but you are forgetting that if the market hits 950 the financial system and the economy will look a lot worse then than it does now.  The news will be really scary. Are you sure you will have the courage to go long in the face of  such bad news?  Remember, you don't want to buy now at S&P 1150 because you think the bad news we are reading in the papers means the market is going much lower. What will change when the market hits 950 to give you the courage to get long again?

Do you have a plan B?  Suppose the market doesn't hit 950. In fact suppose, just for the sake of argument, that it makes its low at 1100 and three months later is selling at 1300 on its way to 1600.  What will you do then?

Remember, you can only reap the benefits of the foresight you have shown so far by getting reinvested at a price lower than the one you sold at.  Why are you confident that you will be able to do this?

(signed)

The Village Idiot

The Intolerance of Crowds

A sure sign that a stock market crowd has formed, either on the bullish or, as now, on the bearish side of the market is the intolerance its members show towards people who disagree with them. This shows very clearly in the comments section of this blog. The bears, who have been "right" so far  offer nothing but ridicule and contempt to those who are on the other side of this market.

A crowd is distinguished by the inability and unwillingness of its members to think independently of their fellows. Instead each member of the crowd accepts the same set of "facts" which become slogans to be repeated whenever a dissenting view threatens their comfortable interpretation of events.

This is a problem because it means that the only thing that will shake the crowd's confidence in their facts and their apparent implications is a very big, very unexpected market move in the opposite direction. At that juncture the crowd disintegrates, its members retiring from the field to lick their wounds. When the smoke has cleared very few of them will have any positive investment results to show for their efforts. About all they have gained is the fun of being part of a big, like-thinking group of investors. This is what happened to the big, bullish, bubble crowd in the stock market in 1999-2000. The same fate awaits the big, bearish, the-end-is-nigh crowd in the market now. 

Long

I just bought one unit of the e-minis at 1149.00

Guesstimates on October 1, 2008

Spiders - September S&P  E-mini Futures:  It still looks like the market can extend its rally from the 1112 low during the next few days.  Support today is in the 1140-50 zone and resistance above the market stands at 1200. Judging from Tuesday’s headlines and the bullish divergences evident in the advancing issues numbers I think that the 1112 low either ended this drop or is very near the final low point. 

QQQ: The Q’s will probably act worse than the S&P for a while and eventually drop into the 34-35 zone before a solid low is in place.   

TLT - December Bonds: I think a big drop is underway in the bonds. It should carry the market back to 111 or lower. 

December 10 Year Notes: The notes are now headed for the 110-111 zone. 

Euro-US Dollar: The trend in the euro is downward and I think the market is headed for 135. Resistance above the market is now at 149.40. 

Dollar-Yen: Resistance is at 108.50 and I think the market is headed for 98.00. 

XLE - OIH - USO – November Crude: Next downside target is 75.   

GLD - December Gold: Gold still has resistance at 935.  I think gold will soon drop to 600. 

SLV - December Silver: Resistance is at 1390. Next downside target is 900.   

Google: I think Google will make a low near 375 and then begin another multi-year bullish trend.