Thursday, November 05, 2009

Ka-chango...and other strange stories of lost and found...

OK, so clearly the only thing I was right about today was UUP, which had a super move for Option Traders as the calls went almost 75% in a single day. THAT is a nice trade.

However, I didn't fare so well as when I woke up the futures were already flying. I made some money fading RIMM and CSCO off the open, but everything else I had was smashed.

Sucks when you're on the wrong side of things, and a trader is often that way. For every million I've made I've probably lost several, but the bottom line is that it's a marathon, not a sprint and in the long run a good trader should provide the bacon, and the cheese.

The carry trade that you keep hearing about is very powerful here. Many technicians and good traders are dumbfounded. I have to say that the last two weeks have been tough trading even for me. For us to have the kind of intense trend day up, with no gap fade, off yesterday's close is rather surprising. Yeah, I know the employment #s were "good" or better then expected, but 200+ points and reclaiming 10k off them? Hmm, the carry trade is all that really is playing out here. As long as the dollar falls and there is no sign of interest rates rising, the market could very well continue higher and higher. Is it a bubble? Yeah, of course it is, but so what? The market can stay in a bubble far longer then you can stay short it waiting for it to be rationale, that's why it doesn't pay to be too biased, like I was headed into today! Oouch.

I the meantime, Friday has more employment #s which should beat easily, and typically the market on Friday follows the move on Thursday FOMC week and trends the same way. I expect a gap up if #s are good, and then probably chop around but probably finish green again. But, I'll wait before making any big bets this time.

If the trend holds true, then next week we will reverse off this weeks post-FOMC move and head lower, potentially to that magic S & P 1000 #. Having said that, I mean, its hard to have conviction to the downside in this market, EVERY move down gets bought and as we head to year end we could easily just head higher.

I will say that when this carry trade does unwind we really should get a huge down move that is gonna shake a lot of people. That should happen as soon as rates head higher. Here now its iffy, and 10k is still in play. Also, overhead if we head higher look at the recent yearly highs as 1st line of real resistence (1075 actually before that) and if we break the highs then 1150 could be a heart beat away.

We shall see, we shall see soon enough!


*Monday I have a GREAT guest on Trend Success on and I'm really excited. Hopefully you guys and gals have checked out the show, its on podcast at

Keep rockin'


1 comment:

Mike said...

Hi Waxie:

Do you still believe that the sp500 is going to 1000 in the short-term after G20 stated that "cheap money" will be available until economy is "solidly" recovering?

I am your options traders' member. Should I stop out of the calls that you made last Thursday? I am currently holding FAZ Nov calls, SPG Nov puts, BAC Nov puts, and UUP Dec calls