Rejection suddenly is not so bad

I remember this super hot girl I knew when I was a kid. I did everything I could to win her heart. It was worth the effort because she was just sooo cute. Now I wasn’t a bad looking kid either, I had money in my pocket, a nice ride, and was pretty good at getting the girls But there was nothing I could do to impress her. It got so frustrating that I probably lost my cool at some point and started to be a nag. Finally one day she couldn’t take it anymore and told me flat out to “get lost”. I was crushed and it was the first time I really knew rejection.

Fortunately traders can take a crappy situation and make something useful out of it. I have now learned not only to accept rejection but now I look for it!

Most notable out off all the price action was the low that was put in at 1292.50. This low was made after “1 ticking” the globex low of 1293.50.

Now before all you brainiac engineers out there who read every technical analysis book known to man and can find documented evidence that a “tick” is ¼ of a point and therefore a “1 tick” is 1293.25 and anything more can not meet the “1 tick definition” and thus the 1292.50 is range extension and bla bla bla bla , hate mail, more bla bla bla….

I tell you; “Stick to building bridges”…price is the reflective action of the “madness of crowds”. Want a real live example of the precise action of a madding crowds take a peek at the Middle East, just pick a country, any country will do. There is nothing precise about chaos.

Traders are crowds with opposite opinions, bulls bears and undecided waiting to join a side.

What happened was that price reacted sharply to a test of this low. Because of the sharp reaction better called, “rejection”, there was plenty of excuses that the action was a rally off the rumor that Gadhafi was shot and/ or the Saudi’s where increasing CL production.

I also had a price line there which was drawn because of the flat line price action of January 26 and 27. This was an unusual flat line and once price rallied above it, it became support (on February 3).

When you have an area where price stops rising, breaks and becomes support, it’s a noteworthy area. It doesn’t have to happen in this exact order (unless you are an engineer). It simply has to be an area where you notice that A LOT of traders were making decisions around this area both long and short. Its simply resistance becoming support. It doesn’t happen all the time but when it does its best to note it on your charts.

What was the real reason this 1292.50 was support? Who cares? Not me. All I care is that there were no sellers here and only buyers. That’s what caused price to rally 16 handles almost straight up.

Its also interesting that there was NO paper buying the rally and I mean NONE! The rally was all electronic traders. Did big paper just not see a reason to be buyers here or ….. what?. I shudder to think…..

Friday, JP Morgan found a reason to be a buyer buying about 1,000 times all day, not huge- but notable. I also didn’t think any traders wanted to be long going into the weekend and expected a bit of an afternoon sell off. So in the end we should see higher prices going into the new month providing we can get over the next “support becomes resistance” area of 1322.25 which is also the wiggle room of the previous days high.


(All the engineers reading this just got a cold chill reading “wiggle room”.)

I would feel better about continued further up side if the spike low had followed a high Arms. The highest daily Arms reading was only 1.58, that certainly doesn’t say a bottom is in.

I am seeing ATRs expand and if the VIX can just stay over 20 we might just get into to some great trading instead of the ‘ol script, early rally….flat line mid day and the occasional late day break.

A break of 1292.50 and I might just get what I wish for…….


Tim Mack




“Do not waste yourself in rejection; do not bark against the bad, but chant the beauty of the good” - Ralph Waldo Emerson

Decision Time - Champagne or Jack Daniels

Sometimes I amaze myself at what a knucklehead I am. It’s interesting though that my wife is never amazed.

I know lot of traders who pick tops and bottoms and only a few have been successful. That’s why I like to take the easy route and try to pick turns but not trade them. I wait until the market starts down ticking to sell off a high or up ticking to buy off a low. Makes sense right?

Unless you’re a knucklehead.

Today I thought I was smarter than the Market and bought what I thought was the bottom. I had a few friends who did so too so that always gives you some false confidence.

I bought on down ticks, not up ticks and the market kept down ticking. I quickly remembered why I don’t do this, it’s the stress that it creates while having a pretty decent package on and it immediately starts ticking against you. On days like today it can easily break 5-6 handles against you in a few minutes without an opportunity to get out.

In the end, the Market started to rally and the trade worked out even better than I had expected. I expected the market to trade up to the IB low 1307.75 before breaking again but it went a little further. But I took some heat on the trade and that leaves me stressed and worn out at the end of the day.

There is a perfect remedy for that and it’s a bit of Jack Daniels. Depending on the stress level it might be on the rocks, with a slash of water or with coke (a-cola that is). I’m thinking with a splash….

The Market needs to make a decision here, will it join me with some Jack or will it go back to sipping Champagne?

The Market will have to start trading and settle above 1313.50 -1312.25, today’s opening range, to tell us that this fun run is done. Champagne for all.

If we start trading and settle under 1294-1295 then we may have a meaningful change in trend…which would be right on time…. Crack another bottle of Jack for Mack.

The Carnage Continues…..

The carnage continues but no one sees it, not even that b@#$% Ms. Market. Goldman was a relentless scale up seller on Friday. They sold 100 cars every handle the market moved higher when the pit was full. When the pit thinned during lunch, they sold 30 lots. They don’t want to jam the locals, they still need them to take their paper. They sold a 200 lot at 1320.00 to make up for the light trade at lunch.

Earlier on Friday Swiss Bank and JPM were buyers so Goldman was the stand out paper seller for the day. Who knows why Goldman is a big seller and has been for two weeks? Maybe they wrote too many options and are hedging. Maybe they are covering longs. Maybe they are getting short. Who knows…. but the selling is significant and significant enough that you must take notice.

Some say that it is how the Market is absorbing the selling that is meaningful. In other words if the Market continues higher on strong selling it just says the Market is more bullish then ever.

I prefer to believe that if you have the ability to swing a line as big as Goldman has been swinging then you have the resources and capital to call market turns. If any house has those resources its Goldman! If you were Goldman and had “free” money to invest and you thought the Market rally was done, would you sell into rising prices or sell into falling prices?

If you sell into rising prices you can sell to all the late comers, the retail, who are now convinced that most of the risk is gone and start entering the market. They are the suckers who buy the top. Selling to them in a rising Market allows you to put on your position under the radar.

You wouldn’t want to sell the size Goldman is selling into a breaking market. You would get lousy fills and you would probably trigger curbs and SEC/CFTC investigations. Then Congressional hearings and the embarrassment of telling them you made a zillion dollars “selling” the market, how un-American!!!

(Actually you cant get more American by having the free will to apply your own capital at your own risk, The un American part comes in when you get tax payer bailouts after you took that risk. AND THEN reinvest that bailout capital back in to the Market, Bernie Madoff is a petty thief compared to what’s happening here.)


Looking further at my fav index, the NYSE, I see we have been rallying in +/-2100 point moves, resting then rallying again. Typically you get three of these up moves in a bull market and we are near the end of the third move. This is just one more argument that we may be approaching a meaningful top.

I also noted that the low of 4181 x 2 = 8362. 8380 was the high on Friday. I read a recent post by Marty Schwartz where he is calling a top in the S&P of 1332 (the 666 low x 2). This prompted me to look at this for the NYSE.

The market likes this simple math. Lets not tell these computer code geeks programming algos this. This is way too simple for their level. Let them keep making it harder then it has to be and we will all enjoy the liquidity. I see this type of simply calculated measured moves in the Market every day. The trick is knowing when they work and when they don’t. That is a matter of considering the context and tempo of the Market. Not too many computer programmers have a clue how to calculate that when it can change moment to moment and day to day (but I bet Goldman has a few).


Even with all this evidence, we still can not call a top. Why? Simple. Prices are still going up. Come Monday I will be a buyer above the opening range (but I might think about going light long June or Sept puts).


Tim Mack



"I buy when other people are selling." - J. Paul Getty

Tipping points

There are a lot of reasons to be bullish equities, Bonds are breaking South from a bear flag, Transports are breaking North out of a consolidation area, Fed pump, Hey… even Egypt seems like its quieting down and lets not forget the #1 reason. The Markets are going UP.

My job is a Market timer. I have to pick tops and bottoms.I dont have to trade them, just pick them. I know a lot of traders who will pick a top, place a limit order where they believe the Market will turn and enter a trade. Some do very well picking tops and they have the discipline to quickly scratch or close for a small loss when the trade doesn’t work. Most traders get married to the trade and add to a losing position to average their cost or in an attempt to pick a higher top (or lower bottom). I have seen a lot of traders get spanked hard doing that. Fortunately I learned on their dime. I learned to let the top (or bottom) "set in" and get on board when the trend has turned.

I’m not greedy; I don’t care about the first 10% of the trend or the last 10% of the trend, all I want is the 80% in the middle.

The top pickers can argue that their risk is small because a new high takes them out. I have been told that my method is “way” wrong because I am too far from my stop, well that’s true only if my stop is a new high (or low). Either my trade works right away or it doesn’t. Time will take me out of a trade usually at a scratch or small loss. I also feel I have "probability" on my side if I’m a seller while prices are breaking or a buyer while prices are rallying. Doing so will usually get me green in a trade right away (time being very important) and even if the trade doesn’t work I can scratch it (my broker loves that).

The key word here and in all of trading is "PROBABILITY".

What is the "probability" of price going higher or lower? I keep asking myself that over and over and over. My wife says I say it in my sleep, she also says I snore, I don’t believe her on the second point.

So I am always on the lookout for a Market top (or bottom). It’s a constant search because no one knows when the Market will turn or how long a trend will last.

Right now a few things are lining up that we might be near a top. Will it be THE top or a pull back or never materialize? We don’t know. We just have to monitor price to tell us what the "probabilities" are.

Looking at this chart, and my prior post, we are ripe for a top. Also there has been a very unusual amount of sell paper in the pit. In particular Goldman has been a size scale up seller for the last two weeks. Are they covering their longs and waiting to see how price reacts in this area or are they getting short? No one knows but when ALL the houses are sellers my bet is that they are getting short. But even the big boys can get spanked trying to pick tops …………but not very often.

Tim Mack




"As I grow older, I pay less attention to what men say. I just watch what they do." -
Andrew Carnegie