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Monday, July 24, 2006

The Voice of Reason

Another nearly 200 point rise in the Dow today. The main reason being given was a company was being bought. The ticker symbol should be BFD, but it's HCA. Honestly, what on earth does this change about the market's prospects? Pfft.

In any case, I was going to title today's entry "This is Not Good" or something like that, but once again, having looked at my charts, I'm not worried. Sorry, I'm just not. Chart after charts just screams "sucker rally" to me, and when I look at the long-term (we're talking decades, people) chart of the S&P 500 or the Dow, it's got bear written all over it.

Oh, before we go any farther, a tip of the paw to everyone's favorite perma-bull, hurricane5. One of his most fervant recommendations (the top one, I think, with a target price of a million bucks a share or something) is NTRI. It's getting slammed in after-hours trading.


Back to reality. The Dow Jones 30 has just two numbers that count right now. This is simple: if it breaks below 10,660, the bears are going to own the market. If it breaks above 11,150, that's going to cause some medium-term damage to our evil plans for world domination. I think the buying mania is just about tapped out. But I've been wrong before!


Looking at the intraday S&P 500, it didn't get above last Wednesday's high, and even if it does, there's still a bit of play before this gets worrisome.


The daily chart of the S&P is the same tired channel you've seen for a while. We're still in a nice succession of lower highs and lower lows since the May 10th peak. Let's keep it that way, shall we?


This final graph is really what I was talking about earlier - - click on it to see a bigger image, stare at it for a while, and try to convince yourself this is a graph that's going to shoot higher. Just try. You can't, because it's not going to do so. History is telling us it's time to head lower. A lot lower. Just watch.

at 7/24/2006 71 insightful comments   Links to this post

Another Chance to Short?

The comment boards have been full of people begging for Dow 11,000 again so they could enter more shorts. Well, folks, here's your opportunity!

For myself:

+ I'm easing out of some of the transportation shorts/puts, since I think this one's kind of done for now

+ The gold shorts still look good

+ The oil service sector is sporting a fantastic head & shoulder formation, but I am keeping VERY tight stops on these positions, since they've come down so far, so fast

+ I think today's 155 point rise on the Dow (as of this writing) does represent a good short opportunity, but only with tight, intelligent stop prices.........it could easily be argued that last week was the start of a new (short-term) leg-up in the market.....

More later. Just wanted to say a few words since the market was up so much this morning.

at 7/24/2006 23 insightful comments   Links to this post

Friday, July 21, 2006

End of a Terrific Week

I never thought I'd declare a week in which we had a +212 up day on the Dow to be "terrific", but it has been. In spite of the (idiotic) one-day rally based on Bernanke picking his nose, or whatever he did to get the bulls excited, I had my single best percentage gain of all time on Thursday, and overall the week was really profitable for me. I think that speaks to the overall deterioration of the market. If a bear can make a bunch of money in a week that sported such a huge rally (and don't forget the +51 up day on the Dow on Tuesday), something's going right.

I have almost 100 - yes, one hundred - short and put positions right now. Not one stinking long in the bunch. And I think all but one or two are showing a profit. I'm not going to assail you with more stock charts. Indeed, my "pictograph" posting seemed to get a lot more comments and attention than my huge slew of charts. So I'm going to refocus on the market in general this time.

Oh, by the way, I just got a sneak peek at what the cover of my forthcoming book is going to look like. Ya'll are all going to be required to buy this once it's out, ya know!


The first chart is of the Dow Composite (symbol $COMP - and, gotta say it, click on an image to see a much bigger version). This one is fascinating because the reference line for the Fibonacci Fans drawn here - - ummm, I just realized how boring this description would be. Suffice it to say these are not trendlines, and I'm kind of blown away at how accurate these fan lines turned out to be, considering the reference line is nowhere near them. The price is definitely playing with the idea of cutting underneath that highest fan line.


Next is the Dow 30, and I know you've seen this chart a million times. But we have got to cut underneath 10,660. That huge green shaded area represents the last, best hope of the bulls to keep this market floating. If we can get the Dow beneath that level, we're gonna own 'em.


The S&P 500 is in the lower half of its ascending channel, and it's look very interested in pushing beneath recent lows. If it breaks under that ascending support line, things are going to get really exciting. We are still within this channel, however.


The Transports actually look like they could take a rest for a bit. They are approaching both a pretty substantial trendline as well as a Fib retracement level. So it wouldn't surprise me to see the Transports bounce a bit soon here.


And, finally, a recent favorite $XAU (Gold & Silver index). This is similar to the Oil Service Sector (beaten to death this week, so I shan't be showing that chart again), except that the head and shoulder is still in formation. (As for OIH, it sneaked beneath its neckline today). This looks like a honey.


I promised this week would be exciting, and it was. Next week is bound to be the same. And just remember, we're moving closer all the time to that wonderfully bearish month of September! Oh, by the way, if the Dow does break under that green area, I'd say we're headed for about 9,800. Should be a fun ride.

at 7/21/2006 24 insightful comments   Links to this post

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