Massey Energy (MEE):
http://photos1.blogger.com/blogger/4311/970/400/0717-mee.jpg
Marathon Oil (MRO):
http://photos1.blogger.com/blogger/4311/970/400/0717-mro.jpg
Petro Brasil (PBR):
http://photos1.blogger.com/blogger/4311/970/400/0717-pbr.jpg
SunCorp (SU):
http://photos1.blogger.com/blogger/4311/970/400/0717-su.jpg
If we continue lower this week, it will show the bears finally have firm control of the market. Otherwise, it'll be another passing of the torch and a bit more wasted time before the fall can start in earnest.
at 7/17/2006 33 insightful comments
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Saturday, July 15, 2006A Bounce Seems Quite Likely
Although I still believe in the forthcoming bear market, I sense the selloff is probably done for now and we'll see a bounce upward. I still have a ton (dozens) of put positions on stocks that seem to have good solid "down" patterns, and I imagine if a bounce does come, it won't do great things for these positions. But I'm going to wait out the storm and, at the same time, go long some indices to soften the blow.
Before getting into those index charts, just a quick mention that my Meritage recommendationseems to have panned out nicely. Although it hemmed and hawed a bit before starting to fall, it finally did so in earnest.
http://photos1.blogger.com/blogger/4311/970/400/0715-mth.jpg
The S&P 500 Volatility Index ($VIX) has spiked up recently, indicating that perhaps the bears might ease off for a bit.
http://photos1.blogger.com/blogger/4311/970/400/0715-vixalone.jpg
Looking at the Dow Industrials ($INDU), there seem to be a few reasons for this to be a short term bottom: (a) the Fibonacci retracement (b) a fair bit of support in the green shaded area (c) the fact that when this level was last reached, the bears were turned away swiftly. Obviously if we're going to get seriously bearish, this level will be breached at some point, but my gut tells me it would take something extraordinary very soon to pierce it.
http://photos1.blogger.com/blogger/4311/970/400/0715-idu.jpg
The Russell 2000 seems to be at the support line of an ascending channel.
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The Russell 2000 seems to be at the support line of an ascending channel.
http://photos1.blogger.com/blogger/4311/970/400/0715-rut.jpg
And it's the same story with the S&P 500.
http://photos1.blogger.com/blogger/4311/970/400/0715-spx.jpg
Again, this lines don't simply travel upward into infinity, allowing us to trade these markets whenever they bounce off these lines. Trends do end, and it's very hard to predict when that will happen. Stay sharp!
at 7/15/2006 43 insightful comments
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Friday, July 14, 2006Defensive Trading
Another triple-point down day (thus far - there's a little more than an hour left) on the Dow. Terrific!
http://photos1.blogger.com/blogger/4311/970/400/0714-breakorbounce.jpg
During a sustained fall like the one we've witnessed over the past week, I change from offensive trading to defensive trading. What I mean is this - - when I trade offensively, I am putting on positions with a certain amount of risk (usually fairly substantial) and, given the bid/ask spread in options, a guaranteed instant loss. But I'm taking the risk.
Once the market goes my direction for a while, I take on a defensive position. This usually involves checking out the intraday charts (some as big as 60 days) and finding out which price point constitutes a change in direction (even if it's short term).
My point is that I want to lock in the profits I've enjoyed by resetting my stop prices MUCH tighter, while at the same time giving the market an opportunity to fall farther. So whereas my stops were very fat initially, they are now reset to pretty much guarantee profits, while at the same time allowing the market enough "line" to continue to head down more.
at 7/14/2006 19 insightful comments
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Thursday, July 13, 2006Double Penetration
From 6/6 to 6/29 the Dow was under the 11,000 mark. It pushed its way back above it, and now it has - as of today - closed below it one more. (Did I do a decent job making a raunchy headline plausible?)
Today when the market was down about 160 points, I figured maybe I should close out some of my positions. I looked at them - all 48 of them - and I found one which seemed ready to close. All the others looked like they were just beginning their falls. My point is that this isn't the end; it's the beginning.
And what a beginning it is! It will be interesting to see if we get a third triple-point decline in a row tomorrow.
The Dow Composite ($COMP) is perched on a very long term trendline. It actually violated this trendline a few weeks back, but I left it in place.
http://photos1.blogger.com/blogger/4311/970/400/0713-comp.jpg
The NASDAQ Composite (which has been weak for weeks) is poised for a big fall down to its next Fibonacci level, highlighted in blue (as are all the other targets in today's entry - - and, as usual, click the image for a bigger one).
http://photos1.blogger.com/blogger/4311/970/400/0713-compq.jpg
The Dow broke its short term trendline yesterday, and it followed through beautifully today. Looks like we've got another 5% or so to lose before this thing pauses for another fake-out rally.
http://photos1.blogger.com/blogger/4311/970/400/0713-indu.jpg
NASDAQ 100 ($NDX) is similar to the Composite - plenty of room left to fall to the next Fib level.
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NASDAQ 100 ($NDX) is similar to the Composite - plenty of room left to fall to the next Fib level.
http://photos1.blogger.com/blogger/4311/970/400/0713-ndx.jpg
Next stop for the S&P 100 is shown with a horizontal line. This would be the third time it hit this level. Should it break it, the real fireworks begin.
http://photos1.blogger.com/blogger/4311/970/400/0713-oex.jpg
The target price for the S&P 500 is similar - about 5% away or so.
http://photos1.blogger.com/blogger/4311/970/400/0713-spx.jpg
The once lofty Transports hit a double top and have a ways to go before hitting their ascending trendline for support.
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The once lofty Transports hit a double top and have a ways to go before hitting their ascending trendline for support.
http://photos1.blogger.com/blogger/4311/970/400/0713-tran.jpg
And the one that's going to shock people the most is the $XAU - I see the potential here for an enormous collapse, provided the head & shoulders completes and breaks its neckline. We could head down to the ~$70 zone here, folks. OK, OK, start throwing things at me now.
http://photos1.blogger.com/blogger/4311/970/400/0713-xau.jpg
You may wonder where all the individual stock charts are. There are simply too many of them! I have 47 discrete positions now, each one of which is really good, and a lot of other new positions to open. There is so much great stuff out there! So I just wanted to give you yet another overview of the indices, this time for a longer term perspective.
Have a good Friday, everybody. See you on the other side.
at 7/13/2006 44 insightful comments
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Wednesday, July 12, 2006Crrrrrrrrrrrrrack........
Maybe, just maybe, we're finally getting some direction. I'm starting to like this market again. And there are some really juicy-looking tops that appear to be in the making, including crude oil, copper, and gold. No, you haven't stumbled onto a commodity blog.....it's just that the fall of those market make for some very nice equity collapses as well.
The $INDU clearly broke its short-term trendline today. The next stop, highlighted in light blue, is to fall to that Fibonacci level (which also happens to be the most recent low). If it cuts below this level, that's fantastic, because that will put the "higher highs/higher lows" channel into its grave.
http://photos1.blogger.com/blogger/4311/970/400/0712-indu.jpg
The S&P 500 is still within the confines of an ascending channel, but it's looking weak. The next stop, I'd say, is that highlighted blue area, which will not only mean that the ascending channel has been busted but will also set up a new goal: the next Fibonacci level lower.
http://photos1.blogger.com/blogger/4311/970/400/0712-spx.jpg
Looking at the Gold/Silver index ($XAU), there appears to be a head and shoulders in the making. Now I realize anticipating patterns is a big no-no. (I also realize I don't exactly have the steady hands of a surgeon, hence the not-so-great drawing in red where I'm trying to show the pattern). But I think this is enough of a low-risk/high-reward ratio here to bend that old rule.
http://photos1.blogger.com/blogger/4311/970/400/0712-xau.jpg
I'd love to show more charts, but it's 2:30 in the morning, people! I gotta get some beauty sleep!
at 7/12/2006 46 insightful comments
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Tuesday, July 11, 2006Breakdown then Upswing
Let's face it. Nobody likes this market. Not bulls. Not bears. Nobody. And why is that? Because nobody owns this market! It's in this exasperating no man's land of equilibrium. This market has been trendless so long that I don't think people even remember what a trending market feels like!
Early today, the $INDU looked like it was nicely on its way to some downward action. It was down about 60 points and had clearly busted beneath its short term ascending trendline. Then it spend the rest of the day firming up with an over 100 point reversal. It closed up about 31 points. Bummer.
If you look at the graph below of the $INDU, you can see its meandering nature recently. My hope is that the sloppiness marked at point "A" which preceded a big decline is similar to what we're seeing now with "B". After all, the ascending trendline was broken today. There's no doubt about that. So there's been some damage done. But the bears didn't stay in charge.
http://photos1.blogger.com/blogger/4311/970/400/0711-INDUIntraday.jpg
The $NDX presents a possibly more bullish scenario. It seems to have been hammering out a bit of a short term base recently. It certainly appears that there would have to be some pretty hefty bad news (nasty earnings from a major name, for example) to break the $NDX out of its funk and push it even lower. Barring that, it may have shored itself up for a short-term rally.
http://photos1.blogger.com/blogger/4311/970/400/0711-NDXIntraday.jpg
Lastly, the $SPX (S&P 500) has a pattern similar to the $INDU, with the difference being that the recent uptrend hasn't been broken. I've highlighted this general uptrend in blue.
http://photos1.blogger.com/blogger/4311/970/400/0711-spxintraday.jpg
I've provided a lot of individual charts lately, so I'm going to leave my commentary as-is at this point. I want to see at least some semblance of direction before getting more concrete.
My hat is off to those of you who post regularly in the comments section. It keeps this place jumping!
at 7/11/2006 44 insightful comments
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Tuesday, July 11, 2006On the Cusp of Short Term Support
I'm sorry it's been a couple of days since I did a post. I've been very occupied with getting the beta test of our new product done (I have a real job too, ya know!)
The Dow Jones 30 is right on the cusp of breaking through short-term support. Indeed, I'm typing frantically because on my second screen I can see the $INDU getting closer and closer to that trendline. I'd hate to post this entry after the fact!
http://photos1.blogger.com/blogger/4311/970/400/0711-inducloseup.jpg
A longer-term perspective on the Dow shows the next two "stopping points" on the way down, should short term support be broken.
http://photos1.blogger.com/blogger/4311/970/400/0711-indulong.jpg
The NASDAQ, which has been extremely weak, is also on the verge on pushing past one of its Fib levels down to the next stop on the elevator.
http://photos1.blogger.com/blogger/4311/970/400/0711-ndx.jpg
OK, maybe I'll post more, but I want to click the Publish button before the Dow cracks!
at 7/11/2006 36 insightful comments
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Saturday, July 08, 2006Post-It to Self: Short Everything!
Thanks, 3M, for helping take the market down Friday. I've mentioned MMM as a great short idea more than once. Glad it finally succumbed.
My disposition on the market has never been sunnier. I am shorting everything I can. Buying puts on everything I can. Owning nothing. My belief is the market is heading for a sustained, profound fall and my intent is to profit handsomely from its demise.
There are certain sectors that seem especially juicy for a fall. Oil services. Gold and Silver. And, to keep it simple, just the good ol' S&P 500. Here are all the positions on which I own puts (note to newbies: click on any image to see a much larger image):
Looking at the DIA with bearish goggles shows a well-formed head & shoulders:
http://photos1.blogger.com/blogger/4311/970/400/0709-halfempty.jpg
You can see the same market as bullish, since there have been a trio of progressively higher highs. Even with this point of view, you can see the market is headed for some very serious resistance to overcome:
http://photos1.blogger.com/blogger/4311/970/400/0709-halffull.jpg
THe OEX chart is noted as:
http://photos1.blogger.com/blogger/4311/970/400/0709-oex.jpg
Oil Services (OIH) have a ton of high-volume options, and thus represents another great put-buying opportunity given the state of this chart:
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