How far are we from the top?

The market is still going up even though by only 3 cents (QQQ). This week, we are supposed to see larger volume coming out due to Friday's option expiration for September. It could be very volatile, and the market could easily go up or down by $2. I will sell my positions if it goes up to $72.

QE3 will more likely to drive the gold price go higher. I will start to build up some gold positions if GLD can come down a little bit more.

Market trend is still going up. DO NOT short the market.

How Far Can The Market Go After QE3

FED Pulled the Trigger to Announce Long Waited QE3

I am glad that things turned out just like I planned, and I made a nice profit on it. I bought back only 50% of what I had sold earlier when the market retreat to its 20-day moving average. I was hoping the market could retreat further to its 30-day moving average, then I would buy back the rest 50%. As we all know, things will never go exactly as how you plan it to be.

Market Reaction to September FOMC meeting

Today, the market decides to take some profit before the FOMC meeting on Wed and Thu. The good sign of today's drop is that there is not a large volume associated with that. I sold 80% of my positions within 30 minutes after market open. Tomorrow's market will be pretty much as quiet as today. It be very likely to keep sliding further down toward the 30-day moving average.

As long as the pull back is mild and not associated with a large volume, it will still have a great chance to rally after the FOMC's meeting. Regardless of the outcome of new QE3, the market will continue it's up-trend for at least another week before completing its last wave.

Market Breaks Out

Today's market rally gives very positive responce to ECB's bond purchasing plan, and it finally clears out prior's high. It recoups all the loss of the short-term pull back since Aug 21st. If tomorrow's non-farm payroll and next week's FOMC do not turn out to give us disappoiting results, the market should keep the uptrend for at least another week until the stochastic reaches 90. Today's reading is merely 59. So, it still has enough upside potention. Hold up your long positions until you see either stochastic surges to 90 or terrible news come out.

Another Day of Going Nowhere

Today's market is boring. The trading range gets smaller and the volume gets lower, which signals that many people are on the sideway just watching instead of really being active in the market buying or selling. Every one is watching closely on tomorrow's ECB meeting and Friday's non-farm payroll. The trend has come down to the 30-day moving average, which could be a nice starting point if good news come out.

If the news come out disappointing, it may trigger a short term sell-off to send the market down a bit. The first suporrt for S&P500 will be 1,380 (50-day moving average) and the second support will be 1,365 (150-day moving average).

However, on the other side, investor intelligence report came out after market closed today with 51% bullish and 24% bearish. This large variance should give us a warning that the market is somewhat over bought or we could be somewhere near the top.

Recommended Book--The Big Short: Inside the Doomsday Machine

Find the hard copy version in Amazon
Find the Kindle Version in Amazon

This is one of the best book I have read about 2008 Wall Street crisis and the loss of 2 trillion in sub-prime mortgage crisis. If you want to find out more about this financial crisis, check this book out.

From Bookmarks Magazine

Michael Lewis has written from the perspective of a financial insider for more than 20 years. His first book, Liar's Poker, was a warts-and-all account of Wall Street culture in the 1980s, when Lewis worked at the investment bank Salomon Brothers. Everything Lewis has touched since has turned to gold, and The Big Short seems to be another of those books, combining an incendiary, timely topic with the author's solid, insightful, and witty investigative reporting. Only the Pittsburgh Post-Gazette criticized what it felt was a rush job of writing and a failure to integrate the individual stories. Few readers will care for the message here (despite laugh-out-loud moments of absurdity), but Lewis is a capable guide into the world of CDOs, subprime mortgages, head-in-the-sand investments, inflated egos--and the big short. However, as Entertainment Weekly points at, if you're only going to read one book on the topic, perhaps this should not be the one.

Post Labor Day Performance

The post labor day performance is not quite as postie as I thought. From the daily chart, it looks that the 30-day moving average can still hold. This is a positive sign, and it shows that the next target is to break SP500's prior high (late Mar) of 1,420. In order for that break out to happen, investors are waiting for more positive news, like Thursday's European central bank meeting, Friday's non-farm payroll report, and next week's FOMC meeting. Many people are still anticipating the QE3 will be released. If it could, the market will very likely to break out 1,420 and head up toward 1,520. Even though the current investor sentiment is fairly bullish, but it doesn't mean that it's the time to turn around and start a correction wave. It could be more bullish depends on how much the good news can stimulate the market.