Monday, March 19, 2007Contratrend Rally
Today was a pretty bad day for the bears. I woke up to find myself stopped out of my S&P and Russell index puts. I only got stopped out of a few equity/other put positions, but suffice it to say it was pretty much red across the board for me today.
I don't comment much on the FX markets, but I just wanted to share a chart of the USD/CAD ratio. To me it looks like the multi-year slide of the USD/CAD may be behind us. The succession of lower lows and lower highs seems to have changed to higher highs and higher lows. I've tried to make this clear with the circles and arrows.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rf8snL7YrgI/AAAAAAAABsQ/4bvWKzjBX44/s400/0319-%24canadiandollar.jpg
Speaking of FX, one item I follow fairly closely is the New Zealand dollar. The NZD/USD pair gave me a clear signal before the February 27th selloff. NZD has been rather strong lately, but I think it may have exhausted its ability to climb back up. A resumption of the sinking of this FX would be very positive for equity bears like myself.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/Rf8W_UDp9MI/AAAAAAAABro/qX-x9Fsuc28/s400/0319-%24nzd.jpg
Is there a VIX on the VIX? If there is, it must be going crazy. Just look at how volatile this thing has been, swooping between 14 and 20 like mad. Today's very strong market took a lot of steam out of the VIX.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rf8W_0Dp9OI/AAAAAAAABr4/iSnudzdBTh8/s400/0319-%24vix.jpg
The principle risk the bears are facing right now is if the markets show much more strength, they are going to push into a relatively "all clear" zone where the bulls and frolic for a few weeks. I've tinted this in green.
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The principle risk the bears are facing right now is if the markets show much more strength, they are going to push into a relatively "all clear" zone where the bulls and frolic for a few weeks. I've tinted this in green.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rf8W_0Dp9PI/AAAAAAAABsA/L-e2X4Hhcj8/s400/0319-%24indu.jpg
The NASDAQ is even a prettier picture for the bulls, since it seems a short term double bottom may have been hammered out, and there's plenty of open sky above current levels.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/Rf8WyUDp9GI/AAAAAAAABq4/DrMUENpFgXc/s400/0319-%24ndx.jpg
The Russell 2000 - which is a favorite of mine since the bid/ask is relatively reasonable on the puts - has been strong compared to the more narrow indexes. A tight stop on this would be $789.88 with a somewhat fatter stop being 797.45.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/Rf8WykDp9HI/AAAAAAAABrA/IJTO6L5cmy0/s400/0319-%24rut.jpg
Same story with the S&P 500. We've been in a trading range for the past couple of weeks, and things will look bad for us bears if we break above it.
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Same story with the S&P 500. We've been in a trading range for the past couple of weeks, and things will look bad for us bears if we break above it.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rf8Wy0Dp9II/AAAAAAAABrI/Agkh5zzEEKw/s400/0319-%24spxminute.jpg
Although people may think the sub-prime story may be fully told, I'm not so sure. I bought puts on AHM today. To me, this looks like the beginning of a much larger fall. What's freaky about these puts is that I actually picked up the June $35 puts for less than the April $35 puts were priced. Bizarre.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/Rf8Wy0Dp9JI/AAAAAAAABrQ/BKxlRw6K1Vs/s400/0319-ahm.jpg
RIMM was about the only bright spot for me today. For RIMM to fall in a market this strong is encouraging. Breaking below $131.18 is key.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/Rf8WzEDp9KI/AAAAAAAABrY/u8pTvxKwk3Y/s400/0319-rimm.jpg
And now your occasional video clip. One of the most unlikely scenes from "The Facts of Life" known to man. Beyond the pale. Enjoy.
at 3/19/2007 6 insightful comments
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Labels: ahm, goog, rimm
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Friday, March 16, 2007So Short, I Could Jump Off a Nickel
One of the readers of this blog commented last night: "If we have a down 3rd Friday, It’ll be the first one I’ve seen, in (well, in a second, as far back as….wait, I think I found it, … no wait, that’s not it, well.. Records don’t go back far enough." Well, we were down today 50 points on the Dow. Another good week!
Here's a daily graph of the S&P 500. I've put three moving averages on this index graph - a 50 day, a 100 day, and a 200 day. The big drop on February 27th sliced through the 50 day and the 100 day. The recover from that fall kissed the underside of the 100 day. And now it's falling again, pulling both the 50 and the 100 into a downward slope.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RfsV2BqWOSI/AAAAAAAABqo/Utz48-GmDBM/s400/0316-%24spx.jpg
Here's something more remarkable to me. See that huge upward-sloping channel? Now take a close look at the upper line of that channel. Keep in mind I drew that channel a while ago. Take a look at what happened today on a minute-by-minute basis:
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RfsV2RqWOTI/AAAAAAAABqw/GKhI1JD8n74/s400/0316-%24spxminute.jpg
Do you see what I'm talking about? The arrow marks the place where the index bounced off the trendline virtually to the penny. Astonishing! Once again, this isn't a trendline I drew today. I drew it a long time ago. But now that we're back within the channel, the price is obeying this level splendidly.
A lot of people, myself including, have become hung up on the fact that the $VIX has become so "high" in a very short amount of time. Going from the single digits to 16 is a big move, to be sure. But step back and look at the $VIX over the past decade. The norm was for it to bounce between about 20 and 30, with occasional bursts above and (less frequently) below these levels. So a level of about 16 is actually way under the norm still.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RfsVvxqWONI/AAAAAAAABqA/Bo0KKUb2sEU/s400/0316-%24vix.jpg
Looking at the NASDAQ Composite, if there is any regularity to the broad action of the market, it seems we're still in the same sine-wave type pattern with plenty of room left to the downside.
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Looking at the NASDAQ Composite, if there is any regularity to the broad action of the market, it seems we're still in the same sine-wave type pattern with plenty of room left to the downside.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RfsVwBqWOOI/AAAAAAAABqI/VrL5kaosmfY/s400/0316-%24compq.jpg
The Dow 30 did a gorgeous bounce off the underside of the 100 day moving average. It seems to me the next target is to take out that red 200 day moving average.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RfsVwRqWOPI/AAAAAAAABqQ/-WInszOdBeA/s400/0316-%24indu.jpg
Regular readers know of my fondness of the Russell 2000, particularly since the put options have a much more reasonable bid/ask spread than the S&P 500. A tight stop on this would be about $785.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RfsVwhqWOQI/AAAAAAAABqY/pGzLPy1SEX8/s400/0316-%24rut.jpg
The Major Market ($XMI) is another interesting graph. We've come full circle on the breakout. The downward momentum of this market doesn't seem like a fluke anymore. It feels truly bearish.
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The Major Market ($XMI) is another interesting graph. We've come full circle on the breakout. The downward momentum of this market doesn't seem like a fluke anymore. It feels truly bearish.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RfsVwxqWORI/AAAAAAAABqg/4vqLZmk9YoE/s400/0316-%24xmi.jpg
Most of the attention has been focused on the rinky-dink sub-prime mortgage lenders. Gigantic blue-chip banks like B of A (BAC) seem vulnerable now. Check out the topping pattern and busted trendline.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RfsVVxqWOII/AAAAAAAABpY/ByqV9HySTVI/s400/0316-bac.jpg
Black and Decker sports an interesting diamond-like top.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RfsVWBqWOJI/AAAAAAAABpg/SLXaisIv88E/s400/0316-bdk.jpg
Purse-maker Coach (COH) has had a great run, but it seems to be history.
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Purse-maker Coach (COH) has had a great run, but it seems to be history.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RfsVWRqWOKI/AAAAAAAABpo/z_CtohPaKGg/s400/0316-coh.jpg
Google (GOOG) is not a slam-dunk bearish pattern, but busting that supporting trendline would cause some big fireworks. I personally think Joost is going to completely trash YouTube. I'd go so far as to say YouTube may go down as one of the stupidest acquisitions in modern corporate history. But only time will tell. It's great for the sophomoric videos I post here, at least.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RfsVWhqWOLI/AAAAAAAABpw/Y9t0K3Ksw-0/s400/0316-goog.jpg
MicroStrategy (MSTR) continues to have its steam leak out its sides.
http://3.bp.blogspot.com/_DC_WvCGCWQ8/RfsVWxqWOMI/AAAAAAAABp4/_9bYwJbR6Vc/s400/0316-mstr.jpg
And for today's video clip.......Carmen Electra's completely hilarious and unintentional pratfall at a fashion show. Chevy Chase could never mime something this good. Find some good Benny Hill-style music to play while watching this.
at 3/16/2007 20 insightful comments
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Labels: bdk, goog, mstr
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Thursday, March 15, 2007Sissyneck
Today's entry will be relatively short.
Not a heck of a lot going on in the market today, although as my "FickleMan!" post suggested, I decided there was a good entry point today when the Dow was up about 50 points. At this point, we are in the upper half of the trading range that has been recently established. The breakout points of this range for the S&P couldn't be more plain:
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RfmsZhqWOFI/AAAAAAAABpA/5jAa1KJdMfg/s400/0315-%24spx.jpg
A similar situation with the $MID, but from a different viewpoint. Look at the Fibonacci levels. The prices are bound between two levels right now, and we're once again in the upper half. Tomorrow morning's economic numbers will almost surely give us a catalyst for breaking out of this range.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RfmsZxqWOGI/AAAAAAAABpI/S_z4-SmDCEE/s400/0315-%24mid.jpg
The most exciting suggestion from this blog in today's action was the Chicago Mercantile Exchange Group (symbol CME), which I wasIt got absolutely clobbered today, and I not only held on to all the puts, I even added a little to the position. I think great things could come from this trade.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RfmsaBqWOHI/AAAAAAAABpQ/TMo4ZxQtzJg/s400/0315-cme.jpg
Although my book has been out just a couple of weeks, there are a already you might want to check out in case you were considering getting it. A lot of kind folks have written me about the book, which I appreciate it. It's pretty obvious I have a great interest in yakking about charts!
at 3/15/2007 15 insightful comments
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Labels: cme
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Wednesday, March 14, 2007Candlesticks Galore
I think it's time to back off for a while.
In many instances, the kinds of clobbering I've been expecting have exhausted themselves, at least in some industries. Take housing, for instance. I first mentioned Meritage Homes (symbol MTH) way back on when the stock was at $58. It lost nearly half its value since that time, so clearly the head and shoulders pattern behaved as expected. But as you can see in the highlighted area near the bottom, there's a bunch of support here, and I think stocks like this have played themselves out to the downside.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RfhzcRqWODI/AAAAAAAABow/9tsm6teDHHI/s400/0313-%24mth.jpg
That isn't to say that the drop from 12,700 to 12,000 consitutes the Giant Bear Market I've been talking about. Not at all. I'm just saying that, barring an important new catalyst, I can see the bulls taking the reigns again for a bit.
Take today's $INDU, for instance. Support at 12,000 was pierced, but there's a ton of buying interest at that level, so the bears were pushed away, and we had an intraday move of over 200 points.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RfhzSxqWN9I/AAAAAAAABoA/5ThynkwPmNI/s400/0314-%24indu.jpg
The MidCap 400 ($MID) is an even clearer example. Look how perfectly it bounced off that Fib retracement level.
http://4.bp.blogspot.com/_DC_WvCGCWQ8/RfhzSxqWN-I/AAAAAAAABoI/q-gX3kh789M/s400/0314-%24mid.jpg
The $NDX also held firm. So the failure of the bears to really maul the market indicates to me that the baton was handed back to the bulls in the middle of the trading day today.
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http://www.ha.xinhua.org/gfwh/2006-08/21/xin_3310021014357182433767.jpg
The $NDX also held firm. So the failure of the bears to really maul the market indicates to me that the baton was handed back to the bulls in the middle of the trading day today.
http://1.bp.blogspot.com/_DC_WvCGCWQ8/RfhzTBqWN_I/AAAAAAAABoQ/oLAcj5mH4uk/s400/0314-%24ndx.jpg
$RUT (the Russell 2000) likewise showed good Fibonacci obedience.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RfhzTRqWOAI/AAAAAAAABoY/R7-SoRaeK-k/s400/0314-%24rut.jpg
The S&P 500 shows the pickle that the market is in right now. It's just stuck on that major trendline. A state of equilibrium in the market stinks for traders......but we may soon find ourselves in a trading range based on this tug-of-war.
http://2.bp.blogspot.com/_DC_WvCGCWQ8/RfhzTRqWOBI/AAAAAAAABog/eZyeo9ZnC6w/s400/0314-%24spx.jpg
The Transports also supports the short-term strength theory. A perfect bounce off the supporting trendline.
[ 本帖最后由 hefeiddd 于 2009-5-3 08:11 编辑 ]
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