Wednesday, November 26, 2008


Coal prices are cheap.

I am done trading for the year. I will probably return early or mid January.

Tuesday, November 25, 2008

More ETFs


ProShares Ticker Index/Benchmark Daily Objective*
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Ultra DJ-AIG Commodity
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Ultra DJ-AIG Crude Oil
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Ultra Euro
EUR/USD daily price change

UltraShort Euro
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Ultra Yen
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Ultra Gold
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Ultra Silver
Silver bullion price, London fix

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Monday, November 24, 2008

Weak Ags

Weak Ags: POT -1%, CF -1%, TRA +0%, MON +4%, SQM +5%
Strong(er) ags: IPI +10%, OS +9%, ADM +7.5%

This sector could not sustain a broad rally during today's bullish session. Makes me think that they have much lower to go. ADM has almost doubled from its bottom, it is looking rip for a short. However, I will wait for signs of weakness to show before I short.

Ideal short entry would be a break above 27, followed by a rejection.

Crack Spread

Again, this is not the exact crack spread, but we can clearly see that it is lower than it has been since oil peaked.

Thursday, November 20, 2008


In my previous post I said

Since the XLF is the sector that is causing all the problems, lets compare it with QQQQ during the dot com bust. It went from 120 to a low of 20, an 83% drop. So by those standards, the bottom should be... 6.5 (ouch). Is that reasonable? It seems like a stretch since the height of the dot come bubble brought about huge valuations for companies, but then again this disaster should also take away huge valuations from banks. I would at least expect continued downside from here, hopefully not straight down like it has been doing lately.

It hit a low of 9.24 today (pretty much straight down). To hit a low of 6.5 we need another 30% move down (that is only 3 more days like today).

This market is crazy manage your risk, whether long or short!

Also watch out for a rally to test the recent breakdown (SPY at 84) in the indexes.

Tuesday, November 18, 2008


Today felt like a low volume day, but I failed to realize how much volume was behind the buying at the end of the day.

I do not know what to think of this market. I can see it moving up, I can see it moving down, I can see it moving nowhere. I will continue to play this market anticipating and taking profits on small moves, until I have more confidence on the direction of this market. The recent action makes me want to be bullish, but this market is just pounding on death's door.

A soft landing to a bottom? I wouldn't bet on it.

Maybe what this market needs is REAL capitulation. A close below the lows for 3-5 days. Take anyone who does not want to be in the market out.

Monday, November 17, 2008

Market Timing Using DeMark

First, here are a few resources for what DeMark Sequential is.

DeMark TD Sequential: An Overview and Brief Tutorial
Impressive Signals From DeMark
Google Book Preview

I just came across DeMark very recently and decided to see how it works. I have read the first 2 links and gone through some of the book through Google. The book seems to complicate things beyond its simple appearance, so I just decided to stick with the PDF's description and keep it simple.

I will show examples of how the DeMark Sequential works on intraday 1 min charts to find reversals in this crazy crazy market. The first thing I must point out is that I would only recommend using this technique to find quick reversals. Usually these are counter trend moves before the primary trend continues. However, once in a while it does predict complete intraday reversals. You can also use the indicator to find conutertrend rallies which you can use to ADD to your position if you are confident in the trend.

I programmed DeMark sequential on TOS platform, with .5 being a buy signal, 1.0 perfect buy, -.5 sell, -1.0 perfect sell. One thing that the PDF does not go over is the fact that the signals should NOT be used after exactly 9 bars (especially true in this momentum driven market). In fact, from my experience a signal should be acted up when either 1) you see the trend weakening with dojis or a countertrend trend bars or 2) the signal actually goes away and you are still able to get a good price. Also, you should NOT chase any moves unless you really believe the trend is changing.

FYI, in this market the trend is DOWN, all charts are 1 min.


SPY gave a sell signal early in trading. After the 1 min red bar, you are given more confidence that the trend might be changing, but dont chase it!

The market proceeded to fall right to the VWAP, where it took a break and DeMark gave a buy signal.

This proved to be just consolidation before the next move down. Another buy signal is given at a lower level, followed by a few green bars (one being a hammer).

Here is more data you see the last buy signal market some sort of temporary bottom. You can also see big sell signal that only marked a very slight counter trend rally followed by another signal that market the exact top of the day.

Now, a look at a few individual stocks. I will try and show good examples, as well as bad examples. I will also try and look at volatile and boring days.

First, here is an example of why you must wait for the market to confirm the change in trend before you jump on using this indicator.

There was a buy signal for 15+min while SKF took a dive down. Notice that the rally (very small) happened right after the signal went back to 0. It is especially important to take precautions in this momentum driven market. Using the indicator to add to a short would have been the money making decision.

SHLD - things can go very wrong trying to pick a bottom in a bear market

The sell signal towards the end was a good signal to continue with a short in the primary trend.


Sell the highs, buy the lows like a pro.


In choppy market you can make quick $, but you must have good entry. This allows you to set stops just below/above the recent low/high and minimize losses, while still taking quick profits (good risk/reward ratio, here you want a .1-.2 risk with .6 reward in a 5-10 min time frame).

I can post many more examples, but I will continue to evaluate this on different timeframes and see what works and what does not. Here is the TOS code for the indicator.

input lookback = 4;

declare lower;

def buySeq;

if close[0] < buyseq =" 1;" buyseq =" 0.5;" buyseq =" 0;"> close[0+lookback] and close[1] > close[1+lookback] and close[2] > close[2+lookback] and close[3] > close[3+lookback] and close[4] > close[4+lookback] and close[5] > close[5+lookback] and close[6] > close[6+lookback] and close[7] > close[7+lookback] and close[8] > close[8+lookback] then {
if max(high[0], high[1]) > max(high[2], high[3]) then {
sellSeq = -1;
} else {
sellSeq = -0.5;
} else {
sellSeq = 0;

plot buySequential = buySeq;
plot sellSequential = sellSeq;

plot ZeroLine = 0;

Here is an updated chart including 2 built in DeMark Indicators

Thursday, November 13, 2008

SPY Volume Breakout

And there is still 1 hour left to trade.

End of day update:

Wednesday, November 12, 2008

Get Ready for the Lows

New lows coming soon, get ready to anticipate a significant rally once we significantly break the lows. I would not try to pick a bottom, just ride the rallies for a few points. The sellers will continue to step up. GOOG has a good chance of turning around now that it has broken 300.

Monday, November 10, 2008


Friday's lows and highs are important to watch. A break and a sustained rally/selloff will determine the markets direction. We might need more sideways action, but it seems that this market cannot stand still.

GOOG update

The horizontal lines I drew acted very well! 330 got a bounce to 340, then broke below. Now 310 seems to have some support. If this area is broken that means new lows for GOOG.

Sunday, November 9, 2008

Ted Spreads

Ted Spreads have come down a great deal. This should help investor confidence and fuel a rally. Will 'all' the 'sideline' mine come back into the market to chase prices even higher? The reason for all the quotes is that I have doubts about how much of this money actually exists. But lets take it one day at a time and watch the inverse H&S formation pointed out in the previous blog entry.

Thursday, November 6, 2008

Inverse H&S?

Courtesy of Trading with TK.

Futures are curiously +1.5% right now... not sure why.

Also, I have been sick last few days and not trading at all =(, which means I have missed the awesomeness of shorting MON or anything else in this market.

Wednesday, November 5, 2008


Does not look too healthy.

A closer look, with some possible levels of support.

The trend is down.


The McClellan oscillator says that we are still somewhat overbought. I also believe there could be some more profit taking to happen. The next few days should be neutral/bearish.


For whatever reason I have stopped doing my stock hw on select nights. I figured this market is so emotionally driven that there is no point in looking at charts. This is especially true since 90% of stocks seem to simply trade with the market.

But I think it is time to stop being lazy and going through my charts again. Lets see what I can find tonight!

Monday, November 3, 2008


Short, waiting for it to break 85.