Friday, September 5, 2008

09.05.08 - Turning Point?

... for scalpers only! Strong technical cross-currents pointing in both directions. Be careful out there; use stops or trailing stops.

9:10AM PST UPDATE: Tick already headed back down/ wavering -- see if VWAP holds.

9:30AM PST UPDATE: VWAP held -- second leg higher. I see money coming out of bonds and relative put buying is tapering. It would be a nice doji (even) if we finished the day here, but volatility ain't over yet.

"The New Normal" - Here we go again with CNBC. I'm a relatively young guy in my early forties. I clearly remember my first job out of school with Peat Marwick's consultancy division. 5% unemployment was considered "structural", couldn't go below it; inflation was regularly modeled at 4 to 5% per annum. Just a couple years into the job our main focus turned to the Resolution Trust Corporation S&L bailout. And it wasn't the end of the world. This is no "new normal". Granted, this recession "feels"/is different in many respects -- both technical and fundamental -- but I find it even more amazing the last bull cycle lasted as long as it did.

10:50AM PST UPDATE: Stopped out. Good for six S&P e-mini points. Problem is, I'm still sitting on inventory from yesterday! I'll hold onto that for now (edit: as it looks like the premise for the call is holding). Lot's of web traffic today. Dr. Brett has noted this on his site as well.

Heavily oversold Financials & Semi's are really the only sectors catching the bid. Discretionaries a tad too.

o Smart-Money Heat Map

12:10PM PST UPDATE: If you bought and held that call, congratulations. Tick is flattening out though, so again, be careful going into the weekend.

CLOSING UPDATE: Well, this is a market commentary and analysis blog, not a trade signal site per se, and I'm obliged to say that I hope you always do your own analysis before trading on any information here. But you can see this call worked out to the good in spite of my fretting all day long and an early stop on my part against some extra leverage.

Next week will be most interesting. Hope you find the post-trade analysis below as instructive as the call. Enjoy your weekend.

AFTER THE BELL BREAKING NEWS: A GSE "backstop"... reality or just more rumors? Sure got a pop after hours -- back to yesterday's mid-point. Amazing. Bill Gross -- "[Can't discuss government conversations.]"

Never Investment Advice

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