Back in the swing of things, or not?

It's nearly September and that means that kids are going back to school, summer vacations are coming to an end, and fall is right around the corner. Typically fall brings many investors back to the markets, but lately the markets have been hectic and unforgiving with nothing but bad news raining down from all corners of the economy. Does that mean some of us will be sitting on the sidelines a little longer, or perhaps altogether?

Are you planning to start or increase your trading activity in the coming months?

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We're interested to hear what you have to say about your stance in the markets for the remainder of 2010, so please leave us a comment below.

Best,
The MarketClub Team

84 thoughts on “Back in the swing of things, or not?

  1. Hey Linda

    Checked out that Nenner stuff but couldn't make out the algorithm. He appears to keep it secret. In the meantime:

    Ireland's economy shrinks 1.2%:
    http://www.bbc.co.uk/news/business-11397875

    Steadily increasing costs of Irish and Greek debt:
    http://www.cnbc.com/id/15840232/?video=1596519472&play=1

    I am staying in the cave for now, I am afraid. I can envisage a lot of turbulence ahead in the markets, still according to my earlier time plan, even though a midterm election is supposed to herald a bull rally starting September. There is just too much negativity, battling businesses, failing banks, falling real estate markets and political uncertainty. Who is Obama going to replace Summers with? He knows no better so it will probably be another ivory tower economist.

    Then over in Europe Sarkozy throws the gypsies out of France and although Sweden presently has a 4.6% GDP growth there is a new racist party in the Swedish Riksdag, with Nazi roots! That early 1930s feel is not going away but deepening.

    Now, how much gold do I have? Soon when the government can't pay the national debt it'll be confiscating gold too. Aren't I lucky the government can't find my cave! On the other hand, vicious hungry humans will be combing the forest in summer to hunt and eat me.

  2. jaroslaw: Nice call on the S&P! I'm impressed. 'long target 1143! wow. Have been mulling all of this around in my mind recently and thought since Paul speaks of equinox and cycles, if one were to look at what Charles Nenner's periodic comments are, (I do not take his publications), however, he eludes to Sun Spots and the fact that they enhance human behavior. If you look up Sun Spots on the net, there is a chart as to where we are, it appears the cycle is headed up. Nenner's contention is that when they (sun spots) increase, people follow one another either in mass movements i.e. riots, buying or selling markets, etc. It appears that this is happening with the markets (instead of to the downside), to the upside. Have been keeping my eye on that and the technicals of course, but do believe the bulls have this under their control for the time being. For what it's worth.
    Have a good trading day.:}

  3. Paul,

    Not only your comments make lot of sense, what I like most is the way you beautifully express them. Simply adorable and so true!

  4. Great honey.

    Now, to try answer my own question of what's propelling the markets. Of course, expectations. Perhaps it is a hope that Ireland and Greece will manage their austerity programs without too much damage to their economies. Perhaps it is also a hope that the President will not allow the taxes to revert up. And perhaps it is a hope that the Fed will step in like a good Daddy and provide QE 2.0. The latter especially would mean a whole new ball game.

    If enough of this happens on Thursday then the full moon emotions would more likely be euphoria than worry, and I might just leave the cave for the forest.

    Time will tell.

  5. I'll come out of a temporary hibernation to give my 2c. As Taleb would say, whether or not you play long or short, it is the outsider chance that you should beware of.

    But since you also refer to Astrology, I assume you are aware that the Sun goes into Libra on Friday, so expect that influence to exert a pull on the markets towards balance. If the market has been playing Icarus, it will tend to come down, if it has been suppressed then it will tend to lift (all other things being equal, which is very seldom the case :). Equinoxes tend to show what is in store for the coming quarter. Plus there is a full moon on Thursday, so that should set off the worries.

    The markets are in denial, some investor said recently. My feel is that it is trying to fly in the face of the facts. UK home prices have declined for 3 months in a row now, and China is not going to be able to maintain its growth rate. China is caught in a terrible trap of a weak internal demand by its middle class population because of millenia of heavy private savings that is wholly ingrained in the population. The politburo dare not start insurance systems [health, unemployment, pensions) for fear of liberating the population so much it might demand some influence and democracy, and for fear it would collapse the savings quote which would starve the banks of capital. At the same time the US is proving a weaker and weaker trading partner. So it is caught in a scissors trap, just as the US is caught in a scissors trap of spending to stimulate the economy vs debt.

    Right now the US economy is skirting around deflation all while Congress and the Senate and the administration are playing politics for another 3 months. It's brinkmanship.

    The market now reminds me of the first quarter before the worries about Greece spooked everything. The market is very neurotic these days. It either has free-floating euphoria or free-floating anxiety, or one after the other in a tight trading range. If the range wasn't so tight a range I'd say the market was manic-depressive and in need of medication.

    The real question is: What's propelling the markets higher now? Some great new fact promising 7% growth? Or hope of the Senate shutting down government programmes or hope of gridlock? But that's masochistic.

    What was it Keynes said? "Something like: the markets can stay irrational for longer than you can stay solvent."

    Sure, I am still bearish, apart from gold. At the moment I see no reason to be otherwise. Of course I would love to see the golden rosy future beckoning to us all. But when the market does fall upon itself, things can get very nasty. Trying to catching a falling knife can be a deeply traumatic experience. And of course highly enriching for the trader who has guessed the vertical drop.

    Now where was that honey...

  6. but this time it will be different. Consumer confidence has dropped off a cliff, like in 2008. The stock market will follow sooner of later (if not this year then Spring 2011). Meanwhile I'm hedging.

  7. It Saturday evening 9/18/2010, after a tremendous few weeks to the upside, I thought the Bears out there (I am still in that camp) may want to see a partial comment from one of the advisers I subscribe to: It goes as follows......something to think about.

    "We preface this final item with the caveat about past performance being no guarantee of future results. Still… If you look at every midterm election going back to 1942, you discover the S&P 500 has rallied during the following 200 days — every time.

    Average rally — 18.3%. That said, the pattern seems to be breaking down in the last decade: The average increase after the 2002 and 2006 midterms was just 7.3%.

    Nonetheless, if you plot the four-year presidential election cycle on a chart going back the last 60 years, you find the last two years of each cycle are remarkably bullish…

    “I’m not endorsing this,” says Chris Mayer, who brought the chart to our attention this morning. “Just thought it was one of those funny things, like astrological patterns and Super Bowl wins.” '

    The recent rally has occurred on light volume and not sure how to evaluate it. Are there any bears left in the room???

    Thanks for any replies. Linda

  8. Not sure my message from this morning went through, so will repeat my response to Paul.

    First, thank you Paul for your time frame analysis. I continue to be in the same camp. I believe today's rally is what I alluded to the first part of September. The 10,500 area should be touched (which has happened today). A close 10,390 or lower will point to objective of 10,334, then under that, 9979-9921 under that 9742, under that 9187-9153 by mid October. Obviously, we will have rallies in between those points, but today's action makes me think the market is poised for the anticipated sell off. Tomorrow's action should tell us where it will be headed into next week. The close today will be key! Have a good trading day! Lida

  9. Linda, I am not trading at the moment. I am in cash and gold waiting for the market to find a meaningful bottom and am not paying too much attention. My belief,(and what I write here is not advice!) is that due to the current diversion created by the Obama plan it might take another week for the market to realise that there are no more magic bullets coming out of government, and that Mother Hubbard's cupboard is bare. The Obama plan looks to me to be a last gasp. So I think the inflexion point may come as early as the middle of next week around Wednesday 15th September, and highly probably by Monday 20th.

    From there I am sketching in a 15 degree decline off the horizon until about 14th-15th October when the Q3 results come in. I think this is where things really come unstuck and I think a vertical freefall will ensue. After a +20% drop there could be a sucker's rally beginning 29th October with a final downspike for this year starting to plummet around 12-15th November and only bouncing off the bottom around the 26th-29th November. Watch for P/E ratios of 1.5 to 4, and that is when I'll get in. Of course resource stocks may bounce up before or after 26th-29th November bounce. My guess is after, in the second week of December 6th-10th.

    Then I am counting on another market dip starting 5th January and continuing for 6-9 weeks, probably plumbing depths lower than the 26th-29th November lows.

    Of course this pattern I have sketched is only a guide. When the mood of the day is upon the markets, the investor always has to be ready to question her hypothesis, and decide to stick with it or revise it. Traders have their own methodology e.g."Have a plan and stick with it" and often very short time frames. I use what suits me, my own concept of the market breathing in and out. A normal market intake of breath takes time - a week or more for inhaling and ditto for exhaling, unless something happens for the market to catch its breath. Sometimes it will take a long deep breath and relax, but those times will be good times, not volatile ones like now.

    Finally, just let me say I would love to be wrong and a miracle happen to save the markets from the coming wreckage, but so far I don't see any trace of one.

  10. Paul: Thank you for your comment; I am on the bearish side of these trades. Your comment about Wednesday forward helps me in pinpointing when the agony should be over. Thanks! You have bolstered my confidence. Linda

  11. Linda, the power of positive thinking has its absolute limits. Being a supreme optimist cannot cure the markets or the underlying economy.

    The market will begin to drop anytime from Wednesday on. The trend will be down until the end of November/first few days of December. Expect the S&P to drop lower than March 6, 2009. Small tick-ups along the way are fool's gold.

    You have been alerted!

  12. 9/1/10 Today's market action is perplexing if you are a bear. There are big funds that do come into the market on the first of each month, along with overnight bullish news from Asia; this rally is holding quite well and would expect (if closes over 10,242 on the DJII) a rally to 10,411 area by Friday. THEN, we need to see what the market wants to do after the long holiday. I am long VXX, TWM and some gold stocks. None of which are doing well. I am suspecting the market to go to the higher level mentioned above which will be a gut wrencher; which one would think by now, I would be used t! Anyway. Good luck.

  13. Anyone here sticking with Adam's "Perfect Portfolio" through the 4th quarter? What's the worst we might expect if we ride out this last quarter?

  14. Playing it safe until after the November elections, too much uncertainty around every corner lately.

  15. Well, the bears are either all right or all wrong.
    The bears are usually very good informed and have a good overview of the big picture. Paul [email protected] 03:34:55 described it nicely. The only possible way is down.
    Here's a nice one: Bernanke spoke again today about that he doesn't worry about a double dip recession. The result: stocks went up. This shows the average narrow-minded investor really doesn't have a clue about the big picture. They also don't grasp that the US has a total debt of about $202 trillion if you include all unfunded liabilities.
    A good informed investor would dump his bonds and long-stocks right away and sooner of later this will happen. We are well past the point of no return.

    Bernanke has been a very good contra-indicator. He's been consistently wrong. Combined with the above, guess what is likely to happen...

  16. Heads up all the S&P Bears. We have a potential outside day today (Friday 8 27 10), close higher on the S&P futures, is NOT bearish; would indicate further follow-through on the upside next week. HAVE A GREAT WEEKEND EVERYONE!

  17. Long Gold, don't play the short side but S&P is looking like a big roll-over, won't play the bounce until I see big volume come in. Small play in Gold mining stocks but risky as they tend to get sucked down with equities.

  18. Believe the stock market will go down. So am short the EURJPY and USDJPY at the current time.

  19. I have been having the same thoughts. When everybody is on the same side of the boat, it usually capsizes !!!

  20. I do not know what the next short term move is since we remain in a trading range on all the major US stock indices, but I feel that the stock market political cycle will soon take over. Historically there have been significsnt upside moves from the mid-term election lows lasting into the pre-election year which is the strongest of the four. From wherever the lows may be if they are not already in, there could be a susbstantial move higher lasting into next year. I do not want to let short term thinking and information about the economy which is widely known, cloud the big picture which favors a resumption of the bull market soon. These mid-term election year rallies typically begin no later than late September so I cannot possibly be bearish going into this period. The smallest move from the mid term election lows to the following year high was 14.6% in 1946. The next smallest was 21.4%.

  21. As long as there is more money going into bond funds than stock funds I am not worried. I think the bond crowd is really pressing their luck and overstaying the party. Interest rates may not go up for a while, but when this money decides to move out I don't want to to be there. The political cycle will soon take over in my opinion. The mid-term election low if it is not in already, historically has given way to a significant rally into the pre-election year, the best of all four. i cannot possibly be bearish with this possibility right in front of us. This correction is running out of time with the mid term elections forthcoming and a friendly Fed.

  22. Yikes!!! So many bears!! We can't all be right!!!! Stock indices look terrible again - lots of technical damage. Been doing a lot of short-term trades lately, like many others, it seems. Trying to be nimble, trade humble. Long the FAZ again....

  23. Dow, closed below 10000 again! we could see 9500 in September and may be a pull back,
    after that a free fall,
    We will see.

  24. Upside correction is over...third of third wave down at multiple degrees is unfolding...short S&P 500 and NASDAQ. Long US dollar.

  25. While I agree that this whole situation is like trying to raise the Titanic with a bag of marshmallows(the little ones that go in hot chocolate), I pretty much see everybody here leaning to one side of the boat. I`m thinking whatever happens, it probably won`t be good. Good luck to everybody.

  26. The way I see it, we are headed for the current rally and possiby up to 10,500 on the DJII. then back down. I have a tendency to agree, too many people are too bearish. Have you looked at a weekly, monthly DJII chart? the 9927 area is critical to support, and plan to use that as my benchmark on what to do next. Reallly enjoy this MarketClub Traders Blog. Good luck. Linda

  27. No Jobs No Recovery, As for the market, Down it goes, Unless they want to spend another trillion faking the market up once again while the real world crumbles...

  28. Right now going to stay SHORT. There is going to a significant price pull back...will not go long at this time. For example, I like what I see at Ford, it's an excellent company, but market will not likely support the current price. It's on my watch list, under $10.

  29. Will continue to follow the trade triangles for a short term long or short positions with tight stops.

  30. I agree with the bearish comments above. Also, any QE and other jinks would take several months to take effect, so nothing can now stop the 2010 crash, which is only weeks away. Anything the Government, Fed, Treasury do now is too late, and probably wrong anyway, since none of them have changed their spots. 2011 and 2012 will be tough. Alt-A and Option ARM will still carry on unwinding until end of Q1 2012 and Prime will continue for as long as there are new initial jobless claims.

    There is no locomotive left in the world to pull anyone out of anything. Japan, Europe, the UK, China, Russia, all have serious problems of various kinds. Left are a few countries like Brazil, Germany and Sweden in mid-2010 mini-booms. But the latter are all export dependent, so when the world catches a cold, they catch pneumonia.

    Very pleased to see the back of the ultra-optimist, Christina Romer. But many more heads need to roll. The failed university boss Summers is still there. Apart from Volcker, the economic team is a catastrophe, and the President is not an economist, but an idealist. This makes for a very bad combination. It was Obama's great mistake of not booting out the economists Bernanke and Geither, and employing Summers which will go down in history as the great flaw in his Administration and which will continue to haunt the planet for every month they are still there.

    Cash, gold, silver. Betting on a scary September-November like 2008. I think a Xmas rally beginning second week of December will switch to a dive on Wednesday 5th January.

    Further on:
    A highly dangerous January and February 2011, with the S&P plumbing even greater depths, especially if Government goes into gridlock. Expect S&P bounces on the way down but no economic reboot until 2012-2013. The way back up for the economy will take a decade and a half, the way back up for the market could take two decades and a half the way the Government is behaving so far. But as always there is money to be made both on the upswings and downswings.

  31. well,

    i believe that the international economy will get improve and that will be reflected at stocks.
    im looking for a good oportunity to buy a stock and make a goood profit.

  32. Utility and Telecom holding up. Gold too. Everything else avoid unless you go to the short side.

  33. Everyone above sees the same scenario upcomming.I was also seeing the S&P down and gold up , but now the contrarian in me says "everybody cannot be correct !"

  34. Is the real correction upon us? We'll know when everything falls, a sure sign. Gold will be the first to come back. We cut back our total number of trades this summer, looling for a great fall. The bears are back!

  35. I will go for long on USD/CAD with profit 1.2550 buying at 1.0410
    also will sell AUD/USD with profit at 0.7100
    eur/usd for short with profit at 1.200

    Hope all of you will have success,
    Regards

  36. these markets have turned me into a day trader,mostly play dow and european indicies,good money to be had with Italy and Spain,very predictable.Always taking profit,(no matter how small) not letting anything ride overnight,cash out and get out until the next day.then try and figure which way the G-Men have messed with the market while i have my back turned,Oh and thank god for Silver

  37. I don't plan to buy any stocks,bonds, and certainly no U.S. treasury notes.
    Obama and his henchmen are LYING about our econemy. The recession is NOT over
    and a double dip or an outright depression are very possible. I have suspected that the government is somehow bolstering the stock market. I prefer gold and Pro Shares.

  38. I am using Options to trade the Gold and Silver. I bought far out expiration calls that are far in the money. The Delta is near 1, so price changes are reflected at near 100%. The up front cost is much lower than buying the asset up front. I have 30 GLD call contracts and 300 SLV call contracts. So far the winds are blowing in my favor. Up $19,050 today. Could be down the same tomorrow for all I know. This is long term, so I don't get worried about daily swings. Long term is UP!

  39. 100% invested in FAZ October 2010 & Jan 2011 PUTS. I fully expect the market to drop to 9,000 - 9,600 bye options expiration in October with a further drop to approximate 8,000 by Jan 2011 options expiration date. Will roll profits from October to Jan & April 2011 PUTS.

    Buckle up people, it's April 1930 and the ride down will last for a minimum of 17 more months or more. Obama and team a worse than the Roosevelt Fluster Cucks. Imam Rham Emanuel wins the 'absolutely worst' imam prize.

  40. there is more to the downside so you either stay out or you short. There is 54% of the votes putting money to work in the coming months...I am hoping they are shorting. If not, they will probably end up getting hurt.

  41. Reviewing what I hold and ensuring they pay me while I ride out any storm which could form. Still liking oil weighted stocks which pay a 3.5%+ dividend. Cautious on bonds. Adding to Cdn banks on dips. Hold some precious metals, say, 8% of portfolio. Cash about 23%.

  42. If I'm right, natgas should move largely back up in September, being seasonally a good volatile month for natgas. Lots of money to be made.

  43. Using some diversification through ETF's and long some gold stocks. The technical side is the only way to fly with these markets! Forget the fundamentals and just roll with your Gann lines and Elliott Wave counts. Plan to get into commodities (which I have traded previously) sometime down the road. Has been a quite awhile since I have traded and find the computerized world makes for a very interesting ball game. Good trading to all!!!

  44. Market has actually been falling since the peak (1220 S&P) this year. The bounce from around 101 disguised this for a lot of people, but that's over. The final collapse (should touch well below 666) has begun. Fully short. Fall should be swift and frightening, will get back in when it's over. Gold miners should be a solid buy, also interested in SanDisk.

  45. Gold rising in comparison and some currencies esp resources countries doing well against the USD. S&P going down atleast 712

  46. The optimistic side of me is hoping for an election year rally into the Fall.
    The dark side is sounding alarms that the elite banking cartel may be fearful of losing their grip in this election and create another financial panic in order to pass more 'emergency legislation' before the Tea Party creates gridlock in Congress.
    So I'm mostly daytrading (back to cash at the end of each day) and swing trading long positions only on oil, gold, and silver ETFs.

  47. trading more 30 yr bond and 10 year note contracts on globex..great liqudity...not as jerky as the emini s&p's except near the morning announcements (employment, durable goods, housing, etc ).doing better on those than in stocks or emini s&p futures..planning on increasing focus to interest rate vehicles (both long and short positions...rarely hold overnite)

  48. See the S&P 500 breaking lower, to possibly 890, then upward, end of year rally, then down in the 2011, looking at buying puts on 500 into March 2011.

  49. Looking for a potential quick and possibly deep sell off in equities - then a potentially significant run up into November elections. I'll trade what the market does however - not what I "think" it will do.

  50. Trading Futures only is the goal.

    YEN = The biggest mover in currencies in the months to come.

    The indices = Going down.

    Waiting for Natural Gas to go back UP and it will !! Same for Lumber.

    Meats = Will start going down as well. I see a nice short play in Cattle.

    Have fun trading and watch your back !!

    Loic.

  51. Short S&P via 1X short ETF ( SH)

    Long PMs and PM stocks - I like royalties like SLW , TRE and RGLD

    Long some Oil, NG and Coal stocks all paying a nice dividend

  52. Already maximized. Current volatility is a challenge requiring constant vigilance.

  53. a drop to DOW 9000 then a scare to Central Governments for more QE and a revived market. But Gold rising in comparison and some currencies esp resources countries doing well against the USD

  54. The Bond Markets are much bigger than the Equities Markets,
    and the Bond Markets are telling us something - the word FEAR comes to mind.

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