Tuesday, August 01, 2006

Down is Good

I was pleased the Dow was down 100 points earlier today. However, looking at the chart, I had a feeling it probably wasn't going to go down any farther, at least for today. As the pink line shows below, there is a fairly prominent "line in the sand" indicated by the Fibonacci retracement at around the 11,090 level. I had a bunch of August puts (and with only 13 days left on them, I was getting jumpy) so I got the hell out at a good price. Moments later, the market started to gather up to strength, closing down 60 for the day.


I have a lot of work to do (again, I've got a real job, folks!) so I'm going to keep it short today. Read yesterday's long-ass entry if you haven't already.

Oh, and someone asked for my current positions. Here you are, courtesy of Mr. Indiscrete (click image to actually read them):

65 comments:

Anonymous said...

inflation going up .... economy slowing


wow. things are going to suck very soon.

Christopher said...

Hi Tim. I was wondering why you have taken apple as a put and where you see it going in the future? It has looked fairly solid these past 2 years and I'm not too sure what you are seeing that most of us aren't.

Thanks

Chris

Anonymous said...

how'd ya fanagle trading puts in your IRA? I thought trading options in your IRA was a no-no, 'cept for writing covered calls?

TR said...

almost every online broker will allow you to trade options and even advanced option spreads. ET, OPXS, AMTD, and Charles S.

Great quick post. Liked today's down, was not happy with the finish. Still goin' down.

Tim Knight said...

I'd put a stop on AAPL at 73.80. It's been amazing strong considering the horrid state of the NASDAQ. It's not a great chart, but I've got puts on it for a reason!

Christopher said...

I know your chillin over by them(apple) in the silicon valley, so you must have some reason besides a gut feeling. Is it the August stock funk? Please divulge what information you have! =)

Chris

Anonymous said...

AAPL is over-vauled and running into a slowing economy, not exactly catalysts for a higher stock price. Plus AAPL has had it quite good for the last few years. Y'days stars are tomorrow's DOG's

Nice pick of your head!

Tim Knight said...

Nope, no special reason. I worked there from 1987 through 1990, and for years I used a Mac. I brought one in June 1984 when they first came out. My wife is a stalwart Mac user. But I don't have any special information, except the notion that iPods can't keep the stock in the stratosphere forever.

Anonymous said...

I am anti APPLE everything. Short away.

PB said...

Hey Tim:

Great economic article! Now I know why the fed no longer publishes M3 and why they will keep raising rates. In my mind a hike in August is in the bag! DOW 10,700 here we come!

Anonymous said...

Tim:

Thanks for your market insights.

Any reason that most of your trades are NYSE stocks? Is it b/c they are former market leaders or do you prefer the specialist system?

Too, for quite awhile I've been looking for a way to screen for good shorts. Any suggestions anyone? On the way up I was buying many of the IBD 100. Now looking for a new screener for the ride down.

Thanks all.

Anonymous said...

I must confess! I just started reading IBD, and have found many errors in their print. For instance, today's paper says that BIDU came public in July of 2006?
Y'day paper had the top 10 and bottom 10 list as one and the same. These are glaring examples of completely wrong info.

Doesn't anyone proof read there?

-Concerned

Anonymous said...

Just looked at AAPL technicals. Looks like a rollover is just around the corner (checkout Bollinger Bands combined with RSI). You could get a nice 23% on a bear call spread should the stock stay below $70 until August expiration. Any others want to play Devil' Advocate for AAPL, I'm all ears as I am still learning.

Anonymous said...

a raise on august 8th without a pause then you can say helllllloooooooooooooooo to dow 10700 once again...............................

chanon said...

GS is bit over value at 155, hope it tank down to 135, buy calls then. Earnings did little, think we'll see Dow 17000 again really soon
DOW

stockshaker said...

yesterday I had posed a question to the forum, and got great responses. Thanks to all, and I really appreciate that this forum/board has become almost like a close knit family, rather than a lot of random noise. Great work to everyone who posts, and provides not just a fact, but able to substantiate it with links/info, where the curious reader can surf and find more information.

I kinda agree with the replys to the yesterday's board, where it is tricky to get a normal return month by month, because I used to average around 20%ish return month by month, but found that these days, I have to take about a 10-15% profit due to volatility/uncertainty. I find it kind of nice to find many people including some really professional traders find it a little tough these days, as I, by NO MEANS, consider myself an expert, but rather a professional in the making (im just waiting for my market forcasting crystal ball to show up).

Thanks all out there, and keep posting your great insights. And of course, without saying, Tim, you DA MAN buddy!

PS, I haven't been on the board for a while, since Im just getting to the tail end of my Europe trip, and I think a week ago, someone had asked about Rome

Rome: Great to see, absolutely horrible to eat in, the pasta is not even comparible to my own below-par take at Mac N' Cheese. Also, there are a lot of tourists, and I mean, the whole city is a tourist trap. If you can, go to smaller areas in Italy, just to avoid the hussle - we went to Florence, and also Lido (a small island off of Venice).

Right now, we are in Prague, and enjoying the dirt-cheap beer (it truly is less expensive than water)

Hope that helps to whomever it was. And this will be the only message that Im posting about my trip, as this is NOT a forum about my trip, but
HOW TO MAKE MONEY!

good luck to all traders.

downosedive said...

With just under 2 hours until the market opens, I believe it will follow a pattern of opening quite strongly up during the first hour of trade and then fluctuate between that upper level and about 30 points below that figure. Shoot me down if Im wrong, but its just a gut feeling based on recent market movements outside of the wild days when the indices either substantially rallies or falls in one direction only in a session.

downosedive said...

By the way stockshaker, yes you are qyuite right we do seem to posting the same comments/sentiments, but thats because of the way the market is either staying static or rallying against us. We all know the direction SHOULD be down, but reality isnt reflected and so we have this bizzare trading pattern. Still offers prospects for trading the indices with a one to five day pattern

EddieFl said...

Does anybody trade the Ethanol Stocks. Peix and ENER seem to be two that institutions are involved in, they are the closest to real earnings. They had some large percantage moves YTD, pull up a one year chart on them.

If we get a continued rally to the upside will get in LOng on Peix.

The market may gap open this morning and just take off, not let anybody in for the ride. Still looking for SP500 at 1300.0

PB said...

eddiefl --- wishful thinking on your part. Looks like you just want a pop here to get out of your longs profitably. Good luck!

P.S. how far ahead are you looking for SP1300?? You must be viewing with some powerful binoculars!

EddieFl said...

pb, (peanut butter), you are funny, Let me guess, from 1999-2001 you were Perma-Bbull,it will never stop going up. now Perma-BEar, all the indexes should go to zero. Earnings, interest rate, inverted yield spread,the crude price of oil, the banana index, etc. blah, blah, it should go down.

Just use stops, there is no shame in being wrong, there IS shame on having the position go 2 weeks against you or 50 points against you. Or doubling up on your shorts, when you are in the red.

I'll check in at 4:p.m.,

Tim Knight said...

It was asked why most of the positions are NYSE stocks. No special reason. I guess I have a lot of energy positions, and those tend to be on the NYSE. Plus the NASDAQ is so battered and bruised it doesn't have as many stocks with "air" in them to deflate. But I don't care where it trades - could be the Mozambique Bourse for all I care - I just need to like the chart.

Doyle said...

check out a 5 day chart on the Dow and you will see a nice resistance bounce this morning at 11180.

Anonymous said...

i would rather be a seller than a buyer at these levels

trading volume has been steadily decreasing since rallying from recent lows in mid july ... and we are reaching substantial resistance on the sp500 and djia

the indices look like they are topping ahead of the fed ... unless we get a positive day with big volume soon

Anonymous said...

wait till fridays job report to add any positions anything really strong and these markets will tank. If the numbers are in line markts could add some gains. Its a no win situation, the federal reserve is raising rates on august 8th without a pause, expect the markt to fall 2-3%

Anonymous said...

is it just me or does this feel deceptively like the same setup in april/may?

rally for 3 weeks ahead of the fed on decreasing volume and then?

Anonymous said...

and then the big drop..........

Anonymous said...

I don't see much in the markets except indecision. I see institutional buying on a small scale to offset their puts.

Hedging is the name of the game in this market. There is no sustainable rally or selloff. August 8th should be interesting. I see a 200+ point day. Up or down? Who knows. Could go either way.

Anonymous said...

blistering bullish break outs batman. S&P charges higher:

http://stockcharts.com/h-sc/ui?s=%24spx

Anonymous said...

Look to Dow Utilities. They are a very good leading indicator for the Industrials and the Utilties. They're very close to closing at an all-time-high.

Got to respect the bull!

Anonymous said...

these markets are just too pathetic, its almost a given that it is getting pretty easy to predict the movement in these markets. yesterday the nasdaq down 30++ today UP 24+++, this market is like a game..

Anonymous said...

Since when is the Utilities Sector a gauge for the market, wasnt it the transports that was the market indicator. Get your facts straight.

Sanjay Sola said...

Stockshaker,

thanks for the travel info. I should have skipped Rome but i'm flying out there. I'm going to Prague in a few weeks and then Rome. should be a lot of fun. You can't beat cheap beer.

i hope the market makes a move soon, since i'd like to close all my positions out before i travel. looks like another great shorting opportunity. volume is terrible.

They are beating up leading stocks. Look at Garmin. it was up 12% today and it's barely up now. Google has shakey legs. TXU is at highs and performing well.

we are getting a lot of bounces from bad stocks on average earnings reports.

oil is at $76, natural gas is at $8.50.

too many problems here for the market to climb higher with conviction.

Anonymous said...

AMD once 17 last week now closing in on $20. Anyone think that goes higher or is it up on completely oversold levels.

Anonymous said...

oil back up, cannot believe it. I think it heads to 80+ with this next move higher, this may drop the markets. Sell this rally, sell this rally. You will not regret it when its falling next week due to the fact they will raise rates and not pause.

Bill said...

"Look to Dow Utilities. They are a very good leading indicator for the Industrials and the Utilties. They're very close to closing at an all-time-high."

Got to respect the bull!

LOL, im sure he was being sarcastic. Good laugh though, this comment section is one of my favorite "forums" now.

my hats of to Tim!

EddieFl said...

Good rally!!. If we get a follow through tomorrow. Maybe tightining up stops on my longs.

Still looking for SP500 at 1300.00

pb, as far as binoculars go I always use Bushnell, hahah...

bill said...

Bad Rally!!!

volume and sectors show that long or short, the main players are not participating in any direction. possibly 1300 eddie, but this move today to higher highs on the S&P smells, and there is no direction. remember weakness in the market only shows itself when the market is heading higher, when the market falls on high volume, you still have to wait for confirmation on the up days to see if the selling contained buying. and right now there is no direction.

Anonymous said...

"and right now there is no direction."

What a hoot! The market rallies and that means there's 'no direction'. Oh the comedy!

EddieFl said...

Bill , I suppose its all about point of view. To me , i keep it simple, my positions are green, going higher.

The price is going higher than where I bought it. Which is my goal for the trade.

But i get what you are saying, its a rally without true leaders, it doesnt feel like real buying, volume is light. IT could look better true, but I'll take it as is.

Good forum.

downosedive said...

As predicted in my earlier post today, 2 hours before the market opened the DJI is behaving as my estimate ie trading in a 30ish point range after an initial rise up. It will close at about 11200 and rise tomorrow to close around 11250. On Friday it will close with a fall, but the amount is impossible to predict and the trading range will be be positive as well as negative ie it wont be moving in negative territory for the entire trading day

bill said...

"What a hoot! The market rallies and that means there's 'no direction'. Oh the comedy!"

im sorry for sounding stupid on that one, i wasnt conforming to your 15 minute chart timeframe

all I can say is buy then....everytime the market rallies you shouldnt ask questions just buy. buy here with the JOBS report and the fed decision on the horizon, and defensive stocks making all time highs and the transports lagging, and all the other red flags we need to ignore.im with anonymous..... load up cause were going to the moon!

" Oh the comedy!"

I do agree with you on this one though

Eddie is the only bull that makes sense so far

Anonymous said...

anyone out there know if the NYSE composite can be traded as a future contract?

Thx!

Anonymous said...

"buy here with the JOBS report and the fed decision on the horizon, and defensive stocks making all time highs and the transports lagging, and all the other red flags we need to ignore."

stop trying to impose what you think SHOULD happen, and trade what is happening.

"im sorry for sounding stupid on that one,"

And then you continue with your bull and bluster. You're like the mother-in-law who insists on singing at the wedding! Groan. Some of the people I have to deal with.....

PB said...

it's PAPPABEAR you fool!

eddiefl -- if you keep long in this mkt, the only thing you'll be holding long is all the crap in your pants!!!

This mkt is FUBAR'd

Anonymous said...

I must admit, this is a pretty crappy start to a bear cycle in the "worst trading week of the year" (first week in August).

Dow up almost 100 points, Naz up 24 points, S&P up 11 points.

Unreal.

Trading what I see. And what I see right now is an overbought AAPL at $68.50. Also see NGas stocks up almost 20% in only a few days. I hate to short energy, but that's just absurd. CHK is very much hedged, and will not see any benefit to the skyrocketing NGas prices, yet it's up 20% in 8 days and looking choppy up there in the stratosphere.

Anonymous said...

The job numbers will move the markets, friday is going to be an easy triple digit gain or loss for the dow, simple as that. Expecially heading into the weekend ahead of the federal reserve meeting.

If the markets get a high jobs number and low employment rate of below 4.6% say hello to 11k on friday. The markets will easily price in 100% .25 rate hike on tuesday, the question remains though will the federal reserve pause. If they do not i know what sector im shorting once again, the housing sector. Watch XHB, without a pause this ETF is headed back to $29. With a pause expect 33+, easy etf to play with the federal reserve meeting.

Anonymous said...

Shorting energy is tough, I follow a few energy/oil etfs which are up very nicely in the past few weeks, especially OIH/XLE/PXE/PXJ.

bill said...

"im sorry for sounding stupid on that one,"And then you continue with your bull and bluster. You're like the mother-in-law who insists on singing at the wedding! Groan. Some of the people I have to deal with.....


let me do the math= Sarcasm

and yes i am trading what is happening, same way i traded in may when the s&P made new highs and held for a few days, I do admit i didnt trade for the amount of move that happened and got out early, but i traded what was happening, right now i dont see anything.

you see a breakout and believe that it should go higher, maybe in the next few days, but its still to early to tell. so the same argument could be said in return.

remember "what is happening" is also the same as "what you think should happen" because it is all subject to interpretation. just set stops and adjust position size!

Anonymous said...

GDX.

Another ETF that tends to slightly pass $40 only to give up. Has been at the 40+ level twice before only to sell off $2-$3.

EddieFl said...

At session highs now, shorts covering if they havent already. See if we get a strong rally to the end

pb thanks for the nice visual, no crap in pants yet, hahaha, I'll keep looking.

I trade OIH for the energy. Good mover.

bsi87 said...

Well I can't say I'm too excited about being a bull or bear. DJIA can't break and close above that 11,250-11,300 area. The volume today? LOL. Should go to the beach or mow the yard. DJIA can't break above that area and it can't break down below 10,700.

Naz can't break above 2100 or below 2000. Again with low volume. Naz was up 20 pts in the first (amateur) hour, now up 17. More gamesmanship.

Adding to OIH short. Descending trendline resistance still in place AND it's now trading below the open despite heat, hurricanes, etc. If I'd been clever, I woulda bought at 130 for the reversal but I hate to trade against a pretty strong trendline in place.

My PFE long got stopped out. Looks like it's headed back to 22-21.5. But my BMY long is hanging in there.

re: FED meeting. I think per Drach that the DJIA will rally 400-500 pts when the Fed sez they're thru or holding. But when people realize earnings will be dropping in coming quarters, the averages will drop like rocks. Plus we could see gold initially blow the roof off. Wouldn't it be interesting if Helicopter Ben has to keep hiking right up to the election?

Anonymous said...

WTF is going on with AAPL. Any news?

Sanjay Sola said...

market will head down soon. Nasdaq 1960 awaits.

the Fed is irrelevant here, imo. the economy will slow regardless whether they raise rates are not.

if they don't raise, it's because they know the economy is slowing and inflation will slow. so no need for Fed to slow, it's already going in that direction.

if they raise, then they think this last rate hike will slow the economy and inflation

either outlook calls for slowing economy.

Anonymous said...

Anyone care to comment on today's action? To me, it looks like the indices are running out of steam. But that could change in a matter of minutes with this crazy market.

AAPL had a good earnings report, that's why it's up from the low $50s. However, I think it's a bit overextended and could start to sell off. It's already down off its high today after forming a bit of a shooting star. I could be wrong, but it looks like there's a short term $69 resistance in place. Here's hoping for a selloff tomorrow.

RSI has peaked and Stochastics look overbought for AAPL.

-Tony

bsi87 said...

sanjay

I guess we'll agree to disagree. Naz hasn't been able to close below 2010 and if 1960 (3% lower) is all the bears can muster, it's hardly worth the effort.

Strongly disagree re Fed. I think a lot of the factors are now out of the Fed's hands but they'll continue to use rate hikes like a hammer till they put some bank or company thru the windshield. I agree the economy is slowing but costs are going up.

I'm watching the Trannies and gold as tells.

bsi87 said...

OIH now trading below the open AND previous close on average volume.

Anonymous said...

my new account was funded and now I sit here waiting to trade with my new commission plan, hope the markets give me some opportunities in the next 2 days.

downosedive said...

Tony any anyone else that whats to join in - you asked for any comments on todays action - I posted my estimate of todays DJA at 10.32 - look at my post! I actually got it spot on. As you will see, I have predicted Thursdays close and Fridays direction but not the actual closing level. I thought rather than comment on the technical aspects or economic factors, I would just spell out to all my predictions. Shoot me down if Im so wildly wrong, but so far Ive got one out of three days correct..........

Anonymous said...

BTW, I've been watching PCU for a while. It's forming a nice bearish rising wedge. Of course, wait for the pattern to complete before shorting, especially commodity/BM stocks.

The chart looks good (overbought and rising wedge), but the money flow is still very positive and is supporting the price movement very nicely. Use caution, but don't be afraid to short on weakness and a break of the lower support. PCU has had a history of taking big hits when things go south.

-Tony

Anonymous said...

WTF, this market will not go down. FUCK ME>

Blue said...

I suggest one short candidate to your guys: ACLI.

From last Wednesday, I called/ short SMSI TSCM ZUMZ...all plunged heavily recently.

I also had some nice calls on long side since last Friday, with VERY good and fast return: TFSM SCUR THOR BRNC...

Good luck to all & Thanks for TIM's great posts!
http://bluelightnewsletter.blogspot.com/

bsi87 said...

I think these markets have a chance to be like the 2004 DJIA all over again. It hit the high in early Feb and made a series of lower highs and lower lows between 10750 and 9750 low into Oct and then it took off again. Naz made its low in Aug that year. Frustration for everyone.

I will note that bonds (tlt) did great during that time period.

bill said...

Eddie, any insight into the afternoon!

I am still worried about this move and any down day on friday as people state might happen due to the jobs report might be a precursor to what will happen next week. im expecting possible 2%-3% correction into the weekend. could be wrong though.

dont read the rest its has nothing to do with the market.

oh and where is that guy with no name that wanted to ignore the jobs report and the fed decision and the market leadership, and the sector movement, because the market was "rallying" today and that i should just trade what the market is doing and that it was rallying.(where was the follow through of the rally this afternoon?)

Well I thought that the market rally stunk in the morning when i posted, and you said that is should stop "imposing what i think "Should" happen and trade what is happening,and that i was funny and like your singing mother in law that you have to deal with, and that because of some morning markup and a break out of some highs (in only the S&P i might add, the DOW and NAZ kept under fridays highs, but he didnt think that was important by the personal direction of his argument toward me), we have direction.

then the market didn't have any follow through this afternoon (rally = follow through) Not to bad for someone like you mother in law,. Hey post a name and stand behind what you say so we can argue with each other, i can review different markets indications and post what I see minus sarcasm which you take literally, and then you can follow the price "only" and make it personal, it will be fun!

or you can stay "anonymous"

Anonymous said...

APPL September 70 puts look very good here.