Thursday, April 30, 2009

Speculate This!

Thanks to Evil Speculator for explaining the rules for bear markets and bear market rallies:

Bear market rallies continue on bad news and reverse on good news.
Chrysler is filing for bankruptcy. Normally, that is bad news... but my GM stock went up in sympathy. Uhhhhhhhh, Y-e-e-e-e-a-a-a-a-h-h-h...

I also discovered another conspiracy theory: that the bank stocks have been going up so that the bankers can have some equity to back up their lending and other witchcraft. I think it's rather that the $750B Christmas Bonus given to them by Congress is being realized in the stock price, and not the other way around. The banks have all this money for lending, but they're using it instead to keep the employees (at the top) happy and to save for a rainy day. However, it's been raining for over a year, and the housing, mortgage, and forclosure notice numbers all seem to suggest that the storm is only getting worse. I'm sure this bank fiasco will all make sense 3 years from now when we look back and the truth is slowly leaked out in the back pages of the 2 or 3 newspapers still printing on real paper.

Other talk is that the Market Makers are whipsawing the prices and destroying the average/noob trader's equity accounts like a whipsaw through a noob trader's account, and that there's not much volume otherwise. I've been hearing for almost 2 years now that the "money is on the sidelines", people are waiting for the chance to jump in. Supposedly, only the institutions are trading, and so the volume is low. I don't know about that. I'm not sure what institutional volume is supposed to look like, but the volume levels on my charts look nominal. It's all noise, the real trading needs to be based on the charts and nothing else.

As for charts, thanks to Trader Stewie for pointing out this winner. He's got a new stock alert service with a free trial. I'm trading with my IRA, so I can't touch any money for another 30 years, and the rest of my paycheck goes to one of those big banks that got billions in bailout money... I guess that means my paycheck AND my tax money go there..hmmmm. Anyway, I'd like to sign up for his service as soon as I can make trading a more serious hobby...or job. I'd definitely recommend it!

XLF is showing an ascending triangle pattern. As much as I am still pessimistic about the banks, this chart is telling me that XLF is about to pop up again...long live the banks/financials. I'll be looking for a pullback in FAS to get in.

Update on previous holdings: I got into TNA today and was almost instantly stopped out as it kept falling. I got into my bear short, TMV, and it's looking good so far. This is despite the Fed announcing that it will buy back another $300B in treasuries by autumn. I had expected a correction, but it was short-lived as I have seen the wildest interday spikes in 30-yr treasury rates ever in the 4+ years I've been watching them.

Still holding GM and GSI in the green.

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