Equity Market Comment of The Last Day Of 2007

We continue to monitor the triangles forming on the daily chart for the next move of substance.
Today did begin to clarify some of the indecision, but there still remains a fog of sorts.


This is a possible trend construction we currently are in and this scenario is bullish and would call for a strong rally to begin very quickly as in the first trading day of 2008.

I have kept the 30% equity allocation into equities and the long term portfolio remains unhedged. I have also not made any changes to the short term trading portfolio and the 20% in 7 days portfolio.

We will know very soon what the short to intermediate term will offer and adjust our posture as such.

I continue to lean towards the bullish side.

The fact that both legs down were of almost exactly the same in price has added an element of symmetry to equities and does send a hint of what we may expect. In order for this hint to be correct, the market mush begin an immediate rally from here.

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Equity Market Comment 12/30/2007

The short term picture has become quite muddled with the action Friday really throwing some indecision into the scenario.

If the strong opening we saw in the morning was able to hold and actually push a bit higher, then things would be a bit clearer, but this was not the case.

This was exactly my thinking when I only began to allocate back into equities in very small steps and currently I have only a 1/3 exposure to stocks.

So here is the short and sweet of what is currently on the board.

We must be prepared to quickly pare back our equity exposure should we see any type of rapid deterioration in the market and there is a fairly high probability of lower prices in the very short term. How low will depend upon many things, but now it appears that we must remain cautious about stock prices. This will entail scaling back not only the short term equity trading account, but the high risk 20% in 7 days portfolio as well.

It is at times of indecision that the best course of action is to remain very lightly exposed to equities until the picture begins to get a little clearer.

In order for the market to continue to rally, it will have to overcome the very high probability pattern on the stochastics and this will not be an easy task. So stay very conservative here until we get a clear signal either way.

Monday will bring very light trading and many times these markets are very easily manipulated by the locals, so if you decide to day trade the market Monday I urge you to remember the potential volatility and keep your stops tighter than usual to protect against thin run away markets.

I hope you all are having a great holiday season and lets all look forward to a healthy and profitable 2008!

Please take a look at the chart below as it really sets the tone for what is currently happening in stocks.

The Downside Of Stop On The Close Only

We were stopped out of our position in FINL today with a loss of just over 21%.

This is one of the downfalls of using a stop on the close only as from time to time the loss
you take may be larger than the protective stop that was set.

This type of action however is more the exception than the rule and it is why I still continue
to use the stop on the close technique. There are many more times that this technique has turned a losing position into a winner, but from time to time you will get stuck, as was the case with FINL.

This is simply one of the risks that you take when using this type of protective stop.

Obviously if this makes you uncomfortable then the best thing to do would be to set your stop a bit wider to compensate for intra-day fluctuation.

20% In 7 Days Account

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Equity Market Comment 12/27/2007

The action today was a bit more than I had anticipated, but it is about to either confirm or deny the intermediate term scenario.

There is a real possibility that the entire short term correction I was anticipating was either completed or almost completed. While there remains risk all the way down to 1468, there are some strong indications that the 1475 level should hold.

The market is going to let us know very shortly whether or not it wants to continue the rally off the 1436 low point. Seasonally we remain in a strong period and this should serve to put a floor under the market.

In a nutshell, while the market got hit with some selling today we still remain in a buy weakness mode.

PIVOT POINTS - AN IMPORTANT TOOL FOR INTERMEDIATE TERM TRADERS AS WELL

BELOW IS THE 1 MINUTE CHART OF THE PIVOT POINTS APPLIED TO THE S&P 500.

INTERMEDIATE TERM TRADERS WOULD BE LOOKING AT NOT JUST THE DAILY PIVOT POINTS BUT THE WEEKLY AND MONTHLY PIVOT POINTS AS WELL.

I WILL BE STARTING A SERIES ON PIVOT POINT TRADING FOR INTERMEDIATE AND LONGER TERM TRADERS.

THIS SERIES WILL REVIEW THE INTERMEDIATE TERM PIVOT POINTS EVERY FEW DAYS OR AS NEEDED.

PLEASE REMEMBER TO CLICK ON THE BLOGELITES ICON AND CAST YOUR VOTE!!

Equity Market Comment 12/26/2007

The premise of buying weakness seems to be working very well, especially on the day trading side. The early morning weakness led to a pretty good level to purchase long positions and then ride the market back to slightly positive.

Currently we may be fairly close to a short term high point although there still remains potential all the way up to 1515 to 1521 before a short term correction is put into place.

I will begin to take some of the short term profits off the table as we work our way towards the short term upside. The market remains in a positive seasonal pattern over the next two days so higher prices remain the highest probability. These prices however will come with more effort and not the sharp rally days we have seen recently.

These reductions I will be making in equities are for short term traders only. Intermediate term traders can use the potential corrective weakness as a platform to increase their exposure to equities.

The market on an intermediate term basis remains poised to have a very sizable rally for the month of January and part of February.

The wedge on the 5 minute chart will give us an indication as to the next short term move in prices. There is also a shorter term pattern forming as well and this is illustrated on the above chart.

Daily Equity Market Comment 12/25/07

While I do not anticipate the momentum of prices to continue as strongly as it has the last two days prices the trend over the short term is up.

The next 3 days have a very high probability of higher prices and if I am correct then the remaining days of the month should continue to rally. I also am looking for a very sharp upward January as well.

We have some good returns on the aggressive 20% in 7 days and some so-so numbers on the aggressive short term trading portfolio.

Equity Market Comment 12-23-2007

Friday had some very strong momentum and seems to add credence to the scenario of the intermediate term low being in place and a potential powerhouse rally underway.

The put/call ratio on Friday needs to be thrown out the window because of option expiration.

Momentum is in the early stages of turning up so there is some real confirmation of higher prices here. We also have the day before Christmas having an astounding probability of a rally day when the previous 2 days were up as well.

We remain in the buy weakness mode and will shortly be bumping our equity allocation up.

Take a look to the Aggressive Equity Account and the 20% in 7 Days account for some pretty good hits.

As a side not, I will be phasing out the commodity section of this blog and make it an equity only blog. I will be putting together a separate commodity oriented blog over the holidays.

I will not be day trading tomorrow, but I will be back at it on Dec. 26.

I wish everybody a VERY MERRY CHRISTMAS and remember that this is a time of reflection and change.

COTTON - STAY ON YOUR TOES

KEEP THE POWDER DRY AND BE PREPARED TO SELL COTTON SHORT.

THE CHART IS REALLY STARTING TO LOOK AS IF IT WANTS TO ROLL OVER AND UPON THIS ROLL THE SHORT POSITION WILL BE INITIATED.

IDEALLY I WOULD LIKE TO SEE THE PRICE LEVEL 66.63 OBTAINED BEFORE ROLLING OVER AND WE ARE NOT THAT FAR AWAY FROM THIS PRICE NOW.

THE NEXT LEG DOWN IN COTTON HAS THE POTENTIAL TO BE A DOOZEY AND WE WANT TO TRY AND GET ON BOARD FOR AT LEAST 2/3 OF THE MOVE, BUT CONFIRMATION AFTER THE ROLLING OVER IS A MUST.

SUGAR

SUGAR BROKE FROM THE TRIANGLE AND HAS PRODUCED A VERY NICE RALLY.

THE TARGET FOR THE MOVE BASED UPON THE MEASUREMENT OF THE TRIANGLE BRINGS THE PRICE TO 11.95.

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Daily Equity Market Comment 12/20/2007

We have quite a few short term buy signals making their way across the models and I have attached a chart of the hourly chart with a bullish breakout.

There is some very heavy resistance in here with a tight pool from 1450-1472, so if we can break 1472 we might see some fireworks to the upside. That is about 12 points from where we are now.

This also is the third day since the end of the sell-off so if the market wants to turn lower it would be Friday that would be the most logical. However, there continue to be strong indications that the rally will continue.

I remain 35% allocated to equities in the trading account and 100% long in the Long Term account. As I have said before, the market still needs to show me more confirmation before I increase my exposure.

Also, take a look at the 20% in 7 days stocks, some of them are doing very well and there were some additions to this portfolio today.

So in a nutshell, the market remains in the buy weakness mode with a real potential to accelerate higher from here.

p.s. If you have not visited the day trading site then stop on by.

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NEW TRADES IN SHORT TERM AGGRESSIVE EQUITY ACCOUNT

New Positions - 12/19/2007

THREE NEW POSITIONS TAKEN ON TODAY IN THE

20% IN 7 DAYS PORTFOLIO

12/19/07

Daily Equity Market Comment 12/19/2007

Today saw once again a multiple of trend directions which at these price levels can be considered bullish.

The daily pattern of a mid ranged consolidation calls for higher prices and perhaps sharply so.

I still have yet to get the strong confirmation that I need to put the last low as an intermediate term low, but as a whole, the market remains on a fairly predictable course of higher prices to come.

I did a bit more buying today on the afternoon weakness and as of now I am 35% allocated in the trading account and 100% un-hedged and long in the long term equity account.

One positive I did like today was the amount of put buying that went on at the first sign of weakness. This is a start towards the majority of investors being nervous and a bullish indication.

Continue to use weakness to accumulate quality issues that have been beaten up, but for your trading account do not move over the 50% allocated level until we get stronger confirmation.

Long Ford January 7 1/2 Calls

We purchased the Ford January 7 1/2 calls today for .20

As you can see from the chart there is no real heavy duty resistance until the 7.72 area and some very strong resistance in the 8.20 to 8.40 area.

The volume tool that is on this chart is simply one of the best as far as determining at what price or prices there was heavy turnover in the stock and thus support or resistance.

I do anticipate Ford to rally at least to the 8.20 level by the end of January. A tall task I know, but one that the stock is capable of accomplishing.

BUY CALLS ON FORD

Here are some of the reasons that I will be buying Ford Call options, once the ultra short term correction has run its course.

Notice there are three fairly heavy positive divergences on the two stochastics and also on the MACD. The MACD divergence gets more weight than the stochastics.

On a closing basis the stock price is forming a diagonal triangle and trending down. Odds are for a quick sharp break to the upside with this pattern.

GM has some similar patterns, but Ford looks to be poised for a stronger rally on a percent return basis.

I will be purchasing the January 7.50 calls which are 20 cents ask, 15 cents bid.
Fair value is .1811, so we are not getting ripped off on the trade.

The reason I am going out of the money is that I am looking for a minimum rally to $8.20 which would bring the options value to .80/.85 or just over 400% on a R.O.I. basis.

I may put together a mix of the Jan $6 calls and the Jan 7.50 calls for a more conservative strategy, just in case my upward target is too optimistic.

New Trades - 12/18/07

Three new trades added to 20% in 7 Days Portfolio.

Daily Equity Market Comment 12/18/2007

We made a nominal new low today with some very trade able volatility.

We had a clear 5 waves up and it looks like we may have had the first leg down already, so this would call for some strength early followed by weakness and a retracement to the levels marked on the 1 minute chart below.

The bullish part of today was the impulse rally structure of the market and also its ability to recover from a pretty sizable and a little panic stricken decline. We even managed to keep a put/call ratio in place that remains bullish for stock prices.

As I mentioned yesterday, we will know very quickly if in fact the low put in place is the end of the correction as the market should move sharply higher from here.

I remain 25% invested with my intermediate term trading capital and I am 100% long on the long term positions after lifting the hedge position.

If we get more confirmation that this rally is the real deal I will be making call option purchases on select issues, with GM and Ford to the forefront. Of course after option expiration I anticipate getting into some AMD call as well.

We had a great day on the day trading with over 15 points captured. If you have the time stop on by and take a look. www.lowriskdaytrade.blogspot.com

Also, if you could take the time to click on the blog elites Icon in the upper right hand corner and Enter and Vote for the blog, I would sincerely appreciate it and if you could make this process a daily ritual that would be even better. I realize that time is a valuable commodity, but it should really only take about 10 seconds of your time as once you click on Trend Analysis LLC you will be brought right back to the blog.

As usual I welcome any and all input and if there is anything in particular you would like to see or have covered, just drop me a line and I will do my best to accommodate the request.

Have a great week trading and I look forward to all of your comments and suggestions!

Re-Visit Your Money Makers

From time to time and especially when I suspect a low of some significance may be in place, I like to look back to the stocks that made me a bunch of money on the long side.

Sometimes it is a good thing to just forget about a stock for a while after you take a big profit out of it and such is the case with USU.

Could be another 50% return easy if the "W" pattern goes to completion.

Help Me Move Up The Ranks

You will notice at the top right of the blog is the title "Help My Exposure" and a
Blog Elites Icon.

If each time you visit the blog it would be great if you clicked on that link.

The click on Enter and Vote and find my listing.

Click on my listing and it will give a vote for the blog and take you right
back to the blog for your viewing.

You are allowed only one vote per day, but if you could make an effort to vote each day or
however often you visit the blog I would sincerely appreciate it.

Thanks for Viewing and I hope to continue to educate guide and learn through all of this.

Option Expiration Time Again

In keeping with this week being option expiration, let us not forget the behavior of some stocks
just after the most recent months options go off the board.

Typically, the players will wait for the Dec's to go off the board before the stock mounts a trending move, in this case it should be a rally.

With this being the case I will more than likely be picking up January calls on AMD this Friday and when I do I will post the transaction.

Soybean Meal - Step One Completed Today

Soybean Meal broke the ascending triangle on the stochastics today that we spoke of over the weekend.

If this pattern is valid then we should see sharply lower prices almost immediately.

I believe this collapse in prices should carry across the entire grain complex, but only time will tell us.

As it is, if we start to see the meal begin to crack under the technical pressure then it will be time to put on a sizable short position.

Lean Hogs - Keep It On Your Radar

We continue to look for one more push lower under the 58.150 level to end the major bear market in hogs.

It appears that the market is in that process now and once we have the low taken out we will begin to look for some type of price stabilization in order to begin putting a long line into play.

Keep this on your radar as the volatility in the market could bring this scenario to life very quickly.

Copper - Looking For A Bottom

You will recall when we talked about the inside skinny on Copper and how the breaking of
the symmetrical triangle in either direction would lead to an extended move.

The break came to the downside and continues to decline.
The target for copper, based upon the symmetrical triangle comes in at 2.74 plus or minus a penny.

This move will also bring the decline into a five wave down pattern and should indicate some type of rally, possible a very large rally even if copper only makes a counter trend move.

So at this point we are looking for copper to get to or close to its target price and then see some stabilization in order to initiate a long position.

The jury is still out on the long term picture for the industrial metal, but many questions about the long term health of the market will be answered upon the reaction off the decline.

Daily Equity Comment - 12/17/2007

Everything seems to be coming together for the intermediate term low scenario.

The beauty about this scenario is that it will be either proven or dis proven in very quick order, so we will know exactly where the market stands.

At this point we could still get a bit more downside, but it should be nothing of consequence if this scenario holds true. The other item that will give us a heads up is whether or not the market begins a very sharp and steep rally from here as the current scenario would call for just this.

Until this market has proven to me that we are entering a sharp rally phase I will continue with my step by step allocation. Currently I have 25% allocated to available equity resources and I have covered all of my hedge positions, so you might say in a way that I think the low is in place.

The only strong reservation I have is that I really would have liked to see more pessimism come into the market on the correction, but hey, the market certainly never makes it easy and that is what I really love about it...... A Never Ending Education!!!

POTENTIAL INTERMEDIATE TERM LOW ALERT

The market looks like it has completed the intermediate term correction and I will begin
to initiate long positions here, albeit at a conservative pace.

We have hit the downside targets and while it occurred a couple of days early I have covered my long hedges.

The reason I am not jumping in with both feet is the simple fact that this correction did not bring forth a large amount of fear amongst investors and this could be the wild card for the current decline being a bit more than just an intermediate term correction. Time will tell and thus I will allocate my first 25% to long positions.

My apologies if this post jumps all over the place, but I have about 10 things going on at the same time right now.

Lets see what happens!

Equity Market Comment for Coming Week 12/17/2007

The correction continues as the final low for this corrective phase has yet to be met.

The 15 minute, 5 minute and 1 minute chart are all signaling an eminent micro short term rally into the 1481.14 - 1478.59 area. We should see this move Monday as the probability model is not looking for a down Friday down Monday pattern.

If we achieve these upside rally targets and turn lower then I would be looking for this to be the final leg lower to complete the correction. The 1445-1451 target zone continues to make its presence in all time frames of my work, with 1445 having the heaviest weighting.

So continue to sell strength as we have been doing, but also have your buy list ready albeit options or stocks as I do anticipate a very powerful rally once the low is put into place.

I also encourage you to take a look at www.lowriskdaytrade.blogspot.com and see the most recent results. I certainly do not want to jinx myself, but we had a great day trading week last week and it only consisted of three days trading. The other thing is that by looking at the 1 minute charts you can learn price patterns that also work on the daily chart as well, so even if you have no interest in day trading the site will be of help in our continuing education as traders.

SOYBEAN MEAL - A POTENTIAL INCREDIBLE TRADE!

There is no question that we are getting clobbered on our grain positions even after averaging down. It looks as if the rally in the grains is drawing to a close and the only reason I have stuck by Beans and Corn is their strong potential for a nasty bear market. If I had it to do over there is not a doubt in my mind that I would have exited the shorts a while ago, but we have stuck it out this long we will continue to hold the shorts.

That being said, instead of averaging down on the soybeans and corn, I am going to put on a large short line in Soybean Meal to help speed up the recovery process.

Notice the ascending wedge on the weekly stochastics as well as the bearish wall of fury on the price chart. You will recall that I discussed the value of chart patterns on momentum indicators and how they generate a more powerful signal than a pattern on just price alone. In the case of Soybean Meal we have both!

The smart money is also exceedingly bearish with their largest short position in over 15 years!

Now that alone sends a message.

The small investor is the most bullish they have been in over 12 years and the commodity funds are the most bullish they have been in over 15 years. Remember, the commodity funds are trend followers and momentum players and we can get a feel for how large a move to expect based upon the size of their position. The larger their position, the longer it takes them to unwind and the further price will go. In this case their position is extremely immense and could really lead to an all out collapse in prices.

For those of you that are not carrying the losses in corn and soybeans that I am then shorting meal offers and incredible long term play with a strong probability of 600% or more returns on investment.

Those that are bleeding a bit on the grain positions as I am, the meal trade offers a superb way of getting out from under the boulder.

Take a serious look at Soybean Meal as I sincerely believe it is one of those trades that come along no more than every 5 or 6 years.

Daily Equity Market Comment - 12/12/2007

We remain in a corrective phase regardless of the reversal today.

I continue to look for one more leg down to end the correction in the 1451 area on the S&P 500.
The daily pattern today, an inside day after a long legged doji has very bearish implications.

These bearish implications only last one to two days which falls very nicely into the theme of one more quick smash down.

After this final leg down I anticipate an exceptional rally so we need to get ready with some solid equities that will do well in the rally.

Keeping The Secular Trends In Perspective

I know it is easy to fall into the sky is falling camp as we are surrounded by all of the doom
and gloom of the sub prime fiasco and also the potential of the credit markets freezing.

These are legitimate concerns for sure, however they do seem to be overstated and used at every turn in the road.

Keep in mind that the truly big money is made hand over fist buying when the panic button has been hit over and over and over and there is blood running on the streets. Not every sector meets these criteria, but there sure are some excellent quality financial issues that are selling at simply ridiculous prices that have been gravely overdone to the downside.

I have also attached a long term chart of the trend in Put/Call ratios and as you can see, there certainly is no rampant speculation on the bullish side. If anything, the Tech Meltdown remains fresh in most investors minds and they simply are waiting for the other shoe to drop and stock prices to follow.

This is also not the only sentiment figure that is giving bullish indications.
If this economy were about to go into a meltdown phase and stock prices with it then I would highly doubt you would see the smart money, the big boys, the commercial traders or whatever else you wish to call them in a very jovial buying mood.

With that being said, we may have some short term hurdles to overcome here, but the long term remains firmly bullish!

Crude Oil - To Buy or Sell.....That Is The Question

Crude Oil is going to tell us alot about itself right here right now.

It will answer the following questions for us -

1. Is this current rally counter trend or another impulse move?
If this is a counter trend move, then it should reverse down right here and it certainly should not take out the contract highs.

2. Is the all time high at 98.70 a major high or simply another stop on the course to higher prices.
If crude prices turn lower here, we can have a pretty high probability that the 98.70 level is at the very least an intermediate term peak and should prices continue lower for more than 17 days without a new high then we can begin to see 98.70 as a potential long term high.

The Big Boys are very heavy net sellers and seem to be saying that the major bull market in crude is at or very near its end. However, while this is the heaviest commercial selling we have seen in quite a while especially when we factor in option positions as well the price action of the commodity is going to be the telling sign of what lies ahead for Black Gold.

We are entering into a very interesting period here so stay alert to potential trade opportunities.

Daily Equity Market Comment - 12/12/2007

Well we got the volatile day that I had anticipated with the high for the day being set in the first 8 minutes of trading.

From there it was a steady decline with very trade able rallies along the way. Take a look at the Day Trading Blog and see how we did http://www.lowriskdaytrade.blogspot.com/

I have attached the 1 minute chart of the S&P 500 to illustrate the clear direction of the market today. I actually thought at about 3pm that we might see my downside targets reached today, but the market was able to stabilize about 15 minutes later and close with a decent rally.

I am looking for the market to move a bit higher early tomorrow, probably to the 1490 - 1495 and then a full resumption of the correction. The most logical target now is 1446-1451 basis the S&P 500 cash index.

I will be posting a list of some short candidates, but being this close to the end of the correction these stocks should be utilized only for very aggressive traders.

Rate Outlook for The 10 Year

With the passing of 4.10% on the 10 year the new target becomes 3.72% and then all the way down to 3.08%. 3.72% is the most logical target, but with the cramping in the credit markets under 3 1/8% is certainly not out of the question.

The pattern today is calling for lower rates in short order.

I have also attached the monthly chart I posted back in June, not to pat myself on the back but to give some perspective as to what to expect over the intermediate term.

************************************************************************************

THIS IS THE CHART THAT I POSTED IN JUNE OF THIS YEAR

Copper - The Short Term Skinny

Copper is very close to showing where it wants to go over the short term.

A break on either side of the triangle will bring about a 40 cent move in the price of copper, a very respectable amount of movement to trade.

Because of the fact that the pattern is a symmetrical triangle we have no clue as to which way it will break.

The important feature of this is to jump on board of the direction that it breaks.

Coffee - Near The Point of True Direction

Coffee is nearing the make or break point.

While we were stopped out of our scalper coffee trade with a loss, I will be looking to sell
short again upon the violation of the lower line in the wedge.

The People Have Spoken

I have changed the blog layout back to the original format as the vast majority of you did not like the new layout and quite honestly the more I looked at it and worked with it the less I like it myself.

Remember, if there is anything you would like to see on the blog or changes that you might think would make the blog more seamless then you can always drop me a line.

I will also be taking the commodity trading and closed commodity trades and placing them near the bottom of the blog. I will do the same with the Aggressive Equity Trading account positions and closed trades.

Market Comment 12/11/07

Well the market answered to the FED exactly what they thought of their statement and easing for that matter.

This brings the correction into force, but don't think for a second that it will be straight down.
Expect a lower opening tomorrow followed by a rally attempt that should retrace a full 50% from the openings low to the high set on 12/11. There is going to be some great trading opportunities tomorrow as I expect a very volatile day.

However, the possible rally of Wednesday should be followed by a continuation of the decline.
I will be taking advantage of the strength by finding some very short term shorting candidates, but alas I get ahead of myself. We still need tomorrow to fit the pattern as laid out above before anything else takes place.

Regardless of what outcome that finds its way into the market we are in a corrective mode.

Targets for the correction basis the S&P 500 cash are 1465 and 1451.

From these levels we should see a very abundant rally for the rest of the year and a very strong January. I have a target of 1683 for January 2008 which is quite ambitious, but very doable.

The chart below is in response to the many emails I got about being so cautious in the face of higher stock prices, Sometimes the daily chart is just not enough to disect the short term trends. For my intermediate term work I use the Daily, 60 Minute and 30 Minute charts and need all three of them to confirm. As you can plainly see this was not the case.

Equity Market Update For The Week of 12/10/07

I anticipate another range bound day today as the market awaits the FOMC results.

I have posted the Pivot Point and Magic Numbers on the Day Trading site for those of you
who are interested. www.lowriskdaytrade.blogspot.com

The market continues to carve out a short term top and we remain short term defensive because of this. I anticipate that regardless of the FOMC meeting results that the market will sell-off.

We also have to be aware of the S&P today as a down close will give a Down Friday, Down Monday pattern which should bring some short term weakness and perhaps sharply so.

I do not anticipate making any short term moves one way or the other until the results from the FOMC give us the short term direction of the market.

COFFEE - On The Verge Of Collapse

The next leg down in Coffee could be a big one!

Confirmation came today that coffee has officially started its next leg lower.

We have a position that was put on as a scalp and actually almost got stopped out, however
we remain short coffee.

I have adjusted the trade from a scalper trade to a short term trade and look to probably be out of the trade by year end.

Downside Targets Are As Follows:

110.50****
101.50
99.5
96.5****

The bold faced targets are those with the highest probability.

Daily Equity Market Comment - 12/6/2007

Obviously there is no question that the call of the short term top was premature as the S&P after breaking down from its bearish pattern was able to stage a comeback of 10 points.

While from a distance this may seem impressive there is much more to this action than simply the reversal from a potential breakdown.

If equities on a short term basis had a substantial amount of upside energy pent up, then a bearish pattern such as we saw would not even form. The fact that this pattern occurred failure or not shows that the market is losing momentum.

Add to this the lopsided risk to reward model and the market continues to send signals that it will work lower.

I used the strength today to unload 90% of the equity positions in the Aggressive Trading Account and also 4 or 5 of the positions in the 20% in 7 days account. Once I receive more confirmation that the market has in fact rolled over and is going to work lower short term, then I will add a very limited number of shorts to the Aggressive Equity Trading Account.

Day Trading today was very slow, as I had only one signal all day and this managed to break even. Sometimes on these large spike days my day trading models can just mark time. I actually did not mind the inactivity of the day trading models today as it allowed me to work on some intermediate term models I have been developing.

Once again the Day Trading Blog is http://www.lowriskdaytrade.blogspot.com/
Stop and by and give me some input.

Also I am sure you noticed that I changed the look of the blog and I want your input on how you like it. Either drop me an email or I placed a Poll on this blog for your input.

Have a great day trading tomorrow!

Huge Move On GCA Today - Take Profits!

GCA was purchased in the 20% in 7 days portfolio and exploded today.

Take your profits on this 59% runner.

I am not even going to pretend that I saw a move of this magnitude coming, because while it met all the criteria for a potential 20% mover, I did not anticipate a move as huge as this.

You know the saying, "I would rather be lucky than good" I never have agreed with that, but at times luck will play a part in your investments and I will chalk this gain up to that category.

Equity Market Update 12/6/07

It appears that the call was a bit early on the high, but the important thing to remember is that we are very very close to a short term high and profits for short term traders should be locked in, whether it be through options or outright selling of the position.

Aggressive option traders can begin to purchase a small line of put options in here and given the 50% rule on declines I think it would be safe to go just a bit out of the money. Not alot mind you, but just enough to give you the extra leverage. Make sure you do not over pay on the option either.

You can check the actual value of an option at http://www.ivolatility.com/ they have a free option calculator that allows you to change the variables.

One item to note is that as tempting as it may be to buy the December puts because of price, I would advise the purchase of the January puts just in case the correction takes a bit longer than anticipated.

I have also basically cleaned out the long positions in the Aggressive Equity Trading Account and I will have that updated tonight.

TRADE ALERT - First Leg Up COMPLETE!

We now have a clear impulse move up from the lows set in late November.

From here, the odds favor a 50% correction of that move which would bring the S&P 500 back
to 1450 or so.

Short term traders can look to lock in their profits of this rally and if aggressive can start putting a short line out.

Intermediate term traders should be looking to pick up more equities on the correction and also look to confirm that a correction is all we are going to have.

Euro - Move Your Stops

Our position in the Euro has been a challenge to say the least as it went from profitable to unprofitable almost on a daily basis.

However, both euro short positions are currently showing a profit, the second position giving us better than a double. But I am not here to gloat about such a thing as you could have taken just
about every other day since I put the line out and thought I was out of my mind.

Currently, the Euro is looking very bearish and should continue its decline.

While we are in a very nice position to profit from such a decline, I am still going to do the prudent thing and move the stop up on both positions to lock in profits.

The position that was taken on first and has given me the most trouble is going to be stopped out at break-even now and the double that we have in the second is going to move up to lock in a 50% R.O.I.

Equity Market Comment - 12/5/2007

ORIGINAL MARKET STRUCTURE CALL

I use Elliot Wave for a guide line of the market only.

For years and years I tried to figure the entire concept out for it to become a stand alone
system, but I was never able to get fully to that point. Using it as a guideline has been very reliable and really helps to give guidance as to where the market is in relation to itself.

Well I think we can safely say that the bullish scenario has been confirmed.

Regardless of this fact, we are still about 90% done with this first leg up and short term traders should be looking to take some of the chips off the table especially if the alternate structure as the chart describes below is in effect.

The probability model for tomorrow calls for a fairly large ranged day and a close very close to the middle of that range with a slight bent to the downside. The model stipulates that this type of market action would mark the end of the first leg up and the onset of a counter trend rally. The probability model also says that fading a gap opening either up or down is a safe bet.

ALTERNATE MARKET STRUCTURE

Equity Market Comment - Alternate for 12/5/2007

I was doing more analysis tonight and I cam across another possibility to where we currently stand with equity prices.

The end result is the same, which is an ultimate correction low in the 1445-1447 area on the S&P 500.

The only difference here is that we would be a bit more bullish on the short term with a rally up to 1475 which would be followed by the final decline to 1445-1447. 1475 represents about 12 points from where we currently trade, so the open tomorrow should really help us to discern which scenario will unfold.

Equity Market Comment - 12/4/2007

Today was a very hard day to make money in the markets as there were multiple times that stocks would just drift aimlessly and at times that usually are not characteristic.

This tells me that there definitely is some indecision out there as many traders and investors weigh in on whether or not a major low has been put in place. The answer to this question will be given soon as the equity markets have some serious upside potential for the month of December.

However, we still need to get through this correction before any of that upside can be realized and while I really thought today would see the low for the correction, it looks as if it is going to be a more orderly progression.

Stocks currently are at their breaking point for this correction and the most logical downside target remains 1447. Once equities break, you could see that 1447 number in a hurry.

Option traders should continue to hold their puts.

Intermediate/Short term traders should be lining up their next round of purchases on the forthcoming weakness.

Long Term traders should continue to hold long and perhaps snap up a few of the battered down financial stocks during this correction.

RES - Option Opportunity

From the Aggressive Equity Trading Account comes an option play that could easily double over the next 2 weeks.

Notice the breakout of the triangle in price and also in momentum with the stochastics.
This triangle projects a target stock price of at least $12.90.

The best option for this play is the Dec 12.50 calls which are 0.05 Bid/ 0.15 Ask.
The true value of the option is 0.15 so they are neither cheap or expensive.

If the stock goes to $12.90 in the next 2 weeks, these options should trade .50/.55 for a 233% return. You might even be able to get the options for 0.10 and split the spread, but don't count on it.

Here is the rub though.
This HAS to be money you can kiss goodbye.
This is a very aggressive play as the bid on these options is virtually worthless.

That being the case, I would risk no more than you can comfortably part with in the event that the stock never makes it to 12.90.

There is some serious potential here though and should you have excess risk capital it might just be a great return.

CORN IS NEARING A MAJOR MOVE

Corn is nearing a major move one way or the other with a minimum move of 53 cents so keep your powder dry for this high probability trade.

Hold a gun to my head and I would say it will break down, but I will let the market do the talking and trade whichever way it breaks.

BUY JANUARY HEATING OIL - Hit and Run Trade

I will be adding January 2008 heating oil to the Long commodity portfolio at the open tomorrow.

Of course if it looks like it will have a large gap opening either way then I will have to finesse the buy side a bit and not just jump in at the open.

Keep the sell stop close at the low of today or just a few tick below.

This trade is looking for a quick sharp upward spike and not the birth of a new trend.

We are going to hit and run this one and I do not anticipate holding the trade any more than 3 or 4 days.