Bill Cara’s Blog for Nov 2, 2011
CTA Trading Desk Morning Report
[9:30am ET] Good morning, Geoff here.
Yesterday was a very interesting day. We have been saying that the market needed to take a breather and that the European issues were not fixed. On cue, the market sold off hard on the open.
From Monday’s notes: “Sorry, running a little late today. I was spending more time than usual on placing limit orders should prices come to us in certain stocks. Sometimes, you get a fear flush and you need your bids in and we are looking for risk assets at lower prices.”
Yesterday we got the sell-off we were looking for and we bought a total of 10 different stocks (in various strategies) near the open and sold some of the bonds (TLT) that I mentioned buying on Friday at a gain. Some of the names that we bought were new positions and some were adding to existing positions. Two of the names were current holdings in gold miners – we ended up selling some of the position down in the last hour, but we held on to most of the position. When you can take gains of 4.5% and 5.7% in a few hours and have the stock remain a core holding in the portfolio you can’t go wrong.
One of the reasons we were buying yesterday was the support band in the S&P 500 from roughly 1200 to 1220. There are various Fibonacci retracements and prior support/resistance levels within that band. Another technical positive is that the dynamic up trend line was in the band and the S&P 500 looked to be finding support on or near that line (the original up trend line from the August 8 lows through the August 22 lows). We like those broad market levels so we had a list of Cara 100 names with strong earnings estimates that we bought. Buying is the easy part, the real part of the trade is the exit plan, right or wrong. Fortunately the trades all look good right now.
This morning, the ADP report showed that private sector jobs rose by 110,000 last month which exceeded the expected 100,000. September data was revised to up 116,000 jobs added versus the 91,000 reported last month. This is helping the market rally.
I would also like to mention that in the future, I will be including some notes from an associate of mine, Larry Hannula. Larry has been running a futures strategy for 5 years that have returns on a risk adjusted basis that would blow your hair back. He is very conservative and he agreed with my long posture after the open yesterday which strengthened my conviction. Larry’s timeframe is much shorter than mine so we are still determining how to add him to our discourse in a way that would benefit readers but I’m sure that you all will see him as a great resource moving forward.
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
|Symbol||Name||Last Trade||Change||Related Info|
||77.20 (3.87%)||Components, Chart, More|
||3.43 (0.17%)||Components, Chart, More|
||13.05 (0.43%)||Components, Chart, More|
||28.85 (0.49%)||Components, Chart, More|
||8.58 (2.79%)||Components, Chart, More|
|^OSEAX||OSE All Share||417.90
||2.65 (0.63%)||Components, Chart, More|
||0.19 (0.06%)||Components, Chart, More|
||0.16 (0.00%)||Components, Chart, More|
||16.50 (0.30%)||Components, Chart, More|
||5.70 (0.64%)||Chart, More|
||7.98 (0.92%)||Components, Chart, More|
||14.50 (1.00%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||744.91
||7.74 (1.03%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad’s Catch of the Day
Kaimu’s Sound Money
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report