Thursday, February 18, 2010

Thanks for nothing, Ben

Yesterday, I predicted a down close for the market today. I'm not sure what score to give myself. At 4 PM the Dow had actually closed up 84. But just thirty minutes later, the ES futures cratered (along with everything else), thanks to Ben Bernanke and his rate-raising follies.

I avoided going long today because I was expecting a lower close, so I guess in that sense I was right. But I was really simply lucky. I had no way of knowing Uncle Ben was going to boil up a bag of Minute Rice and dump it on our heads.

And as we all know, sometimes it's better to be lucky than good. As for tomorrow, Dr. Doom is in the room.

Olympic Sports for Traders

Today, we examine which winter Olympic sport you should compete in, based on your trading style.

The Scalper

Short track speed skating is your sport. Like scalping, it's fast and furious, requires lightning fast reflexes and the ability to read the competiton instinctively. And you can go form hero to zero in the blink of an eye. There are only two kinds of competitors here: the quick and the dead.

The Daytrader

Daytraders go for downhill skiing. You jump out of the start house at 9:30 AM and rush headlong to the finish at 4 PM. Like downhill skiiers, the daytrader needs courage, confidence, and ambition to negotiate the twists, turns, and jumps the course provides on every run. The daytrader needs to be flexible to adapt to changing course conditions throught the day. Like the downhiller, daytrading generally ends one of two ways: on the podium or on the stretcher.

The Option Trader

Curling is the ticket for option traders. Exciting only to the participants, both come with a built-in countdown clock. When it's done, so are you. And like options, curling comes complete with a set of convoluted rules and strategies that would make Bobby Fischer's head explode. Sweep, curl, put, call, spread, straddle... kaboom!

The Swing Trader

The biathlon is the sport for swing traders. Not quite as lethal as the downhill and not quite as baroque as options trading. You definitely have to pace yourself here. The lead can change hands many times and the eventual winner is often not the one you'd have picked from the start. And like in biathlon, when the swing trader pulls the trigger and misses, they have to ski a penalty loop to get back to even.

Well, there you have it. Now back to Bob Costas...

Dow Forecast for 2/18

The Dow finally managed to put together two consecutive winning sessions for the first time in the last eight today (2/17). Will this mini-streak continue tomorrow? I have my doubts.

Looking at the daily chart, today's close, 10309, was right at a short-term resistance point established on 2/2 and 2/3. It also marked exactly a 50% retracement from the January highs to the early February lows. In addition, volume declined today from yesterday, and momentum has turned downward. Both the CCI and stochastic are at overbought levels, though the RSI is not yet. Getting above this level may be tough.

Also, the Asian markets closed mostly lower and the US futures are currently (1:40 AM) running lower too. Overall, I expect tomorrow to be a transition day ending slightly lower. I'm looking to see the day end with a doji candle. Longer term, I'm looking for the market to make a third try to get back above the 10310 level sometime in the next month, and that time it will be successful.

Wednesday, February 17, 2010


Welcome to the Night Owl Trader. This blog will follow the stock market and include a mix of market predictions and observations on the art of trading itself. The name comes from the fact that I'm a night person. Because of this, I do a lot of my market research very late at night. I'll discuss why in another post.

I'm starting this blog mainly as an exercise to help my own trading performance. Though I'll be tickled if I get anyone following it, that's not the main objective. I just find it helpful to put things down in print. That helps me organize my thoughts and keeps me honest. Perhaps someone else may find something of value here.

That's about it for now. My first post - we're off the ground. Let's see where we go.

Disclaimer: Nothing in here is investment advice, period. Your trading is your own responsibility. If I say the market is going up and it goes down, too bad.

Privacy: I don't collect any information from this blog. No counters, no cookies, no hidden widgets, no Javascript, JSON, Ajax the Foaming Cleanser, or any other trickery. No ads either.

I have no presonal interest in or affiliation with any of the products or services I may mention other than as a regular customer. I am an independent trader working for no one other than myself. This blog isn't mainly about recommending individual stocks, but if I do it, I will always disclose my personal position im them.