Strong Dollar - Weak MCD

Last week I posted a possible swing trade on MCD and MACD divergence, however, the rally that the rest of the market saw did not crossover to McDonalds.

The dollar has been strengthening against the YEN, EUR, and GBP, and as a result global sales are off. Side note on the long run macro: as the US increases their money supply faster than the other central banks around the world, this will cause a shift in the long run equilibrium exchange rate. So I will be looking to sell the dollars strength in the next few months and buy foriegn securities. More on this later.

Rally Congress and Avert Disaster

For those traders out there who do not find this stuff amusing, please sign the petition and contact your congressman.

http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-tax/

The Political Circle Jerk

Representative Peter DeFazzio from Oregon introduced HR 1068. This bill basically states that all securities traded will be taxed at a rate of .25%, on a typical trading day for me, that's 90% of my profit, but that's just me.

Here is a link to the text of the bill:
http://www.opencongress.org/bill/111-h1068/text

Here is a rebuttal by the STA:
http://www.finalternatives.com/node/7043

Here is how you contact DeFazio
http://www.defazio.house.gov/index.php?option=com_content&task=view&id=127&Itemid=74

Peter DeFazio earned his masters degree in gerontology, not Economics. It's time to take these decisions regarding markets and capitalism out of the hands of those who are incappable and ungrateful.

QQQQ Retracement

Q's are at the 61% retracement level from the recent high. We'll see if we can get pas that, and push on.

End of the world not so close?

If the Q's can hold this level, and continue higher, we might be in for a good ride back up. Thinking of adding to my long position. I, however, remain cautious, but cautiously optimistic.

Support?

It appears that the Q's are holding support at the 61% level. This level is also indicative of a higher low on the daily chart, leaving the uptrend intact. Some good rallies this morning, let's see if this can hold up. Financials, however, are looking worse for the weather.

Looking for some buyers

I'm looking for buyers to return to the market, but earnings reports among other things has them spooked. As a result the market has taken a turn from its highs, and broken through some important levels, but as long as it doesn't make a lower high, it should be okay.

I am still holding my long position. I got caught in a gap lower, and did not want to liquidate. I have held on hoping things would turn around. So far, no go. However, if the Q's can hold above 28.80ish and make a turn higher, we might have a continuation of an uptrend on the daily time frame. From there I will look into expanding my long position.

QQQQ (Daily Chart)

There is a trend on the 30 minute time frame, but weakness in the short term. Sellers are in control. Looking to establish a higher low to continue the trend.

Trading 2009

2008 was a brutal bear market, with volatility up the sky; the DOW traded its largest daily swings ever. Lehman Brother's collapsed, yet other major banks found bailouts. The list goes on.

Here on the first trading day of 2009, the NASDAQ 100 traded up very nicely. Looking at the daily chart, we see that not only did the Q's break above prior resistance at 30.50 (the 61% retracement point from the November highs), but it closed above the 10,20,50 SMA. We also have convergence of these averages, which is important. This indicates the end of the market decline and the beggining of accumulation, the long process of healing. This type of market is subject to a long period of sideways movement; very much a range bound market. Also we have our first "long" signal from the DMI indicator. The crossing of the of the DM+ and DM-, as well as the ADX above 20 (though it is declining). I am not acting on this long signal, but it is the first real signal since August/September '08.

These are some promising signs that the world is not over and we will live to trade another day.

I started the trading year by closing out and posting profits from my short position I took on Citi. The stock has taken a beating, but has found good support. Come next week, I will most likely open another short put and let theta decay away.

Also, I have several stocks on my watch list that have also taken a beating, but have good potential for a fast rally this month. If these can show strength and break out, I'll take some small long positions with out/at the money calls.

2009 is all about managing risk and using what the market hands me to my advantage.

Bailout

Fears of a bailout failure cut the rally yesterday at the hip. And it appears as though the actual failure of the bailout might go down to the knees. However, there is a lot of bad news already thrown into the price. I don't see a lot of good signs for GM stock, but there are others out there that won't take it on the chin like that. All said and done, it looks like there will be an early morning slide, it's already gaping lower by a dollar. The rest of the day will be very choppy. An afternoon rally? Probably not, if there is one in the works, Monday might be a better candidate.

Market Shakeup

The Economic news has been weighing on the markets. People want the markets to go higher, the buyers try and push, but in the end, the sellers are in control as the constant drum beat of negativity resounds. The jobless report that comes out today was on everyone's mind. I couldn't bring myself to take a long position in that kind of situation. However, if there is a significant shake up today, and some of those weak kneed stock holders sell out, maybe we can get some momentum next week. If that flush can come, I might set myself up with a small long position to hold over the weekend, and play a gap up over the weekend--very risky, I know. We'll just see how it goes.

Futures are down, and the Q's appear to head for a gap lower. They broke through some recent support yesterday, looking to see where the next strong support might be hiding.

Slight Pull Back

A .5% loss on the Q's today after some big movement of Friday and Monday. I'm not surprised, you are not going to see lots of sustained momentum in a primary downtrend. It is always possible that we are forming a bottom, but I can't for the life of me call one. I have friends who have called the bottom of the markets, oil, etc sold naked puts only to get caught in the proceeding plunge, fail to stop it out and end up excercised. That's not the position I want to be in.

I have put on some paper trades on the QLD, and XLF to see how those go this week, but otherwise I am taking a holiday, after which, I am going to step up my trading another notch.

Last week, E*Trade, for my efforts, offered me lower commisions. I take them gladly. Also, E*Trade is now offering access to options on the VIX and VXN, which should make for some great spreads. I am going to paper trade those this week to test the waters. Look for some of my plays to come, and happy tradding.

Pre-Market Activity

The pre-market activity has been interesting: dropping below 28.00 almost down 1% and then back up to positive territory up 0.5%.

Futures are still lower. It looks like things will open higher though.

Both HPQ and YHOO are opening higher after adjusting earning and CEO stepping down, respectively. HPQ is up quite a generous amount--15% and climbing.

In other words, this could make for an interesting day.

Mixed Messages

Too many mixed messages to make to make any trades on the Q's. The key is to be patient and wait for the setup. Right now, my signals say no--long/short.

However, this is options week, so there is likely hood that we will see some increased volatility and selling as the week comes to a close. Keep an eye out.

Downward Momentum? Just Down

The NASDAQ is gaping down this morning (is anyone surprised after Friday's sell off?). It looks as if it is going to test the lows again. I don't know if it will find support or find anyone to rally it this time.

I am going to wait to jump into the market--wait and see approach. Watch price action and see what it tells me for the week. I'll start posting some of the setups I find, and more details of which options I am trading and why.

Gapping Down

The Q's are gapping down today, after yesterday's gap up (and subsequent sell off). There is generally no good news out there. Earnings are looking bleak for several companies, bailouts around the world don't seem to inspire confidence, except in Germany. The primary trend is still down.

I had mixed signals over multiple time frames yesterday, so I remained out of the market. I am going to wait it out, and see if the Q's will test support from their prior 52 week lows. An important level to watch--if it holds, we will eventually be in for another tradeable rally to the upside. If it fails, another wave of sellers will emerge and things will slide, making for a good short position. I am going to stay disciplined and watch for the signals from the market, and trade them as they hold up.

CPSL also has earning today. They seem to remain in a good financial position. I'd like to see more movement to the upside with them. My covered calls are set to expire this month, and will continue to write them until I get assigned.

Friday: Headed Down

Looks like more bad news for Friday, but futures are up slightly. I'm looking at trends continuing downward, but I am not making any trades headed into the weekend. I'll still have my eye on price and volume though.

We will see what Monday brings and with it a new trading week.

Have a good weekend.

Halloween Pullback

Asian markets held steady for most of the trading day, but sold off in droves at the end of the day despite a rate cut by the BoJ. European markets are down slightly, but not off kilter--still watching for last hour sellers.

US futures are down. The NASDAQ futures are down just over 2%. Subsequently, the Q's are going to gap down this morning. We'll probably see some channeling, and some downward pressure.

I am optimistic though, the markets will retrace down, test prior support, and head back up to try and break the resistance that has seemed to form right around 33. If we can break that I'd be happy. I am going to stay long for now, no major news to think otherwise, and market sentiment is slowly shifting.

LIBOR and Futures

The London Intra Bank Overnight Rate has dropped below 1%. The credit markets are indeed starting to thaw. The Fed cut rates and European and Asian indicies are up. Futures are up.

High Options volume for yesterday was the QQQQ Nov 34 Call.

It appears as sentiment is changing. There are still sellers in the market, don't doubt it; but, there are signs of mild improvement.

I am still long a spread on the Q's with my original target rate of 34. I'd like to see that target hit by weeks end, but am prepared to wait it out.

Q's

The markets rallied the last two days, and with the announcement of the Fed rate cut, they jumped sharply only to be met with vicious selling.

Perhaps we'll see more selling, but I am looking for a continued move downward, and eventually a track back up.

We're still working on purging the last of the sellers from the market.