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Registered User
Joined: 3/16/2006
Posts: 2,214
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Registered User
Joined: 10/7/2004
Posts: 2,181
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Thanks Sig. Yes, the charts look like my bullish week is ending. Time to go short.
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Registered User
Joined: 4/23/2008
Posts: 214
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Tobydad, you have uncanny timing for the long or short side of the market. Congrats
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Registered User
Joined: 8/29/2007
Posts: 31
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SignalTap - I thought I would segregate your list into those positions that have a Weak Industry or Sector and those that are in a stronger sector. With the 14 I could see: 8 were in what I term Weak Sectors and 6 were in Hot Sectors (In this market Warmish). Then I looked for extreme optimistic readings on the 8 Weak sector stocks. None came up, but I have tight excessive parameters and I look for the most extreme and if I looked individually these may have been somewhat extreme. An optimistic extreme is bearish in theory.
I'm listing them below for accountability and to track if there is 'more' weakness in the Weak sectors. I'm sure someone on the board would know how to track these.
Weak Sector stocks from your list: (With the exception of WMS - All weak stocks are hitting (or just about hitting) my crossover trigger..
PCR
ABC
AN
WMS
PSS
QLGC
HLTH
EME
Hot Sector stocks from your list:
KSS
ADM
PCG
PNW
NVE
SCG
steve
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Registered User
Joined: 8/29/2007
Posts: 31
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On a weak day where the Dow, SP500 and NASDAQ were down around 2.7 - 3.2%
6 of 8 in the weak sectors underperformed (HTLH, up slightly and ABC down .7%)
only 1 of 6 in the 'Hot' Sectors underperformed (KSS)
Again I am just showing the board how I filter positions and doing this to create account of my observation.
steve
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Registered User
Joined: 2/17/2008
Posts: 132
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i know this might sound like a funny thing to say, but are you suitably convinced by today's bearish action? there have been some notable days recently when the dow took a turn for the worse, and the charts indicated an upcoming further leg down, or possibly even a crash, only for the market to rally. i'm thinking specifically of december 1st, december 11th, and the run up to christmas, when i thought to myself...here comes another crash. only for things to rally.
i know you guys aren't too impressed by news...but obama plans a major speech tomorrow about the economy. and with an obama rally some people are predicting next week in the run up to inauguration, perhaps playing the shorts should be done somewhat cautiously for the next week or so. who knows, we might get some unglamorous sideways action for the next couple of days...
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Registered User
Joined: 8/29/2007
Posts: 31
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djdhrubs,
You may not be addressing me here, but I'm just using my post to point out my thoughts on Weak Sectors v. Strong Sectors.
In general - if you're setting to buy long why not buy strong sectors, and if you're planning to sell short, well then shouldn't you consider selling in the weak sectors? Although I tend to stay comfortable in a weekly chart setting and move slowly (some of the traders here seem much better with quick timeframes), I think this approach would work with any timeframe. I am posting this to look for feedback and maybe to help others think about sector relationships and other external trends and I hope they provide comments, concerns, and experience. How about yours?
steve
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Ive recently taken to making shure that any and all long trades have a positive RS Vs SPY profiels and the reverse for Short trades. Also ocasionaly sorting the sectros for strenght and then grooming my watchlists based on that.
I have tended to suffer from perma bullitous but now i'm not real impressed with most of my short options. Pluss the market internals have been looking fairly strong.
Oh I also use a RS vs. Subindustry. So I'm working with subindustry leaders (usualy i'm flexable here) and index outperformers.
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Registered User
Joined: 8/29/2007
Posts: 31
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Another follow-up;
Today at about 3:20pm I just totaled the weak sector and the hot sector stocks:
Weak sector down and average of -2.2825%
Hot sectors down an average of -0.515%
Yesterday in a mixed market the weak sectors stocks were again 'weaker' not much though.
Scottnlena, I think that is a good thing. I have sub-industry sorts ready to go, but my elementary studies showed me that the Industry was sufficient (Watch out for Financials though - That could be ETFs of any industry and in either direction). In one of my posts to the Ask A Trainer you'll find a very simple approach to eliminate undesired sectors, or include only targeted sectors.
I think this only makes sense and I have spoke to a number of professional active fund managers and they like the direction. There are a few sector rotational managers I have tried to work with on this but I haven't been able to catch them yet. (Most managers just mirror the sectors in their benchmark (+/- a few percent). I say why not avoid the weak altogether? That is, if you're long.
steve
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Registered User
Joined: 5/1/2007
Posts: 158
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sdablack - Obvious - yet needs to be stated and repeated. Weak sectors are weak for a reason - same for strong sectors. And lots of institutinoal traders are slow - not intellectually, but in coming to concensus - that is why mutual funds run by one person can outperform those run by committee - unless the committee leaders are smart enough to assign tasks in a way that speeds decisions - it's possible, and the very best - GE in 1980-2000, for example - manage to do that in a corporate envirnment.
The trick is to do your thinking ahead of the situation - exploit your strength, and cover your weakness. Oils are still weak, even after the recent bounce. Auto/steel had a nice move up, but the fundamentals scream wait until after bankruptcy. Defensive stocks - say JNJ - are showing relative strength - when they show relative weakness is time to put on my bull hat.
And you new traders may not know this, but volume in a bear market of historical length typically goes down, by a large percentage - that scares me, because we haven't seen even a hint of volume collapse yet. If the nightly news stops covering financial news, that would be a huge signal - but I don't expect that.
My strengths are demographics, and 3-7 business day swings. The demographics aren't that good for medical for a very interesting reason - government agencies have been, through Medicare/Medicaid, paying for at least half of pharma income - and more than 100% of its profits. I don't see Medicare/Medicaid spending continuing to increase 7-10% in real terms, even though the demographics say it should, because people aged 40-75 don't have enough real wealth to support that. All Ponzi schemes must fail in the end; the demographice of 1.2 children per family hit Japan in 1990, Russia in 1993 - do you really think it will be different here? It will hit Europe (Western first, likely Italy first) and we are just feeling the rumble of a far-off train. Probably inflationary, like Zimbabwe, rather than the U.S. of the 1930s.
What is your capital gains tax if you gain 10,000% on a $1,000 investment? I get $15,000 at 15%, but by April the tax paid is just pennies, real money. What if the Chinese buy U.S. real estate with their $2 trillion? Could work better than for the Japanese. Musical chairs - where will the music stop?
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Registered User
Joined: 8/29/2007
Posts: 31
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Weak sector stocks continue to be weaker. As Scottnlena and tllucero pointed out we control our plays.
In fact 4 of the 6 Hot sector stocks were UP today. All 8 weak sector stocks were down.
The play I made was Put options on NEM. I have the March 35P - and my timeframe is January 31st. If the stock does not move in my direction by then I will close and move on. I am looking for 100% return. I entered with the market on my side, the McClellan Osc. turning down (26d SMA), sentiment with me, the stock trading below 40,80, 120wk SMA, and the stock turning down.
If the stock moves against me within the next week (2d EMA crosses up over the 8dD EMA) I'll move on.
If you've read my posts before you will know my stop loss is my nemisis.
enjoy your day,
steve
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