'Twas the night before Christmas
And all down the Street
Not a hedge fund was stirring
Not even a peep The write downs were hung
From the chimney with care
In hopes that St. Benjamin
Would soon be there
The bankers were nestled
All snug in their beds
While visions of bailouts
Danced in their heads
Dear Treasury and Congress
And the FOMC
Oh please won't you save me
Mr. FDIC?
For the Nikkei had tumbled
And the S&P crashed
And not a bank in the world
Had saved any cash
In London, in Tokyo
And, of course, on Wall Street
There was nary a profit
On their balance sheets
On sub-prime, on leverage
On CDO's
Are any banks solvent?
Nobody knows.
Investors had fled
Redemptions were froze
Their investments now worthless
For the funds had all closed
Oil's at 40
Stocks are in deep
The Yen's at the moon
The Euro is cheap
And when it looked like the market
Would never turn 'round
I heard the most wonderful
Magical sound
For what to my wondering
Eyes should appear?
But a federal helicopter
And eight tiny reindeer
It kicked up a cloud
Of new fallen snow
As it hovered above
My rooftop below
And the doors they all opened
From way up on high
And the money it fell
Through the Christmas Eve sky
Dollars and sterling
Euro and Yen
No expense spared
Consumers must spend
And then he appeared
All decked out in red
An angel from heaven
The chair of the Fed
He stood on my rooftop
Yelling with glee
"If the banks, they won't lend it
We'll print it for free."
As I doubled my leverage
And turned back around
Down the chimney St. Benjamin
Came with a bound
He was dressed in Brooks Brothers
From his head to his foot
His checkbook was covered
With ashes and soot
A bundle of money
Was flung on his back
Dollars and T-Bills
Overflowing his sack
To Fannie and Freddie
GM and GE
To Citi and Goldman
And, of course, AIG
Mortgages, car loans
Credit cards, too
Credit default swaps
We'll buy it from you
From currency swaps
To agency debt
The Bank of New Zealand
And China is next
He filled all the banks
With holiday cheer
Except for poor Lehman
They were naughty this year
He gave out his goodies
But before he did go
He stuffed all our stockings
With taxpayers' dough
And then he was gone
In a white puff of smoke
But nothing had changed
The country was broke
But still he did yell
'Ere he flew out of sight
"Merry Bail-Out to all
And to all a good night."
MERRY XMAS everyone. I will be back on the 29th December 08
So G, what are you suggesting now? That we have price control in oil?.... great...why don't we do the same for housing, or better yet: currencies... oh you tried that, didnt you, back in 1992.... uh, forgot that, did you? forgot your lesson about market forces...............merry xmas....
"Wild fluctuations in market prices harm nations all round the world," Mr Brown insisted. "They damage consumers and producers alike."
Well, I am glad he insisted. I am sure none of the oil producers were harmed on the way up. It does say somewhere in my "investments 101" that prices may go up as well as down. I guess G wants to put an end to that.... ... lord help us all
Friday 19th December 2008 - 10:15am
EURO STERLING
I have just completed my best trade ever, one which funnily enough was discussed at my IX seminar about 2 weeks ago. The Sterling Euro is making fron page news, and if you read my newsletters, you know I have been hammering on about "parity", even on CNBC and Bloomberg. So I was talking my own book, well who isnt??
However, on the 2nd chart you can see a monthly 1,27 extension has been hit, so I am flat. The next target is 91 pence to the Euro, IF we begin to trade below parity. I may re-enter, but now it is time to hear the cash register ring. That is after all why we are trading. Let us not forget that.
SP500/Dow Index
I had forecasted a turn on the 5th December. It marked a good turn, BUT we are certainly not motoring higher, for whatever reason. I saw a great interview with Hugh Hendry, who made a note of everyone being on Xmas holiday. Maybe that is why we are going nowhere. I am staying commited to the long side as long as my 5th Dec turn is not violated.
PROPERTY
And now a little history lesson. I love - simply LOVE - when people say "this time it is different". Well, maybe there will be a time when things are different, but I wont hold my breath. Trying to explain to my family WHY it was time to get out of real estate 2 years ago on the back of the work I had come across with Dewey and the Foundation of cycles was like trying explain the use of prudence to GB. Either way, as it is never too late to learn, I want to show you the very interesting chart of property of the last 150 years. If you are not out, get out, and if you are waiting to get in, wait some more:
Merry Xmas
Sunday 14th dec 08: sorry for the lack of updates. I got flu.
Tom
10th December 2008 07am
outstanding interview with Hugh Hendry
http://www.cnbc.com/id/15840232?video=957524089
ttp://www.cnbc.com/id/15840232?video=950838437
why do I need to write, when I can let him do the talking. Amazing
Tom
8th December 08 7am
I believe in cycles !!!!!!!!!!
Tom
7th December 08 10pm
I am quietly hoping that my predicted turn for the 5th was the start of a strong close to the year. I am long. I wil update the site by Monday 10am...
Tom
Tuesday 2nd December 2008
Good afternoon,
I got some great news: Larry Pesavento is coming to London to conduct a 2-day workshop on the 31st January - 1st February 2009. The two-day workshop will be conducted in London from 9am to 4/5pm on both days. I will have the details ready later in the week.
More news: I am speaking at Nick McDonalds Trading Symposium on Friday the 30th January, where Larry will also be and we will both be trading live. It will be a great day, and I have organised with Nick for discounted tickets for anyone signing up for both the Symposium and the Larry Pesavento seminar. Stay tuned for more information
Finally the Weekly TA newsletter has been sent out to you. The live trading room is up and running, and I am putting it through the paces. I am getting used to the technology, so bear with me in this transition phase.
Thats all for now. Next update is tomorrow
Tom
Wednesday 26 th November 2008 07:33am
Good morning,
The Asian complex is trading largely higher The US session last night was a messy affair, with little genuine direction. The Dow hit 8600, and fell off immediately. Chart wise it looks like we are consolidating the recent 13% rise in the Dow. There was a comparison to 1987. A 13% rise over a two-day session was a record not seen since 1987. Well, if that comparison holds water, then we will see the market rangebound for many weeks to come, and it could be wide ranges indeed.
The FTSE 100 will probably hold around 4075-50 (futures market - +10 point premium), to produce a range bound market, otherwise we dont have any genuine support until 3900.
The SP500 correlation chart with the Yen(JPY) looks interesting. The JPY is sitting at 95, with a bias for lower prices. Will it drag the SP500 with it?
Happy trading
Tom
vvv
If you can manage to digest it, it is well worth reading the following extract from John Mauldin, from the Front Line Newsletter:
""
Warren Makes a Bet
And let's close on this note brought to my attention by Bill King.
"MSN Money's John Markman: Shares of Warren Buffett's insurance holding company are on the ropes this month, plunging 30% in part because the famed investor dabbled in an area of the market he has long publicly derided: derivatives. And due to a tangled web of financial relationships, they may be taking Goldman Sachs shares down with them. Investors are concerned about a $37-billion bet that Buffett made last year that U.S. and world equity values would be higher in 15 to 20 years than they were then, when the Dow Jones Industrials were trading around 13,000. Through his firm, Berkshire Hathaway, Buffett sold option contracts, known as "naked puts" to an undisclosed group of investors for around $4.85 billion, reportedly using Goldman as broker...
"Because of its solid-gold credit rating, Berkshire Hathaway was not required to put up collateral to make this trade. But now rumors are flying on Wall Street that the owners of the contracts have demanded that broker Goldman Sachs put up collateral for the rest of the amount due. Since the value of the trade could be infinite, the collateral demands are said to be large, and fears that Goldman will struggle to make good on its obligation has panicked shareholders. Indeed one theory making the rounds this week is that Buffett put $5 billion into Goldman at around $125 per share in September not as an investment but to help provide funds for the collateral.
"Isn't this the oracle that called derivatives, 'financial weapons of mass destruction'?"
I personally think that Warren made a very good bet. I would be shocked if the Dow was not at 13,000 in 20 years. Inflation will do most of that heavy lifting. But it does make for an interesting discussion now. """
Happy Trading
Tuesday 25th November 2008 08:33am
Good morning,
I have sent out a newsletter this morning to all subscribers.
Larry Pesavento is coming to London in late January 09 to do a seminar, with live trading. Stay tuned for that. In the meantime I will show you an awesome chart he sent me. I have included his text too:
Nov 25th is “combust” Mercury conjunct Sun and is one of the most accurate of astro-cycles we follow. It is usually within 1 day of the exact turn. I have not seen as many 3 drive to a bottom and bullish butterfly patterns coming together. Keep in mind these patterns can fail so that is why good risk protection is absolutely critical.
Stock Markets around the world are poised for a rally that could last several weeks. Asian markets in particular look far better then American markets. Realize this could change in a matter of hours due to some important economic or geophysical event. i.e. earthquake. The next important astro-cycle occurs between Dec 11th-13th.
The real problem in our economy and (the rest of the world also) is that we are in the most severe recession anyone has ever experienced. Just review the following great companies that are near worthless. Some are no longer with us. BSC-LEH-AIG-WM-C-GM-F. Make no mistake about where we stand economically. We are going down until 2011 when the next major planetary opposition and conjunction occurs.
"history tells us that a stock that goes below $5 will file for Chapter 11"
Tom H
Wednesday 19th November 2008 14:24pm
Good afternoon,
I am not sure there is any reason to change the analysis. This market hasnt done anything to make me bullish......
Tom
Tuesday 18th November 2008 07:50am
Good morning,
I had a very fun evening trading SP500 futures during a Technical Analysis seminar. It was a chaotic mix of teaching the theory and applying it in real-time. Great fun. It was very much like last Friday in Frankfurt during the World of Trading show. They had arranged a live trading night, so for 3-4 hours my laptop was public domaine and they could see everything I looked at. Slightly intimidating, and disturbingly exhibitionistic, but above challenging. When 500 people are watching, you better make sure you don't cut corners.
The trading session last night was interesting because there were no buy signals at all during the day, on the system that I use in the live trading room. When that happens, you get a big move the day after. I can only surmise that this mean we will be headed lower today, much lower. I am not going to bet on it, I will trade the signals as they come, but I thought I would pass on this observation.
The live trading room has been a tough start last week and a decent finish. It was down 30 SP500 points by Thursday, but Friday produced 40 points (before a crowd - so a great testimonial) and another 20 points last night before another bunch of seminar attendees.
I think a re-test is coming. This would take us to the lows from Thursday, before the insane 800 point Dow rally. Any move above 870 in the SP500 will negate this prospect.
The market extended by 1.27 from the GLOBEX 38% retracement, into the regular trading session, to provide a selling opportunity.
Thats the view for now. Here is the FTSE 100 chart. I will press the short side under 4100
Monday 17th November 2008 05:10am
Good morning,
The Dow lost 400 points in the final hour on Friday. This morning the Dow has been called down another 200 points. Right now it is being called down 100 points. The FTSE however is being called down 10 points. Am I missing something here? I would have thought the FTSE would be called down a lot more, as well as the Dax.
I have attached two time cycle charts for your viewing. It is the second chart that I am paying particular attention to now. The 10/22 Oct call has been breached in the SP500 and I think it is a question of time before the same will happen in the Dax and FTSE. Therefore I am looking for the market to continue lower into the 5th December.
The cycles on the chart below is proprietary, although you should be able to figure that out in about 10 seconds or less.
So it is more downside for me. The October calls produced a good turn, but obviously not the buttom yet.....
My newsletter will be sent out tonight or tomorrow lunch time. You can sign up here:
Webmaster message: Tom H is in Germany for the live trading show in Frankfurt. Unfortunately the Wi-FI connection in the hotel is not powerful enough to launch the website updater. Normal service resumes Monday.
Webmaster
Wednesday 12th November 2008 08:54am
A quick update: This sell-off is omnious, and I have closed all longs for now. I dont know what has caused it (do I need to know?), but the fact that we gap up and fail to hold the gains makes me suspicious of the prospect for upside gains this morning. I like the SP500 futures to regain 910 before I am enthusiastic about the long side. Right now it looks bearish and I am looking at the short side.
Unfortunately I am not able to update the site throughout the day....
Tom
Wednesday 12th November 2008 08:15am
A quick comparison between crash lows in 1929 and now. I wouldn't put my money on it. It seems too circumstantial, but it does oddly enough though support my bullish stance.
I did the same for 1987 crash (not shown here), but I found no significant correlation.
What is the conclusion for the chart below? Well, IF you believe it has any merit (and that can arguably be a big IF), then we are about to embark on another leg up.
I like the SP500 to hold above 900. Maybe today will give more clarity on this issue.
Tom
Tuesday 11th November 2008 06:50am
I have attached this weeks newsletter here instead of emailing it to the subscriber list.
tom
Friday 7th November 2008
Special update friday 8pm.. this pattern looks like it could fall into negative into the close. A move below 900 and a close below 900 is very bearish, and I will stay be short over the weekend....Dow is off 150 points from its intra-day highs. Goldman Sachs is down 6% on the day....
Tom
Friday 7th November 2008 13:23pm
7 minutes to go. There is no doubt the report will be bad, but it is a question of how bad.....We held 900. Any move below will have me betting on some form of retest of the lows around 880 or lower. But I am optimistic the market will attempt to resurrect the rally after we hit the 62% retracement last night in the Dow....
so here we go.. good luck.. I will post more in-depth analysis after today. The game plan is simple. Watch 900 like a hawk...
Tom
Thursday 6th November 2008
I went on CNBC and presented my view. I will repeat that here.
The SP500/Dow turned on a dime on the 22nd October. This date was flagged here and in the Matrix Newsletter for a while. There is plenty to be bearish about, but I am still playing the long side. Granted, I have taken some positions off the long side. The FTSE rallied 1000 points. The DAX rallied 30%, all since the 22nd. The good old saying "don't look a gift horse in the mouth" springs to mind.
This does not mean I am not bullish, and I would like to get back into the market at lower prices. The sell-off we are seeing today and yesterday is in my mind a natural reaction to the huge gains we have witnessed since the turn on the 22nd. I will watch the FIB levels for potential entries.
Is there anything I worry about? YES. My friend Larry, who I think has traded this period better than anything I have ever heard of, is bearish. He favours more downside, and has so far been selling the 38% retracement in the SP. That was a great call, and respect to him. I have protected myself against downside by placing a break-even on my remaining positions from the 22nd. I have also bought some ridiculous put-options in the Dow. If some of the really bearish forecasts does come true, then the Dow will see a move below 7000 in the next month.
For now I am betting on the 55 week cycle turning the market up eventually to break above 1000 in the SP500, and rally for 8 to 13 weeks.
IF I am wrong, I will get my first alert if the SP500 slides below 900. If we take out the lows from the 22nd October, then prepare yourself for a wild end to the year.
Here is the chart I presented on CNBC. You have seen it all before. What I did not get an opportunity to present on CNBC was the bearish scenario. This happened in 2001, where the 55 week cycle turned the market for 2 weeks, with a huge rally. We then declined again, and went straight down for another 5 weeks. The last 5 weeks lost the SP500 20% from the top of the 2-week bounce. As I said, the verdict is still out, and I will watch the market very closely around 900, if we get there.
Happy Trading
Tuesday 4th November 2008
I am kicking back a little, relaxing. I think the market will be quiet up until the election results begin to kick in. The futures are almost flat here at 7am, so I see no reason to do anything.
Tom
Sunday 2nd November 2008
The live trading room has been going on behind closed doors for a handful of traders. It will soon become live for a wider audience. The results trading the SP500 for October is listed below. This is all time-stamped to the second, including fill price, stop-loss, movement of stop-order and exit time and price:
Date
SP500 Points
Comments
1st October:
-12
2nd October:
+6
3rd October:
+13
6th October:
+52
7th October:
+40.75
8th October:
+0.25
9th October:
+14.5
10th October:
+91.5
13th October:
-10.75
14th October:
+8
15th October:
+24.75
16th October:
+2
17th October:
-1
20th October:
+3.75
21st October:
-20
Platform error caused huge loss
22nd October:
+8.25
23rd October:
+41
24th October:
+14.75
27th October:
+11.50
28th October:
-16
29th October:
+42
30th October:
+9.50
31st October:
+10.50
Total for the month of October = 334.25 SP500 points
All trades are placed with a 2-point stop loss.
31st October 2008 - 13:35pm
Unfortunately got stopped out of some of my long banking positions. I am still of the opinion that the 55 week Fib cycle that bottomed out late last week will carry indices higher over the coming 4 weeks or more. I will try to reposition myself in the banking stocks. My view is gold is still going to trade in a range between $750 and $650. I am a buyer around $650 for long-term positions. Otherwise, I am trying to hold on to my long US positions, and look to enter again in the FTSE and DAX on retracements. The volatility is here to stay for the next couple of weeks. The US election is probably going to be the next cause of volatility.
Next update Monday... have a nice weekend
Tom
PS: yesterday was a stop-start day, which saw the room end +9 SP500 points for the day, but with the last trade of the day making +10. A tricky day....with 19 trades, and a whole lot of break-evens....
30th October 2008 - 07:57am
I am generally of the opinion that we will have higher prices over the coming month. However, I have taken profits on parts of my position this morning with DAX at 5000 and FTSE at 4350. It has been a huge run in the space of 72 hours, and I suspect we coud see a bit of "back and fill", which means I can enter at better prices. The risk is that I let the market run away from me, but I am taking that risk. I told you ealier that I am not going to chase this market. The other risk is of course that this was just another 2-day wonder. Who knows?
Tom
Live trading room SP500 futures point result:
Monday: plus 8
Tuesday: minus 16 - that was just a plain awful day
Wednesday: plus 92 - that was just a plain lucky day - with a Capital L.... dont expect one of those more than once a year
29th October 2008 - 07:06am
I had a look at the crash of 1929 and compared it with what we are seeing now. I must say that the repeat of history is astonishing. In 1929 we saw a crash in October, followed by a 2-day bounce, worth some 30%. The market then drifted lower and made a new low, before a multi-week rally ensued.
In 2008 we crashed into October, followed by a 2-day bounce worth some 26%. The market then drifted sideways lower, without making a new low, and made a significant bounce yesterday. Both charts are showing a classic pattern of a re-test of the lows, with one chart making slightly new lows, while the other doesn't. Both lows comes 10/11 days apart.
In 1929 this marked the beginning of a rally. I see the potential for the same now, and I am not selling out my long position yet. In 1929 the secondary low marked the beginning of a 26-day rally (16 traded days).
The story today for me is the DAX. I got out of my longs yesterday on the huge rally (too early admittedly), and I don't quite know yet how to position myself today. The DAX is being called down from the close last night while the FTSE is being called up 230 points. Interesting....Either way, here is the fly in the ointment: WHAT IF scenario is my chart below is wrong, and we are simply moving up today as well, and by Friday we are headed back to new lows? I am keeping this thought at the back of my mind.
Right now vw's gain makes up for 390 points of the Dax gains...
Tom
28th October 2008 - 08:56am
Did anyone experience what I just went through on the Dax futures?
28th October 2008 - 06:44am
I think we will see more upside today. The sell-off late last night in the Dow threw me a bit, but we are gaining this morning, so I will buy some more and expect more upside. I will post some charts by 9am.
Tom
27th October 2008 - 09:04am
I think we are seeing a low today. I would not like to call a FINAL low, but I am beginning to buy December contracts in the FTSE and the DAX as well as a few stocks that I like. I can take considerable heat on these positions, and I am not filling the boat yet. The downside price targets have not really been hit, but time wise there are some compelling reasons to be more optimistic about the coming week. I will trade in and out of the core position.
The SP500 has key support around 825. I will continue to buy for a day-trade, only as long as the SP500 futures are above 825. Limit down is 806. A move below 821 will most likely target the limit down number. But I am gunning for the FTSE and the DAX to make it into positive, as long as the SP500 is holding above 825. Don't get me wrong, I am coloured by my position, and I know I can very well be wrong, as the trend is down, but I do have a turn today...
What else can I say? Alea Jacta Est.....
Tom
27th October 2008 - 06:40am
Selling pressure is intensifying. Today is a key date... Cyclically it is connected to the crash of 29th Oct 1929, the 20the Oct 1987 as well as the 28th Oct 1997. These are 3 of the most significant crash lows ever. As I said, today is tied into it cyclically. I will talk about it in more detail later in the morning.
Tom
24th October 2008 - 10:12:00am
"Something big is brewing" - that was my morning comment. I have decided to not to write the newsletter, because the events have already unfolded. The Sterling Dollar has dropped 800 points. and gold is way below my $750 target. As a matter of fact we are trading at $685. So the crash is unfolding. I am staying short. No point in covering now. The market is headed down towards 8000 or lower. I have the next key date as the 26. I think it will mark the crash lows, so I am staying short over the weekend, if we close at the lows today. Some serious bad news is brewing.
Cyclically, we are where we were at the crash of 29, at the crash of 87 and the crash of 97. There will most likely be a violent bounce from any lows made over today or Monday. I just urge you to be careful. You may curse all the money you havent made by not being short or short enough, but there will be more opportunities coming.
Larry Pesavento, who is coming over to do a seminar in January next year, has traded this to perfect and has kept me updated along the way, much of which I have passed on to you. I spoke to Larry just moments ago, and his last comment was: "it will get worse".
So I think I will have to leave it at that. You should be aware of what is coming. We are looking for the SP500 around 780.....
Here is the email I received from Larry two days ago:
Tom, stay short, and keep adding. Do not buy. BUT October 25th is a major astro-harmonic date. It is the culmination of the events that started on September 19th that accelerated during the period of October 6th to October 10th. Since October 25th occurs on a Saturday, one must assume the low will either be Friday or Monday. My guess is that it will be Monday because it gives several more days of some kind of surprise. I'm assuming that the Dow Jones should get to the 7400 level and possibly lower if in fact we have this big selloff that I'm anticipating. I've enclosed some charts of currencies making major pattern completion's, the potential completion in gold and a few stocks. Personally I'm going to use call options and buy very low premium (under $500.00) so that my risk can be limited to the price of the call. This is the strategy that I'm anticipating. If the Dow Jones goes below 7400 I'm going to buy the December 80 apple calls. The stock is currently at $97.00 so we'd be looking for a possible 20% haircut. I do expect it to be one of the most violent financial times that we've experienced and the recent volatility might be a prelude to what is coming. Now let me tell you a little bedtime story. When I first started writing about astro cycles in the early 80s I had made some startling predictions and partly due to hard work and maybe more of just being lucky. On one particular occasion in November of 1988 I was the most adamant about what was going to happen than I had ever been in my entire life. I had told everyone that would listen to me that what was going to happen in that week in November would be the single most important event in that decade and possibly be on the cover of every newspaper and magazine in the world. I prepared for some of the most volatile action the market had ever seen. At the time the market was relatively quite as it was one year past the 1987 crash. The astro date came on schedule and the market did absolutely nothing. Ironically, it was one of the most significant things to ever happen in history. On that exact date in November the Berlin wall came down. It had absolutely no effect in the financial markets. So remember that occasionally these things just don't do the things that you are expecting. ABOVE ALL, NEVER RISK MORE THAN YOU CAN AFFORD. I SUGGEST USING CALLS OR PUTS TO KEEP YOUR RISK LIMITED TO THAT AMOUNT. IF YOU DECIDE TO BUY CALLS, USE THE DECEMBER STRIKE . PERSONALLY, I'M LOOKING AT AMGN AND APPLE AS SHOWN IN THE ENCLOSED CHARTS.
So there you have it... The FTSE is now down almost 10% in the first 2 hours of trading... good luck today
Tom
LIMIT DOWN ON SP500
STERLING DOLLAR DROPS 800 POINTS IN 8 HOURS
24th October 2008 - 06:00am
Something big is brewing, and it is looking sinister. I will post a special message in my newsletter around 10am today. If you want it, sign up before 10am. It is free. Here. In the meantime I dont see any reason for being long.
If we trade below 881, then the lows of yesterday night comes into play
23rd October 2008 - 10:40am
I wonder how many got suckered into going long this morning on the bounce in the FTSE? I suspect a fair few. Now I suspect that the liquidation is continuing in Europe. But there is an interesting set-up in the FTSE, whichI want to point out to you.
At the recent lows on this 100 min chart you got some really interesting geometry. Two swing projected down targeted the lows we saw. We retested it once, and we are testing it again now this morning. So, although the trend is down (duh), we are trading at a level, which some could see as a buying opportunity. One item that I think is newsworthy is that IF we manage to get indices back into positive today, I have it on the cards that we will close at the highs for the day, with a trending day. But I want to see support levels hold. Otherwise I dont see a reason for getting out of short positions.
The same re-test is setting up on the DAX chart, and the two indices look somwhat similar. I dont think we will have clarification until the US market starts trading.
The Dow map warned of a weak close. Today it is warning of a sharp turn later in the day.
Happy Trading
Tom Hougaard
22nd Ocotber 2008 - late update 10pm
Was that it? nah. It wasnt scary enough. Pricewise it was on par with 1987 crash, but maybe not enough. I didnt get really scared today, So I am staying on the short side. Here is the 1987 crash again, but before, we are trading out a nice pattern, which ultimately completes with the SP500 at 810.
Good night
22nd Ocotber 2008
I thought I would post the Market Map today for the Dow, because it has a particularly pronounced turn towards the end of the trading day. The nice side of this is if the Map inverts and we finish the day with a very strong rally. Keep it in mind for later in the day:
22nd October 2008
The chart below shows the current market structure with an example a similar structure in the past. Truthfully I dont know what to think now. I am still short from last night. The market rallied into 984 again, and refused to budge any further. On the downside you got support at 940. So a 40 point range, and which way will it break. The 22nd is a key date, but if you look at the newsletter I sent out late last week, you can see that the time count is also on a weekly chart. So while we got 377 days count today, we also got a weekly link. The weekly link can span from Monday to Friday.
In this case I will use what has been working well: sell rallies. The trend is down, and I will be bearish as long as we are below highs from last night. I believe the turn I spoke about happened late last night and we are moving furher down into next week. I will step aside if the SP500 gets up to 980 again. In the meantime I will continue to sell rallies. What else has worked in the last 14 days? A move above 980 could cause a short covering rally...
Tom
22nd October 2008
Oh dear. This does not look good. A turn was due today, but it looks like it came early yesterday and have accelerated the downside, and on top of it, it is dragging lower currencies. We are set in an ugly crash pattern, and any move below 900 in the SP500 will accelerate the selling.
This could be an ugly day in Europe...
I will post some charts a little later in the session, around noon.
21st October 2008
I did a hit for Cantos TV. You can view it here. I wish they had chosen a different headline. I can't say that Warren B is wrong, but I think there is something fishy about him going out on print in the NY Times to declare that he is so bullish US equities. By his own admission he says he likes to be cautios when everyone else is bullish and vice versa. Well, I can only summise that W B is already fully invested in the market.
I wont post anymore today. If you watch the program, you will know why 22nd is a key date.
Tom
21st October 2008
Friday was a cr## day for me, and I lost 8 SP500 points. Yesterday was a poor start with 3 losing trades in a row, before I caught a couple of runners, and closed up on the day for 3.5 points. Not spectacular I know. I have had quite a few emails, regarding the live trading room. I think we are ready to post live in November. My web designer is putting in the hours now. The real issue with a live trading room is the technology. You dont want an alert 5 minutes later. You want it instantly, and that is what we are making sure is happening.
I have heard from some of you that you have had a fantastic month (I have also heard the opposite). Larry Pesavento called me and let me know that in his experience, where you are most vulnerable to bad decisions, and poor trading, is after a string of winning trades. So maybe you huge hitters out there celebrating a great month should take some money out of the bank and spend a little bit. The economy needs you :))))
21st October 2008
I will post my analysis shortly, but I want to post a comment from a trader in the US, who took the time to write to me:
Tom: I want to start out by saying that I have a huge amount of respect for the work you do, and for a very informative website. I also respect the fact that you pay attention to individual details of the market: details that might lead you to make a call that is against popular sentiment at the time.
Which is why I was so surprised about your comments on Sarah Palin.
Right now, the popular thing to do, in the press, in the classroom, and on the trading floor, is to bash Sarah Palin and call her an idiot. But many people in the press haven't taken the time to inform
readers like you how good a job she has done as Governor of Alaska,
and what a great job she's done on energy policy. And again, it's because the popular thing to do is to bash her in the press.
If you've taken the time to fully understand the job she's done as governor, and her record on taxes, spending and energy policy, and still came to the conclusion that she is an "idiot", then I
apologize: you are certainly entitled to your opinion, and are entitled to voice it, as are we all in free countries.
I am a woman in the portfolio management business, and 2 years ago I did a great deal of work on the financials (both in the US and in Europe), put on large short positions in the group, and tried to explain to my colleagues that there was a potential disaster brewing. And I was bashed by my colleagues, because the popular
thing to do at the time was be long everything and anything.
Ironically, your website and the article about the 8.3 year cycle (that topped in Feb 2007, exactly when Bear Stearns and Lehman topped
out) kept me hanging in there. So thanks for going against the grain when it wasn't the popular thing to do.
Knowing what it's like to be a woman, and be bashed by people before they take the time to fully understand you, I feel it necessary to defend Sarah Palin against people who may not have taken the time to fully understand her and her accomplishments.
And again, I still find your work on the markets incredibly good.
Name withheld
I have replied:
I think you are right, and there is definitely a tendency in times of heated debate to make sweaping statements. I hope you understand that my "bashing" is out of frustration that the prospect of having a president in the US, who is not up for the job, at a time when the world needs it. The Peter Principle states that you get promoted up to the point where you are incompetent. We are as a world on the wrong track, where hatred and disrespect is on the breeding at a rate never seen before. We live in a world where our leaders are making choices, which reflects the opinions of the few, and while I have no doubt that Sarah Palin must have qualities, which the vast majority of the world are unfamiliar with, especially the press (trust me when I say I know first hand how incredibly stupid and ignorant journalists can be), I think it is so important to get a fresh start initiated, in what I consider the most powerful nation on earth. You have had a fool in office, and if the fool just fooled around, it would have been fine, but he didn't. He initiated a war, which has killed hundreds of thousands of innocent men, women and children, and he took his war to our shores in Europe, through the Madrid bombings, through the London bombings, and our world on this side of the Atlantic has not been the same since. You must understand that I am all for a woman in office. I was a bigger fan of Clinton, and I think in the world of upsets, it would have been a welcome change to really strike afresh. I am worried about our world B, and I worry that McCains health may not take him through 4 years of exceptional stress. At his age, things happen, and in charge we now have a bright, but a totally inexperienced politician at the helm. That is a worry. So aside from the funny aspect of Saturday Night Live, there is a real serious issue at hand. You know how I believe in the cycles, and thank you for the compliment of TraderTom. It is nice to know that you turn to my site, but truthfully I am just a reporter of what I find. There isn't always much original thought in there. The Matrix is not my work, as you know, but it has been incredibly accurate in the time I have known it. Sure, it misses a turn here or there, probably because I don’t understand all of its cycles. However, I understand when it states that things for us could and most likely will get a lot worse. You know how the markets and our emotions are so incredibly closely linked. What would the US say when the SP500 hit 584? What if it hit 584 next week, or in March next year?
I know the AmerICAN attitude is "I can", and we both mock you and admire you for that in Europe, but we also shake our heads in disbelief at some of the things you get up to. We say "only in America", and right now, it is only in America, where there is a real possibility that an albeit bright but inexperienced woman could become the first female president ever. But then again, it is not all new here, is it. Do you remember When Doc Emerat in Back to the Future ask Marty "who is the president". Marty says "Ronald Regan". Doc shouted "the actor????". Bottom line is that of course it is unfair to bash anyone you don’t truly know but that is part and parcel of public life. I can only hope that the US will make a better choice this time around, because it will affect all of us.
Thank you for writing me. All the best
Tom H
21st October 2008
I will update the site by noon. The 22nd October is an important day to be prepared for.
Tom
18th October 2008
The SP500 is setting up to test the lows again. We have broken through the support on the chart below, as I write this, and I am on the side, awaiting the US open. The fact that we closed on the highs yesterday and rallied in the final 2 hours should be bullish. So be careful at news time. We got housing starts and Michigan Sentiment. Overall it still pays off to sell the rallies....
Tom
Friday 17th October 2008
Did you see the intra-day swings on the day yesterday? It's a 1-min chart. I got 20 SP points yesterday, which when you look at the range is pretty pathetic: we clocked up a staggering 2400 points intra-day on the Dow index. WOW!!!!!!!
Now, I am going to have some fun. Enough of the markets for a minute: The US will elect their new president in November. I have got to share the love with you here, because the prospect of having a hockey mum as president for a powernation is insane. What the hell is wrong with this world. There was a time when substance ruled and form came second. Now I become a celebrity when I screw the right person, or my overtly extrovert character gets me on some surreal "reality" show. Give me a break. Spread the word. Your next US president will statistically have one in three chance of dying while in office, and then folksy hockey mums all over the US can cheer that the first female predident in the US ever knows how to swing a hockey stick.
Take a look at this and then someone email me where I can bet on the outcome of the election, please, and email me fast, because surely no one in their right frame of mind can vote for that freak show.
And according to CNN, there is a growing support behind Sarah Palin. Will you spread the word, please, because I can't stand the thought of having another idiot for another 4 to years in the US. The world is decidedly a shittier place since W came in power.
Know this. We will not experience anything like this in a life time, and the experiences you gain from trading this will always be a reference point in your future trading. Yesterday was a 25 point SP500 day ( I deliberately keep my stake size a secret ), but I was not the only one to do well. Nick McDonald managed to put his infant child all through uni and then some with his killing in the Dow last night.... RESPECT.....I am sure you all did well too. What a run...
Where are we now? Friday I called for a low. Remember? The 10th October!! It rallied like nothing you have ever seen before, and then, by magic, it lost it all again. Sure, I had expected some retracement, but a crash like sell-off. Still, you trade what you get. And what have I got now? I got this feeling that a total collapse is lurking out there. It could totally wash out the system and hit silly price levels. It is an outside change, so I am not discounting it as a probability now.
What if this is an ABC pattern up to the 22nd? Then expect another 500 point day in the Dow. BUT BUT BUT.... the worst that could happen was that the 22nd October is a high, and we turn violently down from there. Then the above scary scenario is in place. Lets hope it doesnt happen. That is not in anyones interest.
So be nimble. Be cautious. Stay composed. 950 is a huge resistance number now in the SP500. Remember we fell 400 points in the final hour alone.... we are exceptionally oversold again, but once again, watch the final two hours... they hold the key to the rest of the week...
Tom
Wednesday 15th October 2008
This is a theoretical guess. The 10th October low was a key turn date. The next turn of significance is the 22nd October. If this is a high, and we turn lower, it could get really ugly. How high could we go if the 22nd October is a high. Look out for the 1130, which is a 1.272% extension of the first move up. This will be a crucial point of resistance. So the crucial point for me is the 22nd October.
We have hit the 38.2% retracement at 980. We can go as low as 925 and still move higher into the 22nd October..... As I said earlier in the week, I am leaning on the long side for swing trades until the 22nd for now.
Yesterday was a +8 SP500 points, while Monday was minus 10. Yes, I still wonder how I managed to lose on a day when the Dow gained 900 points, but I did..... :)
Tom
Monday 13th October 2008
Dax futures have reached the first objective, and I am clicking out of longs. We are out of the time period from the 6th to the 10th, so I can only go by being long again. Next key date is 22nd October. I will keep you informed. The newsletter will go out later today. Sorry, but been too busy trading this to write about it :))
Sunday 12th October 2008 - 23:34pm
The SP500 futures have opened up 30 points. I am more tempted to sell this short now, and will do so as long as we stay below 925 in the futures.
The FTSE is being called up 220, and the DAX is being called up 160.
NEXT update 7am. I am short the FTSE and long Dax on a spread trade overnight. Nothing big.... as long as the politicians are still debating in Washington this thing could go either way. I dont want to be short the S500 above 930. If this really gets the short covering going, we will be limit up (+60) shortly.
Good night
Sunday 12th October 2008
Good morning,
I will update the site Sunday night, late, and post it here and send out a newsletter.
I am close to launching my "look over my shoulder" live trading room. This week yielded 202 SP500 points, and 62 points on Friday alone. It will give you an opportunity to watch in real-time when I am buying, and when I am selling, and most importantly, how I manage the position. Of course the way things are going right now, by extrapolation, we will not have a market to trade by the end of October. To lighten your mood and mine, I have sourced a few cartoons...
Tom
So if Time Mag is a good contrarian indicator, then what should we make of this????
FANTASTIC. A NEW ALL-TIME high for Vix index (fear/greed index) marks the end of another record... : the biggest lost ever in 7 consequtive sessions. I hope the 377 cal days turn marks the end of the downturn for a week or two.... stay put...
Update 12:32pm
I fed you wrong information regarding Bank Holiday in the US. Columbus day is NOT a bank holiday (I dont think the US even uses this expression), and the exchanges are open for trading as usual. Sorry!
update 09:42am
I hold my hands up and say I am thoroughly tempted to buy something here. The reason I am not buying anything is because it is not even 10am, and I want to see how the US reacts to the Globex SP500 futures being down 20 points. This is a classic panic, and there will be capitulation coming. Please dont be a hero here. The trend is down, and there are a lot of distressed sellers still waiting to catch a bid. You know that timewise the turn is due, but you cant trade it using options. The Vol is through the roof and you would be paying a hefty premium for the priviledge of owing a call. The 10th has been mentioned several times over this page, so read through below and draw up a plan. Monday is a bank holiday in the US, and it is very possible that central agencies all over the world will nationalise Morgan Stanley and Goldman Sachs. Given it is a bank holiday on Monday, I suspect the SP500 pivot is 916. Anything above it I will buy. Otherwise I will stay short. Watch for short covering into the close in the US. And if we get a lower open in the US, watch for a reversal at 16:30 UK time. I am not predicting there will be one, but if there is one, if could spurt a huge amount of short covering into the close....
Tom
update 06: 56am
DAX being called down 300 points... I am not even interested in buying now...
update 1:56am
HMMMM.... I got some bad news. And it isnt that I sold my unit bought at 952 out at 920 and lost all the days day trading profits. Nope... money means nothing compared to life, and the bad news is that we have lost a really fine man this week.
Dominic Mazza, who ran Trading the charts site, has passed away at too young an age. Dom came up to me in NY once and spoke. He was just a really pleasent gent, a solid technician, and a giver. You will be missed amigo.
I sold out. I dont mind a bit of heat when building a stake, but I was out of pocket by 30 SP points in 10 minutes, and I am not putting up with that. And here is the worst thing: we havent even begun to panic yet. There is no fear but I think tomorrow is about to change that. So I am sat on the frontline, ready for tomorrow morning. It will be a day for quick fingers and decisive mouse action... good luck... TA wont matter here.... I will buy dips on huge volume for small scalps, and I will sell every rally..... bedtime....
PS: I cant find any retracements that are worth considering here...... so the bottom is the old lows from 2002!!!!
NEWSFLASH
DOW DOWN BELOW 9000. I AM BEGINNING TO BUY A LITTLE. SO IF I HAVE 10 UNITS TO BUY, I AM BUYING ONE UNIT. I AM BUYING THE DEC SP500 AT 952. THE SP500 HAS JUST LOST 40% (GANN LEVEL) AND TOMORROW IS A BIG DAY, PLEASE READ BELOW FOR INFORMATION
d DAX opening up +100 points and now trading down 50 points.
The 6th - 10th October is the key period together with the 22nd october. I can begin to speculate how those two dates will pan out, but I think it is more important to get the gist of the the sell-off: sell rallies.... It has paid off hugely so far. At some point it will stop of course, but I dont need to tell you that this is the nature of trading. Good luck today. This is an investors nightmare and a traders paradise..
Tom
7th October 2008 - 06:16am
good morning,
I had a question on the live trading room. It is close to completion. We have been running it in live demo mode, trading it myself, and posting the entries, stops and exits in real-time for a 2 months period. So far the results have been good, but obviously need to be seen with the volatility in mind. Nevertheless the room produced 304 SP500 points (about 3000 Dow points) in September. So far October has been manic with yesterday producing 52 points (about 500 Dow points), and since the week starting on the 29th September up until last night has produced 101 SP500 points (about 1000 Dow points). I trade the SP500 because it is the most liquid but the signals can be used at the same time for Dax, the FTSE and the Dow.
This morning we are looking at a substantial rally. The 6th October was a key date, but it actually extends up until the 10th, and another key date at the 22nd October. So hang on for a wild ride. We hit a real key point yesterday:
So I will remove myself from the bearish camp for a little while, well at least for this mornign.
Kind regards and happy trading
Tom Hougaard
5th oct 08
SUNDAY NIGHT 11:16PM - dOW CALLED DOWN 70 POINTS... FTSE DOWN 180, DAX DOWN 190.... NO REASON TO COVER SHORTS...
PATTERN TARGETS 1044 IN SP500.... A MOVE ABOVE 1112 WILL HAVE ME PLAYING SHORT SQUEEZE...
Larry Pesavento sent me this....priceless...thank you Larry
" many of you have emailed me with questions about what is happening in the world today-all i know is that money is very scarce as witnessed by the LIBOR RATE -this is the rate set by the London banks to lend to each other--it is 8 standard deviations from normal--even worse than 1987--
why are they so reluctant to lend even at high rates???
--also GE capital had to go to warren buffet and issue more stock to raise capital--GE is AAA rated and should have been able to raise this amount easily-I sent an article about the panic of 1837 which was based on the same thing that is going on now-A WORLD WIDE SQUEEZE ON CREDIT-what is also interesting is that the astro aspects from 1837 are present now in the same positions--this is why i am so cautious--
if there is going to be a meltdown it will start late Sunday in the usa as Europe is in as bad as shape as we are (MY notes: the German rescue package for Hypo has falled through and I expect that will not be well received by the market Sunday night) --dropping interest rates will just cause further problems --the bill that passed Friday that brought on all of this hoopla was a bad bill--it was originally 2 pages and failed --it was over 400 pages Friday so every member got his pound of flesh in order to pass the bill--the 700 billion could be gone in a few hours Monday-the market has told them it was a bad bill --wall street is now run by Washington--the power that Paulson and bernake have was not meant to be by our founding fathers--the good news is that we will still be just fine but we are in for at least 5 years of contraction and great trading markets--my opinion of course and i hope i am wrong all the best Larry """
Weekend Reading. Download PDF from Milken Institue on WHY we are melting down. It is called a PDF which explains the mortgage meltdown.... really interesting in place... click on image
the next two weeks will in mind offer the low, but more likely towards the end of NEXT week. Please also bear in mind that 61.8 retracement for Dow 9900.....
Have a nice weekend
3rd October 2008 -
Good morning,
I am surprised why Europe is being called up today. Asian indices are all in red, with Nikkei and Hang Seng down between 1.5 and 2.5%. The trend is so firmly trenched lower, and I have no idea why anyone would buy ahead of the Non-Farm Payroll numbers released today. And to add to the argument, the vote in the Senate will take place today. If this was such a done deal, I very much doubt that the Dow would decline 3% yesterday. The real issue is not the vote. Investors are looking at for example the LIBOR rates and note it is 8 standard deviations from the mean. What does this mean? No one is lending money to each other. Do you want to have an idea of what does to society. Take a look at this link:
Ask yourself this: if this was a crisis of normal magnitude, would you not expect Gold rally? It always rallies in time of uncertainty. Yet, it has declined $80 in the last 2-3 sessions. Why? Because investors are going into cash. Hedge funds are seeing redemptions at an unprecedented level, as cash is being hoarded. So I am not seeing this is an opportunity to buy gold. At least not yet.
Finally, the VIX indicator suggest the market is oversold, and I agree. BUT when I look back over the last 10 years of VIX signals, I have been able to time lows in the market using tools such as the Matrix Timing indicator. If we are making a low today or this week, it will be with a time cycle that I dont know anything about. I dont have a low on the cards for another week at the earliest. I could be wrong, and I will follow the market closely. I do however remember the old saying when trading cycles: 90% of the damage is done in the last 10% of the cycle. I do have many links for a low in 2 weeks time.
Some thoughts to ponder upon. I think today will be crucial. If we close near the lows again today, I will stay short over the weekend.
Safe trading today...
Tom
2nd October 2008 -
Good morning,
there is a lot to read below, so I will keep this short, and short is what I want to be.
I got an important time date at the 6-10th October. I can't rule out there is more downside to come.
ANALYSIS
