Friday, June 09, 2006

Is that all you bulls can muster?

Sheesh. So much for the hammers yesterday. You bulls had so much going for you. A severely oversold condition (600 points off the Dow in 3.5 days). A huge bounce-back rally yesterday and all the media clatter that accompanies it. The green patch in the chart below represents the entirety of the follow-through rally today.


Of course, the market fell in the end. I think people are kind of freaked out at recent market activity and didn't want to go into the weekend exposed. So there's still a chance of an upward push Monday. But it's clear to me that we bears own this bad boy.

12 comments:

Super Bull said...

Trader Tim,

I am surprised too that given yesterday's huge comeback, the bears took control right back today. Somehow, I have a feeling that next week will be very ugly for the bulls.

I have another question for Hurricane5: I heard that in order to justify GOOG's current valuation, Google would have to produce 65% revenue growth yearly from now through 2010. In my opinion, that is extremely difficult to do. So while I think that Google is the best computer company around, it is not a good investment at the current price. What's your take?

niko said...

This week has me reeling (in a fun way). I was also expecting a strong carry-through from yesterday. Though I am positive (in that my puts are making money), I'm not as strong as the market would indicate, which leads me to this: what do you folks think about CYMI? Broke below a long channel, but considering I've not been as dead-eye as I had hoped, thought I'd get some input...

Good hunting next week!

cristri25 said...

with the Mountain of ECONO news there is gonna be some serious wackage... the FED already has the DATA and that is why they went on the war path to let investors know what is coming. Today's import price data was just the start.

Get ready for major wackage.

Super Bull said...

Cristri25,

It is interesting in that you think the FED already has the inflation data (PPI and CPI) so they were mouthing off to warn investors. If that is the case, then look out below.

stockshaker said...

Guys, it was a fun ride last week, yesterday was a really good signal.

I hardly doubt that just because today the bulls didn't come back, that it warrants for any type of Bear party. Look at yesterdays volume compared to today's volume. Its like comparing the population of India, to that of Utah - there is no comparison, so just because today was red, doesn't mean that the bulls took cover.

We saw substantial volume follow through when teh markets were tanking May 11 to 24, and hardly any volume in comparison on the subsequent drop a week later. Yesterday's volume tells us something, the bulls are coming back.

The indices are all at pretty good support levels (I have a support on the Dow at around 10940, so right now, its a little below, regardless, a stronger dow support exists at 10720 ish) THe S+P500 is 6 points away from a really hard support level - 1246, and the Nasdaq is about 10 points from the lower support level in its multi year channel.

I don't see this bear market, that everyone is talking about - the lows are not lower yet - multiyear speaking

I also have started to see recovery in a lot of stocks that i was looking at for puts.

The only thing is that with all this economy data, its like bad news, always. Bad if its good, and bad if its bad. You know what I mean? That is gonna be pretty screwy with the markets next week.


Yesterday's hammer suggests that the bulls have got their construction boots on.

Bad one, I know.

Richard Foster said...

For what it's worth. It looks like a Bear party to me. Besides the technical indicators and Fibonaccis I ran my best bull stock list last night and found strong well formed Head and Shoulders patterns in more than 35% of them, and all of these strong stocks are showing topping patterns.

John Wheatcroft said...

Lighten up guys - if you think a Friday in June, July, or August is worth crowing about you all need to go back to analysis 101. Thursday represented the boys squaring their books before they took off for the weekend in the Hamptons. Friday was the usual "poor folks day" - so no money (i.e. liquidity) no movey.

I unloaded what I bought on Thursday on Friday morning just before the slide began. Took a couple of positions (including GM) in mid-afternoon.

Look at the weekly charts for a clue regarding the direction of the market. Looks to me like the run is ending and a turn is coming. How do I know? I don't "know" I just see that this week represented a huge blow off with large volume and at the end it began retracing. Part two - the largest volume print all week was Thursday's recovery. It was a third again higher than Wednesday. Friday was the weakest volume day.

Ignore the fed - since they are irrelevant to anything except to give the talking heads at CNBC something to talk about. Then, ignore CNBC as well. The only people around who make any sense are our host - Tim, Barry Ritholz over at Big Picture and Brett Steenbarger.

The only thing that matters is price. Observe the way price interacts with volume. Observe its volatility and the way it will ebb and flow over a period of time. If you can't "see" a stock as it slows down and begins to turn (in either direction) then I suggest you keep your money in your purse until you can. Practice, practice, practice - it is the only way you will get to Carnegie Hall AND the only way you will get rich betting on stocks.

As always thanks Tim for taking the time to run a lucid site and thanks also for prophet.net.

Hurricane5 said...

Superbull, I am more than happy to address your concerns over GOOG's valuation. To properly address Google, we must first look at Yahoo. Yahoo is trading at 58x 06' earnings, and 42x 07' earnings. I believe that Yahoo is not only losing market share to Google, but it is also in a more mature stage of it's growth cycle. Therefore, I believe that Google deserves to trade at a premium to Yahoo. This is where I come up with a 60x earnings multiple for Google. I believe that Google will earn $10 a share, and trade at 60x earnings. GOOG is the market leader in search and is experiencing a higher rate of growth than YHOO. I believe that over the next 5 years the gap between the two companies will widen significantly. Bottom line: Buy GOOG below $400, $500, and $600. In case I did not make myself clear...BUY GOOG!!! Have a great weekend everyone!

Supreme Solo said...

My take.........A quick bounce over the next few days this coming week. Then the bears will resume their push to the bottom of the channel as they did last year for the SP 500 and the NASDAQ. Look for the NASDAQ to reach 2075ish and the SP500 1225 before we see a sustained turn around if in fact we do see one. If you are aggressive, make a couple of long plays for the next day or so on some up trending stocks that have not felt the bears and some up trending stocks that did move lower due to the bears but look to move up to their 30 DMA. And as always.........YOU MAKE THE CALL.

John Wheatcroft said...

'cane - you seem to be a nice guy so I will tell you a secret - don't tell anyone else ok - what a stock "should do" and what it "does do" are most often two entirely different things.

Suggest you put a weekly chart of GOOG up somewhere and then put the Chaikin Oscillator on it. What you will see is that for a year now (beginning last June) the run up has been accompanied by a declining Chaikin. That suggests that the institutions are dumping. You will also see an interesting story being told by the MACD histogram. Right now GOOG is dead in the water - absolutely no movement at all. Interstingly enough your other favorite NTRI shows the converse of GOOG. Take a look - it's free.

My suggestion - don't plan on any more GOOG runs unless the institutions start buying again. But what do I know - just like everyone else - nada - I buys 'em at 3:45 and sells 'em at 9:45 and make a few quid holding risk overnight. It ain't classy but it's a livin'.

sab63090 said...

big rally (sucker's rally) forced many to go flat by selling out puts and covering shorts. next day was down AGAIN....trend down... large down volume was not needed to confirm that we are in a declining market, the price shows that there is NO DEMAND. I remain bearish and look for a new low which could provide a reversal.

Ken Russell said...

I, too, think the market is beginning to turn down, but the bears are getting too giddy too quickly. Taking a look at the NASDAQ, since Oct'02 the major lo's have occurred in 3/03, 8/04, 5/05, 10/05, and now 6/06. They form a wonderful series of higher lo's. Likewise for the hi's, and the S&P 500 has a similar pattern. I would be very surprised to see the current move down to continue until the 10/05 low is taken out as that seems too far to fall in one swing down (but anything is possible). Instead, I believe it is more likely we will see a herky jerky move up to at least about 2250 but that does not take out the 4/06 hi. That is, a lower hi will be established. Then the real fun should begin.

The QQQQ looks a little weaker. You could argue that on 4/7/06 it did establish a lower hi vs. the hi on 1/11/06 and now it is only 2% away from taking out the 10/05 lo. In comparison, $COMPX is over 5% away from taking out its 10/05 lo. That said, I believe it is likely that even the QQQQ will head north for a day or two before resuming its fall.