Tuesday, March 11, 2008

416 POINT GAIN IN THE DOW

Phew, good thing I got out of my short position yesterday. I sold my QID shares at $56.81. Here's another example of my poor selling timing, if I waited just a few more minutes I would've been able to sell at a price that was 70 cents higher.

So today was a big day...the Fed has lent $200B to the banks which lead to Dow's biggest day since 2002. Everything looks a whole lot better now as most people expect positive gains in the indices. This could be the beginning of new all time highs, and we may have bottomed but here are my reasons why we haven't bottomed yet...

It's too early to say that we will be bullish. If you look at a 5 minute chart on the S&P 500, we haven't even confirmed a rally. If we break 1325, we will have a good chance of testing the 20-day and 50-day moving averages. Keep in mind that nine of the biggest up days in Wall Street history all occurred during the bear market of 2000 to 2002. Today's bounce should just remind you of spikes back in 2002, which, in hindsight, only provided opportunities to sell. This could just be another fake breakout. Institutions love these gaps, they want amateurs to run it up so they can short the heck out of it and watch the panic selling that happens. Further, after today's proposal we shouldn't be expecting a .75 cut in next week's Fed meeting. Aside from these reasons, let me introduce you guys to a "useful" market indicator. I shivered when my girlfriend asked me to go to MAC again to buy more makeup. The Lipstick Indicator is an "indicator based on the theory that a consumer turns to less expensive indulgences, such as lipstick, when she (or he) feels less than confident about the future. Therefore, lipstick sales tend to increase during times of economic uncertainty or a recession...This term was coined by Leonard Lauder (chairman of Estee Lauder), who consistently found that during tough economic times, his lipstick sales went up. Believe it or not, the indicator has been quite a reliable signal of consumer attitudes over the years. For example, in the months following the September 11 terrorist attacks, lipstick sales doubled"-Investopedia.

Alright, so that about sums it up. Again, we may very well be heading higher if we break 1325 in the S&P, but be careful and keep all these things in mind while you trade for the next few weeks. Oh, and I know I've been lacking charts in my posts, but I promise that you'll see lots of charts in the new layout.

Sunday, March 9, 2008

THE OVERALL TREND IS DOWN

After confirmation of a fake rebound (head fake), it became clear that the markets were heading lower. This week was a volatile one, but the S&P500 was due to test the 1300 support. Both Thursday and Friday were crucial days as we approached this level. I wasn`t surprised to see an early bounce off of support early Friday as this usually happens. Afterall, 1300 is a strong support, if we were to break the support immediately the markets would be in a complete bloodbath. After a mini rebound we proceeded to drop below 1300...if we continued to drop throughout the day a gap down Monday morning would've been certain, instead we got another mini rebound near the end of Friday which puts us right back to Friday morning's level. I am still holding my bear ETF from Monday but wish I took a profit mid Friday afternoon. I'm not too pleased with myself because in a matter of minutes I lost $1.80/share. I seem to be buying at the right times, but I've been way off when it comes to selling my positions. In volatile markets like these, you need to have your eye on the market all the time.

The overall trend is down, so I don`t expect any movement upwards next week. Let me break it down this way, there's a...
5% chance of going up, a 40% chance of going down, and a 55% chance of moving sideways this coming week.

CONTEST
There have been 6 entries to the Ad Space Contest so far, if you`re still interested in entering, please refer go HERE. The Contest ends on the 19th of March.

EXCITING NEWS
In April, Hedge Against Speculation will have a brand new layout and domain! No more blogger, things will be much more professional, I will keep you posted on this.

Monday, March 3, 2008

WIN A 125X125 AD SPACE

I am running a contest. The winner will receive a 125X125 Performance Ad Space for one month.

RULES
Reply to this message with a picture of your 125X125 ad along with your website and email. I will choose the best designed ad out of the bunch.

CONTEST END DATE
All entries must be entered by March 19, 2008. I will select and announce the winner the following day. The winner will be contacted through email and once I receive confirmation their ad will be displayed immediately.

PRIZE
The winner will receive an ad spot from March 20 to April 20, 2008 on the right side of my blog.
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If you are interested in purchasing an ad today, email me at richardt@ualberta.ca

OTHER AVAILABLE AD SPOTS (hover over pictures for prices):
$8/month, email richardt@ualberta.ca$5/month, email richardt@ualberta.ca$4/month, email richardt@ualberta.caSOME BLOG STATS:
The average time on site is 2 minutes and 50 seconds.
In two months time, my blog has seen visitors from 40 countries.
Navy blue=no visitors yet from that country

For full stats, please email richardt@ualberta.ca

Sunday, March 2, 2008

SHORT-LIVED RALLY, ONLY A HEAD FAKE

I should've known better, in this volatile market anything can happen. I expected the S&P500 to creep up to the 1400 mark by the end of the week and this obviously did not happen. S&P's inability to break out to the 1400 trading range is a pretty big clue that the recent rally was merely a head fake. So this isn't exactly comforting news for me...I'm stuck in my long position of NYX. Getting stuck on the wrong side of the fence is a horrible feeling and something I've been trying to avoid this year. Holding this stock over the weekend was also another fatal mistake (I had some technical difficulties, I was trying to sell my shares on Friday, but my online brokerage just wouldn't follow through), it is pretty obvious now that the markets will gap down in the morning come Monday. The only relief I could possibly get is if Bernanke decides to cut rates on Monday...highly unlikely, but still a possibility.

Let me explain what may have happened last week and where we are heading this month. The US dollar dropped in value earlier last week, this causes US investors to have to pay more for stocks with their more and more worthless US dollars. This also boosts foreign investors' buying power and results in a higher market. So that along with "good news" last week brought the markets higher, but if last week was in fact a head fake then this market is going to head lower...much lower for the rest of this month.
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UPDATE
I sold NYX at 10:30am on Monday and bought QID shortly after. It's no time to be bullish right now...we could see another January bloodbath this month.

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Edmonton, Alberta, Canada
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