Before the Open (Feb 3)

Posted on by Jason Leavitt

Good morning. Happy Friday. Happy Employment Numbers Day.
The Asian/Pacific markets closed mixed, and only India (up 1%) moved 1% from its unchanged level. Europe is currently mostly up. No market has moved more than 1%. Prior to the employment numbers being released futures here in the US were flat.

The dollar is flat. Oil and copper are up slightly. Gold and silver are down slightly.
Here are the numbers…
unemployment rate: 8.3% (from 8.5%)
nonfarm payrolls: 243up
private payrolls: 257up
average workweek: unchanged to 34.5 hours
hourly earnings: up 0.2% to 23.29
The market’s reaction was very positive. S&P futures went from being flat to being up 10.
Over the last 10 days the market has been up 5 days and down 5 days, and thanks to the up days being more impressive, there has been a net gain.
This week the market has been up 2 days and down 2 days, and again, because the down days were small losses and one of the up days was a solid gain, we have a gain on the week.
The Energizer Bunny market continues. Opening gap downs get bought. Intraday dips get bought. Bad news get absorbed/ignored. It’s been many weeks since we’ve had a truely solid down day. I don’t know when it will end, and I’m certainly not going to guess. I have no reason to change what I’m doing, so for now I remain cautiously bullish in the near term and bullish in the intermediate term. If something happens that forces me to re-evaluate, fine. But until that happens, it’s not wise to be in a state of deial.
headlines at Yahoo Finance
headlines at MarketWatch
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Feb 3)”

  1. as a great trader once said –
    when she starts bucking, get on until her legs give out
    when she settles down get off
    when she does it again, get on & dig the spurs in
    …or something like that
    need everyone to get silly giddy for the market to turn. until then dig the spurs in.
    potential black swan catalysts
    – greece, portugal, others of no consequence default
    – iran and israel nukem dukem out, iran does something else crazy (great energy play)
    – afganistan pull out gets delayed, pakistani nut jobs do something crazy
    likely a great go all in opportunity
    – some big financial institution comes out with more skeletons
    – QE efforts get pulled back, some of the big G20 increases rates too fast too soon.
    now that would be a hmmm moment, esp on the 2nd / 3rd instance.
    lots of explosive moves yesterday – cause for concern
    new stocks / ETFs perking up / setting up – looking good still
    lots of pundits complaining of manipulation, rationalizing why they are wrong / clueless
    as mike covel would say, who cares, everyone wants a story, the trend is our friend 😉
    best of luck

    1. Yes, I beginning to think I need to pinch my nose and jump on the train. If I only have the presence of mind to jump off before the train reaches the bridge that is out.

      1. paper trading, intently studying history. reading, learning from great traders with an validated performance history is extremely helpful.
        anyone tells you, you gotta have money in the game to learn, to try it, to gamble without doing your home work is a sophmoric bleeping bleep head. shun them.

  2. all indices are composed of stocks.
    some go up
    some go no where
    some go down
    thats what makes up and moves the indices.
    the trick, and the hard work is to find the big trenders, preferably to the upside
    . the discipline is in doing the homework not just watching, then pulling the trigger to get in & out, to load up or feather in / out. words are cheap tho, execution is extremely difficult.
    best of luck.

  3. might be a good idea to take a bit off of ZNGA if you followed that trade yesterday. the move began on the jan 24, back tested on the 26 shaking off the weak hands and ….
    look for a c&h or other base to build in future. may be tied closely to FB ipo action.
    all the best

  6. Before I add my comments, let me just say that Raymond offers valuable insight and I second his remark yesterday that other traders should feel free to jump in in offer their detailed insights as well. We can all learn from each other.
    Yesterday I took a short position at SPX 1328 and held that position at the close. As my idea of “leverage” is a 2x ETF, the $$ loss thus far is well within my capital management limit but painful nevertheless. My EW analysis has viewed the advance since Dec 19th as wave 3 of a 5 wave advance of larger wave C. Several times now, I’ve interpreted a potential completion of wave 3 (most recently at 1333) and have taken a short position against what I see as a larger wave C target of last May’s high of 1370 (actually a little above that). Each time that wave 3 has “extended”, I managed to cover at breakeven, but not this time.
    Today I’m watching for resistance at 1242-1247ish now that the advance from 1300ish has unfolded in what I see as 5 waves. When I trade, I don’t add to a losing position. Had I covered my short position on the close yesterday, I would be looking for signs of a reversal in this area of today’s intraday thus far, to take a short position on the basis that wave 3 has ended.
    Having traded for 40 years, what has kept me in the game is trading the right size and cutting loses short. I agree with Raymond & Jason, i.e. the big profits come with trading in tune with the longer term trend. I offer these comments to clarify my current trading position in the hopes it may prove helpful to others.

    1. Well put Pete, if there is no input, some small amount of collaboration, no pt to sticking around.
      Still watching for a pullback and bounce to load up and max margin we may go through rest / base building period.

    2. On the issue of money management
      I would add being decisive, not reckless, is critical. When the market goes against you and its outside your range of acceptable volatility or margin of error / poor entry etc get out or at least take 1/4 1/3 1/2 off. You can always put it back on.
      As for position sizing, imho there is no set position size – you must adjust for your analysis of trade conditions (range bound, trending, etc, etc). you cannot just use a 3/1 2/1 etc profit/loss, share value, etc to simplistically set your position size.
      If you have not done your homework, dont trade.
      If youre taking a position but not confident, feather in.
      If youre confident use max position, use your margin.
      Most successful traders who have validated performance, are strict & rigorous in their analysis, disciplined in execution, trade big positions and often trade asymmetrically (that is almost all in or out, all long or all short). It shows in their eqty curves, big swings down and big swings up – but a persistent growth in their portfolios. This is not to suggest recklessness but to develop and use strict analysis and disciplined execution and go big for the big win and to cut your mistakes / misfortune as quickly as possible. The key is analysis, timing and aggressive execution both in and out.
      After you have practiced and honed your skills trading should not feel comfortable you should be always feel a bit on edge, thats being on your game. If youre feeling comfortable, then you will just survive, muddle along. Or maybe your a psychotic 😉
      This does sound some what cavalier but you can get there. First do your homework and training. If youre a 200lb couch potato dont expect to run a sub 3hr marathon your first time out. But do expect to train effectively, focus and eventually run your guts out.
      Finally, there is a big myth that money management is the key to the kingdom – NO NO NO. It is a component, just a survival / maintenance tool for trading. What you trade and timing of the trade are very important components. These make you the big money. Money mangement just keeps you muddling along until you make the big money. In a way just focusing on money management is a sort of self deluded form of gambling.
      I wish you the best.

      1. I completely agree. The goal is to survive…and then when given great opps, you go for it. This is much like a baseball player fouling off borderline pitches while he waits for the pitcher to make a mistake…the he hits a double off the wall.

  9. IRE closed the gap from oct today, watch for a topping tail to form, if not it is very bullish. if there is continue interest in days / wks to come it will pull back, maybe put in a handle or base on base structure and continue the move up. STD also interesting. Not crazy about the financials but the initial technical moves of JOB (junk off the bottom) stocks can be very profitable.

  10. bears sell exhausted old bulls
    the hedgies/market makers are contraians
    and they seem to have goten everyone ofside and totally bullish
    i see what the close or asian mon brings

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