Wednesday, August 10, 2011

More Random Thoughts

  • We’re deeply oversold and we feel it in our bones that the US market wants to rally (be it even a few day dead-cat bounce) but it can’t until there’s some semblance of order in Europe.  You can hear the collective sigh of relief at 11:30 EST every day as Europe markets close.   We rallied on what was perceived to be negative news yesterday and even bad news that is not catastrophic could get this market going.
  • That coffee stocks are rallying today shows us there is some appetite for momentum, which is bullish  ($JVA $GMCR $DNKN).  Again though we need the European stabilization before this can mean anything substantial.
  • Rumors need to dissipate (no France downgrade would be nice start) and French banks need to stabilize.    (If you have Interactive Brokers you can watch Societe General via GLE once you subscribe to Europe data feed)
  • We’re itching to pick up some names but just can’t do it with the current overnight risk.    Our swing-trader hat is in the closet and we’re only daytrading and barely that right now.   Today thus far it’s been edge-less chop.
  • We  live by charts and make our living via charts but charts aren’t going to help us if Europe implodes.   Our rational side tells us that Europe won’t let France go down as the stakes are too high, similar to”knowing” in the back of our heads that the idiot politicians wouldn’t actually let US default.  But at same time we don’t want to risk our hard-earned money on that either.
  • This leaves us to hitting singles and forgetting about home runs for now.    When things stabilize we’ll pay up for it — in no rush to get into anything right now as it’s beyond our risk tolerance.    Everything we do is vis-a-vis risk and the risk right now is too high for us to try to find the bottom of a news-driven market.