I Still Don't Get It

I was watching the NBA Finals game with a group of friends last night and one of the guys had the Galaxy S3.  I'm not here to dog on Samsung, I actually believe it is a great phone and easily the best competitor to the iPhone.  But, I will still stick with iPhones as long as they make them.  And with the new and improved iOS7 coming out this fall I am even more hooked. 

So we got in a heated debate about bigger screens and other features.  I just do not get the bigger screen.  And I am not just saying that because I am biased for AAPL products.   I am a pretty big guy, I have 8" hands and can still dunk a basketball (humble brag).  I hold my iPhone specifically in this way as do a lot of other people:  For right handed people, the bottom right corner is setting firmly in the center of the palm.  The pinky is underneath the bottom of the phone and used for gravity support.  The index, middle, and ring fingers are spread evenly across the back of the phone.  The thumb is used solely for scrolling/hitting buttons etc.  I can do all of this with just one finger and reach everywhere on the screen without having to switch my grip.   

All of this might seem juvenile until you actually pick up the larger Samsung phone.  Even with my 8" hands I have to hold the phone with two hands just to reach all of the buttons.  I'm not trying to play a damn first generation Gameboy.  How annoying is that?  To me it is extremely annoying because I need that hand for other things, like driving (just kidding, don't text and drive).  

I'm not so sure that AAPL will create a larger screen phone.  Even TC said during the last conference call that they would not sacrifice quality for quantity.  As an investor, I think the larger screen may benefit their stock more but as a user I do not want a larger screen.  I think the iPhone 5 is the perfect size, and I hope they don't deviate too much from this design in the future.  Even if they do, I will still stick with their products over any of their competitors.  I am stuck in the AAPL ecosystem and I love it. 

Watermelon To The Dome

Sometimes this market can make a trader feel like slingshotting a watermelon directly to the dome.  A perfect example was yesterday for the bears.  I had checked the short term oscillator in the morning and it was resting at -16.  A hugely oversold number which hasn't been seen since the end of March.  There were exactly 37 buys on my list for the close.  I knew only a handful would remain buys by the end of the day with the market being so oversold.  By the end of the day, the market rallied right under 2% from the lows and 36 out of the 37 buy setups had been ruined.  CHKP ended up being the only remaining buy yesterday.

The oscillator which provided you the slightest chance to buy stocks went from -16 to -3 in a day.  That is a big move.  I prefer to do most of my buying when the oscillator is extremely oversold like that.  It does not work the same way by shorting when the oscillator is overbought.

I haven't been watching too many key levels but I would take notice of this trend that I've noticed lately.  On the 30 min chart of the DJIA, the 200 period moving average was acting as support at the end of May but since breaking has been providing resistance in multiple occasions throughout June.  Look for a breakout above this for more upside or as resistance for more opportunities to get short.  It has already traded off 0.5% this morning after hitting it again. 

FB is the only buy on my list today and I may take a stab at it at the close.  The oscillator is sitting at 0 right now so it's anyone's guess where we go from here.  Could end up being a flat Friday.   I will sell BRCM and QCOM if they close up today.

Tuesday's Gone

With the wind.  Who'd a thunk it?  The market actually closed down on a Tuesday.  More specifically the DJIA since that was the one with the longest streak.  Today was the worst Tuesday the markets have seen in half a year and it was only down 0.5%.  Laughable. 

I saw in a/h that apparently Meredith Whitney and Nouriel Roubini are now bullish and "Equities are an incredibly safe play here."   Go ahead and add this to your "Why we are at the top" list. 

The game plan for tomorrow: ADP numbers and ISM non-manufacturing reports.  I'm not too concerned with the ISM report, even the lower estimate is about 52.5 which is still not a decent number.  I'm more worried about a miss on the ADP number.  Like I've mentioned earlier.  Bad is good.  So the key (if you are bear) is that the ADP number misses, but not too much.  Just enough to keep people wondering if it was good enough for Fed tapering talks to start again.

The market really is about weighing a couple factors against each other with a multiplier.  What that multiplier is?  I do not know.  Here is what you are weighing against each other:  What is more bearish for the stock market?  Bad unemployment numbers or Fed tapering?  Contracting manufacturing or Fed tapering?  Trade deficit widening or Fed tapering?  Low/stagnant GDP or Fed tapering?  Companies lowering guidance or Fed tapering?  Slowing global growth or Fed tapering?  You have to weigh every one of these against the Fed.  They say don't fight the Fed, but if all of the factors are saying that you need to, I'm not going to tell you not to.  

This market is extremely difficult.  We have seen 1-2% moves consistently for the last 2 weeks.  It is not easy to navigate this market.  When a correction or the next leg up happens, it will happen quickly.  Get ready because I think the choppiness will continue to occur throughout the summer.

In portfolio news MYL sucked a fat one today.  AAPL outperformed slightly which is helping my short general markets via DXD/long AAPL "pair trade".  VRNG continues to get whipsawed around by every Joe Blow who writes for Seeking Alpha.  And Obama hates patent trolls so that's not going to help their future cases either.  It's okay though.  Tuesday's gone.  

Diversion From Reality

What kind of world do we live in?  I feel that we middle to upper class folk like to view the world through rose colored glasses.  I hate the fact that bad is good.  Take this mornings ISM reading of 49.0.  The lowest reading since June 2009 (Don't worry, next month's wont be much greater with the new orders and backlog ticking down as well)!  And what did the market do after that, at least initially for 30 minutes after the report?  It skied upwards.  And for all you people who actually pay attention to the market everyday you know exactly why it did that and so do I.  QE4EVA.  There is no mistake about it.  Our markets are manipulated, pure and simple.  We need QE to survive just like our obese children need to eat cheeseburgers and fries every meal to survive. 

Japan is showing us a glimpse of what will happen if the QE milk teat will finally be taken away.  It has been getting pounded mercilessly.  But, to be fair, it is still up about 28% this year.  Since the relative prices of the Nikkei and DJIA are similar, I think it is fair to use it as reference.  Could you imagine if the Dow fell from 15,000 to 13,000 in only two weeks?  Boy wouldn't that be fun.  I wonder who the finger would be pointed to then?  Nothing frustrates myself and other traders more than when you know something is bad but everyone else refuses to acknowledge it.  It reminds me of the housing top in 2007 when a handful of people knew that housing was going to collapse but they kept losing month after month by shorting because everyone ignored the signs.  

Now, before I get too bearish here, let me point out that tomorrow is Tuesday.  This means that I will be looking to pick up 2 longs before the close and dump them within the first hour tomorrow on a potential gap up and fill.   I am setting my eyes on SBUX, SIAL, ROST, and MYL.  These buys will be updated at the end of the day.  I will continue to hold my DXD, and will probably switch to QID soon after I break even on the trade.

Full Retard

The markets are in full retard mode this morning.  It's another buy everything because it's Tuesday mentality.  I thought the panic in Japan would have maybe filtered over into our markets this morning but by the time I checked it again this morning the Nikkei rallied from the gap lower and trended higher all day.  Our markets are set to open up near 1% and probably rally even more after we get another huge miss from the Dallas Fed again. 

I've been sitting in no man's land for a while now.  The market continues to rip higher so I continue to hold core longs but add to shorts on the way up.  I am only looking for about a 2-3% pullback to take profits on those shorts to break even but my position has been getting much larger seeing as this bull has been very stubborn.

I need to start updating my blog more but it is hard when there is nothing new to talk about or pine over.  The markets haven't been this boring to me in years.  It's just the same thing everyday.  There is hardly any reversals anymore.  Just gap and trend.  If you do get the reversal, it only becomes a buying opportunity to rocket us to new highs.  Why can't just once some of the bulls get trapped so we can return to a normal market?  This summer may get a little more interesting since most fund managers have already made their quota for the year so they will be trading from the sandy beaches of some tropical island.

This is the new normal. Get used to it.

There were 17 buy setups that I was looking at today but most of them will close up today so I will ignore.  The ones that interest me are FB, NUAN, and INTC.

Fed Up With The Fed

Well yesterday was fun wasn't it? For a second there in the morning I could have been caught cursing at my computer screen.  After watching the ridiculous skyward move after Bernanke started speaking I actually felt myself begin to capitulate on the short side.  I just couldn't take it anymore, the irrational exuberance that is.  I had to ignore my computer screen for a bit.  By the time I came back, lo and behold the market was actually trading off a bit.  There was hope after all.  I am so fed up with the Fed and the way they are manipulating this market.

I actually tweeted yesterday that I wouldn't be surprised if we would be up today, if not significantly.  Who knows if it is just another one-off event?  No one REALLY knows what Bernanke is going to do but himself (actually I don't even think he really knows either).  Everyone will continue to postulate theories about why he will or won't continue with QE.  I am still in the camp that he will not taper QE anytime this year.  The market may get a slight pullback (2-4%) before the Fed's next meeting, just in time for Bernanke to have a more dovish speech to send the markets to new highs.  It is interesting to see how the Nikkei reacted to Bernanke's speech along with the FOMC minutes, it was down over 7% last night.

So what do the bears have going for them?  Nothing really.  Besides a slight break of an upward channel since the beginning of May.  Longer term trends are still upwards as we reach support levels.  It is going to take more than a one off event like yesterday, or even a down move today to spur any more panic selling.  So after his speech does this mean bad is good, good is bad, and horrible is great (depending on who you think actually controls the markets of course)?  

Yesterday reminded me of an experiment that I had read about before.  A guy is in a somewhat crowded area outside of a building and decides to stand in line behind a random door.  Within minutes, people start lining up behind him, not even knowing what was inside the door or why they were waiting in line.  Before he knew it, a line had formed around the block behind him.  The moral of the story is that people tend to do things even when they don't know why they are doing it.  The shoot first and ask questions later type of mentality.

Hopefully this will be the return to an actual market.  We are due for one.

As I write this the markets have bounced pretty significantly off the lows with the DIA only trading off by about 0.2% and SPY trading off 0.5%.  The VXX tits is up marginally.  Looks to be a hold your nose and BTFD type of day.

Playing With Fire

I'm playing with fire today.  I shorted more of this overpriced and overbought market via DXD.  Of course I know that the Fed is speaking again tomorrow and I will probably get my nuts ripped off again but I just couldn't resist.  Of course I know that it is Tuesday, which means buy programs are initiated.  But I still have ammo in my arsenal and I will fight to the death to defend this position.  

The people who love this market are the people who are naive and do not know what a real market looks like.  My grandchildren will be asking me one day about what it was like when the markets actually went down on the year.  And I will pull up old charts and blow the dust off of them to show them what red looks like.

I had a chance to catch a little of the AAPL hearings this afternoon.  I couldn't help but laugh my ass off at these idiots in Congress trying to take on Tim Cook and Peter Oppenheimer.  What is funny is that Congress is the one trying to berate AAPL for not paying their "fair share" of taxes.  If anyone has the right to NOT complain about AAPL being smarter than the tax system it is you Congress.  They are the ones who wrote the damn thing.  Plus, add to the fact all of the jobs and money that they have already brought to the US.  I seriously thought this was such a joke and I hope that everyone also agreed that Congress looked like a bunch of idiots today, which really isn't any different than any other day.

Long AAPL, DXD

Short Congress

Stripper Market

This is a stripper market.  No top in sight.  Or topless if you must.  If you think this is the top I highly recommend you check out this site: www.isthisthetop.com

AAPL has been making a gut wrenching move since Tuesday.  Of course I pay the most attention to it because now it is my biggest holding in my portfolio.  It is funny to watch this thing trade like a penny stock instead of a megacap.  After hitting 418 and change this morning within the first 20 min it then proceeded to rally $20 off of the lows in about 2 hours.  This is a wet dream for every HFT.  There is a battle currently taking place around the 50DMA at 435.  There is also an inverse head and shoulders pattern forming very nicely.  But since everyone sees it who knows if it will actually happen.    

The market in general is just getting outright ridiculous.  How can 16 out of 19 days up in a row be sustainable?  Answer: It isn't.  Give it time.  Aren't we do for another European bank run or riot or depression rumor by now?  We all know the misses by all of the regional surveys such as the Philly Fed this morning are just fuel to the fire for Bernanke and it pretty much solidifies the fact that any FOMC tapering is just noise. 

The risk is to the downside obviously but the hardest trade to make imo is to be long.  That is why we keep going up.  Short squeeze after short squeeze after short squeeze culminating into an epic melt up reminiscent of 2010 right before the flash crash.  The people who are benefiting most from this market are the grandmas and grandpas getting ready to cash in on their 401Ks.  All us other plebes are sitting here wishing for lower prices because we are either tired of sitting in huge cash positions or trying to catch the top.  I am continuing to short into this market against my better judgement.  The question is if I'm better served at this point to start looking at QID instead of DXD if I think we are even closer to topping out.  I am closely watching levels in SPY for any pullback.  Markets are starting to get pretty extended above their 20DMA.  I would like to see one last ridiculous push higher of about 2% before bears start capitulating.

Enjoy the GIF below, not a bull but pretty damn close.