Thursday, June 22, 2006

Sex & Guilt

It occurred to me this morning that these bear market rallies are a lot like sex when you're a teenager. For the bulls, it's exciting. It's fun. And it's over really, really fast.

So again we find ourselves sinking (not a ton, but some) after a one-day wonder. Good.

Now for the guilt. I'm feeling guilty these days because:

+ I don't have as much time for the blog as I'd like

+ People are asking questions which I don't have the time to answer (what I really need to do is get some kind of forum set up that tracks unanswered questions so at least I don't have to dig for them)

+ I haven't posted any good charts for a couple of days.

Oh, my poor tormented soul. Hang in there, folks. Don't foresake me. Great charts are coming soon. I can't promise you your teenage sexuality back, though. That's gone for good.

35 comments:

Anonymous said...

Tim, I would not change a thing, you are right on track imo.
Glenn

Richard Nikoley said...

Tim:

You're doing a great job and I appreciate every post you throw up.

Anonymous said...

many people here yesterday were talking about a continued run. Are they insane this market is headed back down, any rally has to be sold and any hard selloff has to be bought, thats the only way to make money in this market. More volatility will be here next week, i would not be suprised to the dow back at its 200 day moving average next week.

Bill

Anonymous said...

this is what i wrote yesterday

Anonymous said...
again, this rally is nonsense. Its days like this YOU SELL....you buy when everything is down and sell when everything is UP....I take this rally as a grain of SALT. WE ARE NOT GOING BACK TO 11700+ no way possible. Yes we may break out to the upside but it is extremely limited, I think this rally holds into the close and goes into tomorrow morning however I do see a wave of selling mid morning and traders taking profits. We will be stuck in a tight trading range for the next 3-4 months after that its anyones guess. I dont think a month worth of selling says it all. I dont think were done going down. I think the DOW goes back down, im calling 10500, easily by mid summer....Unless earnings are great this quarter this market will be totally stuck in a trading range...DO NOT FALL FOR THESE RALLIES.

12:35 PM


bill

Tim Knight said...

I've never thought of myself "throwing up" posts, but sometimes it may seem like it! Anyhoo, hang in there, ya'll. My brain is caching all kinds of good stuff to talk about. Just gotta get da time!

Sanjay Sola said...

Good analogy between teen sex and bear rallies. we get a blowoff top either way. then it's downhill with some sharp rallies. lot of dispair over performance at the end. during the rallies, you know you should pull out but everyone is screaming around you.

still waiting for some leaders to fall apart: Garmin, Google, and Celgene. it looks like we're in a narrow trading range today. let's see

Anonymous said...

and what do you know, another sell off, this is getting so predictable its not even funny. But the dips sell the rally. Federal reserve meets next week and rumors of 50BP are possible, if this does happen expect a big selloff

bsi87 said...

Ascending trendline support for DJIA broke at 11,044. VXN picking up. Guessing a retest of last week's lows are in store. Probably will fail which will give bears a chance to cover and go long or just sit esp since we have EOM favorable period coming up. JMO.

stockshaker said...

Oh c'mon - we are all bears here, that its ridiculous. The markets go up one day, everyone says its going down ... it goes up the next day ... everyone starts to freak out a little bit ...

THEN the third day, it goes down, and everyone was like, "I told you so..."

Im actually kinda missing Hurricane5, too many bears and if this is a calm before a storm downwards, good. If not, and all this is a consolidation for another bull rally, then Im telling you right now:

if we have to go back into hibernation, MY CAVE IS TOO SMALL for all you guys to fit in.

bsi87 said...

Cosmo Cramer is praying for a rally to silence the bears. Still watching that 11,044 neckline.

dsantos said...

I haven't heard the 50 BP rumors at all. That would be a huge kick in the pants though. Most likely, (IMO) the market is going to rally up at first when Benny-Boy speaks and then tank like a cement truck in the ocean when his actual statements come out. He's no Greenspan, if he thinks something stinks, he tells you.

Anonymous said...

Tim:

I know you feel bad about not posting charts recently, but I'd exchange all your beautiful charts for just one year of my teenage sex life back :-).

Anonymous said...

I think these markets head back down, there is no catalyst for a move higher except a pause in interest rates which i do not see happening. I think they continue to raise rates until the end of 2006. Talks of recession are popping up on cnbc. If the markets do dip this time I think the dow heads a lot lower than the 10653 intraday low on 6/13/06...

bsi87 said...

Keep an eye on the % of stocks trading below their 50 day moving average. When it gets below 20, that's rocket fuel for short covering/dip buyers like we saw last Wednesday/Thursday. Also the VXN/VIX get near top of their range and start to reverse, fear will have maxed out. We could be in a situation where the mkt drops 10% over 4-6 weeks, then rallies 4-5% in a couple days. Gets your head spinning.

Anonymous said...

Where do you find out that information (about the % of stocks below their 50-day SMA)??

Thanks.

I agree, buy on the BIG down days (not these 60-70 point consolidations). Buy small on the first down day, buy bigger on subsequent down days. Then sell the short covering rallies. It's a no-brainer.

What ISN'T a no-brainer is deciding which stocks to pick. I need good scanning software. Anyone know of any??

downosedive said...

I wish I could put my money where my beliefs are and sell the Dow, but why do I feel a lack of confidence to do that? Guess thats at least one reason why Im visiting here regularly. I so desparately need to recover my losses ...........sorry I guess that sounds too self pity. Im still not convinced that the market isnt being played to speculative whims more than any solid volume.

Anonymous said...

bsi87 where can i get that % of stocks trading below their 50 day moving avg?

I do think we could see a 10% drop in the long term followed by big rallies.

are you short the market now or long. Im looking to open up some long positions but waiting until what the federal reserve decides what to do.

Anonymous said...

dow pushing back higher now. lets see it continues into the close. I think its a headfake and the dow closes around 11k.


Paul

bsi87 said...

anon

re: % stocks trading below 50 DSMA. http://stockcharts.com/h-sc/ui?c=$spxa50r

re:scanning software. MSN, Reuters, and Bizweek all have 'em. Nothing magical in them. You have to know what your parameters are, etc. Unless you're trading daily and watching, I believe shorting indices or ETF's are easier.

I'm about 60% short, some longs in gold stocks, some longs in special situations. Trading in smaller positions on the long side and taking profits when I see 4-5% profit.

Anonymous said...

bsi87 agree with shorting the etfs. someone disagreed yesterday about shorting etfs, i think shorting etfs are the best way to go. GDX short might be a good hedge against your long positions in gold stocks

anunakki said...

Downnosedive

Needing to 'desperately recover your losses' is not a good mindframe to be in when trading. When your emotions run your head you will keep losing money.

This is not a difficult market to make $$ in IF you have a decent amount of capital ( I would say at least $50k) to work with and can exploit gains under 5%. If you have less than that you might want to consider sitting on the sidelines until the market finds its direction.

Just my $.02

downosedive said...

anunakki thanks for the comments, especially your last sentence which is the most sensible dvice to give at present. What a weak day this has been DJA wise. Yes a reasonable drop, but insignificant against the recent rally total and did any of you see how weak the fall was? There was little momentum, it was more of a token jesture and one that is bad for bears as it allows some of that upward steam to gentley let off which may lessen a later bear fall if this wretched pattern of more up than down continues.........does that make sense to anyone?

Anonymous said...

This market has me perplexed right now. Support/resistance aren't quite measuring up to expectations.

I was pleased yesterday when the SP500 was rejected by the 1260 barrier. But the lack of selling pressure today as a result of that rejection has me a bit puzzled.

The Dow is floating in no-man's land right now. It cut through the 11,103 level like butter, and even went past the 50EMA at 11,115, but it clung to it for a while before dropping slightly to 11,080 yesterday. Today, instead of dropping back to 11,000, it floated around mid-stream and went nowhere.

When someone finds some real prospects, wake me up, because I don't see any direction here.

bsi87 said...

anon:

I typically use Rydex or Profunds to short since I can get leverage. Bad part is no stop orders if I'm wrong but entry/exit strategy more important with these funds. The new ETF's that let you short look very interesting. Might mean the bottom is near.

nosedive/anon: Go back however many timeframes needed to discern the trend using MA's or trendlines. Then come back one timeframe to look for the trade. For instance, the DJIA broke below the 26 WEMA. That's a sign to me to trade from the short side. Looking at the daily, I watched for the DJIA to rally up to its 50 DEMA to add to my short position. It's a lower risk entry vs trying to trade a breakdown IMO. If it breaks above yesterday's high, I'd be closing the position.

If you consider the mkts are now flat for the first 6 months, any trade you can put on for a few days and net 4-5% and then be flat would appear to be worthwhile.

JMO

downosedive said...

anonymous - quite, no real solid continuance with momentum in eirther direction. It was both painful and rather pathetic to watch the live tussle on my spreadbetting site. I wouldnt say today paved the way for a further downward movement tomorrow or indeed next week. All know the next 1/4 point rise is certain and only a varience from that will generate a sustain downwards move. Plenty of other negatives but they are all at the same strength each day, no urgent panic deteriation in any of them to cause a rush for the exit

Anonymous said...

That's what I'm afraid of. If the Fed sticks to the 1/4 point increase (could we see 1/2 point??), then the market should rally hard. But if the Fed surprises everyone with the 1/2 point increase, that will be the final straw.

Without any urgency to head for the exits, I just don't see this market selling off. But by the same token, I can't really look around the market and find anything that I would go long in. Everything is either fairly priced already or has a bleak outlook.

Here's my other concern: guidance for Q3 may indeed be raised by many of the big hitters. But my fear is that they will maintain that guidance only to help the Big Boys cash out on the rallies. Then, when Q3 rolls around, we'll see some earnings surprises to the downside and the little retail guy will be left holding the bag.

Of course, cashing out before earnings would be smart in that case, but I'm not seeing too much strength here to go long yet. It would be more of a crap shoot than anything.

Just babbling now. Maybe someone can offer some long suggestions for me. But as I said, I'm just puzzled by the market action right now. Resistance and support levels don't seem to be very effective.

brian said...

GOOG is the only long that seems be doing well. I'm holding this for upward insurance.

downosedive said...

anon - I think youve summed things up well for now. Any attempt to try otherwise would be pure guesswork. Looks like we must all wait to see where we are dragged next - feels very much like a piece of driftwood in the sea, so to speak...........

Brian said...

I hear you anonymous. (about resistance/support). Has anyone how many trendlines the S&P seems to be bouncing around on? It's a mess.

John Wheatcroft said...

I made money today - I hope you did too. I made it in my spec play MRVL, a swing trade TEVA, and my usual gold and oil plays. And I knocked off at noon and went and played 18 holes in some awful heat with my buds.

This morning I touted an excellent site and I hope some of you went there. It is http://traderx.blogspot.com/ and the folks there make money every day playing the market as they find it - long or short as the set-up demands. They even teach how to recognize the set-ups. Many of you could learn a lot by going there. I've been in the game for more years than I care to remember (maybe more than I can remember) and I am still learning. I don't get anything from this tout except the well being of knowing I sent some friends to a place they might learn how to make money.

TEVA was a set-up I learned from trader-x and yesterday trader-x played TEVA short!

And don't forget to visit Tim's commercial site, prophet.net. Most of the folks at trader-x's site use prophet.net to find their trading targets. I know I do and I like that site.

Anonymous said...

We already know the federal reserve is going to raise. I am going with a 100% chance of a 25bp raise and a 10% chance of a 50bp. The markets know the federal reserve is going to raise but what they also want to hear is that the federal reserve is going to pause. If they pause im sure we could be in for a 2-4% rise in the markets however if we head back to new 6 year highs on the dow and nasdaq I would be shorting and writing puts on every index out there. There is no catalyst to keep this market going higher. I think we could be stuck in a trading range throughout the summer. I see more downside than upside to this market at the moment. I dont see sentiment changing until the end of 2006.

Paul

Anonymous said...

Paul, I completely DISagree with your sentiment. There IS a catalyst to keep the market going higher: earnings season. It's almost a given that the earnings are going to be outstanding. My only issue with earnings is forward guidance. But even if guidance is raised, there's nothing that says it will be accurate and a disappointment is likely.

And about the Fed: I'm also at 90% chance of a 1/4 point and 10% for a 1/2 point, but the real issue is that the Fed will NOT provide any forward hints on what will happen at the next meeting. They have already made it perfectly clear that they will analyze the data as it comes in. This is a data-driven market right now and the Fed will NOT show their hand before the next meeting in August. That is to say that they will not pre-announce a pause. And I don't really think that the market is EXPECTING them to announce a pause. But for some reason, if they do pre-announce a pause for August, then the market will go absolutely nuts, possibly posting a 200+ point gain next Thursday.

I see much more upside than downside in the short term, because sellers have taken to the sidelines in the absence of any BAD news. And unless we get the 1/2 point increase next week, there will be no more bad news to force the sellers to dump any more shares.

I'm going to have to start signing my name here, as I haven't created a login name.

-Tony

Anonymous said...

Oh, and if anyone here thinks that "this time it's different," take a look at this article. The talking heads are still saying the EXACT same things about the market's actions as they were more than a year ago when the Fed Funds rate was around HALF of what it is today:

http://moneycentral.msn.com/content/CNBCTV/Articles/Dispatches/P112812.asp

Bottom line: use technical analysis. Forget the rhetoric on CNBC, Cramer, Bloomberg, or wherever. It's all the same old crap, just repeated by different people.

-Tony

Anonymous said...

tony i did forget to mention that a possible catalyst is earnings, but we are going to need just incredible earnings to get this market back above 6 year highs.
However after earnings season is over what is next to carry the markets higher. I cant seem to find any other catalyst unless by chance OIL drops below $50 and the housing boom continues but this is not going to happen.

I predict the federal reserve goes to 6% thats why this whole talk about a pause makes me laugh. I hear it all day on cnbc, pause here, pause there. They have been saying this for nearly a year now. Investors do not like to be left without knowing as to what the federal reserve is going to do. This is what may cause downward pressure on stocks.

I think the markets had their run for now, I will continue to say that the markets will trade sideways for sometime until they find the next thing to give them a lift. I think there is more negative things going on then posivitive at the moment.

Yes there are plenty of people on the sidelines with plenty of cash to put to work but I think this money will be coming in slowly as the market finds a direction.

Another thing, if the federal reserve does 25bp and waits for data to come in like they have and finds out inflation is still on the rise with CPI and PPI higher on the core you will continue to see this market selloff until the federal reserve gets rates to at least 6%


Paul

chanon said...

love to get my hand on ProphetCharts when it's release.

using streaming chart, wish the wait time be shorter when viewing 50days chart.
Anyone else using Linear regression channel, very profitable trades using it in april and may.

Today decide to buy put on RIMM, peaking intraday high and peak on a downward 50days tread,
RIMM

Also brought put on SEPR, but bit worry, 50d up trend

nearterm, think i'd be a bear if dow drop below 10955