Thursday, June 29, 2006

Short this Sucker

If you are feeling brave, this might be a great time to pick up some DIA puts. This huge rally has pushed the Dow up against a trendline, and let's face it, it's hard to resist selling into a 200+ point rally.

34 comments:

Anonymous said...

Buy PUT what strike/expiry?

Anonymous said...

As I watch the market day come to a close, the only word I can begin to form is "HUH?".

Why would a .25% rate hike and a lot of uncertainty about the future of rate hikes spark this rally? What did I miss?

Anonymous said...

anonymous exactly right, when the market is down next week it will be blamed on inflation and worries about how high the federal reserve is going to go. SHORT, this market, its going back down. Mutual Funds have to look good for the end of the quarter so they are buying everything up to make their funds look so much better. Market heads back down, OVERBOUGHT.

Hurricane5 said...

This is exactly what I was expecting. A .25% increase and a huge rally. I have said many times that 5.5% is the max. It is. If the Fed raises another .25%, then they will declare the end of rate increases in the language. The market now understands this. This will send the DOW past 12,000 this year. Earnings will be very fruitful starting next week. So I hope all you bears enjoyed your little smallish 4 week do dah. The bulls will own 48 of 52 weeks. I like that. BUY BUY BUY

Dave said...

Hurricane,

ever heard of a secular bear market? :)

chanon said...

if we have good earning quarter, Dow probably push pass 11200, strengh like in Nov of 05, if not uncertainty will creps in next again month

DOW
DOW

sean04 said...

Hi, you'll. Great blog and great comments. Very helpful and thank for all great advices.
Question 1: is trend broken?? Are we bullish now or is it bear flag??I'm so confused,, day like today,,kinda lost..
Rookie, sean

cristri25 said...

my puts hurt but lets see what happens. ..

cristri25 said...

OIL up today, gold up .... lets see.... inflation is contained , yeah right. housing crashing.

go ahead and buy. not me,

Anonymous said...

End of quarter markups were in full effect today. A lot of bonuses got "earned" today.

CowboyTrader said...

Philosophical note: Labels can be a bad thing. They tend to narrow your options or lead to a closed mind. Bear/Bull doesn't really matter, only as it relates to your position (Long or Short) relative to your time horizon. Be both and make some money! By the way I wasn't a bull today, DOH!

jockgunter said...

Tim -

Earlier you said "if the Dow gets to 11131, the bear case will be damaged". Now you say, "short this sucker".

Aren't these contradictory? Why would you short when the bear case has just taken a hit to the solar plexus?

Help me understand ... Jock (also a damaged bear)

CowboyTrader said...

On a less philosophical note, this is an interesting site and he pegged the S&P 500 rise to 1272.87 (off by a fraction 1272.28)

http://sandspring.com/charts2006/cdj061806.html

downosedive said...

Im lying on my back with my four paws in the air........a dead bear

Tim Knight said...

jockgunter, I'll be doing a pretty big post today to address your question; remember, I said there was be SHORT term damage (and there has been!).

Anonymous said...

Hurricane 5.5% Max. No way, rates are going to 6%+, oil and energy are just starting to trickle in. Inflation is on the rise, Oil and gold look like they are headed back up while the dollar is dropping. This market is going back down after "inflation fears" grip the market. AAPL already down about 3%. This whole thing about options is knocking down stocks one at a time.

PB said...

OVER-REACTION, that's what today was, but the markets are good at doing that. If friday we have follow through then that would definitely hurt the bear case. But in this great orgy to buy, many have missed the hawkish tone of the fed. Also, these puny 25 bps in the end will do more damage to the markets and the economy than raises of 50+ bps. Anyways, I believe this is a great suckers rally and that stocks are still bunk. Today brings us that much closer to a crash. September DIA puts have a very good chance of paying off. Complacency? Fo' sheeze!

Kapil Khanna said...

Technically there is no sign that this rally is over. Its in the process of forming a top, once we have a top, lets see what level it is at and then analyze.

Mark said...

lol I was going to mention in my eval of DIA yesterday that anything over what I put as my high was going to be very bad for the bears for the short term on DIA. I had too many lines coming together at the point where DIA opened that I didn't think it would drop back down to it once I saw it open there. I was silently hoping that I was wrong.

I see the rally continuing through tomorrow with the DOW hitting a high around 11299.14 (2-month Fib high), then drop. For next week I expect there will be a huge drop as the bulls run out of steam and the Fib was bounced off of. Will there be a test of the low? That will be answered in July.

It all depends on who grabs a hold of the market in the morning, I expect the bulls to have it, so that gives the bears time to line up ready to maul in the afternoon, maybe even starting about 11-noon.

Is Friday going to be boring this time?

Kapil Khanna said...

jockgunter,
Tim is not a trader, he is a persistent bear. He will short every market most of the time. So his back to back posts although contradictory, are not unusual. Most of us are used to it..lol.

Sanjay Sola said...

I went long after getting crushed with my short positions. Rally attempt is confirmed. we got 1.7% and volume in an index. today is day 11 of the rally. kind of late. so it has a higher chance of failure.

Nasdaq closed above 2150 and Dow 11,100. lots of stocks are near 52 week highs too. I went long on stocks that held up in the downpour. Google, AKAM, FMD, Garmin. HOC, PWEI are trending up.

Risk/reward seems favorable. we got our 10% correction. if the nasdaq breaks 2150 again, i'll just sit out.

cristri25 said...

after this window dress time lets see what happens. you figure people who bought the 6-Year highs are really pissed off right now. As well as some of us bears ...

stockshaker said...

fellas, THIS IS WHAT HAPPENS when everyone in here is a Bear.

Everyone tries to comfort one another.

I look at the SPX, and i see a huge resistance line taken out. I look at the Dow, and I see a huge resistance line taken out. I look at the NAZ, and I see a huge resistance line taken out. By the way, 3 FREAKEN PER CENT on this INDEX???

I think we are at a point where we don't need to speculate anymore. Let the numbers speak for themselves.

I am a Bear at heart, but even I know that right now is not our time.

The volume today confirms that huge things are going to happen.

I would not be surprised if this rally carried on into next week, HELL, i woudln't be surprised if this carried onto next month.

The BUlls are eager to get their money back, and they see "bargains".

Inflation, economy slowdown, housing, these will eventually lead to the downfall, but right now, its the FED, and a short term optimism

WHO CARES about option messups at Apple. BIG DEAL. thats not going to affect the market! Apple, by the way, looks geared for a further downfall anyways. IT did 5% today, on below average volume!?

What does that say?

The indices, however, tell a different tale.

Bear long term, bull short term.

Don't stay stubborn to a losing trade, make money when money is meant to be made.

stockshaker said...

also note that today was the first time the dow closed above its 30 EMA, the last time it was above this line was May 17. And if you are a Bear, you all remember May 17 VERY VERY WELL.

(ooohhhh, spooky)

Anonymous said...

Hello Tim,

How about analysis for CMI.

Short at 109 and dead bear.


Thank you

Tim Knight said...

Kapil Khanna - - get lost. I work too hard on this blog (for free) to have you post insults.

- Tim

Anonymous said...

I like bearish trades, but with day like today, right after the data came out, I went for a ride with Bulls and took some profit.

I am working on not letting my bias blinds me of current opportunities.

-Hoi

PB said...

Hey Kapil:

I remember you posting something to the effect that if the DOW takes out 10,900 on the downside then you will believe in the bear. Well, the DOW went all the way to 10,700 and your little bullish ass was nowhere to be seen. Now, on a fukked up rally you come boasting like you knew this all along. I would love to go to your blog to see how good you are

Kapil Khanna said...

pb,
if you see my comments on this blog, i posted that the long term trend is bull, intermediate bear and short term bull. I also said that i am waiting to see if the current rally fizzles out gathers steam. At this time i am waiting for the short term trend and intermediate trend to reconcile to re-eneter the marker. Btw my last trades were all short, now i am in cash.

Kapil Khanna said...

Tim,
That post was by no means an insult. I am sorry if it came across as that. You have admitted that you are a bear at heart on this blog several times. A true trader has no preference for any one type of market bull or bear.

Tim Knight said...

Kapil - it very much came across as an insult, and I think everyone read it as such (including the "lol"). I am not a permabear, as I clearly cite circumstances that spell bull market; I give appropriate levels for when the bearish argument is damaged (or destroyed). In any case, today's market is godawful boring, so maybe I won't do a new post until after the 4th.

Kapil Khanna said...

Tim,
No market analyst is without contradictions. If i thought your posts were not useful, why would i keep coming back? In the end it boils down to one's own personal outlook on the market. :).

niko said...

I think it's far better to have contradictory points of view rather than a support group for bears, but there is no place for mockery and teenage boasting. If you've never been wrong on the market, then you're a liar.

More POV's, less childish behavior. Thank the Lord for Tim. His work is charity I can use.

Anonymous said...

I just read online of a inverse H & S pattern on the dow, is this correct????