Trading the Bounce

aus_trader · 2 May 2020

qldfrog said:
One point I did not see discussed much: SPP.
A lot of companies are raising capital, as they did in the GFC;
This tends to distort pricing severely obviously and present some risk and maybe some advantages;
I got offer from OSH, MTS, IVC so far out of a quite small portfolio...
Should I keep a few shares when I sell just to qualify? Is this something people have tried?

If these are companies you'd like to hold onto, yes keep a few shares to be eligible. Otherwise it costs extra brokerage to do that and end up with a few shares that makes the portfolio messy to keep.

Few years ago I tried what Dona suggested to keep as many companies on my portfolio as possible by having tiny holdings left when I sold out. For example if I had 500 shares, I will sell out 495 shares and hold the 5 long term to participate in cap raisings. It got so messy and paperwork used to clog the letterbox and drown me. It also took focus off from looking after the current shareholdings or trades. In the end I sold out anything that had a +ve value after the brokerage which weren't many and donated the rest to 'Share Gift Australia' to end the headache and keep a clean portfolio. In terms of raisings it wasn't worth it - it made a bit of money on some capital raisings but lost money on a lot of others.

ducati916 · 2 May 2020

So hedged by 25%.

jog on
duc

ducati916 · 2 May 2020

Pretty much the whole market running hot. Typical of bounces. Possibly now it runs a bit cooler.

The old Wall St adage may me apt this year: Sell in May and go away.

jog on
duc

qldfrog · 2 May 2020

ducati916 said:
Pretty much the whole market running hot. Typical of bounces. Possibly now it runs a bit cooler.

View attachment 103148
View attachment 103149

The old Wall St adage may me apt this year: Sell in May and go away.

jog on
duc

Looking at last night US market, we could indeed have seen the top of the bounce this week.
Can not manage to insert an image from my phone but looking at the last 3 months DJ, I see an exhausted rise and guess a top this week.
Brain playing pattern matching based on feelings more than knowledge..

waterbottle · 2 May 2020

Agreed.

Rising prices with decreasing volumes
The big companies that were meant to lift the rest of the S&P (i.e. Facebook, Tesla, Netflix, Apple, Google, Amazon) have either performed poorly or are expected to do so in the 2nd quarter. Meanwhile, other companies around them are only delivering poor results based on 1st quarter earnings (which only really caught the tail of this crisis!!!!!)
Increasing rhetoric RE: US v. China trade-war, which to be honest has been the case throughout Trump's presidency although for some reason it seems to have easily spooked market participants today
US Fed decreasing the amount of stimulus for the next week, now down to $8 bln/day

All-in-all, its a fragile market that's easily spooked with declining stimulus.... IMO the next leg will be down.

The question for me is: Does it stop at the March 23rd lows or does it keep going? Personally, the synchronised, global intervention and the introduction of remdesivir detracts from the possibility of a new low being reached.

ducati916 · 2 May 2020

Just to provide some context: the S&P500 has moved in excess of 2SD deviations higher since the bottom. That is a really massive bounce (particularly when you include the time frame involved) and it was always going to become unstable at some point. That point might be now.

I'm going to watch the (if it continues to sell-off) 2600 level as we had a lot of action there on the way up. It also happens to be the 1SD deviation mark lower (on the initial sell-off) and bounce higher.

So I would be looking (in a continued sell-off) for a signal circa the 2600 level.

jog on
duc

aus_trader · 2 May 2020

qldfrog said:
Looking at last night US market, we could indeed have seen the top of the bounce this week.
Can not manage to insert an image from my phone but looking at the last 3 months DJ, I see an exhausted rise and guess a top this week.
Brain playing pattern matching based on feelings more than knowledge..

Here it is qldfrog. Looking at it it's not clear if this is just another pull back in the bounce or the start of a leg down...

qldfrog · 2 May 2020

If we were talking about the virus, i think flattening the curve would be the term we would use but while death or cases do not diseappear, reverse action is possible on the market, the curve can go down

My belief is some people will call it stabilisation before another up period while other will see a peak, we will know more next week

aus_trader said:
Here it is qldfrog. Looking at it it's not clear if this is just another pull back in the bounce or the start of a leg down...

View attachment 103162

aus_trader · 2 May 2020

qldfrog said:
If we were talking about the virus, i think flattening the curve would be the term we would use but while death or cases do not diseappear, reverse action is possible on the market, the curve can go down

My belief is some people will call it stabilisation before another up period while other will see a peak, we will know more next week

I think it will be clearer of the direction as more and more companies report their impact going forward. At the moment a very similar picture in DJ as well...

Student of Gann · 3 May 2020

I went back and rechecked the cycles and it looks like the 29th April Top is connected to the Top 1st May 2019 . So if this Top holds past records indicate a 7.5% decline into either Friday 29th May or Monday 1st June which is in line with the original Forecast

ducati916 · 3 May 2020

aus_trader said:
Here it is qldfrog. Looking at it it's not clear if this is just another pull back in the bounce or the start of a leg down...

View attachment 103162

On current data (indicators that I use) it is simply a pullback, it is not the start of another leg lower. If it were (or I thought it were) I would not be hedged 25%. I would be hedged 150% or completely sold out (100%).

My best guess (and it is a guess) is 2600. Partly that it is a technical support/resistance level, partly it is the location of the 1SD move (both down and up). Someone might want to stick a Fib. analysis on that level and see if it matches up at all. I haven't checked but I wouldn't be surprised to see a 50% mark on a Fib.

jog on
duc

fiftyeight · 4 May 2020

ducati916 said:
Yes. I like trading volatile instruments as my strategies are based around volatility.

jog on
duc

Does the below relate to what you were referencing re vol and your strategies?

http://econompicdata.blogspot.com/2016_01_01_archive.html

Smurf1976 · 5 May 2020

ducati916 said:
On current data (indicators that I use) it is simply a pullback, it is not the start of another leg lower.

Using a completely different approach I'm thinking the same.

I've gone looking for opinions online, anywhere basically and by that I mean financial sites and non-financial where there's some discussion going on. Most of that focuses in the US markets but bottom line is that public sentiment is predominantly bearish so far as I can determine and I take that as a contrarian indicator.

ducati916 · 5 May 2020

fiftyeight said:
Does the below relate to what you were referencing re vol and your strategies?

http://econompicdata.blogspot.com/2016_01_01_archive.html

No, not really. I'm largely gamma scalping.

jog on
duc

ducati916 · 5 May 2020

Smurf1976 said:
Using a completely different approach I'm thinking the same.

I've gone looking for opinions online, anywhere basically and by that I mean financial sites and non-financial where there's some discussion going on. Most of that focuses in the US markets but bottom line is that public sentiment is predominantly bearish so far as I can determine and I take that as a contrarian indicator.

Agreed.

Markets and the economy (which includes sentiment) often diverge. The day-to-day economy that we live in, is only a single variable in financial markets. Thus, the financial markets can (and often will) trade (seemingly) irrationally to that day-to-day economy.

jog on
duc

aus_trader · 5 May 2020

ducati916 said:
Someone might want to stick a Fib. analysis on that level and see if it matches up at all. I haven't checked but I wouldn't be surprised to see a 50% mark on a Fib.

Here it is on the S&P500, already rebounded above 50%

ducati916 · 5 May 2020

aus_trader said:
Here it is on the S&P500, already rebounded above 50%

View attachment 103207

So it was actually a bit higher than I thought. It also looks like the sell signal will be invalidated today and a buy signal generated for tomorrow. Again, very shallow pullback if signal reverses. I'll post later on whether it has or not.

jog on
duc

aus_trader · 5 May 2020

I am still cautious on this V shaped US market recovery. The reason is simply this:

"" Looking at the stock markets, it seems that the US has recovered the most and the rest of the world markets are lagging behind in the recovery or languishing near the bottoms.

But I fear that the US might be the Achilles Heel in the Global market recovery thanks to mismanagement of the situation (the virus), although they are leading with their FED backed stock market bounce at the moment... ""

Quoted written by myself on another thread. I thought to just past it here.

gartley · 5 May 2020

aus_trader said:
I am still cautious on this V shaped US market recovery. The reason is simply this:

"" Looking at the stock markets, it seems that the US has recovered the most and the rest of the world markets are lagging behind in the recovery or languishing near the bottoms.

But I fear that the US might be the Achilles Heel in the Global market recovery thanks to mismanagement of the situation (the virus), although they are leading with their FED backed stock market bounce at the moment... ""

Quoted written by myself on another thread. I thought to just past it here.

US has probably see the best of it's gains for now. ASX has catching up to do but trend still up and I think will pick up momentum in weeks ahead.

ducati916 · 5 May 2020

So signal was triggered today: close shorts re-open longs. Choppy.

jog on
duc

Trading the Bounce

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