Market Outlook

[AbeSmith 10]

Hello. Today we had the rate cut, which was in line with market expectations. Price spiked up, but came down and closed in the red. Looks to me like a very bearish sign. Many of the guests on CNBC, and Bloomberg (which I've been watching more recently) had predicted in recent days that the market is looking bearish for the long term and it will go lower than the 1/22 lows, rate cut or not. Typically, from what I have seen on rate cut days (though I've only studied the markets for some months only) price goes one way or another. Seeing price action today tells me that the market is not feeling confident.

 

I would like to know what you all think. What is your outlook? Would you go short here on the longer time frame, or wait for the 1/22 low to break before going short?

 

In my opinion, after seeing price action today, combined with hearing many analysts predict that market is going lower, I might go short tomorrow on a daily time frame trade.

[torero 10]

I can only assume the cut was already priced in, hence the lack on enthusiasm. In any case, markets eventually have to test the recent low to find out if we're going into a recession or not. February should be a hot month for trading.

[james_gsx 16]

All those talking heads were saying the market looked bullish 3 months ago. Now they are saying it looks bearish.

 

You have to remember how many negative things were priced in during our 5-6% decline. We most likely had a minor recession priced in, because let's admit a 600 ym decline is pretty impressive. That doesn't just happen BAC or C missed earnings.

 

That doesn't mean we won't test those lows again, I wouldn't be surprised if we do. But I also wouldn't be surprised if we blow through 13,000 and charge straight for 14,000 again.

 

Be careful when all those guys pretend like they know what they are talking about. Because usually they don't have a clue. The best thing to do is sit back and look at all of your data, and your charts, then make your own decision. You'll probably be right most of the time if you do the right homework.

[AbeSmith 10]

I can only assume the cut was already priced in, hence the lack on enthusiasm. In any case, markets eventually have to test the recent low to find out if we're going into a recession or not. February should be a hot month for trading.

 

So you are saying markets will test the recent lows soon. If that is the case then perhaps it is best to go short now and take some off the table when it reaches the 1/22 lows.

[AbeSmith 10]

All those talking heads were saying the market looked bullish 3 months ago. Now they are saying it looks bearish.

 

You have to remember how many negative things were priced in during our 5-6% decline. We most likely had a minor recession priced in, because let's admit a 600 ym decline is pretty impressive. That doesn't just happen BAC or C missed earnings.

 

That doesn't mean we won't test those lows again, I wouldn't be surprised if we do. But I also wouldn't be surprised if we blow through 13,000 and charge straight for 14,000 again.

 

Be careful when all those guys pretend like they know what they are talking about. Because usually they don't have a clue. The best thing to do is sit back and look at all of your data, and your charts, then make your own decision. You'll probably be right most of the time if you do the right homework.

 

James, thanks for your comments. I must say I would be surprised if markets charged towards 14000 anytime soon.

[james_gsx 16]

Well the point I was trying to get across to you was don't listen to the guys on TV. Do your own research and come up with your own conclusions. If you had been listening to most of the guys on TV for the last 7 months you wouldn't have any money left.

[MC 10]

Well the point I was trying to get across to you was don't listen to the guys on TV. Do your own research and come up with your own conclusions. If you had been listening to most of the guys on TV for the last 7 months you wouldn't have any money left.

 

This is a valid statement. News is used to sucker people into or out of shares plain and simple IMO. Even if we agree the news is valid, by the time it hits presses and airwaves you've lost the edge. News at fever pitch means get ready for a fade opportunity as I see it.

 

JMHO

[Soultrader 12]

Just woke up and.. WHAT HAPPENED?

 

I went to bed to this:

 

 

And woke up to this. Was this just a counter reaction or was any negative news releases?

 

[404 10]

From what I understand, I heard that a bond company lost its AAA rating. That was a big deal, and what caused some weakness...

 

someone correct me if i am wrong.

[james_gsx 16]

Yeah then the market sold off fairly hard after hours and is now basically back to where it closed.

 

I heard about the bond company, but what's the real story behind it? Because if it's like a typical stock downgrade then I want to be buying right now. If not, then obviously I wouldn't want to react.

[MC 10]

"Our nice rally was killed by the Ackerman release of a letter showing the bond insurers having more exposure than previously stated."

 

This is what I heard from another site. No source was given though.

[james_gsx 16]

We'll see what happens over the next few days. I think long term though these rate cuts are going to help the banks a lot. Short term I'm still undecided.

 

Whatever happens the Fed can keep cutting rates. Gotta love it when you're long gold and short the USD

[AbeSmith 10]

I shorted the market this morning for a swing trade. Bought the DOG at 63.78. Stop at 61.95, which is below the 1/30 low in the case of DOG, which corresponds with the 1/30 high on the DOW.

 

The factors which made me think the market most likely moving down in the daily time frame:

 

1. Market closed lower yesterday even though fed cut rates .50%. Tells me there is lack of confidence for the bulls.

2. Majority of recent economic data have been bearish.

3. Markets have been in a down trend.

4. We are close to resistance here, which failed to break yesterday, which in my view was the most likely time for it to break.

5. The majority of analysts that I heard on Bloomberg are bearish.

6. Infalation concerns might weaken the Fed's willingness to cut rates.

 

The factors, or arguments that I'm considering that are against my position:

 

1. The fed has alot of power to move the market, and he has shown willingness to help the market.

2. We might still test the 13000 pivot before going down. So my current position would be stopped out in that scenario.

3. Right now I see the market has closed the gap and has moved higher.

3. Can't think of any more arguments, but if you have something to add please feel free.

[EOD Traders 10]

Bears are not convinced by the recent Market action.

I am neither Bull nor Bear @ this point.

Time will tell.

 

Doug Kass, founder of Seabreeze Partners, suggests buying the weakness that would possibly result from only a 25 basis-point cut and selling the strength that would possibly result from a 50 basis-point cut. "If there were a limited or opposite response to my two scenarios, I would do nothing,” Kass says.

 

Prudent Bear Fund manager David Tice expects the Dow will fall another 5,000 points and stocks will fall by as much as 60 percent. "Everyone has patted the Federal Reserve on the back for avoiding recession,” Tice told the San Francisco Chronicle. "The problem is, we should have taken mini-recessions along the way.”

 

Even gloomier, Euro Pacific Capital’s Peter Schiff believes that the new financial capitals will be in Asia, the Middle East, and Europe.

 

"New York will certainly still have a role to play, but much like Detroit, it will be but a shadow of its former self,” Schiff says.

 

Resolution to the bottom of the market being reached

appears to be unresolved.

Today may have just been a YAHOO burst.

Next week should give a a clue.

[james_gsx 16]

So Abe, now that you've been stopped out of this trade what have you learned?

[AbeSmith 10]

So Abe, now that you've been stopped out of this trade what have you learned?

 

Nothing new. Just try your best.

[Ronin 10]

Hello. Today we had the rate cut, which was in line with market expectations. Price spiked up, but came down and closed in the red. Looks to me like a very bearish sign. Many of the guests on CNBC, and Bloomberg (which I've been watching more recently) had predicted in recent days that the market is looking bearish for the long term and it will go lower than the 1/22 lows, rate cut or not. Typically, from what I have seen on rate cut days (though I've only studied the markets for some months only) price goes one way or another. Seeing price action today tells me that the market is not feeling confident.

 

I would like to know what you all think. What is your outlook? Would you go short here on the longer time frame, or wait for the 1/22 low to break before going short?

 

In my opinion, after seeing price action today, combined with hearing many analysts predict that market is going lower, I might go short tomorrow on a daily time frame trade.

 

Abe,

 

SELL the ES next week and get your money back, GUARANTEED

[MC 10]

Nothing new. Just try your best.

 

If you traded your plan then who cares of the outcome.

One trade won't define your net profitability over time...though I'm sure you know this already.

 

Get ready to take some money from Cramer viewers, I guess he said it's time to go "all in" on the market. :\

 

The short side has an appeal to me, I don't believe they could have V bottomed that sharp a drop and stopped the fear regardless of how much the big boys threw in to support the market. We need a W bottom at least IMO. 13,000-13,300 range could prove formidable and need some more basing to break that also...assuming somehow we don't break down to test the lows. I'd love to see some divergence down low to back my overall mid term bullish view.

 

Good luck fellas

[AbeSmith 10]

Abe,

 

SELL the ES next week and get your money back, GUARANTEED

 

If you traded your plan then who cares of the outcome.

One trade won't define your net profitability over time...though I'm sure you know this already.

 

Get ready to take some money from Cramer viewers, I guess he said it's time to go "all in" on the market. :\

 

The short side has an appeal to me, I don't believe they could have V bottomed that sharp a drop and stopped the fear regardless of how much the big boys threw in to support the market. We need a W bottom at least IMO. 13,000-13,300 range could prove formidable and need some more basing to break that also...assuming somehow we don't break down to test the lows. I'd love to see some divergence down low to back my overall mid term bullish view.

 

Good luck fellas

 

Thanks guys. I also don't see much strength in this market. I don't mean to sound like I know it all. After all, I have only been trading for some months. But for what it's worth, that is still my view. But for now I'm staying away from trading. Or rather, taking a more conservative approach. Need some time to sit on the sidelines and do what a trader from Market Wizards said: just sit around until there is money just sitting there waiting to pick up.

 

So that is my plan right now. Don't see much strenth in the market, but I'm not confident enough to make any moves right now or short at the next resistence, on a swing trade. I may do some day trades if I see a good opportunity.

[james_gsx 16]

The only thing I would recommend is wait until you get a better risk/reward setup before going short or long. But if this setup was in your trading plan and you took the trade, then that's what matters. Each individual trade is irrellevent over the course of your career.

 

Good job! :thumbs up:

[AbeSmith 10]

Bears are not convinced by the recent Market action.

I am neither Bull nor Bear @ this point.

Time will tell.

 

Doug Kass, founder of Seabreeze Partners, suggests buying the weakness that would possibly result from only a 25 basis-point cut and selling the strength that would possibly result from a 50 basis-point cut. "If there were a limited or opposite response to my two scenarios, I would do nothing,” Kass says.

 

Prudent Bear Fund manager David Tice expects the Dow will fall another 5,000 points and stocks will fall by as much as 60 percent. "Everyone has patted the Federal Reserve on the back for avoiding recession,” Tice told the San Francisco Chronicle. "The problem is, we should have taken mini-recessions along the way.”

 

Even gloomier, Euro Pacific Capital’s Peter Schiff believes that the new financial capitals will be in Asia, the Middle East, and Europe.

 

"New York will certainly still have a role to play, but much like Detroit, it will be but a shadow of its former self,” Schiff says.

 

Resolution to the bottom of the market being reached

appears to be unresolved.

Today may have just been a YAHOO burst.

Next week should give a a clue.

 

Thanks EOD Traders. Sorry I didn't notice your post beofre.

[AbeSmith 10]

The only thing I would recommend is wait until you get a better risk/reward setup before going short or long. But if this setup was in your trading plan and you took the trade, then that's what matters. Each individual trade is irrellevent over the course of your career.

 

Good job! :thumbs up:

 

Yes. Good point James.

[Phantom of the Pits 10]

Market outlook as of Feburary 2008 is like a swinging door. Meaning - Good opportunities now that we have a chance to buy the bottom 1/3rd and sell the top 1/3rd of our chosen ranges.

 

POP

[MC 10]

The only thing I would recommend is wait until you get a better risk/reward setup before going short or long. But if this setup was in your trading plan and you took the trade, then that's what matters. Each individual trade is irrellevent over the course of your career.

 

Good job! :thumbs up:

 

 

I used DIA so I can get the volume in there, for some reason with a TOS prophet chart on the DJI I can't get volume even for daily. :\

 

This looks like a nice spot for a short...JMHO.

We have heavy resistance and the volume has dried up on the rally, we probably need new buyers/fresh volume to break that resistance. Also on the fibs we are in the ambush zone and close enough to the 50% level that I see good risk to reward using that 50% as the stop trigger.

 

I'm curious on your view of where we are on risk/reward and what you're looking for now. This site has the best traders and up and comers, I value all the opinions on here.

[Phantom of the Pits 10]

Good point. Just remember to sell early is to suffer longer than needed. There always seems to be early buying and a late selloff if indeed.

 

POP