八月 16, 2008 - 08:29 上午From the Land of Sky Blue WaterHello from beautiful North Lake Tahoe, land of Prophet North, the fabled and enchanted woods where bears roam and bloggers muse.
The last week was pretty hum-drum. I think everyone - bulls and bears alike - is waiting for "the big break". The bulls have enjoyed a relatively robust push higher from July 15th (and in some cases, not "relatively" at all, but multi-hundred percent gains with the likes of ABK). The amount of fear out there, particularly with respect to the financials, has really come down.
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It would be more exciting to see the VIX at a nadir like in October 2007 or May 2008, but at least we're back in the teens. In spite of my portfolio being stuck in neutral for a while, if and when the "big break" does arrive, my financial goals will be done for the year. My only challenge at that point will be to basically go fully into cash and not commit a common sin among traders, which is to extrapolate recent gains out into the future. So do me a favor and remind me, if we ever do a major plunge, to basically go into cash and post funny videos for the balance of the year. It probably wouldn't profit me to trade any more until 2009 begins.
One big break we're all waiting for, of course, is the $UTIL, whose plunge will correspond to higher interest rates and a stronger dollar. We're right on the cusp. A push above the $477 zone would put this pattern into some doubt, whereas a drop beneath $458 would start the fire. This is, I say again, one of the cleanest, finest patterns I have ever witnessed as a chartist.
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I was premature to say the EUR would strengthen short-term. The fast and furious drop beneath the red line you see below simply continued. Congratulations to those short the euro! I drew a new retracement pattern this morning, and it seems to me this could keep falling until around the 1.44 level. I still do think the euro will have a robust bounce sometime soon, but at the same time, I think the long-term prospects for the US dollar are pretty bullish.
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The NASDAQ has been especially strong since mid-July, but as you can see with the channel drawn below, it is very close to the underside of that 25% median line. In addition, there is a large amount of overhead supply between 2475 and 2550. Interestingly, this index actually fell (albeit slightly) on an otherwise bullish day.
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I've pointed out some diamond patterns recently. ANR is a very clean one, and it's pretty close to breaking down.
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x
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CF has broken a major trendline and completed a retracement to the horizontal line you see, so this is one of my cleanest trades right now.
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Another diamond pattern - - this one completed just one day after I mentioned it - - is Devry (DV).
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Battered gambling issues had a big resurgence in recent weeks, which in the context of a broader bear market for these securities simply presents another shorting opportunity. I've acquired a put position in Las Vegas Sands, and the desccending trendline dictates my stop price.
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I suggested MTL as a short when it was in the 50s, although I stupidly got out of it too soon (at a nice profit, but not nearly optimal). I think the retracement has given us a new chance, and the pathetic volume on the upswing is meaningful.
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Agriculture stocks have been great shorts lately, and a modest bounce higher has likewise presented new shorting opportunities. I hope I am not being hasty with these, but the major broken trendlines I am seeing suggest a very good trade ahead.
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Options on RKH have pretty wide spreads, but I've got a decent-sized position in this with a stop at about the $112 level. The resumption of a downtrend in financials (and tech, for that matter) is a important requisite to a meaningful new swing down in the market (which the Elliott Wave folks would describe as wave 3).
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Here are a few favorite equity shorts right now - - CCJ's pattern is absolutely gigantic and, I think, quite potent for a huge fall.
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CNI is in the midst of forming, simultaneously, a head and shoulders pattern and a diamond pattern.
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Coca Cola (KO) has done a nice retracement to a major failure line.
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That's it for now. I'm going to spend the weekend swimming and boating with my family. I'll probably do a one-sentence "comment cleaner" post Monday morning so people don't have to load this massive set of charts each time they post a comment. Have a good weekend!
Posted: 08:29 上午 | Comments (View) | Permalink
六月 26, 2008 - 06:01 下午So What Next?
Posted: 06:01 下午 | Comments (View) | Permalink
六月 19, 2008 - 05:08 上午Crosseyed and PainlessOh, Lawdy, Lawdy. I went to bed at 2:45 a.m. Wednesday morning, having packed for hours. I had to get up at 4:00 a.m. to get ready for the trip. Off the plane goes at 6 a.m. Change planes in Salt Lake City. Arrive here in Baltimore. And it's past midnight, and I'm still up, looking at charts. Gawd. (Update: Errr, I collapsed in a heap at 12:30 and got up at 6:30 to resume........sorry!)
During the aforementioned layover, I was pleased to see the Dow was down 95 when I got off the plane. Soon after, it was down 125. When I got back on the plane, it was down only 65. I had, during the layout, tightened up stops and trimmed index puts a little. But I'm glad I didn't get too aggressive with tightening stops. The action today was spastic, and I was relieved when I finally landed (after the market had closed) to see the Dow was down over 130. The chart of the $NDX below shows how, in the course of one day, the market was just all over the place. It looks like one of those contrived wall charts you see drawn as background in one-panel cartoons.
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I'm starting to get a little cautious in my immediate-term bearishness based on the Dow approaching the rising trendline you see below, which indicates the higher lows that have been established through the course of 2008. I'd feel a lot more comfortable seeing this trendline broken. We're very close to it now, which could mean another bounce.
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The $COMPQ is more clear, with a relatively clean path down for about another 100 points (barring any general market strength!) The 2325 level seems to be the next logical resting place.
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As for the more narrow $NDX, provided we stay below 2,000, I'm comfortably bearish.
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The Russell 2000 has a bit of support at the dotted red line you see drawn around $718. We'll need to break that in order to have some downward momentum. I'd say doing so would clear a path to about the $670 level.
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Adding to my cautiousness is the $OEX, which is approaching a big Fibonacci retracement level. The move from 660 to about 600 may be all this has to offer in the medium-term.
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I like the pattern AAPL is carving out, with a retracement to a major trendline completed and a dainty series of lower lows and lower highs over the past six weeks. My target here is around $161.
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CAT is looked good, too, having failed to complete a bullish breakout in May and now slipping away from its 2008 trendline, drawn in red here.
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Coach has been a favorite short position of mine, and it will get to be even more favorite if it pushes past the green trendline shown below. That would be a pretty important break.
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I'm an idiot for having puts in ACI. Trying to guess when a momentum stock has topped out is lunacy. Shame on me. I bet I get stopped out of this one today.
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I'm less of an idiot for my CEG short position, which has a major broken trendline and general downward movement for the past seven months in its favor.
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One of the most valuable lessons I've learned from the readers of this blog is to stay short on weak securities (sounds obvious, but I have always had such a penchant for trying to bring down crazy momentum players, this is somewhat of a revelation). The fact is that battered issues tend to get more battered, and I'm experiencing that with SHLD. I am simply going to keep hanging onto this.
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On Tuesday I pointed out the broadening top in VMI. The next day, this stock really had the air taken out of it.
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Here's a fine example of a change in fortune. Take a look at ANR below; this graph ends at the beginning of 2007, and you can see what a dog this stock was. Now click on the "Present" tab. Incredibly, isn't it? About a 900% rise in less than 18 months. When will the wind be taken out of ANR's sails? I'm weary of guessing.
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Here's another nice example.........AIG. In the graph below you can see AIG broken a trendline (and it's a huge one, spanning back to when Richard Nixon was in office). The prices struggled back to the trendline, but the damage was done. Now click on the "Present" tab to see what's happened since then.
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OK, I'm on a roll here; let's do another fun example. BORL, shown below, was clearly a fantastic winning stock. The bulls loved it, and wish good reason. You can see an "ANR-like" climb, as this company was seriously considered a threat to Microsoft's dominance in the microcomputer software field. Now click on "Present". How the mighty have fallen, eh? It's pretty sad.
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I had taken profits on AZO a little while ago, and I'm sorry that I did. The (crude) diamond pattern in this stock seems to be fulfilling, and the price breaks beneath support.
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One stock that was frustrating people with its slow movement was COF. This seems to be changing. COF had been, for about 7 months, bouncing between about $57 (on the high side) and a series of "higher lows" on the low side. But this trendline, shown below, was broken last month, and the damage is clearly done. Bears are finally getting their day on COF.
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In May, I pointed out what looked like a nice little H&S pattern on LNN. This pattern was never really completed, though, and there's little more dangerous than a failed pattern, so I got out at once. The stock pushed higher. On Tuesday I was toying with the idea of shorting it, but shorting based on the conjecture of a double top is often dangerous, because there's very little to keep a stock from rendering the double top moot by having simply one more good day. In any event, a short here would have played out nicely, as the stock got zapped hard. Ah, well. This is something my charts wouldn't have been very good at predicting.
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I will be out and about all day long, and I'll do a post tonight. I'm sorry for anyone that waited for this post last night. Have a good trading day!
Posted: 05:08 上午 | Comments (View) | Permalink
六月 09, 2008 - 04:25 下午AAPL=Another Anticlimactic Product LaunchAfter Friday's big sell-off, equities started today off strong, but it was a very inconsistent day. At one point, in spite of the Dow being up triple digits earlier, all the major indexes were in the red (including the NASDAQ, which was down a hefty 2%). Sadly, there was late-day strength, and the Dow managed to tack on 70 points. All the same, much of the damage done on Friday was still intact.
One of the big stories today was Lehman Brothers, which I remarked on earlier today. The case for some short-term support here is decent.
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The broader brokerage picture, however, is still fairly bleak. The $XBD is down 40% from its peak, but as you can see from this graph, there's still plenty of open air beneath current prices. Another 50 points off this index seems totally plausible in 2008.
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The widely-anticipated iPhone announcement came today. I mentioned a couple of times last week what old news this was, and the classic "buy the rumor, sell the news" rule held true here. At one point, AAPL was down about 9 points. Even with the drop "only" at $4.03, this chart is more attractive than before.
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The Dow itself is a mystery to me at this point. There is much more resistance than there is support. The market just needs a catalyst. But this pattern is just a mess right now, and it's hard to see what's next.
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The $COMPQ is a little easier for me to interpret. We've got very strong resistance at 2,550, indicated by the purple line, and a drop below 2,425 would be very bearish.
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The $NDX sneaked below its support line Friday, but it plunged below it today. This line is very obviously broken at this point.
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The chart below is a weekly, as opposed to the more common daily, of the Russell 2000. A drop beneath today's lows would be a very compelling bearish picture for this index, which I have not been trading for quite some time.
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My current index position is in the S&P 500, which is the cleanest chart for me to read at this point. My stops on this are set at 1406.20.
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"Fizzler" (FSLR) had another nice drop today, reaffirming how broken its former support is.
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And a similar situation can be seen with ISRG.
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AMLN, one of my equity shorts, had a nice double-digit percentage drop today.
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And I am re-attracted to real estate shorts (both individual ones and the broad IYR ETF).
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Akamai has been a slow pattern to develop, but it's looking nice.
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One of my favorite, cleanest patterns right now is CHTT, which I intend to hold into the high 40s.
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And, finally, one specific real estate short is LRY.
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After Friday's fireworks, today was a snoozer. Oh, well! Not every day can be 400 points off the Dow, can it? Good night!
Posted: 04:25 下午 | Comments (View) | Permalink
六月 05, 2008 - 02:59 下午The Indefatigable ConsumerI'm starting to worry that this economy is mysteriously stronger - - either through truthful data or otherwise - - than we had suspected. In spite of a host of unprecedented challenges, including a collapsing housing market and exploding energy costs, the U.S. consumer still seems fully committed to keep using debt to buy stuff. And buying stuff is what makes this country tick. And for all that, it was an awful day for the bears, with a rise on the Dow far in excess of 200 points.
The tidy gains made over the prior three days were wiped out in one session. What bothers me isn't they forsaken profits - - it's the wasted time. It takes a lot of time to analyze charts, do good analysis, execute trades, and set responsible stops. That time is well spent when it yields profits. But in a see-saw market when paper profits get nuked by a single strong day, the only gain to be had is exasperation.
One could, I suppose, avoid such frustration by piling into any of the momentum stocks that are trading, such as the one below. I just don't have the personality to do it, just like I didn't have the personality in 1999 to pile into Internet stocks. I'm too scared of when the music is going to stop playing. Shame on me for being that way, but it's just how I'm put together. The stock below, for all I know, could go up ten-fold from here. But a chart like this simply makes me nervous.
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Besides strong retail sales, another thing pushing up the market (particularly with oil and commodity issues) was the resumption of the dollar's fall and oil's rise. Crude oil futures pushed nearly 5% higher today alone.
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Another disturbingly bullish sign is the $XBD. I had mentioned a few days ago the nascent series of higher highs and higher lows had been eliminated. I'm embarrassed to say this was incorrect due to a data error from our price feed. This error has been corrected, and as you can see, the setup for a reversal in this index is still very much intact.
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Some charts are weaker than others, of course. The Dow, for example, seems to be simply fighting its way back in the context of the 800 points it lost over a couple of weeks.
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Whereas the Dow Transports are in new record high territory. Not yearly high. Record, never-seen-before high. In the face of $130 oil, this is astonishing.
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Tech-related indexes have gone up 20% or more in the past 10 weeks or so, and some of them are approaching the underside of their broken trendlines.
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