OIH:
http://photos1.blogger.com/blogger/4311/970/400/0720-oih.jpg
PBR:
http://photos1.blogger.com/blogger/4311/970/400/0720-pbr.jpg
$XAU:
http://photos1.blogger.com/blogger/4311/970/400/0720-xau.jpg
Cheers.
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Wednesday, July 19, 2006Massive Sucker Rally!
For all those who think I'm a permabear, I want to point out that last . And wow, what a bounce it was. Up over 212 points on the Dow. Yuck!
This is soooooo typical of a rally in a bear market. It's fast and furious. I hate days like this, believe me, but it's all part of the unwinding. Bernanke goes in front of Congress to yack a bit, and people go haywire. Bulls will take any excuse to buy.
Here's the Dow - I've pointed out with the up-facing red arrows where the Dow has found support. The area shaded in green highlights in more. It made for formidable support this time. We have got to break through this level to get serious, bears!
http://photos1.blogger.com/blogger/4311/970/400/0719-indufar.jpg
Here's a close-up of the same chart. I'd say the circled area is about as high as it's going to be able to make it (11,150 or so). If it busts above it, I've got some more thinking to do!
http://photos1.blogger.com/blogger/4311/970/400/0719-induclose.jpg
Gold still looks like a solid H&S in the making:
http://photos1.blogger.com/blogger/4311/970/400/0719-gold.jpg
And the S&P 500 looks like it's retracing to a short-term trendline.
http://photos1.blogger.com/blogger/4311/970/400/0719-spx.jpg
As is so often the case these days, I've got a plane to catch - but I just had to post a few remarks after today's madness!
at 7/19/2006 24 insightful comments
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Wednesday, July 19, 2006And There's Our Bounce!
On July 15th I wrote that a bounce seemed quite likely. It took a couple of days, but, voila, it's finally here.
http://photos1.blogger.com/blogger/4311/970/400/0719-spxfar.jpg
At first the SPX bounced perfectly off its Fibonacci retracement. It seems to have goosed past this for now. To me, this means only one thing: another shorting opportunity. I'd eagerly short as the Dow gets close to 11,000 again.
http://photos1.blogger.com/blogger/4311/970/400/0719-spxclose.jpg
By the way, congratulations to any YHOO put owners out there - what a day!
at 7/19/2006 42 insightful comments
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The area is green represents major support for the Dow Jones Industrial Average.
http://photos1.blogger.com/blogger/4311/970/400/0718-dow.0.jpg
If it breaks below 10,660, it's party time, bears. Even I am surprised how flaccid this "bounce" is. YHOO reports after hours. That's bound to give us some fodder for either direction.
at 7/18/2006 12 insightful comments
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Monday, July 17, 2006Oil Your Shorts
Wow, was that the rally? Maybe, maybe not. Perhaps it's just more basing behavior before we push higher.
Good bear that I am, I couldn't bring myself to go long. The bounceback seemed horribly flimsy. And with 8 points on the board at the end of the day it seems that, for today at least, the bulls haven't seized control back yet.
One relatively safe haven, I think, for shorts is in the oil services sector. Oil has obviously been on a tear for a couple of years, although thishelps put it in perspective. But the per-barrel price of crude is sky high:
http://photos1.blogger.com/blogger/4311/970/400/0717-cl.jpg
In spite of this, when I look at the oil services sector (in this case, OIH) I see a head and shoulders pattern shaping up. I must state once again that a pattern in formation is not the same as a completed pattern. One shouldn't normally jump the gun. But if you set your stops tight enough, this might be worth a look. It may seem hard to believe, but if the H&S pattern breaks beneath its neckline, the target zone is that area wayyyyy down in blue.
http://photos1.blogger.com/blogger/4311/970/400/0717-oih.jpg
Let's look at what I think are some juicy opportunities in stocks related to oil. Many of these have puts available, or you could just do a straight short sale. We have Atwood Oceanics (ATW):
http://photos1.blogger.com/blogger/4311/970/400/0717-atw.jpg
Cleveland Cliffs (CLF):
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Cleveland Cliffs (CLF):
http://photos1.blogger.com/blogger/4311/970/400/0717-clf.jpg
EOG Resources (EOG):
http://photos1.blogger.com/blogger/4311/970/400/0717-eog.jpg
Frontier Oil (FTO):
http://photos1.blogger.com/blogger/4311/970/400/0717-fto.jpg
Massey Energy (MEE):
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Massey Energy (MEE):
http://photos1.blogger.com/blogger/4311/970/400/0717-mee.jpg
Marathon Oil (MRO):
http://photos1.blogger.com/blogger/4311/970/400/0717-mro.jpg
Petro Brasil (PBR):
http://photos1.blogger.com/blogger/4311/970/400/0717-pbr.jpg
SunCorp (SU):
http://photos1.blogger.com/blogger/4311/970/400/0717-su.jpg
If we continue lower this week, it will show the bears finally have firm control of the market. Otherwise, it'll be another passing of the torch and a bit more wasted time before the fall can start in earnest.
at 7/17/2006 33 insightful comments
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Saturday, July 15, 2006A Bounce Seems Quite Likely
Although I still believe in the forthcoming bear market, I sense the selloff is probably done for now and we'll see a bounce upward. I still have a ton (dozens) of put positions on stocks that seem to have good solid "down" patterns, and I imagine if a bounce does come, it won't do great things for these positions. But I'm going to wait out the storm and, at the same time, go long some indices to soften the blow.
Before getting into those index charts, just a quick mention that my Meritage recommendationseems to have panned out nicely. Although it hemmed and hawed a bit before starting to fall, it finally did so in earnest.
http://photos1.blogger.com/blogger/4311/970/400/0715-mth.jpg
The S&P 500 Volatility Index ($VIX) has spiked up recently, indicating that perhaps the bears might ease off for a bit.
http://photos1.blogger.com/blogger/4311/970/400/0715-vixalone.jpg
Looking at the Dow Industrials ($INDU), there seem to be a few reasons for this to be a short term bottom: (a) the Fibonacci retracement (b) a fair bit of support in the green shaded area (c) the fact that when this level was last reached, the bears were turned away swiftly. Obviously if we're going to get seriously bearish, this level will be breached at some point, but my gut tells me it would take something extraordinary very soon to pierce it.
http://photos1.blogger.com/blogger/4311/970/400/0715-idu.jpg
The Russell 2000 seems to be at the support line of an ascending channel.
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The Russell 2000 seems to be at the support line of an ascending channel.
http://photos1.blogger.com/blogger/4311/970/400/0715-rut.jpg
And it's the same story with the S&P 500.
http://photos1.blogger.com/blogger/4311/970/400/0715-spx.jpg
Again, this lines don't simply travel upward into infinity, allowing us to trade these markets whenever they bounce off these lines. Trends do end, and it's very hard to predict when that will happen. Stay sharp!
at 7/15/2006 43 insightful comments
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Friday, July 14, 2006Defensive Trading
Another triple-point down day (thus far - there's a little more than an hour left) on the Dow. Terrific!
http://photos1.blogger.com/blogger/4311/970/400/0714-breakorbounce.jpg
During a sustained fall like the one we've witnessed over the past week, I change from offensive trading to defensive trading. What I mean is this - - when I trade offensively, I am putting on positions with a certain amount of risk (usually fairly substantial) and, given the bid/ask spread in options, a guaranteed instant loss. But I'm taking the risk.
Once the market goes my direction for a while, I take on a defensive position. This usually involves checking out the intraday charts (some as big as 60 days) and finding out which price point constitutes a change in direction (even if it's short term).
My point is that I want to lock in the profits I've enjoyed by resetting my stop prices MUCH tighter, while at the same time giving the market an opportunity to fall farther. So whereas my stops were very fat initially, they are now reset to pretty much guarantee profits, while at the same time allowing the market enough "line" to continue to head down more.
at 7/14/2006 19 insightful comments
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Thursday, July 13, 2006Double Penetration
From 6/6 to 6/29 the Dow was under the 11,000 mark. It pushed its way back above it, and now it has - as of today - closed below it one more. (Did I do a decent job making a raunchy headline plausible?)
Today when the market was down about 160 points, I figured maybe I should close out some of my positions. I looked at them - all 48 of them - and I found one which seemed ready to close. All the others looked like they were just beginning their falls. My point is that this isn't the end; it's the beginning.
And what a beginning it is! It will be interesting to see if we get a third triple-point decline in a row tomorrow.
The Dow Composite ($COMP) is perched on a very long term trendline. It actually violated this trendline a few weeks back, but I left it in place.
http://photos1.blogger.com/blogger/4311/970/400/0713-comp.jpg
The NASDAQ Composite (which has been weak for weeks) is poised for a big fall down to its next Fibonacci level, highlighted in blue (as are all the other targets in today's entry - - and, as usual, click the image for a bigger one).
http://photos1.blogger.com/blogger/4311/970/400/0713-compq.jpg
The Dow broke its short term trendline yesterday, and it followed through beautifully today. Looks like we've got another 5% or so to lose before this thing pauses for another fake-out rally.
http://photos1.blogger.com/blogger/4311/970/400/0713-indu.jpg
NASDAQ 100 ($NDX) is similar to the Composite - plenty of room left to fall to the next Fib level.
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NASDAQ 100 ($NDX) is similar to the Composite - plenty of room left to fall to the next Fib level.
http://photos1.blogger.com/blogger/4311/970/400/0713-ndx.jpg
Next stop for the S&P 100 is shown with a horizontal line. This would be the third time it hit this level. Should it break it, the real fireworks begin.
http://photos1.blogger.com/blogger/4311/970/400/0713-oex.jpg
The target price for the S&P 500 is similar - about 5% away or so.
http://photos1.blogger.com/blogger/4311/970/400/0713-spx.jpg
The once lofty Transports hit a double top and have a ways to go before hitting their ascending trendline for support.
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