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Wednesday, July 18, 2007
Red Rubber Ball
It was an interesting day on the market. Non-amazing earnings from YHOO and INTC, coupled with the continuing problems at Bear Stearns with their hedge funds, took the Dow down about 130 points or so. Looking at the 60 day intraday minute bar graph, I thought that was about all that was going to squeezed out of the market for the day, so I sold all my index puts.
This doesn't always work........back on February 27th, I also sold my puts at what I thought was the bottom, when the Dow was down about 130 - - and it continued to fall hundreds more points.
The only honest-to-goodness bear market right now is anything to do with residential real estate. It's a slow death.
After the close today, IBM reported good earnings, and the after-hours market is up a little. At this point, it's simple a question of whether we shake off the worry and truly blast through 14,000, or if the weakness will get us down to at least that breakout point from last week.
The intraday of the Russell 2000 shows how nicely we swooned and then recovered up to what is a pretty substantial point of resistance. Falling today was easy. Pushing through this resistance area will be tougher.
Much the same can be said of the S&P 500. This longer-term graph shows the small rounded top, the fall, and the recovery.
I'm staying away from the Gold and Silver index ($XAU). I'm not sure what it's going to do next. But it has clearly made the (former) long-lasting channel irrelevant.
Longs might want to consider CCJ. It seems to be bullish and is done with its retracement.
Although residential real estate is getting thrashed, these problems seem to just be starting in the commercial real estate world. Maybe there's an opportunity to short these and enjoy a spill similar to what we're seeing now in residential real estate.
I don't think I'm going to take a position in Union Pacific (UNP), but this is an awfully terrific looking shooting star candlestick.
at 7/18/2007 38 insightful comments 
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Tuesday, July 17, 2007
Not Quite........
Today was the big day. Dow 14,000 was crossed (we won't mention that the broader S&P 500 index actually fell on the day). I'm not sure what repelled the market away from this level. Your guess is as good as mine.
Of course, television pundits were completely obsessed with the Big Round Number. If and when we actually close above 14,000, it will be about 3 seconds before someone writes an article entitled, "Next Stop: 15K!" Yawn.
I took a small bearish position on CME today. It seems we have a failed breakout here. Plus, all the elation over BOT is past us now.
Intel is one of the largest and earliest earnings reports for Q2. As of this writing, this stock is down nearly 5%, wiping out about $7 billion in shareholder value. As an aside, YHOO also just reported, and they are down about 2% right now.
I've got puts on NutriSystem, whose stock is finally starting to slip some.
I also augmented by CVX position by buying some XOM puts.
That's it for today. I think some of the snarky comments have me less inspired to write a long, thoughtful post. I've got other things to do.
at 7/17/2007 73 insightful comments Links to this post
Monday, July 16, 2007
Any Gas Left?
Dow 14k is in the air, and it's all the pundits seem to want to talk about. I've already mentioned here that my 'upper limit' is 14,100 on the Dow based on its breakout. Even though the Dow was up today to yet another lifetime high, the broader indexes were down, and my overall portfolio climbed by 5%.
When I showed the "mother of all double tops" by way of the S&P 500 graph, many people remarked that the S&P was cheap since profits have doubled on the S&P 500 since the prior high in 2000.
That may be true, but the logic is flawed. That's the equivalent of a Republican declaring the White House could be won in 2008 if only they could find a candidate twice as popular as George Bush. Just because something is double something else doesn't mean the opposite result will take place. If the P/E in 2000 was 500, would a P/E of 250 make it a bargain? Of course, those weren't the real P/Es, but hopefully you can see my point.
The daily chart of the Dow 30 helps illustrate how this market is in the toppermost of the poppermost. I see a fall ahead.
On an intraday basis, it's clear to see how strong the price movement has been since the breakout. I've tinted in the target zone. We have moved through most of the pain already.
A daily chart of the NDX - which I've been avoiding for many months - suggests this graph could be running out of gas too.
My favorite, the Russell 2000, edged down nicely today.
Even though the Gold and Silver index ($XAU) broke above its channel, recently history indicates the RSI has been a reliable bearish indicator; note the areas I've tinted and the subsequent price action.
Akamai (AKAM) looks like a potential bearish play; note the series of lower highs.
ALB also looks nice for a short.
I bought puts on Colgate (CL) today.
I continue to hold onto my CROX puts, which are doing OK.
I also bought puts on CVX this morning. So far, so good.
And I shorted DST (a busy day.....)
I mentioned puts on FXI last week. These look better than ever.
JC Penney has been a favorite of mine recently. My puts on this stock edged higher today due to the stock's weakness.
at 7/16/2007 35 insightful comments Links to this post