07/31/2012 Live Update

[ronrico]

GM..The wife and I will be taking off to the big city of Seattle for the day in about 1/2 hr for something a little different etc..Hope the mkt is not to boreing today.GTTA.

wish i was there still KENA. have some Ivar's fish and chips for me

[nirvana]

vix up 4% already while spx barely moves. Be careful guys.

[Mr. BachNut]

Still short but with a hard tight stop.
My stop protocol triggered at the close yesterday.
However, there was good evidence for some kind of pullback.
So, I have capped this thing but have a shot to participate if a pullback unfolds.
I don't expect much and am just managing closure of the trade.

While I believe there is a probable downtrend on the horizon, all my signals and setups have been shoved into bull mode by the move late last week.
I'll trade the signals and setups not the belief.
Yesterday's action did not suggest that Friday was an exhaustion move. So, I can't argue that a high is in.
I probably won't do anything new until after the central bank kabuki dance is done.

[KeiZai]

GM esteemed Board Members!
Thanks Keizai,appears russels should have a bit of downside next 1-2 days....unless this is a bull flag forming, then all indexes may have another push up....stillnot strength in discretionary and smalls....any views on TRANS out there?
thanks, joe

Yes we will know that in a few days, trans looks weak, but I am watching carefully SOX there is possibility that after one more push up she will make 3xtop, break above previous 2 tops - game over4bears IMO

[essessme]

Another turn in the series?

[KeiZai]

Prepared for tomorrow

[OverUnder]

Oh, sure one day experts say Fed is going to ease soon, another day experts say we didn't mean right away lol.

“Fed Seen Forgoing Next Round of Asset Purchases Until September”
http://www.bloomberg.com/news/2012-07-3 ... ember.html

[Al_Dente]

Dumb question:
When Shanghai diverges this much from Hong Kong, whom do u follow/believe and why??
Any smart China watcher please answer, thx

[Petsamo]

HUM is getting slammed today due to bad earnings.
XLV (health care ETF) is doing well relative to IWM.
Anyone like any health care stocks ?

[taggard]

“Fed Seen Forgoing Next Round of Asset Purchases Until September”
http://www.bloomberg.com/news/2012-07-3 ... ember.html

i bet commercials knew this in advance. It seems like a bull trap during past days.

several points (and again only my opinion)

(1) this is just another story with "this many econ guys say this" except for 2 points. (1) the idea the fed may break with tradition and act in front of the election as opposed to the usual hold off till after the election. (2) the obvious (but really important) idea that in fact "the fed is not the issue it's the euro zone".

(2) the number mentioned (600 billion) is too little to make any really huge difference in anything other than the markets short term. however the amount is speculation. Statements by the fed in fed minutes and teaching show three things (1) there is some concern no qe will "work". (2) they are studying how much/many bonds that can be bot prior to destroying the fed and us debt markets. (eg size matters) (3) monetary policy is not the issue (there is plenty of money there is no velocity or movement of money). and it is unclear to the fed and almost everyone else how to amplify velocity in the current situation.

(3) the september date has been around for at least 2 weeks as a possible issue. and it is obviously given the euro situation an issue to consider timing. eg the action would likely be of more value after the "super big really don't even worry cause we are going to crush it" rap by draghi.

(4) nobody knows what is going on. this is a very hard thing for smaller traders (or anyone to) accept. but most of the time (not all) everyone is clueless and positions that pros take are relative to "perceived risk" at any given point in time. put simply if you are short going into a key event--the risk is to the upside and if you are long the risk is to the downside. 90% of the what people believe is foreknowledge is "removing risk" or at least balancing it. So amusingly the idea that pros mostly don't know--is what causes the moves. and the moves often begin as simple risk adjustment--and then can either morph into something or not. if you listen to soros or a hipshooter from goldman trading (eg both indivduals--and people "in the know") you will find this is how the game is played about 90-95% of the time. 5-10% of the time there is "valuable insider information" as opposed to "non valuable insider information".

(6) what sometimes gives the appearance of everyone acting together is the fact that they are positioned in the same way. this is far more a case of being taught the same approach and the idea of trend following than it is information.

(5) as small guys you can use the idea that "anything can happen at any time" to your advantage. you are smaller and more fluid. you don't have to scale 30 billion into the futures and so on. The idea "anything can happen" if really deeply considered--will make you flexible and fluid. This is actually superior to foreknowledge as the fact is that knowing an outcome of an event--is not the same as knowing the market action after the event.

again this is all just my opinion and what i have learned in 15 years of market action and hanging with few sharp guys. i am not in any way trying to be critical here--but we do ourselves a disservice when we assume others are more powerful and that foreknowledge exists when mostly it does not. instead it's best to focus on our strengths. it's not about the fed or hft or the ecb or the inter agency working group--it's about how fast fluid and intent we can be on the action. once you get over the idea that anyone has a clue--you are free to react very quickly with little thought--and sadly these days this is what works the best. what you have going for you is that (1) nobody is watching/it's your trade. (2) you can move instantly. (3) you can size and position how you like. (4) and you can trade when you like. thus the larger players actions can be used as a sailboat uses the wind. that is it's in your favor if you play it that way.

[Petsamo]

Dumb question:
When Shanghai diverges this much from Hong Kong, whom do u follow/believe and why??
Any smart China watcher please answer, thx

HAO is small cap China, similar to IWM.
HAO is weak relative to FXI or GXC. Similarly, IWM is weak relative to SPY.
I took a small position on HAO.

I don't pay attention to Shanghai. I just keep my eye on the Hang Seng.

[EvilTrader]

“Fed Seen Forgoing Next Round of Asset Purchases Until September”
http://www.bloomberg.com/news/2012-07-3 ... ember.html

i bet commercials knew this in advance. It seems like a bull trap during past days.

several points (and again only my opinion)

(1) this is just another story with "this many econ guys say this" except for 2 points. (1) the idea the fed may break with tradition and act in front of the election as opposed to the usual hold off till after the election. (2) the obvious (but really important) idea that in fact "the fed is not the issue it's the euro zone".

(2) the number mentioned (600 billion) is too little to make any really huge difference in anything other than the markets short term. however the amount is speculation. Statements by the fed in fed minutes and teaching show three things (1) there is some concern no qe will "work". (2) they are studying how much/many bonds that can be bot prior to destroying the fed and us debt markets. (eg size matters) (3) monetary policy is not the issue (there is plenty of money there is no velocity or movement of money). and it is unclear to the fed and almost everyone else how to amplify velocity in the current situation.

(3) the september date has been around for at least 2 weeks as a possible issue. and it is obviously given the euro situation an issue to consider timing. eg the action would likely be of more value after the "super big really don't even worry cause we are going to crush it" rap by draghi.

(4) nobody knows what is going on. this is a very hard thing for smaller traders (or anyone to) accept. but most of the time (not all) everyone is clueless and positions that pros take are relative to "perceived risk" at any given point in time. put simply if you are short going into a key event--the risk is to the upside and if you are long the risk is to the downside. 90% of the what people believe is foreknowledge is "removing risk" or at least balancing it. So amusingly the idea that pros mostly don't know--is what causes the moves. and the moves often begin as simple risk adjustment--and then can either morph into something or not. if you listen to soros or a hipshooter from goldman trading (eg both indivduals--and people "in the know") you will find this is how the game is played about 90-95% of the time. 5-10% of the time there is "valuable insider information" as opposed to "non valuable insider information".

(6) what sometimes gives the appearance of everyone acting together is the fact that they are positioned in the same way. this is far more a case of being taught the same approach and the idea of trend following than it is information.

(5) as small guys you can use the idea that "anything can happen at any time" to your advantage. you are smaller and more fluid. you don't have to scale 30 billion into the futures and so on. The idea "anything can happen" if really deeply considered--will make you flexible and fluid. This is actually superior to foreknowledge as the fact is that knowing an outcome of an event--is not the same as knowing the market action after the event.

again this is all just my opinion and what i have learned in 15 years of market action and hanging with few sharp guys. i am not in any way trying to be critical here--but we do ourselves a disservice when we assume others are more powerful and that foreknowledge exists when mostly it does not. instead it's best to focus on our strengths. it's not about the fed or hft or the ecb or the inter agency working group--it's about how fast fluid and intent we can be on the action. once you get over the idea that anyone has a clue--you are free to react very quickly with little thought--and sadly these days this is what works the best. what you have going for you is that (1) nobody is watching/it's your trade. (2) you can move instantly. (3) you can size and position how you like. (4) and you can trade when you like. thus the larger players actions can be used as a sailboat uses the wind. that is it's in your favor if you play it that way.

give clarity when its needed !

nice post taggard.

[OverUnder]

Pretty good post, agree. Articles on Yahoo etc. about what "pros" say are utter BS. Bloomberg/Reuters/WSJ more credibility but same act far as that goes.

“Fed Seen Forgoing Next Round of Asset Purchases Until September”
http://www.bloomberg.com/news/2012-07-3 ... ember.html

i bet commercials knew this in advance. It seems like a bull trap during past days.

several points (and again only my opinion)

[KeiZai]

HUM is getting slammed today due to bad earnings.
XLV (health care ETF) is doing well relative to IWM.
Anyone like any health care stocks ?

BIIB from 60 but she looks toppish, I think it´s little bit late for defensives stocks they are too expensive for my taste - toppish

I have also ABC you can take a look maybe at this one

[Al_Dente]

Long term volatility sell signals on SPX and RUT and INDU
(but note here how they like to bounce, and note failures are the blue boxes]
Thanks everyone for great comments...........“”anything can happen””

[Al_Dente]

Thanks petsamo GL2u

[OverUnder]

VXX collapsing.

[buyorsell]

Dumb question:
When Shanghai diverges this much from Hong Kong, whom do u follow/believe and why??
Any smart China watcher please answer, thx

Based on my own reading, there were too many scams in Shanghai listed companies. People make money in Chinese stock markets (excluding HK) are most likely insiders. HK has relatively less issues. Just my 2 cents.

[OverUnder]

Was just listening to Ben LIchtenstein's marketcast recording of pit orders from a particularly bad day, maybe someone else is interested. It's a bit dramatic and difficult. and loud. I believe this is the "flash crash".

The link does not autoplay the recording.

http://www.ritholtz.com/blog/2010/05/be ... er-taking/

[Cobra]

well, hopefully finally we could see some breakout. I'm z z z ...