RMBS

It looks like today’s action could be the technical breakout (BO) we’ve been waiting for.  RMBS has broken through its 200-Day MA ($16.18) AND its 50-Week MA ($16.53).  

Very good volume also for a normally very low volume day.  We see many large lot trades which indicates that there is significant institutional accumulation going on while most of the big money is still absent.

Very good signs indeed.  We may be nearing another substantial Add-On, or Entry, opportunity once RMBS confirms today’s move above these significant resistance levels.  That could come early next week, even perhaps Monday.

Watch RMBS‘ price action into the close closely but it appears that there are a few big players making significant Add-Ons to their RMBS positions right out of the gate in the New Year.

A very nice little Happy New Year gift o all of us in this potentially monster trade of a lifetime.  I am traveling today but next week should be very interesting indeed.  Everyone get your dry powder ready, the RMBS hour may be approaching quickly.

For anyone who may have itchy trigger fingers, we still like the JAN 2010 - 20/50 Call Spreads for ~$4.50.  We also like, as OTM Spec Trades (Mad Money), the JAN 20 Calls @ ~$.60 and the MAY 40 Calls @ ~$.85

Coach BD

Happy New Year…

To all of our incredible Trade Coach Members.  Through one of the most turbulent market years in history we hope you have found true value in our service and approach toward investment and trading education and the critical importance of risk management.

Early next week we will review our performance in detail to highlight the result of effective risk management and the importance of managed hedge trading in markets such as the one we encountered over this past year.

It appears that the trading portfolio we published during this first year will be UP in the neighborhood of 11% vs an overall market decline of between 30 - 40%, with extreme volatility of historical proportions.

One of primary goals for this year was to illustrate clearly that in good markets or bad, protection strategies and managed hedging techniques can indeed keep all investors afloat, and even profitable, during even the worst of market conditions, which we clearly witnessed during 2008.

We are very excited about the prospects in 2009 and feel there are some incredible opportunities to capitalize on what has happened this past year and produce some really exciting results.  Stay tuned for many changes and opportunities that are emerging both in our service and in our portfolios.

We hope everyone has happy and healthy end to 2008, and that your success will be greatly enhanced by the work and education that we have begun over this past year.

Thanks to all of you for your support and belief in the educational principles that we believe are the foundation for all successes in investing and trading endeavors.

Coach BD  

As we noted yesterday, the market’s inability to close strongly above the 40 & 50-Day MA’s yesterday did not bode well for continued strength… and with all closing back below their 40-Day MA’s today, we remain cautious about the ST outlook.

However, with quite a bit of recent strength, if there is a bailout plan announced in the next couple of days for the auto companies, we may see a rally that could carry the averages back above the daily trend resistance.  Most importantly, a weekly close above the 50-Day MA.

Beyond managing our hedges and following the action in RMBS closely, we don’t anticipate any new entries unless there is a strong rally into the year’s end.  Many stocks, especially dividend paying stocks, are beginning to look good from a reversal perspective and we will be noting many of those over the next few days, especially if any of them offer good setups for new entry or add-on.  Otherwise, we will be happy to wait for the new year to see if the market can make a good start to 2009.

Coach BD

RMBS

The strong move upward off the bottom has resumed for RMBS as they bucked the negative trend today on higher volume.  This after 5 days of healthy consolidation.

The technical picture also improved as RMBS cleared its 20-Week MA today along with the higher volume.  If this upward move is able to hold above this important resistance level through the end of the week this is most definitely one of the Buy, or Add-On, signals we look for.  Ideally we would like to see a strong close into the weekend after a test of the 20-Week MA that was cleared today.

We will be watching the action closely over the balance of the week and may be adding on Friday if we get the above confirmation that we want.  Plus, the news still appears to be all favorable on the legal front and we wouldn’t be surprised to see more good news over the next few weeks.

Coach BD

The DOW is flirting with it’s 50-Day MA @ ~8,940.  It would be a positive event if it were able to close above this trend resistance and rally strongly into the close today.

After being up nearly 350 points earlier in the day and then methodically moving lower until just about 30 minutes ago, we thought we may continue selling off into the close.

The reversal that began over these last 30 minutes has seen a significant improvement in UP volume but the last hour has been, generally, the weakest part of the day during this sustained downtrend.

Let’s hope for a confirmation move upward into the close and a close above the DOW’s 50-Day MA, which would be another step forward in this recent reversal since the 11/20 & 21 lows were put in.  

Coach BD

VIX

All of our VIX hedges expired @ full value, completely reversing last months crazy settlement losses by 2x… We are currently not holding any VIX hedges with this sell-off over the past 2 days.  We will wait until next week to evaluate possible entries where we can BUY under-priced ST Calls and SELL OTM ST Calls with premium against them, creating price advantaged spreads.

We are also completing routine adjustments and roll-outs to DEC on our LT Long positions and their accompanying hedges, which we will continue to maintain as this market heads lower… and lower… and lower… We have broken through some significant support levels and this could accelerate selling over the short term.

Coach BD

Greetings from the Traders Expo in Las Vegas.  If anyone is attending and would like to enjoy lunch or dinner on me please send me a message via email or text.

877.995.4111 - TTC

310.995.4111 - Cell

As for the market… YUCK… we wait.

Coach BD

Once again we are reminded…

Volatility is alive and well… and continues to drive this market to extremes.  After a beautiful, and much needed, reversal rally yesterday, today’s action is again confirming that we are still firmly in the grip of this big bear that has been in control since late last year, and that the major sell-off that began in late September has given no significant signs, yet, that it may be nearing an end.

While yesterday’s volume was significantly higher than recent down days, none of the averages made any attempt to challenge their respective 20-Day MA’s, and today’s bounce lower shows that the 20-Day is firmly in control of all of the big money bets.  Also, both the 40 & 50-Day MA’s are moving steeply lower heading for a showdown with the now flattening 20-Day.  And there appears to be no significant catalyst to break this downtrend, at least none so far… all of the news continue to be bad for our economy, and for the global economy.

This is a time to sit on the sidelines, patiently, and wait for the market to make a strong about-face, continue to hedge any LT positions tightly, collect ST premium income and look for isolated opportunities in good, battered stocks that could stage strong runs on any significant market turnaround or on good news (i.e. RMBS).  

We continue to like RMBS at these levels and believe the downside is close at hand with a huge and unlimited upside when the HJW starts handing down decisions in the two outstanding, but completed, trials that appeared to be clearly positive for RMBS.  

Coach BD

Watch closely today for a lower low on higher volume which would continue this week’s trend of lower lows on higher volume.  That would not be good… but I guess that’s not really any surprise to anyone in this market environment.

Coach BD 

Unfortunately…

The averages have broken below their recent lows from last Thursday, and today would be the 3rd failed attempt to move back above the 20-Day MA.  

If the markets close below last Thursday’s low, there may be more selling yet to come.  The only positive is that the volume so far today is fairly weak, but on recent down days it has picked up as we approach the close.

Keep an eye on how the market reacts during the last hour of trading.

Coach BD