Tuesday, August 08, 2006

Fed Day is Out of the Way

Well, today's post-Fed rally lasted about as long as a bull in bed: 30 seconds or so. These guys are such turds. They bid up the market like mad in anticipation of a pause. BFD. Is a slowing economy great news for earnings? The market is doomed, people. Get real.

Here's a minute by minute chart of the DIA. You can see the massive micro-rally take place here if you look really close:


The $VIX is well positioned for a long, meaningful upswing. That'll be great for the bears.


Oh, do you need a good contrarian indicator? Check out Business Week's cover story. It features this kid on the cover claiming he's made $60 million on his Internet idea. He hasn't. It's bullsh*t. The editors dreamed up some hypothetical value for his firm, multipled it by his stake, and came up with the figure. I have no doubt this chap will get rich, but isn't this jumping the gun a bit? Smells like 1999, doesn't it, folks?


I've got something like 50 positions in the market, all of them puts or shorts. There's no way I'm going to show you all the charts, but let me throw a few interesting ones your way. Setting a good stop price is going to be up to you.

CAM:


IPS:


LEN:


OIH:


PBR:


PD:


Oh, let's do a hurricane5 update. Nutrisystem - target price of $600 - current price today, after getting smacked over 7% - is $45.58. And Hansen - target price $120 - currently at $29.45. Way to go, 'cane. I wonder if he is lurking to see what people are saying. Nah, I doubt it. Way too painful.

Anyway, congratulations to all of us for having the brass nads to get through this ridiculous Fed nonsense. Now we can turn our attention back to grinding bulls into hamburger.

95 comments:

downosedive said...

A note of caution - volume was very low today, so a further follow through on the sell side by be a tough act. In fact even todays little sell off was a struggle, which is rather worrying when you consider that todays infamous 'rate pause' is in fact the most damaging outcome for the bulls, they are just too dumb assed to realise it..........yet. The danger is the herd remains in their current brainless state of minds and continues to prop up the market - no rally, just annoyingly narrow trading range just might be the stagnant short term outcome that noone wants to happen

dexter said...

Hey Tim, congrats on the nice bearish action today.

Do you purchase straight puts or do you any fancy option strategies?

Also, what do you think about the banks as a short? Seems like their bull run should be almost over.

Anonymous said...

i was taken back by no raise and a pause. I was wrong, thought there was going to be a 1/4 hike. As soon as I saw the market take off then start heading down I entered back into SDS and made a bit of money. CSCO is helping the markets tonight but I have no idea how long it will last. Im hoping for a mini rally so i can get more SDS and DXD under $69.00. I dont see any huge rally to 10500. If we do Ill be shorting everything.

Possible shorts:

EBAY
SMH
BRCM
EWZ
AMD
AMZN

Anonymous said...

I'm usually cautious, but I don't see it that way, downosedive.

The ONLY volume that occurred today was on the downside. Heavy volume picked up and the markets sold off. Once the Dow reached around -50 or so, the sellers backed off. But that doesn't mean they're finished selling.

As I've said before, excess liquidity funnelling into the markets will always continue to prop them up unrealistically. This could be 1995 all over again where we see an inexplicable bullish rise in the markets, except the economic situation now is much, much worse, so I doubt it will happen.

I still remain cautiously negative on the markets with some shorts on SDS and DXD. I'm waiting for a bounce rally on the Naz before buying QID.

I don't think we'll see a sustained rally, NOR do I see a sustained selloff. The market priced in a pause and got it. But now what??

Nobody knows.

That being said, I think people will turn to the slowing economy as a rationale for selling off the markets a bit. I think we see the 1900s on the Naz, the 1230s on the S&P, and we revisit (if not break) 10,700 on the Dow within the next month. Heck, that's only 400 points away.

On a related note, I'm a bit surprised to see that gold did not rally today on the Fed pause. I think that perhaps the pause was anticipated, so the response was muted. Also, I think that the market is still pricing in another rate hike before the end of the year, so it's possible that gold will hold steady until people see clear signs that the Fed is DONE and will let the dollar fend for itself. Then you'll see some fireworks with gold (if not before then).

-Tony

downosedive said...

Tony, you are possibly right on many counts, except a revisit to 10700. I just cant see a mini short term downturn, much as I desparately need it to clear the short positions I opened at that level and have hung on to ever since. Hopefully, I will be proved wrong and you will be right! By the way gainers out weighed loosers by about a quarter before the rate anoucement, so it wasnt the sustained volume of selling that we all should have seen. Still, its early days yet......just needs to get obesessed with any negative aspect and that may well act as a catalyst to drive the market down. Heavens knows, there's enough options to choose from!!

Anonymous said...

tony you mentioned:

"I still remain cautiously negative on the markets with some shorts on SDS and DXD. I'm waiting for a bounce rally on the Naz before buying QID."

shorts on SDS and DXD????

dont you mean long on SDS and DXD

As for QID im looking to pick some more up at 68-70 area.

stockshaker said...

well. that turned out beautifully didn't it? Technically, we are primed up for a nice downswing. Which I am gearing up by dumping some coin in a BEAUTFUL looking stock, called the QQQQ, or I like to call, my bank.

Tim, those a fantastic graphs, but also take a look at HON, and FDG. theres also KOMG which I had calls last month, but had to turn into a bearish spread because of a sell off - not as good of a profit, but something nonetheless.

Im waiting for ADM to fall below a $39ish support level.

I like how the housing sector still managed to fall at a ridiculous pace, despite the rate hike pause. Wierd. It falls when the rate increases, and it falls when teh rate doesn't increase. I love those puts.

But, as everyone knows, there seems to be irrationality with the markets, and for some reason I would not be surprised if tomorrow, the markets rallied on something insignificant.

Its like: The economy slowing? Im so happy, let me make the dow climb 5 billion points! Dow 300,000 here we come!

Im kidding, of course.

Anonymous said...

Sorry for the confusion. I meant I took out some short positions on the Dow and S&P via SDS and DXD. Those are double-short ETFs, as is QID (as you already know).


Downosedive: I don't care what the adv/dec ratio was BEFORE the announcement. I only care about what it was AFTER the announcement. Look at the volume, look at the direction. And again, look at the volume. That's not to say that the markets are going down in flames. I wouldn't be surprised to see some unrealistic optimism pushing the markets even higher on low volume in the near term.

I'm still cautious, as I said. I haven't bet a ton on anything yet. Just some starter positions on SDS and DXD. Head fakes are a signature of this market ever since May. I don't consider this market having any clear downward direction unless it breaks past 10,700 on good volume. Or if it makes new highs past 11,700 (which I seriously doubt).

We'll see what happens to finish out the week.

-Tony

Tim Knight said...

To answer the earlier question, I just buy regular puts, in the money, at least two months out. Nothing fancy.

Anonymous said...

CSCO blew away their numbers. Big up day tomorrow.

Tim Knight said...

Yeah, like CSCO is a major market force anymore.

Anonymous said...

Chance of seeing 11700 on the dow is 5-10%, and if it did touch 11700 i would think 12,000 would certainly be possible but I just cant see it. I think its impossible now. To many things going on. If there is a huge up day tomorrow where the indices gain more than 1% im buying SDS and DXD, I just dont see how any rally can hold up. The market is not done with its volatility. Expect great volatility in the next few weeks.

Im predicting 6% by the end of the year and with the Federal Reserve Pausing its only to do worse for the markets in the next 2-3 months especially in late fall. Any strong data will only keep the markets down on anticipation of more rate hikes. The federal reserve should have hiked rates .25 with a pause. Leaving out the 25 basis points was not a good idea. If inflation shows up again the next meeting in september may bring on 50 basis points. The next huge drop in the markets will be blamed on inflation, slowing corporate profits, housing bubble popping, and rates going to 6%. Dont believe the hype on any rally this market is headed lower.

Anonymous said...

have to agree CSCO is not the same as it used to be. Alot of the market leaders have lost there way especially CSCO. DELL, INTC, AMZN, EBAY and ORCL dont move the markets like they used too. CSCO is stuck between 17-22.

Anonymous said...

Was watching cramer. He said EBAY, AMZN and AOL are done with and that the new net leaders are NILE, IACI and VCLK.....what is he thinking. I believe that AMZN, EBAY and AOL are done with but to hype up NILE IACI and VCLK what is he thinking. Too FUNNNNNNY

Tim Knight said...

Yeah, Jim Cramer, there's another great guru. Check out http://www.cramerwatch.org/ which pits Cramer's picks against those of a monkey named Leonard.

The monkey is winning.

Anonymous said...

cool!!!! thanks cramer! I was preparing to short NILE. Looks like Cramer pump up will present an opportunity soon

Anonymous said...

oh come on, what do u think? Crammmmer is trying to help people out there, he is trying the maximum possible way to rob the people out of their livelihood. So, there is no way in the hell that this Crammmmmer ass-hole will ever beat the monkey.

Anonymous said...

i was looking to short nile too I think it heads back to 26-28 range

Anonymous said...

If you look at $FTSE and $AORD, the day after the interest hike, they both went up. Maybe wait a bit and short it around 2-3PM EST.

Sanjay Sola said...

Here's the chart for TIE courtesty of downtowntrader's blog. stock is channeling down.
should bounce off the horizontal line.

http://photos1.blogger.com/blogger/2875/1447/1600/tie.0.jpg

Anonymous said...

BLOG OF DA'FKKING YEAR!!

Anonymous said...

Tim,

Can you please provide your (chart) analysis on NILE?

PB said...

Ladies and Gents:

If you were alive at 2:15pm EST today, you just witnessed how the Federal Reserve fuks up! Yes, pausing to let a slowing economy contain inflation pressures is akin to crashing into other cars to let the brakes cool down!

Oh, well, soon enough they will be back hiking and probably with more force. Market volatility has just increased. Thanks Ben, this market needed to be shocked to life.

chicken6 said...

QQQQ daily, a corrective ABC could be forming off the bottom... No problem just a better price to reload the shorts and pick up some QID

Anonymous said...

I agree regarding NILE. Cramer's pump just put an extra 4% on the table for the shorts. The stock is clearly headed downward, trading at a forward P/E of 34 right now. $32-33 is clearly an area of heavy resistance. And if all else fails, the 200-day SMA (right now at $34.85) has pushed the stock back down 3 times already since February. Looks like a great short setup, especially if it goes up to the $33-34 range tomorrow after the Cramer pump.

Gotta love it. Thanks for the heads up on NILE.

-Tony

Anonymous said...

CSCO not a major market force? Just a tiny $100bn company. Chump change really! LOL. And why are futures up then?

Anonymous said...

And why are futures up?

Because when the cattle ship sinks the bulls cling to whatever flotsam remains before the bears, (excuse me) sharks move in to feast.

Anonymous said...

Anon at 5:51pm,

Yes, the futures are up. Please buy as many stocks and as much as you can. May be get some NTRI, HANS and AAPL

dsantos said...

Hurricane 5 you are being called out!

EddieFl said...

So what really happened today? What really happened, the FED did what 88% of the traders expected it to do, and that alone tells you something. Who are usually right in this market the 80% or the 20% that make the big money.

Can anybody really show me any technical damage done to the Nasdaq,Dow or Sp500,, The SP500 is still above its 50 day EMA,and so is the DOW. I mean really pull up a 1 yr chart of any of those indexes and show me some serious techincal damage that happened today, maybe I need to get a new datafeed or something, I dont see it. I do admit there are some individual stocks that were due for a sell-off.

But was there a giant outside day with huge volume to the upside or downside, NO.

Look at days that moved the market 05/11 sp500 down 19 points,big volume. 06/15 up 25 points, big volume. 07/13 down 17pts big volume, those are days that either started a trend or pivot points in the market. Today it moved a giant -4.29pts to the down side, and now it looks like it is itching to go higher with some CSCO news, from a stock that doesnt even fly on peoples radar anymore. What does that tell you.


I mean, I am all for a strong trend up or down, but techincally what changed today, really not much. Im still long Sp500 using 50day/ema as a stop.

Mark said...

So no hike on the rate equates to no hike in the market. Hike the rates and the market hikes.

I think I got it. :p

Anonymous said...

eddie: I'm surprised that you talk about the huge down days back in May and June, yet you completely ignore the REASON for those huge down days.

Are you at all aware of the BoJ removing 30 trillion yen from the system? They did it in 3 stages, 10 trillion yen each time.

Look at a chart of the major indices. Can you spot the 3 stages?

A cooling economy and a soon-to-be downtrending market don't necessarily have to result in huge volume, huge point selloffs. It can just as easily (and more probably) equate to a sagging of the markets and a sandpaper-like movement, gradually eating profits of bears and bulls alike.

My intention is to have a plan; that the market will go down, eventually, and that the indices will be lower by November than they are right now. I can't try to out-guess the short term market direction, but I can try to estimate what the overall correction might be, going into the historically worst period of the year.

Good luck.

PB said...

CSCO has not much to do with the futures being up, and it's not like we are flying away here either! Please tell me what CSCO is doing right? Not much, it's dead in the water. Moving on, the bulls will probably try to mount a rally here, perhaps 2-300 points on the upside, but even the 'dumb' retail investor knows not to buy stock into a slowing economy. The institutions? Out of money, as MF cash levels are at historical lows. So it's back to the hedge funds to play their games. But with a war looming, how long can their appetite for equities last?
Happy Hunting!

call-sign maverick said...

Word of warning: the spy qqqq & dia futures & a number of "bell-weather" stocks are pointing north... looks like a 1-2 day rally starting tomorrow; if your short, you may want to cover early or be prepped to ride it out

Anonymous said...

I may be biased to the bearish side and so may Tim, but I think Trader Mike is kind of neutral-to-bullish. Take a look at his post tonight (http://www.tradermike.net/) and the charts there. Especially the OBV in each chart. I think it clearly shows a gradual drain of money out of equities. Many retail longs have been burnt in the last 3 months, and mutual funds don't get major fresh inflows till next tax season. So guess where the money is going? Out of stocks, into fixed income, gold, and plain old cash. So the short term outlook does seem bearish.

EddieFl said...

The Bank of JApan is pulling out 30 trillion, ahh yes, no wonder my Sushi guy seemed nervous last time I saw him, he knew something i didnt know..

I just watch the charts, if I get a short signal or my system says to get out of longs, then I do it. I found the more I follow the system, the more money I make. When i remove my opinion from the trades usually for the better. I know it sounds boring, but i like my trading boring and steady.

So besides the 30,000,000,000,000.00 yen (trillion, very big number, ive never written that many zeros---ever)there is really nothing you can say technically damaged today. ,, ok. ,, got it.

And November is the historically the worst period of the year.?!/!?!,, ok, I dont think that is correct either..

We''l see how it plays out.

costas1966 said...

I have to agree with nosedive's assesment. The volumes today was anemic. Only 1.6 million, I doubt that there are enough sellers to take this through the short term support of 1265. I think there will be another ramp up as early as tomorrow. Looks like both shorts and long setups could work in this market. Not extremely bearish yet. I need to see more volume to the downside 1.9-2 billion or more. It will get very challenging.

bsi87 said...

From IBD:

Tuesday marked Day 16 of an attempted market rally.

Some rallies do start slowly. In the past, the broad indexes have at times followed through and launched new bull runs after long gestation periods.

The current rally try includes far more distribution than is typically seen during a healthy uptrend. The market has flashed few big up days in heavy volume, suggesting a lack of conviction among institutional investors such as mutual funds, banks and hedge funds. The Nasdaq has weakened since it hit resistance at its 50-day moving average last week.

Meanwhile, utilities have seized a leadership role in recent weeks, not usually a good sign for the broad market.

The IBD Defensive Index also has hit new highs lately, which isn't the kind of action you see in a strong, growth-oriented environment.1

Anonymous said...

Daily put/call hit 0.91 yesterday. The market is extremely oversold by this measure. Last time it got this high was 04/05. A big rally followed.

downosedive said...

costas 1966 and the group
I dont like what I see and feel. The futures are showing a rise (yet again, as is the case every pre trading session) and the market opens in 2 hours. The whole thing sinks of continuing strength on the upside
To sum up:-
a) we are all agreed on a whole string of negative economic data, that by rights should be causing a market slide, but isnt
b) the market volume during the last couple of weeks hasnt been particularly high, altough thats typical for the summer season
c) whats driving the market upwards then? Its sentiment. Pure and simple - Bull sentiment dominates over Bear sentiment, ok an occasional set back but each one is reversed and the move upwards continues
d) bad economic data is now seen as good news because it is believed to weaken the case for any further rate increases. In fact the next call will be speculation on when the rates are going to come DOWN. Already I can see comments from the analysts on this topic. That specualtion is in danger of providing a further strength to the market - perhaps enough to carry it through this dire eeonomic period to the extent of negating the enevitable future poor reporting season
e) the only possible speculation for a downturn can be based on the historical DJA performance and the repeating 4 yearly cycle, which is due in theory to happen between Oct 2006 and March 2007. Now thats a nasty wide time period and until or unless that downturn hits, the market will continue rising and so hurt all attempts to short the indices
Worrying times for this bear who has stacked losses of £7000 on DJA short positions - I need a miracle, but I dont think it will come. The regular speculations of members here about retesting the recent lows of 10700, would be my saviour, but I just cant see that happening - can you?

PB said...

I think all you can do in this messed up market is let it run higher then short it. Rinse and repeat.
But please don't make the mistake that inflation will solve itself. Bernanke just proved the world he is a dove. The market will have to come to terms with that. It is now up to the bond/gold vigilantes to keep this market in check. I am not sure why bulls are so gung-ho in wanting to buy, but they have grossly mispriced risk. This is why I think a big nasty drop is coming! When? You tell me.

dash said...

" Bernanke just proved the world he is a dove. The market will have to come to terms with that."

The bond market doesn't seem to worried about Bernanke being a dove, or that inflation will become a problem. 10yr and 30yr yields rose a mere 2 basis points yesterday.

"I am not sure why bulls are so gung-ho in wanting to buy,"

p/e is the lowest it's been since '95. The market may not be cheap, but bears cannot seriously claim we are in bubble territory any more. That's why I fail to undertand why some of you think the 2001/2 drop is just a dress rehersal for a much bigger crash. Based on what exactly?

bsi87 said...

Nosey,

You gotta learn some basics, dude. Only rookies buy the futures. The big boys want to gap 'em open one way or another and they nail the newbies/Ma's and Pa's in the first hour. That's because they can see the stops put in overnight and the buy/sell mkt orders at the open. I bought a bit of DXD yesterday when the goofs rallied the mkt immedidately after the report came out. Again, the first action is generally, not always, incorrect. If the big boys wanna gap 'em up at the open, I'll add a bit more around 69.

The market is a discounting mechanism, looking forward. October 2002 was awful but that was a time to buy. May 2006 looked great, that was a time to sell. I wouldn't spend too much time looking at the data and trying to figure out why the mkts are doing what they're doing. TA guys look at price/volume/patterns and not much else. If you want to think about fundies, then you need to ask what will the mkts' reaction be as companies' EPS decline due to interest rate hikes take hold (it's a lagging impact) along with energy costs.

All that said, we've been in a range since May. There have been times to be a bull and times to be a bear especially at extremes. And it has been difficult to trade because the moves don't last long, volumes have been light, etc.

I don't know what % of your equity you've lost but if you've lost 6% in any month, you need to close all your positions and reconsider your methods. JMO. Trade smaller until you see some results and gain some confidence. The KEY is not to get blown out.

I tend to agree with PB that there is potentially a big drop out there. Paulsen trying to jawbone the Chinese reminds me of Jim Baker whipping up on the West Germans in '87 over the strong mark. And we had a new Fed chairman in '87, Greenspan, after the greatest (IMO) Fed Chair in history, Paul Volcker. And the Fed was hiking right until the crash. Lotta similarities. I don't think one can trade on that basis but be aware of it.

Good luck/good trading

bsi87 said...

Dash

10 year rates have dropped from 15-16% in 1981 to almost 3% in April, 2003. We've had about a 20 year cycle in declining rates. From 1963 to 1981, rates went from 3.8% to that 16% area. If we see any kind of retracement of that 16 to 3 drop, ten year rates will be 7-10% in the next 6 years. JMO. I'm carrying bond positions because compared to equities and PM, bonds have been cheap. I expect that to change in the next 3-4 months. But that's conjecture at this point. I don't know that we can evaluate the bond mkt on one Fed meeting, that's my point.

P/E is a lagging indicator because E is trailing. The question is what forward earnings will be. I think they'll be cut but I don't trade on that basis.

re: Crash. It's what you don't see that kills you. Too many on this board want to understand why fundamentals are indicating one thing and TA another. I don't know that you can reconcile that. But you can't trade on the basis that the mkts will crash either. It's like a 3-6 standard deviation thing, unusual. But if you look at the Master of Fundies, Buffett, he's not buying American, other than some energy plays.

Good luck.

Anonymous said...

Gold and silver did a huge reversal. If they don't stop it right here we might get a massive inflation run which will left all sectors. The metals have traded lockstep with equity. Have your stops in place and becarefull folks.

costas1966 said...

As I have said before dont lean to the short side very aggressively yet until the market has a down day on high volume. Many longs setups are still working right now and its good to balance it out.
The market participants seem to be buying into the soft landing theory righ now. So it will take some more data to show where we areh heading economically. Meanwhile there are still a lot of oversold areas that can bounce and squeeze overconfident bears. Stops , stops and stops.
Looks like it will be a strong day today.

costas1966 said...

Shorting ideas: Looks like the mortgage finance spectrum is starting to implode. Lend reduced guidance from $8 to $5 I would look into other players in the industry like nde, nfi, ahm, new

Sanjay Sola said...

market volumes are anemic this trading range is painful, but it will be over soon. there's no market leadership at all now. without market leadership we will head down.

Sanjay Sola said...

I like Celgene is a short at $43+. just my opinion, but the volume is heavy. do your DD.

i expect to the stock to hit the 200 day average.

downosedive said...

bsi and costas - thanks for comments - they all go into my 'melting pot' in trying to decide my next move..........

Anonymous said...

need the markets to still go higher, so I can load up on QID, SDS, DXD.

Costas, could this be the same kind of rally where the big boys first screw the shorts and then the longs.

Sanjay Sola said...

not much volume. not a very convincing bounce.

oil is at $77+ and going to climb higher. natural gas is likely to head up also.

i'm adding to my shorts with the Nasdaq near the first resistance point at 2100. next resistance is 2125.

not many breakouts today. i'm getting more bearish.

bsi87 said...

Just eyeballing the DJIA. Looks like a double top intraday. Close around 11145 is my guess. Of course, this is just a parlor game.

Also watching Trannies. They popped at the open and immediately gave up the ghost.

More exciting is the VXN. It's approaching the bottom of the 20 day Bollinger band. It's 20, the bottom is 19. Widespread complacency. Needs to get lower and then show a PM reversal above the previous close and open. THAT would be a sign to get massively short IMO.

EddieFl said...

Costas, you speaks words of wisdom. Stops, Stops, Stops is right. I know there are people here that dont use them.

We got relationship issues. People trying to have a relationhip with the market, statements like " it has to go down, waiting for it to behave right, i cant believe this market, who would buy at this level, .. the market is irrational, my position has to work ., Banana index says overbought.etc.. " The fact is the market doesn't know you and doesnt owe you anything, It doesnt want to have a relationship with you.

Short, long, straddle, whatever, You needs stops. I saw a couple of posts above, " cant wait for it to go down, i can get out even", or " my short is going against me
so , I doubled up, I know it has to go down!!"......

Oh LORD, that is soooo wrong in sooo many ways.

Doubling up on losers will lose your money just as fast, maybe not this time, but it will catch eventually.

Do you want to be right or do you want to make money--- think about that phrase, its a whole different way of thinking that helps you make money.

tommy said...

This rally was expected to flush out the retail shorts from yesterday. It has happened to $FTSE and $AORD. Tomorrow will gap down. Then next week will be options expiry manipulation so depends on the value of the maximum pain for the option expiry.

bsi87 said...

Eddie

Add these to your "Do you want to be right or do you want to make money?" (Ned Davis said that, has a book).

Trade what you see, not what you believe.

What everyone knows isn't worth knowing. (Too many people read all the reports/analysts info and they think they know something. If it's in print, it generally, not always, is factored into the price).

If you sit down at the table and can't figure out who the rube is, you're it.

The market will do what it can to inflict the most damage on the most people.

EddieFl said...

bsi87, amen, you are on the money brother,, right along the same lines.

Christopher said...

To be fair to Hurricane5, he has been a long term bull. I think his calls on nutrisystem and hansens still have some validity. I don't think 80 bucks in a year is too far a stretch for NTRI (he said 120) and HANS is probably going to post strong numbers the next year. Is it worth 120 as well? Probably not. Is it worth $55 in a year, yeah it could get there.

Anonymous said...

HANS is holding up very well in the 29 range, still below 120 MA at ~30

Sanjay, do u still have all your shorts in HANS intact?

bill said...

Dow red. lol never ceases to amaze me what the MM's have done these last couple weeks. as previously said, the markets will do what makes people loose money, that is why good markets look bad, and bad markets look good. right now that market has been looking good, but underneath lies the problem.

Anonymous said...

Glad I waited yesterday to enter my QID position. Was able to catch it with the Naz up 1.33% today. Could be all downhill from here.

I love those new ETFs. Lets you capitalize on what you know is going to happen, without the risk of worrying about unrealistic intraday rallies.

Someone else mentioned that the market leadership has diminished. You see utilities, energy, precious metals, and health care leading the way now. Not a good sign.

I'd personally like to see some heavy distribution days, but as long as the markets don't rally hard, I'm not too concerned about the long term direction.

costas1966 said...

Credit contraction very likely lies ahead of us.

This is the briefing on LEND.



Accredited Home Lenders reports in-line; lowers guidance (42.28 ) : Reports Q2 (Jun) earnings of $1.84 per share, in-line with the Reuters Estimates consensus of $1.84; revenues rose 6.6% year/year to $153.2 mln vs the $152.9 mln consensus. Co lowers FY06 EPS guidance to $4.50-5.00 from $7.70-8.00 vs $6.67 consensus.

Spectacular miss and I was wondering how is it possible with the problems in the housing sector, the morgage lenders to keep their earnings at these inflated levels. I guess this must have been the peak earnings quarter. This is the pretext of what will happen to the rest of the morgtgage finance companies. I think the rest of the sector will follow through with bad earnings guidances, companies such as nfi,nde,cyn,new,wfc,ahm are vulnerable and it also should have a spill over effect to larger more diversified banks like c bac jpm, wb. Market rushed to buy these stocks with the assumption that the FED will pause and the margins on the carry trade will stop shrinking. Rude awakening today with yield curve still inverted and the huge downwards earnings guidance from LEND. These news just reinforce to me the idea that there will be a contraction in credit witth a recession and a bear market as a result. I suspect the next phase will see the financial stocks participate and lead to the downside and that is a big chunk on the S&P 500, 22-23%.

Congratulation to the management of Golden West financial who sold right at the top of the market to those idiots down at Wachovia.

Sanjay Sola said...

I didn't cover my Hans short yet because it's an IBD #1 stock. They are famous for their plunges. many never recover once they are removed. ERS and NGS never recovered. DXPE was shaky for a while until earnings.

if HANS gets removed this weekend, then the stock is done until next earnings. so i want to see the weekend IBD edition to see if Hans is #1.

the 4 for 1 stock split, really made this an easy short. the float just got too big.

same with TIE. too many splits. too much supply and not enough demand

bsi87 said...

DJIA hit 11147. Naz now below the open.

ZZZZZZZZZZZZ.

Anonymous said...

DOW is putting a battle at the 11,153 level

bill said...

Markets doing nothing now. EOD rally into close, or continued selloff, and clues? For the Nas to be up over a percent, the breadth looks god awful.

Anonymous said...

My shorts AAPL ACLI are working good!

tommy said...

LOL. USO 2PM meltdown, as predicted. Kiss OIH goodbye.

bsi87 said...

POW! There went 11147. Still doesn't mean much since the DJIA neckline is around the 11050 area. Nosey, you had two nice low risk setups to go short yesterday and today if you were able to monitor the markets. The first was the reaction right after the Fed announcement which I grabbed with a DXD position. The other was today's gap up open basically because of CSCO and DIS. You'll note that DIS did NOT hit a 52 week high today AND it is showing a bearish engulfing AND a series of lower highs despite "good" news. So much for DIS. CSCO is a similar situation, blasted thru all types of resistance BUT it's not at a 52 week high and who wants to chase gap up opens? A trailing stop above the HOD would protect you if you got it wrong.

The action in the last hour generally shows the institutions/funds (or big boys as I call 'em) real intentions. And they agreed with you. Things aren't great on the economy front but they want to sell their shares to the naive/newbies at the open.

costas1966 said...

Nice action today!!! I love it

Sanjay Sola said...

market reversal.

downosedive said...

No but guys, Ive really screwed up - I civered my short positions today by counter balancing with long positions, so Ive gained absolutely nothing from this fall. I just dont know what to do......whether to close all or some of my shorts, or whether to close all or some of my longs, hummmmm

Anonymous said...

I am guessing the big boys will screw up the new shorts in the last hour?

Anonymous said...

downosedive - unless your longs are strong uptrending stocks, I'd recommend you to close most of them. Look at the daily charts of the indices. It's more and more probable that the following days will favor the bears. I said 'more probable', because in the markets, nothing is certain, but at all times, the trend is your friend.

Just my 2 cents. Held my recent shorts through todays bull trap and seeing some nice gains. Not exiting yet, because the technicals are more and more in my favor.

Sanjay Sola said...

bulls are really defending the Nasdaq's 2060 level. if it closes below 2060, it's great for the bears. i think that will get us out of the trading range.

too dangerous to have long positions. this is the second distribution day in a week, i believe. last friday was also a market reversal.

darcy said...

I know that you fellow bears can appreciate the steely nerve required of holding puts on the NDX

At one point I actually had my finger on the send button to get out at 1517

phewf

bsi87 said...

Nosey,

I think you better sell everything, long and short, and consider why you're doing this stuff to yourself. I'm not being mean but many have identified 11250 as resistance. That's the place to short. I would also get Elder's books and read them, not so much for TA, as for money and risk mgt.

Good luck.

As for the mkt, nice reversal but we didn't get 1% or greater drop in the indices and we didn't get volume. Another push.

Anonymous said...

Some of you are overthinking and overtrading. Get short, have your stop and stay short. There was nothing in today's action that should had stopped you out.

Anonymous said...

About time we drop, GEEZ. 7 mored days of selling would be nice.

I know people are looking for volume, dont forget its summer.

Anonymous said...

Anyone looking at PCU? It's at the bottom trendline of a bearish rising wedge. Might be a good swing trade to go long at $90 with tight stops. Could be maybe $100 on the upside if it regains some momentum.

Anyone agree?

BTW, holding full positions in DXD, SDS, and QID now. Should be easy money long term.

-Tony

bsi87 said...

Mike Kahn in Barrons.

Of course, there are always subtexts in the market and Getting Technical has beat that horse a few times this summer. Defensive sectors such as utilities, tobacco and healthcare, remain in the lead and technology and cyclical stocks have fallen behind. Big stocks are holding up better than small stocks. And the transportation sector is hurting badly.

None of these themes appear as markets are about to embark on a bull run. They typically happen when the market is in trouble. This is not to upstage the market and predict that support will be broken but rather to add yet another piece of evidence to the bearish side.

For the bears, the evidence is plentiful -- a preponderance, if you will. The market could care less. If it wants to break out to the upside then it will and despite being "right" the bears will be sitting with losses in their trading accounts.

All we can do it listen to the market for it will tell us when it is time to act. Either support or resistance will break and that will be the trigger.

Until then, there is no sin in waiting it out. If is summertime, after all, and beach resorts are full of professional traders not trading.

downosedive said...

bsi and anonymous - thanks for the comments. Sure, I followed the 11250 resistance comments, but then there was a period when even the hardened bears were saying , go with the flow dont stick to shorting if the market trend is up and sure it did seem up. If I cash in the longs now I will loose £3400. Now do you see my dilemma? And if I keep the shorts Im down £5300 now, ok if the market continues downwards because the loss will reduce, but what if it doesnt go down. Can you imagine - a loss by cashing in the longs and an increase in the loss on my shorts. Now thats what Im trying to get the nreve to deal with, but as anyone in a similar situation will know, the decision is 100 more difficult when its your own money, humm. Anyway Ive shared something very private in public with you all, so I guess Im inviting you all to share and develop as a community bear forum, under the chairmanship of Tim, by reveal this persoanl dilemma

bill said...

"go with the flow dont stick to shorting if the market trend is up and sure it did seem up."

Just as I posted earlier, bad markets will appear good...remember that, the big guys and MM are here to take your money, not to help you by providing a better picture of the current direction of the market.

i still stand by a re-test of 1220. it may not, but well see. Did you guys see the trannys get destroyed today, look at the volume! dont expect a confirmed 1280 breakout with market action like that. Also the breadth i commented on as being horrendous when the Nasdaq was up 22 reared its ugly head.

Folks, gotta look under the surface, this last rally has been like a used car with a brand new paint job, but no engine.

downosedive said...

bill, indeed you are right - 'those pros, whoever they actually are, aint here to give a damm about anyone other than themselves and making loads of money. I agree bad can trun good and vis versa, which is why I find it so difficult to sell at such a high loss.
By the way, you are so right about the car! Spot on!

Anonymous said...

Tony, im short PCU @92.31. i guess i need to tighten up the stop.I was thinking 85.00.maybe im dreamin?? im a rookie but im in the frey. Short on aapl as well!!Go Team! ChrinicTown

Leisa said...

Downosedive: I don't know what your loss is compared to your principal, but it strikes me that you need a plan. For both your longs/shorts state (on paper) an exit strategy (stop)for each position. You could always post your longs/shorts here and ask these smart folks for their take. I can tell that its gnawing psychic health, and I wish you a successful conclusion on your positions.

stockshaker said...

yes, when i saw the dow/spx/naz all up like bonkers, i have to admit, i was a litte weary. But look at the graphs on teh indices - even at its highest point, the dow/spx were hitting its resistance level.

I don't know why everyone was freakin out over a bull trap, because any type of bullish move would be to blow away this resistance level.

It was more like a last gasp of air before going back under.

Downosedive, buddy, I know how you feel man. I remember watching my account go from dollars to pennies when i first started. And you better believe i took a year afterwards to just study the markets (didn't even make one single trade).

The key to what i learned is that let the prices dictate what you do. Don't let emotions play into anything.

I don't speculate at all. if the markets hit a resistance and start falling = puts. bounce off support = calls.

If im wrong, and it breaks thru a resistance level, I convert to a bull play. and vice versa.

TA allows you to play without getting attached to a play.

And if you are letting emotions play, that means you need to sit back, and just learn.

Theres nothing wrong with sitting out for a while, and theres nothing to feel bad about it.

Im just telling you this because I've gone thru a similar stage. and im pretty sure I am not the only one in this form to have gone thru some really tough times.

study, buddy - you'll be a much, much better trader.

stockshaker said...

dammit. did anyone look at the HON/KOMG picks I had posted yesterday.

If you did, and you played it, good for you.

FDG still looks primed to take a fall.

I would have a stop out at around $30 (this is a resistance of a price pattern downward channel).

downosedive said...

Thanks leisa and stockshaker. Yes I should have taken more time to study and work a stategy, but.....I did a few smal trades and they all produced a few small profits - no losses. Well of course, then I got drawn in by trying to cover my first loss and so it has grown from there. I am sure I am a typical gambler, pure and simple and as you know a gambler good at giving advice, but lousey at taking advice! I look for some hope of guidance through this sight as the comments made relate so well to me. But then I go and mess up by doubting, which cause me to chop and chage direction. What a mess!

bsi87 said...

Nosey,

One thing that has helped me a lot is Elder's Triple Time Frame. If you trade in days, you look at a weekly chart to see the LT trend of the stock or index. Even when the current situation is choppy, going back one or two time frames can clear up as to long term direction. If the LT is down, then you'll look to short at rallies up to resistance lines or 20/50 DEMA's. The hourly chart then gives you the actual entry or exit. You want to buy in the bottom 1/3 of the range for a long or sell in the top 1/3 of the range when exiting a long position.

I don't know what to tell you re your positions. If these losses represent a significant portion of your equity, you're over your head. I've been in your situation and uses rallies and selloffs to work my way out of a jam. Still lost but not as much but it's a helluva strain over time because you have to wait for the mkts do their thing and hopefully (hope, the killer of many traders) move your way.

I'd be spending time figuring how I got into that jam.

JMO
Good luck.

darcy said...

DOWNOSEDIVE

I have to say that I feel for you.
I am relatively new to TRADING

Kinda forced onto me by circumstances
I've been involved in the markets for a few years, but those have been bull years.

these are different.

I had the same thing happen to me that it appears has (is) happening to you. I got lucky and only lost 5-7000 on a spike in my favor and I covered immediately

to hell with the losses.

I preserved the other 70% of my acct and then got real lucky in late june and made 10 times my loss.

PATIENCE for right time and signals, then take another run

good luck

downosedive said...

bsi - I will take alook at Elder's Triple Time Frame by searching the net - I havnt heard of this ans yes I do trade daily and some positions I close the same session, but usuaully I hold them until they show a reasonable profit and then close when I feel the market may turn down with a view to reopening the same amount once the market has moved in my favour. The losses I keep running with as my past experience of both in built stops or manual stop decisions has been dreadfull, absolute disaters. Perhaps the Triple will help with better timing so that Im not left holding the loosers, quite so much...

downosedive said...

Thanks darcy, by God could I use some of that luck! Well, ok , judgement then! I juggle every day to try and improve my positions by various methods. I think a lot is down to a lack of confidence in myself, as well as the markets. Until late Monday this week I couldnt see anyway the market would fall, but it has. My further specualtions continue on Tim most recent posting.........

EddieFl said...

downosedive, trade small, very small, so it is doesnt matter, work on your system and discipline, then start adding position. Its very hard to learn with a large position in place, trade small for a while until you get in the swing of things.


OK, SP500 and DOw sitting on thier 50 day m.a.,, this may be the day I close out of my 2.5 week longs,, ans yes, oh lord, i will say it, yes, i may look for shorts coming up soon.

At least get out of my longs, not short immediately. eddiefl

MIKE ROY said...

THANK YOU!

I AM LEARNING SO MUCH!!!