九月 06, 2008 - 09:48 上午Thank HankThe news looming over all of us now is theIt is reported this would be the largest bailout in the nation's history. As an American, this saddens me. It saddens me to see the government of our country turn its back on true capitalism and whore the nation's treasury for the sake of their friends. This is not how a free market behaves. Free markets - - true free markets - - are natural, healthy, and self-cleansing. Sometimes the cleansing process is painful. But what Hank Paulson and Ben Bernanke are doing is destroying the country's future for the short-term benefit of ingratiating themselves to their small body of constituents.
Having said that, as a bear, I couldn't be happier with this news. As readers here know, last week was sensational for me. But I got out of my index puts since I felt they had done their duty, and I wanted to see indexes fight their way back to their failure levels before re-entering those positions. But what would create such an opportunity? What new reason would the bulls be given to buy? Well, my friends, the reason is here. Straight from God in heaven above. Another bailout. Another white horse. Thanks, Hank. I'm not the patient sort, and this is going to let me reload without the bother of waiting around.
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As for where to re-enter - - anything near 1,260 on the S&P 500 is going to get me excited.
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Folks who read this blog aren't used to hear me talking about "buying calls" and "going long", but on Friday, that's exactly what I did. I loaded up on precisely those things which had made me money on the short side just days earlier..........oil.........gold..........ags. This is somewhat risky, since I am betting on a countertrend movement, but that's how I am positioned. Playing both sides requires ridiculous amounts of dexterity; I'm not sure if it will pan out, but to my way of thinking, the graphs are telling me that it's time for a bounce higher before we resume the broader bearish sweep down.
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One specific issue I've gone long is ABX. I'm not sure if it would push its way as high as that horizontal line; it's sort of done that already; but I think this is good for a couple of points.
One specific issue I've gone long is ABX. I'm not sure if it would push its way as high as that horizontal line; it's sort of done that already; but I think this is good for a couple of points.
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A larger point move is more likely with FCX, which got near a major support level that stretches back more than a year.
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I bought puts on CLX about a week ago, and it's just about the only thing I own that's in the red. I'm willing to hang on. I like the look of this chart.
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Of course, I am delighted that the $UTIL finally broke down. We've been waiting a few weeks for this, and it's finally here. The FNM/FRE bailout will probably send interest rates zooming higher, and obviously that will be great for this bearish position.
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As for which energy issues I've been buying, I've been focusing on those charts which have retraced to safe support levels. Let's face it - the chart below is pretty bullish looking. In some cases, I might not even hold on just for a quick bounce; there is a real argument to be made for the long-term strength of such a graph. Of course, it would have to push past its August highs. If it did, this becomes a dynamite bullish chart.
As for which energy issues I've been buying, I've been focusing on those charts which have retraced to safe support levels. Let's face it - the chart below is pretty bullish looking. In some cases, I might not even hold on just for a quick bounce; there is a real argument to be made for the long-term strength of such a graph. Of course, it would have to push past its August highs. If it did, this becomes a dynamite bullish chart.
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I think the investment banks could find some serious strength too. Just look at MER (incredibly, this retracement pattern goes back to 1974!) I think a ride up to the high 30s is absolutely within reason.
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While energies in general have been falling, natural gas in particular has been getting just obliterated. Look at the continous contract below for the NG futures. There is a hugh amount of ownership at these price levels. I think support here will be terribly strong.
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.......which led me to go long (for the first time ever) UNG.......
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In some cases Friday, I was tempted to take profits, but I wanted to be in a position to take more if the fall extended. EXC was a good example. I had four puts, which about $6,000. I decided to sell half the position (for about 100% profit) and hang on to the other half. To be honest, I can't picture this falling much more right now, so I've set my stop absurdly tight. But you never know.
In some cases Friday, I was tempted to take profits, but I wanted to be in a position to take more if the fall extended. EXC was a good example. I had four puts, which about $6,000. I decided to sell half the position (for about 100% profit) and hang on to the other half. To be honest, I can't picture this falling much more right now, so I've set my stop absurdly tight. But you never know.
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Well, I'm typing this from my little girl's gym, which smells like someone's jogging sock, so I'll sign off until Monday. If the rumors are true about FNM and FRE, it's going to be an amazing Monday. I get very cautious when things go this well - - I'm expecting the trading gods to come down and smack me with losses. But if one remains humble, cautious, and prudent, you can at least make sure your ego and success don't come back and force humility down your throat by means of losses.
Posted: 09:48 上午 | Comments (View) | Permalink
九月 04, 2008 - 12:26 下午Going Long the OIH
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Posted: 12:26 下午 | Comments (View) | Permalink
九月 03, 2008 - 04:52 下午When to Take Profits?Let me start off by saying this - - - if and when the S&P 500 finally breaks 1261, that level is going to change from our worst enemy to our best friend, because it is going to represent a wall of resistance that will be very tough for the bulls to overcome. Because this level is getting hit again, and again, and again............and again..........it is getting stronger all the time. That is bad for us now, because support is strengthening all the time. But if anything manages to act as a catalyst to finally push the S&P below this level, we have a new best friend. Time will tell.
There was a time on Wednesday when it looked like the market might finally crack, but no such luck. The thick red line you see for the $INDU is continuing to do a yeoman's job as support.
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Whereas IWM is clinging like iron to a magnet to its own Fibonacci level, which represented the exact midpoint between today's open and close.
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Most mesmerizing of all, of course, is the S&P 500 itself. This is, by my count, the eighth instance of the market trying to push below this level and failing to do so. If 1261 is breached, you are going to see an incredible rush for the exits.
Most mesmerizing of all, of course, is the S&P 500 itself. This is, by my count, the eighth instance of the market trying to push below this level and failing to do so. If 1261 is breached, you are going to see an incredible rush for the exits.
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A closer look via minute bars amplifies this point.
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Today was a very good day, however. I was especially delighted with the third day in a row of a meaningful drop in the $UTIL. Just one more day like this would crack that neckline without question.
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As I mentioned earlier, I took a fair bit of my oil/gold/ag profits off the table. Just look at the volume soar on OIH over the past week! I am thinking the dollar is going to weaken temporarily and gold/oil will push higher. This doesn't mean they are entering a new bullish phase; it simply means there could be some short-term strength.
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I have found USO to be another helpful chart to monitor when crafting a "theme" for my trading. Its approach toward the fan line compelled me to take some profits, but I would also note that any countertrend rally, for me, will simply represent new shorting opportunities.
I have found USO to be another helpful chart to monitor when crafting a "theme" for my trading. Its approach toward the fan line compelled me to take some profits, but I would also note that any countertrend rally, for me, will simply represent new shorting opportunities.
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As an object lesson, take a look at how a security can cut through its fan lines one after another. I expect the likes of OIH and USO to do the same.
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Knowing when to take profits is very tough - perhaps one of the toughest chores a trader faces. I saw enough charts that looked like the one below to convince me it was time to take some money off the table. This isn't a bullish graph, but the price levels certainly have reached a level of at least medium-strong support. A cut beneath such a line, of course, would be bearish, but I lightened up a lot of positions by 1/3rd, and in some cases, I took them out of my portfolio altogether.
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One item I sold (near its high today, in fact) was DUG. This has had a super profit in the very short time I've held it, but I'm not comfortable banking on it breaking above the summer's highs. Not yet, at least.
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There were a few standout issues today. MasterCard (MA) is seriously breaking down.
There were a few standout issues today. MasterCard (MA) is seriously breaking down.
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First Solar's failed breakout has created a marvelous bearish chart. I bought puts on this a week ago, and they are doing very well.
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And Foster Wheeler (FWLT), in spite of having lost nearly half its value already, looks like it has plenty farther to fall.
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I'm trying not to get greedy, since things are going so well. Responsible and "fresh" stops are the key, as is taking at least partial profits. I'm looking forward to seeing what happens next.
Posted: 04:52 下午 | Comments (View) | Permalink
九月 02, 2008 - 03:31 下午Utter Rally FailureToday went very well. I was somewhat concerned before the market opened, because the buying public seems to have swallowed the notion "oil down=equities up" hook, line, and sinker. The Dow blasted higher, soaring over 200 points as oil and gold got pummeled.
It didn't take me long to realize I was going to be OK. About an hour into the trading day, the Dow was still up 170 points, but my portfolio was up handsomely. It is a very, very good sign for a bear to have a lot of green in the portfolio in the face of 170 points up on the Dow. So, naturally, when the Dow actually lost every single point of its gain and went into the red. my portfolio went from green to mega-green. It was an awesome day.
I've been talking about the Euro's fall for weeks now. Maybe we're in for a pause at around the 1.44 level.
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The broken trendline, first pierced in mid-August, is proving to be critically important. As good as today was, things are going to get sensational until we can break this series of higher lows.
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The "watched pot" of $UTIL isn't boiling yet, but it's getting there. I love this chart!
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Check out the honkin' big bearish engulfing pattern on the $COMPQ. It is noteworthy that there is no similar series of higher lows here - - - today marked the lowest price in weeks.
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As for how much farther gold will keep falling, that's hard for me to say; looking at $XAU, it was almost too easy calling for a plunge when it was at $155 last week. Judging by these lines, another $10 down looks very likely.
As for how much farther gold will keep falling, that's hard for me to say; looking at $XAU, it was almost too easy calling for a plunge when it was at $155 last week. Judging by these lines, another $10 down looks very likely.
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OIH is somewhat easier to judge. I am going to hold on to these puts until about the $165 level.
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I offer the following charts without additional commentary; they represent to me my favorites among my holdings right now.
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The only really big economic news this week is going to be Friday morning's employment report. For me, the good news is that the plunge in oil prices excited the bulls, but it let them down. This is the kind of market we need in order to push lower - - - providing, literally, a slope of hope.
Posted: 03:31 下午 | Comments (View) | Permalink
八月 29, 2008 - 03:33 下午August, Die She Must........Today was a welcome relief, but it still doesn't get us over the fact that this summer's frenetic up-and-down motion is agonizing for bulls and bears alike. Even if we had a single week of a consistent downturn, I'd nail all my financial goals for the year. As it is now, I have to play offense one day, defense the next, offense the next day, defense the next. Feh!
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The $UTIL, which you all know I'm especially bearish on, is on the right track again. A break beneath 460 would spell doom for this index and usher in the 20% drop on which I am counting.
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I've got a medium-sized position on QQQQ puts; the $NDX is below its retracement line (barely) and below its fan line. Weakness in the $NDX would send it, I am supposing, about 150 points lower.
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Every technician on the planet is eyeing 1265 on the S&P. I've tinted in the key area. I know I've said it ten times already, but I'll say it again: a break beneath this level will make the job of the bears really, really simple. Until then, we remain mired in this dread battle. September, "the month of the bear", will hopefully smile kindly on us.
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Oil and gold look nicely poised for a tumble; I'd bank on OIH to fall to 165.
Oil and gold look nicely poised for a tumble; I'd bank on OIH to fall to 165.
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And this ten year chart of $XAU positions this instrument for about a 20 point fall in the near term.
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One specific gold short I'm fond of is AEM:
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The recovery in financials is starting to peter out, I think. The rally following July 15 was gigantic, but the volume is shriveling up. I repurchased puts on BAC today, and both FNM and FRE had sharp percentage drops today.
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What follows are a variety of charts, some of which you've seen, that I like a lot as short positions.
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We'll close this week out with Art Garfunkel singing "April Come She Will", one of my favorites. This only reminds me that Art should be made a saint.
八月 28, 2008 - 05:00 下午Brutal YouthWell, there is one and only one trend in place - - - that is, me bellyaching about the markets and saying my post will be relatively short today.
This wholething gets really old. Up, down, up, down, up, down - - all month long. You may ask: "Tim, why not take profits on days you are up?" Because the only way to make real money is to ride a trend...........at least for more than 6 hours at a time! My equity curve resembles the edge of a saw. Up, down, up, down, up, down. Insane!
The broken trendline is still intact and still has meaning. But by exceeding last Friday's highs, the market did some damage to the bears today.
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It was even worse in Russell-land; the resurgence in battered financial stocks helped the IWM and $RUT quite a bit, and the series of higher lows and higher highs, shown below, is troubling. Particularly since the downturn we were starting to enjoy a couple of weeks ago was stopped cold.
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I am feeling better about my bearish positions on oil and gold, however. Early this morning, oil and gold were briefly strong, but they gave up these gains and moved into the red. The horizontal line on the $XAU at 157.50 is formidable.
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You should also take note of the substantial bearish engulfing pattern on the OIH..........
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.........and the USO.............
.........and the USO.............
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I was looking at the S&P 500 chart, and I found something interesting. Look at the three sharply ascending trendlines I've drawn (not the long purple ones, but the blue ones, below). It may not look like it, but all these lines are the exact same 70% angle. What I find kind of riveting about this chart is how, for the third time in a row, the market's countertrend is cleanly tracked by this line, and eventually prices fall away. Plus, with each succession, the amount of "recovery" time is getting shorter, and the amount of "climbing" time is shrinking too.
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I have avoided pursuing dead cat bounces in the financials. Those that have, for the moment, have prospered. Just look at the 300% gain in MBI, for instance, over the past six weeks.
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But you need to keep these things in context............as well as the potential for a resumption of the plunge.
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The biggest sign of my nausea with the market these days is my complete absence from the comments section. I usually really enjoy reading the comments, getting new ideas, and answering questions. But I am again (for the moment, at least) so put off by the market's whipsaw action that I don't even want to go there. Let's see if Friday does any better for us, or if this week is going to end on a sour note...........
Posted: 05:00 下午 | Comments (View) | Permalink
八月 07, 2008 - 04:23 下午Fear of Music
Posted: 04:23 下午 | Comments (View) | Permalink
八月 04, 2008 - 06:36 下午EnergizedI liked today a lot. One, my portfolio went up substantially - - over 15%. Not bad for one day. And two (and this is the part I really like), it didn't take some nutty market collapse to make it happen. The Dow fell 0.37%. Nothing!
The reason for my positions surging was that my hypothesis, which I've been pretty vocal about, is panning out. That is - - energy: down; equities: down. Not inversely related. Again - - - energy (and commodities in general, while we're on the subject): down; equities: down.
Now, just like no "up" is straight up, no "down" is straight down. Looking at the continuous crude contract (how's that for alliteration?), I'd say we're probably in for a breather when oil gets to $112 a barrel or so. People were ga-ga bullish when oil was $140 a barrel. I can only imagine some futures n00bs got their scalps handed to them already.
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The OIH has cut through its fan line, and - just eyeballing it - I'd say $170 or so is a good target. Not to say that oil and the OIH have much, much farther to fall. I'm just talking about the coming week or two.
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I sure wish $XAU options were more liquid. I'd really enjoy that market if they were. But they're not, and I avoid it..........which is unfortunate, since it's a really dynamic, technically-interesting market. The $XAU has plummeted an incredible 25% in just a few days. Here again, commodities n00bs (on the long side, at least) surely were surprised. But fortunes were made on the short side.
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I have a quantity of positions that ticks a lot of Garys off (80), and yes, it's cumbersome. I took a little money off the table today, but mostly I tightened my stops. Looking at the $CRX, it seems sensible to have a bit of a bounce here, but for goodness sake, I've seen so many graphs like this lately, and sometimes they don't wait for a bounce; they simply cut through the trendline and take no prisoners.
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And, oh, yes, my good friend $UTIL. I walked into the palatial office of my network guys today, and I wrote "SDP" in huge letters on their whiteboard. There is no more "jumping the gun" here. This is a head and shoulders. It's complete. The neckline is cut. And this thing is ready to rock.