Today is February 4th, and we finally got a move up.
It has been a long time since we have had a move up and it sure is welcomed. I had gotten that feeling that we would rally today, when I heard Obama say that Americana’s with the means should consider to buy stocks. It is not very often that you will hear a sitting president, to buy stock in the market. I think he got tipped off by Goldman Sacks. If we do get a rally, everyone will be saying, “see, Obama told us the bottom is in and we should buy stock”. Knowing how people think, heard mentality, people went out like good little citizens and did what they were told, buy stocks. I am being a little sarcastic and maybe I should not be, but I can not help myself right now. I do not ever remember a president making a market call like this today and I have been following the markets for 25 years. Oh well, there is a first for everything.
The rally was welcomed, I am sure by all. I thought yesterday, that as the market closed close to the low of the day and Tuesday is the day that the sentiment numbers come out by the news letter writers, that the numbers must have dropped again, which is good news for the bulls. I will post those numbers tomorrow, because I get them two days late. I am not a subscriber so the best I can do is a little delay, I will take it. My guess is that it dropped 3-4 % to 23 or 24, with a reading under 35 as a traditionally a bullish signal. You need to remember, that all of the times we were in more or less, normal market conditions, these readings were very very accurate. But as we find ourselves in this massive sell off, which has happened before, like in 2000, sometimes the readings get stretched to extreme levels before the market reacts. This is such an environment currently. When the numbers got to the mid 20’s, we had a big market bounce off the bottom in November of last year. Since then the numbers started to rise and are now getting back to what they were before, pending Thursday’s reading. So, I am thinking that we may be in for a bounce up for a few day’s. In addition, I heard a lot of people starting to say that much lower levels are coming, like now. When you hear people on TV and Newsweek, Time, etc. saying the same thing, look for a move in the opposite direction. Those people are rarely right and it usually can pay to bet against them. With all that being said, the current trend of everything is still down. Let hope we get some follow through this week.
The market did sell off just at the close, by 100 Dow point and 10 S&P points, in just a few minutes. That sure was not good, so for tomorrow, look for a continuation of the pull back initially and watch for a rally back up. It is possible that we could get a few days of consolidation at these levels to give us a better footing for an up move, but we will just have to wait and see.
Yesterday, I made a comment about the Pension Funds being underfunded and I found a chart of just such a story, explaining the facts. Below I will post a chart of some of the underfunded companies that are having the most problems. Over all, I hear there is a $ 409 billion dollar shortfall in the pension funds right now. Last year there was surplus and now, a big underfunded liability. These companies have some time to make up the difference but if things do not improve soon, it is really going to hurt. They are regulated by the government to make these pension contributions to cover future retirement obligations. They are currently only funded to 60%, which leaves them 40% short. They are going to have to take more of there earned income and kick in a bunch of money to make up the difference and that is going to hurt earnings potential. On Wall Street, its all about the earnings. “What have you done for me lately”. That is an old saying in my family and is appropriate for the current situation hear. Oh, the reason for the big shortfall, is that a lot of these companies invest that money in the stock market and with valuations going down so much, it is putting a big strain on there balance sheet. This can turn into the old snow ball effect, if things do not turn around soon, lets hope. Just reporting the facts here.
In my day-trading effort, I only had a limited amount of time to trade and did so for only 15 minutes in the morning. I did get my daily goal with all gains. I placed 5 trades with 8 exits in the morning and as I said all were gains, nice. I found a few minutes in the afternoon session around 11 am and traded for about 25 minutes and added nicely to my gains. I posted around $1,300 for the day with 22 pieces of profit and 3 losses, 88% . I started out with a 1 point gain on 5 contracts for $250 profit, then started to reduce my size, played it safe, because I had a limited amount of time. If I had draw downs it would be harder to come back, not having the time. It worked out just like I wanted and so, I chalked up another days worth of gains. I think I am now about 30 days in row of posting solid profit every day, no loosing days. I had many days of profit before that, but in the last week of January, I started to post every day, no exceptions and it has been going great. I have had struggles and came close to my daily loss limit, where it is, that I will have to stop for the day, but my streak is alive and I plane to keep it that way, by trading smart and following my rules as best I can. Below is an equity chart of the days gains and a chart of some of my trades in the 233 tick. I am taking these trades in the 100 tick, but I am looking at other time frames to give myself a larger view and perspective.
http://www.screencast.com/t/E8oNvlEsc6r Today’s equity chart
http://www.screencast.com/t/KTX51dkd Some of today’s trades in 233 tick
http://www.screencast.com/t/dOBUnSMx Chart of, some company pension shortfalls
http://www.screencast.com/t/MAWnN1pts7b Day trade chart of IBM, my promise from yesterday
Related posts:
- Called Live, Short Term Top In Today’s market.
- Sentiment numbers stronger than expected
- Federal Reserve takes drastic step, Buys 300 Billion in Treasuries
- Training series / First in a nine part series
- Interesting Trading Lesson Today
Tags: 100 tick, afternoon session, bullish, buy stock, contracts, daily goal, daily loss limit, Dow, equity, market bounce, Market Call, rally, sell off, stock market, tick, time frame, Wall Street
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