Bill The Trader

Tough month for market bulls

by BillTheTrader on Jan.31, 2010, under Rant

The bulls have taken a hit in the last couple of weeks, leaving January on a negative note. The drop has been quite dramatic, and everybody is now thinking there may be another pull-back and maybe the crash isn’t over yet. Well, what a surprise! Nothing has been fixed in the economy, the banking fix has not benefited anyone but the banks, and the politicians have no idea how to get us out of the hole they and their friends the bankers got us into. The little guys making an honest buck continue to go to the wall, the bankers get billions in bonuses out of the money the taxpayers provided to keep them going. Something wrong here…

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Mainstream tipsters start talking down

by BillTheTrader on Nov.04, 2009, under Information Sources

Today I received an email from Schaeffers Research  – one of the well-known market tipsters – warning of a coming slowdown or reversal:

I wanted to give you a heads-up as soon as possible.

Because I believe the current trading environment is about to undergo a dramatic shift. And I want to be sure you’re correctly positioned to take advantage of this shift.

Since the market hit bottom on March 9th, the S&P 500 has rallied straight up like a rocket, gaining 55% in the last 8 months. That’s the single biggest stock market rally since the 1930s.

Investors who jumped in with both feet when the market bottomed have enjoyed a very profitable ride.

But all that’s about to change.

Because I believe we are entering the tail end of this market rally.

And that means this market will be characterized by decreasing gains and increasing choppiness.

You see, history shows that the biggest gains come in the first 12 months after a market bottoms. Which means that after 8 months and 55% gains, the full-steam-ahead, fast-moving rally we’ve been enjoying since March is starting to taper off.

That’s why I expect the gains between now and next March to be much more modest… more along the lines of 10% rather than 55%!

But that’s not all… I also expect to see some major choppiness as stocks search for a new equilibrium. In short, we’re in for a bumpy ride.

So, it’s not just me!

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Open Positions

by BillTheTrader on Nov.03, 2009, under Trades

As I start this blog, I have just one open position -

XLF Dec 15 Put

bought 21 Sept 2009 at $1.10. Value overnight £1.32, has been a little higher, has been quite a bit lower.

The logic in holding puts at the moment is that there is likely to be a big drop in the markets sometime soon – there’s no real recovery yet, and when everyone realises that millions are out of work and manufacturing has stopped, the markets are going to catch up and the bottom will fall out.

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