Please Note: These charts are from the end of regular trading hours on Thursday, July 23, 2009.
MSFT, AMZN, AXP, COF, BRCM and JNPR all reported after the 4 pm NYC close today and they all missed, some by little, and MSFT & AXP, by not so little. All were taken to the woodshed for some much-neglected discipline. They are down, some heavy, in the after hours trading. We live and trade in a very frothy world, the management teams, were repeatedly reminded.
And for Reg. FD purposes, our Phoenix Traders went long JNPR Aug A-T-M Puts yesterday at about 2pm EDT. And, today at about 212 pm EDT, we doubled that position, very near the market high. After JNPR reported a double digit fall in revenues, a slide in margins and gave a disappointing outlook, I was asked on Twitter, why AAPL long calls on Tuesday and JNPR long puts today? My answer was simple: trading is all about market intel [something you won't find on CNBC]. We both laughed it out loud.
Let's go thru some charts. First my favorite, Sp1-MoMo chart. "Let's get really overbought" was name of the game today. After all, the venerable money manager Bill Miller of Legg Mason, wrote last night "the worst has passed" and "bargains abound in the US stock market" to his Legg Mason Value Trust fund.
NYSE Advance/Decline Line closed +2088 and SP1 back again above +2 sigma with MoMo at +45. Remember, as I mentioned in the last Friday video, posted further below, we could stay here and see these types of high readings both in relative (SP1) and absolute (MoM0) terms for some time. No guarantee we will just fall off the cliff here just because we are overbought. As always, I look for the requisite "catalyst" in geopolitics, Fed, White House, Wall Street, Pentagon, Big Oil, etc etc.
Next is our Wyckoff Chart. Notice we have moved 1,000 DJIA points in 9 trading days (spanning some 4 sigmas). Today, DJIA closed for the first time over 9,000, trading above last Jan 2nd high and came within 200 pts of Nov 4th Election Day price range.
In like fashion, DJ Trans moved some 4.5 sigmas: (Economy going forward will do well -- what commercial real estate problems, consumer credit, forget about it -- Washington will save 'em too -- and please, quit complaining about retail vacancy rates on Miracle Mile). And, RUT (risk-loving is back, its Index Futures at one point were up almost 4% today) and NAZZ Composite (closing higher 13-days in a row) all screamed in unison: Xmas is here early. Yeah, for sure !!
But not our beloved Vols. There were smarter of the bunch, and they stopped dropping in face of rapid ascend rate in the equities. VXN rode down the -2 sigma line, three days in a row last week, and as expected (as in last Friday video), it pulled backup, albeit, very very slowly until today. Both VXO & VXN closed higher today, as smart money started to buy some puts for downside protection. And Market Makers smelled it and adjusted those bid/asks, albeit by rapid-fire algo trades.
One fund rolled UP its SPY August downside protection at 92 strike into December 95 strike, for some 72,000,000 shares of SPY (S&P-500 ETF) it holds. Yes, 720K put contracts on SPY, a "jaw dropper," was one trade today that cleared at the ISE in NYC.
Last but not the least, here is our Timer Chart. With NYSE McClellan Oscillator (MO) at +226 and NAZZ at +144, with CI Indicators lit RED, SPX at +2 sigma, NDX above +2 sigma, we are short-term overbought again. Just look at Up/Down MO for NAZZ, it is almost +210. With Volume, being a coincident indicator, we should brace for a pullback.
Now with MSFT latest report, the TechLand recovery roadmap got a lot fuzzier. And with AXP and COF results showing consumer finances remaining in stress, the retail spending should remain below trend.
Now I said the same thing some eight weeks ago and nothing happened. We simply traded in a range. This time, it may be different. Tomorrow could be for the history books as the spin meisters will try to put a fresh new lipstick on this pit bull.
A Note of Thanks: We are immensely indebted to our learned colleague, Steven Sears, the Editor of The Striking Price Column at Barron's for his valuable & speedy research regarding the SPY trade today.
Fari Hamzei is frequently quoted by Benzinga, StocksNJocks, CNBC, Bloomberg, FoxBusiness and RealMoney. His book, Master Traders: Strategies for Superior Returns from Today’s Top Traders, published by John Wiley & Sons in October 2006, has already become a bestseller on Amazon trading books space. On January 29th, 2007, Timer Digest ranked Fari tied for THIRD place for the past THREE YEARS in its "Timer of the Year Competition." As of September 13, 2008, Fari was ranked 3rd in the Nation by Timer Digest among approximately 150 market timers in the last 12 months. On February 21, 2011, for the second time, Fari was the featured advisor on Timer Digest monthly newsletter and was ranked FIRST in the Nation for the last 12 months. On June 24, 2013, Fari was ranked 3rd in the Nation for last 12 months. Once a year, Fari teaches Proprietary Sentiment Indicators at The Options Institute of CBOE. Fari is a graduate of Princeton University with a BSE degree in financial engineering, and was a director of strategic planning at Northrop Grumman Corporation's Aircraft Group and served for eleven years on the Board of Directors of Electronic Clearing House (ECHO), now an Intuit company (INTU). Read Fari's Recent PostsBrad Sullivan is a member of both MERC & CBOT Exchanges, and trades for his own hedge fund in Chicago. His comments posted in our HFT Premium Chatroom, is read each day by many active index, debt and commodity futures traders. Read Brad's Recent Posts Ethan Premock, started his day-trading and swing-trading career back in early 2007 trading both individual stock option contracts and index futures contracts. Ethan has developed a unique trading style in which he uses a very disciplined technical analysis structure of several components to ensure human emotions will not interfere with the potential for high absolute returns along with consistently applying clear rules for trade entries and exits. Read Ethan's Recent Posts Pirouz Hendi graduated from California State University Fullerton with a BA in Business Marketing. Pirouz started his career in the financial industry at Prudential Securities in 1999 as a licensed Stock broker after successfully completing series 7, 63 and 65 securities exam up until 2003. Pirouz has been an independent trader in the equities market since 2007 with primary focus on individual stocks and ETFs. Pirouz has successfully completed the beginner level of CBOE option courses and is planning on completing their intermediate and advanced level courses as well.
Vic Sehgal is a Volatility and ETF trader. Currently trading for private clients, Vivek has been in the industry since 2005. He worked with Merrill Lynch Private Client Group from 2005-2009 and then moved on to the NRI group at the flagship Merrill Lynch office at World Financial Center. During his time with Merrill Lynch, Vic was a successful Financial Advisor, working with elite clients from the tri-state area.
Vivek resigned from Merrill Lynch in 2009 when it became BofA. He moved to an independent firm, Newport Coast Securities and worked there with his clients till 2011.
From 2011 till 2015, he worked with JSM funds as CEO and head trader.
Vic is very experienced in trading ETFs, and Volatility. He is a technical trader, and had worked closely with Hamzei Analytics since 2012. He closely follows Hamzei Analytics ideology and applies those principals to ETF and Volatility trading.
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Jason Goepfert is President of sentimenTrader.com. He has been trading stocks, stock and index options, index futures, currencies and commodities for over 15 years. He holds several securities licenses and has most recently managed the operations of a $3B hedge fund and top-10 online brokerage (Gomez rankings). Jason founded sentimenTrader in 1998, and began a web presence in 2001. Currently, the site has subscribers in all 50 states and 40+ foreign countries. In 2004, Jason was awarded the prestigious Charles H. Dow Award for Excellence in Technical Analysis by Market Technicians Association. Read Jason's Recent PostsJeffrey Spotts, CMT, a contributor to Master Traders, is a hedge fund manager for Prophecy Funds. He has more than 16 years of experience providing portfolio management to corporations, institutions, and high-net-worth clients. He began his career in 1989 at Merrill Lynch Private Advisory. He was responsible for over $500 million of client assets under management. In May 2001, he launched Prophecy Asset Management, a technically managed hedge fund catering to institutions, pensions and family offices. He also teaches a behavioral finance segment of a graduate studies course for several colleges.
Read Jeffs's Recent PostsFil Zucchi is the founder and manager of Zebra Investment Advisors LLC, a Virginia registered investment advisor, and Zebra Fund, LLC, a long/short hedge fund. Before founding the Zebra companies, Fil managed individual long/short accounts. Prior to that, he was a bankruptcy and commercial litigation attorney in a Washington, D.C. law firm. Fil was a contributor to theStreet.com Street Insights. Fil is also currently involved in his family’s commercial real estate development and management operations. Read Fil's Recent PostsDavid Miller, a contributor to Master Traders, is the CEO and co-founder of Biotech Stock Research, LLC, publisher of Biotech Monthly. Launched in October 2001, Biotech Monthly combines a monthly newsletter format with alerts on breaking news on more than two dozen development-stage biotechnology companies under coverage. His firm is one of the few independent research firms in that it accepts no money from the companies it covers, does no outside consulting in the biotech space, runs no mutual or hedge fund, and is 100 percent subscription-supported. In addition, David was CEO of a successful technology company and a university professor. Read David's Recent PostsFrank Barbera, CMT, a contributor to Master Traders, is a co-manager of the Caruso Fund, a $35 million hedge fund that seeks to make gains trading precious metals, stocks, and currencies. He began his career in the early 1980s working with John Bollinger, Bill Griffith, and Susan Herrera at Financial News Network in Los Angeles. After FNN, Frank spent 10 years as an on-air market analyst for KWHY-TV in Los Angeles. His first money management position was at the Kavanaugh Fund in Santa Monica, a hedge fund subsidiary of Goldman Sachs. His technical work in gold and gold stocks is considered among the best in the industry. Read Frank's Recent Posts Tim Ord, a contributor to Master Traders, is the president, editor and publisher of The Ord Oracle, established in 1990, which is an electronic advisory newsletter that recommends S&P, NASDAQ, and gold stocks trades. He is frequently listed in the top 10 market timers in the country. Timer Digest ranked Tim No. 5 in gains for the S&P and No. 2 for gold timer in 2004. He has more than 25 years of trading experience and placed fourth nationally in the option division in the United States Trading Championship in 1988. Read Tim's Recent Posts