Tuesday, July 25, 2006

Post # Two Hundred Fifty!

This is my 250th post to this blog (tweet! honk honk! tooooot!) I wish the market gave me more of a reason to celebrate this momentous occasion. But bulls love to buy, irrespective of reality, so there we have it.

NTRI obviously got completely hammered today, losing nearly a fifth of its value. I noticed that NTRI bulls were citing that it was "only" because the CEO had left. As I mentioned in the comments.....can you imagine if the stock were up 20% because of some great news, and NTRI bears cited that news as meaningless? They'd get zinged. So, likewise - - NTRI Bulls, you were dead wrong, and the stock is in sorry shape now.

The comments section is completely abuzz, which I think is terrific. Lots of little battles being waged there, which I think is very much like the market these days. It's just a mud pit of fighting. Someone comment that the market was bullish because "...the GDP rises with time and the markets rise with it." OK, so does that mean the market always goes up? With that logic, apparently so.

Today the market was neither up nor down but simply annoying until about the final hour of the day, when it inexplicably shot up. It closed up just a little over 50 on the Dow. This is a very dangerous juncture for us, fellow bears. The $INDU is mushed right up against an important resistance line, and it's actually risen a skosh more than I would like to see. I'm worried. It sure as hell better head south tomorrow. Crossing above 11,257 would indicate something is very, very, very wrong.


The S&P 500 ($SPX) is likewise mashed right up against an important trendline. 1,280.38 is the upper limit of what I'd tolerate right now.


Now on with some specific short picks. Here's Cigna (CI):


CP:


ESRX is one I haven't talked about in a while. This is sweet looking:


GS is another beauty:


I like Dick Cheney's old company HAL:


Health Net (HNT) is another shortie:


Well congratulations to us all for putting up with 250 of my posts. Here's to the next 250! (God help us....)

49 comments:

rob t said...

Thanks Tim for your commitment and your great insight. I have been learning a lot along the way, though I have been only here for about the past 2-3 months.

I look forward to your next 250, along with a party to celebrate them. I am also anxiously awaiting the arrival of your next child (your book). Thanks again.

Rob

Anonymous said...

To all bears out there:

Look, the market isn't "wildly overvalued" here. It's at the mid- to upper-end of the valuation range, in my opinion. The future does not look very bright, BUT earnings are still pouring in with double-digit growth figures for a large number of companies. And several have already either reiterated 2006 guidance or guided UP for the year.

The MAIN reason that the markets have taken such a beating is the Bank of Japan's liquidity drain. 30 trillion yen is a bit large to pull out of the market in 2 months' time.

I fully expect a decline in the markets over the course of the year. 10,500 or maybe 10,200 for the Dow is my target. Not much more than that, in my opinion.

Here we sit around 11,100 or so. A couple days of selloffs and we'd be right back at 10,900 again.

I definitely don't see the market making new highs and I don't see the Dow rallying above 11,300. But I also don't see it plummetting to 9,000, either.

The long side trades from oversold conditions seem to be the best bet right now. If you catch it right, gains of 10-15% in only a couple of days is almost a no-brainer. I just don't see that happening on the short side without a huge catalyst.

-Tony

Mark said...

Tim, congrats on hitting 250!!!

This is about all I see the market mustering unless some more big money jumps in. The hook down on the end of the day makes me think that the market ran out of steam (or some bears scraping some profit) at the end after all the money hopped in. Probably some real good selling off tomorrow through maybe Fri. Monday may be another up day.

For long-term bulls (5+ years), this isn't a bad price right now to jump in. But if it was a bullish me, I would sit on the side until at least Oct. No point in loosing money on a confused market, when there are other options out there that guarantee returns for a few more months.

Kapil Khanna said...

I agree with you Tim. We are at an important juncture. The falling trendline is about to be violated and if 11260 is violated we will have an intermediate change in direction from bearish to bullish. Combine this with the double bottom on the DOW and we are in for some surprises.
The downtrend that started on July 6th did not give me good returns on my puts (usually not a good sign in a bearish market).

mike said...

The one other factor to look at are some of the indicators. The last 2 or 3 times we hit the upper trend lines on the DOW, for instance, the stochastics, RSI, etc. looked much more overbought. Right now they are still in neutral territory. Granted they react to prices rather than the other way around but I'd feel better about a likely top if they were topping also. I've been in the bear camp and still have some shorts but I don't think this rally is done yet.

lsjumbof said...

Tim - Congrats on 250! I appreciate your insight, perspective, software, and Attitude!

acceltrader said...

Hurricane- Tell us please how much NTRI you bought today...Did you put your money where you keyboard is?

Me thinks it is dangerous to have such strong opinions...

Anonymous said...

I agree that the market is not looking bearish right now. But the big question is: do you really feel confident taking out long positions here right now?? That is, if you're not daytrading.

My thought is that the indices will be much lower towards the end of the year, so unless you're trading only a few days at a time, I don't see the real urgency to jump into the market at this point.

Or am I just not bullish enough?

costas1966 said...

TIM, congratulations on your 250th post. May you be good and healthy for a lot more.

As for the market it keeps surprising to the upside. Not only it rallied today but it did it on rising volume and the dogs started barking, ie homebuilders. The short term trend is higher for now and I don't know where it stops. It usually stops when the last bear turns bullish and buys stocks. Tim, you mentioned a couple of numbers 1280.38 on the S&P 500 and 11257 on the DOW and if they take these numbers out something will be very wrong. I think they will do just that take these numbers out and convert a few more non beleivers to the bullish side. I doubt however that something will be wrong at that point. Why change to a bull if they take out those numbers? Would the housing implosion have stopped at that point? NO. Will the non saving overdebted us consumer start spending more at that point? Clearly not. Will the 2 trillion dolars ATM mortgages that are getting readjusted have no effect on the economy? Probably not. Will the seasonaly weak September Octomber be behind us at that point?
Certainly not. I am still bearish, but I dont think it is time to short yet. I hate putting shorts in a confirmed general market rally. Anyway lets see what happens maybe we get that ellusive 2 billion volume down day tomorrow and things will change.

Anonymous said...

Dear Tim:

Congrats on hitting #250. I've been following your blog for about 3 months, and it is definitely one of the best out there. I like your combination of humor and education. I am fairly new to buying puts--are you buying mostly AUG, SEPT, or OCT puts? Any insight or general put-buying strategy is appreciated.
Keep up the great posts, and I will definitely be buying your new book when it comes out!
Sincerely, David O.

Anonymous said...

this market sucks. it sucks to be long it sucks to be short.

my puts are looking like crap and i am not inclined to go long.

geeeeez. maybe its time to walk away.

Anonymous said...

'Someone comment that the market was bullish because "...the GDP rises with time and the markets rise with it." OK, so does that mean the market always goes up? With that logic, apparently so.'

That was me! Over the mid (20 years) to long term (70 years) the answer is a resounding yes.

The long-term chart of the S&P tell you the only thing you need to know: over the long-term it doesn't pay to be a bear:

http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my

dash

Anonymous said...

Oh yeah!

Big juncture!

Happy anniversary!

Anonymous said...

Great. Tim hits 250, will the Dow follow suit?

Anonymous said...

Great work Tim! and good call as well, for tomorrow.

Companies reported below consensus/issued downward guidance: AMZN, GLW, SUPX, CYMI, CRI, XLNX, SIRF, CHH, FDRY, PNRA - list goes on.

Companies reporting above consensus: Materials/Energy

Broad based miss in earnings today across all bull market stocks after close. Looks like a VERY ugly today tomorrow in Q's, SMH, IWM.

costas1966 said...

This should be of interest


16:34 EZPW EZCORP beats by $0.04, beats on revs; issues upside Q4, raises Y06 EPS guidance (42.50 +0.39)

Reports Q3 (Jun) earnings of $0.40 per share, $0.04 better than the Reuters Estimates consensus of $0.36. Co issues upside guidance for Q4 (Sep), sees EPS of 0.43-0.46 vs. $0.40 consensus. Co raises upside guidance for FY06 (Sep), sees EPS of 1.87-1.90 vs. $1.81 consensus, up from previous guidance of $1.80-1.85.


Pawn shops are doing great business. That says something about the economy.

Anonymous said...

The question is do you go long or short. Right now the markets are just stuck in the middle. Tim now points out 2 points. Dow 11257 and 10660. I think the 11257 will be broken before the 10660 at this point. However all it takes is a few selloffs to get everyone back into buying puts and going totally short. If 11257 is taken out tops i see the dow going is 11350-11400, that is absolute top, if people think we are headed back to 11650+ they have to be fools. No way does the dow see fresh highs anytime soon. I think the markets top out once more DOW 11350-11450, Nasdaq 2150, from there they trend lower and stay stuck in a trading range, I dont think the markets have seen their lows for the year. I still think dow 10,000 before 12000.

The next catalyst is August 8th. FOMC meeting. Expect a raise and what the market expects is a "PAUSE". Without a PAUSE at this august meeting the markets could easily dip 2% in one single day. Remember the 200+ point run up last FOMC meeting, expect the opposite of that if they dont pause. If they do pause we will get a relief rally that may last a few days but after that I see no catalyst to push this market higher going into September.

GLW, AMZN and XLNX all down AH.

GLW to 16
AMZN to 25
XLNX to 16

costas1966 said...

Anonymous, I would not be surpriced if the market tops right after the FOMC announcement. The pause is being discounted right now so I dont see much upside after that takes place. After all a pause does not help the situation economically, interest rates are still much higher than what they were 6 months or a year ago so that still remains after the pause.

Anonymous said...

I think the pause would be discounted at dow 10350+++

costas1966 said...

WHo knows lets take a day at a time

Hurricane5 said...

My final post:

Let me set the record straight here because I believe people should be aware of where Tim is coming from in regards to NTRI.

Tim has has been telling people to short NTRI for a very long time now. He has called tops in the 30's, 40's, 50's, and 60's. He urged people to short the stock when it was trading at less than $40 per share. If you took his advice you would have missed about a 100% gain in a few months. And you would have lost a ton of your money.

Tim would like you to believe the stock is being hammered because it reported a bad quarter. In fact, the company beat eps estimates by 15%, and 22% without the effects of share based expense. They gave Q3 guidance 15% ahead of estimates.

Tim would like you to believe that the bulls are dead wrong. He would like you to believe he was right in recommending to short in the $30's. In fact, the opposite is true. The shorts are wrong. The stock suffered a similar drop on February 2nd of this year. People were calling for it tank and never come back. If you bought the stock on February 3rd after the tank you would have nearly doubled your money.

So the bottom line is that Tim is dead wrong. If you believe what he says about the stock then you are in for a very bad ride. I have said many times, and it bears repeating, that NTRI is going to $120. You will not find a better company to invest in than this one.

Sadly, I have found that I am the only bull that comments in this blog. This is sad because we are in a bull market. I'm not sure why investors choose to go against the grain sometimes. Perhaps when the DJIA is at 12,000 everyone will change their tune.

This will be my final post. I hope everyone was able to make some money off of my picks. I know I sure did. When NTRI is trading at $120 and GOOG $600 just remember I told you so.

costas1966 said...

Hurricane 5 why do you want to stop posting? And if you want to stop posting why advertise it? Just quietly fade away, that is how you should do it.

Tim Knight said...

I may be dead wrong on this too, but perhaps a margin call from his broker makes it impractical to pay his ISP bill. In any case - ta ta. We'll see where NTRI's at by year end.

Anonymous said...

From where I sit cash has been the place to be since May 11th after most of the major indices lost their 20 day ema. Yeah you could make some good money on shorts at that time but who's got the freakin' crystal ball? I love this board many times filled with perma bears and permabulls...quite entertaining. I'm permatrend..I think that's best. If you short this market your playing with fire, if you long this market your playing with fire. Cash is king right now. Look at all the indices that are in right shoulder patterns and triangles...any wonder why this back and forth action. Techs are not leading, when they do, thats when we could talk about bullmarkets...sorry hurricane5...this AIN'T a bullmarket...good luck with that sentiment. Tell you what folks if you checkout the nasdaq a close below 2018 that gets my bearmarket stamp. Like I said cash is king! Not interested in hovering over shorts looking to cover on options expiration week and bounces from compressed oscillators. I'll keep my cash on the sideline and wait for that firesale probably sometime after summer.

Anonymous said...

dow 12,000

what dow stocks are going to push the dow to 12,000

here are just some of them:

GE cant pass 34

HD is in a downtrend, the place is just a joke to shop at.

MMM completely missed this last qu

INTC is in a price war and will be lucky to close the year at 22+

MSFT is going no where quick 26 tops

KO stuck in the 40's for 5 straight yrs

MRK how many more trials ahead of them???

GM facing more problems than you can think of.

MCD great sales month over month yet still stuck at 35.

HPQ, who wants anything to do with computers (DELL)????

WMT still the leader in retail yet no one cares...

what will lift the dow to 12,000

unless they make changes to the dow 30 its not going anywhere quick.

Super Bull said...

I agree with Trader Tim that the drop in NTRI is much more than just an executive leaving the company. It could signal that the earning growth is on the downhill slope which is a kiss of death for growth companies like NTRI. My two picks NTRI and CME both delivered very good earning yet they are sold off. That is not a good sign. Perhaps the bear has finally arrived.

Anonymous said...

I think this is probably the best entry yet:

"Like I said cash is king! Not interested in hovering over shorts looking to cover on options expiration week and bounces from compressed oscillators. I'll keep my cash on the sideline and wait for that firesale probably sometime after summer."


Absolutely perfectly said. Unless you're confident with your shorts and can afford some pain, then there's just no sense in going either long or short here. The risks are just too great.

Most stocks are going up 10-15% in 2 days on the "bounces." And they're going down 5% or so per day on the big selloffs. And there's no rhyme nor reason for either the big up days or the big down days. Just when you figure there'll be a huge rally, the market goes nowhere. Or when you feel it's overbought, the market spikes 100 points at the end of the day.

It's just not worth it. Sit in cash until the 10,650 level is broken on the Dow. Then the bears will come out in force to show us a clear direction.

bsi87 said...

There is money to be made in these markets. It is one thing to say "My indicators are neutral and I have no setups." (which I find hard to believe) and it's another to say the markets are too volatile and I think cash is the place to be. IMO, the answer is smaller positions and take profits/losses more quickly since the markets are non trending at this point. If you've lost 6% of your capital within a calendar month, then the sidelines is the place to be but all these pronouncements what traders ought to be doing is pretty worthless IMO.

TR said...

Think we are in the midst of a mini bull. Treading carefully around shorting the major indexes for the near term.

Lot of items on my watch list are forming short term entries. Looking at some earnings today, the world has just started spinning backwards - GM crushed the estimates (how the heck!).

Sorry to see the Hurricane leave, he does add some different views and was so good a brushing off the "digs" from others. Good luck man!

Can't wait for the next 250 posts Tim!

downosedive said...

Hurricane and all interested in NTRI..........Hurricane, you are welcome here as a bull, as you well know we like to hear a bulls point of view and even more so if linked to indices predictions and individual stocks. We respect everyone has a right to an opinion and you as with many others here, genuinely believe in what you say. I must point out though to you and all - take a look at the directors share dealings in NTRI during the last 12 months to 18 months - all have been sales and many of those have been for very large values. A myriad of reasons given is given by small to mid size cos by their directors for share sales, the most often its 'to increase market' liquidity', followed by a range of personal reasons, like a house extention or a tax liabilty, school fees etc etc, the usual old rubbish. But it all boils down to the same thing........these guys are taking you all for a ride. They are selling selling selling and have been since levels way lower than currently, because the price is over rated - big time. Noone wants to see their favourite 'go-go' stock go to the wall, but that may be what is happening. Get out while you can, Ive been in similar situations again and again here in the UK. Its all an illusion, its all in effect a con. Directors get the share sales money, a fat salary and bonuses and share options right up until the company goes belly up and then they still get the fat pension and a fresh series of positions with other companies boards of directors afterwards - private investers are left bust - thats the way it works over here when there are mass director sales..........can you be so so sure that in the USA it is any different?? Tim is right about this one. Finally as to Dow 12000, yeah ok, but not til 2008, me thinks! Do continue posting - some of your other recommendations have/will turn out right, just not NTRI (there will be the inevitable bargain rally at some stage, but each time followed by further and further falls). By the way, no I havnt shorted NTRI as I only speculate on the good 'ole, DJA absolutely nothing else Stateside, ever (Im UK resident)

PB said...

So long hurricane5 --- at least go out with style and give us bears a frikkin' short!

Congrats to Tim on hitting 250!

Sanjay Sola said...

we're still in a downtrend. the breakouts aren't very good either. market leadership is unclear. transports are in pain with UPS and the railroads. semis are not exactly shining bright either.

a difficult market on both sides. market has not made its big move yet to the upside or downside yet. but i think we'll head down after this end of the month buying is done and the market gets into better selling shape.

Anonymous said...

Hey Tim-- I was wondering what you were talkling about when you stated that you thought the transport group was about done. And here I thought they were just getting juicy. My BNI, CNI, UNP, and EAGL shorts are doing great. You almost didn't sound like the bear we know you to be with that comment...

Shawn M. said...

I've been entering calendar spreads with a slight bearish bias in these murky trend conditions. For example, long Dec80P and short Aug75P on WLP, which has a brick wall at the 80 level (if that level is broken, get the hell out of the trade). Salivating at the chance to buy DIA and SPY puts, but am waiting for the rally to show greater weakness as I don't think today is the rally peak.

Anonymous said...

tim

just writting short short short has no meaning...it would be better if you could write approx time frame that you are looking for the shorts to work and possible reasons...else its just a jargon like cramer who says buy buy buy or sell sell sell...

hope you would make it more meaningful and directional, if possible

Anonymous said...

I agree, but only very slightly. It's not Tim's "job" to guide us through entry and exit points of every trade.

His main intent through the blog is to identify technical trends, resistances, supports, and possibly forecast a PROBABLE direction in a small number of charts.

I think that it is unreasonable to expect Tim to provide the details of a time frame, price point, or entry/exit timing. Those are your own decisions. He is only identifying POSSIBLE candidates for positions because their charts look bearish (or bullish, as the case may be).

I, for one, appreciate his work and hope that he continues. I find it valuable in my daily research.

-Tony

Anonymous said...

Raise your hand if you think this is a tough market to trade.

I expect an increase in the Fed rate come August 8. The feds do not want the dow to drop below 11,000 so they are injecting money into the market until that time. Dow will reach 11,300 before Bernanke's August circus.

Someone here wrote ( regarding market behavior ): "the world is spinning backwards..."

I feel exactly the same way and so will delay buying more puts purchases until the first week in August.

I still have a lot to get rid of now.

Anonymous said...

DIE BULLS, DIE!!!

- Frank the Tank

PB said...

This market needs a phsychologist!! It seems to like pain! Bad news = buy, good news = buy! Lot's of fools with lotsa money to lose!

Anonymous said...

and sad to say, I am one of them :)

Kapil Khanna said...

The falling trendline has been violated on the upside. Not a good sign for the bears. Now we need to see if 11260 is going to be breached or not. Markets turn when you least expect them. It's futile to fight it, just join it.

costas1966 said...

down in the morning and up by the close that is bull market behaviour. Ignore it at your own peril. If the volume comes in higher than yesterday and we hold the gains something bigger is cooking on the upside.

Sanjay Sola said...

Market is getting ready to make a big move. probably down. the Fed beige book said the economy is slowing. I also think the Fed will raise rates to 5.5% and pause.

artificial buying this week.

52 week highs todays are more utilities and banks. those aren't bullish stocks.

just a head fake, imo. i will short at Friday's close

Anonymous said...

the FED is pumping money in. come on the beige book shows slowing growth and INFLATION and we RALLY , WTF ... this is the FED HOLDING UP THE MARKET. un PHUCKING real. My puts are DEAD., The economy stocks are being held up ... if the stock is not the economy it is getting hammered. XOM all time high is NOT good. But hey what the F do i know.

downosedive said...

Im a bear with a sore head - market just keeps on rebounding from all attempts to take it into any daily negatives. Reluctantly agree 11250ish looks a possibility, but then again, who reakky knows?..............

Anonymous said...

Well, FWIW, OIH is getting close to 148 which is the descending trendline resistance for the right shoulder.

IMO it will be a low risk opportunity to go short in this area. Keep in mind the daily ATR is 4-5 bucks so position sizes should be kept manageable.

BSI87 (on a borrowed PC)

Glad I went long DXD and QID yesterday.

Kapil Khanna said...

Good thing is that the close on the dow did not violate the falling trendline. It breached it intraday.
Lets hope tomorrow is a sizeable down day, if not the downturn may be losing steam.

Anonymous said...

THE BEAR IS TRIUMPHANT TODAY.

ALL HALE THE BEAR.

SELLING INTO THE CLOSE. SMART MONEY LEAVING. CHUMPS COMING IN.

WE ROCK. YOU SUCK.

-Perma Bear 5000

Sanjay Sola said...

market is in overbought territory and rolling over.

I shorted Garmin at $94.85 (below the 50 day) and Celgene at $45.50. the market leaders are falling very hard now. XMSR is a slamdunk short also.