Whale Tails and Market Tells

I'll quickly discuss the Treasury's flush-and-gush plan to attack the banking sector's bad assets (whereby the Government intends to spend up to another $T).

This follows the Fed's plan to spend more than a $T buying mortgages and selling themselves their own product of treasury bonds; the quantitative easing thrush-crush for shorts, announced last Wednesday.

Let's reduce this to the simplest form. If I was smarter than the market, then I would be adding shorts right now. The Government is taking very large steps (they're gambling) and basically the severity of these actions illustrate just how desperate they are (or how dire the situation is).

Fortunately, I don't like to think. I react. For all I know the Government will succeed and I'm an idiot.

Either way, when whales start splashing vehemently I don't like to be on the wrong side of the wake. Market internals remain extremely positive for today, to a large enough degree it suggests we'll see higher-highs in the final 90 minutes of the session and likely close at or near the highs.

If we do manage to reverse on this news, which I truly doubt based on the tape thus far, I would not want to be long.

Of all the major Financial names out there, GS is the only one I see above last week's high so far. That is the Financial play I am content to play long here.

If the complexion of the day changes to any signifcant degree, I will post again later. Otherwise you can follow my new trades on the Twittfeed; I expect to do some long-side day-trading in the final 90 minutes if internals remain extreme.

Total Position: currently 5.19-to-1 net long, (72% invested)

Currently Long (according to size): RJI, GS, ARST, PMCS, WNR, MYGN, SNDA, STAR, MNRO, UGP, IOC

Currently Short (according to size): AXA, ELOS

Quicknote

I have no comment on the new Gov't plan, but market internals are extremely positive early in the session. I let go my SDS hedge in the pre-market (when SP500 futures traded down to 780). I'll be using 780 as a pivot-point for re-applying protective action. At this point I'm content with being aggressively long. More later

Night Gallery (sucks to be you)

Upside the Head

I've kept quiet lately, but frankly I don't anything overly terrific going on at the moment.

We're in a choppy state and this could last several more days (if we're not careful). Smart cats go fishing, then see what the market looks like next week. There are several factors suggesting upside in the intermediate term.

Those factors include a substantial number of decent growth charts exhibiting resilient or upward action at the moment (something I'm not accustomed to seeing when/if the market is about to tank); Significant shorts (both retail and institutional), combined with extreme negative sentiment which preceded the rally (combine those two elements with an actual rally and you have the positive); Momentum is now upward; And an utterly insane Federal Reserve that will mortgage your children's grand children to get this market stable.

The bears may think I am crazy and they are recovering much of their recent blood-let losses today and yesterday; but if the market is so ugly right now I should be getting killed being nearly 100% long (so far that's not the case). I'm a little nervous and more recent sentiment numbers are bearish, not bullish, but longer term - okay let's not talk about longer term.

I like my portfolio right now. Good trading

Total Position: currently 5.35-to-1 net long, (76% invested)

Currently Long (according to size):RJI, ARST, PMCS, GS, STAR (new today), WNR, MYGN, SNDA, MNRO, UGP, IOC

Currently Short (according to size): ELOS, AXA

Quiknote STAR

I'm buying STAR here (ave 15.725). I don't know what the news is yet, but so far feels not fundamental. I like to buy the first slice on a leading chart; that low normally holds for some weeks. Low today so far is 15.25 - below that price gets dangerous. Market is mostly ho-hum still; more later on that

All-In Ben

People like baseball analogies. For me it's always the first inning. But poker gets to the meat of the matter.

The Fed went all-in today and I folded my short stance promptly.

In poker terms it adds up something like this: The Fed showed terrific strength today; I can't be sure the strength of my hand and even if their gambling mentality may mean penultimate failure down the line, what's the point of gambling with them right here and now? Sometimes you just let the other guy take the pot, but you try to take something away from that hand that will enable you to spot a better set-up later.

If this market stalls tomorrow, it could get ugly very fast. This is not a bullish call. I can be mkt-neutral inside of a minute and I can scale my accounts fully short within the hour*

At the same time though, the tape has been strong and today it got stronger. I'm not fighting that kind of momentum.

Growth stocks have been lagging lately while broken, beaten down stocks coming off of lower-lows have screamed upward. If we are going to continue higher, I think we'll see leadership growth start to outperform now and that would be exciting; as there are so many nice set-ups on the charts.

Tomorrow will be interesting. Tomorrow the session and tomorrow the future (that thing we just mortgaged today). The Fed is going to sell treasuries, sell them to themselves. If I were a country and I owned a lot of US debt, I think I just might sell it to them. Keep an eye on the bond market.

*Follow my Twittfeed and you'll know within a minute.

Total Position: currently 2.29-to-1 net long, (77% invested)

Currently Long (according to size): ARST, RJI, WNR, PMCS, MYGN, SNDA, MNRO, UGP, IOC

Currently Short (according to size): BWA, IPI, ELOS, GTIV

Footnote

To clarify, the Fed is making the gamble of a lifetime here. I'm not interested to fight that - until I see it's not working and then I will fight the Fed all the way to the mat.

In the meantime, I think commodities make sense here. I've taken a 6.3% stab so far with RJI. If this idea is going to work, it should work right away. In that case I may go to 10%.