Q4 2013: A Market Inflection Point

Discussion in 'Trading' started by cmdtytrdr, Oct 6, 2013.

  1. Fellow ET'ers,

    I believe we're about to get an early Christmas gift from the market gods and the 1%

    Many, indeed most, traders and hedge funds have underperformed the S&P and hovered in the +/- single digit range for returns this year and for many going on several years. Wholly unacceptable. Bernanke and Co have virtually closed the casino and forced us to play $5 table blackjack. Enough.

    I believe there is ample evidence that the general populace has reached a historical inflection point recently and this has not been lost on Obama, Bernanke, TBTF Banks, and their bretheren in the 1%.

    They are going to give hedge funds, traders, and a small minority of middle class investors with some cash an opportunity to buy stocks at a discount and what better time than now as we approach the holiday season.


    Technical: Pull up a 5 year chart on virtually any major index - you will see more than just dandruff about to fall from the H&S.

    1. S&P multiple quite overextended on historical basis.
    2. Earnings are going to come in shallow.
    3. Consumer confidence is coming off a very high number and has much room to go down which it now will with shutdown, political instability, etc

    1. Obama: "Wall street should be very concerned"
    2. Buffett (regarding stocks): “They’re probably more or less fairly priced now,” and “We’re having a hard time finding things to buy.”

    1. More than 50% of Americans in a recent poll said they hoped the Government would NOT raise the debt ceiling and ALLOW default
    2. Twitter will mark the final nail in the coffin of 'tech & social media boom'. That's Wall Street's last big card to play with public and they played their hand too early.
    3. The very idea of shorting and not buying the dip sounds ludicrous. This trade 'feels' terrible.

    Primary Targets: Short Nasdaq, Short S&P, Short Nikkei, Short Oil, Short Retailers/Consumer Discretionary

    Secondary Targets: Buy volatility through puts on your favored shorts - give yourselves at least to the Dec strike. Be careful outright shorting stocks with small % public floats. Use 5 year charts first as your basis and then dig deeper.

    Fake danger zone: There will be a rally when Yellen is announced as next Fed chair. Short it.

    Game changer: Market consensus is now that there is about a .001% chance of default. I think it's closer to 25%.

    Capitulation point/Stop: S&P 1747 or thereabouts. If the S&P doesn't drop to at least 1600 by mid/late December will cover.

    Thanks for the laughs this year. It's been fun to both tease you and to be teased; however, the hour's getting late.

    I feel free to share this info as all bears are dead and a couple piggybackers won't matter. Hope it helps.

    Peace out
  2. So buy puts and dump them at cab. if we trade to 1747? Nice.
  3. What H&S? I don't see it.
  4. You must be a pro because I can only focus on tommorrow for what I think might be good trades. YOU CAN SEE YEARS INTO THE FUTURE! IS THIS WHAT LEGENDS ARE MADE OF?!?!?!?
  5. Not every trader you meet has a 20 second time frame for their positions. This is a 2-3 month time frame trading strategy. I think the timing now is pretty excellent to be short from a r/r perspective and with all the conditions I mentioned already.

    Some traders average or scale into positions. "Losers average losers" - the great maxim by PTJ - is just his philosophy. You'll find it sometimes doesn't work as well for plenty of traders with more patient and disciplined approaches and time frames longer than 1-2 days.

    Finally, puts were the secondary target because options are more sophisticated so that should only be for the more advanced traders.

    Yes, 1747 stop. So what? That's not that far off. Just position size accordingly. And, yes, if you buy puts they may be worth toilet paper if things don't materialize within the next 2-3 months as I envision and the market goes significantly lower.

    In that case you lose money. That's part of trading. Get over it.
  6. gkishot


    Can I buy gold?
  7. So you write-off the puts and thank your for your trouble? Awesome sauce, Bro.

    A position, price, target, stop and time-stamp or this entire thread isn't worth the bandwidth.
  8. Indeed, a massive rally is about to start... to S&P 2000.
  9. I'm not spoon-feeding you everything I'm doing. Tonight and tomorrow I'm going to initiate short positions on the indices and commodities mentioned. I'm also going to buy puts on some select stocks in the industries that I mentioned that I want to short.

    Do your own homework.

    As far as the puts go, YES, when you trade options you risk a binary outcome if you hold to expiration. There is a chance you may lose your entire investment. So what? Part of trading is being comfortable losing money in good r/r scenarios. How do you handle "writing-off" the puts? Don't put more than 5% of your portfolio in them. If I'm right I'll make multiples on the investment anyway.

    You want me to tell you what stocks, strikes, and monthlies I'm looking at? No way. This isn't a journal. A lot of these options I may be a large part of the open interest in. Can't divulge those specifics. In any event, I gave plenty away already.
  10. I have a feeling you're being flip, but anyway, I have ZERO opinion on gold. One of the harder instruments to trade in my opinion. I've never been especially good at trading it and it has been acting so whacky this year especially, I don't know what to make of it.

    I'll get interested again if it starts trading below $900 or above $2000. Till then, I'm not touching it.

    Many easier instruments out there to trade.
    #10     Oct 6, 2013