Wednesday, November 19, 2008

The RO Report, "Death To The Market!" Edition

That's a 20-year graph of the Dow. Make sure to take note of the little blip back there in 1987, just to put things into perspective.

I'm not a mathematician, but I think back in 1987, we had a 38% move from the top to the bottom. Now, purely for fun, and acknowledging that we've already moved a huge amount from the top of the market, a 38% move from the start of this month would put us at around 5985 on the Dow... I think. Again, math isn't my thing.

But anyway, my point is that 7000 is no longer scary. This sell-off is way too controlled. We're heading into the 6000s. However, I'm not even sure how we'll get there. I mean, I guess C can go to $1, BAC could go to $5, and JPM could go to $12... I just hope they don't stay down there too long.

In short, everything is a big mess. It's hard to imagine how much lower stuff is going to go when everything already looks completely oversold (if we were in normal times). And again, when I start to feel like the end of the world is coming, it normally means we're due for a bounce soon.

My best case scenario for a meaningful, long term, bottom is a complete washout through 7000. I mean, blast it like it doesn't even matter, touch down at 6482 (I just like that number) and then shoot back above 7000, all in the same day. Then, hopefully, never look back, just like how in 1987 they never saw 1616 again.

At this point, if you're hoping something worse happens, you're really fucked up.

Speaking of fucked up, the RO saw more blood today. But again, our results are mixed. So the volatility is there, the opportunity is there, but it's not easy. The risk/reward ratios are not as favorable as they were even a month ago. "Trader A" (yes, he's still alive) explained to me that the Average True Range of the indices (based on a 5 period) is about half what it was a month ago. Additionally, volume is down.

Those two things together may go a long way towards explaining why short-term aggressive trading has been more difficult.

Anyway, out of 24 traders today, 15 were gross positive, or 63%. 8 traders lost more than $1,000 gross, and 12 traders made over $1,000 gross. Not bad on the face of it, but Traders B and D held hands and skipped together towards death, destructing the office.

Indeed, they took the term "Manservant" to a new level today.

I was #8 of 24. Happy enough, but I could have easily been in the top 5 had I a pair of balls.

Here are the Manservants:

"Chambermaid" - Trader B, -$52,792 on 614k shares traded.

2. Trader D, -$38,873 on 412k shares traded.
3. Trader H*, -$8,320 on 3,300 shares traded.
4. Trader C, -$2,493 on 64,600 shares traded.
5. Trader 10*, -$1,948 on 2,600 shares traded.

And the Bosses (congrats to A, N and Z for strong bouncebacks from yesterday):

"Lucky Pierre" - Trader A, $15,501 on 109k shares traded.

2. Trader N, $12,325 on 68,600 shares traded.
3. Trader Z, $11,062 on 147k shares traded.
4. Trader J, $5,472 on 86,400 shares traded.
5. Trader V, $5,008 on 72,400 shares traded.


Jawbreaker said...

I agree we will see DOW trading in the 6000's. I have been saying for awhile that it will look like an "L" shaped chart. Down, then sideways for quite awhile. JMO DT. Deff save your stacks for a low volume, dry spell. But then again who the fuck knows, maybe a perverted rally to 10k again.

Dinosaur Trader said...

Yes, I'm really, really concerned about that low volume dry spell... now I need to just get some stacks.