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buffalonate (43.86)

I Called The Pullback!



June 01, 2011 – Comments (32)

On April 28th I wrote a blog saying that the market was due for a big pullback due to the market being way too high considering there was high unemployment and high oil prices.  I also said I was going to put money into 3X bear etfs until the market pulled back.  A lot of people said you can't time the market and you will lose your money in the 3X bear etfs.  I was right on both as I called the exact top of the market and made more than 12% in the bear etfs I was in.  It doesn't take a genius to figure out that when gas prices go sky high the economy and the market will soon crash.  I fully expect that the Dow will keep pulling back until it hits about 12,000.  Big Oil is only using 81% of their refining capacity right now which is manipulating prices upwards.  Until they decide to actually supply enough gasoline our economy will be stagnant and so will the market.     

32 Comments – Post Your Own

#1) On June 01, 2011 at 5:12 PM, ikkyu2 (98.17) wrote:

Refiners have little ability to affect the retail price of gasoline, they deal with the 'crack spread' but are far from being the main force that determines what that spread really is.

Congrats on the top call.  What do you see coming up for 3Q 2011?

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#2) On June 01, 2011 at 5:22 PM, mtf00l (43.17) wrote:

What ikkyu2 asked and is your "system" a mentality or do you have a tool?  Like a spreadsheet.

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#3) On June 01, 2011 at 5:25 PM, L0RDZ (90.88) wrote:

I wouldn't exactly be braggin...  and holding a triple neg etf for months let alone  weeks  is crazy...

Triple etfs  are nuts....   I see a fight coming... but I won't go there... LOL....

Mister  Nostradamus....  LOL...  good job nonetheless... go on with your bad  self...   now if you said all this  yesterday  you would have a little more cred.... is all i'm saying..

So how much money did you make in the real world ?   luck trumps genius... all the time.



Come tommorrow if it swings wildly back what will you say.

2% is no correction...


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#4) On June 01, 2011 at 5:30 PM, ikkyu2 (98.17) wrote:

Well hey now, I recall reading the kid's top call in April and thinking it took guts.  (Also don't think holding a 3X ETF for more than an hour or two is a very good idea due to contango but that's a separate issue.)

I think in general it'd be good if folks didn't come in after a well-intentioned post and start attacking; that'll just drive decent folks off the site.

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#5) On June 01, 2011 at 5:38 PM, L0RDZ (90.88) wrote:

To clarify I meant  good  JOB  BUFF.........   sorry...


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#6) On June 01, 2011 at 5:52 PM, buffalonate (43.86) wrote:

I think I was one day off on calling the top but close enough.  I remember listening to the financial news and hearing that the DOW was 10% off of its historical high with oil at $113 and unemployment at 9% and the market had gone up 4% in April.  It seemed like a pretty obvious time to short to me.  I held the SQQQ and TZA for less than a week and made somewhere between  10% and 15% on both.  I have been sitting on cash for the most part but I did buy a few things today.  I put 4K into a 3X Financial Bull etf today because it is the lowest it has been in several months and I am bullish on the financial sector longterm.  I have thought that gas prices have been manipulated higher for awhile now due to the rise in gas prices being much higher than the rise in oil prices.  Senator Chuck Schumer agrees with me as he is having a Senate hearing on the subject soon. 

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#7) On June 01, 2011 at 6:04 PM, TMFAleph1 (89.75) wrote:

I don't mean to be negative or discouraging, but this call almost certainly falls under the 'Fooled by Randomness' category of succesful predictions.

Almost everyone falls prey to this illusion, to one degree or another. Personally, I try to guard against it. In this article which ran on Friday, Apr. 29, I wrote:

" analysis of the historical data suggests that those who pay nearly $50 an ounce will eventually suffer massive losses."

I might be tempted to believe that I called the top in silver, as the metal lost roughly 30% the following week. However, in the same article, I also wrote:

"Silver is in a bubble, but I'm not predicting an imminent fall in its price."

I know that the timing of the publication, just prior to silver's correction, was the product of randomness. The only thing I was reasonably confident of when I wrote the article was silver is significantly overpriced at $50.

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#8) On June 01, 2011 at 6:06 PM, buffalonate (43.86) wrote:

The market is down 4% from when I called the pullback and I strongly believe it is going below 12000.  When that happens I will go back to being fully invested.  Because of the debt problems in Europe and the USA there is going to be a huge amount of volatility going forward which makes it easy to make money with short term bets on leveraged etfs.  I put 4K into FAS today at 25.50 so we will see how that turns out in a few weeks. 

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#9) On June 01, 2011 at 6:06 PM, L0RDZ (90.88) wrote:

Be careful on  FAS  Buff....    if your wrong cut your losses sooner than later...


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#10) On June 01, 2011 at 6:08 PM, TMFAleph1 (89.75) wrote:

Also, the only way to call a 1-day a 'big pullback' is by comparison with the ultra-low volatility we experienced in May.

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#11) On June 01, 2011 at 6:09 PM, Borbality (39.59) wrote:

congrats, but it seems like you could come up with plenty of good reasons every month why the market should be going down, for about the last three years. 


 Again, congrats on making some money but I would take it and run. 

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#12) On June 01, 2011 at 6:09 PM, TMFAleph1 (89.75) wrote:

***Also, the only way to call a 1-day drop of 2.28% a 'big pullback' is by comparison with the ultra-low volatility we experienced in May.

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#13) On June 01, 2011 at 6:10 PM, Momentum21 (96.95) wrote:

Congrats on "the call" but you are all over the board here...

On CAPS you opened two leveraged bull ETFs in mid May (TNA & UYG). Why would you do that while still holding a 3x short in RL? 

I find it hard to believe that you would wait until today to sell off your 3x bears when most of you return was basically made today. It sounds like you did sell today, correct? 

TZA actually peaked on May 24 @38 and the S&P ironically was 1314 on that close. So TZA has lost about 5% since May 24 while the S&P was dead flat.

It sounds to me like you barely escaped with your life while holding these bad ETFs for too long and now you are doing a victory lap! : ) 

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#14) On June 01, 2011 at 6:11 PM, buffalonate (43.86) wrote:

When gas prices sky rocket and the market still goes up 4% in a month, predicting that the market will have a major pullback is not random it is common sense. 

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#15) On June 01, 2011 at 6:14 PM, TMFAleph1 (89.75) wrote:

"...which makes it easy to make money with short term bets on leveraged etfs."

I'm sorry to have to tell you this, and I don't mean to be rude, but that kind of remark can only come from someone who has only experienced a single market cycle.

People who say things like this almost invariably end up getting their heads handed to them (i.e. experiencing losses that exceed their aggregate gains until that point.) 

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#16) On June 01, 2011 at 6:18 PM, TMFAleph1 (89.75) wrote:

"...predicting that the market will have a major pullback is not random it is common sense."

You're missing my point. There is a crucial difference between predicting a pullback and predicting its timing with enough confidence to bet on it with a 3x leveraged ETF. The odds that you can do the latter profitably on a long-term basis are epsilon.

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#17) On June 01, 2011 at 6:24 PM, L0RDZ (90.88) wrote:

3  Important questions needing answering  :)

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#18) On June 01, 2011 at 6:26 PM, Momentum21 (96.95) wrote:

 I strongly believe it is going below 12000.

Buying FAS today @ 25.50 doesn't seem to make that much sense to me under this theory you are holding for the broader market.   

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#19) On June 01, 2011 at 6:28 PM, L0RDZ (90.88) wrote:

More important  issues :)

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#20) On June 01, 2011 at 6:33 PM, buffalonate (43.86) wrote:

If the market makes a big move upwards or downwards I make a leveraged etf bet the other way.  It is not guaranteed to make money but I am 7 for 8 in the last couple of months.  I can usually make a nice profit within a week.  Will I get burned by a really big move in the markets at some point?  Probably but I am not betting with a big % of my money so I don't care.  I have a lot of my money in cash right now so it is just profitable entertainment.  My favorites are TNA and TZA because they are really volatile.  Last week I bought TNA at 78 and sold above 84 a few days later which made for a nice profit.   

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#21) On June 01, 2011 at 6:44 PM, L0RDZ (90.88) wrote:

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#22) On June 01, 2011 at 6:48 PM, buffalonate (43.86) wrote:

I only put money into leveraged etfs long enough to make at least 6%.  If that takes 2 days or 2 weeks I am fine with that.  If it takes longer than 2 weeks to make a decent profit then I made a bad bet.  I don't bet more than 5% of my money on leveraged etfs so I don't lose any sleep over it at night.  Right now I am betting with profits from previous leveraged etf bets so I could really care less whether I lose it or not. 

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#23) On June 01, 2011 at 6:48 PM, TMFAleph1 (89.75) wrote:

" is just profitable entertainment."

If it's just entertainment, that's a different matter entirely. Most people are prepared to pay for entertainment.

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#24) On June 01, 2011 at 7:23 PM, buffalonate (43.86) wrote:

I don't think the market is going up much for a long time so I think the best way to make money in this environment is to play the volitility. 

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#25) On June 01, 2011 at 7:34 PM, buffalonate (43.86) wrote:

TMFBullnBear,  you don't think a 4% pullback in a little over a month is a big pullback?  As long as gas prices stay high it is going to keep trending lower.  High gas prices mean little to no good economic news is coming.  I would be shocked if the market doesn't go below 12,000 in the next month or 2.  I might even bet on it. 

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#26) On June 01, 2011 at 7:39 PM, L0RDZ (90.88) wrote:

Buff how long have you been in stocks ??? if you don't mind us asking ?

As to what happened today,  have you ever considered that its a short holiday week ?  and when the cats away the mice do play ?

Funny how people who are angel investors in  social networking will never  say anything bad about  the recent IPOS   man that guy is straining...  Marc Andressen...

Just listen to the strain  ~   in his voice.

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#27) On June 01, 2011 at 8:11 PM, buffalonate (43.86) wrote:

I have been investing for about 10 years.  My grandparents are millionaires from investing in stock so they got me into it.  For the first few years I didn't really know what I was doing.  After I read Peter Lynch's One Up On Wallstreet and The Motley Fool Guide to Investing I started to get good.  I have never found another investing book close to as good as those two.  After I read those 2 books I started to keep track of my returns and I am up over 12% annually the last 6 years, which is over twice the return of the market.  With gasoline as high as it is there is nowhere for the market to go but down.  It will be very choppy but it will continue going down.  Many economists believe the high gas prices of 2008 are what really caused the recession to begin with.  I have only been on CAPS for a few months.  I like it because it is a good way to keep track of interesting stocks and experiment with new ideas without killing your real returns.  I stay away from IPOs entirely because there is rarely any value at that time.   

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#28) On June 01, 2011 at 8:30 PM, L0RDZ (90.88) wrote:

Buff you do know its a rigged game ???

Hope you liked my comedical clips... good luck  man..

Gasoline is high ??  lol....  I didn't really notice...  the price actually seems low when you consider all the factors it takes to get that gas as well as the economic money policies of our gov.

Strong dollar will  crush  these high prices or at least  bring them back down.

It sure is easy to scape goat high gas prices as the culprit, just like  the easy loans  made to everyone to buy ridiculously overpriced  real estate.

Betting against the long term success of America is like  playing  dice~craps  too long,  eventually the table will eat you up and spit you out.

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#29) On June 01, 2011 at 9:07 PM, buffalonate (43.86) wrote:

I would never bet against our economy for long.  But until the dollar rises oil will stay high and the economy will suck.  Lordz, you have to admit that I called the top and the market is down 4% since.  Everybody knows that high gas prices will kill the economy but for some reason the market kept going up until people got proof the economy was slowing.  I think the wallstreeters underestimate the psychological effect high gas prices have on the consumer.  People get a constant reminder of how much they are spending on gas and stop spending money on other things.   

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#30) On June 01, 2011 at 9:38 PM, L0RDZ (90.88) wrote:

Buff I think you may think your right, but for the wrong reasons,  regardless if your making money that counts more than who is right.

I would be wrong all the time if I could make money most of the time.

I may have missed it, but I didnt see no this is the top blog.

BTW  the top has yet to arrive,  just as soon as one positive data point comes, it'll  all change,  all the so called data points have been neg  and the mkt  climbed and climbed...  I see the market still climbing  once  this downturn  corrects.

I think the holiday had more to do with  the mkt dropping as much as it did today,  big money isnt stupid and as soon as prices come down you'll  see  them  driving up the mkt.

Big money makes more money on the way down and than even more on the way up.

Your family didnt make their millions shorting stocks :)  but by owning them.

How do I know ????  :)

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#31) On June 01, 2011 at 9:41 PM, L0RDZ (90.88) wrote:

The economy really isn't slowing... only  the perception that its slowing... 

Ask anyone who has $$$$  and the right opportunities  and its balls to the walls  in growth and profits.

As soon as the debt ceiling is raised Obama will buy his second term.

Check out CNBC   slavery sex trade....     4% slaves  making like 32 billion  40%  of the slavery profits

slavery profit margin is 60 % plus....


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#32) On June 01, 2011 at 10:13 PM, buffalonate (43.86) wrote:

My blog was titled Market Due For a Big Pullback and was written on April 28th.  The market won't go above 12,800 for a long time.  High gasoline sucks the life out of the economy.  There won't be much good news to come.  Unless someone figures out how to get the manipulation out of the oil market the stock market is going nowhere fast.  Longterm everyone should be a bull, but for the next few months I am definitely not a bull.  What brought the market down today was the ADP employment report that was way below what it was supposed to be. 

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