SD's - Final Shot-2013-

[sd]

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The market had a sell-off today- One of the first rationalizations I heard was something to do with the Italian elections- Closer to home, is news that there is dissention among the FOMC governors, holding differing views of the present policy of continued easing.
Interestingly, several weeks ago I had purchased "Aftershock" the recently updated book by David Wiedemer- whose premise is that the so called bubble economy has not completed being popped -yet- That there is indeed more to come, that the recovery of the past few years is just a temporary lull of what will occur-
Today's price action makes me want to Fast read the book-

In the IRA, I will adjust the more aggressive positions more defensively, bonds/ cash.
In th4 trading account- ALL positions were stopped out
with the financials taking a bigger chunk out- both getting filled on a higher move and then selling off much lower.

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Bonds are still working - Gartman's point-
The price action went higher today thanks to Father Ben Bernake.
The question one has to ask is that we've had a great run- since the New Year- exceptionally so-
The over extended market had a quick small pullback- yet it was fairly sharp and fast.
Earnings have been good, profits are good- some outstanding company earnings-

I think the market action suggests that it could find reasons to go lower faster than it will find reasons to climb much higher.
It feels that a top should be in since the majority of the com[panies have reported with positive earnings- but that is "known" to the market.
This pullback shows how fragile the investor is, having listened to the "overbought" mantra.
I wonder if this is not the "Go Away in May" several months early- time frame?
Todays bounce higher on Brother Ben's talk simply tells us this has become a politicised market- reacting to 'news".
The essential fundamentals are known-
Time to be a quicker tactical trader IMO, as it will be a surprise to see the market embracing large trends- That and $.75 will get a small cup of coffee at the 7-11.
Throw in Sequestration- How will the market interpret this?
I'm going further defensive in the IRA, will be paring back growth stocks and adding to the bonds- which have not crashed btw. Yet.
In the trading account, I will likely be sitting the week out and see what transpires-

[sd]

Lower highs, lower low, today was a lower high-
Can't bring myself to go long the financials here- or tna.
I am going with a buy-stop buy of DZZ as a possible resumption of Gold's downtrend.

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Don't care for the pullback of course- derails that nice smooth uptrend.
Thursday put in a higher low, but this could be at the midpoint of a sideways consolidation-
I set a buy-stop for TNA $80.25-80.50 limit with a $78.25 stop.

Don't have much faith in this price action- the markets should trend higher but you can't help but wonder that it should be overdone by now- Earnings have in general beaten estimates, but what will be the driver going forward? It sounds as though the market is expecting the average Joe and Sally to wean themselves from their bond positions and seek some gain with the Risk-on trade.
Does that not confirm that we're at the top?
The Fed made the point that their policy will remain generous for the time being, and yet the market did not jump higher in lockstep-

I know I cannot trust my Bias, but this does not feel like a reason for the markets to be propelled higher-
That said, I took a small UVXY position Friday, and have a buy-stop on TNA for Monday I sold 1/2 of my gold short- Don't have any conviction here- so stops are relatively tight-SD

[sd]

The markets indeed moved higher this week-
Bernake spoke and assured the market that the punchbowl would not be taken away any time soon-
On top of that, we got a significantly improved employment report-
It appears that everything supports the market moving higher-rather than it finding reasons to sell-off-
Made a new historic high on the Dow as well this week.
I had added to the XBI position and am now overweight- It is trending strongly- higher out of a period of consolidation-
Should be due to pause-
My Buy-stop for TNA was gapped over by the market- I entered belatedly higher several days later- along with the FAS position.
My Bias of course interferes in my staying long and seeing a relatively minor pullback- - I'm reading "Aftershock" which of course is presenting the spectre of a real market meltdown in the next 2-5 years- as a result of this Fed's easy monetary policy-
Just started the book - Regardless, one needs to trade WITH the trend and not try to foretell the change in trend.
Thanks to Bankedout for expanding on his approach-
His postings have also inspired me to consider my own approach-and potential ways it could be modified- .
As one example, I liked the fact that I was able to hold a fairly long position in FAS recently-
Some of that was due to experimenting around with the Renko charts - helped to not get too fearful or greedy as price made what one has to consider as "normal" consolidations-
Bankedout's weekly focus will also provide a less reactive environment compared to the ups and downs of the daily chart.
As work demands are also a factor in limiting my time to focus on trading, having a longer term approach and not feeling compelled to view the daily charts is a benefit in my life. With that said, it is important to not be complacent .
If "everyone" drops their bonds and goes for Gain, The seasonality approach should hold strong- Don't wait for MAY though-

I'm going to consider adding another position- Nat GAS- focused-
Since Nat Gas is the energy source that will turn this country around in Energy related jobs and technological changes- Cars, locomotives, Energy plants- etc. The infrastructure plays that support this development- the pipelines- etc should be able to see a longer term sustained move -
The actual gas price may be low- due to an abundance of supply- but what about that infrastructure that delivers it?
Notice the trendline for the AMLP- It is higher, while the actual commodity is downtrending-
I would find it preferable to take a leveraged bet on something as mundane as the AMLP- Where the direction is already consistently heading up. I don't know that there is a leveraged fund available-
In looking at MLP's - there are differences to be accounted for-
There is a taxable event for some MLP's , as well as a greater Risk in ownership-
AMLP vs AMJ for example- As I understand it, both have similar $ value of assets, but the AMJ has delivered almost 2x the return YTD.
etfdb.com/etfdb-category/mlps/
When one thinks about major sector trends, consider water- PHO, or the nat gas shift and revitalizing the energy balance of the world's economies-
If one is investing for the long term, these should be macro plays that withstand the transitory market fluctuations, and still retain their importance.

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tHE tna POSITION SOLD AT $90-I think This was an inadvertant auto fill to sell $1`when I adjusted the stop-loss- I failed to adjust the limit sell of the bracket order at the same time- This is what occurs when one loses focus-
Still holding FAS, XBI- and despite the feeling that this should end quickly and have a reversal, I am trying to maintain a stop that will allow for some volatility.
The DZZ position stopped out and a buy-stop @ $77 for a bounce in Gold was filled for UGL. I had this order for a week or so, as the market had trended higher, Gold was near the support low, appeared to be putting in a base, it seemed that a possible market top would see also a bounce of the Gold trade-An initial reversal attempt had been made in the downtrend. We are indeed close to the bottom of the support range.
In retrospect, this reversal of trend trade was simply indulging
myself in taking an action that presumes I have a sense of what will likely /should/could/occur. This is making a trade on what supports one's ego/bias or interpretation of the market. I can rationalize this trade as an indulgence- but it is a low probability
event. Since I already know that I do not have a great success rate in predicting the markets future moves, I should simply stay with trading what is in trend, and to not try to guess when that trend should change. Moreover, the Gold trade will benefit only when a decline in the dollar or the stock market occurs-if a flight to safety event is in the near future- That appears to be doubtful.

Present acct value is $8967.00-

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OK,
Well today is CYPRUS news day- causing the US mkts to sell-off slightly- CYPRUS bank depositors are going to see 9%+ of their monies in the banks confiscated by their gov't to pay off their debt-!
What a concept ! Just think- Obama could issue an edict that all retirement accounts should surrender 10% of their holdings to save the gov't and pay down on the deficit!
Impossible you say? In Cyprus they closed the banks through Thursday- and froze the accounts up to the percent of the tax they want. Still a changing story....

FAS hit my wide stop $%162.55 for a minor gain, THE UGL trade moved higher,and since I got home at 3:30 from Jury duty, I chose to sell XBI $98.77, and took a long position in SKF right at the close-
I don't think this is the kind of news that will precipitate a large sell-off- it is a small issue in and of itself- however it gets resolved.
It may be a short term blip- or it might be just the excuse to take some off the table following all those days making recent new highs.

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Approx 2/3 of my capitol is in cash/clearing.
I have to view this pullback in reaction to a minor Island's financial issues as an excuse for the big money to sell-off a bit and lock in some profits.
I think it prudent not to expect that this will be the correction-
UGL and SKF both gained some today- I adjusted the stops a bit higher- both are just below B.E. One more day of upside and I should be able to get there.
We'll see how the week develops- I hope we're not dropping into a rolling choppy market- but the market has trended unusually well this new year- If we start reacting to "fears" about the Eurozone, over this Cyprus crisis, we are on thin ice IMO- and that would suggest to me to be more tactical- With a higher level of Risk in the market -
But, then again, I tend to allow fear of loss to be my copilot-

[bankedout]

The term 'correction' I always have to take issue with. It implies current prices are incorrect and future prices are correct. I disagree with the use of that word and financial markets.

Why are lower prices always 'correct'?

No need to answer this.

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"The term 'correction' I always have to take issue with. It implies current prices are incorrect and future prices are correct. I disagree with the use of that word and financial markets.
Why are lower prices always 'correct'?
No need to answer this."

Hmm, You make a good point- It shows how indoctrinated I and a lot of the viewing public are to the news media's characterization- of a perceived expected market event- and it's justification. Market sell-offs occur periodically- some relatively minor , and others more extreme. When we have a good momentum move, we anticipate that the move will run out of steam, yield a pullback that then can be perceived as a buying opportunity if the uptrend is expected to continue. The "correction" implies that some sort of momentary excess has occurred- and that it is the process of rebalancing back to what should be "normal" .
Perhaps that excess is simply the complacency & greed of the market participants, finally taken to task. The 'correction' may not be about the actual values of the businesses that comprise the market at that moment, but could simply be viewed as an "attitude" correction of the market participants.
It's akin to taking your dog to obedience school- You are the one that is actually trained in the classes to then train your dog.

Is it not the "Efficient Market theory " that stocks are essentially priced 'fairly' at any moment in time? At least until there is no greater Fool to buy at the very top.
So, when such a sell-off event occurs- it often takes the majority of stocks along with it, justified by the price value or not.

So a pullback in price comes to be anticipated ;- following a run up in price along with words like "Extended" and "overbought" & "profittaking" as the rationale for the sell-off- Perhaps the word "correction" has the 'air' of something that is indeed justified- When actually it could be better described as the child's game of musical chairs- Someone loses, and the surviving participants get to reevaluate what is "fair value" . The businesses likely remain the same essentially, despite the change in stock value- The investors perception of what is "fair value" is challenged when the "correction" no longer finds a buyer at higher prices.

It is indeed about the psychology of the market, the perception of what has value and what is overpriced-
Since the market is comprised of millions of investors, a price "correction" is actually a vote- at that moment in time- that the fellow investor does not believe the stock of company xyz is worth as much as you were willing to pay for it- or hoped to sell it for.

While the semantics are employed to put things in terms everyone has become accustomed to-the truth is that the perception of what is value changes based on the perception of the participants.
So, the market place determines that their assessment of the "future" trends- determines what is fair value- Not necessarily what is today's actual fair value- but the market will pay up big time for the potential of future value. So a company like AAPL gets a PE of 8 while AMZN can have a PE significantly higher and perhaps unjustified- but the market perceives it as potentially valid. For the time being........Until that time changes.
If we are simply short term technical traders, we don't care about PE values and the like- That fundamental information may eventually come to be perceived as the true value- at some point in the future-by the market- All that technical traders need to be concerned with, is the sound of the market song playing at the moment, and what to do when the music stops, and is there a chair left vacant?

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I went long yesterday going into the open as futures were reportedly higher- During the course of the day, news about Cyprus continued to push the markets down-
I had gone with a wide stop-loss ; towards the end of the day, the markets gained back a lot of what it lost intraday.
I had sold my Gold and financial short (SKF) , and went long FAS,TNA,xlv,xbi-

This am , things are reportedly improving; The Cyprus crisis will reportedly see US banks become beneficiaries to fears in Europe of a similar confiscation in funds. (thingy Bove-bank analyst)

We also reportedly had positive housing numbers this am-

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Peter Schiff - Gold advocate while market traders are taking Gpld short positions.
Schiff may eventually see a rally- but the present trend does not support his thesis.
video.cnbc.com/gallery/?play=1&video=3000136594#eyJ2aWQiOiIzMDAwMTU3NTA5IiwiZW5jVmlkIjoiYlk1NWZvbXlRanRuMU1yMnlHU3F2QT09IiwidlRhYiI6InRyYW5zY3JpcHQiLCJ2UGFnZSI6IiIsImdOYXYiOlsiwqBMYXRlc3QgVmlkZW8iXSwiZ1NlY3QiOiJBTEwiLCJnUGFnZSI6IjEiLCJzeW0iOiIiLCJzZWFyY2giOiIifQ==

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I sold the TNA position yesterday on market weakness-
Still holding FAS, XBI, XLV-
It looks like sector rotation is occurring, with the markets up today but the small caps failing to participate-
I will overweight healthcare , despite the gap up today.

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The jobs # came this am pre-open is dismal aT 88,000, LESS THAN 1/2 OF THE MODERATE # EXPECTED.

My remaining FAS position is now below my stop-and dropping.
My healthcare stops CURE & XLV are likely to be taken out as well.
Gold will rally on this fear, & premarket trading is taking my DZZ trade down lower and will likely hit my my break-even stop-

The pundits on CNBC - including normally Bullish Cramer - are focusing that this is indeed very negative-"There is no silver lining"
with this jobs report.
With some limited free cash, I will look to take a counter trade short today-.Could have considered tza when I sold the tna position- but thought we were likely just in a sideways move vs a real shorting opportunity. It's already up 4% premarket-
Going in a more conservative position, I will take a position in HDGE .