Dramatic Change in Opinion BOT Long at 1172

Unfortunately I have to raise the white flag on the near term bear case right now.  I expected the market to show near term significant weakness.  The bears once again failed at their job.

I am very concerned now about a huge upside move in the market.  The QQQ has been very resilient.  The bear flag is now a non issue and is too mainstream.  The bear flag is destroyed.  Even CNBC is talking about it.  Now it cannot happen that way.

The QQQ has an ascending triangle bullish structure and AAPL looks like it is within inches of blasting to new all time highs.

The bears had the ball today and fumbled.   How pitiful.  They just can never seem to get the real job done.

Now this market is at risk of a huge rally into QE3.

I am issuing a BOT long signal now at sp500 1172.

One of bigger problems is that while Europe indices have been getting crushed, the USA indices have not been crushed.  Instead they have held ground quite well.  This is a sign of strength.

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13 comments on “Dramatic Change in Opinion BOT Long at 1172
  1. Neal says:

    Tom:
    You wrote that you have to raise a white flag and that “the bears once again failed at their job.” Once again, as I’ve said many times, the function of the bears is to fuel bull runs. The corpses of the bears are, in fact, serving the market machine very nicely. But, Tom, you’re apparently a numbers man, interested in charts. Do me a favor and consider this: aside from the statistic I previously mentioned that after every initial reading of a VIX of 40 or above the next month there is on average a 9% S & P gain, here’s something else for you to scrutinize: The daily S & P chart from August 7th to date, despite the whinging, whining & complaining of the would-be bears, has been quietly forming an ASCENDING TRIANGLE WITH HIGHER LOWS! The 1100 low of early August was an exact 38.2% retracement of the run from S & P 650 to 1350. In other words this is a correction/ consolidation, not the meltdown you and many of your readers have been so eagerly anticipating. The more I read of this blog the more I get the feeling I’m in a den of wounded bears. By this I mean traders with a bit of capital left after taking maulings in 1987, 1999, 2001 and/ or 2008. Only Geoff has been responding to me when I assert categorically that the big boys run this casino and you that you “card readers” cannot possibly beat them at the game they control. And my advice for you frustrated bears: take up another sport than bull-baiting!

  2. Tom says:

    Well yes I agree with you that they do control the game a lot but you must agree that they had lost all control from 2007 to 2009.

    Since 2009 they seem to have it still under control.

    Anyway this is a short term BOT long signal that may evolve into a more important bottom signal but for now I had to give my nod to the bulls.

    It is true though that the government and Fed are a tough crowd to bet against for an extended period of time…

  3. Neal says:

    Tom:
    2008 came damn close to a bank meltdown. 2008 and 2011– apples and oranges. in 2011 we’re not in financial armageddon here, not in any way, shape or form. In any event, panics, whether justified or not, can be very profitable on the LONG side. That is if you haven’t blown your working capital trying to kill the big boys by firing your puny little short ammo at them. 2008 was a beautiful time to BUY extremely high yielding investments, and 2011 isn’t very far behind on the LONG side. But I can tell you with certainty, tying to scalp short-term positions in this whipsaw environment will eat up your remaining capital and throw you out of the game for good.

  4. KT says:

    Global_Macro on StockTwits has this to say: GRiD indicates that Risk to Equiy Markets ( $SPY $DIA $OEF ) increases sharply after 11:50PM , Sept. 13th, 2011.

    That’s his latest post.

  5. Geoff says:

    If past is prologue, this blog site will be wrong again. . . . totally wrong. suggest that readers do their own thinking and analysis PERIOD.

  6. RMT says:

    Neal,
    Your seem to have made a back-handed slap at traders like myself, so I’ll take a moment to respond. First of all, we all know that trading is difficult and all have taken losses at some point. Call it bull baiting, card reading, or whatever you will, the bottom line is that we are all trying to make money. I have a neighbor who is 66 years old. In 2008, he lost 40% of his 401k and had to postpone retirement. Now he works as a cashier at a local gas station. I’m sure there millions like him who lost money during the housing bubble. There are millions more who lost money during the tech bubble. If you had bought stocks five or ten years ago, most likely you lost money. So the traditional “buy and hold” isn’t full-proof either. Traders don’t care where the market goes. If you can win 7 or 8 out of 10 trades and limit your losses on the other 2 or 3, then you will be a profitable trader over time. Fortunately, I’ve been able to do that. yeah I lose money on trades, but I limit my losses on my losing trades. In one of your earlier posts you had mentioned LTCM. Well those traders at one point were billionaires , yet they managed to lose it all by compounding their losses. They are a perfect example of how NOT to trade. THe purpose is to make money and once you are in the profit, then you must protect. I look for signals that confirm my theories and try to put the odds in my favor. I don’t try to break the bank on any trade, instead I look for small gains and over time it sure adds up. Everyone has his/her own style of trading. You seem to favor the more traditional “value” investing. If that works for you then good for you. But trading and investing are different things and takes completely different mentalities. Successfully Trading is probably one of the most difficult things to do. But it is possible to be a successful trader; trust me I personally know a couple of highly successful traders. It’s a skill that very few can attain, but if one can do so successfully, the pay off is worth the risk. No one here is pretending to have any great insight into the future. When we make predictions its usually on very short term basis. We aren’t predicting an end of world scenario when we go bearish. No one here should be a “wounded bear”. I’m bearish but I”ll be happy to take a long position if the markets prove me otherwise.Yes shorting is more dangerous than going long because amateur trader are inherently disadvantaged. but nonetheless, its possible to nibble around at the feet of the big boys to make some money.

    Tom,
    As far as the charts are concerned, I think going long after a two day rally during options ex when we haven’t any broken any kind of technical barriers is an atrocious call. I guess its all about discipline, which Tom you don’t seem to have. Geoff’s analogy of a squash player chasing a ball seems quite accurate. If you really want to go long, look for an ultra bullish set up and by on the dips, instead of chasing. If you don’t mind me asking, do you actually put your own money on the line when you make these calls?

  7. RMT says:

    One more thing ( promise it will be my last post today), on a macro level, we’re probably in a worse situation now than we were in 2008. Fundamentally, we’ve solved very few problems. All we’ve done is increased our debt substantially and we essentially have no more bullets left to counter another crisis. If the Fed does dish out another round of QE, we’ll probably rally short term, but that won’t fix a dam thing in the long run. Germany and France came out with GDP numbers a month or so ago, and they are basically a rounding error away from officially being in another recession. Its a huge mess right right now in Europe and bailouts are like a quick band-aid fix. More easing in this country will lead to massive price increases for commodities like oil, which will hurt growth overseas and hurt American consumers here at home. One can argue that profits are strong, but companies in the SP are also sitting on record amounts of debt. Much of the record profits have been financed by low rates. We still have structural unemployment problems and housing still hasn’t bottomed yet. Look I’m not a doom and gloomer. But I’m trying to look at things practically, and things aren’t too pretty right now. There are solutions to all of the problems I’ve described above, but the solutions are tough and I don’t think the political class is willing to act. So yeah 2008 and 2011 are apples and oranges….2011 crisis might be a whole lot worse than 2008.

  8. Geoff says:

    RMT

    your note to Tom in comment #6 deserves an answer. i hope you get one. i have asked the same question many times., e.g. does he invest his own money in his predictions. i have also asked what his credentials are, e.g. education etc and how he gets remunerated by this blog (i guess it is on number of clicks on site and / or specific ads that appear here)

    your other comments, summed up by saying that we may be worse off now than in 2008 – – totally agree.

    i recommend that readers check out http://www.zerohedge site. the person running the site is very sarcastic but site is free and articles / comments loaded almost hourly except during night / early morning. in a posting of about an hour ago, he or author suggests a potential buying frenzy based on high short interest, but that is only one indicator and so often i have seen the market go strongly in one direction only to reverse course and go equally and more strongly in the reverse direction – – overall zerohedge seems to me exceptionally pessimistic that the world can get out of this fix without considerable pain

  9. ed says:

    Will continue to hold long until the end of this week. Unless otherwise indicated, I will go short the market at this Fridays close

    I EXPECT NEXT WEEK TO BE THE BEAR WEEK OF THE YEAR

  10. JR says:

    I enjoy this blog because there is so much banter going on.
    I certainly don’t use this blog to influence my plays in the market. I look at the market as a game.
    A fun game. Yes there are a lot of really sharp people who are trying to game the market.
    But there still is room for the little guy.
    As I mentioned before after the dinosaur extinction back 65.5 million years ago. It wasn’t the big fellows that survived but instead the little ones inherited the earth.
    I notice that the big hedge funds that make their moves every nano second are recording gigantic losses this year.
    I don’t know about the rest of you, but I have had a great year. I move in and out sometimes in a few days, sometimes longer.
    I pick my spots and do not play the general market or the ETFs.
    There is still a place for stock picking.
    You can pick stocks that are sick and do poorly when the market is down and you can pick really healthy stocks for when the market is up.
    So far we have had a lot of movement up and down in channels, the channels offer guidance in when to be long or when to be short.
    Tight limits do protect from excessive loss and letting profits run works when things are going right.
    These are old fashioned ideas but they still work!
    One last word, avoid absolutes.

  11. Tom says:

    Sometimes I do take actual positions based on what I write about. Sometimes I don’t. Today I did get rid of SQQQ and went long TQQQ.

    I realize people don’t like it when I change my mind and change from BOT short to BOT long, but the chart of the QQQ to me right now is saying BOT long and so is AAPL, so would I be nuts to stay BOT short especially since the charts never lie ?

    As I have said many times before there is always a bull case and a bear case even if the current direction seems very persistent.

    Throughout this entire decline AMZN and AAPL charts have bothered me very much because of their resiliency. I would like to be bearish, but I have to make the signal based on what I see, not on what I think.

  12. Tom says:

    If we close above today’s high in the QQQ then it will be a MACD histogram buy signal and a breakout from a down trend line in force since late July 2011 (when BOT issued a major BOT short signal) and it will also be a breakout north from a compressing symmetrical triangle formation with an implied measurement of 60 which would put it back at the old highs.

    Today was THE day where the market had a chance to initiate a crash or a massive break down. The daily MACD was about to curl down and the bears should have taken the ball today…

  13. KT says:

    I have only been following this site for a few weeks, but it seems like Tom’s calls on the immediate direction of the market have been accurate. He was quite accurate for Wednesday, Sept. 14! I am sure if he sees bear signs again he will inform us. Maybe it’s best just to look at his immediate calls since he seems to go back and forth on longer-range ones.

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