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Friday, January 26, 2007
Stalled Bull
Even the most fervent bull would have to admit at this point that, at least for the immediate moment, things have stalled. The week as a whole was down for the markets, and in spite of a lifetime high on the Dow this week, there's plenty of news and market action out there to scare our bullish friends.
Let me show you something interesting. Below is a chart of the S&P 100 ($OEX) over more than a decade. I have drawn a Fibonacci retracement from the peak in early 2000 to the nadir in October 2002.

Now let's take a closer look at the same index. The 61.8% retracement level was 702.13. And what was the peak this week before it reversed? 699.99. In other words, the market climbed to 99.7% of its anticipated retracement before reversing. Pretty impressive!

The Dow Transports continue to be relatively bearish. I've marked the level they need to crack before we can consider this a new series of "lower highs/lower lows."

Although the S&P 500 pierced its retracement level a while ago, at least it neatly bounced off its trendline.

As I've said repeatedly, this is not a bear market until we break the uptrend. And we have not broken the uptrend! So the bulls still run the show. It is heartening, at least, to see what a monstrous divergence exists between the price action and the RSI.

For more bearish evidence, take a look at the NASDAQ. If you consider this price channel to be meaningful, take a look at the bullish upside (green) and the bearish downside (red). One is a lot bigger than the other, isn't it? I'd say the risk/reward ratio gives the favor to the bears.

Now - as always - some bearish ideas worth examining. Behemoth Microsoft (MSFT):

FCX:

ETR:

Camden Property Trust (CPT):

CKH:

It's been a pretty good week. I'm sure those who follow NutriSystem, mentioned here several times as a bearish idea, enjoyed the drop today.
Thousands of people stop by each day to read this blog, and I want you to know I appreciate it. Doing this blog helps me think more clearly about the markets, and it's fun for me to share my views. Do keep swinging by!
at1/26/20079 insightful comments  Links to this post
Labels:$compq,$indu,$oex,$spx,$tran,ckh,cpt etr,fcx,msft
Thursday, January 25, 2007
Engulfed
What is with this crazy market? Don't get me wrong; a triple-digit down day on the Dow is terrific. But this market is heading for the nut house.
Over the past trading week, there have been two instances of big bearish engulfing patterns on the $NDX. Today's was a whopper. Having a superstar like EBAY up in the double digits at the open and yet have a wipe-out like this is really encouraging.

The $SPX bounced off that resistance line beautifully. The market still has no direction, though. It's neither bullish nor bearish. Just schizo.

The rest are straight-up short ideas. AMX:

AutoZone (AZO), still in the stratosphere:

Carnival Cruise Lines (CCL), approaching resistance:

Black and Decker (BDK):

Goldman Sachs (GS), finally getting a reversal:

LLL:

NutriSystem (NTRI), with its cup and handle pattern failing:

RTI:

Sears Holding (SHLD), also weakening:

Now for your occasional clip of the day! The world's worst weatherman. Brace yourselves.
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at1/25/20076 insightful comments  Links to this post
Labels:$ndx,$spx,amx,azo,bdk,ccl,gs,lll,ntri,rti,shld
Wednesday, January 24, 2007
It is a Most Elusive Fish...
The markets were very strong today. At least I am not putting my foot in my mouth. I've made it very clear lately that until there's a clear "rupture", we're still in bull-land. Earnings season isn't doing a hell of a lot so far for our cause. It reminds me of a favorite movie clip of mine......
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The Dow Jones 30, shown below, hit another lifetime high today. I wouldn't be shocked if we pushed all the way toward 13,000 in the coming weeks. Earnings from EBAY this evening have the stock up over 10%.

The S&P 500, while not at a lifetime high (its high in early 2000 stands unbeaten) is nonetheless at the very highest point of a massive ascending wedge. Looking at the charts tonight, it's obvious that the strength is widespread and devastating to the bears. (Goldman Sachs just being one of countless examples).

The only bearish holdout is the beleaguered Dow Transports. Of course, I'm sure the bulls will say Dow Theory is sad and outmoded and should be ignored.

If there are any living bears still out there, I like the looks of Adobe (ADBE).

...as well as Black and Decker (BDK).

For a bullish play, CRR looks like it is beginning to turn northward after a long slide.

Ryland (RYL) has recovered back to its neckline, although I use that term somewhat loosely since this isn't much of a head and shoulders pattern. All the same, with this much recovery under its belt, it makes going short the stock much less risky.

Much the same logic holds true for Sierra Health (SIE).

Lastly, I will mention one short suggested here, Textron (TXT), seems to be getting slammed inafter hours trading. Nice to have one bright spot to anticipate for the morning!
at1/24/20078 insightful comments  Links to this post
Labels:$indu,$spx,$tran,adbe,bdk,crr,new high,ryl,sie
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