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cbwang888 (29.70)

Game plan for the next bottom and rally

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February 28, 2009 – Comments (5) | RELATED TICKERS: FAZ , QLD

 

I think we are repeating the same monthly up-down pattern (magnitude may deviate) late last year if you comparing the chart of S&P500 or look at historical data on day or two after option expired. Only thing is that we didn't have a massive sell-off during last summer so we didn't get strong rebounce either. We had 2 ugly months on Oct/Nov 2008 that gave us 1+ months of strong rally. I expect the magitude of late March rally to be less stronger than what we had for Santa rally of 08. 


 
 
20-Jul21-Aug22-Sep20-Oct20-Nov
126012771207985750
-4%1%-5%-18%-24%
20-Nov19-Dec20-Jan20-Feb20-Mar
750888840770693
-24%18%-5%-8%-10%

Based on that assumption, I think S&P500 index will have short term bottom around 680. Then it should come back to 750 before the next leg down.

My game plan is to cover 80% of my shorts when S&P500 index break 700. Then I'll commit 40% to QLD, 5% buying puts of FAZ. Sit and watch if strong reversal happens or not. If not, I think the rally might be short live and switch to day trading mode ...

I put in my game plan here and hope to hear some fools to pitch in their thoughts.

5 Comments – Post Your Own

#1) On February 28, 2009 at 7:12 PM, Ecomike (< 20) wrote:

You need to read Goodvibes recent TA blogs here the last few days. You might want to reconsider those plans.

I too see the monthly trend, especially in oil and gas stocks running a monthly panic/rally/panic/rally cycle around the options monthly cycle for oil and gas, natural gas.

 

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#2) On March 01, 2009 at 10:49 AM, mattskin (96.59) wrote:

I am anticipating an upturn in the same range as well.  I am thinking roughly 40% SSO, 40% DIG, 10% BGU, and 10% FAS.

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#3) On March 01, 2009 at 11:02 AM, JoeAgresti (86.37) wrote:

these etfs are complete bull, do the research, u dont get the move for your money. just buy the stocks

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#4) On March 01, 2009 at 1:19 PM, ayekappy (< 20) wrote:

Joe: What do you mean?  Leveraged ETFs are horrible for long-term, but for short term it's hard to find anything better if you're placing the correct bets.

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#5) On March 02, 2009 at 7:23 AM, cbwang888 (29.70) wrote:

Looks like March is going to be as ugly as Feb. We will break DOW 7K on the first trading day of March.

Instead of going short more, I'll put 1% of my portfolio into put buying before the next bottom reach. I would suggest mid March?

 

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