Trading Journal - July

Of the six home-building stocks that I watch, five are below both their 200-day and 50-day moving averages. Only LEN is holding just above its 200-day MA although its below its 50-day MA. My conclusion -- the home-building stocks as a group have topped out. We should shortly be hearing more bearish news on the housing front. This is confirmed by the poor action in lumber.

The Fed, desperate to keep the housing boom going will almost surely drop rates at their meeting next week. Which I seriously doubt will help housing.

The bonds appear to have discounted any new moves by the Fed. The 10 year T-note (off of which mortgage rates are usually priced) is well off its recent lows and about halfway back to its October 10 high.
 
The KEY to the primary trend of the market is the 200-day moving average of the Dow. The 200-day MA of the Dow has been declining by about 8 points a day. The 200-day MA stands today at 9300.

The faster-moving 50-day MA of the Dow stands today at 8200. As long as the Dow holds above 8200 I grade it neutral-bullish. If the Dow break below 8200 it will revert to clearly bearish.

VIX almost unchanged at 35.91, showing continued nervousness.
McClellan Oscillator at plus 110, still OK and still on the plus side. Very weak rally in the Oscillator, however.

No real weakness, but not real strength either. Market may be waiting to see what Greenie does next week. Or is it waiting to see what the Bush does next? Or waiting to see what consumers do next? Or it just waiting to see what's happening to housing? Who knows?
 
Who knows how long it float up. It could easily continue floating upward for the next 1-2 months. But it seems a decision will be made in the next 3-5 sessions.
 
''See what Bush does'' -partial Seanote quote.Wouldn't want to promote carlessness in a war,but most military planners figure around January on Iraq. Weather window figures in.

QQQ could easily drop about 10% ,in one day , in November like last [2001]bear [counter trend] rally.

Figure the most likely scenario is a November rally[techs too ];however will still plan on hitting stops.Will not plan on lage drawdown and hope the end of the month will bail me out.:cool:

--------------------------------
Rally [tech too ] figured because;
What's the alternative to stocks?????

IBM, MSFT 10 year charts [Novembers]

Active Trader Magazine , which mentioned seasonal trends of November, +
Yale Hirsch.

IBM,MSFT are real close to 200 day MA; most are not.
:cool:
 
Short 3800 MERQ @ 28.10

Total Position: Short 10K MERQ @ 26.76 (avg)

Pull up a daily chart and look at the recent gap up over Oct compared with the On Balance Volume (OBV). The OBV has weakened over Oct. and not followed thru with the price. Bearish signal.
 
Real Time:

SHORT .FWU 180 0.45 +0.35 LONG TXN 5000 15.90 +0.27 SHORT MERQ 10000 26.76 -1.34 LONG .QAVWU 50 1.40 -1.35 SHORT CYMI 5000 25.18 -2.71
P&L: ($38,950)

Still cleaning up some of this crap.
 
We have an interesting situation. Overbought market entering the period of greatest seasonal strength with the catalysts of the election and likely Fed cuts. Big players are leaning on the short side and have been hurt for doing so. Mutual funds are fully invested, after trying and completing a desperate 4th and long pass play from their own end zone. Will they get inflows to squeeze the shorts more? Will the market drive out the shorts before reversing? Will the market sell off on the news?

Techs look so overbought it is tempting to short every one of them. QLGC is up 100%+ in a month, many others are in what appear to parabolic blow-off moves. Financials have dire problems that will be helped only marginally by rate cuts. Can anyone say Brazil? A deleveraged WCOM can emerge from bankruptcy and wreck havoc with the other telco zombies, putting all that debt at risk. But the short case is always the easiest to make. They made it from '95 to '00 and continued to make it as they were carried out feet first.
 
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