Thursday, October 6, 2011

Illogical? (updated 1045 am HST)

5:06 am (Hawaii) I missed it by a hair or two. FAZ rose to 67.00 this morning, but I didn't profit. Though I set the alarm, I fell back asleep and got up around 4:00 am. By the time I was online, FAZ was back to 65 and then sank from there. I got out at 63+ for a small loss, but what makes it illogical is that it fell $4 (and now almost $5) from that intraday high on no news. The closest thing to news was Trichet announcing no rate cut in Euroland ... which should not have been beneficial to bank stocks. Yet they are mostly up, including BAC (+3%). While the Dow went from +40 to +15, FAZ fell below 63 (currently 61.70).

BAC is up 4% to 6.00. That's what happens when you raise fees and bar people at the door from taking their money elsewhere. The market likes that? Apparently, yes.

For the market, this is a technical bounce maybe. But really not logical. And the price action on the 1-minute chart left me little choice but to get out. I'll take the near-term loss, but I may get my wish for FAZ at 60 or 55.

AAPL hit 384 this morning, which was no fun of course since I bought at 379 yesterday and sold below 378. AGQ is up 4% to 113. DGP up fractionally. I still hesitate to start a position in AGQ though it's been completely beaten down. Too much puppeteering by the banksters/naked shorters there.

Clearly, the past few sessions have been about "plunge protection" pure and simple. The HFT algo alien monster machines that rule the market have been programmed to insure that the banksters are protected even if they are publicly "shamed" by everyone from protestors to Joe Biden. Just a plain observation rather than a complaint. I'll get back in FAZ somewhere between 50 and 60 and appreciate the ride up.

Update 6:08 am Nice to step away from computers and water the plants, take in some fresh pre-dawn air. AAPL was up to 384 well before the market made its latest run. By then AAPL had fallen off its high of the day and is currently at 381.85. Not all the time, but much of the time AAPL leads the market. Precedes it, I should say.

FAZ dipped to 59+ where buyers stepped in and it's now at 61.23. I wanted 60 and I want 55, too. But I'll let his shake out for awhile. I'm not going to mess with a market that sends BAC to 6.10 after it was 5.13 a couple of days ago.

One thing is true: As I mentioned earlier this week, each time FAZ has a long white/green candle that is followed the next day by an equally (or longer) black/red candle, price declines for a few days. Sometimes several days. In the last eight instances, FAZ dropped significantly.

This will make it nine out of nine times since summer began. Also, FAS has gone from 9 to 11 in the past two days. The last two times it dipped below 10, it rallied to 15+ and 14+. In a sick, but predictable way, BAC may never go below 5, where many hedge funds will not be able to trade it (re: CEO Moynihan making TV appearances). That's likely why BAC at 5.13 (Tuesday) was an easy buy for some traders. But the digital bank run on BAC is not going to stop no matter how often they "crash" their own website.

MS below 12 a few sessions ago. Now 15+ despite the nearly $40 billion in toxic exposure (which they deny) to Europe. Sometimes, it's just about math and puppeteering by the banksters. I'm not against making a profit on them. But the evidence is stacked against them in the long term. They'll end up merging, ie the big banksters will win again with the exception of those that will be sliced and diced, like BAC.

Update 7:34 am Ominous? AAPL has fallen from today's high of 384+ to 375+. It's led the market so far today, so this isn't a good sign for the bulls. It's not altogether bad though. AAPL is down less than 1% for the day.

FAS drifting below 11.00, BAC below 6.10. These gains were strong but they're not holding and the Dow has gone from 100+ up to +66.

Update 9:02 am Dow is +120, Nas +31, D&P +13. 86% of my Regular watch list is green in a big way. XG +20%, MCP +15%, YOKU +14%, CHGS +13%, AGQ +10%, AMRN +9%, PSLV +8%, EXK +7%, BIDU +6.6%. A few of these are Chinese stocks that had been beaten down. The losers are bear ETFs/ETNs, but it's odd to see AAPL still among them at 375+, -0.7%.

Below is a look at FAZ on downtrends. Since it hit a high of 81 a few months ago, there have been plenty of moves higher and lower. Clearly, the less severe dips take the longest to play out. The quicker, steeper declines have taken only two to three sessions before reverse back to highs. This week's decline looks more like the steeper drops. I may add a few shares at 60, but what I really want is 55 or 54, which is where FAZ dropped to the last time it went to 81 in July.
FAZ daily: declines since July have lasted as long as seven sessions

Volume tapering off on the FAZ daily.
Still an hour left in trading today.

Update 9:21 am Each dip below 60 was met with solid volume in FAZ. Same happened in the past several minutes, battleships loaded with buyers. I re-entered at 61.20, maybe a bit late, but this is looking more like a short-covering rally that has run out of gas. Traders who sold FAZ above 70, 75 and 80 see a bargain here.

Update 9:34 am FAZ got up to 61.75, but cratered and I got out at 60.39 got small loss ($80). A lot of nickel and diming. Now it's  back to 60.90.

Update 9:58 am So much for short-covering rallies being over. Dow is +187 going into the close and bankster stocks are ripping even higher. I did a quick in and out on FAS, in at 11.40, out at 11.53 for a small profit (+$130). It's now 11.55, high of the day. Incredible volume going into the close, one of those intense, insanity-laden finishes. I thought it would finally sell off at some point, but it didn't until the minute before the bell (just now) when it dropped to 11.50. Now 11.45 afterhours.

Reminded me of a few years back, trading Citi and BAC through the subprime mess. FAS, too. Every time I banked a big profit, I gave it right back from trying too hard, being too greedy. Now? I'm content to get in and out.

I despise the banksters, but I don't mind making a few bucks off them on one of their hot days. It'll just supply me with more fiat when I get back into FAZ at 55 or 50. FAZ is at 58.21 afterhours.

Update 10:30 am Not sure what to make of FAS chart and it's just as well, trying to figure out any ETF or ETN is often a waste of time and energy. But it's a little bit fun so I try. I'm not going to bother looking too closely at a 3-year chart, though I'll probably take a look again at that time span in '08 and early '09 when the sector was nosediving. For now, FAS is highly liquid during this recent run of lower highs and lower lows.

On four separate time frames since August, it has gone from 11+ to 16, 11+ to 14+, 9+ to 12+ and 8+ to the current 11.55. Volume was massive the past three days, each day a bit lighter. What else can I tell you? It's a good trade if you can time it, and judging from this chart, it wasn't all that complicated. The problem is staying in too long, as it is with any ETF/ETN. Some traders might fantasize that FAS is going to stay at 11+ or run higher just because volume has been heavy. I doubt the recent volume came from buy-and-holders. It's all intraday trading, not much different from '08-'09. Problem for bankster bulls this time is QE3 is nowhere in sight yet. The talk out of the White House and Fed has left no indication of any free fiat for the banks anytime soon. In fact, the talk has been brutally negative (and honest) for the most part.

FAS daily: Not a happy chart

FAS daily: Topping out? Might be bullish for FAZ

I'll be surprised if FAS closes tomorrow with another gain. It could gap up, but if this chart's trendlines hold true, 11.55 is a ceiling, and with a 37% gain in FAS off Monday's low (8.43), it would be foolish to realistically expect more. Buying pressure could soften real quick.

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