MARKET COMMENTARY (7-17-09)

A lot of people asked me how I caught the moves in HGSI and DRL yesterday. In case you are new, everything's been documented in the previous post's comments section as well as on my twitter. HGSI required a 1.5 month time frame to make the decision to buy right at the open. DRL, however, required only the previous day.


I bought HGSI at $2.84 and DRL at $2.219. I sold half of HGSI at $3.52, sold a quarter at $3.83, and I am currently keeping the remaining quarter. I sold half of DRL at $2.65, sold a quarter at $2.49/$2.50, and I am keeping the remaining quarter. This is typically how I scale out of positions as they run higher. Potential tops are determined at previous resistance areas on the daily chart.


Within 15 minutes, I recouped my entire CIT loss. I told you that I would go back in the green, didn't I? I didn't think it would be this quick. You can see the upper sym tri resistance on the 1.5 month chart of HGSI and how the open would have gapped completely above it. You can also see the high-and-tight flag on DRL the day before yesterday, the most reliable short-term long pattern in existence.

So, that's how I did it. There are dozens of patterns that I look for that gap at precisely the right location at the right time. It's all about grabbing your balls and executing the trade immediately at the open. There is no room for "thinking about it" as you are gauranteed to miss the initial move. As long as the setup is high probability, it's a risk worth taking.

In the end, CIT failed to do damage to my portfolio. The more you don't care, the more you are able to focus on making things right. I had no choice but to be more aggressive yesterday to quickly take advantage of these gains and contain the damage. Folks, I do this nearly every single day. It's nothing new.

Imagine if you could bag a +20-30% gainer almost every single day? Welcome to my life.

Anyway, I'm thinking that the SPX pulls back to the 50-day support over the next few days. A breakout of the multi-month high would be an enormous victory for the bulls. It will confirm the possible continuation gap that was formed on Wednesday.



If you look at the COMP, you can see that the index actually made a new multi-month high. The pattern is extremely bullish on the daily. We can see a descending bear pennant and NOT a head and shoulders.

MARKET COMMENTARY (7-16-09)

As you may know, I bought CIT yesterday, and minutes later, the stock was halted pending news. Currently, the government is refusing the bailout CIT and the stock is under the very serious threat of bankruptcy. This is a 9.5% allocation.

This was a high-risk speculative play, and I lost. CIT will likely be the biggest mistake I made since I started trading in late 2002 (I never got caught in a bk co). No doubt, I am fully prepared to take a 100% loss on this position. The stock won't open at $0.00, but let's say that it does. Not only will it wipe out my entire week's gains (so far), I'll be in the red at approximately -2.2% for the week. This will also bring my YTD gains to about +198%, below the 200%+ level that I've been holding on to for a while. Who cares?

That's nothing. In fact, it doesn't bother me at all. I'll be green by the end of the week, and I know it and you know it. Everyone makes mistakes, and not a single person here is perfect. I will be the first person here to say it. The important thing is to just let it go and move on and bite the bullet like a man (or a woman, if in fact, you are a woman). And remember, taking losses is part of the business, unless your Lenny "Roofless" Dykstra.

Now, if you bought a huge position in CIT, then you are screwed. Take it as an expensive lesson in money management. Everyone is responsible for their own actions.

Moving on to the SPX, yesterday's move broke away from the descending channel. I stated in my previous post that the opening gap was enough for an intra-day breakaway gap. What's important now is IF and HOW we consolidate from such a massive move.

Below are the 2-month/60-min, 3-month/60-min, and 7-month/daily charts of the SPX with noted support and resistance levels.


Below are the SPRD Select Sector ETFs (XLV, XLB, XLP, XLI, XLU, XLY, XLI, XLF, XLE, XLK):

MARKET COMMENTARY (7-15-09)

Let's go through the SPX again. This time, today has a huge significance. Today is the day where the market either breaks away from the descending channel, or fades immediately, thus continuing the steady downward price action.



Currently, the SPX futures indicate that we will open at around 916-918. This is enough for a break away gap up right at the open. The first 5 minutes are critical.



915 is the KEY resistance area as noted above. 905 has become KEY support. Therefore, in the case where we are unable to BTFO, then 905-915 is your area of operations.



In the case where we do get enough power to sustain above 915, the major consolation resistance area is between 922-928.

MARKET COMMENTARY (7-14-09)

Here is the SPX analysis. The charts progress from 8-day/15-min, 2-month/60-min, 3-month/60-min, to the 7-month/daily. This way, you can see what's happening in the short-term, intermediate-term, and the long-term all at the same time.

This is currently a reactionary rally with the trend rating at "neutral". Currently, the 20-day MA sits at 905, with the 50-day MA not too far above (911). If you trade the general market indices or futures, then keep these boundaries in mind: