Tomorrow's action

Now the Fed detailed their plan for FNM and FRE, let's see how market reacts tomorrow, July 14th.

1. Market should have a positive day, a rally.
2. Financials should lead the market rally, at least double the percentage of the general market gain.
3. If these two don't happen, then we'll have more trouble ahead. It's been so long and so depressed in the financials, it's about time to have a decent rally, once the rally holds, shorts will cover and we'll have a lasting short term bounce, like a few weeks.

Bloody day

Today is as close as it can get for a panic selling, it's blood on wall street. Yes, it may sell off again, and if on Monday FNM and FRE go under, that's pretty much the same as Bear Stearns' last Friday. I added more UYG and DDM today.

1. FNM and FRD were both down like 50% at one point of the day, and FRE only down 3% at the close. This tells me something will happen this weekend.
2. Financials were down for more than one month straight, a bounce is almost certain, just don't know if it's from here, or it's another 5-10% dive before it bounces. But I felt it's cheap enough, so I added more UYG, and some DDM.
3. I really hope we'll not have a bloody Monday, but if that's the case, I'll add more.
4. It's very painful and tough.
5. And I sold GDX today, my only winner today. I'll use the cash to add beaten down ETFs. If oil and gold continue to go up, too bad for me. But I think now owning commodities is riskier than owning DIA, SPY and XLF.
6. Yes, everyone is shorting financials and think LEH,FNM and FRE will go under, but I think government won't let that happen, therefore, it's rewarding to own these beaten down stocks in this very bearish market.
7. When people are selling, it's time to be brave. So I bought more today.

Tough

This market is very tough, yesterday it scared the shorts, on a strong rally, XLF was up over 6%. Today, it scared the longs, XLF was down close to 6%. And Dow was up 150 yesterday and down over 230 today!

I think this is again a sign of uncertainty, and when the market takes off, both shorts and longs are gone. Only the long term investors and funds are in, short term longs and shorts are out.

I have to think the next big move is up. But what do I know, I was wrong already since middle of June, after brilliantly exited commodities by then, but decided to try financials, what a mistake! Now I gave most of this years profit back, and on danger of losing should market continue this relentless selling!

I'm sitting on these holdings. Still hope for a bounce. And hope is a four letter word.

Reversal day?

I was lucky yesterday to add UYG again in the low 18s, sometimes, heart beats brain!

We need follow through the next few days to confirm a reversal in the market. And unless something bad happens, we'll likely to get a meaningful bounce that will last a few weeks (or days) that can bring major indices back to its 50EMA. Like a 10% move. But a few things can derail the bounce:

1. Oil spikes again.
2. Financials sell off again.
3. Bad news in earnings.

I think since people just started to unwind the oil long positions, it's unlikely it will spike again. And we had FNM and FRE news yesterday, so financials are not out of woods yet, but another 10% bounce in XLF is reasonable, that will bring XLF back to 22.5 and UYG back to 25.

Still need market to confirm this. Don't use my target to guide my trade, use market's price action to guide me.

Trapped

I was careful this time, waited and waited more, before I first added UYG at 23 on June 24th. It was down from 35.7 (intra-day high is 37.2) from May 2nd. I thought I was picking up a quick bargain on a bounce. Now, just 8 trading days from June 24th, it's 18.1 (intra-day low is 17.9). So it's safe to say, UYG halved in two months. I added UYG again today. My heart says yes, my gut says yes, even though my brain says no!

1. I am trapped. And I added DDM end of last week.
2. I was right to exit commodities and related stocks like POT, MOO, KOL, MOS early and took great profit early in June.
3. But I was wrong and too early to jump in UYG.
4. Now I think it still can go either way, but the most likely case is for a bounce to release the energy: it's been pressed into 45 selling days for UYG since it touches 37.2 on May 2nd, without a meaningful bounce. I am following my gut here.
5. Today, oil dropped, and airlines bounced. The only thing prevents the rally is financial news from FNM and FRE.
6. I'll keep adding until I am running out of cash.

Sign of a bottom

With market continued to turn lower, and oil continued to turn higher, I think following things will be signs of a market bottom, even though it maybe a short term bottom:

1. Oil touches $150.
2. Financial stocks refuse to drop, even with bad news.
3. Airline stocks refuse to drop, even with bad news.
4. Coal stocks continue to drop, even with new record high oil.
5. Fertilizer stocks continue to drop, even with record high agriculture commodities.

We already see 4 and 5. We need 2 and 3, specially, we need 1, we have to have oil at a new record in order to see a short term bottom in the market. I think we're near that point, maybe as early as next week.

Wait to add three sectors

Another bloody day on wall street. I think the market is close to a bottom. Maybe just a sharp sell off away. If that happens, I'll consider three sectors:

1. Financials. It's very oversold, and they're not going away. XLF and UYG are the ETF plays. All big names like MER, BAC, MS, C, LEH, WFC are way oversold. Any one of them can have a 10% bounce in a day.
2. Sold off Ag and coal stocks. KOL was off 10% today, and MEE of close to 20% and PCX 15%. POT and MOS were sharply down as well. I was fortunate to make money in KOL, POT, MOS and MOO early this year, and my sell of POT and MOS were close to the top. Now, it's time to watch them consolidate before jump in. If oil tanks, they have further decline to go.
3. Airlines. There is no better plays in UAUA and AMR when oil tanks. I think oil is the last one holding up, when it crashes, airlines will bounce sharply. Again this is the most risky one, since it can go down another 10-20% before the bounce. This is really a best way to short oil. Not a long term play, obviously.
4. Overall, I think I'll use financials and general market ETFs like SSO and DDM to play the bounce. And added selected stocks in Ag and coal. Maybe one in airline.