A few reasons why I am shorting this bounce

Quote from rowenwood:

yeah i guess i think too much like position trader. i think of major market directions: bull market or bear. Then my question is, why day trade when one can more easily get rich through position trading. All that stress and what profits?

I'm up eighty percent since july 2003. I was up as much as 200% in november. Does the average day trader make this easily achieved profit look miniscule?
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Well.. the question is.... assuming 2004 is not gonna be a bull market will u be able to make as much $?

Also.. maybe u just bought stocks.. we had a rally u made $. Going forward how will u continue to make $?

People that trade shorter term.. try to reduce their risk.. and dont need a strongly directional market to make $.

IF you are a pure trend follower you need a strongly directional market.. which really happens quite rarely.. Most of the time markets go no where and just chop people up.
 
Quote from waggie945:

Why would anyone be trying to pick the top here?
It doesn't make sense.

INTEL and AMD get downgraded, and guess what?
INTC is now up on the day.

Hmmmmm.....
Sounds like a pretty strong market to me!
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Its the same market that shrugged off good earnings in regards to AMAT.

VIX at new lows. Market could continue its rally.. I agree thats why I am not agressively shorting this rally. $119 on the IWM would be my trigger to get very aggressive.. and I will move to %50 short. The remainder of the short will be if IWM makes new highs.

By the way guys... when things look absolutely great and market rallied 3-4 days in a row.. its not the time to be looking to go long.
 
I really don't think that it is as much a question as to whether or not 2004 will see a continuation of the strong trend that we saw in late 2003.

You merely have to be locked into the "right" group or sector in order to find a trend to ride. The first leg of a Bull Market sees the chip stocks surge due to the incredible growth in {b]M3[/b], then as we see now, the cyclical stocks take the Bull inito the next leg with strong advances in oils, papers, aluminums, steel, and copper stocks along with the Deer and Caterpillars of the world.

Look at the Homebuilders for example.
How could anyone stay in business "fading" that kind of a trend?
 
VIX closes at new lows.. volume very weak today on major indices...

My bias is still the same.. eventhough we did have an impresive rally. MDY new highs. Looking to fade that in addition to the IWM.



--MIKE
 
There is no question that today's volume was low.
No question about it.

However, I don't know anyone that has ever traded based on volume and made money doing it. I don't trade volume. I just trade price.
 
Quote from waggie945:

There is no question that today's volume was low.
No question about it.

However, I don't know anyone that has ever traded based on volume and made money doing it. I don't trade volume. I just trade price.
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I've made money trading based on price and volume.

Many good stock traders use Volume. William Oneil uses volume to confirm rallies.. he was a good trader.. as are many canslimers.


--MIKE
 
Quote from waggie945:

There is no question that today's volume was low.
No question about it.

However, I don't know anyone that has ever traded based on volume and made money doing it. I don't trade volume. I just trade price.
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Until the Clearing House goes to a volume weighted settlement of funds sic. I too will care most about price. This whole rally has seen volume explosions on the few breaks with those shorts getting squeezed on light volume mark ups. LOW VOLUME in a bull market is BULLISH. Sellers are clearly non responsive to trades above value. Thus the market must auction higher to find supply.
 
today was first day of week and first day of month and start of tax filing rush. all that plus good economic numbers this morning combined = big inflows of 401k money hitting fundmanagers desks and all they are required to do is buy.
 
Don't look now, but HOVNANIAN (HOV) just reported a super first quarter and now guides upward to $9.50 for the year. The stock is still only trading at 8.77 times earnings, even though the stock has had a monster rise from the breakout at $40.00 in May of 2003. Now I call that Earnings POWER!!!

Just another great example of why it does not pay to "fade" a breakout out of a bull sector move. Had one shorted the new high at $40.00 in the first week of May 2003, you were simply left "pissing in the wind" with no reference point to use as a stop loss. You would have had to be incredibly disciplined to cry Uncle with a mental stop . . . a risk management technique that I would be the first to admit am not very good at!

Meanwhile, the ISM inflation component came in at a NINE YEAR HIGH this morning and yet the Bond Market has now closed twice under 4.00%

By the way Pabst . . .
I agree with your observations, totally.
As always, a very informative post by you!
 
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