Tuesday, June 24, 2008

Waiting for Godot, Act #N

Well, it is time again to start the count down for the tomorrow's FOMC decision, or the lack of. Things are definitely getting dicer by the day on the Wall Street, as yet another attempt of technical rebound fizzled today. Today's decline might have more to do with the deflating bulls than the edgy bears who might be having flash backs on the beatings they took after previous Fed rate cuts.

As of the close today, several more key indices completed the 1-2-3 reversal, including: Russell2000, SP-Mid-Cap, and Dow-Transport. With DOW/SP500 only a stone-throw away from their Jan/Mar lows AND financials as a whole are at new low, it must be disheartening and discouraging for Big Ben and Co. right now. After all, the massive rate cut campaign, which was meant to save the financials, has not only failed miserably, but further fueled inflation flame along with the excessively injected liquidity. But perhaps the most tragic part of this odyssey is that unlike other central banks, no matter how much the Fed wants to, it just cannot raise the rate right now. Talking about quenching the thirst with poisonous liquor!

I gather many folks are ready to buy into this post-FOMC rally, especially the market is deeply oversold. But be very careful, especially if the Fed jacks up the hawkish tone, there are reasons while the technical rebound attempts have failed 2 days in a row.

Today's massive price raise from the DOW Chemical and India rate hike news are pushing me towards the "every rally must be sold down" mode. I probably won't be aggressively bottom fishing, unless I see a sizable drop (2-3% on major indices), and I probably will actively look for short setups if there is a 2-3% immediate jump of the major indices.

And oh, don't forget tomorrow's RIMM's ER in AH, it could be a kicker or spoiler for either bulls or bears party. Speaking of RIMM's ER, my plan right now is to use any post-ER jump as an opportunity to initiate short positions, why? just look at its weekly chart (hint, volume and other indicator bearish divergence).

Good luck to all for tomorrow, and trust me, you will need it (unless you sit out).

7 comments:

Doug said...

Not sure whether it's market makers and/or shorts but when you see numerous trading patterns like the last two days in FTI and OI, there is no way to intelligently participate in a market like this.

RazoR said...

Fti is leveling in a range, did the same thing before hitting 83, see chart, its getting ready to break down to 65 or go higher...

http://stockcharts.com/charts/gallery.html?FTI

RazoR said...

sold drys 75's for 4pts and both 80c's for 2.6 pts I'm not waiting for 11:15 have fun mm's...if we go down I buy back, if up I still have the common...will be interesting to see if they force a capitulation today...

RazoR said...

thoughts...well t-45 minutes, everybody expects a happy ending here, a rally would be to 12080 or +250 pts...bought drys 70p and 90c just for giggles...

pcaguy said...

POT, MOS, MON, :
Bot a pile of calls today. Upside down on the POT and MON because I got in too early and the calls were mispriced to the stock price.
JRCC, OIH:
Bot small positions on calls; in profits now.
PCLN, GS, MA:
Bot medium positions puts today. The GS and PCLN puts trades have been a cash flow generator for me for a month or more.

X, CMI, NOV:
Closed puts positions early with nice profits.
FSLR:
Bot more puts today but I am still upside down on the position.
DRYS:
I don't know what to do, puts ? , calls ? After the big scare on DRYS a few weeks ago I'm less willing to go long.
PCA GUY

RazoR said...

Wow pca I would have thought you bought every drys90c available! If she goes to 87, she sails thru 100, the chart is sick. Btw good call on oih you nailed that.

fortune8 said...

pca
I am lost on FSLR and glad to see that you bought puts. I am going to short it if it cannot break 293.