Hey Jeff!

For the slow kids in the back, read:me, are you saying that we can expect another move down based on the charts you posted? I went back and looked at May/June 06 and I see a move down.

New trader here looking to understand it all.

Thanks!

I believe what Jeff is saying is that the may/june 2006 bullish divergence (price lower low while technical indicator makes higher low) led to an amazing bull run shortly thereafter. That while the media is preaching gloom and doom, price action is forecasting a potential move higher. Unless I totally missed that.

If I'm correct, tonight might be an interesting marketcast, since Eric's been very bearish and so has Jeff...until today it seems.

Second to last paragraph:

"I have been open about my feelings on some of the market fundamentals, and yes, these feelings are bearish. But make no mistake, time frames are the only variable."

I am bearish on the market overall. But the tech signals I displayed show some bullish indicators for short term movement.

Last time the market was in a rut, these indicators preceeded some great short term movements. I put them on the radar to see if history repeats itself.

I'm confused! I've been waiting on the Bears to come out of the woods, but are you saying they may not be coming?

Will we ever really face the reality of this ever increasing amount of "Bad Debt" or are we just going to sweep it all under the carpet, say it's now a Global Economy and keep printing money to solve the problem.

Dr. Tony

Jeff,

These are the best kind of posts by you. Thank you for taking the time to point these out to us, and also for clarifying.

Dr Tony:

Exactly! Sweeping stuff under the carpet is normally a temporary soultion, but at some point the market will start to realize the severity of our problems, and various "bombs" will start to drop again. This is why I mentioned time frames being the variable that drives your trading actions.

What is your time frame?

Jeff:
Thanks again for keeping us thinking. Can't wait to hear your market Cast this evening. Looks like we may have an interesting final trading hour today as well.

Jeff,
I agree with Brett (well... if I don't I'll hear about it, so I guess I'd better.) These kinds of posts are huge to me. I suffered a semi-meltdown whilst you were wearing party hats and downing yards of hooch in Chicago, and this is exactly what I need to get me back on track. I'm away for the next week or so, so I've taken on some paper trades just to keep the "game face" on. Naturally they're doing great. POT is my only real stock at the moment.

Thanks for posting a meaty one, to start us back on the "Post Chicago" road to perdition.

Thanks, Jeff. That was good info.


Michelle

I get it, thanks Jeff.


Brett, thanks for the explanation on divergence.

Thanks for the post Jeff and congratulations on you first CLEAN CUPS!

Laney,

Feel free to check my archives also. You can run a blog search for "divergence." Or any other topic for that matter.

Addicts,

Now that Chicago has come and gone, I'll get posts like this going a lot more often, just like the good ol days. Thanks for being patient with me.

great post Jeff, so glad you'e back to steer the ship. I saw that divergence coming could be why I went long on LVS a few days ago, and ELON( thanks brett). Love the set up on MA. Let's market some$$.

Thanks, Jeff. I have read some of the articles on your sidebar. They're really good and I always gleen some great info from them.

Jeff, AWESOME!

I have been away from the blog since 7 AM PST and have periodically checked in the on market although haven’t had time to notice much other than the bullish sentiment right now (VIX, and indices ETF price action) on rather low volume. I logged on to the blog to get EXACTLY the information and thoughts that I and everyone else got. Thank you!

I am reluctant to get too bullish because of the lack of overall volume. I will just take good low risk setups. Since I am positioned correctly to give some bears I have entered recently another day, I will probably take it barring a HUGE end of the day rally to the upside.

It is also real nice to see ideas that you have are ones that I have entered recently. Oh, and may enter in the next few minutes...

Have a great weekend!

Jeff-
Thanks for your insight.

Brett-
Thanks for explaining divergence again for those of us (like me) who forgot what that means.

liz

Brace yourselves for tonight's marketcast - SHV is going to close down about $.15.

Jeff, any tally on the number of emails today??? LOL!

Gary

Oh, yea... thanks for the great video for Friday... it's a good transition into the weekend.

liz

I don't mean to ruin the party but I'd like to quote from the Stock Trader's Almanac 2007:

"End of August Murderous 6 of last 10 Years. Average Loss Last 5 Days:

Dow -2.6%, S%P -2.3%, Nasdaq -2.1%"

Long: plenty
Short: plenty

Dear Jeff,
Another way to look at the SHV emails - maybe they are new to the MarketCast, let alone new to trading. They may still need your insight, assurance.
Encourage them to read your blog and listen to MC nightly and they have the capability to go back review either.

Jeff,

As always you did a great job of wrapping up and clarifying what it is I am (or should be) seeing on the charts. Thanks from a newbie.

Diana

...Or encourage them to research trades that they don't understand.

Brett,
Thanks for the divergence explanation. I was struggling to remember what it meant.

So historically end of August is down, am I understanding that quote correctly?

Michelle

I would like to thank the leader of the blog Jeff and everyone else on the blog. I is wasn't position sized correctly I would be sitting in the bathtub right now with my wrists bleeding huge !!! As it is I may still go to the store for some rum and then sneak around drunk until I find a hot tub on the block to jump into.

It seems today is the day where I go to bed with 4 losing days in a row. We will see what Monday brings. Early in the week I sold a bunch of Sept. paper. So I at least have Theta working for me. Monday I start my 3 day live (online) class. Can't wait.

Anonymous,
I am not even sure what you are talking about, but whatever....


Michelle

Anonymous,

Welcome. I think your point is a good one and this blog welcomes traders of all backgrounds and educational levels. My only suggestion is to leave your name with your posts. We enjoy getting to know each other, at least in the virtual sense. It is what gives this blog a community feeling.

Jeff,

Okay, I see everyone is letting Jeff off the hook here easy. What, no one wants to give him GREIF??

Okay, I will.

JEFF...

We expect you to be here 24/7/365
We expect great picks all the time
We expect you to live and die by the blog, for the blog, and only for the blog.
We expect you to give up all family and social life.

Is this too much too ask!!

(glad your back buddy)

Annonymous,
Sorry if I came off mean. I re-read your post. I thought you were slamming Jeff. I misread what you wrote because it was broken up into two. We have just had a rough week with annonymous posts and so are a little wary.

Michelle

FlyPro & others I'm sure,
I didn't have a good week either. I guess that comes with being too bearish in a world full of bulls with blinders on. Their day of reckoning is coming.

Meanwhile, I'm going to bang some drums.

DG
You go, girl. And bang some for me. It seems like everything that I bailed on this week is recovering nicely. GRMN, PCU, and DRYS were 3 that I feared were headed to the toilet.

Entries are OK... Exits suck.

Homework for when we get back from Portland: Work on exits.

We're taking Catherine out in public again, by the way. She's recovering nicely and looks human once again. New glasses are probably in order. And running 15 minutes later so she can see those nasty tree roots.

DG-
Bang the drums for me as well please.


Chris-
Have fun in Portland.


liz

_____________ A funny thing happened today _______________

Sometimes a little perspective is in order.

Today my loving wife took my face in her slightly mangled hands and said "My pet..." (sometimes she confuses me with the dog, but I didn't want to spoil the moment) "My pet... you made 100% on our money in the five months from Feb to July... you will do it again. I have every confidence in you."

I suddenly realized that so much of this whole thing we call trading, is mental. And my wee wifey's comment has put a very positve slant on things.

I am eternally grateful to her.

Yesterday I saw a bearish engulfing candle on $RUT near resistance and wanting to get back some of the money the RUT fleeced from me last month I entered gobs of puts and put spreads. As we all know it closed higher along with everything else I was bearish on. Question- how often are these candle formations accurate when accompanied by support and resistance ? I would think pretty often, maybe the market just knew it was me again. Laughing on the outside, crying on the inside.
Stan Lake

Stan-
My understanding is... like a lot of patterns they are not stand alone indicators. (remember, this is my understanding-I'm sure someone better qualified will answer you soon.)

liz

Chris-
I'm glad that you are positive again. We need your sarcasm on the blog. Have you read "Trading in the Zone". I really like that book. It's all about trading mentality. Anyway, if you haven't, you should.

liz

liz
Thanks, I'll give that a read. I really felt I was "In the zone" for a while there. I know I can regain the zone. I will be at one with the zone. ummmmmmmmmmm.

We're really looking forward to Portland. I just worked with a First Officer (a girl) who used to take ballet. Michael Buble used to sing at all her performances because he was trying to get rid of his nerves while singing in front of people. What a small world.

Stan,
The worst thing in the world you can do is try to make money off a stock because it hosed you before. Emotions have no place in this business. They will cloud your brain. They will make you do things that you would normally not do. Like losing money. Put the previous (and this) loss behind you. Get into the zone. The zone is your friend. Be the zone.

Thanks to everyone, I love this place and appreciate all of you. Special thanks to Jeff ( and family) for bringing us all together.

STUMP

------HOW MUCH DO YOU MAKE AN HOUR-----

That was one of my questions to myself today, should it be a question you ask yourself?

I took a big hit on DIA today. It was my biggest loser. If I had taken the time to make sure my position size was correct with my exit how much less money would I have thrown away? I was too busy to run the numbers.

Life has been very busy, work vacation, lawn work around the house. I have not spent as much time as I should checking my risk. I feel good that I have only pissed away 6% of the account this month. Unfortunately I lost 7% of the account at the end of last month, for a total of 13%.

So how much do I make an hour. Not near enough to not take the time to check the position size and get out when I hit my mark in the sand.

Next week I will take this lesson and learn from it. I will also forget about the money that is gone. I will stick with my plan and trade the sizes that I need to.

FP,

Great post. I am also guilty of doing the same and getting a bit lazy. I love to find the REE, but sometimes fall back to the SEE (Sean early exit). Good luck and may the fish keep biting!

Ha, Sean! I am also very often guilty of SEE. Especially now since the market is so fickle. I was getting much better with my exits until the market went all schizo. Now I find the timing is much more difficult.

FP, I did a similar thing with DIA which I entered today at around noon. I had to leave for the day and was in such a damn hurry to buy puts on DIA. I should have waited until Monday like my original plan. I did put a stop in and it didn't get hit but it is right up there kissing my line.
BACK OFF!! BACK OFF! (tm-Drew Barrymore in FIRESTARTER).

FP-
I really liked your post. Most of us, if not all of us would like this to become our main source of income so it's good to remember that we need to be treating this like a business. Thanks for the reminder.

liz

Chris-
I have to say that I'm a little jealous. I would love to see Michael Buble perform. I love him. I haven't really been to any concerts and/or performances since having children. I use to go to shows all the time. Maybe it's time to get a babysitter and go see one. Anyway, I hope you have a great time. Blow him a kiss from me. Okay, have your wife blow him a kiss from me. ;-)

liz

C2 have you been in daytona carving your initials into things???? rod and i went to a steak house last night for our anniversary and i look out the window and see C+C carved into the window tint....hmmmmm.....

FP.....while in chicago i attended michael drew's trading for a living session and he mentioned how he actually likes to do yard work, but why should he do a $10/hr job when he can make $100/hr trading. he was basically saying we need to focus our attention on the jobs that give us the best rate of return and hire somone else to do the rest. i totally get what he is saying, we also like doing our own yard work, yet our schedules are so hectic that spending 4 hrs on a saturday really takes a big bite out of my study time & family time. the neighbor kid only charges $20, so i am debating having him do it this weekend....the $20 will be well worth the time saved.....it makes me feel lazy just thinking about it, but it will help him make some extra $$ and give me a little free time.

christine, renee, susan, john, joel and glenn...the pics are on the way....i promise you will have them by tomorrow night....it was great meeting you guys, i only wish we would have gotten a few pics of susan, joel, and john....did you guys take any pics???
chuck if you want me to send you the pics from howl at the moon, just leave your address on the blog...

i am excited about next week....i think it will be a great week for all of us

Sean,
I have to agree with you on the REE. I got lazy a couple of months ago and just entered trades whenever. Here lately the REE has saved my butt. I have missed a lot of good trades, but didn't get hit hard when the market moved hard against me because I waited.
Thanks again Raimo, for hammering that point home. If I have learned anything from this blog, it's to enter right at support (or exit). It also keeps me from nailbiting when the market has a reversal day. I set my stops and move on.

Chris,
Glad you are back. I find myself struggling wondering if I am ever going to make money instead of losing it or treading water. But I know the only way to get there is to keep my attitude right, preserve capital, position size and keep trading -- and did I mention Eric's favorite, diversify. I am so glad Jeff and Eric have pounded those home. I know they think they are harping on this stuff over and over, but that's the only way I seem to get it is if I hear it 50 million times.
I also plan on making a book list and start some reading again. Got the one Brett mentioned and "Trading in the Zone" sounds good too.

Summer's almost over, time to gear up and make some money.

DG,
I took a cue from Raimo and added some stock plays this week because before I had all puts. So I feel your pain. I think we can expect a down day sometime soon to move those in the right direction, too.
You weren't the only one expecting a bearish move that didn't happen last week. It makes me feel better when I know I'm not the only one out there. Thanks for all your insightful posts.

Michelle

Sorry for the book I wrote.

Hello all,
I will be authoring another book in addition to my early favorite. A sequel if you will to "Fooled by Stupidness".

I have begun working on "Trading out of the Zone".

But that is not all, with an introduction by Chris "Staying out of the Zone" I a hopeful that will attract a small couple of appendixes for addition later too:

Raimo: "I SAID STAY in Google Long or else!" and Brett's hopeful contribution, "Winning with the Phoenix".

I have had and OK (Albeit Down) week but my strength has come from KOP and yes BPHX.

I'M OUT
ARTY

glenn, john, and elizabeth.....sorry but the pic email has been rejected from your email accts

Tonya, our work mail server is a bit stubborn sometimes, my wife can't even email me at work... try johnplogan@earthlink.net.

jlogan....i think that worked

Arty,

The fire is lit. THE PHOENIX is rising.

Also, there's another ELONgated chart in the making.

These 2 software companies are destined to be 10-baggers. Buy stock. Remember the adage: Be right and sit tight.

Brett,
Just realized why BPHX must do well. It has the word 'blue' in its name. For reference see BCSI and NILE. May the force of blue be with you!

This comment has been removed by the author.

Doji Girl-

I was hoping no one would bring up BCSI, but since you did, I have to come clean. I know Raimo is sick and tired of hearing about this, but I'm going to share it with the blog.

I bought 10 october $55 calls while BCSI was consolidating into the ascending triangle. My plan was to sell 5 calls the day before earnings, and let 5 ride. I even emailed Jeff about the trade. I was so excited about its potential, and I had a solid plan.

So what happened? .

My trading instincts told me a bounce was coming 2 Thursdays ago (the capitulation bottom), which was why i sold all my puts at the bottom and went long a bunch of things that day). However, that night, I totally ignored my instincts and gave in to what sounded like the experience of others. Expiration Friday is where I made enough mistakes to wreck the first half of last week. The Fed and their surprise rate cut shocked the market on expiration Friday, but despite being right about my feel for the market, and the beginnings of the exact bounce I expected, I was swayed by those saying to sell into strength. So I did.

Along with some call plays bought the day before (and some I held previously), I actually sold my 10 BCSI october $55 calls that day when it stalled at resistance, fearing the market was heading for lower levels. I allowed myself to be swayed by the opinions of others, and I changed my plan

There are a lot of lessons to be learned from this:

1) If you go into a trade with a plan, execute that plan regardless of market conditions. As Jeff says, it's a market of stocks. If your stock doesn't give you the sell signal you're looking for, DON'T CHANGE THE SELL SIGNAL. Look at BCSI and what I gave up. It wasn't a loss, but it was FAR MORE COSTLY than any loss.

2) There are many experienced traders and commentators on the market. I recommend that you listen to all of them, but never allow them to sway you. Certainly allow your caution flags to go up because of them, but you should never trade on anything they say. No matter who they are or what experience they have. You need to develop your own feel for the market. You do this by experiencing different markets and learning from your mistakes. If you take the trades and market posture of other people, you are just going through the motions.

3) Learn from your mistakes. How many times have I said this on this blog? BCSI may be the big one of the year that got away for me. I scouted that trade for weeks. I got in BEFORE the breakout. I had a solid plan in place. And I bailed on it. I'm not a rookie anymore, but that was a rookie mistake.

4) When you do make mistakes, act quickly to fix them. No matter how messed up you get, get your account cleaned up and ready for the next day. Take whatever losses you have to because every day, those 'weeds' in your account will hold back your performance.

Remember: This is one of the very few jobs where every day is another boundless opportunity to make money. Do everything you can to take advantage of it. And when a shooting star goes right through your hands, make sure your hands are always open and ready to catch the next one.

This comment has been removed by a blog administrator.

Brett -thanks for baring your trading soul. I always find a phrase or two worthy of cutting and pasting as encouragement or a caveat.
THANKS. May the trading gods shine on your (blue or otherwise).

Brett,
Thanks for that. It's posts like that where we newbies jump light years ahead if we heed your advice. Your experience is hopefully helping us avoid the same pitfalls.

Michelle

Brett,
Thank you for sharing that. I have done that very thing too many times myself. Most recent is GME. Except my GME was actually a lose because I bailed at the worst possible time. Had a profit, gave it back and then some only to see it begin its ascent a couple of days later. Feh.

Anybody got any good bullish stock plays I can look at that are right at support? Most of the strong stocks I've been watching over the year have blown past REE. If the market continues to be bullish, I'd like to evaluate some plays to enter next week.

Brett,
I missed the ELON entry because I was so busy with getting ready for school starting tomorrow. I am only entering positions that are right at support.

Wish I had gotten some POT at 75, but it is gone.

Michelle

Michelle,
I'm looking at CEF and FTI at support.
DWSN about to break out of asc. tri.
ARD but hasn't broken out yet.
FARO - coiling, ready to pop
TRAK - building an asc. tri. Put it on your radar.

Thanks, Doji Girl


Michelle

Brett,

You mention several times in your comments things like "I gave into what sounded like experience of others,"I was swayed by those saying sell into strength," "I was swayed by the opinions of others...." jeez you make it sound like your hand was forced!!!

What exactly did we say that changed your world? For the life of me I can't recall saying anything that powerful.

Brett,
That was great, thanks!

Jeff,

Nowhere in my post did I mention you saying anything. Also, nowhere in my post did I fail to take the blame for my own mistakes. I was just opening up my gamebook for the blog, not lobbing some personal attack (which unfortunately is how you must have interpreted the post).

The bottom line is, it really doesn't matter who said what (which is why I deliberately omitted names). What's important is that I changed my strategy based on the opinions of others, to my own detriment. That's the lesson here.

Understood, and not taking this as a personal attack. However in an earlier e-mail you pointed Eric and myself as to blame for our opinions on the market, then you point it out on my blog 4 different times. Since we have never discussed the timing of our opinions of the market, I was just curious as to what was said that altered your strategy.

Obviously if it your opinions were rattled, it could have done the same for others. If it is something that I need to address with the masses I ought to be proactive about making some clarifications.

Thanks

Jeff,
I think we all were hearing lots of bearish talks on everything from TV talking heads to some trading rooms on the Investools sites while charts were indicating bulish. I was and still confused about this. But this is not anyone's fault but the trader himself. I had similar problem last week the market was giving bulish indicators on the technical charts but at the same time form me the thought was that how can the problem that drove the market low be forgoten so quickly.

I am still concern about this lack of volume on the move up. I am not sure that we are done and that is why i was playing short side at resistance but lots of them start breking upward on Thrusday and Friday. I am affraid now that i have taken bullish side on these that market will just turn arround and fake me out.

These are all single contract positions but still lots of whip saw going on. How can we as new trader handle that. I am keeping the stops very tight and keeping the postions very small.

if it was not BCSI i would not have had a positive week. But that one just was a rocket.

I am actually very happy being in the market and also reading these comments, it is making my learning curve vey sharp to up direction :-)

I think that some of the biggest lessons I have learned so far is that each trade is it's own, "It is a market of Stocks", and that market when trading like it has lately, can have more of an effect on price (my definition: the actual rendezvous or collision of supply and demand).

I have learned in a market with this kind of velocity I just have to take profits and losses more frequently and be extra vigilant on what I trade. Finally and ultimately I have to know what I am go to do tomorrow should my trades, (and/or the market) go with me or against me.

.02 from ARTY

Anyone want to comment on this article?

Jeff, wouldn't it make much more sense to just buy PUTS??

http://mparent7777-2.blogspot.com/2007/08/45b-bet-on-another-911-within-4-weeks.html

Brett,

Here's my .02 on the article you posted after reading it. I can either spend my time worrying about when the next attack is coming (and there will be one some time in the future because there is no way we can be 100% accurate about stopping them all) or I can spend my time enjoying each day as it is. If this open interest is a red flag there are people smarter than me already working behind the scenes to track the people behind it.

Bottom line: if I paid attention to every potential terrorist threat I'd never get out of bed in the morning. I'm not taking a blind eye to it but I refuse to let it paralyze me.

Thanks for posting the article, though. I'm sure it will start some healthy discussions.

Kim

Jeff-

I e-mailed the photo from last week to your gmail acct. Let me know if you don't get it. Thanks again for taking time out of your day to meet us.

Kim

Brett,
the article is talking about buying sep 700 calls. If the crash is being expected then it would make more senseto buy puts

I guess I did not get the article. I am sure people more intelligent then me are also looking at this and working to figure what they need to do to handle this

Mahmood,

I think the point is that someone SOLD those calls.

Now, perhaps this was part of a larger complex (and quite possibly insane) exotic options strategy. That's why i was looking for input.

Brett, Jeff, all OA's.....

Wow, i missed some good discussion while away hunting Bears. I of course feel the need to throw in my 3 cents (yes, 3 cents not 2 cents..time to kick it up a notch!)

Just like the market is made up of stocks, the Blog is made up of opinions. Stocks will move the market, opinions will move the blog. This is a fact that will never change.

I do not allow the market indices to decide how to trade my stocks, I trade my stocks independent of the market. I make my trades independent of opinion, and I will use GOOG, AAPL, CME and CROX as examples. If you read previous posts (you may have to even go back several months), I never allowed the opinion of others to stop me from trading WHAT I SAW. But I still VALUE opinions, and in many many instances have learned so much from them.

Also, and I learned this from Jeff... get to know a stock. Learn it. Get a feel for it. I apply this same technique to opinions, and from where they come.


Jeff, this blog would not be here if not for you. We all must take the opinions of others and use them as clues, not as fact. Well, that is what I do. And yes, as in life, the opinions of some do carry more weight than those of others. This we must all figure out on our own. And while everything you say Jeff will have an affect on the the minds of all of us,or at least me anyway, it is our responsibility, as Brett has taken, to make our own decisions and hold ourselves responsible for who we listen to and how we trade.

Brett, yes, sick of BCSI(LOL), but never sick of your invaluable contributions to the blog. Keep them rolling buddy...

Brett,

That is huge.

Who's the source? If this is true, and someone actually placed this bet (as a seller), they are looking to lose some significant amounts of intrinsic value here, unless that person was a buyer and heard about an upcoming Fed rate cut.

Jeff-

I looked up the option on IT and the open interest is consistent with the article.

Kim

I just bought some NVT. Couldn't help myself. Need something bullish to help balance my portfolio and this looks promising.

DG-

What's the matter? Scared of the fire from THE PHOENIX???

The SPX 700 PUTS also have ginormous volume...

Pat

Brett,
Not scared but do wish I had nabbed some of that when I had the opportunity last week. Bon chance, my friend, looking good.

Whoa,

I too missed some good discussion while away at an endurance race this weekend.

Brett, I appreciate your sharing your experience. Being reminded to run my own game (or "Ride your own Ride" as we say in the endurance world) by example is great learning. I get alot from going back and charting what was seen and how the chart turned. I am learning alot about exits with this.

And thanks to all the OA's who are not afraid to share thier losses for the good of all. It shows how tight you all are.

Diana

All I can say is with all this selling huge calls on the on the Spooz it makes we wonder.
Should I double my position size on BPHX when it blasts through 15 today on high volume?

Cheers,
ARTY

clean cups...

Would somebody explain the "clean cups" for me?

Diana

Diana,
It means "there's a new post so would everybody please move over and continue the discussion there".
Think Alice in Wonderland's tea party when the Mad Hatter (or March hare, whatever) would interrupt the conversation every once in a while and announce "Clean Cups...everybody move down for clean cups" whereupon everyone would slide down to a different portion of the table.

Diana,
If you're still here - Clean cups was coined by Doji Girl (I think). It's from the tea party in Alice in Wonderland and referred to the instruction to all move over for clean cups and a continuation of the party.
Here it means that Jeff has started a new thread and we need to move over to the comments on that thread.
Lori

Lori you have mail.