If you are feeling brave, this might be a great time to pick up some DIA puts. This huge rally has pushed the Dow up against a trendline, and let's face it, it's hard to resist selling into a 200+ point rally.
http://photos1.blogger.com/blogger/4311/970/400/0628-hugerally.jpg
at 6/29/2006 34 insightful comments
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Fib Wars
As the Fed's 2:15 decision looms, the market is doing something pretty fascinating. Looking at the S&P 500 index vis a vis the long-term Fibonacci line, it seems that the 61.86% retracement constitutes the current line in the sand (see green shaded area going back over half a decade).
http://photos1.blogger.com/blogger/4311/970/400/0628-hugefib.jpg
You can see how significant this line is by looking at the recent daily history of the S&P. I've circled those areas where the market is flopping between considering the line either support or resistance (it is currently support, given today's strong upward movement).
http://photos1.blogger.com/blogger/4311/970/400/0628-bigfib.jpg
To me, the intraday is the most fascinating of all. It never ceases to amaze me the power these Fibs have. This line goes back to early 2000! And yet is still holds power over the market.
http://photos1.blogger.com/blogger/4311/970/400/0628-fib.jpg
at 6/29/2006 12 insightful comments
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Thursday, June 29, 2006What Would Constitute a Reversal
This morning's triple-point rally on the Dow puts the short-term bearish case at risk. If the Dow crosses above 11,131 (which is possibly in the post-Fed gymnastics) it will create a small series of higher highs and higher lows, as well as pushing the index well past a Fib retracement, that will seriously damage the short-term bearish stance. I've drawn an arrow to illustrate the possible new trend, should that level be crossed.
http://photos1.blogger.com/blogger/4311/970/400/0628-rally.jpg
at 6/29/2006 8 insightful comments
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Tuesday, June 27, 2006Powers of Ten
When I was a young boy, I fondly remember being transfixed by the short feature Powers of Ten shown at the National Air & Space Museum in Washington (the link shows you the same film). It's a completely mesmerizing piece to watch, even though it's about thirty years old and not exactly high tech (the cheesy post-60s spooky-synth music is a bit much).
This is the inspiration behind my posting today - to get a look at the big picture. In this case, the S&P 500 (which is a good enough proxy for the U.S. stock market in general). I'm delighted the Dow lost 120, of course, but I wanted to not make a daily report and instead remind us all what the theme behind my investing philosophy is: to take full advantage of what is likely going to be an extremely bearish market for years to come.
Let us first look at the past 75 years of the index, going back to the depths of the Great Depression. I've embellished this chart with a number of drawn objects as well as major historical themes. As always, click on any image to see a much bigger version.
In this instance, as you can see, there is plenty of room to fall. The bull market from 1982 through 2000 didn't create much in the way of a support zone anywhere, and in spite of what people might regard as a brutal bear market from 2001 to 2003, we are still at some extremely rich levels.
http://photos1.blogger.com/blogger/4311/970/400/0627-multiyears.jpg
Now let's zoom in (hence the Powers of Ten theme) to the past decade or so. Here you can more plainly see the detail of the Fibonacci Fan as it relates to recent history, as well as the Fibonacci retracement levels. I've drawn an area to illustrate the likely path and speed of the market's fall for the next year or so.
http://photos1.blogger.com/blogger/4311/970/400/0627-years.jpg
Zooming closer, we see the support levels dictated by the Fibonacci lines. I've circled some likely zones to where the market will successively fall if weakness continues.
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Zooming closer, we see the support levels dictated by the Fibonacci lines. I've circled some likely zones to where the market will successively fall if weakness continues.
http://photos1.blogger.com/blogger/4311/970/400/0627-dailyfar.jpg
To me, the graph below is currently the most interesting, since it plainly illustrates how the index has not been able to conquer its current resistance level, and indeed, it has started to weaken. It would not takea lot of damage to the market for it to cut through that supporting trendline you see.
http://photos1.blogger.com/blogger/4311/970/400/0627-dailyclose.jpg
Finally, the minute-by-minute intraday graph gives us a view into the rounded top that has been forming. I've drawn a red line to illustrate the level which constitutes the top. If prices fall cleanly below this level, the odds of a continued fall are much stronger.
http://photos1.blogger.com/blogger/4311/970/400/0627-intraday.jpg
Everyone's fixated on Bernanke and Thursday's announcement. How tedious. Look, at some point, interest rate increases will stop. It won't save the market. Any more than 0% interest in Japan saved the Nikkei all through the 1990s. Expect the same, stupid spasm on Thursday after they announce that rates are up, or rates or down, or rates or unchanged, or Bernanke is going to shave off that stupid beard. It won't really matter in the end. It's just noise.
at 6/27/2006 22 insightful comments
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Monday, June 26, 2006Stalemate
Boooooooooooring......
Earlier this month, I mentioned how things seemed almost "too easy" for bears. Well, I would like to have that problem again.
We seem to be, over the past several weeks, sort of stuck around 11,000 on the Dow. The red line I've drawn divides bullish control (upper) and bearish control (lower). It's just a struggle between the upper and lower halves.
http://photos1.blogger.com/blogger/4311/970/400/0626-stalemate.jpg
I imagine until there's some clearer direction, my posts will be less verbose and less frequent. Because I don't want to talk about the market just for the sake of talking about it. As long as we're stuck in neutral, there's not a heck of a lot to say.
at 6/26/2006 41 insightful comments
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Monday, June 26, 2006Carnival
From time to time I find an option that seems to be just about free.
One I've come across this time is Carnival (symbol CCL). Here's the chart; no broken trendline yet, but there seems to be a topping pattern completed (highlighted in green) which also seems similar to an earlier top that preceded a fall (other, earlier green).
http://photos1.blogger.com/blogger/4311/970/400/0626-carnival.jpg
At the moment, the January 2007 $50 put on this has an ask price of $9.40 (its symbol is .CCLMJ), and the stock is at $41. That means you are paying 40 cents for the time premium between now and seven months from now. To me that's ridiculous, and a great bargain. I bought some of these thing morning with a contingent stop price of $49.30
at 6/26/2006 4 insightful comments
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Q&A Forum
Here are some recent questions (and my answers) to recent posts. Thanks for your patience!
Mike: "Based in part on your targets and some things I've read from other experts I trust I entered into some short positions toward the end of the day...not a ton but some. My question is ... is there something specific you'd look for during the day tomorrow that would change your tune? For instance if Dow jumps way above this line? Like to know if there is a point at which you would exit your shorts and change your stance to one of an intermediate term rally as a few other sites expect (3 to 6 weeks)."
At this point, I'd step aside (and be very confused) if:
+ The Dow crossed over 11,132
+ The S&P 500 crossed over 1,259
+ The NASDAQ 100 crossed over 1,586
Rob: "Hi Tim, would you please tell us what positions (other than GOOG) you are currently in and what are some on your watch list?"
My positions are listed below. As for my watch lists, you can subscribe to them for free if you use Prophet.net by going to the Shared Watch List page. My screen name is "Blue Knight"
Brian: "Has BSC invalidated it's Head/Shoulders pattern by breaking up over the neckline after breaking down below it?"
I don't really consider this a head and shoulders pattern. I would say the downtrend of this stock remains intact, in spite of last week's strong performance. The price crossing above $139 would change that view.
http://photos1.blogger.com/blogger/4311/970/400/0626-bsc.0.jpg
Andrew: "1. Do you have a timeline for the release of ProphetCharts?
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Monday, June 26, 2006Carnival
From time to time I find an option that seems to be just about free.
http://photos1.blogger.com/blogger/4311/970/400/0626-carnival.jpg
http://photos1.blogger.com/blogger/4311/970/400/0626-bsc.0.jpg
Andrew: "1. Do you have a timeline for the release of ProphetCharts?
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[ 本帖最后由 hefeiddd 于 2009-5-10 17:55 编辑 ]
Thursday, June 22, 2006A Few Juicy Charts
Between my recent mentions of teenage sex, "juicy charts", and Abby Joseph Cohen, you may all thing I'm sex-obsessed, but it's not true. My true self returns. Here are some lovely short ideas for you.
Boeing (BA)
http://photos1.blogger.com/blogger/4311/970/400/0622-ba.jpg
Bear Stearns (BSC)
http://photos1.blogger.com/blogger/4311/970/400/0622-bsc.jpg
Cummins (CMI)
http://photos1.blogger.com/blogger/4311/970/400/0622-cmi.jpg
Massey Energy (MEE)
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Massey Energy (MEE)
http://photos1.blogger.com/blogger/4311/970/400/0622-mee.jpg
Sears Holding (SHLD)
http://photos1.blogger.com/blogger/4311/970/400/0622-shld.jpg
Simon Property Group (SPG)
http://photos1.blogger.com/blogger/4311/970/400/0622-spg.jpg
Union Pacific (UNP)
http://photos1.blogger.com/blogger/4311/970/400/0622-unp.jpg
As always, click on any image to see a bigger version. Except Abby's, which will cause a recursive deletion of all your files.
Wednesday, June 21, 2006
So Now What?
So what does this mean? Does it mean a bold new bull market has started? Hell, no. Does it mean we've reached the bottom of the ascending channel and are ready to move up again? (See chart below, with the red circles showing a series of higher lows). I sure hope not because that looks like a seven month process before we would start heading down again! Does it mean we simply retraced to a resistance level and can resume the fall down in earnest? Maybe, but it's not guaranteed. Or it could break down and get serious about being bearish.
http://photos1.blogger.com/blogger/4311/970/400/0621-spx.0.jpg
at 6/21/2006 26 insightful comments
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[ 本帖最后由 hefeiddd 于 2009-5-10 18:01 编辑 ]
Wednesday, June 21, 2006Ouchie!
Well, the baton has been passed (for the moment) to the bulls. If you think this is a one-day wonder, you might consider the DIA puts with a stop at 112.85 (I've put in green the retraced H&S pattern below). But, make no mistake, this day belongs to the bulls, and it could be the start of a multi-week lift. We'll drill down into it deeper tonight.
http://photos1.blogger.com/blogger/4311/970/400/0621-indu.jpg
at 6/21/2006 46 insightful comments
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Tuesday, June 20, 2006Crossroads Again
Greetings from bucolic Palo Alto, California.
It seems the Dow is clinging to its former support (now resistance) line once again like a magnet. To 99% of the population, the market is having a great day. To those armed with good charts, it's clear to see we're simply at a crossroads again, where it's unclear whether bulls or bears are going to own the short term future.
http://photos1.blogger.com/blogger/4311/970/400/0620-crossroads.jpg
In the recent past, the Dow's attempt to break out (followed by a failure) has been a critical component to the downdrafts we've been enjoying. The Dow moving above 11,057 would change my tune for the short-term.
http://photos1.blogger.com/blogger/4311/970/400/0620-indubreakouts.jpg
If this micro-rally fails and we bust through last week's lows, I'd say the next target for the Dow is about 10,450.
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If this micro-rally fails and we bust through last week's lows, I'd say the next target for the Dow is about 10,450.
http://photos1.blogger.com/blogger/4311/970/400/0620-dow.jpg
A reasonable downside target for the S&P would be about 1,170.
http://photos1.blogger.com/blogger/4311/970/400/0620-spx.jpg
And the Transports at about 4,300.
http://photos1.blogger.com/blogger/4311/970/400/0620-tran.jpg
I am quite confident we are going to end the year below 10,000 on the Dow. As for the longer term (say, 2007 through 2009) my crystal ball is really fuzzy. A down market, yes, but how far down is unclear. So let's take it a day at a time, shall we?
at 6/20/2006 25 insightful comments
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Monday, June 19, 2006A Clear & Present Danger
OK, this isn't the slam dunk I was hoping. The market was weak today (down about 100 points) but has recovered some. Worse, there is a plausible argument to be made for a short term bottom at this point. Notice this bottoming formation. The market has to be firmly and decisively weak tomorrow. Otherwise the bulls might be slowly pulling that baton away.
http://photos1.blogger.com/blogger/4311/970/400/0619-head.jpg
at 6/19/2006 23 insightful comments
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Attack
Here's what I'd suggest. Buy as many July DIA puts as you can possibly afford. Set a contigent stop at any price over 110.94. Simple as that.
Die, bulls, die!
http://photos1.blogger.com/blogger/4311/970/400/0619-cocksuckers%21.jpg
at 6/19/2006 13 insightful comments
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Friday, June 16, 2006Good Enough.....
The market's rebound fizzled out today. This is how rallies are in bear markets - quick, fast, explosive, and short-lived. The Dow ended up basically unchanged today (down .62 points) - here's the intraday graph, where it just bobbled up and down through the day.
http://photos1.blogger.com/blogger/4311/970/400/0616-ingaround.jpg
What's fascinating is that the resistance it's bumped up against is the very long term trendline going back several years; the blue line you see in the intraday graph corresponds to the long blue line on this daily multi-year graph.
http://photos1.blogger.com/blogger/4311/970/400/0616-dowtrendline.jpg
I've put green highlight at the next target for the Dow - about 10,450 or so. It's based on both Fib and classic H&S measurements. Plus it feels right.
http://photos1.blogger.com/blogger/4311/970/400/0616-dowtarget.jpg
I've likewise laid out a target for the S&P.