CNBC Portfolio Challenge

I couldn't help myself...I had to sign up. Not gonna spend a lot of time on it (not really a revenue producing activity) but it is fun. I put together a couple of portfolios and will manage them in my spare time just for the heck of it.

Off to a good start so far..here's the rank as of today:

1068th isn't bad considering there are over 500,000 portfolios.  We'll see how it goes.

Have a good one.

TLT

Maybe time to buy the dollar now...right now?

In a recent post, I outlined a trade idea that had to do with buying the dollar when it touched the upper linear regression trend line. If you haven't/didn't read the post, here it is. Coming up with ideas for trades can be a very helpful exercise but being flexible and nimble in your forecasting is a prerequisite for successful trading. Unfortunately, the Eur/Usd pair has not rallied back to my entry target but that's okay because I can tell when I'm wrong and I was wrong...at least for the time being.

Here's an updated 4 hour chart of the Eur/Usd pair:As you can see from the above chart, the Eur/Usd did not hit it's upper regression trend line. Although that would have been an excellent entry, it's not mandatory for a good short entry into the pair (short being long the dollar). Actually, my trend following system just flashed a sell signal and I've taken a small position with the intention of adding to it if it starts making money.

Below is the same chart as above but, it's zoomed in so that you can easily see the sell signal. Here it is:The red circle outlines the sell signal from my system. Notice that both lines around the price are red (this is the multiple trend following systems signals) and the bottom histogram (BB width) is above it's break out zone (the purple line). These signals tell me that it's probably time to sell the pair (buy the dollar) because it's the path of least resistance. We'll see how it plays out...because nothing is even close to a sure thing and my trend following signals are certainly not an exception.

On a different note, here's my weekly ranking with the CNBC portfolio challenge. Like I said, I'm not actively managing my portfolio anymore, I'm just going to let it play out. As you can see, I finished the week in the top 0.2% of the challenge but I've actually fallen back to the 961st position...apparently lots of participants had huge gains on Friday because I actually had considerable gains but still fell back position wise. Here's a screen shot of my ranking:
Next week should be really interesting, both with currencies and stocks, and I look forward to posting some opinions on the price action. Be careful trading because we seem to be at a potential turning point...especially with stocks.

Good luck out there.

TLT

Strong Close But....

We had a big rally at the end of the day today with the S&P closing up 3.5 % but, it was a rally on low volume...see chart below.It's hard to determine the significance of today's move because it's the day before the Thanksgiving holiday and there was low volume traded. Friday won't be much help either because it will only be a half day for the US markets. With that, I say to take this week with a grain of salt and be ready for anything on Monday.

The are a few things that we can discern from the recent price action. From the daily chart below, we can see that the S&P jumped over some overhead resistance today but it ran smack dab into the downward trend line (the yellow line). Also, there are a couple of significant resistance levels that are not too far above the current price level (higher blue lines). The MACD just gave a great buy signal with the bullish crossover (blue circle on the macd) but the RSI and BB width are both flat...kind of conflicting signals.At this point, we'll just have to wait and see how the market reacts to these various resistance levels. If the price stalls at the yellow line, I'd be looking to short and if it blows through the yellow line without hesitation, it might be time to start buying. Like I always say, only time will tell. I don't try to predict the price moves, I only attempt to properly react to the signals that the market gives.

On a different note, I've climbed up to the top 0.2% in the CNBC portfolio challenge. At this point, I've decided that it's not worth wasting too much of my time with the challenge and I'm just going to hold onto what I have and see how it plays out. Unfortunately the challenge has some rules that are very unfavorable to traders like only 10:1 leverage in currency trading (whereas I usually use 50:1) and only being able to buy and sell stocks at the prices for the day's close, no intraday prices. I hope that you all have a very happy Thanksgiving!!!

TLT

Opportunity is Nowhere

Markets tanked yesterday and it's finally starting to seem like complete panic has set in. The Dow broke below the 8,000 level and the S&P fell below 800. These were psychologically important levels that were not respected by the price action at all. Here's a chart of the S&P as of yesterday.
(*should read over extended)
Everybody and there mother is expecting some kind of short term rally because of the extreme readings in the indicators. Although we might see a big rally, I can't see it lasting right now. The technicals are looking like we should stay in free fall mode for a little longer if the market doesn't get back over the short term support levels.

As for the CNBC Portfolio Challenge, my bearishness has been paying off. As of the close yesterday, I was in the top 1.1% but this only gets me up to 4,544th place. Probably not going to win this week.
As for the title of this post, I stole that from Bill Williams...author of Trading Chaos (it's on my recommended reading list). This phrase is a little game he plays that shows 2 things: 1) Perception affects us all and 2) Opportunity tends to present itself when it looks like it isn't present. The phrase sounds pretty hopeless with the way it's written "Opportunity is Nowhere." However, if you look closely, there is a different way to look at it--"Opportunity is Now-here." Just a reminder that there's always 2 sides to every coin and our perceptions do get in the way every once in a while. Although the markets are terrible, you always have to remember that they look the worst right before a turn.

Good luck out there.

TLT

CNBC Million Dollar Portfolio Challenge

The CNBC Million Dollar Portfolio Challenge begins tomorrow and just for grins, I've entered. In order to participate in the Challenge, I've created a couple of strategies that should cut down the time necessary for trading...still need to be able to work and pay the bills.

First of all, I'll be trading currencies and stocks...with an emphasis on the currencies. The daily and hourly time frames will be used for the currency trades because the slightly longer time frames (I usually use 1-5-30 min) will allow me to enter trades and then not check on them for at least several hours and maybe even a couple of days.

As for the stocks, I'll be using a short screen that I've developed in order to generate a list of potential shorts. I use MSN's Deluxe Screener...the most powerful free screener available on the web (at least that I know of). Here's a screen shot of the screener and the list that it generated for today (Nov. 16). I will most likely create a portfolio of shorts and update it once a week...not even going to try to make long trades right now, it's just not worth the effort. I'll post some routine updates to let you know how the challenge is going and I'll also update the short screener next weekend and post the results for those interested. Good luck to my friends and everyone else that is also in the challenge.

Good luck out there.

TLT

***UPDATE***

The portfolio challenge does not allow short selling! Unbelievable, you can trade currency but you can't short stocks. Never mind my wonderful short screen strategy...instead I loaded up a portfolio with leveraged short ETFs.