Wednesday, May 10, 2006

Extending the Overextension

The insanity surrounding "Fed day" has become so predictable it's perversely boring. It's the same old song - - from the open until 2:15 EST, the market doesn't do much of anything special. Then a snare drum rolls, the announcement is read, and the markets go stark raving mad for about 30 minutes. It's quite a spectacle.

Speaking of lunacy, here's an updated chart of perpetual riser Hansen Natural (HANS). This is a percentage chart. I don't touch this thing. I just watch in amazement. It's kind of hard to fathom that a niche player of energy drinks has a market capitalization approaching five billion dollars. This stock will fall hard one day, but I for one am not about to guess when or why!

As long as we're looking at insane charts, let's drink in the latest on copper:

......and gold:

Just to show you how loony things have become........I was speaking with my electrician about providing an electrical circuit to my back yard for some construction work going on. The electrical contractor emphasized that the bid was only good for one day, since the price of the wire was moving higher so rapidly, he could not rely on his own cost of materials. When your own electrician has to worry about commodity prices for a 100 foot piece of cable, you know things are bananas!

Below is the Dow 30. I could make all kinds of technical jargon, but I will offer only this: the market is really, really, really extended. It will not keep going up every day, people. Promise.

The NASDAQ 100 fell over 1% today, and as you can see from this chart, its attempt to bust out above its consolidation simply isn't going to happen. If it weakens further, it is at serious risk of cutting beneath a major supporting trendline.


costas1966 said...

Hey Tim how about this stock for a short play. Parabolic move, break down on volume weak bounce that failed. Any rally tomorrow is a good short. Hey maybe that is how the rest of those metals will look in a few days. Who knows. But check this one out ERS. Here is my chart analysis.

costas1966 said...

I thought this would be interesting for the readers in here.

W Buffett:
"I don't think there's a bubble in agricultural commodities like wheat, corn and soybeans. But in metals and oil there's been a terrific [price] move. It's like most trends: At the beginning, it's driven by fundamentals, then speculation takes over. As the old saying goes, what the wise man does in the beginning, fools do in the end. With any asset class that has a big move, first the fundamentals attract speculation, then the speculation becomes dominant.

Once a price history develops, and people hear that their neighbor made a lot of money on something, that impulse takes over, and we're seeing that in commodities and housing...Orgies tend to be wildest toward the end. It's like being Cinderella at the ball. You know that at midnight everything's going to turn back to pumpkins & mice. But you look around and say, 'one more dance,' and so does everyone else. The party does get to be more fun -- and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice."

Hurricane5 said...

I am not about self promotion, but I need to take a minute and pat myself on the back. On monday I gave your readers the following buys: GOOG, NTRI, NXG, TIE, HANS, GOL, ZOLT. I believe in accountabliity.Let us see how much your readers have made off my picks.
GOOG: +2%
NTRI: +8% (+62% since I reccomended April 10)
NXG: +3%
TIE: +15%
HANS: +35%
GOL: +0.2%
ZOLT: +7%
For those who took my advice, congratulations. I am happy I was able to fatten your wallet. I will not be giving stop prices so its up to you guys to decide when to take profits. I believe that NTRI has the biggest upside of all the picks. Consider NTRI the next HANS. Indeed, I believe it can trade at $200 in 2007. Let us take it one step at a time though. I have plenty more amazing stock picks.

niko said...

Ah yes, the traditional correlation between gold, copper, and fruity soft drinks.

Perhaps the market will fall, but what do you think the chances are of a rotation to a different sector? Perhaps techs? You recommended two chippers yesterday...

TR said...

Surprised someone would post about not self promoting. Think any clown who reads the paper or knows how to straddle positions would be up greatly on any idle uncertainty with the list provided above. Why do you allow that clown to post on your board . . . i really like seeing the comments, but could do without that nonsense. the idea behind a blog is to share ideas, not promote you know how to search the biggest winners for the past week. FYI - holding TIE for about a year now, thanks Hurricane (for nothin').

cristri25 said...

if we are watching data for a next fed hike ... good sales and and other positive economic indicators could prove to be a disaster for the markets.

8:30 ....

John Wheatcroft said...

I don't know how much higher copper and gold can go but I'm going to ride this train for awhile longer. This is so crazy here is what happens - yesterday morning I sold TGB (Copper and Gold Miner) at 4.19. Yesterday afternoon after the fed announcement and for some reason or other it dropped to 3.90. I scooped it back up and it closed at 4.01.

This is happening almost every day in these relatively inexpensive stocks (obligatory warning for the children in the audience - Remember an "inexpensive stock" is inexpensive for some reason and you might not be privy to that reason and it might hurt you some day.)

Anyway buy the dips and sell the rips - stop looking for shorts based on a "it's just too high" criteria. And 'cane - NTRI is looking about ready to take a rest. It will be a good point however to buy the dip.

Tim - HANS might stay up forever (but I doubt it).

Super Bull said...


Congratulation on your gains. I have been a bull for a long time until a week ago. I have turned bearish at least in the short term. I think it is prudent to at least take somethings off the table. For sure, I am not a perma bear but who knows, remember a bear market always starts with a correction.

Kapil Khanna said...

It has begun.