Thursday, January 28, 2010

Evidence of a trend change (IWM, QQQQ, CME, AAPL, and CME charts)


Isn't it funny how all these big patterns completed simultaneously like this as volume surged. While a throwback wouldn't be unusual at all, the uptrend that has existed since March 2009 appears to have ended. A big squeesy pop wouldn't surprise me all all so tread with caution, as always.

Disclosure: I own QQQQ options (puts and calls).

14 comments:

chintan said...

Yep!,VIX is rising too!

pythagoruz said...

The great crash of 2010 is upon us! Wake me after the market gets cut in half.

Anonymous said...

Line up the weekly 2009 DOW against the daily 1929 DOW. The fractal pattern is exactly the same. Bottom line: we're going MUCH lower.

kaleb5 said...

Pyth,
Your Christmas Q's call was a little early. Looks like it'll be there by Valentines Day though! Nice call sticking to your guns. I've got a music recommendation for you that I've never seen on your eclectic mix - bubblegum!

chintan said...

OOOh..

Yeah,Crude is falling
USD is falling against EUR & JPY
Yields are falling
Major Stock Indices are falling

Basically this seems to be dawn of end of american economic hegemony.!

pythagoruz said...

Anon,
I know a lot of people are modeling this market after the market of 1929 but things were so different back then. I'm not sure how much value it really has and relying on such comparisons might be distracting. But I have to admit, so far things seem to line up quite well..

pythagoruz said...

Kaleb,
Thanks, December was painful but January worked out quite well. Right now I am not short so I am am really hoping that the market can push back up a bit before really tanking. I would love to get some cheap puts on a short squeeze this week. I will not enjoy chasing expensive puts if things continue to unravel.

I'll need more specifics on that music you suggested, I couldn't find anything on youtube. Is the song or the artist called bubblegum?

pythagoruz said...

chintan,

Yes, the US dollar is surging and taking all assets down in the process. This risk aversion de-leveraging could go on for a long time.

"Basically this seems to be dawn of end of american economic hegemony.!"

Hmmm, I think not. =)

chintan said...

USD will dominate the world in terms of currency but US stock markets have no futures from now.
Dont you think,rising fiscal deficit is big danger?

Atlest Onething should happen
1 devaluation of USD
2 rise in Yields of GOv BOnds
3 bearish stock markets

1 & 2 wont happen as there is no better currency in world which can replace USD.

So may be 3.

My guess is just like japan experienced 2 lost decades b/w 1991 to 2010.Similar things may happen in US!

chintan said...

1929 crash was after roaring 20s.Thats bit different thing.Whats happening now can be compared with japanese real estate bubble aftermath.

chintan said...

My Role Model --> http://ddo.typepad.com/ddo/files/Citadel_2001.pdf

Do you like him?

pythagoruz said...

Nice article.

Its crazy how successful he was in the industry so young. If you achieved even 1% of his success that would be something amazing.

Thanks for the story.

chintan shah said...

Well,The Other Side of a Coin-->



The secret of his success is missing from above article.

Here it is, He basically stole code of Convert Arb Computer programs created by a salesman of an IT company who was his mentor when he was 19 and then he met FoHF guy and impressed him.......& So on..
http://blogs.wsj.com/law/2006/06/14/hedge-fund-king-ken-griffin-sued-by-self-described-mentor/tab/article/


Another lucky factor is bull run of s&p from 1991 to 2000,So convertibles hardly defaulted .And upto 6x to 9x leverage was available.after 2000 Conv arb is generating cyclical returns.But he diversified into other strategies thereafter.

I dont have access to Convertible securities market data so i cant comment but i have read some research papers like "rise and demise of convertible arb".(reason stated is now debt-like converts are issued instead of equity-like)

If one wants to start young he is perfect role model .But not his investment strategy.


So,He is a Crook-Nerd!

chintan shah said...

Hmmm..My Success depends on my Luck!

-->"Luck is what happens when preparation meets opportunity."<--