Wednesday, November 04, 2009

The sound on the bus goes round and round, round and round...

Wowsa, talk about whipsaw. Here is the logic of the market for ya;

We gap up, fade off the open and cause the ISM #s weren't so hot, then rally like mad dogs to up 130s, then pull in a wee bit into FOMC but still near the highs.

Then the Fed says EVERYTHING and MORE then the market could ever hope for, we catch the fade of the spike up, then we spike back up, then down, then up to highs and then we completely roll over in the final 1/2 hour and the Nasdaq closes red, and the DOW barely green.

Plus, the dollar, which I have to tell ya I went long WAY WAY WAY too early and got smacked HARD on that trade, spikes lower and it looks like the Euro is going to new all-time highs vs the dollar and then it too roll over quite a bit to close the day like crap.

Then CSCO reports earnings and blows out and guides up and the stock spikes a lot higher and the futures rally hard...

and now, as I write this, the dollar is higher, the futures look miserable and what the hell is a trader to do?

OK, so here's the dealio. I think you have to lean lower and still short any spikes, thats what the tape is saying. However, one thing I've been learning the hard way at times is that swinging stuff here hasn't panned out that well, so I am starting to look minute to minute. What's that mean? Well, I went home net pretty short. I own puts on VNO, SPG and BAC and calls on FAZ and SRS. I'm also long the dollar. Thing is, if we do gap down decently I'm going to have to consider, at least, selling half or all my position and waiting to see how we trade from there. This market is up for grabs and the volume is just so low that it's tough to get any traction either way. It almost seems like these days the proper game plan intraday is to see where we are at lunch and then fade that bias. It's been working fairly well lately. This market trades on such light volume that it gets pushed around based on what it feels second to second. It's a very sensitive market, and that needs to be respected. Taking too big a bias into a day only hurts you.

Capital preservation remains paramount.

In the meantime, watch what the central bank in Europe does tomorrow am. If they start tightening then the dollar should really get an extended move higher as I suspect. If they don't, then the dollar bears may get their candy for a while longer as the dollar could go even lower. It's interesting reading pundits all over and listening to Booyahhead say that the "Bears" as though they are some mythical creature, sorta like the Lochness monster or somethin', as though these Bear beings really give a crap about arguements for or against the market going higher or lower. Any good trader trusts his gut and its fixated on being a Bear or Bull. Yes, there are people who are BEARISH, but as far as I know the only "Bears" are either in the forest, in freezing tempatures, in a zoo, or in Chicago. The rest is hogwash.

Watch Gold here, it looks way way way overextended. I woulda liked to have seen it go over $1100 to get short for a quick trade, but it still may and I wouldn't hold a swing on GOld short if you paid me hard cash, or GOld. It's just such a beast.

It really comes down to the dollar. If the dollar continues lower, we are going higher, if the dollar stengthens, we are going lower, period. Mark it down, its worked like a charm for a while now.

Europe should tighten. I'm not sure they will, but they should. It's really in no one's best interest that we have a weak dollar as I've discussed many many times, but certainly it's not in Europe's best interest and it's not in China's either. I suspect they still tighten and support the dollar. The Euro goes to $2 or something close, you'll see a very bad US economy, potentially even worse then we've had. That will not be good, not at all.

I stick to the deflation followed by inflation theory I've had for a while and that's what seems to be playing out. That supports a higher dollar followed by a much much lower one.

Thanks for all who tuned into my radio show on I'm getting my feet wet and really enjoy it. Next Monday coming up I have a VERY cool guest, and we have some really powerful guests upcoming from there. I'm taking it very seriously.

Also, please be advised, the January Effect list time of year is almost here! Last year's list went 15 of 16 and ROCKED! Many people said they made HUGE and so did I. Some of the option plays were TREMENDOUS.

So, get ready, we'll be offering the list out in about 2 to 3 weeks - ARE YOU READY???

You should be, I think it's gonna ROCK!

See ya on the other side,


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