Tuesday, July 05, 2011

Stock Market Update


OK, a lot has happened since my last post so lets get right to it. As you know I've been bearish on stocks and had a very large short position. The trade was actually working nicely for about 2 days but then things changed in a dramatic way.

Out of nowhere stock exploded higher and before I could even blink my profits were gone. Just two days later I was sitting with large losses which continued to get worse throughout each day. I finally pulled the plug a few days ago but the damage was already done. My nice profits turned into a loss over 2 times greater than what I had originally planned to risk. This was a ridiculous move higher which I obviously did not see coming at all.

Above is a 60 min chart of the NASDAQ and as you can see the market is now at heavy resistance. Given that the market has had such a big move up in such a short amount of time I wouldn't be surprised to see the NASDAQ hold here and  pull back.

I do not have any positions at the moment in the stock market but will keep an eye open for the next opportunity that presents itself.

15 comments:

Anonymous said...

I have to applaud you for being honest about your losses. Some people tend to "minimize them" and instead "brag" about their gains.

Kevin said...

Thanks..... You see, I'm not intrested in being right, I just want to make money.

Jared said...

Tough break, but keep up the good work..

For next time - there is a lot of research into long-weekend effects out there - if you buy on Friday before a holiday weekend and sell Monday/Tuesday there is a consistent bull move.

Anonymous said...

That's OK, Kevin. You are a great trader, so you'll get your money back in no time. Good luck there!

Anonymous said...

More applause!

So looking back what signs pointed to an explosion if any.

What I took away from this is the Greek situation (PIGS) is much more serious than is believed and when they can not kick the can (next time) we could have another worldwide crash

Kevin said...

Thanks guys...

The only bullish technical sign that I saw was that the market held the 200 day moving average.

Anonymous said...

Not that I am tied to anyone , however I would be a liar if I didn't say I follow Helene Meisler and I was long and ((all in )) over the last 4-5 sessions. Took some off the table today though , with what I am told is an oversold market . I may give it sometime before I become agressive again .

Lewis said...

wow, Kevin, I really appreciates your honesty. I really hate to read a blog with just winners and winners. It's like they are god and never got wrong. In the end I just stop reading it. Your honesty prompted me to read on.

Lewis said...

Hi Kevin, I really appreciates your honesty. I really hate to read a blog that always brag about how much he makes. Your honesty really prompt me to read on.

sodhan said...

Stochastic divergences do provide a hint to cover shorts momentum indicators may be confusing to tell routine trend but at turns their use should not be neglected.

Anonymous said...

Kevin haven't you realized it's not a "normal" market with hft robots leading to where they want not fundamentals.

ben said...

It looks a little bit like
1987 - the market and interest rate kept on going up, then
there is some weakness toward September, than the market crash big in October...

I think a lot of shorts like us got caught by this surprise move.

DG said...

Kevin: The touch of the 200 DMAS was accompanied by some of the highest levels of bearishness in history. For example, back-to-back equity put call ratio readings over 1.0. Rare and universally bullish. In an up-trending market (200DMA trending up) it'd be hard to drop sharply given that much fear. Is this a fair point? That all said, I did not go long there (and fault myself for it). A buy at the 200DMA with a stop below was a safe entry point amidst investor terror...usually a winning combination.

Kevin said...

I agree DG.. I guess I let my bearish view of the market get in the way of my judgement. I was more focused on sell in May and go away...June is a bearish month, financials were weak...etc

Chris said...

Just want to ditto the comments on your honesty. You can't put a price tag on integrity.

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