Thanks, Consumers!
Well, it's been a terrific two days. My portfolio is up 25% per day for two days in a row thanks to the swoon in stock prices (finally.....) A tip of the hat to consumers, who registered the largest drop in sentiment in the entire history of it being measured. Keep it comin', fellas!
As I mentioned yesterday, as enjoyable and quick as these drops are, I'm not going to be jumping around about the wonderful bear market we're in (yet). I imagine once the bulls dust themselves off, they're going to try to push stocks higher again. Maybe even beating the highs from earlier this week (God forbid).
There will always be ups and downs in the market. What we're all waiting for, of course, is a steady and consistent series of lower highs and lower lows that spell out ongoing diminishment in values.
Let's just take a look at a few indices today. Here's the Dow 30 in candlestick form for the past year or so. The past two days are pretty remarkable, and the next stop might be the trendline you see beneath. We are going to have to ultimately crack that line in order to make a more serious move down.
More encouraging are the series of breakout failures (prepare yourself to see that pair of words a lot...........) in the other major indices. Here's the NASDAQ 100:
......the S&P 100:
And the American Major Markets Index. I noted this one a few days ago since it had broken out from a pretty nice inverted head & shoulders. Well, bulls, the pattern's been invalidated. Prices have crossed back underneath the neckline in a big way, so there is no longer a breakout.
For you voyeurs out there, here are my current positions. Those listed twice are those in which I actually have two positions (meaning I'm especially confident). All of these are puts.
7 comments:
As much as I hate to say it, I agree with hurricane...2 days does not a Bear market make.(Am I talking like Yoda? hmmm). The major indices(Nasdaq and Dow)ARE pulling back, but that is natural, if not expected, in any bull run. I can understand how such a large move down in such a short time would panic any investor, but it is not time yet to fasten the seatbelts. Even the FED(who knows more about the economy than all of us combined) beleives in the economy, that is why he's raising interest rates! Hang in there and wait for the Bear signs...they will come, but the time is not now.
OK - that was nasty - but whatever. Let's take a look at the history. Last year the Dow hit 10682 on 12 Sep. From there it dropped 400 points to 10216 and everyone said - it's toast (especially the Elliot Wave guys - my favorites). From there it bounced to 10552 and everyone said - it's back (The EW guys mumbled something about 3 of the 4th of the a of the C). From there it went to 10216 (seen that before) and once more everyone said - it's toast. From there it went to 11043 and then back to 10667 (been there before) and then to 11639 (recently) with several other 100+ point corrections in between.
Why in the world given that volatility would I believe that we are at a top, near a top, topped or are in anything other than a small correction like the last 6 corections we have had in the past 8 months? And you can look this up - it isn't hidden nor does it depend on Fibonacci or trend lines or anything else.
Keep tight stops on your shorts and get ready to cover your naked puts - we are probably going to have an NR7 day on Monday and if we do watch out Tuesday (unless we skip the NR7 on Monday and boom out there).
Just an opinion and we all know what they are worth.
Oh - one more thing - those that the Gods would destroy they first make proud - "My portfolio is ... " is the first step towards ruin. "Keep it comin' ..." is the second.
What you are calling failed breakouts could just as easily be called "headfakes". After the last bollinger squeeze there wasn't much buildup in volatility. So we could see a rebound off the bottom bands next week. Or not. We'll see. I'm going to take a couple of days off and watch the flowers grow. Good trading.
So, I'm a new reader here... Is this a perma-bear blog, or do you folks just believe the market is turning?
Niko, I wouldn't call it a perma-bear blog, but my point of view on the market has been bearish for a while, and certainly is so now. So I'll put it this way - - if you think the Dow is more likely to be at 13,000 than 9,000 in a year, you probably wouldn't find it that interesting.
hey what charting software or site do you use?
Thanks for the info. I am long term bearish in that this is an incredibly mature bull, running up on a mountain of unsustainable (and increasingly expensive) debt and a probable drop in GDP. I'll keep reading!
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