神马文学网Steve Jobs 017
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Tuesday, May 22, 2007
Small Caps Catch Up
The market pushed higher today in fits and starts, and in the end, the Dow and S&P 500 closed down a little while the Russell 2000 - home of smaller cap stocks - pushed to a new high.
Even though the market seems unfazed by the weakness in NZD/USD, it is still worth watching. This currency pair has done a decent job indicating recent turning points in the market.
One stock I don't think I've mentioned before is Bunge. This has made a flag pattern recently. You can make of the pattern what you will:
BTJ has been a recent high-flier that might make a good short candidate:
CRS had a nice breakout a few weeks ago, but this breakout seems to be losing steam in a big hurry. Failed breakouts make great shorts.
Much of the housing sector - - lenders such as AHC as well as builders like BZH - had a nice bounce higher today. I took it as a good opportunity to enter some shorts of stocks that were retracing their head and shoulders pattern to the neckline, such as ESS, shown here.
Honeywell (HON) is starting to lose ground.
....as is Microsoft (MSFT)...
A couple of long suggestions. JetBlue, mentioned here not long ago as a potential buy, looks good. A series of higher lows and agreeable volume trends make this a handsome candidate for puchase.
And Questar (STR), also mentioned in the past, continues to prosper after its well-formed breakout.
at 5/22/2007 15 insightful comments 
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Monday, May 21, 2007
The Indexes Change Places
I've noticed - anecdotally, of course - an interesting trend recently. It occurred to me when I went to the Maker Faire in nearby San Mateo, which is basically a get-together of do-it-yourself types. And I don't mean Bob Villa. I'm talking about people who make their own stuff, from robots to housing to computers to clothes.
As I milled around - and this was a very crowded event - I noticed how many nerds, geeks, and Melvins (my term) there were. And I was transported back to 1980, when I attended the West Coast Computer Faire (there's that olde English spelling again....) as a youngster.
It seems to me there is a backlash going on amongst nerd-dom with respect to computers. In 1980, you had to be pretty hip and with-it (ahem....) to really be into personal computers. Nowaways, anyone with a room temperature IQ has one. Sort of the same with cell phones.........if you had a mobile phone in, say, 1986, you were hot stuff. These days, even homeless people have them.
Another thing I've seen supporting this trend is the recently bestselling book The Dangerous Book for Boys, which features not the latest information on PlayStation 3 but instead discusses kites, marbles, and handy Latin phrases. If this cultural counter-trend has anything to it, I find it all quite charming.
As long as I'm ignoring charts, I'll also say that I just finished The Wisdom of Crowds by James Surowiecki. On pages 224-228, he writes:
In 1995, the finance ministry of Malaysia suggested that [short sellers] needed to be punished [with] mandatory caning....Napoleon deemed the short seller "[an] enemy of the state." Short selling was illegal in New York State in the early 1800s while England banned it outright in 1733 and did not make it legal again until the middle of the nineteenth century...shorting was denounced on the [U.S.] Senate floor as one of "the great commercial evils of the day"'...one reason why there isn't more short selling is that most people are not psychologically built to endure constant scorn.
We poor bears! Hated throughout history.
I noticed MarketWatch was touting the idea that the S&P was at a new high. Not quite. With their tortured logic, the S&P's high today was higher than the highest closing price. Well, yeah, that's true. But that's comparing apples and oranges. Who cares?
According to my data, the highest price reached by the S&P on an intraday basis was 1552.87 on 3/24/2000, and the highest closing price was 1527.57 on the same day Today's high was 1529.87 and the close was 1525.10. It's a pretty sure bet there will be a new high on the S&P 500 tomorrow, but let's at least wait for it to happen before touting the news, shall we? Anyhoo, here's the $INDU:
The indexes, until recently, have had all their firepower in the Dow 30. That was not the case today. The Dow actually inched down in price, whereas the Russell 2000 blasted higher by 1.21%. It seems the small caps are finally playing catch-up.
The Chicago Mercantile Exchange (CME) inched down today and continues to shape a nice topping pattern.
I like to look for stocks that are far away from their supporting trendline and seem to be flipping around to a downward direction. CSX fits this.
ESS looks like it is inching up toward its neckline, which could make for a relatively low-risk head and shoulders pattern to play on the short side.
JC Penney also is forming its head and shoulders cleanly. Of course, one must be cautious to trade incomplete patterns, as a single price bar would render it moot.
KRC is another homebuilder with a similar pattern forming like ESS.
On a final note - one frequent commenter, Gary, has mentioned the Commitment of Traders many times in the comments section. I was intrigued and did some basic research, but I find this data difficult to interpret. I guess I'm a sucker for easy-to-read graphs. I would appreciate his illuminating this issue in the comments section to give us a bit of a tutorial on the subject, since it sounds interesting; thanks in advance.
at 5/21/2007 14 insightful comments Links to this post
Friday, May 18, 2007
Sheer Energy
Another record. This is getting really monotonous.
One index that hasn't actually reached a new record, but is within a hair's breadth of it, is the S&P 500. It peaked back in January of 2000, and if Monday is up at all, it will almost certainly reach a new record closing high (and I don't need to tell you the financial media will make a huge stink about it).
The $VIX remains very, very low, indicating widespread complacency. You can see how the VIX deteriorated from 2003 through 2005 and has remained low ever since. There was a time when the normal VIX range was between 20 and 50 or so. These days, it's lucky to even stay in the teens.
Real estate has been getting hit, in spite of the market's overall strength. I've got a number of real estate shorts, one of them being AIV.
Akamai (AKAM), which I am short, went up some today, but I am still comfortable that this pattern is safely beneath its neckline.
One days like this, if you see major stocks with weakness, that's usually a very bearish sign. The CME is a good example.
InfoSys (INFY) is an even better example, since its pattern is more clearcut.
The thirty stocks which comprise the Dow 30 Industrials have obviously been very strong, by and large. MMM is no exception, although it seems awfully lofty right now, and it is sporting an impressive shooting star with today's action.
Energy has been incredibly strong. I've mentioned some oil service stocks here recently as good bullish plays. But even looking at the general OIH stock, which represents an amalgam of oil service securities, you can witness the terrific strength lately.
PSB is an other short of mine that has been enjoying the real estate tumble.
Finally, VNO is another participant in the real estate slump, and it features a really nicely-defined head and shoulders pattern.
at 5/18/2007 45 insightful comments Links to this post