Sunday, January 30, 2011

Weekend Summary - 1/30/11 - "When in Doubt, Stay Out"

Hi traders - I just completed going over my scans with a fine tooth comb and while I was doing that I kept thinking, "what am I going to talk about or do a video about this weekend? There really isn't anything here worth discussing."  Guess what - although it's probably boring, that's what I am going with.

If you read Friday's summary, you know where we are at overall with this market.  There was a sell signal Friday and certainly on the surface it looks like this market is topping out.  How big of a top and how long the process will take are the unknowns right now, and believe me, they are BIG unknowns.  

Normally, I would go short right now, but I am not going to do so.  I am going to stay in cash.  I didn't see many great setups last week and that should have been a sign to stay away, but I did not take it as one.   I traded the few I saw and ended up getting whipsawed like pretty much every trader last week, bear and bull alike.  This week, guess what - I see even fewer setups.  

Virtually nothing interests me on the long side here, not after Friday's action and the number of failed breakouts I saw.   There are a lot of ugly chart with indistinguishable, random patterns to them that (I'll be honest) I have no way of interpreting well.   On the bearish side, I see some stocks that have broken down, but not as many as I would expect.   The only thing I would consider shorting right now is perhaps the XLF (financials) but I have a sneaking suspicion it is still too early to get short anything.

Perhaps I will be wrong - it certainly won't be the first time.   Perhaps this will be a great week filled with lots of money-makers.   For me, however, I think the best thing to do at this point is sit back and do nothing.   Wait for this market to figure out what it wants to do.  My gut tells me the bulls are not going to just lay down and die here, even after Friday's damage, but I also don't expect new highs anytime soon.  Tops take time and sap a lot of energy out of traders.  That is why I think cash remains the best bet.  

I know most pay sites feel that since you are paying for information, they need to put "something" out there in terms of stocks to watch and so on.   Since this website is completely free, I don't have to do that.  Sometimes making no moves is the best move, and that's where I believe we are at today.   Things may change quickly - my scans may be completely different tomorrow and if they are I will let you know - but for now, that's my story and I'm sticking to it.   Take care and good luck next week.

17 comments:

Anonymous said...

Mac,

I think you have the story correct..

Anonymous said...

Sit still and do nothing ...isnt that what you been doing on the largest rally we had last 2 years. You are waiting for the market to tell you what to do ? By that time, it will be too late. You were get whipsaw again

Mac said...

For the second anonymous commenter, I am not quite sure what you've are talking about. I've been recommending going long for a while now - riding the trend until it ends. If you don't believe cash is a position, then that's your preference. good luck with always having a trading - we'll see who's the one getting whipsawed.

Anonymous said...

So far, it seems like you are the one getting whipsawed with the TZA, QID.

ppmoore said...

It's the usual story, people who dare to go public, are the ones who attract the daggers. To the second anonymous poster: I look forward to reading his market opinion on a daily basis. Keep up the good work CST, I've made some decent money with the help of your input.

Doctor Stock said...

I think investors can do two things this week: 1. Make sure any orders places this week are not market orders, but at a higher % than they closed. 2. Place an order for an inverse fund so you profit if the markets drop. Just my two cents.

Mac said...

Thank you PP - if the guy who wrote anonymously is trying to insinuate that not making any moves is cowardly (which I think it what he was getting at) then so be it. He is probably just a much, much, much, much, much better trader than I am.

I'll sit back this week in cash and see what the market wants to do from here and be fine with it. If he doesn't like what I think, there is a very simple option - don't read it anymore. My guess is I will end up ahead anyway.

Mac said...

And to Mr. Anonymous - yes, I did get whipsawed with TZA and QID. I also got whipsawed a bit with my longs on Friday. I've gotten whipsawed many times like many other traders, and you know what, I'll be whipsawed many more times this year. That's part of trading.

I guess you never had to deal with that. Please feel free share your expert methods that prevent these from ever happening - I am sure all of my readers would love to hear about them.

Ken said...

I agreed fully with Mac on taking a cash position when there are so much uncertainty.

I don't think getting whipsawed is unusual for short term trader - everything is well under control if you have good money management technique.

I'm just wonder if Mr Anonymous happens to be one of the paid website you mentioned in your blogs?

Cheers and more good trading ahead!

stlbiopharma said...

Mac, I hope you didn't let Anonymous get to you. If he has read any books about Tech Analysis (Elder or O'niell), they all say "when in doubt, sit it out". He just being funny, I think.

I don't think it is bull yet though since weekly still looking good. But yes, we are in the tipping point.

Anonymous said...

Actually, I dont get whipsawed. I am a very long-term investor. I buy companies with great mgmt. not those micro-caps that crosses some magic line. I just laughed because somehow you think you can beat the market on a very short-term basis. You have been brainwash to believe you can beat the market by the brokers, finanical makers... Seriously, look at how long you been in the market and what is your total return ?

Anonymous said...

ppmoore,

All I can say is a sucker is born every minute if you really think you can beat the market trading short-term

Mike said...

this comment is for anonymous #2

if you disagree with a position mac takes then at least go on the record and comment on the day of the post for exmaple when he went short via inverse ETF's and posted it in his daily recap that is the appropriate time to respond and provide an alternative opinion..hindsight is 20/20 and its easy for any idiot to criticize after the fact and that serves no constructive purpose

anyways cash is a position and a huge edge retail traders have over institutions that have mandates requiring them to be fully or nearly fully invested at all times

JP said...

My models are both saying "caution" but no sell signal yet. That said I've been stopped out of all but one position so I'm almost all in cash anyway. My scans show very little as well. So, I think you're pretty much dead on with your reading of things.

Mac said...

This is my last comment to and about anonymous - we could go back and forth on this all day and I really don't care enough to do that.

My only question/comment to Anonymous is "why are you reading this blog if you are a long-term investor that doesn't use technicals?" That's exactly what I do.

If you have a different style you believe and are successful in, then congrats - that's fine. There are many ways to skin a cat. I am just not sure why you want to criticize another style just because it is not what you do. I am sure there are many blogs and websites out there that discuss long-term investing and how it is working out. I don't go on those websites and criticize them. Not sure why you feel the need to do the opposite.

Anonymous said...

Mac, don't waste time responding to anonymous #2.....comments don't dignify an answer.

stlbiopharma said...

LOL. I was also a long term investor (or fundamental). I actually was doing really well. I specialized in Biotech/pharma since I know the industry well. but with long term investment or fundamental, nothing is quantitative, so I move into Technical. I think either one is a great investment strategy as long as you are discipline enough.