Friday, April 21, 2006

Bigmouth Strikes Again

What a week! In spite of the Dow going up consistently this week, it seems broader markets are petering around. The NASDAQ in particular, falling over 1% today, is definitely showing signs of age.

Below is the $SPX with Bollinger Bands. As you can see, it's way up at the tippy-top of both the resistance trendline and its Bands. It seems a softening from these prices is just about inevitable.


The Dow Utilities, which is critical to watch since it is inversely correlated to interest rates, has its head & shoulders pattern plainly intact. I've put an arrow indicating where it has not overcome its downward-sloping trendline. The green shaded area is the price target I've set.


One contrary chart I've got is $XMI (the American Major Market index) which, if it breaks above the line shown, would give a bullish signal. It has been repelled by this line in the past, although it made a weak attempt above it recently.


Express Scripts (ESRX) looks better than ever as a short. It failed to penetrate its descending trendline, and it gave a bearish engulfing pattern today. This on top of the important fact that it's in a marvelous H&S formation.


Lastly is Unibanco Uniao De Bancos (UBB), which is in a similar pattern as ESRX. Same reasons, same prediction.


Enjoy the weekend, everyone!

11 comments:

Hurricane5 said...

Where do you get your charts? The NASDAQ was not down "over 1% today". In fact, it was down less than 1% at .83%. Did you forget to add the NASDAQ is up .7% this week? I guess that slipped your mind. Yep, hitting multi year highs is certainly a sign of age. You see a stock or index go down for 1 day and you call it the end of the world and declare victory. I can't imagine how much money people have lost by following your advice. Nice call on the NTRI double-top by the way. lol.

Tim Knight said...

The NASDAQ 100 is what I was referring to. It was down 1.12% today.

Why don't you just not come to this blog if you think it's so bad? Jesus.......

- Tim

TR said...

Appreciate the post. As a bull at heart, I read your blog almost daily to try to understand what factors I should be thinking about before preceeding with my personal trades. I understood you meant the NDX as it tracks differently than the broader market. What Hurricane's don't understand is that traders use the NDX, SPX and OEX as their benchmark.

Appreciate seeing your current bearish watchlist. I like some the trades and always have the UTH as one of my index traders!

Go bulls! (but I understand the need for having bears - to eat bulls if they get too plentiful - heh, heh!)

John Wheatcroft said...

Easy Tim - I enjoy your Blog too. But I don't have a bull or bear in me - I just make money. My suggestion is try an approach like Trader X - go with the flow. He can put up three charts on a day and two will be up and one will be down and who cares - just making money.

We take what the market gives us and try not to predict. If a trade goes the wrong way we close it and move on to the next.

But you have to relax - take it easy. Most of the people who come here respect your opinion (I know I do) and the few who don't - so what.

Keep on keepin' on. Chill Amigo - life's too short to get in a twist.

costas1966 said...

Why don't you all supertraders out there stop kidding yourselves. When you are entering a long position in a stock you are making a prediction that the stock is going up, when you enter a short position you are make a prediction the the stock will go down. That's all we do out there making predictions. So cut the BS and control your loses that what it comes down to.


Also to asnwer to the other reader that asked Tim what he is doing shorting stocks in a bull market, since in a bull mrket 4 out of 5 stocks go up. I will have to say.
WHAT BULL MARKET? The market has gone sideways for the past 5 weeks.
The advance decline line topped out 2 years ago. This is a transitional market from bull to bear.

Kapil Khanna said...

Well said John.

Kapil Khanna said...

NTRI is up 27% after market today. What double top hurricane5?

Tim Knight said...

hurricane5 wasn't serious about the double top; he was alluding to my mention of it; it was "my bad" not to set an explicit stop price on this suggestion (from quite some time ago); suffice it to say, the potential double top was invalidated long before tonight's earnings.

PB said...

Sideways market for 5 weeks?? More like 2 frikkin' years! What kills me is the complacency, or lack of volatility. Look back to 2000 and see the wild month-month moves in the DOW! We're lucky if we get that in a year now! It would be great if someone enlightened out there would give me a reason for it!

TryumphTrader said...

Tim,
On UBB I'm seeing a whole heck of a lot of price patterns with bullish breakouts. of course price is king so we'll see if it can meet the predictions .

On Hurricane5 They'll stop posting when the bulls run out of steam. Your a big name and respected trader so naturally there will be those that take shots at your commentary. ;)

costas1966 said...

PB, I agree with your 2 years statement. However I avoided it since the bulls can argue that the past 2 years the s&p 500 has gone up at a breathtaking 10% rate. As for the volatility I think there is not enough participation it is a post bubble phenomenon. Everyone went into flipping houses and avoided the market.