Thread: Bullitt's Account Talk

Market volatility caused by the end of the quarter and profit taking before earnings kick off. We might as well write off this week as being meaningful anyway because the big players are all kicking it on the Gold Coast this week for the Holiday and won't be trading. Hedge Funds and Mutual Funds are like us when it comes it housework. They save it until the last minute. Some things they need to do to make a portfolio look a little more presentable are, clear out the dead wood, beef up a winning position, sell and take profits, or unload buku shares of a loser amongst other things. That kind of thing coupled with a Fed decision can cause market queasiness.

The cat's out of the bag with the subprime. It's ancient history. I don't see enough positive talk about the breakout moves last week in the Tech and Semi sectors. They are often the leader in big market moves.

Goldilocks and Bullitt can't be concerned with the rising energy prices, Bear Sterns Hedge Funds, China, or people who are in over their heads in a mortgage. When the gates open after this short term consolidation, the stampede that follows positive earnings will crush any fruitless thoughts of a slowing economy.

I'm ready for the last big run of this rally. As nice as it was to see the price moves upward during the holiday shortened week, the volume wasn't strong enough to make any strong breaks out of our new trend. We are currently at the top of a possible resistance/trendline at 1530. The rally last week still only produced a lower high than the prior week. Even though the chart shows two lower lows and two lower highs than last peak, I'm still bullish. This earnings week should bring out the emotions in investors as usual and since the bar has been lowered this quarter it only makes the possibility for blowout earnings greater.

I mentioned a while back the strength in the QQQQ's which continues to storm to higher highs. That alone shows that investors are not expecting a rapid slowing of the economy since growth stocks are making a run. If defense stocks were the ones breaking away, it would be a different story.

Short interest remains at a high, which I just love. I don't mean to get off subject, but Hedge Funds are able to hold on to a losing short position longer than most investors because of the capital involved. Not every short seller is a hedge fund though, and gap ups can crush a short seller's emotions (and cash) in a hurry.

I'm looking for the market to pullback some and not break the 1540 mark right away this week. What I'd like to see is for the market pull down below that 1490 mark again, trap some more shorts, and then take off for a higher high. A small drop coupled with a few blowout earnings calls in the weeks ahead will have short sellers changing their minds in a hurry. Of course, since that's what I'd like to see it won't happen that way, but hey...

If the moves in EFA can hold above the 82 level, then we might see another run higher there as well. If it fails to hold above 82, then 'with failed moves up come fast moves down'.

Still going long.

Originally Posted by Bullitt

If the moves in EFA can hold above the 82 level, then we might see another run higher there as well. If it fails to hold above 82, then 'with failed moves up come fast moves down'.

Confirm it first, but I believe the ebbtracker is going to the I fund for Thursday.

Based on Asia's action tonight, that's gonna take some stones to make that move.

Things are not as bad as they may seem at this point even though we've made a lower high in the SPX. It seems that this pause was anticipated. Last week's action was way overblown and overbought on low volume. Low volume moves lack conviction. For what it's worth, today's move down was the biggest volume day since 6/22 (also a distribution day). We haven't seen a very convincing accumulation day with big volume since 6/15.

So right now I'm going to accept this as an overreaction to the earnings meltdowns from HD & SHLD and the miss by AA. We needed a good washout anyway. Hopefully we're going down a bit more to that 1490 level I mentioned before so the buyers can regain control.

I'm not forcing anything, but here's some wishful thinking. the SPX (actually it's clearer in SPY) is shaping up for a reverse head and shoulders, a bullish formation. Now I understand that technical formations are only confirmed in hindsight, but it's a possibility just as a double top was a possiblity last week. Remember, it's earning season. All of those people that sold today are going to want to get back in on the sound of any good news.

I'm still maintaining my positive outlook going forward. I'm not going to try to pick a top or bottom but I've got a game plan either way. We could trap a few more shorts in the next few days only to bust on to new highs. On the flipside, if we break the support of this Flag (1480-1490 area) and fail to come back in the same day, we could see a reversal.

Looks like the reverse head and shoulders is forming up nicely. Projected upside is SPX 1580+. Just think of all the people who are going to jump into the market tomorrow. Not only that but think of all the gamblers who shorted and have to cover. Last I checked it was something like 4.5 days to cover. We're off to new highs in a highly emotional market. The technicals look great from here on out. Any tiny bits of positive news will put more emotional money in play and send this market soaring.

Nothing but the tail lights.

I'm not going to use this board as a means to celebrate any gains. Anyone that was in the market in almost any fashion yesterday made money. Yeah it was a great day and all, but there's just too many high fives and bashing going on than there should be.

The true test of any breakout is whether the old resistance holds as new support. I'm planning on it holding as support. There may be a few days of consolidation in the week ahead to shake out any non believers, but in theory the only selling ahead should be profit taking. The reason for resistance is that all the people who bought and rode the stock down get scared once it comes back to their initial buy point causing them to sell in order to break even. Above 1540, we shouldn't have any break even selling.

I'm still long. That should be enough to indicate my previous and current market allocation.

Originally Posted by Bullitt

Looks like the reverse head and shoulders is forming up nicely. Projected upside is SPX 1580+. Just think of all the people who are going to jump into the market tomorrow. Not only that but think of all the gamblers who shorted and have to cover. Last I checked it was something like 4.5 days to cover. We're off to new highs in a highly emotional market. The technicals look great from here on out. Any tiny bits of positive news will put more emotional money in play and send this market soaring.

Nothing but the tail lights.

Hi Bullit,

july SP expiration is july 20th, so 7 calendar days or 5 trading days. I begrudgingly covered a 1570 call option this a.m. Still holding a 1580 call option, hoping we stay flat till the 20th. I don't like your 1580+ call unless you see that after the 20th. (SP futures are ~10 pts above the cash)

Well, the actual target price projection is based off the inverted H&S, nothing more. You must have a good knowledge of the market to be trading futures on margin, that's some complex stuff. I know only the basics of the futures markets. Looks like you made money on the 1570 call, and that's the name of the game. You can become a millionaire selling by too early but nobody ever became a millionaire selling too late. Good luck with your trades.

I was short the 1570. Got shook out, took a loss Still short the 1580, so I'm betting we don't get there by the 20th. Can only cross my fingers

Originally Posted by FUTURESTRADER

covered a 1570 call option... holding a 1580 call option(SP futures are ~10 pts above the cash)

Ok, I understand now. You definitely fill the name 'Futurestrader'!

I love the smell of napalm, err I mean, fear in the market. SubSlime Fears, BSC Hedge Fund meltdown, Uncle Ben says that 1. Housing is looking bleak, 2. We have no clue on where we stand on inflation matters but it seems ok, 3. Energy is still a good investment, and 4. We should expect sustained economic growth ahead despite inflation fears. Anything new in that jumble?

No surprises at all. Goldilocks is still happy and convinced that not only US but world economic growth will continue. What a nice selloff today. To move forwards, you need to take a move backwards every now and then to regroup. Just watch a Travis Hafner load up to start before uncorks a swing that drives the ball 450 to right field. (OK, had to throw that in there.)

Keep in mind that Friday is options expiration. We had reports from INTC and YHOO. Big tech stocks. Tech is funny because in order for the stock to move on an earnings call, it needs to absolutely blow out analyst expectations. Any hint of bad news and bye-bye. INTC continues to selloff as of writing, yet every analyst has raised their price targets. Back to options expiration week... The power of a Hedge Fund is unimaginable to us retail investors. One fund could easily move the market one way or the other short term with the amount of leverage they have. Hedge Funds took HUGE gambles, I mean positions in INTC and YHOO before they reported last night looking for instant money. I like how they have been unsuccessful at getting INTC below that 25 strike price today. Somebody's buying at 25 which is causing the support level. Options traders, the right move to make money in INTC today is the 25 calls option. Just take a look at that call volume spiking!

Let's face it, we went too far too fast and didn't quite get the step back to the 1490-1500 level that we so much needed before that freak move on Thursday. Maybe once the smoke clears after Friday's options expire, buyers will step in and regain control, taking us once again past the 1540 mark. That would set a nice bear trap, another one of my favorite terms. A bear trap is when support is broken, sucking in short sellers with hopes of a move lower. Buyers step in instead and move the stock past the prior support only to cause a short squeeze. Once again, I'm not making any short term predictions but this is the way I'd like to see things play out.

Until then, keep hanging on. Anyone that sold out today to G... We'll see you later in the days ahead when you're rejoining the rally at new highs. Those that IFT'd some today to C,S,I.. I like where your head's at.