Let's Take a Test Drive by Pay$ense

Despite some questionable action for the market's recent rally attempt - overall we continue to see constructive behavior.

After struggling to gain and hold their respective 50-day moving averages, most of the indexes have now been positions solidly above them.

I will not only be watching this, but also lower support at about 850 on the ES.

With today's jobs report not bringing any surprise news, we may see more consolidation. This of course is great for my covered call system that produced 27% for all of 2008. 2009 may indeed be another solid year.

I remain cautious in my futures trading accounts, since if indeed institutions step in to support this rally, there will be plenty of upside as a new bull market is staged.

I will phase in LONG accordingly, however in my ETF account my LONG swing MVV trades are continuing to sport solid gains. Started just 3 months ago, $25k ahs grown to $40k as we let our market shift call still ride into higher gains.

Conviction in the form of larger volume gains from the indexes are what we need to see for this rally to have any staying power. In the meantime, it is prudent to be patient.

paysense

:p
 

Attachments

So much for our budding new rally! The only action we have seen since the December 2, 2008 confirmation has been in barely average volume.

Yes day-to-day volume) comparisons may have seemed like a healthy rally <i>could</i> continue to emerge - but in fact without institutions or large investors putting money back to work it's hopes diminished.

Leading stocks that broke out soon or eventually fell. The Santa Clause rally came and went coupled with some short-covering<b>...but without <i>any</i> conviction on the part of fund managers</b> the rally was stopped dead.

With a decided close below the 852 level, my "swing" positions have shifted to a SHORT bias. Next downside level: 825

It doesn't look good. Like I've said all along, the criminals er um I mean bankers know that their toxic balance sheets were leveraged into ENORMOUS losses and even with "father time" these continue to be camouflaged and will eventually have to be exposed.

We are now seeing retail bankruptcies and further waves of foreclosures along with plummeting consumer confidence and retail sales as spending - which contributes to the majority of our GDP - continues to go further into "hunker-down" mode.

Ominous to day the least.

Oh well, more debt and taxpayer bailouts will temporarily pull us out of a recession - if lawmakers can now afix conditions to our "gifts" to actually help the U.S. <i>and not just themselves.</i>

:confused:
 
Well I hate to say "I told you so."

Or even post one of these:

:D

I mean it is plain to see what is <i>really</i> going on in our financial system these days. And the new or old Administration will have very little they can do about it.

Losses from leveraged bank investments STILL remain obscure and massive, despite the HUGE taxpayer bailout.

These are eventually going to have to fail - for better or worse. Probably at first worse and eventually - more quicker - better, since throwing good money after bad will NOT likely provide a <i>dent</i> into the problem.

If good companies have to fail and businesses can't get loans to grow - what is the point in that? On the other hand, if the Big Three Banks have to merge or fail, it will only then allow for others that didn't take unnecessary risks to come to the forefront.

That is how healthy markets work - not nationalizing these institutions!

The sooner they realize it the better and our tax monies can be used elsewhere instead of just one BIG Black Hole.

That being said, my covered call systems have once-again cashed out like clockwork (I have set stops). Meanwhile my market shift last week to SHORT for my futures "swing" plays are well fong fine.

Sad, but with SO MUCH technical damage we may not bottom until the second or third quarter - <i> if we are</i> <b>lucky.</b>

:p

pay$ense
 
So what do you "think" now? Yesterday's short-covering rally in financials did seem to be a bit overdone.

With volatility spiking once again, I hedged my SHORT "swing" contracts a bit - but it does seem that we are heading for new lows.

Perhaps this financial juggernaut is not <i>that</i> bad.

:p
 
Another manic Monday as a large, visible merger meets the headlnes - while a wave of companies fall well short of earnings expectations.

The indices are said to now be in "sideways-mode", but with key levels already breached and plenty of bad news looming - I am not counting on it.

The big question remains. . .<b><i>how much</i></b> toxic debt are taxpayers liable for (since thus far we - er um our elected officials - have decided we are not going to let the banks work things out themselves (fail/merge).

Are we talking multi-trillions? We all know how ugly leveraged bets can get!

It truly amazes me that no one truly knows (or is letting John Q. Public know) just how much...and that years or even decade went by and no administration picked up the task until too late.

Even then we have had to endure 1.5 years of Fed manipulation - - with no end in sight.

What is <b><i>real funny</i></b> depending on how sick your humor is, is that U.S. citizens appear to not understand what is going on!?!

THINGS ARE NOT GOING TO GET BETTER AND NO ONE IN THE ADMINISTRATION IS GOING TO DO ANYTHING FOR US.

Now Obama & Company are stating the obvious (so that they won't be blamed) as they have quickly reverted to prepping us with "this thing won't right itself for a long while".

At least we still have a market that can (kind of) sort things out.

pay$sense

PS I am still with a SHOrT bias and add trades to gain from the brief sharp rallies and subsequent plummets to new lows.

I am totally cashed out of CC trades - waiting for the REAL bottom to show up.

:D
 
My trading systems did fairly well going into the close of 2008.

On December 2, 2008 I went LONG with my "swing" futures positions and again started initiating covered call trades my other account.

These Jan contract trades were closed and the year ended up nearly 28% - outperforming the S&P 500 by more than 66%!

Meanwhile, 10 months of futures trading yielded a 114% return.

Now that we turned the corner in 2009 I've basically been treading water this past month with futures trades - but my covered call system took a 14% drawdown. My "Caution" signal came January 7, 2009 and my "correction" signal came January 12, 2009 that allowed for me to avoid a possible worse drawdown.

I was quick to get fully vested writing contracts out to February, but a decisive market shift cashed me out. Volume with the Santa Clause rally had increased - but was barely average and large investors sold us back down.

Said pullback in my Covered Call Fund can and will be easily made back and more, while today I received a pretty good "all clear" signal to again go LONG.

We shall see how this plays out.

:D
 
Phewww!

The day came and went with NO BUYERS to be found <i>anywhere</i>.

I had to ask what is going on?

In summary, stocks plunged Thursday as a barrage of weak economic data and dismal earnings news erased Wednesday's big gains.

The lighter trading meant the market did not suffer a distribution day.

Meanwhile, for the second straight day, the index of top-performing stocks was more subdued than the broad indexes. In fact a few leaders actually gained ground.

Going light with bullish futures "swing" plays for now. Dipped my toes again into a covered call position, too.

Test, test, test anybody there?

:cool:
 
Indexes continue to hem and haw.

Of course, that is what corrections do to work things out.

But to a large extent the directionless market with no conviction (institutional volume) can be directly attributed to our elected officials.

Administration after administration allowed Wall Street to run rampant - now erasing years of earnings and nearly all shareholder value!

They continued to keep their dirty fingers in the muddy mess - since the surprise discount rate announcement in mid-2007.

All their intervention has only allowed this meandering market to persist. Some analysts say that the actual amount of "toxic debt" on bank books can be valued at $1T. We should be SO lucky.

Meanwhile, we won't get a bump until the announcement of the stimulus package passage - but a market that reacts as much to headline news is an unhealthy one.

In the past I simply cashed out when markets corrected. This last year with futures I more than doubled my account - but for now will simply stay with a light "swing" contract.

At least until we get some kind of direction.

:p
 
Truly, we (this market) is at a cross-roads. The new Administration, new TARP plan, economic stimulus bill, etc. have run up against a wall.

Exactly what Obama promised yesterday - that Geithner will give "very clear and specific plans." were not delivered today as the market awaits more uncertainty.

It is true, the indexes have traded in a fairly tight range for more than two months, but today's decline came in very heavy trade - casting doubt it can rally from here.

If we test the lows and fail, it may be a good thing as we will likely setup for a "classic capitulation".

Meanwhile, despite government intervention, the indexes continue to work through the excesses built up for many years.

In the end we will be better off. My Covered Call Funds will again out-perform and may add some very nice gains with a new bull market.

As far as my futures (trend following) "swing" trades - we remain light, since there still is no real direction.

pay$
 
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