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Thursday, May 03, 2007
A Call For Bull Content
Over the past 25 trading sessions (March 29th through May 3rd), the Dow 30 closed up 22 times and down only 3 times. That means only about 12% of the time, we were down for the day. The net change was up 941 points.
During the 25 trading sessions prior to the above (February 22nd through March 28th), the Dow 30 closed up 12 times and down 13 times, meaning the Dow closed down 52% of the time. The net change was down 438 points. Quite a change, eh?
Given the above, you can imagine how the brawling in comments has been getting worse (and only God knows how bad it would be if anonymous people were still allowed to post). Back onApril 17th, I asked all the bulls to make some recommendations. Only a couple of folks did. One of them had a bunch of options, which frankly I'm too lazy to look up, and another -TomTheTrader - listed a bunch of equity symbols.
I decided to do an experiment and entered a hypothetical portfolio of 100 shares of each of his recommendations, using a price of the opening on April 18th (the morning following his comment). In other words, I'm assuming you decided to buy, at the opening price, an equal number of shares of each of the stocks suggested (the weighting would vary quite a bit, obviously, since the share prices were so different). The symbols and their "entry" prices were:
DOW 45.29
EMC 15.12
GLW 23.40
GSK 58.4573
GS 213.75
GSF 62.31
INTC 21.35
MYL 21.60
MS 81.50
NDAQ 31.20
SMH 35.22
QCOM 43.19
QLD 85.85
By way of comparison, I decided to compare it to the Russell 2000. Over the period since Tom's suggestions, the Russell has moved up from 827.41 up to 828.87, which is a small change of 0.18%. Tom's suggestions were also up .18%, but with a 3 in front of the decimal point as well (e.g. 3.18%). So - - great work, Tom!

Now, as regular readers know, we get our fair share of bulls in the comments section that yell and scream daily about how stupid bears are. That's fine. But what interests me is to find out how smart our bullish colleagues are. Specifically, I'd like to hear what they have to say (in a constructive sense).
So here's my offer - - anyone who has bullish recommendations, commentary, or market views, I'd like you to send them to email address (which you can find in my profile). I will print any specific suggestions or market analysis without comment or editing (except for spelling). Consider it an opportunity to demonstrate the market prowess which you possess.
The NASDAQ is threatening to push above its resistance line, similar to the fashion that the S&P 500 did a few days ago. If tomorrow opens higher, we can pretty much count on a new surge by the NASDAQ. It's all up to the employment report.

The Russell 2000 is also threatening its stop-loss price of 835.17, which is its lifetime high.

Notice how the S&P 500 is staying above its former resistance line. Even earlier this week, on the one day the market dipped lower, the S&P closed above this former resistance line.

I shorted BID yesterday, and it fell nicely today.

I am also short CCL, which seems to have a lot of potential to fall.

InfoSys(INFY) is in a small H&S formation. Plus, when a major stock like this goes down on such a strong day, that's a good sign.

Retailer JC Penney (JCP) remains below its busted trendline.

I went long CCJ (the uranium producer) today, and it's already in the green.

CRDN is shaping up as another prospective long, assuming it breaks above the line I've drawn here.

WBD has been on a tear for months, but I shorted this one earlier today, and it fell nicely. It is sporting a hefty bearish engulfing pattern, although for a stock that is relatively thinly traded like this, it isn't such a big deal.

Finally, just to ensure I am going straight to hell, I offer youMerrill Howard Kalin, who is a mentally retarded adult that broadcasts his own cooking show. And does imitations. Poorly. This must be seen to believed, but if you're the impatient sort, skip ahead to about 4:30 and watch it until the end.
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at5/03/200718 insightful comments  Links to this post
Labels:$indu,$rut,$spx,bid,ccj,ccl,crdn,infy,jcp,new highs,wbd
Wednesday, May 02, 2007
Bespoke
I guess I first noticed it about a month ago.
I took my family to North Lake Tahoe, where we've got a place, so we could enjoy the last days of skiing. I saw an issue of theRobb Report, which is basically a magazine for wannabe zillionaires. It is full of ads for Rolls Royces, exotic vacation destinations, and the like. In a nutshell, the essence of tacky.
I used to actually subscribe to this thing when I was a teenaged twirp, dreaming of having a fortune some day. I suspect that I had the same idea that many readers of this magazine have, which is that somehow wealth would rub off on me if I read about it and coveted it enough.
Well, I hadn't seen this magazine in over twenty years, so I thumbed through it. What struck me the most was a single word that kept appearing again and again - bespoke. It had to be the most frequently used adjective in every ad and article. Everything was bespoke this, and bespoke that.
It actually got kind of comic after a while. The actualdefinition of "bespoke" has a lot more to do with tailoring clothes than wealth, but I guess the idea is that if you throw money at products, you will get something specifically suited to you and you alone, as opposed to the unwashed masses beneath you.
People often look to the 1980s as the decade of greed, but frankly the symbols of greed from the 80s appear quaint today. For one thing, the Dow topped out at about 2,700 before it crashed, which is a small fraction of its current value. Obviously the asset bubble in real estate, stocks, and just about everything under the sun has made a lot of people far more fabulously wealthy than at any prior point in human history. Evenhouse porn has become a favorite fixation, particularly in the SF Bay Area where I live.
Because of this wealth, the symbols of greed and covetousness abound. Since I'm pretty well past my adolescent craving for "stuff", I generally find the whole Gimme Gimme Society as a mix of interesting and stomach-churning. But it reached a new low yesterday when I thumbed through my personal mail.......I got this:

I stared at the cover in disbelief thinking, "You have got to be kidding me." I get the fact that Trump will whore himself out for just about anything with his name on it. But putting your name on hotels, condominiums, houses, and even a TV show is one thing. But - - - meat? A grocery item? What's next, toilet paper? ("Now you can wipe your ass with the same quality paper product that I do....")
If you believe - and I hope you don't - that money equals class, you are sadly mistaken. There are plenty of billionaires that don't have an ounce of class, and there are plenty of thousandaires with gobs of it. For a superb perspective on this subject, read Paul Fussell'sClass. It is many years old, but it is absolutely on the mark.
Anyway.
Well, the asset bubble kept expanding today, although it moved away from its highs. I watched the Dow cross the 13,250 mark, and at one point I think it was up something like another 130 points. The "melt up" started to simmer, however, and it closed "only" about 75 points higher, yet another all-time-high.
My portfolio has been doing an admirable job of holding its own. In fact, it closed the day virtually unchanged. This is very encouraging to me. If I have constructed a bearish portfolio that can weather this kind of abuse, then I know any weakness will be richly profitable.
Here is an intraday graph of the red-hot Chinese market (which is basically a verbatim repeat of the NASDAQ bubble of 1999). I've drawn a neckline here on what seems to me to be a nicely formed head and shoulders pattern.

The Dow 30 has obviously been the strongest index of late, although its lurches forward seem to be getting more spasmodic. But it certainly has not broken its upward pattern yet.

My concern yesterday about the candlestick formation of the Russell 2000 was well-founded. I am glad I closed those puts - - and at a very handsome profit, I might add. But I was aggressively re-entering the position today when the Dow was in the +100 points zone.

The Dow Transports have not been sharing in the glory, and this looks toppy to me:

As for the $XAU (gold and silver index), I hate for you to think I see an H&S pattern everywhere I turn, but there's really no doubt in my mind as to what we're looking at here.

Now, it's confession time. As you may recall, I was short BankRate (RATE). I had a stop in place. And, first thing this morning, I overrode it and closed out the position.
That was stupid, it was a mistake, and it was against my rules (in particular, "Never do an ad hoc close.") The stock closed up for the day, but substantially below its highs, and the chart is still a reasonable bearish play. So this is a bit of public flagellation for jumping the gun. I don't do it often, but when I do an ad hoc close, I almost always regret it.
at5/02/200739 insightful comments  Links to this post
Labels:new highs
Tuesday, May 01, 2007
Learning to Crawl
Today's post will be short, everyone. I had a pretty good day, actually, but looking at the charts, there is frankly not a heck of a lot to say. Some days are just like that.
The rise on the Dow today was actually kind to my portfolio - - it went up some, in spite of its bearish stance. But the hammer pattern shown in the Russell 2000 is a little worrisome. We're not exactly at the bottom of some gigantic slide, so this single candlestick isn't anything horrendous in terms of a turning point, but all the same, a hammer is a hammer, and we need to be extra cautious. For myself, I trimmed my $RUT puts pretty substantially near the bottom earlier today.

The stock PSB continues to shape up as a potentially great head and shoulders short. Speaking of which, AMR (not shown here) continues to behave very well for the same reasons.

One stock which has broken its major ascending trendline is BankRate (symbol RATE). Even though it's bounced above the line again, I consider the line broken and therefore am short this stock.

This is a fairly quiet week on the economic announcements scene, and the real excitement of earnings season is over (with the likes of Apple, Google, Yahoo, etc. behind us). So there aren't a lot of fireworks right now, and in many ways stocks seem to be stuck at a more or less equilibrium stage right now. As always, well-placed stops are the most crucial thing to have in place, should the market regain its strength in a big way and start to push higher still.
at5/01/200728 insightful comments  Links to this post
Labels:psb,rate
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