Pre-Market Analysis: September 18 2013
Futures are up slightly. But does that even matter? With todays 2pm Fed forecast, you can expect some intra-day volatility. So I doubt the opening print will be much of a guide for the day ahead. So what can we do to prepare?
Well, before any market moving event it makes sense to take stock of where you are now. Review your positions, check your cash balances and pull up some charts of the major indices to get grounded.
I’m sorry if this is a repeat for you. But I’m also reminding myself.
For example, IWM is threatening new highs (possibly negating a blow off top). And the Dow Jones Industrials are back at their previous highs (indicating a triple-top or head and shoulders reversal pattern to some traders). And while we are still in a major uptrend, it’s important to understand any potential headwinds so we can be nimble, if it’s needed.
Plus you don’t want to slip into complacency. Especially on a Fed day such as this. I wish I had more to say, but the truth is you just have to expect some fireworks this afternoon.
My gut feeling is the Fed disappoints and markets pullback.
September 18 2013 Portfolio Review:
As I mentioned at the end of trade yesterday, I’ll be watching for some follow through in SNV. I might even take some profits if we see a morning gap higher. And any sustained run into the Fed meeting will be a “sell the news” event for me. If there’s a chance to scalp some gains after yesterday’s run up, I’m willing to sell a 1/3 to 1/4 of this core position. Unfortunately (and owing to the low volume of yesterday’s move), I think the more likely play is SNV will retreat lower.
And to be honest I don’t expect much from the rest of my stocks either. BRKS and AEG had flat days yesterday. And I expect them to follow the general market trends once the Fed shows us what’s behind the curtain.
Per my analysis yesterday, TINY is in a world of it’s own. So I’m sure it will be relatively insulated (unless there is huge selling across the board).
Obviously it’s clear from the above I’m pretty uncertain about what will happen next. So to pass the time here’s what I’m researching this morning…
Good Articles For September 18 2013:
— With the Dow Industrials coming to their prior highs, and the QQQ approaching dot-com-bubble prices, it pays to learn about the applications of overhead supply.
September 18 2013: Stock Market Day in Review
By now you know the news du-jour: No Taper. But can you believe it? And can you believe markets rallied on the news?
Sure it’s great in the short term. And I guess if there is no downside to QE why should we stop. COCAINE FOR ALL. Right?
Isn’t the underlying assumption for more that QE that the economy is not ready to stand on it’s own? That’s why I like this bearish ForexKong conclusion. It makes sense to me. And it makes sense UUP got absolutely throttled.
But until equity price action says otherwise, we remain decoupled from economic data, at the whims of an over-arching (and apparently unstoppable) uptrend. So play along accordingly.
And if you’re curious to know how my portfolio help up today, allow me to fill you in:
I finally pulled the trigger on IAG and day traded the stock for about a 4% gain. But it wasn’t anything worth bragging about and could have just as easily gone against me. Plus I dilly-dallied and debated executing the trade for much longer than I should have. I guess that’s why you need more detailed trading plans. I’m really not a day trader.
As for my prior positions: AEG looked good. And BRKS, although a little late to the party, ended up moving higher. I should have took my own advice this morning with SNV and sold when it hit $3.36. But instead I held on hoping for more, and watched the stock fade hard into the close. And oh yeah, per the value trap thesis, TINY did nothing.
So I guess all we can do now is wait. Will there be follow through higher tomorrow? Or was all of this an elaborate head-fake to trap in the capitulating retail bears? Only time will tell. But if you keep a close eye on the price action (including divergences), you might be able to take advantage of the next move (whichever direction it ends up being).
How are you feeling after today’s volatile market action?
PS – if you’re looking for more commentary, check out this tape talk video by Quint Tatro.