Yet another rollercoaster ride this week to bring us 60+ handles up and down to end up on Friday basically unchanged. Technically speaking, the markets are breaking down and the lows are nowhere close to being put in for the year. My guess is that we will continue to play this rope-a-dope for another couple weeks until the EU can no longer give us “good” rumors. Speaking of rumors, that is basically what the markets have moved on the last 2 months, it only takes one person to say something completely untrue to move the ES in a ten handle range within a minute. How do you expect to make money when the game is rigged?
The third quarter ended Friday and it was the worst quarter since Fall ’08. Broad markets down 8-10%, small cap Russell 2000 down 20%. I honestly would not be surprised to see continued downside and heavy selling into the closeout of the year, granted the Fed does not step in. You can all very well see that out gov’t has done absolutely nothing but put a band-aid on a gushing wound twice. Right now, we are slamming it down because this is what should have happened 2 years ago. We would literally still be at S&P 700 if the government did not intervene. Unemployment is worse, banks are still in bad or worse shape and still losing money, jobless claims still printing above 400k, Chicago PMI, Philly Fed, consumer sentiment, etc. all multi-decade lows. Those of you who buy on these slams, especially the banks, good luck with that in the next few months because we won’t be seeing a next day ramp; it might work now because investors are so confused. The problem with banks is they are not at all benefitting from the low interest rates set by the US gov’t, while still suffering from the housing crisis. Read this great piece in the Fiscal Times written last December explaining how lower interest rates can be beneficial to our economy: http://www.thefiscaltimes.com/Columns/2010/12/17/Rising-Interest-Rates-Really-a-Bullish-Sign-of-Recovery.aspx#page1
Alright, that’s enough of my view, back to what happened last week. As I was saying, we moved quite a bit but still stayed pretty tight in the range. 1,130 held support this week, but don’t trust it next week, we have a lot of data coming out, especially the much anticipated September jobs report. As you all remember, August’s was not very nice at all +0 with revisions negative. This one may very well be negative, and I’m going with the fact that it will be a loss; we will break below 1,100 by Friday. We are literally at the breaking point.
An updated ES chart showing what happened this week from last, once again we literally did not move, just some huge swings. Also, drew in some predictions which I explained below.
What I see happening in the ES this week leading up to the jobs # is a nice ramp to start off Monday on an oversold bounce, close at or near highs, Tuesday unch to slightly neg, Wednesday open lower, move up midday then 3:00 slam to lows, unch to positive Thursday and Obliteration Friday.
If you look at what happened last month, exact same thing.
As some of you may have noticed, I have been completely off Twitter for a week now. Got three test grades back and they were not the best (72, 76, 80, one of them Economics) nowhere close to where I should be, figured I was spending too much time on there so this is just an experiment; I will probably be off for another week or two, I need a break anyway lol. I was active at the desk this week though. Before I begin with Eastman Kodak’s huge plunge Friday, let me say that yes I did buy some at $1.50 and I’ll explain. Basically this is probably the biggest spec stock right now, no one knows exactly how much their worth, but I saw an opportunity for a bounce above $2.
Notice how back in early Aug we saw a dip, then recover. Friday’s move was very very overdone strictly on rumors of a bankruptcy filing. Even in after hours, they are back up to over a dollar, but whoever bought it at .54, congrats you just doubled your money in 2 hours. Still waiting it out for now.
Got lucky on Ener1 $HEV on a slam Thursday. Broke below the .12 pivot Thurs, bot at .1 and sold out at .14 on Friday made $60 bucks, so that would negate out about 2/3 of my loss on $EK this week.
Not much in the way of reports this week, going to stay pretty quiet until mid-term exams are over with Friday, then get back to it next week when Q3 earnings come out. Good luck everyone and stay safe.