Thursday, July 20, 2006

Pictograph of One Day Wonders

First, my beloved readers, I must apologize for the turd-throwers at Yahoo screwing up my blog. A few days ago, they announced a free quote/chart module which I decided to put on the blog. I added it yesterday, and it didn't change anything. So I guess their side wasn't working. Today it starting "working" and completely hosed the format of my entire blog. So, umm, I've nuked it, and I shan't be using that again! Idiots.

I'm delighted to see that yesterday's madness was yet another one hit wonder. Allow me to express my view of these sucker rallies in picture form:






34 comments:

Anonymous said...

Latest AAII survey shows 24% Bulls, and 58% bears. Last time we got a -34% difference was Feb 2003, and before that October 1992.

Such overwhelming pessimism is rare, and invariably signals important bottoms.

Anonymous said...

LOL, great post Tim

Tim Knight said...

It doesn't invariably signal important bottoms at all. There have been many examples in history that bearishness actually preceded down markets. Contrarian indicators are not always reliable, because the assumption is that the public is ALWAYS wrong. There *is* no 'always.' Oh, and I hope GOOG gets nuked tonight. That would be sweet.

Anonymous said...

goog to 350 if it misses

Hbarr said...

Is that bear smoking a cigarette? That's almost as bad for one's health as being long this market.

dsantos said...

That pictorial was AWESOME! I am laughing my --- off!

Anonymous said...

if GOOG by chance falls to 330-340 might try and buy a few shares AH only for a swingtrade. Could easily swing 10-15 points off of the 330-340 if it does go there later on. I remember a while back it dipped like crazy AH only to come back up.

Hurricane5 said...

GOOG is set to report after the close in 30 minutes. I am reiterating my $600 price target ahead of the earnings.

Mark said...

lol

Today was a great day to load up on DIA!!!

(puts)

Howard Lindzon said...

pretty funny.

Anonymous said...

hurricane5 --- is that $600 target on GOOG after a reverse split??

Anonymous said...

another reason to short the bejesus out of yahoo yesterday....

Anonymous said...

NICE follow through you degenerate BULLS!!!

Anonymous said...

Hey Bears! need your help --- has anyone come across research that explores gaps on charts, and more specifically that "all gaps must be filled"? -- appreciate any help on this, and on that note have a look at AAPL!

-Frank

PB said...

Well said Tim! one day wonders!! + oil was down today, and the bulls still couldn;t find a reason to buy, what pathetic losers!! hahahaha

Hbarr said...

Hurricane5,

Did you buy any SIRI for a bounce? That had one helluva run in yesterday's rally (up a whole nickel) and the follow through today was just awesome. Loved how it closed under $4.

Looking forward to GOOG $600. Along with the second coming...

Anonymous said...

Tim,

Thanks for the heads up on the OIH prospective H&S formation. I shorted DO this morning and it was down huge. I have a question for you, when you see an etf with a certain pattern do you like to trade the etf or the constituent elements of the etf. In the case of OIH would you buy puts on OIH itself or buy puts on BHI, HAL, RIG, SLB, GSF, BJS, DO, or NBR.

Thanks,
Pete

Hurricane5 said...

I've not had a chance to look deep into the earning report of GOOG, but it looks like an EPS beat of 27 cents and revenues coming in at 1.67 vs. 1.64 estimated. The stock is at $390 and at first glance this is a great earnings report. Not sure why the stock is down.

hbarr, I bought SIRI last friday at $4.02 and sold it monday for $4.15. I was just looking for a quick pop. At under $4 it can be bought again.

Anonymous said...

Wow, did I call this one wrong. I thought for sure the Dow would be at least 50 points in the green today. The Naz gave back EVERYTHING today. The Dow fared better, but still gave back a good portion of yesterday's gains in steady, seller-dominated action. There was no hope of recovery today for the blue chips.

A REALLY pathetic follow-through from yesterday. The sellers must have really coordinated their efforts yesterday and sat on the sidelines in unison. Today they came out and took advantage of those buyers yesterday.

Congrats to the sellers today for holding out yesterday. I must admit that I misjudged today's action. But if the sellers can coordinate their efforts tomorrow and hold back, they might trap some bulls yet again. One day up, next day down, one day up, next day down... by coordinating like that, the sellers can really scale out of their positions without losing much on the way down.

You could see this type of action on a smaller scale with UNH when it was topping around $64. The big money was selling in an orderly fashion.

It's like the party's over and the last one left gets stuck with the check.

-Tony

Brian said...

speaking of UNH, it was right at a downtrendline the other day. looked like a good short. oughta teach me not to trade before earnings.

Jim Chan said...

Thanks Tim another slam dunk!!!

Tim Knight said...

Hi Pete,

I was pleased with the action of the OIH and all the oil service stocks today. I'm long puts on OIH *and* a lot of the component issues. I think they've got a long way down to go, yet.

- Tim

bsi87 said...

Wow, talk about premature.

Dow up 200+ pts yesterday and people want more today? Gives up 80 pts and now the rally is over? Don't think so. DJIA has to break and close below 10,700. Naz support around 2000 (2012 to be exact).

If one closed short positions on Tuesday afternoon and went long, you're still in the green.

If I see those support levels violated, I'll close the longs and go short.

Anonymous said...

Agreed. After the huge gains yesterday, a pull-back today was inevitable.

GOOG and MSFT both up big after hours after posting stellar numbers.

Sweet!

Sanjay Sola said...

market action is very wild these days. even the afterhours earnings are strange and irrational. even after you see earnings, you have no idea how a stock will react.

Apple beats earnings, guides lower, and it's up 12%? Microsoft misses but announces a buyback and the stock goes up 5%? i can't make much sense of this market action.

bear markets are pretty irrational i guess.

Anonymous said...

Regarding the "wild" market action:

GOOG was down to $360 after earnings was released today.

It then moved steadily back to $400 within about 15 minutes.

Now it's back to $392.

Definitely NOT a sign of a healthy market.


bsi87: I don't think anyone's being "premature" here. At least I'm not. I called for a follow-through day today, but clearly I misjudged the whacky market. Yes, a pullback was in order after yesterday's record gains, but today's action saw a steady stream of big sellers heading for the exits. There's no way to spin that into a "pullback day."

Does that mean that it's all down from here? No way! It's just too tough to call at this point. Could be up big tomorrow, could be down big tomorrow. I agree about the support levels. I'm not going long nor short here. Just watching the action. If the upper resistance lines in the major indices push back the buyers, then I will most definitely take out some shorts, at the very least go long on DXD, QID, MYY and SDS. And if the support levels are broken, time to pile on the shorts.

Too bad they don't have a small-capper double short ETF. That would be SWEET!

-Tony

Anonymous said...

GOOG under pressure today....

The earnings were good BUT I heard smaller margins on the conference call, plus more spending, and then there is a weakening economy.....

Nice pump job on the CC.

Notice the close today under the 50/200 day MA ..... tomorrow should be interesting.

I think I would wait to go long on this stock....technically I think it smells badly....

Super Bull said...

Wow, that is truly a one day wonder. I got snookered. Give kudos to Trader Tim who nailed it.

Mark said...

If the DOW goes up some more, then I'll be getting more puts. Otherwise, I'm pretty happy with what I have now, all the Aug DIA puts from 104-111.

I think the top of the DOW action on Friday through mid-week will be ~11070, much more and it could be a short-term problem for the bears.

I have an interesting line to me from the high of 7/6 tracking down through the open of 7/7 & 7/12 and the intraday action used it initially as support, but in the end of the day it ended with that line being resistance and faded down from there.

Another line I have is a Fib line @ 10927 (I didn't note the high/low it came from) that it almost closed at today. The next one up is the 11070. And speaking of Fib lines, the 61.8% for this recent high/low is the high for today and yesterday @ 11037. If it heads down tomorrow, it will likely bounce up from 10900, if a bounce will happen.

If there isn't another small rally to get it up to 11070, then this is definately a bearish h&s.

bsi87 said...

Tony:

1) A follow thru day is usually day 4-10 after the initial rally. IBD called Tuesday the initial rally, I'm more inclined to consider Wednesday the initial day. Volumes were lighter than Wednesday. If we had seen volumes heavier than Wednesday AND 1% or more drop (Naz was almost 2% but lighter in volume), I'd say the "rally" was over. I don't know what one can call a pullback day and I didn't expect much today after all the buying yesterday.

It's a range for the time being, I'd call it a push for now. I find it hard to believe that the mkts can breakout here but I respect some of the indicators I use. McClellan Oscillator is cranked up and looks like it did in Oct.

re:GOOG after hours. With expiration here, there are just too many things going on to try to game what GOOG's ER. See how the dust settles.

It's one thing to be wrong, it's another to STAY wrong.

Be nimble.

Anonymous said...

bsi: Thanks for the reminder on the rally confirmation days. I agree 100% that I just don't see how we can break out from here. It just doesn't seem logical.

One indicator I love is the NYSE Summation Index. Check it out here:

http://stockcharts.com/charts/indices/McSumNYSE.html

Notice that the market generally fails to rally when the index is below 0. It's still below 0 and got pushed back a bit today. This "rally" may take us near 0 in the short term, but I don't ultimately see us breaking above 0 this year.

Seems like a simplistic indicator, but for a good all-around feel for the broad market, that one is tought to beat.

I may start taking out some shorts on the oil stocks that Tim mentioned on Monday if the market attempts to rally tomorrow and nothing horrific happens to spike the price of oil over the weekend.

Good luck everyone.

-Tony

PB said...

bsi87 -- abandoning your bearish pals? Today's action was anything BUT bullish! Y'day's 200 point gain was all testoserone driven. Today was pure profit taking on the back of the 200+ point gain Weds. See how quickly players are booking their profits? Why? It's not 'cause they believe things will go much higher from here. 11,050 is now resistance. Good luck to you if you are still long going into the weekend, you're going to need it!

bsi87 said...

Tony,

I looked at the Index. I agree but it hasn't been turned back from 0. That's that the problem with TA (and I'm guilty too). Too many trade in anticipation of what indicator will do.

Also note in the NYSE composite that this last low was HIGHER than June 12/13.

I've short OIH thru Profunds when the right shoulder formed. That neckline at 132 looks too obvious but a break in oil prices/drilling would not be expected. 30 pts if it breaks. AND wonder how people would feel if they saw prices going down at the pump?


PB
I'm a trader, not a bull or a bear. I didn't lift any skirts on Wednesday so I don't know why they bought. Profit taking yesterday is natural. I see a lotta quick trades. I'd like to hold more than a day. Grin. With options expiration, I'm not sure what I'll do.

The thought I do have is that we may be entering a period similar to the 70's where we experienced stagflation and the mkts entered a broad trading range. Maybe 9000/10000 on the low side and 12000 on the high and the markets trade back and forth and wear out the bulls/bears.

Thanks for the luck. But I'll trade what I see.

Anonymous said...

Tim I enjoyed your photo representation of Wednesday and Thursday market action. It seems the best play of late is to short every time the dow has a big up day and your bound to make money.