Back to BOT Long on the sp500

The market evaded any near term bearish signal yesterday and is now set up to tread higher above 1230.  There exists the extraordinary possibility that the market may turn the previously potential bearish monthly MACD histogram setup into a bullish one.

That would occur if we see November and December 2011 closes higher as up months and if the December month closes above the monthly high of November 2011.  This would completely invalidate the ultra bearish scenarios.  It seems to have a favorable chance of occurring given that we are in the traditionally strong end of year quarter.

This entire correction has simply been a Wyckoff retest of a previous breakout area whether we look at the Dow, SP500 or the NDX 100.  The retest is the most clearly seen on the NDX100.

Once again I think the most important lesson out of the last several months is that one cannot trade based on news.  And that one cannot trade on longer term time frames based on news either.  The Europe news all sounds extremely bearish, but the bottom line is that Greece falling into the abyss does not prevent me from buying a cheeseburger, a snow blower or an Iphone right down the street here in the good ole USA.  And strange as that may sound, the previous sentence describes almost exactly what we see going on in the USA markets versus the European markets.

The bulls win once again !!! And it is not recommended to keep a bearish bias into the end of the year.

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11 comments on “Back to BOT Long on the sp500
  1. Neal says:

    Tom, RMT & Geoff:
    I won’t annoy you guys with reiterating a list of political, economic & institutional reasons for a “bullish” bias to the market. You guys have my sympathies in your attempt to game the small moves of the market. It’s a costly game when you add up all your margin overhead, slippage as well as the cost of bum wrong-way trades. Alternatively, you guys without churning your stomachs could be earning a consistent 10% a year INTEREST in the right vehicles, doubling your money in 7 years without manic trading.

  2. Golfdude says:

    Sup fella’s-
    I do enjoy the input that you provide, however as of late it seem’s as if your entire opion is based on nothing more than how the markets closed the same day as publication.
    Maybe a look @ an intraday chart to use also, but for what it’s worth I’ve got to say that tecnicals in this market don’t mean squat, going back into the past to predict the future does @ times work,not so much in a market that has proven to be trading on nothing more than rumors and headlines as of late.
    Monday the S&P will close back @ the 1220 level, the breakout that is expected will come on the 1st week of Nov.
    After those cat’s in europe show the markets they’ve got a solution to thier problem. Remember it really has become a 1 worlld market like it or not. Neals got a good point to. I hold a couple high yield equities myself, but it’s more fun knowing I can beat the market – Good luck & enjoy your weekend

  3. Neal says:

    Tom, Geoff & RMT:
    I’ve noticed this website has gotten very quiet. I feel as though it’s early March and I’m standing at the mouth of a cave where the mama bear and her cubs are now hibernation. My point is that I suggest you be careful when you get the urge to come out again into the sunlight because you’ll find waiting for you outside the snowy entrance some very powerful three-quarter ton eight-foot alpha males who have nothing good in store for you and your offspring. It’s downright dangerous being a bear at mercy of forces beyond your control.

  4. Geoff says:

    waiting for the next posting of the “Cheetah” system

  5. RMT says:

    Neal,
    I’ve said many times that I’m not a bear nor a bull. I go by the charts and trade accordingly, a strategy that has given good returns over the years. THe SDS trade over the past month has been unbelievably good for me, but I stopped myself out on my remaining position last thursday and friday. I am effectively 95% in cash right waiting for another shorting opportunity. Just becasue I have a bearish outlook, doesn’t mean that I blindly short the market and hope for the best. I’ll play the long side if I see a good chart setup. But my bearish long term views stand, and I honestly believe we’ve put in a multi-year top in this market. SO no I’m not in hibernation. I’ve been doing some day trades for small scalps but now I’m patiently waiting for another shorting opportunity. I’ll look to short aroung the 127.5 level on the spy for a small pullback. Dont know how big the pull back will be, but anytime I’m in the profit on a trade, I take some profits or put trailing stop in place.

    But Neal, I have a cahllenge for you. Why dont you actually put some of your trades on here instead of repeating the same “wounded bear” mantra over and over again. It would give you more credibiltiy if you would your money where your mouth is and actually state your postion on the markets and let your record do the talking about

  6. RMT says:

    continued…(accidentally clicked “say it” button)
    ayways, my point is that if you are long the market, actually say so. Anyone who bought stocks 5 or 10 years ago probably lost money. If you bought stocks 6 months ago, you lost money.. SO good luck to you if going long and holding works out for you…But What is this nonsense you keep repeating on this blog?…Yes we all know that trading is dangerous but at least we are making an effort to be better traders and learning to get bigger returns instead of blindly going long…So from now on, please no more of your generic advice; maybe Geoff reads them, but I find it utterly useless. I have been quite succesful at what I do and will continue to do so…Thank You very much…

  7. Neal says:

    RMT
    First of all, I pay well for information on which I make my decisions. In other words free information, whether on this site or elsewhere, tends to be tainted and ofter worse than useless. Secondly, I would never consider posting any position or advice to a double clicker/ stock jockey whose time frame is as long as the distance to the tip of his nose. Of course my generic comments are useless to you if you’re forever prospecting for a hot top. I don’t know you and I don’t appreciate your rhetoric, and most certainly I have no intention of being useful to you. Frankly, if you were so successful I don’t believe you’d be proclaiming your conquests to a blog site.

  8. Neal says:

    Geoff:
    There’s wisdom in that advice, really. I think I’ll just have to remove the site from my desktop. It’s been way too easy for me to click on it and follow the ongoing saga, like a soap opera. Under different circumstances, we two could probably have a pleasant conversation about the state of the world, avoiding the state of the markets, over a coffee;. But this is cyberspace where nonsense has a way of escalating to its own reality.

  9. RMT says:

    Neal,
    I’m not proclaiming any conquests here; I’m just saying that it is possible for retail invetors like myself to be succesful in trading. Most of us on this blog are short term swing/day traders. I feel like every time you go on one of your rants, you’re actually taking a back-handed slap at people like myself, so I felt a harsh response was warranted from my end. I actually make an effort to share my thoughts and views about the market. You on the other hand repeat the same mantra over and over without stating your positions or provoding an alternative, and its a bit frustrating that you only come here after a mega rally…Where were your “mama bear” comments when the market was crashing 500 points a day a few months back? Obviously There’s no point in arguing here; we have different styles and trading obviously isn’t for you. But that doesn’t give you the right to spew your “wounded bear” mantra without providing your position first. Its easy to talk the talk, but you should walk that talk if you want to be taken seriously. At least I’ve made an effort to do so and if that’s somehow “procalining my conquests”, then so be it.

    When I first started following this blog, I actually took this seriously and made an effort to be a valubale contributor. But over the past few months, the calls made on here have been absolutely atrocious. I really only follow this for a contrarian point of view, and comment occasionally if i just can’t resist…but I just may take Geoff’s advice and stop all together.

  10. ed says:

    I think it’s a shame the way some people beat up on this blog. How many of you would risk putting yourself out there every day with detailed predictions for others to ridicule.

  11. Neal says:

    RMT
    You’re right. I’m taking a swing at retail short term traders and trading. They are distorting the markets by drastically increasing volatility. For example, look at the effect GLD ETF and compare trading gold futures today versus back in 2000. Now a contract is $7000 whereas then it was $1000– due to 700% increased volatility! And what’s my position? No way will I give any details of the analysis of these vehicles, much less specific names, but in general the double-clicker trader would be far far ahead of the game to buy into “crashes” 10% per annum vehicles that have been slammed down 30-40% and then and retain them with a 2-5 year perspective, collecting an aggregate of 50% in income. Unfortunately the average investor, whether retail or investor, does not understand compounding and the true cost of his trading overhead and has a time frame of a couple of quarters. The reason I have ben observing this blog is to get a better feel for the current breed of day traders. I thought the bulk of them got annihilated into extinction with the blowup of the tech bubble back in the late 90’s, but evidently I was wrong. The day traders are alive with the same aspirations for glory and fortune.

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