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Discrepancy Trading - Category Archive

Dec 04

Christmas Crash: Perfect Set Up

Filed under Discrepancy Trading, Elliott Wave Analysis, Technical Analysis

Our regular readers will know that we are net short and we expect markets to pull back significantly from here. It is a matter of time, and because we are still not 100% short, we are happy if the Big Boys will do us the favour of pushing markets even higher so that we can establish all our shorts. Patience is required in the mean time. We believe we are at a significant top, and that these levels may not be seen again for years once the decline commences. We have been day trading in the last few days, shorting at the high and closing after a 1% fall and repeating it again, whilst at the same time holding our core shorts.

The only thing against a crash now is the fact that some big banks are still raising capital (HSBC, BOA). So it is less likely for the manipulators to tank the market. Once they are all cashed up, get ready for some serious decline. These ruthless bankers want lower prices. They want a crash so that they can buy up good assets for cheap. The government also want a crash so that the ensuing panic would drive treasury bonds up. How else are they going to get out of debt? Sell people worthless pieces of paper. Alternatively print their way out of debt. Nuts. Gold looks like it wants to go higher - 1300 looks likely but that would mean markets need to rally if the correlation remains the same.

We like our current scenario - markets to stay around here or slightly higher (S&P <1120) and range trade until Christmas before diving hard. In the short term, we expect/hope for a positive reaction to Fridays numbers to push markets up (S&P 1105-1110, Dow 10400-10450) followed by a hard fall Friday/Monday. We just opened another Binary Index for the Dow to close 10000-10100 for the week - maximal loss $30; profit $930 (after spread).  We like the risk reward on this, admittedly its asking for quite a bit for the Dow to crash >300 points tonight. Once all the banks are capitalised, then beware.

After the Christmas Crash, we expect one more big push up. This rally could go higher than the current to hit 11200 (our most bullish scenario). If markets decide to go to 11200 NOW, then we are prepared to hold out.

All the best tonight fellow traders.

Update: 20 minutes before close

Last nights volatility and pseudo rally was predictable. Dump on good news is the way to go. The insiders know this and are sucking in more bulls and at the same time screw the bears. The following orders were opened last night:

  • Short S&P $80/point 1112. Note: Stops put at entry.
  • Closed $5/point Nikkei at 10220

Theinflationist Fake Rally
Theinflationist Fake Rally

All entries filed under Discrepancy Trading

Incubation Period
no responses - Posted 10.20.09
We have fired most of our bullets establishing both naked and hedged positions (hopefully) without breaking Rule #1 ie Do NOT overleverage. It is time to wait for this rally to boil over. It will, and this is probably the easy part. The real problem begins when the market has pulled ...continue
Protected: Markets Rise Preopen
2 responses - Posted 10.08.09
This post is password protected. To view it please enter your password below: Password: continue
Short India NIFTY Long Japan
no responses - Posted 09.08.09
Opened another short NIFTY at 4806 $5/pt and long Japan's NIKKEI at 10350 at 220 Yen/pt. continue
TheInflationist Weekend Summary: 100709
no responses - Posted 07.09.09
We will be travelling this weekend so will post our weekend summary in advance. There was no weekend summary last week because no trades were taken for the previous week. Our portfolio now is worth $94228, up 135% since inception (6.5 months). Cash in bank is down to $56000 ($57229 last ...continue
Market Weakness
no responses - Posted 06.03.09
Market should show some weakness after such a powerful rally - our short term indicators suggest a down day Wednesday. Stay alert, take some profits if its there to take - India remains our main bet. Currently the Dow is down 100 points. Most technical traders have a confirmed uptrend ...continue
Village Cinema 30% Dividend Yield
no responses - Posted 05.12.09
We love buying things at all time low. With everything going against Village Cinemas (economic crisis, DVDs and home theatre sets, online movies), its share price is almost at all time low (and deservedly so). We are however, taking a punt on Village (VRL.AX on Yahoo) tomorrow at 0.80, only ...continue

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