To summarize some points mentioned on this thread and elsewhere why shorts will make money next week: 1) intraday double top @ 93.1-93.2 on spy 2) excessive short term move up in bullish sentiment (among both money managers and investors, also VIX is oversold) 3) SOX is not confirming the breakout in the general market 4) "sell bank news" mentality 5) we are very overbought (SPY, XLF, XLE) 6) 2/5 of the largest SPY drops (since the rally started) took place on Mondays 7) Full Moon this weekend (marking a potential turning point) Basically, we should drop as soon as tomorrow.
Frank A. Delaney, posted this on the Epiphany Trading Blog: Where We are in the Market: "The market has just finished a eight week rally with the S&P closing around 923 (june Contract).The stress tests for the banks have been released in which the banks have rallied further since their leaked release on Wednesday and actual release on Thursday. Goldman Sacs , Wells Fargo and Morgan Stanley have had very successful Secondaries. The first quarter results of the banks have been quite good. If you look deeper into this rally you will see that the banks earnings were supported by stronger balance sheets based on the government flooding them with huge amounts of money and AIG paying back loans to them with money received through the government. Eight weeks ago Private Equity Firms had no interest in buying toxic assets from the banks at prices the banks wanted to sell them at. Eight weeks later with banks trading up well over 100 percent of where they were maybe Private equity will be more interested in buying these toxic assets at prices the banks are willing to sell to get them off their balance sheets. My concern is that the toxic assets are still worth what they were eight weeks ago. Why would Private Equity be willing to buy those assets at a higher price now. Simply because the banks have appreciated in price and have done successful secondaries to firm up their balance sheets. The assets are still toxic. Whether the banks are trading at 5 or 50 the assets are still worth what they were worth 8 weeks ago. My guess is that hedge funds were anxious to buy the secondaries to cover their massive short interests in the banks, and equity funds were willing to buy on the secondaries because the outlook for banks have stabilized and they would rather buy them at these much higher prices then they were 8 weeks ago simply because the sentiment has gone from bankruptcy to survival. The government has done a awesome job in stabilizing the banking system by printing money and flushing it into the system. The problem is that when people realize that the toxic assets still have not been identified and priced appropriately the blooms and green shoots will turn into wilting dead shoots from being over waterered for the last eight weeks. The lynch pin to this event where we will have a W recovery or a U recovery will be when people such as Meredith Whitney bring these facts to the surface again. My guess is it will be very soon. As we do not pick tops we must wait and go with the trend. But, when the trend changes the retracement will be quick deep and devastating to the market. Re inflating the Bubble is not going to bring the the economy into equilibrium. Things will get better and we will grow again, and the economy will thrive, but the true work is ahead of us and I believe the markets will retrace at some point soon. Stay nimble and light and be prepared for volatility to return with a vengeance at some point. Is it a week or three months from now , I am not sure. My guess is that it is sooner then later. Bank of America filed a secondary statement with the SEC on Friday. Will they get their stock to market , we will see. It was falsely reported that they priced stock at 8 dollars. Could that become a reality with the stock now at 15? Things are very often not what they seem to be. Wells Fargo s' 3 point gain on Friday looked a bit like a blow off top or at least the beginning of one. Enjoy your weekend and be prepared for a an interesting educational and enjoyable conference on Saturday May 16th. Regards, Frank Delaney" Frank Delaney is a futures specialist and NYSE member. His track record has been phenomenal over the last 30 days. He has just become bearish.
A bull market begins when the last bull becomes a bear. This means that when the last bull sells, we have reached a bottom. I am almost certain that we are due for a pull back, but we are in a bull market. If you find yourself at BBQ's and people are talking about the market, do the opposite. Then again, I don't care. The Epiphany Method has no bias. We buy when the highs and short the lows. For longer term trades, which Frank Delaney does the technical work for, we are more interested in shorting stocks soon. I agree with whom ever said "as early as tomorrow" Brendan P. Byrne
If we are talking Dow, I am looking for a 1-2 week pullback to ~7850 level. Once Memorial Day gets here we probably go sideways for a while. This level to me is a 1/3 Fibonacci retracement of 2000 point move and a former resistance and then support level. I believe this would probably be the healthiest thing for the market going forward for the remainder of the year.
Yeah ivanovich, that's the story of my life. It was luck when I ran a successful website for 3+ years. It was also luck when Forbes and the Wall St. Journal did pieces on me despite the fact I never advertised nor payed for a publicist. It was incredible dumb luck when I parlayed that success and started a hedge fund in 2003 with $5M It was really dumb luck that I was able to parlay the $5M into over $200M today. And It was really, really dumb luck to have audited statements showing i've made double digit returns every year for the last 15 years. So it's definitely better to be lucky than smart. Speaking of smarts, how was port/stock trad3r able to fool you all this time? And if you are going to respond that you always knew they were the same people, that makes you look even more inept.
Hey Rowshan, I think Ivanovich was just asking for at least a hint of the rationale you used to get to your conclusions; which I am interested in as well.