Friday, January 16, 2009

A Few Morning Thoughts

I'm going on limited sleep once again as the little guy was up a lot last night, so bear with me. Here are some thoughts though after going through my scans yesterday.
  • Today is going to suck for me after getting stopped out of my long ETFs prematurely yesterday. I should have kept my eye on the market more after getting stopped out, but once those stops were hit, I figured we were in for more selling and a reversal at a lower level and turned my quotes off to focus on other things. When I checked back in, we were already flat for the day and the big rally I had anticipated already occured. Never take your eye off the ball I guess. I did and I missed my chance to get back in even though my timing was off a bit to start.
  • I am still looking to short this bounce in another day or so. To be honest, it wasn't that impressive when compared to other one day reversals we had in 2008. The S&P closed a total of 26 points off its lows for the day. Other one-day reversals from late 2008 include 9/18 (73 points off the lows), 10/10 (60 points off the lows), and 10/16 (81 points off the lows). Of course, volatility was much higher then as well, but overall, I don't think this will amount to anything meaningful. I compare today to September 5. Back then, we moved higher the next day as well, hit the 50 day moving average, and started a volatile move back down.
  • The financials have led the recent swoon down, and all the taxpayer-sponsored "good" news from today aside, I will focus on shorting this sector via SKF or FAZ when the XLF gets up around $11.15. I think XLF could bounce all the way up to around $12 (its 50 day moving average), but I doubt it will get that high. I mean, seriously, what makes anyone think this particular taxpayer-sponsored bailout will be the one that solves all the problems? Everytime we have had one of these bailout reversals in 2008, it was quickly met with selling in a few days. I don't know what makes this time any different.
  • I haven't gone through my short scans yet and will wait till the weekend to do so. I'll compile a list of individual stocks then that I will focus on, although the way individual stocks acted recently, maybe I am better off just going with the inverse ETFs. I would guess oil, retail, and the aforementioned financials will be the areas to focus on. Tech via Nasdaq is looking stronger on a relative basis compared to the S&P.
  • The big unknown here is how the market will react to the inauguration of Obama. I have no clue, but I am sensing a possibility of a sell-the-news reaction, even though we really haven't had a big rally into the event. If we rally today and Tuesday, maybe Wednesday is when we start selling off again. Just my thoughts as of now.
I don't expect to make any trades today but if I do or have any other revelations, I'll post my thoughts on Twitter. With the long weekend, I'll put a video together at some point as well, although it might not be until Monday with all the sports this weekend (Go Steelers!). Good luck today!


Anonymous said...

HI Mac, sorry you are not having enough sleep. But hope mama and baby are doing well. You said you are going to put your thoughts on Twitter. What is that? How could we get access? Thanks! - Elena

Randal said...

I still like RGLD for the time being.

Mac said...

Elena - thanks, but it's not a big deal - something every new parent deals with. Twitter is kind of an instant messenger type thing where people share thoughts with each other. Check out the right sidebar on my site for more info.

Randal - you may be right but the action today is very bearish - i expected a bigger bounce.

Randal said...

Mac - i agree and dumped it when the bounce fizzeled. Now Im in the same boat as you, looking for short setups. Like you, I watch SKF regularly, but its a bit extended here I think.