Trading for the Masses

Messier!!!

David Lareah is here

Oh and Shanghai is down another 3 plus percent overnite. See if they lead our markets again . . .

There was a nice setup on the Russel Emini’s today that I again missed. I have had connectivity issues the past three weeks at the office and have spent inordinate amounts of time with the tech support people at my ISP. To no avail, I did miss this great ORB test today on the Emini russels. The chart was classic, they opened them higher took them down to test yesterday’s lows, then busted up. The trade setup around noon EST when the “rusties” came back and tested the 792 price. The 10 ema and the 40 ema happened to be coinciding with the test of this are and it was just a beautiful reward/risk entry. Darn it all. This is classic set up I look for. Let’s look for good setups and trade em. The future ran up to test the earlier high of 798 and you could have booked in anywhere from 0-6 on the trade with a minimal 1-2pt risk on the trade. Classic, just CLASSIC.

We mentioned KYPH as a long opportunity recently in the medical device space. Another company we like a lot is Fox Hollow Technologies. FoxHollow Technologies, Inc. designs, develops, manufactures and sells medical devices primarily for the treatment of peripheral artery disease (PAD). PAD results from the accumulation of plaque in arteries, most commonly occurring in the pelvis and legs. The Company’s first product, the SilverHawk Plaque Excision System (SilverHawk), is a minimally invasive, disposable catheter system that treats PAD by removing plaque in order to reopen narrowed or blocked arteries. The Company introduced the SilverHawk in the United States for treatment of atherosclerosis in the peripheral vasculature. FoxHollow Technologies markets the SilverHawk through a direct sales force in the United States, primarily to interventional cardiologists, as well as to vascular surgeons and interventional radiologists. These guys have been growing their sales rapidly and the stock has been hammered of late. The stock may be putting in some type of bottom by the looks of the daily chart. I wouldn’t doubt it at some time if this company was bought by a JNJ or a BSX to compliment their full bag of products in this category. The valuation is pretty cheap in here and I will be owning some stock in here and buy some protective puts below 20.

With the snapback we had a good opportunity that slid by us today with ATI. The stocked gapped down, took out the ORB, then tested the breakout solidly @ 100.55 range, it is now heading towards the first fib projection of 103.35 and riding the 40 ema on its way into the close. Wave riding at its finest.

Well after yesterday’s fireworks, it could be expected that today would be relatively lame. We are basically sitting at the gap up prices we had on the open across the board. So if you expected another volatile day you are not getting it with an hour and 15 to go. Shall see. I also noticed that the bounce hasn’t even been 33% of the downward move we saw yesterday. This doesn’t portend very strongly for the bull case one day after the 510 dow drop. But, still some time left. I would like to see if they can get em up to that 33% number, as they hit it early on the dow, and since we have been languishing. If we rally over that the other key numbers for me are 50% of the move and 71%. So at this point. I am leaning bearish, but all depends on the close and the open tomorrow. Patience again must be the move of the day.

The vix by the way has been smashed from 19’s back to 15.5 range. So . .. still breakout area, but slowing tediously today.

Tight entry here @ 536’s, and will stop above this downward sloping trend line. But looks like it may be tiring after being up 25 pts today.

Homebuilders see sharp drop in reaction to data…
New Home Sales m/m drop is biggest since Jan 1994
White House says U.S. Economic fundamentals are “very good,” won’t comment on volatility in markets - Reuters
Awful new home sales data, down 16% m/m, lowest since April 2002
Bernanke repeats warning U.S. Economy in “calm before the storm” before entitlement spending surges
Bernanke doesn’t comment on Fed policy, recent market moves in prepared testimony on budget issue
New Home Sales 937K vs 1080K consensus

6 Billion Years is About Half the Age of the Universe

Vix and More

Big Down Days: What Happens Next?

BBC Knew Building 7 Was Going To Come Down?

Economic and Financial Hardlanding ahead?

Let’s look at three weekly charts. The Banking Index, BKX, the Broker Dealer Index, XBD, and the XLF or the Financial Sector ETF that is widly held. You can’t have market leadership without these three in control. I also add Semiconductors and Biotechs to give me a good “sentiment” feel of the market. But the financials and Brokers really are most important for “bull” or “bear” markets. For the first time in nearly four years, since early 03, the markets gave a good strike of fear by selling off at the levels they did today and also breaking some daily, weekly and monthly look charts on all three of these areas. Really amazing, and one day does not make a trend, but the signs of exhaustion have been in this market for 3-4 months as we have diverted with prices going higher yet momentum lagging and volume dwindling. Today that all changed.

I talked a little about the fact that the market needed to take out the January lows on a closing price to get me pretty excited about the downside. Not only did we do it and do it with gusto today, but we also have some fear back in the streets with volatility doubling today in one day’s work. I mean today was pretty aggressive selling, I don’t care whether you are a bull or a bear, there is no denying today’s downside strength. We were at 6 to 1 Advances over Decliners most of the latter day. Trend day down all day, even if you sold the gap open down and held until the end of the day, it was a pretty good day to the downside for short sellers.
Every talking head the last hour of the day came on and said we are going only 2-5% lower and you need to buy em. This is garden variety sell off, blah blah blah. I am not so sure of that, with subprime taking down the XBD and the BKX in a way I haven’t seen in literally years, I am excited to see the volatility back and the fear back. Will everything, all assets continue to move up and down together as we have for the last few years, or can we get back to some normal markets where relationships matter and we aren’t run by liquidity and hype? Time will tell, for me a crucial exciting juncture is here for this market. I am reinvigorated that some fear is back. And fear is a great thing for traders.