Blog
We are committed to charitable giving and as such, we set aside 15% of our earnings in support of the following:
The Intelligent Trader's - Long and Short of It
|
From: Robert A. Christy Editor/Publisher, ‘The Intelligent Trader’ http://www.intelligent-trader.com http://www.christyinvestments.com
Date: October 3, 2009
The Numbers
Major Index Bullish Percent
The market struggled this week and as a result, both the NYSE and S&P 500 have flipped to DEFENSE. This is an important event and one to not take lightly. If you haven’t checked your stop losses, now is the time to do. If you haven’t taken any defensive action in terms of PUT option purchases, tread lightly because most of the options that I have looked at have a risk move priced into them.
The talking heads will start yapping about “buying the dip”. This is pure noise. We’ll take our cue from our indicators and go from there.
Major Sector Bullish Percent
Note: This past week several more sectors have moved to defense. These sectors should be considered weak and either shorted or avoided.
Sub-Sector Bullish Percent
Green = Favored Yellow = Average Red = NOT favored X = Offense O = Defense
Note: Please note the color change in many of the sectors.
Last week the selling began in earnest. October is usually a rough month and we’ve not gotten off to a very good start. The question on my mind right now is (1) is this the start of something big or (2) is this just a blip where we buy the dip?
The talking heads and the “buy the dippers” are saying this is just a normal correction in the new bull market. They opine that as long as we continue to make higher highs and higher lows, we have nothing to worry about. We can only hope …
Look, I have no idea where we are headed next. We could go into the tank and knock a few thousand points off or we could take out Dow 10,000 like a Sunday walk in the park. I will continue to rely on the indicators that I have used for years. I’ll take what the market gives me.
Earnings season starts this week and the talking heads will be trying to divine something out of every release. The key here is to use reason. Remember – price and value are not the same thing. PRICE AND VALUE ARE NOT THE SAME THING
Value is what fundamental analysis is all about. What is the company actually worth in real terms? Price is what people are actually willing to pay right now.
Making money in these types of markets is not difficult if you can check your ego and opinions at the door. You must be flexible and take what the market gives you. If you’re hard headed and refuse to be flexible, Mr. Market will teach you an incredibly expensive lesson.
I’m keeping a close watch on interest rates. I am short Long Treasury bonds (TBT) because I expect rates to rise over the next few quarters. (Note – when interest rates rise – bond prices fall)
Kevin Warsh, one of Bernanke’s Fed governors said in at a conference in Chicago that the Fed could push interest rates up more aggressively than normal. I think this is a trial balloon where Bernanke can gauge the reaction. In other words, could the Fed be ready to change policy and head in another direction? If they do change, the market’s reaction will not be kind. Even Alan Greenspan doesn’t think too much of the recovery so far.
If you haven’t taken any defensive actions so far, I would do so right now and not wait around. I would caution against buying put options because the risk factor is currently priced into most issues and puts are priced on the expensive side. Actions you can take are: (1) review all of your positions – keep the ones you like and sell the ones you’re not happy with.; (2) make sure you have stops on all your positions; (3) spend some time envisioning the worst case scenario and plan accordingly.
Is this just a pullback or the start of a more serious move to the downside? Time will tell, but as I have said before I am long until I am not.
That’s about it for now. Let me here from you if you have any questions.
Robert Christy
P.S. You can now sign up and follow us on:
Twitter: stcktradr Facebook: The Intelligent Trader and/or Bob Christy (Atlanta area) Skype: stcktradr
P.S.S. The currency market is the place to make money this year. If you’d like to know more about how you can participate in this, just send me an email and I’ll send out the information to you.
P.S.S.S. Please fee free to forward this to your peers, friends and anyone you think would benefit from its contents. They will thank you for it - and so will I!
The Intelligent Trader's ‘Long and Short of It’ is a free OPT-IN e-letter. Sign Up to receive your own free copy at: http://www.intelligent-trader.com or http://intelligent-trader.blogspot.com. Please note: We do not spam or give personal information to third parties-ever.
Be sure and bookmark our blog: The Intelligent Trader. There you will find our daily market comments and diatribes about life in general.
About 20% of e-mail is never received due to spam filters. If you have a spam checking program installed on your computer, please be sure to add rac@intelligent-trader.com to your "safe list."
Robert Christy is a professional currency trader, stock trader, money manager, author and speaker. Mr. Christy is the President CEO of Christy Investment Group, Ltd., a fee-only registered investment advisory firm. He is also the Managing Partner and Portfolio Manager of Crabapple Capital Group, LLC and the editor/publisher of The Intelligent Trader, a subscription based long/short trading service. At the time of publication, Mr. Christy may from time to time write about stocks in which he, Christy Investment Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a position. In such cases, appropriate disclosure is made. Under no circumstances does the information in this column represent a specific recommendation to buy or sell stocks. Mr. Christy appreciates your feedback and invites you to send it to rac@intelligent-trader.com .
Robert Christy The Intelligent Trader
The Christy Investment Group P.O. Box 625 Alpharetta, GA 30009-0625
To unsubscribe or change subscriber options, please contact us: online: http://www.intelligent-trader.com by email: info@intelligent-trader.com
© Copyright 2009 Robert A. Christy, The Intelligent Trader
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
