Friday, August 11, 2006

What a Week.....

The week started with hand-wringing and anticipation about the Fed's announcement on Tuesday. By the end of the week, terrorist fears had people asking "Bernanke who?" It seems like a hundred years ago already.

I've been bellyaching a lot, but I've actually had six profitable days back-to-back, so I guess I should cheer up. I remain confounded at the market's curiously positive reaction to the horrible terror threat, but Friday seemed a little more in touch with reality.

We haven't looked at the Dow 30 in a few days. This is a bit of a wider field. Not much has changed here. The golden number is still 10,660. We can't really start to take over earth until this is broken. Until then, we're just kind of jerking around.


The S&P, like the MidCap and the Russell 2000, is at a bit of a juncture right now, although it seems to be tipping downward. I actually - gasp - bought a bunch of MidCap calls (yes, calls) early today, but I dumped 'em at a loss later when it was clear no rally was going to take place. Things are still mushy, slightly favoring the intelligensia (da bears).


The gold & silver index finally started weaknening again. If this starts to gather speed, it'll be terrific, because this could shape up into a marvelous downward pattern.


Starting with Bed, Bath, and Beyond, here's a slate of cool looking short possibilities. I've got 80 - yes, I can hardly believe it myself - 80 different positions. Out of these 80, 80 are bearish and 0 are bullish. So I guess you can say I've got a slight bearish disposition.

BBBY:


BBD:


CERN:


CME:


DNR (what a ticker symbol, eh?):


HAL:


HLX:


MBT:


SPG:


UBB:


Hope you have a good weekend and don't waste it on something as lowbrow as a golf game. Ta-ta...........

72 comments:

darcy said...

DNR (what a ticker symbol, eh?):

Tim, are you a displaced Canadian


eh?

great blog by the way

Anonymous said...

Golf? Putt Putt & a 6 pack OK?

Tim Knight said...

I'm not a displaced Canadian. But some of my best engineers are! Plus I thought SCTV wsa brilliant.

Mike B said...

tim, take a look at WFC.

kimberlysgarden said...

mike b,

the volumne on the Aug options for WFC at-the-money are astronimical. any idea what's going on?

Mike B said...

Kimberly,

Not sure what is going on with the August series. I'm playing it from a longer term perspective with some LEAPS.

Sure looks like it is in a topping process.

Anonymous said...

Tim,

Could you please tell us about the screening criteria that you use to find puts?

Thanks,
Ray

Anu said...

Tim,
what time frame are you using on the charts you are posting?

Anonymous said...

time to face some reality. the ppt will not allow the market to drop some 500 points ( to approxmately 10600 ). the m3 is no longer reported, why? because inflation results from too much money being printed. the dollar is weakened and thus more dollars are required to produce products.

we have a goldman sachs sec treasury (paulson) who will manipulate the market using the liquidity provided by the now hidden m3.

ta is meaningless in this environment.
show me a chart that moniters manipulation and i'll take a second look. till then you are all pizzing in the wind.



john

onemilliondollarman said...

Tim,

I know you used options as your trading vehicle. I have very good results reading charts, but I seldom make money using options, mostly due to time decay or simply the options did not move as much as the stock... delta. I hope you can tell me, if you were to enter straight PUT or CALL, do you buy ITM or OTM and how many months to expiry do you buy?

Hope you can share your ideas.

Tim Knight said...

To answer some questions that came up in this comments section:

+ The puts I buy are in the money, sometimes substantially so, and are at least two months out. Sure, it takes some of the thrill of the volatility out, but it sure does hold up better over time.

+ My criteria for finding trades is strictly based on the chart. I have a stable of about 240 charts I look at every day, and from time to time I'll run a scan to smoke out any I've missed. I like volatile, high-priced items that have had a major ascent in price.

+ As for the time frame, I used to use 5 year daily, but I've become enamored with 10 year daily recently since it incorporates the last bubble and the subsequent burst.

bsi87 said...

Re: TA and the wind

Gee John, then fundies don't mean much either, do they? Kinda like Enron and Worldcom, cooked books?

Guess we just hold cash...LOL.

Anonymous said...

bsi87,

well, we could start with the GATA lawsuit.

just seems like there are many ill-looking charts that are defying gravity.

market is up on bad news, etc., etc.

I have puts and calls in place. Long on oil, short naz sand spx, and watching gold.

If, when Iraq enters the mideast turmoil ( or we invade ) then these positions should be strong.

what are your thoughts on why the m3 is no longer reported?

john

Anonymous said...

sorry, meant to "when Iran enters the mideast turmoil..."

EddieFl said...

It summer time here in the U.S. WHich means al lots of sideways market action, failed trends and whipsaws. And every summer there is a reason for the price action, last summer, Enron, wall street shakeouts, bird flu. This summer war, hurricane trouble. I think I would be easier to follow the price action, and know that in the summers there is usually not a meaningfull rally that begins until we get into early Fall.

BUt i also, like playing jr. economist so here is my two cents: who can argue with this guy, he is worth about 400mm, Master of Wall Street, see what he has to say:

NEW YORK (Reuters) - The U.S. economy is in good shape, with growth moderating to a more sustainable pace from the rapid expansion in the early part of the year, U.S. Treasury Secretary Henry Paulson said on Friday. "We have a healthy economy in the U.S.," Paulson said in an interview with CNBC television from the Chicago Board of Trade. "We appear to be making a transition from a level of growth that was seen over the last couple of years and the first quarter, that was fairly not sustainable, to a more sustainable level of growth

Anonymous said...

I miss Hurricane5... where has he gone? Bankruptcy court, perhaps?

Anonymous said...

"BUt i also, like playing jr. economist so here is my two cents: who can argue with this guy, he is worth about 400mm, Master of Wall Street, see what he has to say:
""

Well of course Paulson will say that as he unloads 300 million in GS stock., LOL

Anonymous said...

bsi87: I see that you closed your DXD, SDS, and QID positions. Are you planning to go long on the indices, or are you just sitting on the sidelines for a while?

My positions in those ETFs are still open. I am sitting on maybe a 2-3% gain on them as of Friday, so perhaps I should consider closing them as well.

I've read a few technical sites that are calling for a net gain in the indices this week. Not so much a "rally", but more of a slow drift upwards. A "gain in the absence of bad news", I guess.

-Tony

Anonymous said...

Great blog, love the interaction, but 80 positions? With all due respect, that's just nuts. Generally better overall profits are achieved from a handful of carefully selected and monitored positions, IMHO.

Chronictown said...

Dont worry about " the great one" he does okay! You got the nuts part right,very large ones! Chris

trader said...

Can someone shed some light for me
on how the TREASURY can manipulate
the DJIA to stay up no matter what stock prices do or how high oil is
or how bad the news is ? Is this
money supply from M3 able to keep the markets above 10,700, or even
11,000 from here on no matter what
happens? Would like to know more about what is happening and who controls that. I've been trading for 20 years and have never seen it
this way. Overall the valuation of the DOW stocks,the housing stocks,
the NASDQ stocks are down 20to40%
from where they were 2 or 3 yrz ago. Very Bizare. And I have read
about Jesse Livermore .

Hoping to learn something !!

Anonymous said...

trader,

last I checked the DOW was never above 11k 2-3 years back. Even NASDAQ is not down that much compared to 2-3 years.

-Jay Mac

Anonymous said...

Holy crap. Is it my imagination, or is XOM ready to come down at least 10%??

Looks like it needs to retest the $64 level at the VERY least.

I've always refrained from shorting energy stocks, but XOM just looks like it's hanging out there in no-man's land.

-Tony

Sanjay Sola said...

market is oversold now. there's a 4:1 ratio of oversold to overbought stocks.

anyone think we'll see a bounce soon?

Anonymous said...

we will bounce hard monday and fade throughout the day...the bears will prevail...

bsi87 said...

John:

Never have had much luck trading on conspiracy theories. I mean you name 'em, they're out there. The Plunge Protection Team, central banks manipulating gold, the M3 report, etc. Very well could be, hell they lied about the Cold War stuff and Vietnam for years. But I don't see anything that will give me any edge. If you do, more power to you. My point was if the charts are crap, the fundies are no better and probably worse. I like oil but at lower prices. OIH is a stumper, hit that 130 area and bounced. Looks like it's sucking on the exhaust pipe...again.

Tony,
All depends on what you're willing to live with on those positions. I believe the mkts will crack...eventually. But they're not rallying often on great news/earnings reports and they're not selling off hard on the bad news/fear. So other than the gold/oil short, I'd prefer to wait for a rally up to resistance, say 2100-2115 on the Naz and roughly 710 on the Russell and reload my shorts. ADX sez we're in nontrending mkts. Big boys gotta erode put values for expiration.

Anonymous said...

Holy crap. Is it my imagination, or is XOM ready to come down at least 10%??
----------------------------------

Just because it's one of the few that is still showing strength, you surmise it's ready to come down at least 10%? It's rarely wise to target a stock as a great short simply because it's up a lot. XOM may correct with the sector if it shows further weakness, but not based on the chart now. Look for the bearish setups, the stocks starting to break support on heavy volume. Shorting something just because it's making new highs is the same as trying to catch a falling knife in reverse. Wait for signs of weakness, then test the waters. If all goes well, add in as your position is confirmed.

Anonymous said...

Stock futures are up huge.....

I'm 100% cash right now and have had a run and gun approach that has worked for me.......

TOmorrow morning the market will be up tomorrow aft people will run because the PPI and CPI numbers are coming out....

Anonymous said...

bsi,

thanks for your reply.

i don't think i am a conspiracy adovocate, but i do know that the market is exhibiting some odd behavior given the world situation. john crudle of the NY Post has found evidence that the ppt is supporting the market which makes it difficult to look at charts and enter into positions with confidence ( and if you are not confident then why enter into positions )?

in a nutshell: we are attempting to deal with a market that is "artificial" so to speak. the lack of M3 reporting is disturbing to me. you seem to be bright and successful, but i ask again, why do you thing the M3 is no longer being reported, or is this a meaningles s question?

my pov is that oil will reach $100 per barrel due to the mideast situation and world geopolitical instability ( N. Korea ). Gold will rise to new heights,
and in general we are all screwed because China and India are the new financial frontiers.

Jesse Livermore made a bear fortune then blew his brains out in a
hotel bathroom stall.

other than that i am an optimistic guy just trying to keep his head above water. i admit i have not been too successful but this due to my disregard of risk management and that's my mea culpa.

looking forward to your future posts.

john

Anonymous said...

bsi87 :: Helicopter Ben admitted to the existance of the PPT in the last appearance in front of congress. Who else pumps money into the market on the day that it is reported 15 planes were to crash into the ocean.

Check out the airlines the day before the release of that news think someone had advance warning?

Anonymous said...

Phucking GAP OPEN. better get filled to the down side. Bears CANT get a break. Maybe tomorrow inflation will send the market into a panic. Im going to poke my bear eyeballs out. this market cannot get any MOMO either way. Agh. phuck it.

bsi87 said...

John:

When the mkt doesn't do what I expect, I either change to the other side or stop trading till it starts "acting" more normally. I've read Crudle for a long time - he's had that opinion for many years. Jim Grant is another (interesting sidenote: Grant, Mike Metz, and Frank Holmes, all bears, have been on NBR last 2 weeks as mkt monitor guests and Holmes will be this Friday's guest - where are the bulls? LOL).

M3 discontinuation. Because they did. I can remember when everyone sat on the edge of their seats when the money supply numbers came out, now it's employment. Even if it existed, is it something that gives you an edge or is tradeable? There are sites that do a reasonable job putting together an M3 number approximation.

POV's. They're nice but difficult to trade off of. I think your view has some merit but the trade is crowded. Remember at the beginning of hurricane season, $100 oil was in the bag due to Nigeria, the Iranian A bomb, etc. Hasn't happened. Today I'm gonna look at USO. I'd like to see it hit 65 in this week or show a reversal at the bottom of the range. Gold will be the surprise on the downside. I'd like to buy some EEM but they're become too highly correlated to the US mkts. Shouldn't be surprised, we're their biggest customer for many things. If the US goes down, it'll be hard for them to resist the pull of gravity.

Gee I hope I don't end up like Jesse. Read his book many times.

anon: could you post a link where HB said PPT existed? re airlines. Trannies have been in a downtrend for sometime now. I don't know we can draw any strong conclusions but have at it.

Gap up open: Remember I said that opts exp would be a pain, the big boys gotta erode those put values by Wednesday or so.

Luck to all traders.

Full disclosure: short OIH, short gold, long bonds. (latter is asset allocation play).

bsi87 said...

VXN hitting 19 and below. No fear. LOL.

bsi87 said...

Long USO at 68.45. Trailing sell stop at 67.85.


do your own homework.

bill said...

mornings not doing so bad right now, gotta see what happens after lunch, huge gap into the morning really not showing all the much follow through except on the Dow, want to see more strength from the Naz, but overall not bad. CPI and PPI still a concerning factor

Anonymous said...

bsi87
link to article where Bernanke responds to questions about the PPT.
www.gata.org/node/4278

Sanjay Sola said...

I covered my short positions because of the oversold market conditions. and i went long on HANS

any thoughts on it? I added 1,000 shares at $30.20. seems to have support in the 5 day chart at $29.50 and it looks like it has bottomed for now.

http://finance.yahoo.com/q/bc?s=HANS&t=5d&l=on&z=l&q=l&c=

Anonymous said...

Bear market? WHAT bear market??


This is just more absurdity in the markets. The price of oil goes down a buck and the Dow goes up 100 points. And the Naz is up 1.5%. Uh, right.

More Market Manipulation Madness (MMMM)

bill said...

im just carefully watching todays action into the close, could possible be the last hoorah or the start of a real breakout for the next leg up. so many red flags make it hard to believe it, and you know when its to good to be true it probably is.

if we close into the middle of todays range on higher volume than the last two days then im leaning toward negative inflationary numbers. I still do not like where the rest of the markets at right now to go long. still need basing in alot of areas and the Dow and S&P to catch up to more attractive buying levels.

EddieFl said...

Up, up and away. Here we go, still looking for 1300 on the sp500.

If this the start of a true trend, I honestly didnt expect it to be to the upside, just becasue I had longs for the last 2weeks.(my opinion doesnt matter) But i should of figured everybody was expecting downside, so it would go higher instead.

Moving up stops, yet once again. Follow the trend, dont fight it.

Anonymous said...

You just gotta love it when the major indices erase THREE STRAIGHT days of selling (on pretty good volume) with ONE single day of nonsensical bullishness.

Should have covered on Friday with my 2-3% gain with my short ETFs and just walked away. Now I'm sitting on a loss.

Unreal.

-Tony

Anonymous said...

read some good articles that bring to light the rising costs of labor, and the tight labor market, may be some more inflationary pressures forming other than oil, which could read into higher inflationary numbers excluding energy, and if energy prices ease , then still relatively high oil prices will maintain inflation, with pressures from wage inflation. energy stock rolling over at this point is not good for the market.

Anonymous said...

What does PPT stand for ?
I'm just starting to read the the
site and can infer that it is
involved in the M3 and money
supply.Thanks to anyone who
can help a newcommer !

bsi87 said...

Patience.

Gotta git 'em a little deeper in the swamp. VXN approaching 18. I expect a nice setup to short between today and Wednesday's close.

bill said...

plung protection team

looking at the action in the vix, im not feeling good about today, too complacent and the prices arent matching

Sanjay Sola said...

Bear market bounce. these things are vicious. market was very oversold with the 4:1 ratio oversold to overbought.

it looks like a rally day on the outside, we are near the 1.7% rally day. but today's 52 week highs are very poor and the trend is still down.

I'm reshorting as we inch closer to the Nasdaqs 2100 level. exit strategy is if the market can close above the 50 day average or we get a confirmed rally day.

bill said...

Volume not matching the moves in the indexes, Vix acting funny, as sanjay stated NH/NL acting poorly, im sorry but im calling bullsh** to today.

bsi87 said...

PEIX

Looks like it's running outta gas on the downside. Buy stop limit at 15.80/15.85. It's used as a proxy to get long in the energy sector. JMO. Do your own homework.

bill said...

just read an article and thought this was funny

"With interest rates likely moving higher again later in the year, not to mention what appears to be a real estate slowdown occurring,"

if this is what "appears" to be a real estate slowdown occuring, i hate to see what happens when it actually does slowdown, LOL

good article, poor choice of word.

darcy said...

it's almost sad to see the bulls give it a go, and then watch it all disappear at the end of the day. at some point they are all going to say "to hell with this "

that will be the
" uh oh " that most of us on this board are waiting for them to recognize

once we get below this subdivide of 11,107 it should be the beginning of an extended fall

IMO

EddieFl said...

bsi87,

I have traded PEIX, it is a good mover. The moves early this year were outstanding. I trade it small, very speculative to say the least.

That is one of those stocks that can gap 20% the next day on any news, its growing nicely, good growth prospective, its got a head start in the ethanol play. I figure it will pretty much be bought by a large oil company soon.

They are selling the market off largely, it you are at home trading full time, the money to be made is on the 30 minute charts. Im not a home, not trading full time. I'll do daily and sometimes 30 minutes from work.

thanks,

Sanjay Sola said...

market is in a very tight trading range.

It's possible that we could be in this range until the Fed meets on Sept. 20. especially if the numbers tuesday and wednesday are inconclusive as to the Feds next move.

bsi87 said...

Eddie

re:PEIX. Yup, my position, if triggered, is small because it would be a long side and I'm trading smaller on longs vs shorts. Lotta controversy over ethanol. I see it as a takeover and/or a quick energy play. Bought at 15.11, trailing stop 13.75.

Yeah, I see the move. I feel like we get another push to the upside tomorrow or Wednesday, then I'll reshort.

I feel like a nap coming on.

LOL.

Anonymous said...

bsi87....peix has earnings today.

Anonymous said...

maybe PEIX doesn't have earnings today......thought i read that somewhere but can't find it.

PB said...

hey Eddie

it's up, up and DOWN! Why bulls insist on buying into a downturn escapes me! Where have all the points gone??

Tim Knight said...

And the winner today is......

Anonymous said...

we will bounce hard monday and fade throughout the day...the bears will prevail...

who said the above last night. You are CORRECT, sir!

bill said...

"Volume not matching the moves in the indexes, Vix acting funny, as sanjay stated NH/NL acting poorly, im sorry but im calling bullsh** to today."

hey the market had three digit gains today when i posted this, can i have a half a cigar tim?

im joking. :)

AT said...

What a rollercoaster today! Tim, thanks to your insights and the posters on this board, I even made some money.

There are some comments about the range-bound action over the past few weeks. From another blog, I became aware of the downtrend in the OBV in all three indices (DJ, NASDAQ, and S&P500), which seems to indicate that ultimately, the breakout will be downwards.

For example
http://stockcharts.com/h-sc/ui

Any thoughts?

stockshaker said...

take that you bulls.

the volume is nothing short of disappointing despite this crazy volatile crap-pot. there were times when i was ready to puke, and some times when i was hugging senior citizens outside my office.

The Q's are ready for some crazy downside movement, look at the price pattern, you'll see a beauty of a downtrend, and today, it is hugging the upper part of the channel (isn't that nice that I give you these really detailed descriptions without any charts or anything???).

Im still holding on to a hell of a lot of Q puts, but if tomorrow something tries to kill the bearish trend I have painted on my charts, I'll sell some puts.

i CAN'T WAIT for tomorrows market to open.

EddieFl said...

pb, I see green, my friend, not red. Flushed the shorts out.

How long will you stay short. How high will it go before you clear your shorts. Wouldnt it be nice to just be starting shorts today, instead of holding them for 2 weeks while the market drifted higher.

Market cant hold a gain, nor does it want to sell-off. I say the most likely trend when it develops is to the short side, just waiting on the trigger point. Until then stay long or in cash, no new positions.

pb--punt block.

stockshaker said...

and by Q, I mean QQQQ, not some Qwest $9/share Bullsh*t

Chronictown said...

Tony, thanks for gw. Do you seeit going lower. Sanjay, thanks for aaple, Im in the money on both.50 dimes worth. this aint gamblin, takin the dodgers yesterday was gamblin! goodluck Traders! Chris

Leisa said...

Suntrust did a fess up on the effects of the yield curve as well as a large bad loan problem on its prospective earnings. It will be interesting to see what happens as cognition of these looming risks spread to other banks. Short BAC/WFC

Sanjay Sola said...

I'm going to speculate and pick two big winners for the next bull run. WIRE and PWEI. both are forming excellent bases right now.

PWEI has a picture perfect base. just straight along. very low float. once the Fed begins to lower rates, whenever that is, it will fly.

I'm thinking of buying shares and storing them in the vault at $25. it's in a good trading channel between $25 and $30.

http://finance.yahoo.com/q/bc?s=PWEI&t=1y&l=on&z=l&q=l&c=

Anonymous said...

chronictown: All of my picks (GW, AUY, VOL, COG) are doing very well indeed. If you shorted GW around $7.50, then you should probably cash out 1/2 your position now ($7.08 current price). I'd drop my stops to $7.30 (22 cent trailing stop) and let the rest ride. Chances are that GW will continue to drop into the mid $6 range, but there's no guarantee.

Wish I had the money to put into those shorts when I made the calls last week. Would have made some very nice coin on them. AUY is down almost 10% alone.

I was a bit miffed today watching my DXD, SDS, and QID positions sitting at 2-3% losses, but traders eventually regained their senses and I ended up virtually flat on the day. Whew. That should take some steam out of the bulls for at least a few days. And if the bears REALLY take over (this is a PERFECT opportunity for them to do so), we could see some significant downward movement over the next few days.

-Tony

Anonymous said...

sanjay, good luck with those. I wouldn't go near them on the long side unless there was a significant breakout to the upside with volume. WIRE, being cyclical (and heavily tied to housing/construction), is poised for a pullback.

PWEI is again tied to construction, but is a nice play on PVC as an alternative to copper plumbing, which helps. However, there is a massive gap around the $15 area, which would most likely get filled if there were any bad news about that stock in the next quarter or so. Until it makes a new high above $32, I personally wouldn't go near it.

Sounds like you've got more guts (or patience) than I do with those picks. Good luck.

-Tony

Anonymous said...

Oh, one other thing: look at the money flow on WIRE. It's been negative for over a month while the stock has drifted upwards/sideways.

Looks like the rug could get pulled out from under that stock at any moment. I think the big run that they had from Jan-May was simply due to the huge speculative inflows to all base metals-related stocks.

-Tony

bsi87 said...

from IBD

Volume closed higher on the NYSE and Nasdaq. But volume picked up in the afternoon. Stocks thus rose in weak volume early on, then sold off in heavier volume late. That's exactly the kind of action you don't want to see

stockshaker said...

hey guys, check out this one MSTR

bsi87 said...

Well this looks like the setup to go short. Want to see VXN hit a low and reverse.

bsi87 said...

Bought some QID at 71.25. Setting a buystop halfway between LOD and yesterday's close to add more AND to open positions in SDS and DXD. Not betting the farm, just easing into the positions.