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Tuesday, December 19, 2006
Beyond Good and Evil
Well, the day started off well enough. A nice initial wallop. Regrettably, the markets clawed their way back up to end in positive territory. Chalk up "Mini Asian Financial Crisis" as yet another thing the markets can shrug off as irrelevant.
Speaking of financial disasters that no one seems to care about, the Financial Report of the United States Government was issued recently. It's nearly 200 pages, but here are a couple of interesting bits:
Despite improvement in both the fiscal year 2006 reported net operating cost and the cash-based budget deficit, the U.S. government’s total reported liabilities, net social insurance commitments, and other fiscal exposures continue to grow and now total approximately $50 trillion, representing approximately four times the Nation’s total output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal year 2000.
and.......
Given these and other factors, it seems clear that the nation’s current fiscal path is unsustainable and that tough choices by the President and the Congress are necessary in order to address the nation’s large and growing long-term fiscal imbalance.
I found the graph about the Medicare gap particularly interesting. I don't think I've ever seen a y-axis before which measures "billions" of dollars with figures such as $16,000 (e.g. Sixteen Thousand Billion - - otherwise known as Sixteen Trillion). Umm, we are hosed, people. Wake up!
AIV is representative of many REIT stocks, all of which are softening like butter on a midsummer's day.
BAC looks like the uptrend is over.
BLUD, one of my few long suggestions, is still looking mighty purty.
BZH, another long suggestion, seems also poised for a rise.
Although I'm uncertain as to where gold is heading, GFI looks potentially bullish as well. (Wow, three bullish mentions in a row.......)
MDC is easing away from its retracement nicely.
.....as is old favorite MTH.
Many people have asked me to look at QID. I own this now. It doesn't have much of a history to it, but it's a nice double inverse play on the Nasdaq. And check out the volume!
RIMM, which will give everyone a quarterly update after the close Thursday, is starting to slip-slide away again.
And SHLD, long-watched but seldom tried, is looking mighty mushy.
It was disappointing, of course, to see how boldly the markets fought their way back today. The bulls have had a dynamite year (and the dynamite was placed directly under our paws). I guess they're just going to keep pouring salt in the wound until Dick Clark's ball drops at year's end.
at 12/19/2006 22 insightful comments 
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Monday, December 18, 2006
Bears and Atheism
I think my bear avatar is so cute, I just have to show it again. Particularly since we had some red today.
Before I start with the charts, I'm going to be an idiot and actually mention religion in this blog. Now, let me be clear from the outset - - this isn't about religion per se. It's about a parallel I've noticed. People seem to confuse metaphors with analogies quite a bit. I don't - - and the analogy is this: atheism is to Christianity as bearishness is to bullishness.
Why, Tim, what do you mean? I will try to explain without ticking off too many people.
Christianity in the United States is mainstream. Most people in the country identify with it. It has been the backbone of this country since its founding, and although certainly attendance at Sunday service has been declining for years, by and large it's a stable, popular base.
So is bullishness. By and large, people in America are bulls. They believe in the future. They believe in optimism. The growth of America over the past three centuries in testament to that. Bullishness works. Bullishness makes people rich. Bullishness is the American way.
And here we come to where the weirdos are. Where the freaks live. The atheists. And the bears.
Both atheists and bears are outside the norm. They are, generally speaking, frowned upon. They are not the mainstream, and deep inside the hearts of those who are in the norm is a secret wish that the doubters will be proved Supremely Wrong at some point. In the case of bears, that would mean that It Really Is Different This Time, and markets will go straight up for many years. For atheists, it would mean that Jesus himself shows up on the Today Show to announce his second arrival.
And this is the troubling part for me. See, I'm a good suburban protestant. I know what it feels like to be in the mainstream. Methodists and Presbyterians do OK in the suburban jungle in which I've grown up and thrived.
But recently the atheists have been getting a lot of press. I'm surprised Richard Dawkins didn't make Time's Man of the Year for 2006. Bestselling books such as The God Delusion are selling like mad.
And here's where the parallels click..........Richard Dawkins is smart. Really smart. And it's got to be just a little bit troubling for those who give it a few moments of thought that really brainy, thoughtful, deep-thinking people are atheists. Because it makes you wonder what "side" you really want to be on.
And so it is with the bears. I'll be blunt - - I think bears are a lot smarter than bulls. Bears tend to be the more thoughtful, cerebral sort. Given the ways of the world, it also means that bears tend to be Flat Broke. Just as atheists can rest assured that they will not elect anyone to the White House in the next hundred years at least.
It's frustrating to be a bear, just as I'm sure it must be frustrating being an atheist. Because you watch the mainstream prosper and thrive. And you believe in your heart that they are just dead wrong. And you're the outsider. You're the freak. But it's very tough to convince the crowd when you are so clearly outside of it.
Do I have a conclusion from this? Not really. I simply think it's an interesting parallel. I'm not tempted to jump over to the atheist side any more than I'm tempted to jump to the bullish side. So I live with being a stupid sheep and a brainy bear at the same time. The duality of man!
Are you still reading? Are you still there? Good. Then we'll look at a few charts. Honest to God.......
The market did what I wanted it to do today (for a change), which is push higher, get the bulls excited, and then dash their hopes. Nothing makes my day more than a disappointed bull. The markets were down across the board, particularly in the world of gold and oil. The MidCap 400 did not break above the horizontal line shown here, indicating a possible failed pattern.
The NASDAQ was especially weak today. Here we see the $NDX slipped away from its formerly ascending channel. Ta ta, naz.
The Russell 2000 is also failing its bullish ways. The relative strength continues to weaken and is heading below the 50 mark. I really like the way things are turning around.
And here is the S&P 500, the only stock index on which I own puts right now (and a disturbingly large amount). We see how the RSI pulls farther away from the failed trendline.
The last index is the $XAU, the Gold and Silver index. We have been watching this a while, and this is a closer view than the one I normally provide. There still is no cut-and-dried pattern here, but it is clearly weakening, and I would look for it to fall all the way back to its neckline, at least.
Although oil has already started getting weaker, it might not be took late to get on board FTO, assuming the emerging head and shoulder completes.
Google (GOOG) fell nearly twenty points today. There is absolutely no doubt at all from this chart that the former "$500 now! $600 tomorrow! Go, go, go!" enthusiasm is shot. Google is priced for perfection. This company is far too arrogant to just keep sailing.
HWAY looks like a promising short pattern.
And MEE, mentioned here many times in the past, is behaving as it should.
I've also mentioned TSO, which had a solid down day. Oil's weakness is benefiting many of the items we are watching.
I'll brace myself for the comments section, since I've strayed away from charts. But keep in mind I'm not advocating a religious position here at all. Although I admit to proselytizing the Church of the Bear without shame.
at 12/18/2006 33 insightful comments Links to this post
Friday, December 15, 2006
Burying the Week
This was one of those days that the market went up but my all-short portfolio actually went up too. I guess I can make a good decision now and then.
I tossed out a 'Second Life' reference a couple of times, but hardly anyone said anything. Maybe I'll just give it a miss. Here's my avatar in case you happen to see me. No surprise, eh?
The market exploded higher earlier in the day, but a lot of those gains melted off. The market was still up (in most cases), but most indices are sporting a nice shooting star.
I've been short gold for a couple of weeks, and that seems to be heading in the right direction finally (as viewed via the $XAU).
I've taken a few stabs at Black & Decker (BDK). Finally it took a tumble! Just look at the volume today, too.
I remain long puts on Capital One. It's only inching down slowly, but I still really like this pattern.
I entered a new position on CSX today (buying puts).
GOOG is a bit of a fascination of mine. It's getting a little weaker every day. They will be reporting earnings in January. Obviously a disappointment there (as happened a year before) is the only thing that could really take the wind out of this stock's sails.
I'm also still short Goldman (GS), my favorite investment bank pick now.
HYDL is starting to behave well to the downside.
RIMM gives quarterly guidance next week on the 21st. The past couple of days gave RIMM some upside, but today's shooting star pattern gives me some comfort. It seems the market is saying, "oh, no you don't" to any sustained strength here.
I see a lot of quitters in the comments section. That's totally your decision, of course. Just try not to be rude on your way out the door. You may be back!
at 12/15/2006 22 insightful comments Links to this post