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Monday, June 18, 2007Post Number D
Well, this is it.......my 500th post to this blog. I would have hoped for some kind of momentous occasion (like a corresponding 500 point drop on the Dow), but it was not to be. I never thought I'd be writing this blog for this long considering its humble beginnings as little more than a personal diary
For anyone who has read my blog even a little bit, you know I'm a relatively incurable bearish sort. As such, the past couple of years have been rough sledding for me and other bears. Although there have been glimpses of hope (such as the early summer of 2006 or the brief plunge in February of this year), the market has, since October 2002, been owned and controlled by the bulls. Period.
Markets weren't always this way. Looking at over 80 years of the Dow in the 20th century, you can see a pretty even distribution of bullish years and bearish years (the latter shown in red).
http://1.bp.blogspot.com/_DC_WvCGCWQ8/Rnb0FQmb1EI/AAAAAAAAC6E/wJkPlfbNsJA/s400/0618-%24dowold.jpg
But the past quarter century has been quite different. Offer any reason you like - globalization, mass credit, the benefits of computers - it hardly matters. The fact is that a down year in the stock market has become a rare exception.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rnb0Fgmb1FI/AAAAAAAAC6M/oJIO7Yvtr4I/s400/0618-%24dowrecent.jpg
And of course, the king of all bull markets, China, shows no sign of slowing down. The hiccup in February is becoming a speck in the history of this market. Except for a small ETF position now and then in some related Asian market, I stay far, far away from China (either bullish or bearish). It's a bubble that no one knows where or when will burst. A true bear market could be years off.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/Rnbz6Amb0_I/AAAAAAAAC5c/wL150Qvbol8/s400/0618-%24china.jpg
Closer to home, the Dow inched lower today, and a potential double top remains in place. Of course, one strong day could pierce that possibility instantly.
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Closer to home, the Dow inched lower today, and a potential double top remains in place. Of course, one strong day could pierce that possibility instantly.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/Rnbz6Qmb1AI/AAAAAAAAC5k/6eHiOYCynlg/s400/0618-%24indu.jpg
Most U.S. equity markets have a strong resemblance in that, over the past couple of months, volatility has increased (judging from the technical indicators), even as prices have plateaued into relative quiet. Here's the S&P 500......
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rnbz6gmb1BI/AAAAAAAAC5s/JQ2aKEa2FMw/s400/0618-%24spx.jpg
And a very similar reading from the Amex Major Market Index.......
http://3.bp.blogspot.com/_DC_WvCGCWQ8/Rnbz6wmb1CI/AAAAAAAAC50/K7rTVwwoGt4/s400/0618-%24xmi.jpg
Today was a pretty hum-drum, do-nothing day, but there were pockets of interesting stuff. ALB, a short of mine, cut beneath its neckline nicely.
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Today was a pretty hum-drum, do-nothing day, but there were pockets of interesting stuff. ALB, a short of mine, cut beneath its neckline nicely.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/Rnbz6wmb1DI/AAAAAAAAC58/6DP62d61LBY/s400/0618-alb.jpg
BTJ, another short, rose some. But I'm still feeling good about this chart.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/Rnbzqwmb06I/AAAAAAAAC40/T0yksy8LZYc/s400/0618-btj.jpg
Another short, Constellation Group (CEG), eased lower, and the reversal in trend seems convincing.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RnbzrQmb07I/AAAAAAAAC48/Sl2tysAc1Lo/s400/0618-ceg.jpg
Housing stocks seem to be rather stuck, although they pushed down somewhat today. ESS is one of them, shown below. Many housing stocks bear a resemblance of this head and shoulders (ish) pattern, but the firmness seems peculiar.
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Housing stocks seem to be rather stuck, although they pushed down somewhat today. ESS is one of them, shown below. Many housing stocks bear a resemblance of this head and shoulders (ish) pattern, but the firmness seems peculiar.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rnbzrgmb08I/AAAAAAAAC5E/n09Vp1FIFUg/s400/0618-ess.jpg
I don't think I've mentioned Entergy (ETR) in a while. I entered a new short position on this today.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/Rnbzrwmb09I/AAAAAAAAC5M/r3ThKVPAUu8/s400/0618-etr.jpg
JC Penney (JCP), on which I own puts, also eased beneath its neckline (finally!) today.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RnbzsAmb0-I/AAAAAAAAC5U/AdnOEwNLMLc/s400/0618-jcp.jpg
I toyed with the idea of making my 500th post my farewell to this blog, but I figured that would be a bit tooPlus, I do like writing this blog, for the most part. It's an honor.
The main reason I keep writing it is because thousands of people show up every day (for whatever reason) to read what I've got to say. And we've got somewhat of a culture built up around this place. So I might as well keep at it. And, believe me, I'm grateful for your interest and readership.
And, after all, every dog has his day. Stay tuned.
at 6/18/2007 41 insightful comments
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Labels: $indu, $spx, $xmi, btj, ceg, china, cpt etr, ess, jcp
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Friday, June 15, 2007Son of a (Triple) Witch......
Well, what a difference three days makes.
As of Tuesday's close, things looked just hunky-dory for the bears. Although such a rapid, 400+ point drop from the Dow certainly suggested it was time for a bounce up. But the very unresolved question is whether the bounce was the contratrend in the scope of a real downtrend, or whether the 400+ drop was no more important than the one from late February.
One trend is clear - - comments are up. Even with anonymous posters shut out of the comments section, activity has been ramping up in line with the market's volatility. Big down days bring out the snarling bears, and big up days bring out the told-ya-so bulls. Of course, beanie11111 alone was responsible for 15 of the prior post's comments, so a few people are largely responsible for the activity. (And Beanie - we get it - solar, solar, solar - enough!)
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RnMQzgmb01I/AAAAAAAAC4M/4_xzRqfBfO4/s400/0615-%24comments.jpg
Looking at the $INDU, the best the bears can hope for at this point is a double top. A neat cascade of lower lows and lower highs simply didn't happen.......today's push higher broke that theory to pieces.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RnMQzwmb02I/AAAAAAAAC4U/NoDFuRiHaQY/s400/0615-%24indu.jpg
If the market does continue its descent next week, the Russell 2000 is, in my opinion, the best place to play it. Not only because of the relatively decent bid/ask spread, but also because it is relatively weak in its performance.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RnMQzwmb03I/AAAAAAAAC4c/UpXPAYLwyE4/s400/0615-%24rut.jpg
I don't think I've ever mentioned ACL before, but this looks like one which has turned the corner from uptrend to downtrend.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RnMQ0Amb04I/AAAAAAAAC4k/BYn5s3q0esw/s400/0615-acl.jpg
I got into a short position with BEAS today, and it's a bit in the green already, in spite of the market's strength. The right shoulder of this pattern is half completed.
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I got into a short position with BEAS today, and it's a bit in the green already, in spite of the market's strength. The right shoulder of this pattern is half completed.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RnMQ0Amb05I/AAAAAAAAC4s/c-FKJkKd3bE/s400/0615-beas.jpg
I shorted BTJ successfully a couple of weeks ago. It has bounced high enough for me to be comfortable re-entering this short.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RnMQbwmb0wI/AAAAAAAAC3k/7ULMS9Ww41Y/s400/0615-btj.jpg
Cardinal Health (CAH), a short I got into a couple of days back, is doing pretty well. It is encouraging to see stocks act weak when the market as a whole is very strong.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RnMQbwmb0xI/AAAAAAAAC3s/moOWR_CZSzA/s400/0615-cah.jpg
Constellation (CEG) has a medium term downtrend that is intact so far.
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Constellation (CEG) has a medium term downtrend that is intact so far.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RnMQcAmb0yI/AAAAAAAAC30/Teb5YCMx4hA/s400/0615-ceg.jpg
One highly liquid, low-risk short (or put purchase) are the Diamonds (DIA). A clean stop here would be 136.84
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RnMQcAmb0zI/AAAAAAAAC38/BN0_Fb0KvjM/s400/0615-dia.jpg
Now that Goldman's earnings are out, I think the risk is much lower to short this stock. The blow-out earnings yesterday actually caused the stock to declined, and it seems toppy enough to me - and far enough away from the trendline - to warrant another attempt.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RnMQcQmb00I/AAAAAAAAC4E/MduEu_Xhuw0/s400/0615-gs.jpg
I first mentioned CRDN as a longSince that time, it has push much higher on very strong volume. I guess the war in Iraq is actually good for this firm.
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I first mentioned CRDN as a long Since that time, it has push much higher on very strong volume. I guess the war in Iraq is actually good for this firm.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RnL8uAmb0rI/AAAAAAAAC28/D6363qHlsgo/s400/0615-longcrdn.jpg
McGraw-Hill (MHP) is a new short for me, entered yesterday.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RnL8uQmb0sI/AAAAAAAAC3E/CHSK4pfjVDI/s400/0615-mhp.jpg
I added to my MMM puts today, based on the big rebound in the Dow. It closed the day with a nice shooting star pattern and without penetrating its prior high.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RnL8uQmb0tI/AAAAAAAAC3M/0g_mAxIVxMg/s400/0615-mmm.jpg
I also bought puts on another megacap stock, AT&T (T).
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I also bought puts on another megacap stock, AT&T (T).
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RnL8ugmb0uI/AAAAAAAAC3U/ANMZSnrxTnU/s400/0615-t.jpg
The rails were very strong a couple of months back due to Warren Buffett's investments there. I think it's time to sell into this strength. I sold short a block of Union Pacific (UNP) today.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RnL8ugmb0vI/AAAAAAAAC3c/f-Yb9QEtwFI/s400/0615-unp.jpg
at 6/15/2007 59 insightful comments
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Labels: $indu, $rut, acl, beas, btj, cah, ceg, crdn, dia, gs, mhp, mmm, unp
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Thursday, June 14, 2007Nattering Nabobs
It's a pretty predictable trend. It the market goes down hard, the comments section is filled with kudos, praise, and huzzahs. And if the market goes up big, the comments section is filled with barbs, told-ya-so's, and permabulls. Either way, it's pretty tedious.
As I've said many times, this blog's purpose is for one person - me - to share his thoughts about the market via some charts. Nothing more. You can get ideas from it. You can take those ideas and turn them upside down (short everything I buy and buy everything I short). It's really up to you. All I hope for in the comments section is a place for other people to offer other ideas. Because there's plenty of interesting opinions out there.
Today, like yesterday, was another "up" day (although not nearly as dramatically). That's fine by me. Now, if tomorrow is up too, I'm going to start to worry. A healthy snap-back rally is terrific in the scheme of establishing lower highs and lower lows. But a continuous push higher can result in what we saw back in early March, where the allure of a drop was squashed and the market simply sashayed its way on to new lifetime highs. My view of the S&P 500 right now is along these lines:
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RnG0dAmb0oI/AAAAAAAAC2k/rSkysvM7VdM/s400/0614-%24spx.jpg
I've got some puts on the DIA with a contingent stop at 136.16.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RnG0dAmb0pI/AAAAAAAAC2s/gjCldhARWAI/s400/0614-dia.jpg
Symbol CEG has a nice series of lower lows/lower highs. I'm short.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RnG0dQmb0qI/AAAAAAAAC20/6CBgIB7zMCY/s400/0614-ceg.jpg
Malaysia (EWM), mentioned here before, continues to look toppy in spite of recent strength in Asia.