Fed buying commercial paper.

Its the Fed, the world, the PPT and they are about to rip the short’s face off.

If you didn’t cover yesterday, and you decided to go against me and these signals overnight because you thought BAC still matters to the markets. You are fatally flawed. Today’s move will likely make the Friday entry profitable.

Seriously, don’t be short here if you enjoy money. I have two open market orders to buy SSO.

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Lets start out with the Ugly.

- Dow down 800 points at the lows of the day.

- New lows vs New highs were extremely lopsided

- VIX, VXN both made new highs.

Now the Bad.

- We didn’t see capitulatory volume.

- Market rallied way off its lows.

- I had to eat 8% loss in the NDX and 7.4% loss in the RUT. Similar losses in the QLD and UWM.

Now the Good.

- We didn’t see capitulation volume. This is good too. The “about to happen” rally will be good, but we will revisit or break the lows we hit today after that rally. Then and only then should we see the capitulatory  volume. I don’t want to see that volume event here, not now - later is better.

- Market rallied way off its lows. This is good. Reverted to the mean, the exhaustion gap theory is working so far. We closed higher than the 10:45 Rydex price.

- We formed tails on the market indexes, and wicks on the volatility indexes. If you look back at previous drops, this will not happen if the market is going to continue to selloff.

- The market is moving according to my expectations.

- The loss in the NDX was 18% midday and the loss in the RUT was around 13% midday. We didn’t close there and recovered a significant amount back.

- People think we needed to close down hard to get a rally. This is good because if the market moves up they will be forced to chase. If you don’t think the market can rally here, then you didn’t think the Dow could rally 500 points in an hour either, but it did. Don’t get tied to the rhetoric.

- Not only has Carter Worth been riding my coat tails by being short all the way into Last Friday, but Carter Worth agrees with me about being long. I guess it depends on how aggressive one’s interpretation is.

- Two of my trading accounts should have funds available tomorrow so that I can buy more longs.

- Lopsided down volume and lopsided new highs/new lows.

Look, do I wish I waited one day and bought today at the close instead? You betcha (wink)! However, thats not what I was supposed to do according to my lights, lines, signals, values, and rules. This trade won’t be considered a loser unless its down on a week over week basis Friday at the close. If tomorrow is up and you’re short, don’t be surprised if a pride of lions bringing Taco Bell comes knocking on your door.

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I’m watching and waiting for tails to develop in the indexes, the VIX, and the VXN.

I like to talk as if you can already visualize the charts and that I don’t need to repost them, however, I do. I look at a million charts every night (actual number), but people love to see ‘em anyways. By the time I get to posting, I don’t want to post charts because I feel like we all did the same amount of work anyways and we know what we’re looking at. Ok enough babble - here they are.

You will get ass raped by a pride of lions if you go against these signals (the blue and white lines):

Shorts will get it after the lions are done with me.

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Mine of course, but I’m a long holder till Friday. Bought QLD this morning.

Waiting on that coordinated effort from govt’s around the world (tapping foot rather fast now).

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As I’ve already posted that I’m long heavily. It is therapeutic to talk your book. Everyone does it because everyone is typically nervous about being wrong to some degree. During these times those feelings are heightened a smidge. A gap down open is what I need and what I want to see. It spells temporary exhaustion and will trap the living the shit out of anyone who gets short tomorrow with new money, sells any long holdings into it, and people who think the market will drop 1000 pts tomorrow who have carried their shorts over the weekend. Watch for an intraday move today that creates a long tail  (speaking in candlestick terms). If you get short tomorrow as a swing trade you might as well shove the entire taco bell menu directly into your ass and pour Cholula sauce all over it, because you will get roasted and will have the sweats like nobody’s business.

Be careful out there, the pessimism in the stock blogging world is deafening now.

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I bought the market today heavily. I bought UWM, QLD, and QLD October 49 calls (bought them early and I bought the strike I didn’t want). I bought the calls in a frenzy lining up other trades and realized I got the strike I didn’t want, but I’m sure its going to be fine because if we get the move I think is coming, these bad boys will be up huge.

The second thing I did was buy the index long funds - heavy. I’m long the NDX, RUT, and SPX. The usual suspects.

I posted a few days ago a list of double leveraged long etfs in case you are into that sort of thing.

Ok, so everyone is going to be talking about the bailout plan and how the market sold the news in a puking like manner that led to people just giving up on the market. The worst week in 7 years they say. I say good. Now that the media and the regular investor will mire all weekend about their accounts wondering when is the pain going to end. You wanna know when the market has likely hit an emotional bottom? When you hear people talking about it at a restaurant at the table next to you. When your neighbor starts noticing how crazy this market has been. When the avg investor (nobody who reads this blog) opens their monthly statement and has a conniption.

Do you think the Fed, Paulson, GWB, the House, the Senate, and the media, who worked their arses off, trying to get this bullshit bill passed are going to let these markets drop? Both Tim Seymore and Joe “Mr. RIMM” Terranova, mentioned that they “think” a coordinated rate cut is likely considering that what we’ve seen for the last several months is a coordinated global recession.

Does the econ data look bad? It looks horrible. However, the market looks forward and there are times where the price action catches up to that pricing. We may be there now or it may be temporary. I think the negative news flow has lost some luster, with the exit of FNM, FRE, AIG, WB, MER, LEH, WM, IndyMac, and of course BSC. The bad paper players are mostly gone from the market. We don’t know who is left, but there aren’t many big targets on our side of the pond left to shoot. When the big targets are not in reach they will go after the little players, but those little guys can’t hold a market back.

I’ll save a list of oversold plays for another post.

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I’m heavy long. More later. My setup has arrived.

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Wells Fargo has upped the bid to purchase all of Wachovia for 15 billion. Wells basically said, “I ain’t your pal, dickface,” to Citigroup.

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I posted about being in the inverse etfs FXP and SDS, but I didn’t post that I took medium sized short trade at the Rydex 10:45 window in the inverse spx, inverse ndx, and inverse rut funds. It was an ultra risky play considering the NDX was already down 6% at that time. I was using my market intuition to make the trade and personal expectations based on technical analysis of where the market should be at the EOD. Its just something you pick up overtime. That trade ended up being a great call, because I made an average of 3.5% from that point as the market sold off hard all day breaking new lows into the close.

I also took gains of 3% in both the SDS and FXP which I sold out of early on the day.

So where are we now? Well I’m expecting an intraday volatile move tomorrow that ends up creating a hammer on the day (that is my hope). If that happens I’m buying the market heavily. If not, I’m probably laddering in slowly.

I’ve posted the popular volatility charts that everyone is looking at. Well the market is making people forget about them because normally we’ve seen a spike and then a reversal. However, this time the market has continued to selloff and volatility has just rode the upper bollinger band higher which has made many a trader (not me) get crushed in this market over the last month and a half.

Now I don’t always explain what I’m looking for and post charts that explain them. Instead I tend to talk and assume you would know what the F I’m saying or predicting will come to pass. On September 8th I said, “Now for a technical bottom, I want to see positive divergences forming while the general markets close lower.” Then on September 18th I blabbed, “However, my personal feelings and belief based on what I’m seeing in indicators (aside from VIX/VXN that did qualify a bottom) is that this is not over. We didn’t even get oversold on many indicators and some are just rolling over now. Several people have pointed this out already and I don’t even use the same secret sauce they are using to smell this. No divergences, nothing. If you scrape out the 1billion shares traded in AIG today, you have a 2billion day big deal. Not enough. We need panic + time for a bottom - not bailouts.”

These current charts show what I was waiting, looking, and expecting to occur in the charts several weeks ago.

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Bought FXP @ 95.61
and SDS @ 72.34

In case you don’t know, these are inverse etf’s.

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The SEC has just guaranteed that market volatility will continue for at least 11 more trading days.

“The U.S. Securities and Exchange Commission (SEC) Wednesday extended its ban on short selling of stocks for a number of financial institutions.

In a release, the SEC said the short selling ban would remain in place, but would not be extended beyond 11:59 PM Eastern Time on October 17.”

Leaving sufficient cushion time to rework the bill if it doesn’t get passed by the House are we? S’ok man. I will use the inverse etfs and inverse mutual funds to do my bidding.

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What a fucking crock. This bailout has been upped to $850 billion from $700 billion. In the beginning I was for a bailout, now, I don’t want to see this bill pass. An example of what was included in this bill, “Exemption from excise tax for certain wooden arrows designed for use by children.”
Don’t believe it? Check the text yourself and search for “arrow”.

Yeh I’ve heard it all, that the government will make money on the deal, the world will end, and credit will dry up. Well, now I’m remembering about Iraq and everything else that was rushed upon the public while trusted officials were conned into anything and everything. Take a few more days, let the credit dry up for a day or two, let the companies who fucked up go under, like they should and will do anyways. Let the markets drop. All of this will recover and we will clean the slate and come up with new legislation that is something better than this crap. Everyone is worried about the citizens who will lose their credit lines, but this bill is frigging extending it.

Today at the close I wanted to lay on a heavy short position, but was too afraid to bet during this two day circus. I will wait till eod Friday to execute a long position particularly if we selloff (which is what I think will/should happen). Where the fuck is this market? Where is the panic? Yesterday’s 500 pt bounce made the 777 point drop look like it never happened. However, I understand that vix and vxn have done their thing and price is all that matters. If I see things turn up, I’ll take it and be quick. We have not marked enough time to create a true bottom and true new trend. I’m thinking this will just be a counter trend rally until proven otherwise.

I don’t normally comment on this crap, and I’m not qualified to do so, but I don’t care. When I see wooden toy arrows exempt from tax put into a bill in a time of national crisis, it makes me think how serious this needs to pass. My tin foil hat side says that this ridiculousness was included so that the bill will not pass thus creating a coordinated and planned market crash. They can act like they are trying to do everything possible, but in the end, they want to clear the board. I didn’t even get into the tax deductions for NASCAR! Are you fucking kidding me?!

PS I stayed at a Holiday Inn Express last night.

Bought BWLD and got long the US dollar today. Flight to safety was happening today. Gold and US dollar continue to move in tandem.

Stocks I’ve mentioned here before they got any attention elsewhere are rocking: FLIR, BWLD, EZPW (pulled back today), QCOR. Do a search on any of these names to see when I posted about them. I want to get some FLIR because I like that chart the best.

I also want to remind anyone who has a boner for shorting. Carter Worth tonight ripped the words out of my mouth tonight on Fast Money. I said this elsewhere, not here, several days ago. Like you care. What he said was, in my own words, “The bad guys are gone. Bear Sterns, Wachovia, Merril Lynch, Lehman Brothers, IndyMac, Fannie Mae, Freddie Mac, AIG.” Who is left? They have taken the bad seeds out of the market, replaced them in the major market indexes with new companies. At the same time I want to catch the last final move down that I think is coming, I also have to be ready when this market decides to unload off its coiled spring.

As I finish off typing this up, my wife is watching, “Private Practice,” in the background and I notice they have written into the show that they didn’t refinance their jumbo loan and now they have a financial crisis on their hands too. Fuck em.

Yes, I’m tagging this post with “wooden arrows” and “arrow.”

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I took my index long off this morning. Its going to be another loss, but this position was even smaller than the last, so not much damage at all. Bought a fresh piece of BWLD @ 40.94. I rolled my index long over to the double dollar fund: RYSBX

This is the Rydex version of UUP. Which I just posted about here.

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I flipped my short for a smaller long trade that I plan on exiting tomorrow if the upside continues. I’m still in awe of the daily moves in the general markets. It looks like a 3.5% and 5% loss from the morning trading window - that really blows, but it wasn’t a heavy position, but it wasn’t exactly lite either. Getting two days in a row on the right side of the trade has been a difficult task this past month.

I posted a list of long double beta etfs today and I will buy the usual suspects most likely on Friday for a trade to the upside heading into the following week.

A few things setting up here:

FLIR - I love the way this chart is setting up.

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There are many options to for leveraging up a long trade and one of the new popular ways is to use leveraged ETFs and Mutual Funds. If you have followed this blog for more than a few months you will know that this is majority of what my trades are involved with.

ProFunds

Indexes
DDM - Dow
QLD - Nasdaq 100
SSO - S&P 500
MVV - S&P 400 MidCap
UWM - Russell 2000
UKK - Russell 2000 Growth
SJF - Russell 1000
UKF - Russell 1000 Growth
UVU - Russell MidCap
UKW - Russell MidCap Growth

Sectors
UYG - Financials
URE - Real Estate
RXL - Health Care
UCC - Consumer Services
ROM - Technology
UPW - Utilities
UXI - Industrials
DIG - Oil and Gas
USD - Semiconductors
UYM - Materials

Rydex

Indexes
RSU - S&P 500
RMM -S&P 500 MidCap
RSY - Russell 2000

Sectors
RFL - Financials
RTG - Technology
RHM - Healthcare
REA - Energy

Currency

US Dollar
UUP - Double US Dollar

Euro
URR - Double Euro

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