Friday, October 14, 2011

What downgrades? (updated 640 am HST)

2:53 am (Hawaii) I wrote yesterday that it's far better to wait for premarket than to own FAZ overnight. Example: FAZ closed Wednesday at 51.11, opened at 52+ and ran to 55.95. But I bought yesterday after the closing bell at 54.42 on Fitch's downgrades and "negative watch" on several major banks. But this morning, retail numbers were "better than expected" and shot FAZ down below 53. I got out at 52.50 with a loss that was totally avoidable. It's temporary, no matter how fake the numbers are, no matter what the "revisions" are.

Just can't fight the trend. Futures are up +100 and it's feeling more and more like a 2010 Melt Up. I'll be watching GOOG, which is trading above 600 after yesterday's earnings home run, and FAS. If they can milk it higher based on nothing of substance, I'm not going to fight it.

FAZ started premarket trading (2:00 am HST) around 52.50 and was near 53.00 when the retail news hit, and it sold off right down to 52.15 before bouncing a little. Sheer momentum can take it down $5 without a problem. Yesterday, it traded down to Fib levels after popping. Today, it's at the mercy of the market.

Update 3:41 am Opened a position in FAS at 12.45.

Update 4:01 am Out of FAS 12.40. Was up to 12.63, but the laptop shut down and the desktop took awhile to load up my trading platform. Tiny loss.

Update 4:25 am Dow still up more than 100 points, but FAZ made a huge snapback rally from 50.89 to 53.91. The white line below indicates where I sold in premarket. The harder they push it down, the harder it snaps back. Finnies went from almost all green on my Debt Spiral list to more than half red. The market can't stay up for long with the financials down, right?

FAZ 1-minute
Unpredictable? Think so

Update 4:50 am So much happened in the FAS/FAZ war. It's more like a battle, but what a battle. The first several minutes were volatile, but the run by FAZ continued to 54.33. No way I could get in. Actually I almost went in around 52.20ish, but I hesitated and it went parabolic like few things I've ever seen. (The AAPL post-market earnings report a year or two ago comes to mind when it shot past 350 like a meteor.) The chart below is more fun stuff. Interesting to see what FAZ does here. Plunge back lower? Go back higher?

The Dow is +91, fairly stable today despite the huge moves in financials. Right now, only four are green and the rest on my Debt Spiral list are red, though just fractionally. I knew in my gut it made NO SENSE for FAZ to go down to 53 or 52, let alone below 51, so there was some freaking shenanigans going on to prop up finnies early this morning. After all those downgrades and warnings from Fitch, how could they not go lower today? But I just didn't have the conviction to stay long FAZ with 54.42 as an entry point. Still need to learn strict price discipline and steer clear of the yadayada crazy momentum swings.

52+ proved to be a buying opportunity yesterday. Today it was 51. So far today I mean.

FAZ 1-minute
What happens with extreme 
price point channels intersect? 

6:37 am Back in FAZ at 53.85, saw it go to 54.07, but it broke the trendline lower and I got out at 53.60, tiny loss. Went down to 53.30+. I should've stuck with 53.53 as an entry point (one of yesterday's Fib levels). It's struggling to stay above the higher Fib level, 54.04. 

FAZ 1-minute
Lunch hour action is slower but still volatile

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