The Stock Market

[DarterBlue]

We are setting up for a test of Friday's lows, particularly on the NASDAQ as I type this. If we cannot hold at or near these lows, then I think the market will have sent us a clear signal. I will heed it. I will not have gotten out at the top, but I will preserve most of my gains. 

The rally off the March lows was spectacular. Almost as spectacular as the plunge from mid-February through late March. We may or may not be at another key inflection point here. If we are, I will not ride the market down. 

 

[DarterBlue]

6 hours ago, DarterBlue said:

We are setting up for a test of Friday's lows, particularly on the NASDAQ as I type this. If we cannot hold at or near these lows, then I think the market will have sent us a clear signal. I will heed it. I will not have gotten out at the top, but I will preserve most of my gains. 

The rally off the March lows was spectacular. Almost as spectacular as the plunge from mid-February through late March. We may or may not be at another key inflection point here. If we are, I will not ride the market down. 

 

So far, the DOW has undercut but then rallied off Friday's lows (the S&P did pretty much the same, but to a lesser degree). The two NASDAQ indices essentially bounced off Friday's lows without undercutting them and now trade over 125 points above them. But in this environment, 125 points is nothing. One bright, ray of hope is the fact that although the averages have been in a trading range for the past two or so hours, breadth has improved over this period. Should we close today in the upper half of the day's range, particularly if there is positive momentum going into the final half hour, I think there is a decent chance that the selling we have seen over the three day period may be over. What does this mean? Ideally, it won't mean that we immediately return to the old highs. That would probably be negative though it sounds counter intuitive. My mostly likely scenario, which would actually be the best case is if the averages spend the next two weeks consolidating (going sideways) here. If this occurs, by the end of month, we would be on a better footing to continue this remarkable uptrend. 

With all of the above said, first the market needs to hold here. If we resumed the early selloff, then it goes without saying that we will likely have further to fall. If this occurs, I am prepared to cover most of my longs tomorrow.  

[DownSouth]

6 hours ago, DarterBlue said:

We are setting up for a test of Friday's lows, particularly on the NASDAQ as I type this. If we cannot hold at or near these lows, then I think the market will have sent us a clear signal. I will heed it. I will not have gotten out at the top, but I will preserve most of my gains. 

The rally off the March lows was spectacular. Almost as spectacular as the plunge from mid-February through late March. We may or may not be at another key inflection point here. If we are, I will not ride the market down. 

 

This is why I stay heavily invested in mutual funds of equity between 30-75%. My downside risks range anywhere from 6% - 10% per year (average gains are anywhere between 4% - 22% depending on the year, that's only counting fund price...income of the funds not included). I hold quite a few ETF's as well so that they'll short the market so I don't have to - when things are really bad or abrupt.

Even with the massive sell off of the last couple days, the damage is largely offset for me as many of my monthly or quarterly dividends are coming through, which will then reinvest.

Larger sell offs always result in incredible long term and short term capital gains in December, which is a decent silver lining whenever the market decides to mini correct.

Just a separate strategy to think about for those that don't have the time to monitor the market fluctuations on an hourly or daily basis. 

[DarterBlue]

3 hours ago, DownSouth said:

This is why I stay heavily invested in mutual funds of equity between 30-75%. My downside risks range anywhere from 6% - 10% per year (average gains are anywhere between 4% - 22% depending on the year, that's only counting fund price...income of the funds not included). I hold quite a few ETF's as well so that they'll short the market so I don't have to - when things are really bad or abrupt.

Even with the massive sell off of the last couple days, the damage is largely offset for me as many of my monthly or quarterly dividends are coming through, which will then reinvest.

Larger sell offs always result in incredible long term and short term capital gains in December, which is a decent silver lining whenever the market decides to mini correct.

Just a separate strategy to think about for those that don't have the time to monitor the market fluctuations on an hourly or daily basis. 

What you do is a decent hedge against selloffs. And, for many, it would represent an alternative to actively trading the markets. For me, it is not an alternative. But I have been an active trader for three decades and monitor the markets daily, though not always by the hour. The analysis of intra day activity is usually done after the close when one can be more objective about the day's action than when things are occurring tick by tick. 

With the failure to hold this morning's upside reversal attempt, the market is now in very serious trouble. The NASDAQ has now given up just over 10% in three trading days, which is a very sharp turn of evens and exceeds what I had expected it would have done. In the process both NASDAQ indices slightly undercut their 50-day moving averages and closed just above their day lows. Bad action all around. The DOW also undercut its lows of Friday and closed within striking distance of its 50-day moving average, but above it. The S&P 500 closed right at day lows also and in the process closed at its 50-day moving average. 

The bull run we have had since March 23, 2020 is on life support on a ventilator as I type this. I am not shocked as this rally was driven purely by the FED's monetary policy and the first round of congressional stimulus. With further stimulus all but dead, all it had going for it was the FED. I expect Jay Powell to come out with some pronouncement to try and calm the markets before Friday, but I am not sure his words will work this time. 

Tomorrow, unless we get a rally from the outset or a very quick upside reversal from a negative open, I will be exiting the majority if not all my positions. I have seen enough. 

[DarterBlue]

Stocks closed broadly lower on mixed volume. NASDAQ volume contracted while NYSE volume rose. The averages closed at to very near day lows, which is very negative. In the process, the two NASDAQ indices breached their 50-day moving averages by a small amount while the S&P closed right at its 50-day and the DOW just above its 50-day moving average. The only two bright spots to the extent any exist was breadth, which finished well off day lows and the fact that NASDAQ volume contracted. At day’s close, the range was from a loss of 1.77% on the NYSE to a loss of 4.77% on the NASDAQ 100. Make no doubt about it, the Covid-19 bull market is now on life support. It is like a Covid patient with underlying health conditions on a ventilator. It could survive this, but the prognosis is very poor. And, even if we avoid a bear market, either we will likely need many weeks of consolidation and repair, or we get a much less orderly uptrend from here. This FED has been very sensitive to the condition of the financial markets. With this amount of weakness, I fully expect them to signal some kind of additions monetary action to try and calm things. However, it is not clear whether this will work this time. We may have seen the latest chapter in an extremely unusual year of market activity.

 On a personal note, I had a bad day. But not as bad as the overall indices as only the NYSE and Russell did better. I lost 2.17% or $13,015. I did better than the averages because I had one open position (I was not fully invested) and while my techs all lost in the 5% range, NEM was up on the day and LOW and DHI had moderate losses. ZTO performed in line with the techs and is back to being technically broken. Unless the market opens higher and sustains the gains or it quickly reverses (by mid-morning or before) from opening losses, I will sell a majority of my positions tomorrow. I have seen enough to tell me that we may be in serious jeopardy of sustaining our second bear market of the year. While this is not good news, as a trader it is what it is. After I lighten up, the question facing me is: is there an opportunity for me to make money on the short side here? The answer as I type this is not clear. For one thing, I will have been late to the party, both because I have been heavily long and because this break, like the one in February has been sudden and dramatic without sustained topping action. Regardless, I am not about to surrender my gains in short order. It is easy to do in bear markets. I speak from personal experience.

 

 

[DarterBlue]

23 hours ago, DarterBlue said:

The Technical Picture of my Positions: Despite the bounce in the market Friday, I was still down $11,328 or 1.85% on the day. Seven of my positions closed down on the day while one broke even. Several of the losers lost quite heftily. The following is a brief evaluation of their technical condition after the blood bath of Thursday and Friday. ZM (HOLD for now) was down 3% on the day but actually finished in the upper end of the day’s range. At day lows, the stock had nearly filled the gap it created off its big earnings report. Despite giving up more than 50% of the gains on the gap up it made Tuesday, the stock is still well above its 21-day moving average. The question is, is it broken (did that gap up constitute an exhaustion gap) or will it find support here and once again resume its uptrend. I am willing to give it a bit more leeway here especially if the market does not continue violently down. Its fundamentals are quite good despite the high valuation and it is not yet technically broken. The fact I have booked some profits on it and am still up significantly on the remaining holding, also provides some confidence to give it at least a couple more days. TTD (SELL) crashed through its 50-day moving average and closed a bit below it. It is in significant technical trouble and needs to stabilize or bounce here quickly. Another bad day early this week, and I will likely sell it, particularly if I don’t like the market’s action. LOW (SELL) is having its first meaningful correction of this bull leg. It closed below its 21-day moving average but held above the 50-day. It has also held up better than its chief rival, HD. This is a relatively low beta stock with very good fundamentals. Unless the market gives a clear sign it’s rolling over (which is very possible) I would like to hold it. SHOP (SELL, this one is badly broken) was down well over 100 points (10%) at its lows of the day. It has now carved out its most significant pullback since this bull run started. If it cannot hold Friday’s lows, it needs to be sold. The good news is that it made day lows early and closed powerfully off them. We will see soon whether it is broken or not. ZTO (SELL) was the only position that did not lose me money on the day. It market its day lows just after 10:30 am and powered higher strongly after that. Unlike my other holdings, this one is more dependent on foreign goings ons and on whether DJT follows through on delisting Chinese stocks in the USA. Like SHOP, it is on a short leash. DHI (HOLD for now) made day lows at about 11:30 am at which point it bounced off its 50-day moving average. As of Friday’s close, it is not broken. Its future will be determined by the industry group (homebuilders) of which it has been a leader. For now, I am willing to give it some more rope. NEM (HOLD for now) closed down a percent and seems to be trying to make a bottom. However, being a gold miner it will rise or fall with the fortunes of gold. A weak dollar will propel it higher as will a Fed induced inflationary policy. MDY (SELL, averages will go as the market goeth) was down .5% on the day. Its chart looks okay relative to the Russell. However, both have underperformed. I will keep it for now if the market rights itself but will get rid of it if the current weakness persists

My intentions by position are reflected above in bold red. They will be executed tomorrow unless the market opens higher and stays strong the entire day or unless it reverses higher after opening lower. For me to not sell, the reversal will need to occur within the first 1.5 hours of the regular trading day. After executing the above, I will be left with three positions, all of which will be on relatively short leashes and of which DHI will be on the shortest leash of all. I would like to hold ZM because I am very bullish on its intermediate to longer term prospects and NEM, because I view Gold as having a chance at shining even if we are now in a brand new bear market. But with both of these positions I will let their action be my guide. I am not prepared to ride either down if it becomes clear that each is badly broken. 

After executing the above, further action on my part (shorting the market) will occur if and only if the negative action continues, but more importantly, I get what I consider to be a great entry point to do so. 

[DarterBlue]

On 9/5/2020 at 9:40 PM, golfaddict1 said:

 

Nothing wrong with a little correction and profit taking for a few days.  Tuesday, it will be interesting to see if the market begins green in any index and does value continue to show some support or does growth continue to push the p/e further on momentum buy ins on a recent dip?

 
 

The problem with "value" is that it is at least a year away from their underlying businesses having a meaningful recovery in their fortunes due to Covid. As such, if the bull market is to remain alive, by definition it will be because there is a resurgence in the techs. Now, tech land is not cheap. But there are companies there that will thrive and prosper with or without Covid hanging in the backdrop. What many investors ignore that leads them to avoid tech is the power of compounding. When a company is able to grow its sales and earnings north of 30% per quarter for multiple quarters, what looks very expensive may actually be quite cheap. The trick, however, is to be able to identify the companies that can actually sustain growth for multiple quarters. That, alas, is often easier said than done. 

[Troll]

14 minutes ago, DarterBlue said:

easier said than done. 

Hey darter, just read some business news that I thought you might find interesting...

You are one of the few that has mentioned the topic...

This product ban seems typical T, but curious what you think of the "reasoning" given for the bold move...

maybe just some excuse from a what was it....a self absorbed evil human being, I think it was 🤔

 

World News

September 8, 2020 / 10:05 AM / Updated 2 hours ago

U.S. prepares orders blocking cotton, tomato imports from China's Xinjiang over forced labor

 

David Lawder

WASHINGTON (Reuters) - U.S. Customs and Border Protection officials have prepared orders to block imports of cotton and tomato products from western China’s Xinjiang region over allegations they are produced with forced labor, although a formal announcement has been delayed.

The Trump administration announcement of the actions, initially expected on Tuesday, has been put off until later this week because of “scheduling issues,” a CBP spokesman said.

The cotton and tomato bans along with five other import bans involving Xinjiang forced-labor abuses would be an unprecedented move by CBP and likely stoke tensions between the world’s two largest economies.

The “Withhold Release Orders” allow the CBP to detain shipments based on suspicion of forced-labor involvement under long-standing U.S. laws aimed at combating human trafficking, child labor and other human rights abuses.

President Donald Trump’s administration is ratcheting up pressure on China over its treatment of Xinjiang’s Uighur Muslims. The United Nations has said it has credible reports that 1 million Muslims have been detained in camps in the region, where they are put to work.

China denies mistreatment of the Uighurs and says the camps are vocational training centers needed to fight extremism.

 

Rest of article is here:

https://www.reuters.com/article/us-usa-trade-china-xinjiang/u-s-to-block-cotton-tomato-product-imports-from-chinas-xinjiang-over-forced-labor-idUSKBN25Z29N

Is that an Interesting development in the issue ?

 

[DarterBlue]

32 minutes ago, Troll said:

Hey darter, just read some business news that I thought you might find interesting...

You are one of the few that has mentioned the topic...

This product ban seems typical T, but curious what you think of the "reasoning" given for the bold move...

maybe just some excuse from a what was it....a self absorbed evil human being, I think it was 🤔

 

World News

September 8, 2020 / 10:05 AM / Updated 2 hours ago

U.S. prepares orders blocking cotton, tomato imports from China's Xinjiang over forced labor

 

David Lawder

WASHINGTON (Reuters) - U.S. Customs and Border Protection officials have prepared orders to block imports of cotton and tomato products from western China’s Xinjiang region over allegations they are produced with forced labor, although a formal announcement has been delayed.

The Trump administration announcement of the actions, initially expected on Tuesday, has been put off until later this week because of “scheduling issues,” a CBP spokesman said.

The cotton and tomato bans along with five other import bans involving Xinjiang forced-labor abuses would be an unprecedented move by CBP and likely stoke tensions between the world’s two largest economies.

The “Withhold Release Orders” allow the CBP to detain shipments based on suspicion of forced-labor involvement under long-standing U.S. laws aimed at combating human trafficking, child labor and other human rights abuses.

President Donald Trump’s administration is ratcheting up pressure on China over its treatment of Xinjiang’s Uighur Muslims. The United Nations has said it has credible reports that 1 million Muslims have been detained in camps in the region, where they are put to work.

China denies mistreatment of the Uighurs and says the camps are vocational training centers needed to fight extremism.

 

Rest of article is here:

https://www.reuters.com/article/us-usa-trade-china-xinjiang/u-s-to-block-cotton-tomato-product-imports-from-chinas-xinjiang-over-forced-labor-idUSKBN25Z29N

Is that an Interesting development in the issue ?

 

Troll, the difference between contemporary USA and China is thus. China is a functional, fascist country masquerading as a "communist" country. The USA is a dysfunctional democracy rapidly heading towards some form of authoritarian government, fascist or otherwise. 

DJT is a corrupt, likely insane, transactional human being. So, I believe his reason for the above has not a damned thing to do with the plight of Uighurs or anything that China may be doing on the humanitarian front and everything to do with the fact China has resisted his moves to getting a trade deal that he, DJT, finds acceptable. Of course it seems more palatable if human rights are inserted into the equation. But at the end of the day, if he gave a damn about human rights, he would have very different policies toward Saudi Arabia and Russia to name two countries. 

I am not especially happy that one of my children has chosen to take up residence in China. There are many things I don't like about their governance. However, TD has always been first and foremost, a pragmatist whilst his dad, at least to a degree, is a romanticist. As such he has chosen to live and work there indefinitely solely because financially and to a lesser degree, his safety seem more assured there than here. To me that is a scathing indictment of contemporary America, for TD is nothing if not a very bright, resourceful young man. Sadly, though I would like to, I actually cannot disagree with his choice. 

[DarterBlue]

A few final thoughts on the market: I said in an earlier post that if the market opens higher tomorrow or quickly reverses higher after opening lower, that I may hold my positions. However, upon reflection, while I will likely hold all my positions at least into the afternoon if that's the case, I may still lighten my portfolio, even if not to the degree I laid out previously. Why? The recent weakness has exceeded my expectations and I had been looking for a pullback as the market had been extended. The extent to which all the leadership has deteriorated in rapid order has actually been breathtaking. Some of this leadership may not repair the technical damage sustained in months or perhaps not at all for this current market cycle. So, then the question becomes what could replace them? I have already argued it won't be the more cyclical types as their earnings are going to be constrained by Covid-19 at least through the first quarter of next year, and that's the optimistic version of events. So, could it be restaurants, entertainment, travel and hospitality? Hardly, in my opinion. Well, then, that leaves us with not many alternatives, now does it? Bingo! If the techs are finished, there are few if any areas that are going to propel us higher. 

With the above said, the correct thing to do, in my opinion is to use either strength or weakness to lessen exposure to the current market which seems to be confirming September's reputation for being the worst month of the year. Whether we have entered the early stages of a new bear market or this is just an alarmingly sharp correction, it is very possible that the "easy money" of this market cycle has already been made and that from hereon it will be far more difficult to do so. 

[Troll]

27 minutes ago, DarterBlue said:

 So, I believe his reason for the above has not a damned thing to do with the plight of Uighurs or anything that China may be doing on the humanitarian front and everything to do with the fact China has resisted his moves to getting a trade deal that he, DJT, finds acceptable. Of course it seems more palatable if human rights are inserted into the equation.

Yes I get the old excuse for a better deal hardball...

but regardless of how much he 'actually cares'

just found it interesting that ball was being tossed

and being hit into play 🤷‍♂️

 

PS: The scheduled to be announced, but not announced yet is a good indicator it's being used as a chip... at the poker table

BTW: Also noted that Disney is taking some major social shaming heat on the same issue, with their new movie Mulan...

seems to be a trending topic. 🤔

 

 

[DarterBlue]

Lightening Up: In accord with my thoughts last evening I sold the following positions this morning between 9:34 and 10:00 am.

23 SHOP (just over 1/3 of the position of 61 shares)          $23,685.60

172 MDY (entire position)                                                          58,756.96

100 TTD (entire remaining position)                                       42,516.27

1,190 ZTO (entire position)                                                      38,499.00

I did not sell any of the LOW which I had targeted as a sale, and I did not sell ZM, NEM or DHI which I said I would keep for now. Total proceeds from my sales were $163,457.83. With that, I now have cash on the sidelines of $345,556.33 out of a total trading portfolio value of $595,994.32 at the time of the last sale. So, I have moved from being about 75% invested to having only about 42% of my funds remaining long. 

Should the market stabilize over the next week, I will go long again. This could take the form of repurchasing some of the positions sold, or finding new positions that meet my criteria. I made good money on SHOP and TTD. I lost about 4% on ZTO, and made a trivial amount on the MDY. I will post details after market close this evening. 

If the market continues to show weakness I will sell other positions up to going 100% cash with a view to shorting the market via put options is circumstances warrant it. 

For now, I am grateful I was able to sell into strength rather than into a fourth consecutive bad day. 

[DarterBlue]

Impressive Rally But: One of Wall Street's dirty advertising strategies when promoting the concept of buy and hold for the long haul is to point out the fact that if you missed the best 5% of trading days (up days), you would reduce your rate of return by about 85%. On the surface this is true. That is, until you look beneath the hood and realize that 90% of the biggest up days over the past 50 years have occurred during bear markets. Gaining 5% in a day isn't worth a hill of beans if the subsequent five days result in a 10% draw down. 

I raise the point because today's rally is very impressive indeed. Could it be the beginning of a new leg up in the stock market? Of course it could. However, as I type this, one noticeable thing  missing is volume, which is running well below yesterday's volume on the sharp down day. Now the lack of volume does not automatically mean that this rally attempt will fail. However, it is more indicative of selling by the big institutions temporarily ceasing their selling intensity rather than them jumping in hand over fist to grab bargains created by this recent weakness. 

In order for me to commit any portion of the recently liquidated money to the long side, I will need to see what IBD refers to as a follow through day. This kind of day is defined as a strong up day (2% or more) occurring on day 3-8 of the latest rally attempt on volume that is higher than the prior day's volume. If we get such a day particularly if it happens on day 3-5, I will then put some of the cash raised today back to work.

On the other side of the ledger, if over the next two to three trading days, Tuesday's lows are taken out, I will likely liquidate my remaining positions with the possible exception of ZM and NEM. ZM because I love its fundamental story and NEM because our FED Chair, glorious idiot that he is, has committed to attempt to generate inflation in excess of 2% for the next several years. You can't make this kind of stupidity up. We truly live in strange times. 

[DarterBlue]

Stocks broke a three-day string of significant down days with the bulls back in charge today. Stocks closed broadly higher, but on significantly lower volume. Interestingly, today’s poor performers were the ones that gained the most in yesterday’s bloodbath. These were namely: airlines, hotels, cruise lines and other travel and hospitality business. Notably, despite the airline’s poor performance, the DOW Transports gained 1.48% on the day. This whole behavior makes no logical sense, as it is difficult to believe that truckers, trains and the UPS’s of the world will do fine in an environment where airlines are sidelined. But I am a technician first and foremost, I don’t trouble myself too much (though I do note what they do) with the lunacy of the Wall Street analyst community. At day’s close, the gains ranged from a gain of 1.36% on the MID Cap index to 2.96% on the NASDAQ 100 which soared. Advancing stocks led by a 23-7 margin on the NYSE to a 12-5 margin on the NASDAQ. So, overall, breadth was there. How do I view the day? It was certainly not bearish. However, the lack of volume on the move was more indicative of selling backing off for a day than of aggressive buying by the big money crowd. As described in the paragraph below, I lightened my exposure to stocks significantly today. For me to dive back in full throttle, I would need to see a William O’Neil, IBD follow through day between next Monday and Thursday, September 17. If this is not forthcoming, I will either remain on the sidelines or sell my remaining positions depending on the action between now and then.

 

On the day I significantly reduced my exposure to stocks. On the day, I sold the following positions:
25 SHOP for a net profit of $ 4,814.60
100 TTD  … .. ..  …..                12,222.56

172 MDY … .. .. …..                     961.64
1190 ZTO for a loss of         (1,818.20)

 TTD, MDY and ZTO were sold in their entirety. The sale of the 25 SHOP represented more than a third of that position. I now own: DHI, ZM, LOW, NEM and the remaining SHOP. As a result of the sales, my cash position burgeoned to $345,556.33. The value of my total trading capital closed the day at $602,417.44. So, I am more than 50% in cash at day’s close (by quite a bit). Despite getting rid of the above positions, I was up $15,820, or 2.7% on the day. In the process I outperformed all the indices except the NASDAQ 100 which gained 2.96%. I tied the NASDAQ composite which had a gain similar to mine. For the time being, I have no intention of letting the cash burn a hole in my pocket. In fact, as I explained in the first paragraph, unless I see a clear and compelling follow through day next week, I will either remain as I am, or if the market continues its selling and undercuts yesterday’s lows, I will sell my remaining positions and look to go short. One of the beauties of my approach is that I am not partial to being either long or short. For I regard this a massive game played by several of the best minds in the world and a whole bunch of average to below average other participants. My job, as I view it, is to take my share of the dumb, inexperienced money.

[imaGoodBoyNow]

Hey @DarterBlue when you have a chance today can you read the first couple paragraphs and give me your thoughts https://hindenburgresearch.com/nikola/

[DarterBlue]

4 hours ago, imaGoodBoyNow said:

Hey @DarterBlue when you have a chance today can you read the first couple paragraphs and give me your thoughts https://hindenburgresearch.com/nikola/

I don't know how credible Hindenburg Research is. With that said, if 25% of what they claim is true, the CEO of NKLA could be looking at prison time in the near future or at the very least, massive lawsuits against him personally, and the company. 

I was always bothered by the fact that NKLA did not take the traditional route to going public. That and the fact that the CEO did not have a science or engineering background. That is the reason why I bought long term options and not the stock itself. It was a way to limit my losses.

I will say this: If the report is correct, then GM's CEO is a flaming idiot! For, at the very least, she should have thoroughly checked the company out before inking a deal with them. It is also noteworthy that all the gains from the GM deal have been given up yesterday and today.

Personally, I would not touch the stock as there are way too many question marks surrounding it. While it could be the real deal, all my ghetto instincts tell me it's probably a fraud.  

[imaGoodBoyNow]

Trevors tweeting about it and they say his stock crashed because of report, something has to be going on

[DarterBlue]

On 9/9/2020 at 1:19 PM, DarterBlue said:

Impressive Rally But: One of Wall Street's dirty advertising strategies when promoting the concept of buy and hold for the long haul is to point out the fact that if you missed the best 5% of trading days (up days), you would reduce your rate of return by about 85%. On the surface this is true. That is, until you look beneath the hood and realize that 90% of the biggest up days over the past 50 years have occurred during bear markets. Gaining 5% in a day isn't worth a hill of beans if the subsequent five days result in a 10% draw down. 

I raise the point because today's rally is very impressive indeed. Could it be the beginning of a new leg up in the stock market? Of course it could. However, as I type this, one noticeable thing  missing is volume, which is running well below yesterday's volume on the sharp down day. Now the lack of volume does not automatically mean that this rally attempt will fail. However, it is more indicative of selling by the big institutions temporarily ceasing their selling intensity rather than them jumping in hand over fist to grab bargains created by this recent weakness. 

In order for me to commit any portion of the recently liquidated money to the long side, I will need to see what IBD refers to as a follow through day. This kind of day is defined as a strong up day (2% or more) occurring on day 3-8 of the latest rally attempt on volume that is higher than the prior day's volume. If we get such a day particularly if it happens on day 3-5, I will then put some of the cash raised today back to work.

On the other side of the ledger, if over the next two to three trading days, Tuesday's lows are taken out, I will likely liquidate my remaining positions with the possible exception of ZM and NEM. ZM because I love its fundamental story and NEM because our FED Chair, glorious idiot that he is, has committed to attempt to generate inflation in excess of 2% for the next several years. You can't make this kind of stupidity up. We truly live in strange times. 

While we are not there yet, as I type this, Wednesday's gains seem in jeopardy of being surrendered. If this happens, it would be extremely bearish for the market. And, in accord with my post from yesterday shown above, Friday morning I will likely liquidate several other positions. The reason is simple. It would be a clear signal that the selling from Thursday of last week through Tuesday of this week has not run its course. Blame it on the failure to reach a new stimulus agreement, or on the market's factoring in the departure of Trump, or on whatever else you wish. It really does not matter. A weak market is one in which traders don't want to get caught on the long side. The correct positioning is to be either in cash, or to be short in such situations. 

[DarterBlue]

After opening nicely higher stocks reversed and closed broadly lower on higher volume. In the process the DOW briefly took out Tuesday’s low, while the NASDAQ and S&P 500 came very close, but did not do so. With this bad day, the rally attempt scored yesterday, is now on life support. Another bad day tomorrow, and we will have resumed the sell off that began on Thursday of last week. At day’s close, the losses ranged from 1.23% on the Russell to 2.12% on the NASDAQ 100. Losing stocks led by 2-1 margins on both the NYSE and NASDAQ. So, the breadth was bad, but not climactic bad. So, how do I view the market? The market is in bad shape technically. We came within a hair’s breadth of ending the rally attempt that only began yesterday. Signs of a slowdown in the economy, failure to pass a second stimulus and the increasing likelihood that the incumbent may lose the election have been offered as reasons for the recent weakness. Those fundamental factors plus the fact that the NASDAQ indices and S&P 500 were extended. To me it does not matter what the cause is. It is the action that matters. And it is negative.

 On the day, after being up over $3,500 early, I reversed with the market and lost $3,295.36 or .55%. All five positions I own ended down. The two biggest losers were: NEM, down 2.46% (interesting since gold futures closed higher); and, SHOP, down 1.59%. ZM also lost over 1% while LOW and DHI lost .75% and .49%, respectively. If Tuesday’s lows are taken out Friday at the day’s close, then on Monday of next week, I will sell LOW, DHI and the remaining SHOP. I will keep, for the time being, ZM and NEM. At that stage, I would be looking to go short the market via put options. I will likely choose the QQQ options and the Russell options. The first to benefit from volatility to the downside and the second because the Russell has been the weakest of the indices. The thing to note here is that there is a game plan ahead of schedule. Therefore, decisions are not made in the heat of battle.

[HSFBfan]

On 9/8/2020 at 9:19 PM, DarterBlue said:

 

Get back to work

 

JPMorgan Top Brass Tell Trading-Floor Staff to Come Back to the Office

https://www.wsj.com/amp/articles/jpmorgan-top-brass-tell-trading-floor-staff-to-come-back-to-the-office-11599757313

[DarterBlue]

39 minutes ago, HSFBfan said:

Get back to work

 

JPMorgan Top Brass Tell Trading-Floor Staff to Come Back to the Office

https://www.wsj.com/amp/articles/jpmorgan-top-brass-tell-trading-floor-staff-to-come-back-to-the-office-11599757313

I am not sure I agree with this policy. I am pretty sure I would trade better from home than on a trading floor or office. I find the distractions of others with there conflicting opinions would detract from my performance. 

[HSFBfan]

19 minutes ago, DarterBlue said:

I am not sure I agree with this policy. I am pretty sure I would trade better from home than on a trading floor or office. I find the distractions of others with there conflicting opinions would detract from my performance. 

People need to work

[DarterBlue]

3 minutes ago, HSFBfan said:

People need to work

Were they not working from home? What are you talking about? Traders don't need to be in an office!

[HSFBfan]

3 minutes ago, DarterBlue said:

Were they not working from home? What are you talking about? Traders don't need to be in an office!

Companies from what people have told me are tired of paying for people to stay home. They want them in the office 

[DarterBlue]

15 minutes ago, HSFBfan said:

Companies from what people have told me are tired of paying for people to stay home. They want them in the office 

If you are a trader you can work from anywhere in the world. What part of that do you not understand?