A Bottom May Be In, For A Long, Long Time.

All we needed was a little confidence in the market. The government is doing everything they can for us, right? The Libor rate is falling, that must mean everything is getting better. But that all changes with the release of a handful of emails between employees at some of the major rating agencies.

I think must of us knew the credit rating agencies were on the take when it came to this mess. But to hear it, and have politicians grilling witnesses on it, is another story. In my opinion this will start a new run on the hedge funds and we may still have Mutual Funds that will liquidate large blocks of shares at prices that will drive us all down.

For that reason I will continue to stay out of individual stocks. All of the signals for the Indexes show we are in a downtrend. With big sell offs like we had today giving us an oversold market, we can probably count on a dead cat bounce rally. But don't be fooled, we are not only going to test the bottom but in my opinion we will set a new bottom. Luckily we have options as traders to make some money on the move, it just might be tough for some of you to sleep at night leaving double short index trades on the table at the end of the day. Remember, that a lot of traders will take the trade off and accept a lose if any trade is down 8% or so. You pick the number.

So let's keep emotion out of it, trade the trends and ignore the stockpickers!

Testing The Bottom Again!

Another 733 points down on the DOW today. Must have been some politicians on TV today! But in all seriousness, this should be enough for everyone to understand that any benefits that the government "interference" will have on the economy or our markets, will be slow in coming.

If we are back to trading on fundamentals it will be a sad fall trading season for traders of individual stocks. I hate to bore everyone, since everybody loves a great stock pick. But this is no time to own individual stocks. Or at least not for long. Very few professional traders are holding any stocks right now. Are you so much better then them that you can know where this thing is headed?

For now I am sticking with what I am now calling [remember, you heard it here first] the "Slingshot Trade". When we become so oversold it is pretty easy and you can almost throw a dart at a list of stocks and do pretty well. For now we are sticking with trading the Ultra Shorts and the Ultra Longs, [DXD, DDM, SDS, SSO, QID, QLD] including the DUG and DIG on crude.

If you are not familiar with these it is time to get on board. We bought the DUG last night and sold it at close today. I'll let you go do some research and the math. We are continuing to short crude for now but that doesn't mean that we won't go long [DIG] one day if we have a catalyst that will turn us around for a day. And with the movements [down] that we have had it doesn't take much.

With us down 733 on the DOW we may be testing the lows of last week. So if it falls apart again tomorrow look for this thing to rip again as buyers flood back in. We'll be right back in the DDM as we get under DOW 8,000.

Good luck tomorrow, you better strap in!

Forget The Fundamentals, Trade The Trend

I think I feel about the same as every other trader right now, hung over. It has been a tough week or two for everyone. But as I have said in previous post we can control our anxiety and stress by formulating a plan and sticking to it. Even if it means sitting on the sidelines for now. But I don't think you have to. There is money to be made.

We are at a point where we need to forget the fundamental technical analysis and trade the trends using catalyst for our buy and sell points. I am tempted to say don't buy any stocks right now, but that wouldn't be right. There is best of breed companies that are getting knocked down to levels that I personally have to add to my positions on. I am adding to FCX and NOV just to name a couple. But I am still sticking to my plan to sell them on every rally. Until we get some consolidation in this market I will sell every rally then turn around and short the market using the QID for the NASDAQ and the DXD for the DOW. Most likely this week it will be the DOW with the levels that the NASDAQ has reached.

Now that the "bail out" vote [yes I'll call it that] is done what is our next catalyst? I think it will be the Federal Reserve lowing the interest rates. The Street seems to be betting that if financial markets remain unsettled, the first rate cut could occur before the Federal Reserve's next meeting on Oct. 28-29. Some are saying as early as this week!

The trend is down no matter how the talking heads want to polish this thing. Stick to your plan, take your profits and don't trust this market.

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The Ostrich Trade Still Won't Work

I am sympathetic. With a market like we have right now it is real easy to just pull the covers over your head and ignore everything. But there is just as much money to be made right now as there is at any other time.

On Wednesday I bought the QID, the QQQ ETF that shorts the NASDAQ 100. I sold that at the close of trading for a tidy 9 percent+ gain. That's almost 10 percent in two days. Now I don't know about you but that is as good a trade as I can get even in the best of times!

So my stock tip of the day....forget the stock trade and trade the trend. Right now I think every smart trader out there knows we are headed further down. I for one am holding to my goal of DOW 10,000 and we my continue down through that. But with the sucking sound of money coming out of Washington with the vote today we are likely to get a pop on all three indexes.

If we do I will either pick up the QID again or more likely the DXD, Ultra Short DOW 30 since the NASDAQ has been beat so hard.

So pull back the covers, stick to a plan, forget the stocks and trade the trend.

How Many Times Do I Have To Say It, You Have To Have A Plan

So how many times do I have to say it. You have to have a plan. Trading is a business and just like any other business you have to have a business plan. I know there is a lot of traders out there that think there is "a plan" that all traders use. But like any other business we are all going to find ourselves fitting into a niche that fits our trading styles and personalities. Even if you are a beginner, you must develop your style and your plan.

I ended the last 15 minutes of today's trading with 5 trades. There is no way that I could execute these trades in that time if I did not have a specific, detailed plan. And I even have to write out the numbers and tickers on sticky notes and put them on my computer monitor. I am jealous of you guys that don't need to do that, but for me it works.

By the way, those 5 trades were selling off UPL, FLR and NOV all up about 10%. I then bought the QID Ultra Short ETF at $54.95, then placed a stop/loss at $49.00. I am sticking to my plan of selling into strength every chance we get and that the trend right now is down.

Good luck to everyone tomorrow! Now let's take some time to relax.

Sell Every Rally At This Point!

After a day like today it is tough for most of us to poke our heads out without fear of getting it whacked off! But we can't do that, we have to develop a plan and go to work. I would be lying if I said I haven't taken a beating on some positions but there are some plays working. And one that I think will continue to work is the QID, the
UltraShort QQQ ProShares ETF. We are going to get a couple of dead cat bounces here but until there is a deal signed in congress we are suggesting that you sell every rally and find a buying point in the QID. The trend is down and without any help from congress we will move down to and possibly through DOW 10,000.

Get your plan together, the Ostrich trading plan never works!

Sold 50% National Oil Well Varco - NOV

Well that didn't take long. As I posted last week I took a major stake in NOV [National Oil Well Varco] and Friday September 19th I sold off 50% of the position when it was up almost 14%. I expect this to go higher along with the rest of the oil services sector but not only am I going to take profits when they are there, the market has gone up so far, so fast, that we will get a pull back this week. We'll buy more at that time.

Because of the run up we will be looking at the ticker QID on Monday. The QQQ ultra shorts. We will be looking at resistance at the 200 day moving average. If it holds in the $38.00 range we will BUY!