Thursday, August 03, 2006

What the Health?

What a day.

It started off well enough, with the GLOBEX in the tank and an instant 50 point chop off the Dow. From that point until almost the end of the day, the losses got chipped away, and eventually the bulls took the upper hand and pushed the Dow up about 70 points. By the closing bell, the Dow closed up about 42. So they took another one away from us.

It seems the increasingly active 'comments' section of this blog has become a commiseration center for us bears. I can sympathize! It's frustrating and maddening to witness this market's continued strength. There are pockets of weakness - such as good old HANS finally getting kicked around some - but, by and large, the bulls are still running the show. (I don't get real hung up on conspiracy theories about the Trilateral Commission manipulating prices..........the fact is that virtually all investors out there are, by their nature, bullish, and that have a lot of money to push this market higher).

I've been very focused on the Dow, which has been relatively strong compared to the Nasdaq and S&P, and - unfortunately - it finally crossed above the "line in the sand". It doesn't mean the bear case is vanquished. It does mean, in the short term, that it holds less water. It would actually make a lot of sense if we had a big rally tomorrow, from a technical perspective. A crossover is a crossover, and there's no doubt prices violated this resistance line.


Looking at the minute-by-minute chart, you can see some very plain, broad Up and Down trends. The time is right for it to turn back down. But nowhere is it written that this up and down cycle will continue. The market should have started going down today (and, at first, it did), but the bulls overcame that weakness.


What never ceases to amaze me - and I mean this, because I've been doing trendlines forever - is how much power trendlines have. I mean, Good God, just look at it - once the price crossed above the trendline, it "obeyed" it beautifully, coming to a gentle rest at exactly the trendline. This will be the launching off point starting tomorrow morning after the jobs report (either up, which is sadly more likely, or down).


I humbly offer a few short suggestions for your consideration. Here's Motorola:


Transocean (RIG), suggested earlier in this blog, which showed some nice weakness today:


And aging handsome dude Ralph Lauren:


Two big events are coming in the next three trading days: the jobs report (Friday, tomorrow) and the Fed (Tuesday). This is really our last, best hope to get the downward market we "should" get based on the market's behavior the past couple of months. If this strength continues, we're really going to have to re-evaluate.

123 comments:

Anonymous said...

bull speed ahead everyone...follow the herd and buy as much as possible tommorrow...

Anonymous said...

Tim....

Any idea when the java beta version will be released? Seems to me you said it might not be...why is that?

Anonymous said...

"bull speed ahead everyone...follow the herd and buy as much as possible tommorrow"


Yeah, when the markets are on a huge 2-week run and nearing a top, that's when you buy.

Right.

Tim Knight said...

The new charting product, ProphetCharts, is going to be part of the Investor Toolbox. We're going to be rolling that into major production this autumn. Beta testers are on the product now. It rules.

spinning_head said...

Too many of us are bears. Until that changes, the market will continue up.

The internet makes so much historical info available to the average investor compared to previous periods. Therefore, all the setups we've seen that 'normally' lead to bear markets and big selloffs are recognized.

People react by taking their short positions, or just cashing out and standing aside, to the point that things aren't playing out as they should...or at least as they have in the past.

Also, there tends to be a crowding into the perceived safer, bigger stocks, like those in the DJIA. The Naz and Russell 2000 HAVE been going down big time, but some of that money has just been transferred into the big safe Dow stocks.

I still think this will crack, but there may be 2 or 3 weeks of pain ahead....until we totally give up our bear case. THEN IT WILL FALL.

Anonymous said...

Only way the dow drops to 10700-10800 area is:

Job report tomorrow is well beyond the consensus and job employment below 4.6%

Federal reserve raises rates .25 basis points without a pause.

Dow 11500+

Job report just below or inline with expectations

Federal Reserve Pauses at the next meeting. Market would easily put in a 2-3% rally, from there who knows where we would be headed.


Best bet is to stay on the side until 2:15pm tuesday afternoon, based on that decision is whether I would go long or short.

Anonymous said...

If you think the low for this year was set just last month you have to think twice. There will be a another new low set in late sept-early october that will make the last drop in june-july look like nothing even happened. I still think 10500 is in the cards before the end of 2006. Dont let a reverse like today fool you.

Jim Chan said...

I closed all my shorts, it was a must, the "bear" market we had was great I was very savy and did well and have no plans on returning those gains.
as you suggested in earlier statement evryone is waiting on the FED, i personally do care.
But one thing that popped out today was Mortgage rates sliding to 6.63 and imidiatley on that news the homebuilders took on some gains along with St. Joe (the big swamp0 Anyway CAt had been taking a hit recently because of the housing sector machines where sitting on the dealers lots (backhoes) anyway I ws in the right place in the right time there.
I don't give it much weight but the one day run was good enough to offset the light loss on closing my short positions.
I still have hope for us bears.

Anonymous said...

wow 93 comments on the last post. Lets take this one past a 100. This is turning out to a wonderful forum :-)

downosedive said...

spinning head post sums it up - only when the last bear depairs and turns into a bull will the market turn bearish. Remember the anecdote about the shoe shine boy just before the 'Great Crash of '29? Perhaps in this crazy wacky market nothing could be more to the point, who knows?

call-sign maverick said...

Call me crazy, but the charts tell me today was pretty much a manipulated/bogus top. It's a consensus that it's been low volume all week. What does higher prices trailing off volume tell you?

Anonymous said...

Jim chan your going to regret closing your shorts on the next triple digit loss on the dow. Why does everyone fall for this rally. I really think the federal reserve is going to do something on Tuesday to tank the markets. Remember a 25 basis point raise is a given. A pause will send the markets up but no pause and erase ALL OF THESE GAINS GOODBYEEEEEEEEE very very quicklyyyyyy.

The Hube said...

My guess is the market goes down Tuesday no matter what. If the fed raises, the market will drop because a pause is already priced in. If they pause, it will be a sell the news event because the pause is already priced in.

I just don't see the market rallying into the recession I see approaching fast (unlike almost everything I read other than on "bear" sites, I see no evidence whatsoever of a soft landing). Timing, however, is a bitch.

Sanjay Sola said...

I'm staying bearish. Market leadership is terrible. I don't take it lightly that soda stocks, pharmaceuticals, and utilities are leading this market. those are bear stocks.

I hope i'm on the right side of the market

call-sign maverick said...

also forgot to mention INFLATION/HIGHER ENERGY PRICES in my last post - that coupled with a job-growth number at or above, say 165K-175K, guarantees a rate hike -The smart money's been sitting this "rally" out. They're pretty smart.

Anonymous said...

"Why does everyone fall for this rally. I really think the federal reserve is going to do something on Tuesday to tank the markets."


Everyone is not "falling for this rally." The facts are plain and simple. The markets have been trending UP for at least 2 weeks. Very strong bottoming action and good gains were made last week. Shorts are getting burned.

If you're going to be stubbornly bearish and ignore the action that's happening in front of your face, then you're doomed to lose money.

It's alright to be bearish, but also be SMART enough to realize that it has been very difficult to make money on the short side, so you take what the market gives you and go long when it's appropriate.

Or stay on the sidelines. I've been trying to force a position here and there on the short side and have gotten burned a couple of times. So I'm staying on the sidelines until the market gives a clear downtrending signal.

August 8th could be a 300 point day UP or DOWN. Nobody knows right now. I'm hoping that it's down, because that would seem to make the most sense, but if it's up, then I'm certainly not going to get caught fighting the trend.

Be smart, don't just be blindly bearish or bullish.

-Tony

Anonymous said...

All i have to say for what has happened these last two weeks is wow. you can draw the trend line up and follow up with a trend line
down for the volume. vix is diverging big time from what the market is doing, and the rest of what is going on behind the scenes is horrible.

makes perfect sense though if you think hard enough, why have the market tank or drop significantly before the fed, and what better way to position large amounts of money before an impending drop then by inflating the major averages. if there is going to be a rally next week, then you would see the averages clinging to the bottom, so that professional money can accumulate and load up, why would they load up here at the top so close to highs already established. then again i can be wrong.

im still not buying the car unless they put an engine in it.

bsi87 said...

One thing that I hate and almost always forget is the end of month effect. Larry Connors has worked with it. Normally one doesn't take the trade unless the average (he uses Naz, QQQQ or SMH) is trading above 200 day MA. Buy at close of 2nd to last day of the month and sell at the open of the 6th trading day of the month. Don't advocate it but it recognizes the money that comes in at month end that the fundies and institutions gotta put to work plus they get their EOM markup to boot. So there could be a bit more pain at least till Tuesday.

bsi87 said...

ADX shows DJIA nontrending on daily and weekly charts. Naz is nontrending on daily and trending on the weekly. Russell and SPX both nontrending on daily and weekly.

Do your own homework.

Mark said...

I agree with when the bears give up, it will turn. The past rally where it looked like it was to finally go down and went up caught me in the same mindset. Fortunately, I was able to adjust quickly and reap a good profit on the fall.

The stocks are taking a deep breath, then inhaling a touch more, then a touch more, but eventually, they have to exhale. Or turn strange colors holding its collective breath.

Tim Knight said...

The air will clear after this Fed thing gets out of the way. Fed days are insane, but this one is bound to be SUPER insane. I can't remember when it was so widely anticipated, because keep in mind, before this time, everyone KNEW rates were going to go up. There was no uncertainty. So Tuesday should be absolutely madcap.

Anonymous said...

Aapl bad news just announced

I hope nasd tank tomorrow

dead bear

Anonymous said...

wow, hopefully that should stop the madness in AAPL.

Anonymous said...

hopefully AAPL goes the BRCM way!!

Anonymous said...

My god, look at AAPL.

They announce bad news just after I covered my short today for a loss. And just after they issue a pumping PR this morning with the auto deals.

Incredible. I have absolutely zero luck in the market. Zero.

-Tony

Anonymous said...

Tim i agree, were getting so close now to 6% that any meeting from here on in will keep investors on their toes. This tuesday will be one of the most interesting fed meetings this year. Were getting down to the end soon. I think they go to 6% so i will not be suprised if they do not pause at this next meeting.

Anonymous said...

Tony your not alone. I look at some of my past trades and think why. I go short and the stock rises I go long and it drops.

Anonymous said...

Even if the the market rallies huge on tuesday for some stupid reason I wouldnt fall for it. As for what anonymous 3:11 PM said I could agree with that. Buy the markets up only to short them back down.

Anonymous said...

and thats why it is not always good to by strict stops in this volatile and false rallies.

Red Dog said...

After the Fed news is out of the way and earnings season winds down, the markets will have to focus on the news again which it has ignored lately. The news should continue to be bearish over the next few months and the bears will again get there chance to dance.

In the twenty years that I have been a trader, I have never seen so many relevant negative news stories ignored by the markets for so long. The last time was in August of 1987 when rates were rising and the markets made a new high for the year just before it all came home to roost in October. The only difference then was the price of oil was $25 not $75, and we were not in a war on terror. Keep the faith.

Anonymous said...

IMHO, fed will pause and retest of prior highs looks possible. this is a very interesting read for those interested in the big picture:

http://www.rgemonitor.com/blog/roubini/138792/

i am long puts out in november+ and long calls expiring in august, september. neutral with short term bullish and long term bearish stance.

Anonymous said...

Tim, I hope you still have ALL of your AAPL puts intact.

AAPL down ~$4 now in AH.

costas1966 said...

AAPL Apple Computer Announces Update Regarding Stock Option Grants (69.59 +1.43) -Update-

Co previously announced, an internal investigation discovered irregularities related to the issuance of certain stock option grants made between 1997 and 2001. A special committee of Apple's outside directors has hired independent counsel to perform an investigation, and the Co has informed the SEC. As a result of the ongoing investigation, the Company will delay the filing of its Form 10-Q for the quarter ended July 1, 2006. Although the investigation is ongoing, the Co has discovered additional evidence of irregularities. In light of this, management has concluded, and the audit committee of the board of directors agrees, that the Co will likely need to restate its historical financial statements to record non-cash charges for compensation expense relating to past stock option grants. The Co has not determined the amount of such charges, the resulting tax and accounting impact, or which periods may require restatement. Accordingly, the Co today filed a Form 8-K stating that the financial statements and all earnings and press releases and similar communications issued by the Co relating to periods commencing on September 29, 2002 should therefore not be relied upon.


Apple news above. Watch for the bullish spin tomorrow on this. It will be something like this. The options irregularities is one time charge, the fundamental story remains intact we are reeiterating out buy reccomendation and a price target of $85. Then all the idiots will send this stock to unchanged territory from down $4.00.

Anonymous said...

"Everyone is not "falling for this rally." The facts are plain and simple. The markets have been trending UP for at least 2 weeks. Very strong bottoming action and good gains were made last week. Shorts are getting burned."

This isn't healthy market action at all. COmpanies are saying slow growth ahead, higher inflation....and high interest rates-Stagflation.

This is a huge roller coaster...we are slowly cranking up on low volume... all for a big plummet in september and october. I will be ready for this....I'm 90% cash right now....

Anonymous said...

costas,

are you long AAPL?

Anonymous said...

I never said it was healthy market action. In fact, I've been saying this market is very UNHEALTHY for several weeks now. I could not be MORE bearish on the markets at this time.

However, what I did say was that the long side has been the way to make money lately. Even when opportunities LOOK good for shorts, they have always reversed themselves. Of course, that could change in a split second tomorrow and the market could plummet. Or Monday. Or Tuesday.

If it makes you feel any better, I'm 100% in cash right now and only plan to play the short side for the next several months, depending on the Fed news. If the Fed news sparks a short term rally, I may jump on for a few long trades, who knows.

-Tony

costas1966 said...

Are you kidding me, long aapl. The only stock I had long was crox and I covered it after hours. I am flat now

Red Dog said...

Oh ya, I forgot there are few more things for us bears than there were in 1987. As AAPL confirms, there are several hundred companies that have backdated option problems and will be restating there earnings over the next few quarters, there are huge underfunded pension problems that are being ignored for now, a new Fed chairman who has no idea what he is doing, Oh, wait a minute, we had that in 1987 with Greenspan as well, and many other issues that will come to forefront in the weeks ahead.

Tim Knight said...

I disagree AAPL will brush off the news and end unchanged. I imagine it will close lower than you're seeing in after hours. Their announcement is loaded with uncertainty. No details are given. Who knows how many options are relevant to this? Who knows how significant the restatement will be? Who knows is CRIMINAL charges may come up, like Brocade? The market hates uncertainty, and this stinks to high heaven with it. My puts are going to rock tomorrow on AAPL.

Anonymous said...

Patience bears patience. I remember reading one of the hardest things to do is not to trade. There is a lot of confusion and anxiety on this blog/board and everywhere else I read. This tells me to stop trading. Am I a trader or a gambler? Everywhere I go, I see the economy slowing except for the markets. Are the markets six months ahead or six months behind? Is the market being controlled by the “boogie man”, hedge funds, mutual funds, the Fed or by the little guy on his PC at home? My guess is by all of them. When people start telling me “they” are controlling the market, I start thinking people have no answers so they are blaming a boogie man. I am always amazed when the “talking heads” say something like, “the market went down today 200 points because Apple announced it will miss by one cent”. They have no clue so they make something up. This market is beyond my understanding right now so I am out. Keep your powder dry, our time will come.

Al K.

Anonymous said...

100% agree with you Tim. Thats why I am here.

Good to know that your AAPL puts are intact.

Anonymous said...

PLEASE!! Tell us you are not here just to trade what Tim is trading? Pitiful!! Hopefully you understand the methodology; at least somewhat....

costas1966 said...

Tim I ve seen many absurd things in this market. I hope and wish things will turn out as you predict.

bsi87 said...

IBD sez:

Two straight market up days in higher volume are, overall, a good sign. But the Nasdaq has shown below-average turnover in each of the past five sessions. August tends to be one of the quietest months of the year on Wall Street.

Thursday marked Day 13 of the market's rally attempt.

Late follow-through days have succeeded in the past. But institutions have shown little conviction in their buying over the past few weeks.

Hbarr said...

This options backdating scandal is the big gorilla in the room that the sell side wants to ignore but it continues to snowball from that little story in the WSJ a few months ago.

AAPL is going to be restating earnings for the past 5 years, (nobody knows by how much!) and they're not alone. This scandal extends beyond just tech stocks and makes the fundamental valuations of God-knows-how-many-companies questionable.

You know those fundamentalists who like to argue that the S&P500 is historically very cheap on a P/E basis?

Well what if the historical earnings are bogus because of accounting fraud and are going to be restated lower? How will future earnings be affected by legal settlements and fines? And who's going to jail to be the token Judas goat for the feds?

When investors buy a stock now they have something new and very nebulous to worry about besides the economy etc... and should hear Laurence Olivier's voice in their heads asking, "Is it safe?"

Watch out for the drill!

Anonymous said...

Futures barely lower. The Apple news looks like a bit of a yawner.

Doyle said...

Tim,
Are you adding more technical indicators to the Prophetscan feature for new investortoolbox version?

I hope so.. site is great, add more technicals and it will be incredible..

eddies mother in law said...

Sorry about this one folks, but Eddie needs to see this
this is the DEFLATION that I refered to in yesterdays post. And we all are getting to know about his Mother-in-Law
haha
"Anxiety Rises as Paychecks Trail Inflation," says the New York Times.

"Home loan demand at 4-year low," adds Bloomberg.

"South Florida House Sales, Prices Fall," notices the Inman Real Estate
News. In Broward County, for example, sales fell 25% in July, compared
to
a year ago.

A credit bubble is typically followed by a credit collapse, which is
the
last thing a central banker wants. But we read the headlines and see it
coming:

The consumer economy depends on consumers with money in their pockets -
or
at least a line of credit. For the last five years, that line of credit
has run directly from increases in house prices. Now that house prices
are
no longer going up, consumers are running out of spending money.
Particularly hard hit are companies that offer middle-class luxuries:
Starbucks, Whole Foods, Red Lobster, Cheesecake Factory. And, let's not
forget the loan companies: Countrywide Financial and Capital One, for
example.

Now, it is the modern financial world that faces ruin. Having inflated
the
money supply, the Bernanke Fed attends rising consumer prices like Joan
of
Arc waiting for a match.

But what can they do about it? The Fed has stopped reporting increases
in
broad money supply, M3, and has redefined the word 'inflation' so as to
exclude prices that are going up. It has also increased short rates by
450
basis points - the sharpest increase since the '60s. But while it
publicly
fights inflation, its real enemy is deflation. So, while M3 goes
unreported, M2 tells us that the money supply has exploded at a 10%
rate
over the last 10 weeks. The Fed is desperately trying to avoid
deflation
by making more money and credit available.

jockgunter said...

Doesn't make sense to be to root for the bears or the bulls, just to watch and react ...

Also, how does a trendline have "power"? Sometimes prices respect them, sometimes they don't!

But, who does have power? the major banks/brokers who run wall st. No conspiracy? I wonder.

Briefly, they're the "sell side". They sell equities; to help sell the product, they want the averages to stay up.

In August, there's not much volume, so it costs less to prop up key stocks that are flagging.

All the biggies no doubt study: where can the least buying have the biggest impact on an index (looking at volume/prices and index composition). Bank A calls Bank B and buys those stocks on the "select list" where he's a bit light on inventory. Bank B calls Bank C and does the same.

They end up shuffling some inventory between themselves at not much cost, prop up the indices just when they're about to break down, and frustrate the hell out of all bears ...

No reason for them to overtly talk conspiracy. They all do the same analysis of trading in index components, all see the trading stats unfold, and quietly work together.

That's what I expect is going on ...

EddieFl said...

Darcy, haha, I love the article, I know its not from my mother-in-law it would be way, way,, above her head.

Ok here we go with some fundamental/economy jive, (im a chartist/technical trader), writing fundamental data makes me cringe. BUT i just saw on Bloomberg T.V., the jobless rate is at a 5.5 year low this month!!, Explain to me how that is a bad sign for the economy? Actually I'm not kidding, you might actually enlighten me, I dont know that much about the subject.

A little inside about Contrywide MOrtgage, that is my former industry for years. They are expanding,not contracting, there are people making some ridiculous amount of money month after month, beleive me on that 100%. They are in the middle of a "echo-boom" as they put it. All the refinances they did 2-3 years ago were adjustables, they are coming due now. They are making money hand over fist, at least that is the case here in Florida, two new centers in the next year alone. And that is with rates going up the last 4 years...

That New York Times guy needs to hit the pavement and find out what is really going on. He dont know jack.

Anonymous said...

job numbers tomorrow, market expecting 145,000, anything above 200,000 and watch for triple digit losses on the dow. Anything in line should help the markets move higher.

Anonymous said...

Is RKH the bank index a potential double top here????

costas1966 said...

eddiefl since you were in the banking business you may be able to explain me this. How are these banks and particular the mortgage finance companies are being able to keep expanding their assets when the MBA mortgage refinance and purchase index hits a new low month after month. Also how are they able to expand assets while home sales are falling meaning less closing and less loans. I keep reading those earnings statements from the mortgage sector and it buggles my mind how they are able to beat their numbers.
Also if there is an echo boom refinancing wouldn't that show up on the mba index.

Sanjay Sola said...

I follow the William O Neil method of spotting market bottoms. It's 80% accurate. So far we've had no rally of 1.7% or better with volume and no follow through of 1.7% with volume on days 4-7 of the rally. that's the ideal situation.

The method improves statistically if the rally and confirmation day are above the 30 day average volume.

so far we haven't seen this and leadership is not good. Bidu, Google, Garmin, and Hans are breaking down. they are all high relative strength stocks that have shown weakness. so which sectors will lead this market?

anyway, we are still in the trading range of the Nasdaq 2050-2100 range and below the Nasdaq's 50 day moving average (the more important of the two).

dead cat bounce until we see some institutions step in and buy stocks that aren't defensive names.

macro picture is that the rest of the world is raising rates, so you can expect the global economy to slow down. The Bank of Japan is just getting started.
also, there's been no capitulation and not enough fear.

The Barron's cover page to start buying stocks is definitely not a signal of the bottom.

Mike Stone said...

where is oldsoothsayer?

If I remember his calls correctly the market is behaving as it should based on his wave counts.

Perhaps he is willing to share a little bit more of what he thinks the next move will be.

-Mike

costas1966 said...

sanjay sola very good post keep it up

costas1966 said...

This is the way I see it so far

The past 2 days looked like we will have a runaway market with everything shooting up through the roof but in both days selling came in at the end of the trading and the advance was contained bellow the upper boundary of the bearish flag. 2.5 trading days now until the Fed meets and the unemployment that everyone is obsessed for now happens tomorrow , it is going to get very volatile. The rising volume the past 2 days is a bullish sign and it should be of some concern to the bears. The last thing the bears want to see is a break and close above that channel on huge volume (2 billion and above)with a 3 to 1 positive breath or above. Having said that this market still remains overbought on a short term basis with the slow stochastics above 80 for day number 5 and it is still in a rising bearish flag. I still think they will top this right after the FOMC statement with some kind of move that will screw bulls and bears alike. My suspicion is they will take this above the channel and screw the shorts and then close it below screwing the longs. My plan is to trade this on an intraday time frame until the FED and if I get the rally after the announcement with some monster tick 1300-1400 I want to go short aggressively. Off course my plan is very fluid and can change according to the underline conditions. Lets see what happens it will be exciting for sure.

bsi87 said...

Eddie,

The employment rate is a lagging indicator. Companies will do anything esp after a recession to avoid hiring more workers. Costs money not only to employ them but to train them, deal with turnover, etc. So they'll buy machinery, work overtime, etc. to avoid putting more people on the payroll. So by the time the economy looks great, it can be time to sell the market.

On the other hand, the transportation index is a leading indicator. If you're not selling or mfging something, you don't need trucks,trains,planes, or FedEx. That's why a lotta observers are worried since the trannies seem to have double topped at 5000 while the DJIA did not make a new all time high around 12,000. Remember all the chatter in April/May about Dow 12,000? That's a divergence so the Dow Theory guys are worried. Anyway, that's the indicator lecture for today. LOL.

bsi87 said...

Costas,

Totally agree about efforts to screw the most people. That "rally" late yesterday took out my stops on my short positions and then dropped right back below. With no LT trends, the big boys are playing volatility.

Anonymous said...

yippee
the economy is slowing the FED can pause

actual quote from bloomberg

Anonymous said...

Yes the economy is slowing less jobs created than expected, and unemployment creeping up more than expected!! Yes!!! im buying since the economy is doing so great, Fed is going to pause and steady growth and profits will continue.

wait a minute there have been alot of downward revisions in earnings, and those inflationary numbers that were ignored have been higher than expected, oh well.

Anonymous said...

even if the fed pauses, their language will bring to light the inflationary pressures, and the markets dont want that.

Anonymous said...

shorts = PHUCKED. thanks ,,, my acct should get blown up today.

slowing economy, more inlfation, less jobs RALLY THE DAMN market WTF ?

Anonymous said...

On a side note:

Is anyone worried about their job?

I mean, the markets are one thing, investments are another, and job security is yet another thing altogether.

A slowing economy/recession cannot be good for anyone. If any of you have "real" jobs (aside from trading), does this concern you?

bsi87 said...

Pulling my sell stop off SDS and look to put it back on after the silly hour (1st hour of trading).

bill said...

anyone notice that hourly earnings have been higher than expected the last 3 out of 4 months.

EddieFl said...

thanks, i bsi87, i think I remember that from somewhere way back.

Tighting up my stops on longs. Like you all are saying probably get a nice spike up on the long side and then pause/sideways till the Fed/TUesday.


pb, where you at?? 11 points from 1300, putting my binocs back in the case. I always use Bushnell.

Good board, Costas has some insight, listen to that guy.

Anonymous said...

another rally, everyone is 101% sure the fed is going to pause on tuesday, if they dont then expect a 200-300 point drop in the dow.

bsi87 said...

VXN is not dropping as quickly as I thought it might. Needs to hit 18.5-19 and reverse. "Rally" might last to Tuesday afternoon.

EddieFl said...

NAsdaq just broke above the sideways range it was in for the last month, to the upside. Can see it clear as day on the daily charts.

Could be a summer rally, or maybe we just had it the last 2 weeks.

Anonymous said...

they are pumping this market higher only to sell it back off, I think the dow tops 11450 and nasdaq 2150-2175 then its back dowwwwwwwwwwwwwn

marhattan said...

It seems I have to revise my futures strategy... It would work fantastic if you're in and out in the first 20 minutes, because the rest of the day makes no sense! I just don't understand the tendency to want to buy on bad news. Does the whole world revolve around a .25% fed raise? You'd think so...

Anonymous said...

I think everyone is just plain guessing blindly at this point.

Yes, there are tons of resistance/support levels and critical Fib retracement areas, but the bottom line is that the market is moving in 100-point swings every day on whatever "news" it wants to. The war in Iraq, Israel/Lebanon, price of oil, NGas, metals spot prices, employment figures, Bernanke's speeches, or whatever.

Today's "news" was the job numbers that came in slightly under estimates, even though the hourly wage figure went up.

Three weeks ago everyone was calling for Dow 10,660, now I'm hearing "tops at 11,450". I mean, this is getting ridiculous. Nobody knows where it's going. And just when it seems to bounce back from a resistance level, it pops through. And just when it pops through, the jobs numbers come out light, sparking more of a rally.

It's all just nonsense.

Anonymous said...

Seven thousand down on my puts. Sold them all. Keeping some oil and natural gas calls.

The market is being manipulated somehow. I will wait for Tuesday. I expect a pause in the rates which will cause the market to jump.

Crazy stuff.

darcy said...

this market action is acting typical of a

MANIA

history has shown what happens with manias
ie:
south sea co.
tulips
nasdaq 1999

that doesn't mean you can't make money, but be very careful near the top

Anonymous said...

My only play now is the homebuilders especially XHB

If they pause go long XHB for about 2-3 days on the rally and if they do not pause Short it down to $30

Anonymous said...

AAPL might close with a gain for the day after all!

Anonymous said...

this is like an Indiana Jones movie.
intense action, thrill a minute, then a pause as he walks across a swinging rope bridge

the audience waits with bated breath as he steps onto some rotted boards


oops---- board cracks

will the floor fall out



oops its OK

gets halfway across, and another board cracks and he slips, falls on his face,

able to get up and run now, being chased

board breaks, he falls through the boards

cut to bernanke

did he fall, we all wonder
floor collapse ?

we wait with wonder

AS THE WORLD TURNS

spinning_head said...

No one has mentioned the gold miners lately, and they are acting very well. If the Fed does pause the inflationists will go wild, saying Ben is going to let inflation get out of hand, and gold will go up even more. That seems to be getting reflected in the precious metal stocks.

Also, rallies in the PM stocks tend to begin around this time of year and last to the end of the year. There is a new ETF of mining stocks, symbol GDX, there are options trading on it as well.

Anonymous said...

i just dont know how the fed can pause with the dollar falling and inflation getting worse.

Anonymous said...

Here are some thoughts: Never seen a market run up on nothing but bad news. 2000 was like this. And guess when the market topped out ??? AUGUST 22ND. I'm down on my DIA puts...but still hold majority cash.......If the market drops on Monday I will take a loss on those.....

Look at OIH, and the drillers and oil..... stupid me didn't pull the trigger when I had the chance.

I expect we are going to top next week.... there are no more positive catalysts.....oh and guess what? CPI and PPI are on Aug 16-17..... those numbers are going to be hot and people will be like oh my god..the fed paused NOT STOPPED.

A roller coaster cranks on its way up....then goes faster on its way down.

Sanjay Sola said...

Still no rally day on good volume. When i saw the Dow up 80 points, i was a worried bear, but then i saw no volume.

"The market is designed to fool most of the people most of the time."


-Jessie Livermore.

Anonymous said...

Short term bottoms at the end of the 4-year cycle are tough to buy into.

However, end-of-4-year-cycle TOPS are not hard to spot. If we get the catalysts that we need to bring down the market (no Fed pause, higher inflation numbers, etc.) then the bears will definitely have a Merry Christmas this year.

Anonymous said...

hourly wages, other countries raising rates, the dollar falling, inflation increasing, high oil prices, be very careful come tuesday, Its shaping to be a damned if they do, and damned if they dont. lower dollar, buy less goods, higher wages, more dollars chasing less goods that cost more,

bsi87 said...

Wow, lots of stuff.

Naz hitting the 50 DEMA from the bottom side but it's already trading below the open. 20 day BB is sitting at 2130 and change. Like Costas said, the big boys are gonna rape the bears and get the bulls chasing the train. Then back to the bottom of the BB range IMO.

DJIA hitting top of its 20 day BB as well. Volume looks high but we're in the same situation as before, either the indices are 1% or higher but lagging volume or higher than average volume but the increases are less than 1%.

Note:GLD. In a large symmetrical triangle from the 720 top. This is its 3rd try but volumes are putrid. Not what I expected with the Fed potentially pausing and the possibility of inflation ramping. Also the "breakout" is near the apex of the triangle which Edwards/Magee say can be a headfake. I'm short gold but watching closely to cover as necessary. On the flipside, if it breaks below 625-626, it opens a whole new can of worms.

MU>looks like an ascending wedge. SMH is diddling top of its BB. Want to put on a short above 16 for MU but doesn't look like it'll touch the morning highs.

OIH looks close to a bearish engulfing. At least, dark cloud cover. LOL. Back to the 130-132 area. I think the energy bulls will be shocked.

costas1966 said...

Speaking of OIH, hal looks like it is setting up for a retest of the low at 29.5. It broke the rising channel yesterday and it is confirming it today with continued weakness

costas1966 said...

This market is so toast. they will trap all the bulls right at the top. We may be putting the top today and not During the FOMC announcement as I thought. It need to close down if it does then most likely top is in and the FOMC wil be just a spike but not as high as todays high. I got a couple of shorts in today ati and hal. I will get in with more firepower on FOMC. May Zeus help us all

Anonymous said...

My prediction for today:

All indices close in the red.


bsi87: I'm long gold from $610, but I agree with your analysis. Could be a head fake breakout and if it falls into the $620's, there could be trouble.

That being said, I think gold will be priced higher next spring than it is right now. So, in that sense, I'm still holding long, even if it breaks down from the triangle formation.

OIH looks bad, yes. However, there have been a lot of unconfirmed candlestick patterns lately. I wouldn't count on the dark cloud cover to really indicate much in terms of direction. NGas spot prices have caused a lot of the bullishness lately and they have been consolidating in the last couple of days. I think they go higher in the mid term.

Good to hear from you.

-Tony

Sanjay Sola said...

Nasdaq may not close above the trading range today. it's starting to sink a bit.

Will today be a reversal day? stay tuned.

bill said...

Were back at the highs of yesterday, funny stuff, will probably hold here though,

Anonymous said...

Costas, even i felt the same about HAL. Another one i added today is CP. bounced off falling trend line and 50DMA, weakness from open. looks like a H&S formation in preparation as well.

marhattan said...

This is interesting: From Yahoo! Finance: Nine out of 10 economic sectors continue to post gains, led by the most influential of them all -- Financials (+1.1%)... The latter has turned positive on the year amid follow-through buying in retail (+1.6%) and homebuilding (+1.3%) as well as a rebound in autos (+2.2%).

These sectors are heavily influenced by interest rates, if these stocks are running up now, it definitely feels like a sucker play. People have been playing these stocks and getting hammered, this could be a way to get them to 'bargain hunt' before slamming back down and taking their money...

Then again, maybe I'm just building a case to support my point of view... =)

Anonymous said...

I hope people come to their senses today, and take note of the news out there.

costas1966 said...

I like CP its a good setup

Anonymous said...

If everyone knows that the fed is pausing...... this bodes well for the bears..... its priced in.

The risk are to the downside. CNBC just said that someone said they were definiately pausing..... I think perhaps this was the fed is done rally......

Tuesday is sell the news....load em up......

bill said...

LOL Nasdaq and Spiders are red, doesnt feel like a breakout for a new bull rally. the casino is live and well

Sanjay Sola said...

market reversal days count as distribution days.

Dow and Nasdaq divergence is nice to see.

Anonymous said...

gap closed ... let's see if we get more buying in the afternoon

Anonymous said...

the news today should have been a catalyst for any strong breakout this is what people were expecting, volume at midday coming in at about 50% of yesterday on the Dow, and yesterdays volume stunk

marhattan said...

I hope you're right, anonymous 9:08

Tim Knight said...

Congratulations, MARHATTAN - you've post the first ever 100th comment on this blog :-) A case of champagne is on its way.

Sanjay Sola said...

Tim, great call on Hans!

Anonymous said...

Big divergence in the dow and nasdaq, can someone say defensive! Big money knows, and the nasdaq is being supported by the dow right now. still more shenanigans to come,

Anonymous said...

I hope the market goes up next week. It will be a good chance to load up on QID, DXD, SDS.

Christopher said...

Look at Apple.

It has fallen from the tree. I guess things aren't so sweet over in the silicon valley.

bsi87 said...

Tony

I have no problem with someone holding gold as a hedge in their portfolio. My skepticism is when it hit 720, Barrons and everyone had "analysts" in, saying gold to 1000 or 2000. That triangle as crazy as it looks, measures gold down to 480, assuming 620 breaks and hold below support on volume. In this mkt, the volume part is the wild card.

I had a few longs from yesterday with small gains. I don't like today's pin action so I closed those.

re:OIH. Oil jumped when the mid East thing kicked up. But it has a series of lower highs. Many energy plays at the top of the 20 day BB and reversing. I think the light came on, if fewer people are working and companies slow down, it's gonna take something off from the demand side. Not to say there'll blips here and there. Big thing on OIH from my reading is the E&P guys can't find help at any price esp petrogeologists, costs are going up to run their rigs/biz so despite good times they're gonna have tougher times delivering on earnings going forward. That's my story and I'm sticking to it.

Trannies AND SMH reversed. Tells and they're not saying good things. GRIN.

Sanjay Sola said...

The fact that Hansens has fallen is the best indication that the market is headed down soon. Hansen is the Cisco of our bull market and Cisco was one of the last to fall in the last bear market.

Hansens one of the strongest stock i've seen this year. rarely does it ever break the 50 day average like it did.

the overall Hans chart is a thing of beauty.

http://finance.yahoo.com/q/bc?s=HANS&t=my&l=on&z=l&q=b&c=

Anonymous said...

how do you trade the trans
what symbol

spinning_head said...

I wouldn't be a bit surprised if this morning was the high for this move up.

I'm looking at the charts of my shorts and the majority are showing candles with big wicks on top. (examples: FDX, DRI, WCI, RUT, even the DJIA) This is frequently the sign of a short/intermediate top. Initial excitement couldn't hold..and it's down from here. Not only that, many of them stopped right at significant resistance, or a 50 day average line, top Bollinger Band or some other point where, if they are in a downtrend, they should stop.

I've been buying some more puts on some of the home builders. They've had a healthly pop in the last few days, relieving some of the oversold condition. Nothing has changed to make things brighter for their prospects, IMO. WCI reports next week and their high rise condo biz is a mess, with sales down around 80% over last year.

You can almost hear the collective market thinking...ummm...well maybe bad news IS bad news. lol

Anonymous said...

AAPL is still above last night's AH low of 65 :-(

costas, your last night predictions are coming true.

Anonymous said...

I think the market will get a mini rally if the fed does pause however it will be short lived, will be a great time to go short. Im trading both QLD and QID..

marhattan said...

Thanks, Tim! If this rally doesn't end soon, I'm gonna need it! =D

Vish said...

Sanjay - good call on the reversal.

bsi87 said...

IYT is the ETF Trannie index.

Anonymous said...

Time for the last hour rally, and indices closing positive for the day?

Anonymous said...

"Stocks Mixed Despite Employment News"

Nasdaq down over a percent and dow down a half and they say mixed.

lol they had this up all day,i guess when they cant say something good to spin the news they dont say anyhing at all, i wouldve opted fo "investor profit taking sends averages lower" or something like that

bsi87 said...

I doubt that will happen after the 1st hour reversal.

Anonymous said...

"Heat May Inflate Dairy, Produce Prices"

add that to the inflation bag

bill said...

Im noticing that volume on the Dow is low and may come in at about yesterdays total. coupled with this opening gap and selloff throughout the day, this doesnt bode well for any rally. if it was strong volume, then i would see that there is demand and it was met with professional selling which can lead to higher prices if any down move came on low volume. However this low volume is showing no demand from the professionals and concerns me more since it jives with this low volume rally we have seen the last 2 weeks. No demand is showing that they are done selling, and are rather shorting into this rally, expecting lower prices and a retest to the previous lows

Anonymous said...

sanjay, are you hanging on to your AAPL short?

Anonymous said...

wow, it is so easy to trade these days. I guess we are going to close positive today.

Sanjay Sola said...

I covered my Apple short at $65.50 because the first test of 200 day average usually doesn't break and the stock bounced at $65.

200 day average was around $65.90.

I am letting Apple bounce and will reshort after their conference coming up: Monday or Tuesday. (sell the news) or a break below the 200 day on heavy volume.

Anonymous said...

Don't play against the main trend of the market.
it's idiot to short AAPL. Because Q2 is the slowest season for a "Gift" provider.
But this company did very well unexpectedly. I think it's because they push their retail stores open in NY \ Europe and so on.
Please take a look at the Q2 Earning report of AAPL and GooG, if the growing rate keep going, A $400 Goog would be equal to A $80 AAPL according to the Earning.
That is why AAPL keep move up and Goog move down after the Q2 report announcement.