Trembling Hand Trader

Yep, I told you!

As the chart below shows the big boyz are back and pushing hard. Yesterdays action was nothing short of amazing. And todays wasn't bad either. Don't tell me I didn't warn you.

Following the push

My last post was about the games the heavy hitters were playing. Since November last year it was painful obvious that the big money was pushing down and hard. Any sustained bid would eventually, if not swiftly, be overwhelmed by a mass of sell orders. Which lead to a record breaking 12 down days in a row and nasty 25% fall in the index. But things have changed. Bids are not only getting stronger they are becoming successful in lifting the price. Monday the 21st of April, as per the last post, I think was a warning shot to the bears that the game was shifting again. When you look at the increase in Open Interest you can see the trouble the Bears are now in. 45,000 contracts have been opened in the last two weeks at a rough average of 150 points lower. That adds some nice pain to the shorts and gives the Bulls the upper hand. It will be interesting to see how far they can stretch the rubber band and where they start to off load. Its always dangerous to read to much into the Open Interest figures for the SPI but the little break we have had has been a classic lesson in a large volume push. It started with a trap for the Bears as they tried to print a lower high then the next day, as per last post, a very aggressive buying day. Then a little bit of unloading and finally a push and break above highs into the squeeze zone. Will be interesting to see if the Bears take this one on the chin and cover or try to push back into the old range below 5670.

Big Boyz Games

Yesterday was an unusual up day on larger than average volume. Of course we have given back yesterdays range in the first hour but the aggressive buying is a warning shot. That level just under 5700 will be a line in the sand. The bulls will be gunning for a weekly close above that and the Bears have a clear line they need to defend. I get the feeling that it wasn't the locals swinging yesterday but more the big Boyz who like to play the game for longer.

Safe no more?

In time like this when not only is the shit hitting the fan but knocking it right off the table, things that once were safe become dangerous. As the nasty reversal in Gold has just illustrated. Yes the US dollar is about as strong as the Zimbabwean dollar but its not always about Fundamentals. When things look scary such as now and when a market falls in love with something like gold *when* the break comes it can be very damaging. This is probably not it as we all know this thing will be worth $2000000000 soon right?

A gap to fill

As hard as the Bulls have tried they just cannot fill the gap over 5465. Even with the rest of Asia up over 2 % there is just to many offers stuffing the run. Not to say it will not fill. If it can get into the 70s you would think we will get a bit of short covering but when? Everyone has seen it there and I'm sure there will be some fireworks to come. Bears have a lot to defend and probably the stronger under 5460.

Couple less fingers?

So your thinking of catch some falling knifes? Done it before worked well and now your armour is stronger than ever before? Fine just as long as you can with all honesty say that nothing has changed since it worked last time. If it hasn't then its the same trade. If it has then dip buying THIS TIME isn't the same trade that worked before and the chances of it working again are less. After five or more years of gains we have become programed to buy the dips. But we are not in the same environment of the previous five years. The game has changed as soon as we started to put in lower highs. It started in the Finacials and now its got hold of the XAO even with the strong Materials. Someone will pick the bottom for sure and they are going to feel great but thats not what this game is about. It making money when the time is right and not losing precious capital when the chances are staked against you. When we are making lower highs the chances are obviously stacked against you.

Bloody Short Sellers

Over on the business spectator they are beating up a storm about short selling wrecking the wealth of good honest Aussie Punters who have "invested" in shit, near broke companies with immoral tactics like short selling. What a bunch of whingers. They want to ride the Bull train hedge fund momentum on the way up but as soon as their ponzi schemes get busted they turn into socialist. They want the government to stop the Bear raids. They can't believe that someone can legally sell a company that is overvalued. Would they like a one way market? I'm sure they would but then they wouldn't be able to pimp themselves to sell their crap bull market reports. Wouldn't it of been nice had they with all there knowledge and contacts shared with their subscribers the fore coming problems the way over leveraged companies were facing? But no they didn't they were busy chewing on their own Bull Market Cow excrement. I guess thats why they pimp news letters, those that can trade do, those that can't sell yesterdays news.

Alan Kohler & Bob Gob get some sleep your starting to look dumb.

Clearer but not all clear

Well the Fed chief has shredded his creditability buy flipping to growth worries. And its saved the US markets for now and probably ours but as I have said for a while things have changed and so should your plans. Its no longer buy and forget. Its buy and flip then short and cover. Any rallies here for some time are going to get dumped on by the trapped longs and the now in control shorts. Remember we need some sort of retest with a higher low before we think about starting a new uptrend. A rally for a couple of days is a reason for caution not celebration. Higher low will be the point to celebrate.

It has to be said where are the big funds and when are they going to flex their considerable muscle. Surely they are not going to be happy with matching the index at -20 + 1.

Have a look at the momentum oscillator. It has been worrying reading for over a year now and other than its way oversold reading there is not much to be happy about. As I have pointed out we have been getting great rallies from these meltdowns but thats it. We reach back up then work off the overbought reading then its all over. Less and less participate in the rallies. If you want to get bullish again on the market this thing needs to get strong and stay strong. but it won't it will just roll over again.

The end of the world?

Well you have to think something nasty is getting priced in here. And if it doesn't eventuate we are going to rally hard. But Boy oh Boy this is nasty. Imagine the state of all the margin accounts. I have a friend that had a 1 mil buy and forget margin portfolio. Now its buy and forget half a mil and still falling.

this is not a bad dream

Can you believe this crap. UK down more than 5%. The SPI down about 4% from its close. Boy I covered my short hedge and went long at 5450. Which was only 100 points to soon. Was stopped out but back in on the long side again looking for a bounce back towards 5500. If so will be a good week and its only Monday night even with the shitty stocks I'm still holding.