Recent market action

Sorry for lack of posts lately. The market basically moved nowhere since my last post which is boring and not encouraging. The only thing moving in this market are the small financial junkies, like C, FRE, FNM, CIT, AIG etc. Those are good for day trade only and too volatile to be considered swing trading.

So are we going up or down from here? I really have no idea. The bulls could say we broke out and now we are just resting. Even China's over 6% drop could not bring us down today. The bulls reversed the earlier weakness nicely. In the mean time, the bears could argue that the recent breakout was sluggish and we lost China, the biggest economic driver. The breaking out stocks are getting leaner and leaner.

Both sides are reasonable. If I have to choose a side, I think the bears have a chance, though the bears have got killed many times this year.

NASDAQ

I was bearish earlier this week, but I guess the market is playing with me, now it looks like a bear trap. As a trader, you gotta be flexible. I am long some FRE and C from yesterday.

Finally the internet is fixed in China

Due to the earthquake in Taiwan, the internet in China was cut off for the last 4 days. I could not access the foreign sites like Yahoo, MSN etc. Today it is finally back to normal, which makes me feel so GREAT! And I just realize how my life turns out when there is no internet. My life sucks (hope she does not see this!)

Still in a trading range

I don't see a nasty sell off for now, maybe a decent pullback to 1830 at most.

Hedge fund bought BAC

John Paulson's hedge fund is reported having bought 168 million shares of BAC during the 2nd quarter. Do you think you can profit from this almost 2 months' old news? I highly doubt it. The retail investors are probably holding the bag for him to cash in. I think this is just another sign of the top.

But why I am not excited

On this weekly chart, the NASDAQ is right at the resistance. I don't think it can break through it this time.

Transportation index

It is breaking out!

Hard to be a bear right now

With the strength of banks, it is hard to have a bear case.

Update: LEN

LEN still climbs.

CSCO-the party breaker?

Panic button

I am concerned by the speculation on the small cap stocks and I also think the uptrend from March is due for a break. I used the "panic button" today and closed most of my long positions. I will watch from the sideline for the rest of the week.

Lesson from Sol at Xtrend

Among the investing bloggers I regularly visit, I have a lot of respect towards Xtrend gang. The main reason is they correctly predicted last year's crash and made lots of profit from it. Trader Sol grew his account from 350k to 4 million at the end of last year. Today he announced he blew it off.

How can a good trader like him lose it all? I conclude 3 reasons from my observation of his trading this year.

1. Fighting the trend. He has been shorting this market all the way up from March.
2. Picking the turn. He has been trying to pick the top from March.
3. Being stubborn instead of flexible. Though we are in a long term bear market, the inter medium is clearly up after March 23rd. Being a trader, recognize it and go with it.

And best luck to Sol, hope he learned his lesson and recover himself from it. He can be much stronger.

Banks still lagging

Even with recent strength, the bank index is still lagging on the weekly chart by looking at the the down sloped 30 week moving average.

Dow Jones weekly

Dow Jones is at some sort of resistance too.

NASDAQ at resistance

I think we should start closing long positions. It is clearly at a strong resistance. If this is a bear market rally, which I think it is, the downward trend line is too heavy to break through.

Update: HOV

It reached my target today, with 35% profit.