Wednesday, October 14, 2009

State of the Market - 10/14/09

After two key earnings reports, the stock market broke to new highs for the year today, as both INTC and JPM impressed traders enough to get them to push this market past some key resistance levels. The market did gap up at the open and after a quick run up, things settled a bit. The intraday-trend was more sideways than anything until the end of the day, when the buying picked up a bit into the close. Volume was heavier but I don't think it was overwhelming, at least on the S&P. INTC provided much of the increase for the Nasdaq.

Technically, it certainly seems like we are starting another leg up here in this amazing seven-month rally, regardless of how hard it may be to believe. The Nasdaq was below its 2009 high for most of the day but was able to close just above it by the final bell. The Nasdaq also is now clearly above some important overhead resistance around 2150 going back to 2008. How far we go from here is anyone's guess - we are not really that overbought and the Nasdaq in particular has some room to run. The S&P could face some resistance at the top of its wedging pattern (a little above 1100) going back to March. A lot will likely depend on earnings reports this week and next

As for other sectors, the story remained the same today - the dollar fell to new lows for the year while oil broke to new highs for the year. On a much broader perspective, this trend continues to be sad for our country, but it is what it is - that's what happens when the people in charge print money to monotize their enormous debt. As it is, the dollar is at the bottom of a steep downtrend channel and could bounce here, but that is not a given by any stretch. Financials were very strong today and could run from here, although XLF may see some resistance around $16, which is the top of the long-term wedging pattern that is still present from March.

From my long watchlist, GOL, ISLN, and HRBN had breakout moves today - all were OK but none were spectacular. CATM tried to move but closed weak and volume was lagging all day. I am somewhat surprised that not much else moved on a day like today when so much seemed to be so good - I don't know if that's a sign or not. RODM had a slight, rather disconcerting breakdown for such a positive day overall. As it is, I will continue to focus on finding potential long setups as that is the only smart play right now. I did get out of both of my inverse ETFs from yesterday pre-market for losses - in hindsight, even if there were bearish things I saw, I had no business taking any position in front of such a deluge of important earnings reports. That was just a lack of foresight on my part.

My struggles this year compared to last continue and this losing streak/drawdown that I keep expecting to end just keeps rolling on. It is quite frustrating as I am seeing stocks in my watchlists move without me and I have inevitably picked the wrong stocks and the wrong entries for some time now. It's not like I've seen too many nice stocks from this year where I've said "wow, why didn't that come up in my scans?" There have certainly been (many) times when I have been too bearish and not bullish enough, and I know that is one reason for my struggles. Even when I've been bullish, however, it seems like I can't get things going. I know this is part of trading, but it is certainly difficult to deal with. I continue to hold hope that things will get going soon, but my confidence remains very shaky and that is probably the main reason I haven't been as successful this year as in years past. I may take the next few days off from trading to recollect my thoughts, and with all the reports coming over the next few days, that's may not be a bad thing.

Tomorrow is another day full of earning reports and Friday is options expiration, so be careful out there. Things look good but that doesn't mean the market has to be easy. Take care and good luck.


----t h rive---- said...

I appreciate your honest analysis, as well as the summary of your trading and how things are looking for you.

Somehow comforting to see that experienced traders are finding this crap hard, when all "we" had to do was buy SSO on every dip.

One year trader here, and have been all cash for almost a week. After a decent September, then a troublesome start to October I don't mind observing for a bit.

Anyhoo. I have my bank-owned mutuals I can cheer on for now.

Good luck out there.
Keep it coming!

Mac said...

No problem - no reason not to be honest. Lying to yourself isn't going to make you a better trader. I do think this has been a harder than normal rally to play - in hindsight, it's easy to say "just sit back and enjoy the ride" but there have been a lot of technical issues as the rally has progressed. Hindsight is always 20/20.

for me I think my inexperience as a trader has shown a bit this year as I have never traded the start of a new bull market (if that is indeed what we are seeing here) so I never had the experience to see what the transition looked like going from a bear to bull market. I guess I will learn in time.

Rich said...

I've had the exact same issues this year as well. While I continue to learn and improve my trading, I somehow find ways to create losses or try to make something out of nothing.

My watchlists do great, but my account hasn't.

Although I must say I've learned way more about trading and the market now than I did during the bull market.

Jason said...

Hang in there Mac. When I have string of losses I revert to re-studying the fundamentals, and then review trades that have gone right in the past.

Anonymous said...

Just close your eyes and buy at the opening bell tomorrow...we are heading to DOW 11K at least by year end