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Friday, August 18, 2006

How Much Longer?

Strength begets strength. Today the markets continued to push higher. Most of the push was left for the end of the trading session - perhaps today being an options expiration was a factor here. In any case, thus ends a nasty week for the bears.

I wonder how long this push upward will continue. We are, across the board, getting to some dangerously high levels which, if pierced, stab at the heart of the bearish arguments. I feel as confounded as I was in 1999 when everyone on the planet seemed to be a bull.

Let's take a look at some major indices and how much room is left to surge on each before they do major damage to some bearish trendlines. First, the Dow Jones Composite. The rounded rectangle indicates how much wiggle room is left:


The NASDAQ Composite is basically out of room at this point. There's a tiny amount left between today's close and the resistance line.


The Dow has been pushing toward its resistance line. It's not even that far away from its all-time high. As long as we're below resistance, I'm relatively OK with it.


The NASDAQ 100 is completely out of room. If it pushes higher on Monday, that's going to demand re-evaluation.


The S&P 100 has been remarkably strong, and it is getting very close to its high set last May.


The S&P 500 is approaching a Fib retracement level.


Earlier today, the Gold & Silver ($XAU) looked fairly weak, but it regained strength and finished in a hammer candlestick pattern. This chart is looking very indeterminate at this point.


The $XMI pushed to a new medium-term high today, exceeding the high set last May. This, among all the charts, looks the most bullish. Last May, however, you could have said the same thing, and that was the high water mark.


See you after the close on Monday - - - although the market couldn't care less, I hope next week is better than this one!

at 8/18/2006 92 insightful comments   Links to this post

Thursday, August 17, 2006

A "Relief" of a Rally

First, a tip of the hat to fellow blogger Charles Kirk for mentioning this blog a couple of weeks back in addition to pointing out this interesting article. The thrust of the article is that we're only about a third of the way through the secular bear market which began in 2000. It's fascinating stuff.

I've looked at hundreds of charts (as usual) today, and in spite of all the hand-wringing yesterday, my belief is that the bulls have pretty much shot their wad as of today. It's been very rough for us bears of late, but I think we may be at a turning point.

My first indication was this morning. Even though the market was up nearly 50 points (again.....) I noticed just about all my portfolios were showing nice profits. Part of this was due to the weakness in oil, but the fact is that the rally was losing its breadth. The only number that matters, after all, is the Profit/Loss column each day, and when that's green, I don't really care what the market is doing. The fact that the market's surge withered away to a 7 point gain today was obviously a relief.

Below is the minute-by-minute chart of the Dow 30 over the past sixty days. I've highlighted the "higher highs" that have been happening for most of that time, connecting them with arrows. My sense is that this is a high-water mark. A very strong Friday tomorrow would absolutely flabbergast me. (Could happen - never say never!)


Oil is still teasing us with a head and shoulders pattern in-the-making. Of course, until that neckline is broken, which may or may not happen, this pattern doesn't mean squat. I'm still short a lot of oil/oil service positions, so I'm jumping the gun, I confess. It's got to push through the area I've highlighted in yellow, and then it's going to get the crap kicked out of it.


I'm only going to post one stock chart today - SHLD. This has all the markings of a beautiful cup with handle pattern that is failing. A failed bullish pattern makes a fantastic bearish pattern.


Below is a compilation of the items I am probably going to buy puts on as well as my current short/put positions. Not a long in the bunch.


Let's hope tomorrow is a good day to an otherwise crummy week!

at 8/17/2006 98 insightful comments   Links to this post

Wednesday, August 16, 2006

What a Drag..........

Dear Readers,

I gotta level with ya, it is not fun to write this blog in this kind of environment. Another nearly triple-point rise today. Ugh. I notice the comments section has gone stark, raving mad - nearly 200 comments. If the market had been slammed today, I'd love to go check out the comments. As it is now, I'd rather not see what people are saying!

Well, as has been pointed out by readers before, there is no right or wrong in the market. There is simply the market. It seems hard to believe that less than a month ago (July 18th) we were flirting with breaking Dow 10,660 and heading into a major descent. Seems like a million years ago, doesn't it? Sad. My only hope is that my emotions tend to inversely correlate to the bearish prospects of the market. I'm feeling like crap, so maybe we're at a turning point, eh? Or maybe not.

The $INDU has risen to the point where it's become very demoralizing for the bears. There's really no "line in the sand" left to speak of. If the high set today is crossed anytime soon, the only goal left to conquer is the high set back in May (and, if that is crossed, the all-time high set in January 2000). The Dow "should have" (definitely in quotes....) resumed its fall where the green arrow is pointed (remember, click any image to see a much bigger image). But the bulls grabbed this ball and ran with it.


The NASDAQ 100, like many other indexes, is just underneath its former support line. There is a chance (hope springs eternal!) that this could be a turning point, since the former support is now resistance.


The S&P 100 is in a similar position.


Here is a heavily marked-up S&P 500 chart. We're still in the lower half of the channel that extends back for quite some time. I'm not exactly sure what to make of this graph, except that it sure was more fun to be a bear from June 1 to July 15 than it is now.


The Dow Utilities are looking pretty toppy right now.


The Amex Major Market ($XMI) looks like it's making another serious attempt at a breakout. The last time it did this, marked in yellow, it failed. We shall see if it fails again or pushes off to blast away from this consolidation zone.


The energy shorts I've got were just about the only bright spot in my portfolio today. There is some weakness here, and this is about the only graph I can point to as looking really primed for a fall.


What a bummer of a day. Yuck!

at 8/16/2006 175 insightful comments   Links to this post

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