Thursday, December 28, 2006

Best of the Blog - 2006 Edition

It was cold comfort that the market fell today (after reaching lifetime intraday highs). 2006 sucked out loud for the bears. May a merciful God grant us catastrophe in 2007.

Anyway, I took the time to go through this year's hundreds of postings to offer up what I think is a "Best Of This Blog." I hope you enjoy it........

The markets will be closed Monday due to New Year's and will be closed Tuesday due to President Ford's funeral. I will therefore not do a new posting until Wednesday evening.

Happy New Year, everybody!

Looking Back at 2006 via TraderTim

There are just a couple of business days left in 2006. I, for one, will be happy to put this year behind me. I just skimmed all my posts for the year (and I did a lot of writing this would easily fill a book) and the recurring themes seem to be (a) frustration and (b) boredom. Not good.

There is, however, some good stuff in the bowels of this blog. Today I wanted to review some of my "hits" and "misses" for 2006, and tomorrow I'm going to publish a Best of the Blog for your enjoyment.

I'm the sort of guy who, if you have good news and bad news to tell me, I always want to hear the bad news first. So let's look at my misses for this year (on the whole, these are just hyperlinks to the blog entry - I suggest you right-click on them and just open the article into a new tab or new window so you don't lose this list):

The Misses

NTRI is doomed! - NutriSystem has done quite well this year, in fact. An amazing stock.

My overall bearishness - well, my Lord, you can find this in almost every post! But a couple of examples are here and here.

Cult of the Bear - a link to the fascinating three-part article predicting 6,800 on the Dow in 2006 (umm, well, the Dow is about twice that level).

Making too much of losses early in the year - but, wow, wouldn't you love to see a GLOBEX screen like that one again?

Shorting OIH prematurely

Premature prediction as to the demise of HANS - it went much higher before it finally stumbled.

The poo-pooing of Barron's prediction for Dow 12,000 - As you know, it's beat that by a wide margin already.

OK, so I'm an idiot, right? Well, only half-right. I had some hits too. Let's take a look back:

The Hits

Predicting GOOG would sink to $330 - OK, I get to gloat on this a bit. The stock bottomed at $331.55. This was an amazing call. Were that there were more like it!

MTH short - a beautiful head and shoulders pattern

ASYT buy, with a target of $7.50 - it actually climbed even higher, to above $11.

Bullish buy list
- the average gain on this list is over 25% now. Maybe I should do more bullish posts, eh?

GOOG as a buy - the stock is up nearly double since this post.

COF short suggestion

PNRA short suggestion

BLUD long suggestion

I'm honestly not trying to get away with rehashing old material. It's instructive to look back. I hope you enjoy reviewing some of these old posts, even though they only show me in a semi-favorable light!

I'll be back tomorrow with my Best of the Blog list.

Wednesday, December 27, 2006


Wow. They finally did it. The bulls got the Dow over 12,500. 2006 is definitely going to be a year of great memories for the bulls. Congratulations, longhorns!

If you look at the performance of the various indices this year, you can see that - strangely - the Dow 30 is the king. Clearly mega-caps are on top of the world. The Dow is usually the boring, staid index compared to the likes of the NASDAQ. The laggard here is in fact the NASDAQ 100.

One chart that provides some small bit of comfort to bears is of the S&P 500. Take a look at how the index has behaved within the confines of the channel I have drawn. It certainly seems that the time is pretty ripe for a push downward. We are completely mushed up against the highest bounds of the channel, and the time space between the arrows is calling for a fall.

Anderson (ANDE) is a pretty handsome looking chart to buy (yes, buy). The volume is relatively anemic, however, and that's not a great confirmation sign.

Immucor (BLUD), which I've mentioned many times in the past as a buy, continues to push higher. The higher it goes, the stronger it looks.

Express Scripts (ESRX) actually fell today, in spite of the triple-digit rise on the Dow. I've always enjoyed this one as a bearish play, and I'm in it again.

Google is still looking good for a fall, in spite of recent strength.

Looking closer, one could even suggest a small head and shoulders pattern recently. Today's big upward move was a nice retracement to the neckline.

There are only two days left to the very tough year.......I suspect the bulls are going to just keep padding their gains.

Hope springs eternal. Come on, 2007 - - be kind to us!

Tuesday, December 26, 2006

Boxing Day

Feh. Blame it on the post-yuletide blahs. There's really not much to say today. A lot of fellow bloggers are taking the entire week off, so I'm trying not to feel too guilty about it. I will say a couple of quick things, though.

First, one of my favorite readers, Leisa, was kind enough to put together a highly disturbing item - - Tim the Elf - - hang on to your pointed shoes.

Second, the comments section has very recently become clogged with a bunch of religious debate nonsense. Maybe I should keep my analogies to myself. But, please, folks, cut it out. Let's try to focus on the markets.

I'm sure the muse will be with me tomorrow. Now turn your computer off and go have another egg nog. It's too soon to abandon the holidays.

Friday, December 22, 2006

Loving the Lump

Yesterday I wrote....

I was hoping for a nice nasty surprise from RIMM, but they had blowout earnings and their stock is way, way high in after hours trading. I wouldn't drop dead of shock if they ended the day down tomorrow. It's just a hunch. Maybe a completely stupid hunch, but a hunch nonetheless. I'm hanging on to these March puts.

Well, well, well. The hunch was right. RIMM was in record high territory after hours yesterday. Once reality started to sink in, the gains diminished, and the stock fell on the day. Let me be clear here: for a stock to go down significantly on a day when blow-out earnings are reported, blow-out projections are made, and record highs are made prior to the open........well, sweet dreams are made of this.

I also still like the look of MCK. Maybe my hunches have a bit more credibility now. Plus the Fib fans.

Bank of America isn't going to have a Google-sized (anticipated) fall. It's a major bank, after all. But I think the best days of this stock are through.

$XAU has a lot of room left to free-fall.

And although I'm not in an $MSH position (I'm in $NDX), this is a good prospective put purchase. Very toppy.

This has nothing to do with trading, but I loved the Lisa Lampanelli bit of the William Shatner roast. As a lifelong Trek fan (of the Original Series......please!) I found the entire event a kick. You froo-froo types, don't bother. But if you want a good laugh and don't mind the raunch, here you go.....

Oh, and Merry Christmas, everyone. Let us look forward to a year of delivering lumps of coal to bulls - both naughty and nice - in the year ahead.

Thursday, December 21, 2006


It's nice to feel on top of the market again. It's no disaster for the bulls, but days like this give one hope.

My shorts in $XAU (gold/silver), which a lot of commenters have slammed the past couple of weeks, are doing well. $XAU kind of gave up the ghost today. No more petite inching down. It fell in a meaningful way. This makes the likelihood of a meaty fall a lot stronger.

High-priced stocks like CME can lose double digits of dollars each day, which makes them great for put owners. It's getting closer to the trendline. Can it crack through?

TSO's top looks lovelier every passing day.

I got snookered into thinking Sears (SHLD) was going to be a superstock. But as I've reminded myself, and others - - it's Sears. Are polyester pantsuits coming back? Does every household need ten new lawnmowers? I confess I have no position in this stock, but I sure envy you put-holders out there.

The disgusting, greedy pigs at Goldman Sachs that have bled obscene bonuses out of their firm this year have been getting a lot of press. Don't you think investment banks have jumped the shark by now? I sure do.

Yep, that twinkle in my eye is Google, everyone's favorite company ever to exist. Chip, chip, chip. Lower each day. So much for the hockey stick.

FDX continues to be weak, even after the impact of earnings was absorbed yesterday.

I was hoping for a nice nasty surprise from RIMM, but they had blowout earnings and their stock is way, way high in after hours trading. I wouldn't drop dead of shock if they ended the day down tomorrow. It's just a hunch. Maybe a completely stupid hunch, but a hunch nonetheless. I'm hanging on to these March puts.

Wednesday, December 20, 2006

Baby Got Redback

As regular readers know, although I'm a bear (in both real life and my Second Life), I do publish bullish charts some of the time (maybe 10%). One stock I've consistently point out as having a handsomely bullish pattern is RBAK, which I first mentioned over a year ago in my September 2005 post. At the time, RBAK was about $9 per share. It was purchased today for $25 per share, and the stock price actually closed north of that.

The calls I bought on RBAK a month or so ago more than tripled in price over a small amount of time. Now this is a beautiful example of an inverted head and shoulders pattern in action!

What's funny to me is some highly-paid analyst published a report in the wee hours of this morning stating, in brief, (1) RBAK had reached its target price, so they were downgrading it (2) a buyout was not likely "in the near future" (which, given the outcome, I guess meant within the next 30 minutes following the publication of the report).. Wow, what an embarassment. Analysts have never been worth a sack of crap, have they?

The $INDU reached yet another all-time intraday high today (turd monkeys!) but closed down a bit. The divergence between the RSI and the price action is absolutely huge. Come ON, you stupid market, would you fall already? Jesus H. Christ!

The NASDAQ continues to look weaker than the U.S. stock market as a whole.

...and the Dow Transports continue to act (alone) in a truly bearish fashion.

CDX, a short I've suggested before, had a nice down day - - I suppose led by FedEx's action.

And speaking of FedEx, another item I've suggested shorting, it had a nice down day, although it certainly was no demolition of the stock. These things can take time, I suppose.

One could make a flimsy argument that GOOG is sporting a petite head and shoulders pattern. I wouldn't even mention it. Oops, too late. Anyway, I have high (low) hopes for GOOG in January.

Finally, TSO continues to be well behaved. This looks like a nice, fat toppy pattern to me.

Someone commented (and let me say, I really appreciate the comments section - - I read it religiously) that yesterday's graph of the coming disaster in Medicare has nothing to do with stocks or the financial markets. I dunno, I think the insolvency of the United States will surely be germane at some point.

Oh, I forgot. Liquidity. There's liquidity. And all that money needs a place to go. (Where it came from, no one knows - - actually they do - - leverage, leverage, leverage. Which, oh, is a two-edged sword). Anyway, liquidity is the current This Time It's Different argument. Just like how the Internet's productivity enhancement changed everything and justified the valuations of 1999.

People just never learn. Never. I simply cannot wait for those Liquidity twits to get blown to hell. Then at least we can wait a few years before we have to endure them again with another fabricated story.

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.


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. 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.

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.