Phantasmix Stock Market Blog

Reprinted with permission. Full commentary at Beat the Dart (right on the home page, scroll down)

The Standard & Poor’s 500 index down 6.7 percent to the 752 level, below the closing low of 776.76 logged on October 9, 2002. Dartline, using the Subjective Probability Model (SPM), claimed that the index support would be at 755. However, when the index fell below 755, it established a major technical down trend to 491, last held on January 5, 1995 (500.71).

Indeed, the index can drop 35% and happen within 150-days. … We must consider this consequence based on the historical prediction that SPM correctly made. (Check our achives for the proof.)

“Unrelenting gloom has taken over the markets,” said Dana Johnson, chief economist at Comerica Inc. “The economic news, the concerns about some major financial institutions, the concerns about the auto sector, earnings reports, everything is coming out in a way that is just provoking a massive selling in the stock market. Back in October we were looking at a potential catastrophic meltdown of the credit markets, and that didn’t happen,” he said. “But that doesn’t mean tremendous damage hasn’t been done to the economy.” SPM predicted that event in May 2008.

Bond prices showed stunning advances as investors clamored for the safety of government debt. The yield on the benchmark 10-year Treasury note fell to 3.14 percent from 3.32 percent late Wednesday. Bond yields move opposite their price. The yield on the three-month Treasury bill, considered one of the safest assets around, fell to 0.03 percent from 0.06 percent late Wednesday.

Sold my longs (AAPL, X, SOL) in pre-market, thankfully, got the best prices of the day (seriously, getting up at 8am does pay sometimes), then shorted a bunch of stuff at open, including ex-longs.

Today I traded: AAPL, AMZN, BIDU, COF, EEV, FSLR, GE, MA, MET, UYG, X, SSO, SDS, SPG. I even went long a couple of times via shorting SDS. It was a good trading market.

I made a nice amount (steak, triple-crème brie, chocolate cake and Amarone worthy amount)… however it goes straight into “The Dishonorable EEV Suck Fund“. I’m still about $10K in the red for the month, but it’s getting better every day.

Now that 755 has been breached on the SPX and a lot of people will get margin calls, we can wade around these low levels for a few days. Time to think about longs (for next week).

Overnight, holding long (EEV: 33.49 +1.24%), short (FSLR: 14.03 -5.97%), (SDS: 17.4199 +0.63%), (AAPL: 533.93 +0.72%), and (BIDU: 118.00 +0.51%) — in the green, except EEV and SDS.

If you’re having a bad day — here’s something for you:

I feel a little bit better. Won’t be selling the longs yet. 755 on SPX must hold.

I got worried when SPY wasn’t in the “Buying on Weakness” list, but at the end of the day there was some heavy buying – whew!