Empirical Musings

Taking Stock: An Atricle to Share

2009-10-01T13:20:00.000-07:00

Support of one of my previous hunches:

http://www.chrismartenson.com/martensoninsider/martenson-insider-fed-pomo-activity-and-stock-market?page=1

Taking Stock: Pull-back

2009-08-17T19:23:00.000-07:00

Today may have been the pull-back that everyone has been waiting for, and not just the one from last week. The selloff was primarily done within the first 15 minutes of the day, with some buying the rest of the day, right at the first retracement level.

Taking Stock:

2009-08-11T15:58:00.000-07:00

Just a handful of mild things going on today. Everyone is waiting for the FOMC to finish their meeting and present the results, which will be tomorrow. I seriously doubt that they will raise interest rates, but that is virtually a given. What would happen to if everyones mortgage rates were to increase in the short-term? Second, the dollar index has been rising the past few sessions, but is down just a touch today. It is likely to drop tomorrow, and even the long-term trend is still down. How is it that the dollar value could rise, considering the percentage that the government has increased the money supply by in the past few months in order to avert the financial crisis? Also, the S&P-500 will likely pull back to the 20DMA (the neat-o little red line) before advancing again, much like it did in the previous rally.

The rally is likely to continue, for two reasons:
1.) The dollar will more than likely continue to drop
2.) The Fed is highly unlikely to raise interest rates

Anothet thing worth noting is that there have been some IPOs filed. IPOs will usually not go through in a bad\bear market.

Taking Stock: Oil Prices

2009-08-10T15:35:00.000-07:00

Warning: The content of this video may be disturbing to some viewers.

What he is saying is that the

There is another video on the same topic, but I have yet to find it again.

Taking Stock: Perspective

2009-08-06T16:19:00.001-07:00

The CVI is still getting even a little stronger today, and the pullback that quite a few people have been waiting for is finally coming to fruition. That's what happens when stocks rally as much as they have in a short period of time. I'm thinking the same as what Dan Fitzpatrick was saying about there being quite a few people on the sidelines in cash, waiting for the pullback in order to get in the market at a lower level\price. In a sense, there is a sort of built-in belief that the market will start a new bull market, which normally starts up to within six months of the end of the recession. The quantitative and projected forecast for the end of the recession is around the beginning of next year, so we are within that range of the discounting mechanism of the market to take effect. I have also been taking into account the factor of government intervention (they really know how screw a market, eh?) because of the massive amounts of money that they have conjured up and has been finding its' way into the market (through Treasuries?).

From having been watching Dr. Nouriel Roubini in the videos that have been posted in various places (I had some audio of him also), he has been saying for some time that the U.S. will experience a period of stagnant growth, and possibly what he calls "Stag-deflation", starting next year. Welcome to the wonderful world of everyone writing down their monetary sins. That hardly supports a strong rally in earnings and domestic economic growth in the near future.

I wanted to share this video to show what I was referring to yesterday about what Dr. Leeb was saying. Some of the things that he mentions plays on the angle that I was thinking in regards to "irrational exhuberance", in the fact that he says that there are both rational and irrational markets and that the current one is very irrational. In other words, I concur and have the same sentiments that he has. Only the market itself will tell what will happen. It is funny that he mentions something about the possibility of the potential crash being something like what happened in 1929 and on Black Friday. I was thinking about Black Friday last night, simply because commodity prices before that crash were sky-high and that this time is somewhat similar. In Leeb's newsletter, he mentioned something about the possibility of the FOMC raising interest rates, which I think could definitely trigger the crash that he is calling for. Like today, the Dollar is having a little rally (probobly only to the 20DMA), which is also likely to happen if the FOMC raised interest rates. The slight contrarian view to that is the fact that the U.S. is deep in hock this time.

Taking Stock: Looks Good

2009-08-05T15:58:00.000-07:00

The CVI looks great, and some of my old positions are in a new uptrend. Just from the looks of the CVI (possibly somewhat of a limited perspective), this rally might be just as strong as the last one. That bodes well for me and my long-term future plans. I took a few steps forward in the rally that started at the beginning of March, and would like nothing more than to do the same in this rally. The Dollar Index (DXY0) finally broke support, and is falling. When the Dollar falls, the price of oil and other commodities usually rises. From looking at the Light Sweet Crude Oil Index (XOIL), the price of oil is likely to continue going higher (just likely, not guaranteed).

I also read a bullish report ("Marder on the Markets") written by Kevin Marder, an associate of Gil Morales.

Something that Dr. Stephen Leeb has been calling for recently is another market crash before the end of this year. Of course, I can't say that he will be right, and I won't say that he is wrong, but I will definitely keep that thought in mind and keep an eye out for it. Apparently the forecast is due to a quantitative model, orchestrated and done by himself and some mathematicians from Yale.

I had a thought recently about the possibility of some of what is called "irrational exhuberance" in the market, which usually occurs at or very near the peak of a market top. This is a crisis inclusive of the financial system and credit market, and is said to be the worst recession in roughly seventy years. I was thinking about the possibility in conjunction with what Dr. Leeb was mentioning in his market update, in relation to the price of oil rising so quickly and his comments about the forthcoming of a market crash later this year. It makes sense to me, with that in mind. Although, the market is still at least far below what the all-time market highs were. I can't help but think of all of those trillions of dollars that the goverment has conjured together. How much have they spent so far, and how much of it has been going into Treasuries? The sort of "rule of thumb" is that money comes out of the bond market and into equities\stocks, and visa-versa.

Taking Stock: Surprises

2009-07-30T17:27:00.001-07:00

The market seems to be full of surprises these days. I'll take an upside surprise any day fo the week, though. I was thinking a much bigger pull-back, but maybe not.

Looking through the S&P 400 Midcap index for some trades. Was also looking at GP Strategies (GPX) and American Greetings (AM) for some short-term trades with ATR stops. I'm also watching Hexcel (HXL) for a potential volatility squeeze, like with B/E Aerospace (BEAV), which the two are a part of my longer term positions and are closely related. I was also looking at Covance (CVD) as a possible trade, along with Hospira (HSP).

Just when I thought the volatility squeezes were over, I start seeing more of them.

Taking Sock: Get Back In Sync

2009-07-28T15:07:00.000-07:00

I'm trying to get back in sync with what the market is doing. I have to say that the rally really threw me for a bit of a loop. The CVI seems as though it wants to continue to the upside, but only time will tell. I think I bought a little late this time around, so I am looking for the next possible wave\phase up.

I'm seeing bollinger bands "hook" and start to contract on quite a few stocks, so the volatility squeezes are likely to be over soon, if not already. The only positions I have\had are\were plays on volatility squeezes with Average True Range (ATR) stops under them. All I am doing for now is mostly just waiting for the market to pull back, and making some trades with ATR stops under them. I didn't buy back in to any of the precious metals positions that I had, even though the dollar index (DXYO) has been falling. I'm sitting and watching those. They actually seem to still be in somewhat of a downtrend.

Taking Stock: Strategy Shift

2009-07-21T10:05:00.000-07:00

Now that I have found a resource for the Cumulative Volume Index (CVI - T2104), I have been putting some thought into things and have a mildly different perspective. I have noticed some things after having found the CVI. That somewhat new perspective from after having found the CVI, I think merits a slight shift in strategy.

The CVI can go in one of three directions: Up, Sideways, or Down.

I noticed that when the CVI was in an uptrend was the timeframe in which I made the most money (I found the CVI after the fact). For example, the beginning of March to the middle of May (you can see the inflection point in the CVI).

While the CVI has been in a sideways trend, the overall market has been weaker and in a sort of mode of indecision. I think a general trend in a specific stock can continue with a sideways CVI, but just need to be more wary of potential weakness.

And, of course, when the CVI is in a downtrend ... I think you get the picture.

I also noticed that when the inflection point in the CVI is when the market started to weaken, and different sectors of the market started to go in different directions. Over the past week or two, I was certain that the broad market would sell off (Dr. Leeb's and Dr. Roubini's opinion gave me confidence), when I could actually have been watching the CVI for confirmation of that (don't ignore Leeb & Roubini, they are very credible). The one thing that I don't know at the moment is as to if one would be pre-emptive of the other. I was thinking of watching Treasuries for an indication of the flow of money, but maybe I could just simply be watching the CVI instead. Watching the Treasury yields still leaves a little bit of guesswork to be done, whereas not as much with the CVI.

It all makes perfect sense, since it is an indicator if the flow of money either into or out of the overall market.

It looks as though there could be another inflection point to the upside forming, but I will give it another day or two to be decisive. I'm very excited to see a possible uptrend in the CVI, because I made quite a bi of money in the last uptrend. It also makes trades come that much easier.

I will definitely be paying more attention to the CVI and those inflection points from now on.

Taking Stock:

2009-07-14T15:54:00.000-07:00

The market is likely to drop tomorrow. There seems to be a channel now.

A Thought: Your Health

2009-07-06T05:58:00.000-07:00

Emotional health is just as, if not more, important than physical health. I think the two can actually compliment each other. If you take care of yourself physically, you will feel better about yourself and be more emotionally healthy. If you are emotionally healthy, you are much more likely to be inclined to keep yourself physically healthy.

On that note, I have had some other recent experiences that has really put some emphasis on the recognition of the necessity for people, especially women, to at least be comfortable with how they look, if not feel attractive. Sometimes, without that comfort with oneself, it can lead to a long-term sort of negative feedback loop on both their physical and emotional health and well-being.

Taking Stock: The Beginning?

2009-07-03T22:21:00.000-07:00

I am looking at adding to my short position, which is in ProShares UltraShort S&P-500(SDS). I've been out of several positions, and happily watching them fall lower (it makes you feel good when you sell a position and it has a dramatic drop afterwards). A few of my other positions look as though they are getting weak, and are ready to fall also, so at a minimum I will put in stop-loss orders if not just sell them outright. I'll use those proceeds to add to my short position.

The next thing I will be watching for is for the broad market to at least start firming up, but probobly for it to start showing signs of climbing again.

Taking Stock: I Saw What I Was Looking For

2009-06-23T15:39:00.000-07:00

I saw what I have been looking for today, I definitely need to put in some more fairly tight stops, and start adding a position to SDS, on the likelihood of a downswing in the broad market. I want to be making a few more dollars on the downswing.

Every one of the stop-loss orders that I put in before the market open on monday morning were blown through in grand fashion. So, I am glad that I was looking at the pre-market monday morning on the premonition of a possible change in course of the market. I'll expound on how I started to notice that at a later date.

There was a small bounce in the S&P-500 today, but I think it was only because of the broad sell-off from yesterday. The S&P-500 closed below the 200SMA and the 50SMA today.

Taking Stock: I'm Glad!!

2009-06-22T09:00:00.000-07:00

I have been observing different developments and events in the market lately, and was having a very bad feeling about what could possibly be happening this week. Several of my positions were at a sort of undecided crossroad, so I did my due diligence this morning before the opening bell and put in several stop-loss orders. Most of those orders were in precious metals, oil, and natural gas related positions.

It looks as though they were all more than triggered this morning, and I will probobly be setting some more. Over the next day or so, I'll be watching to see if it will be a good time to take a position in SDS.

I'm willing to bet that a part of the FOMC presentation this week will contain, implied or otherwise, something to the effect of 'There is no threat of inflation'. So, it was definitely a little past due to bail out of gold and other inflation related positions for a little while.

I'll also be keeping my eye on the Dollar Index (DXY0) in the near future, and waiting to see what the broad market is going to do.

Taking Stock: I Found It

2009-06-19T22:13:00.000-07:00

I found something that I have been trying to find, the Cumulative Volume Index. It can be found in the FreeStockCharts.com webpage, listed as T2104.

Taking Stock: When you wish ...

2009-06-05T17:46:00.000-07:00

It appears as though the inevitable is finally coming true. First and foremost, the dollar is falling, and Boeing is also finally in production of the 787 Dreamliners. The past few days, the dollar has managed a sort of "dead cat bounce" rally to the now downtrending 20DMA, which the inverse is true for precious metals.

I have also been thinking lately about how much the degree of technical analysis has helped me the past few months, which is a remarkable amount.

I have been busy making a handfull of trades the past few months, to compliment my other positions and to keep the rent paid. My CME trade has been working out quite nicely, and I think my Intuitive Surgical (ISRG) trade will come to fruition soon enough.

Consensus is that the longer term rally is the broad market will eventually cease to sustain. Only the market wil tell, which is when I will be interested in loading up on some of the ProShares UltraShort S&P 500 (SDS). Nothing is safe from a broad-based selloff (fortunately, I have learned that lesson now). What I am anticipating, by accord of the consensus view, is that the market will fall almost to the March lows. I won't hold SDS all the way to that point, though. Another part of the consensus view is that the market will continue to rally for the time being, simply because there are some latecomers just getting back into the market.

Something that I was reading in one of Dr. Leeb's "Market Updates" is that he views the rally as being driven by systemic mechanisms, and he noted his analysis of that everything has been rallying is virtual unision (Dan Fitzpatrick noted something very similar in one of his videos). I'm looking for the DJIA to go up to around 10,000-10,500, simply because it is a round number (it has more psychological significance than you might think). Also, that is where the 200DMA was when the deflationary period started. By virtue of simple logic (overly simplified?), is that all of the "Monopoly Money" was deemed to be worth much less than what it was originally valued at, causing a deflationary period, and now that money isbeing replaced by the graces of the US Government and taxpayers.

Taking Stock: For the Short Term

2009-04-17T12:31:00.002-07:00

I have been learning how to do short-term trading, with the aid of the now infamous Dan Fitzpatrick and his website, StockMarketMentor.com.

Making a great trade on Ashland (ASH). I got in at around $13, and am making enough to pay a month of rent.

Chicago Mercatile Exchange (CME) has yet to pan out for me.

Intuitive Surgical (ISRG) is doing nicely, especially today. It seems to be going the same way as Ashland, but maybe that is just wishful thinking.

There seems to be a commonality between multiple stocks, in that they are moving higher in a big way, banging up against their upper bollinger bands. Of course I am not complaining, but only making an observation. The broad market also seems to be inching its' way higher each day, but there are some doubts as to if it will lead to a brand new bull market. I doubt it also. The financials appear to be making steps toward improvement and getting at least somewhat healthier, but apparently they are not lending yet.

I couldn't help but think when I heard the earnings news for Wells Fargo (WFC), "Earnings surprise? How is it a surprise? They were not a part of the sub-prime lending scheme".

I made another interesting observation, in that there is a prominence and popularity amongst the activity in residential housing auctions, like ZetaBid.com. The thing that caught my attention is that the banks have the ability to auction off a considerable portion of the "bad assets" (not necessarily MBS) that they have on their books within a month or so. It isn't necessarily a new idea, but the idea under the current conditions and causes to those conditions makes it noteworthy.

A Thought: Is it worth it?

2009-04-17T12:31:00.001-07:00

Anything worthwhile doing is never easy.

Taking Stock: Bank Stress

2009-04-01T09:35:00.000-07:00

The government stress tests on the banks are going to be done this month, which I am looking forward to. The way I understand it, is that the tests will determine which banks are solvent and which ones are not. Maybe the government will do what Dr. Roubini is suggesting, which is to shut down insolvent banks. The reason Japan had such a long deflationary period is because the zombie banks remained zombies for so long. In other words, they just let them sit there. That's the difference between the U.S. and Japan. If banks are confident that other banks are solvent, then they will begin to lend to each other again, which will get credit flowing again.

I find it somewhat ironic that Roubini is suggesting some improvement in the U.S. economy, considering that Dr. Roubini is normally the epitome of a perma-bear.

My other guides and sources of information tend to agree with Dr. Roubini on the outlook of the economy, so that is more than likely what is going to happen. I'm leaning more toward what the growth of China will be like.

Does it make you feel ... ?

2009-03-17T15:00:00.000-07:00

I wonder if there is anything that is completely devoid of emotion, especially when you consider what can stimulate human emotion. I have my doubts, but I suppose it depends on how emotional stimulus is classified. I don't think anything can be completely void of cognition, but I also suppose that cognitive necessity also depends on classification.

Taking Stock: Warning about Cramer

2009-03-03T16:57:00.001-08:00

I have the same problem with Jim Cramer.

Did he predict the DJIA dropping below 7,000? I still remember when he was on TV capitulating. It seems as though whomever I meet that knows anything in relation to the stock market does not like Jim Cramer. Go figure. I'm not bashing him, but would simply like to issue a warning.

Although, I reiterate in that it seems as though one of the most difficult things to do in regards to investing is knowing what to learn and where to start. One of the other difficult things to master is having the right thought process and rationale for as to when to buy, and when to sell.

Taking Stock: Macros

2009-03-02T11:18:00.000-08:00

For the present term, it appears as though the broad market is going lower. The theme for gold is that it will be going much higher. Ben Bear-nanke was claiming that there is no threat of inflation, but that has yet to be forseen. He gave hints to the overall economy possibly improving in the second half of the year. According to Dr. Stephen Leeb, inflation will prove to be a problem in the not so distant future. The way I see it, Dr. Leeb has been right about quite a few things in the past year or so that I have been following him.

I looked at some of the macroeconomic indicators this morning, and they appear to be just barely starting to improve. One of the first things that I noticed starting to improve was the fact that there is actually demand for oil in the recent report. It was not much demand, but it was better than nothing. We will see if the crude inventories continue to decrease. Something that Dr. Leeb has been saying repeatedly is that there will be more oil shocks coming, somewhat proportionate to the previous oil shock of last year. I am interested in seeing if that happens.

A few other macros that I noted:
-Personal Income increased for the prior two months by 0.4%
-Personal Spending increased by 0.6%, which is up from -1.0%
-Personal Consumption & Expenditures increased by 0.1%

I don't watch the unemployment rate or jobless claims quite so much because it is a lagging indicator. The consensus for the unemployment rate is that it will continue to climb.

The report from the Bureau of Economic Analysis for the preliminary GDP was a contraction of 6.9%, which is a huge contraction. I recall seeing a report from, if I remember correctly, National Bureau of Economic Research (NBER) that there would be a small contraction in 3Q08, large contraction in 4Q08, and anoher small contraction in 1Q09. So far, the 3Q08 & 4Q08 have proven to be true.

To me, it appears as though the overall economy could quite possibly be starting to recover, although it is going virtually unnoticed.

Taking Stock: Trading Patterns

2009-02-26T19:38:00.000-08:00

There are a few well-known trading patterns:
-Pennant
-Flag
-Wedge

I came up with a new one recently, which I call the Bearish Cliff Pattern. We had one in the major indexes in October & November of 2008.

Taking Stock: Trading Possibilities

2009-02-23T10:08:00.000-08:00

I was also looking at CE Franklin (CFK) to make some trades. If it bounces off of the 20DMA, then I'll have two data points for both support and resistance on the uptrend. That would allow me to trade it in a channel.

I'm not sure about Compass Minerals (CMP) yet. As Dan Fitzpatrick says, "Don't be the first one out of the foxhole". It needs to start to bounce before I can put in a limit order and a trailing stop loss order. It looks as though $65 is the resistance level for Compass Minerals (CMP).

I am happy to see that DryShips (DRYS) could finally be starting to move higher again. I'm not sure of the proper name for it, but there is an overall long-term trend line that was serving as a severe level of resistance, and DryShips has broken through it. I also read a message board for DryShips, and I have noticed that quite a few other people have lost a substantial amount of money. It seems to be a common theme.

Jim Cramer was recommending Axsys Technologies (AXYS) not long ago. That's funny, because I was considering shorting it, considering that it is is a well-defined downtrend.

There's an article about the DJIA possibly being overhauled.

The DJIA broke another level of support last week. So far, at least from an empirical perspective, it doesn't seem to be a broad-based sell-off. It just seems as though positions are pulling back to the most recent support level. That is part of the reason why I am interested in the overhaul of the DJIA. I was somewhat shocked to read that GE is down to single digits, but I have heard that it is being grouped along with the financials. It is a similar situation to Wells Fargo (WFC), which is getting dragged down because it is in the index along with other financials. Wells Fargo is actually one of the better banks right now, because they did not participate in the sub-prime "give a loan to anybody that wants one" frenzy. Yet, since their stock is grouped along with the stock of bad banks, it will be dragged down along with them.

On that note, there is a good playlist of videos to watch on the credit crisis.

Since the broad market has broken support, I'll put in some stop loss orders for the previous support levels of stocks that I own. Once support is breached like that, then who knows how much lower it will go.

Taking Stock: Breakout Fakeout

2009-02-19T18:43:00.000-08:00

Well ... so much for the supposed breakout! Instead, the broad market sold off to new lows. There has been some discussion about some of the DJIA-30 components being replaced with some new ones, which should be interesting.

As of late, I have just been looking for some trades, and to implement the guidelines that I have learned from watching Dan Fitzpatrick's videos. One of the stocks that I was looking at earlier today was Compass Minerals (CMP). It looks to me like it has a nice trading range/channel.

I was reading another article about Boeing being in production of the 787 Dreamliner. I also noticed that Airbus is in production of their A380 jet.

I am a little wary of Transocean (RIG) at the present time, because it normally trades dollar for dollar with the price of oil. Oil is ~$40/bbl, and Transocean is trading up ~$60/share. I put in a stop-loss order at $55/share as a precaution on the divergence.

** Empirical Musings **

Taking Stock: An Atricle to Share

Taking Stock: Pull-back

Taking Stock:

Taking Stock: Oil Prices

Taking Stock: Perspective

Taking Stock: Looks Good

Taking Stock: Surprises

Taking Sock: Get Back In Sync

Taking Stock: Strategy Shift

Taking Stock:

A Thought: Your Health

Taking Stock: The Beginning?

Taking Stock: I Saw What I Was Looking For

Taking Stock: I'm Glad!!

Taking Stock: I Found It

Taking Stock: When you wish ...

Taking Stock: For the Short Term

A Thought: Is it worth it?

Taking Stock: Bank Stress

Does it make you feel ... ?

Taking Stock: Warning about Cramer

Taking Stock: Macros

Taking Stock: Trading Patterns

Taking Stock: Trading Possibilities

Taking Stock: Breakout Fakeout

Empirical Musings