Thursday, August 10, 2006

What's It Gonna Take?

OK, so let me get this straight. The world narrowly avoids having a slew of commercial passenger jets being blown out of the sky, sending thousands of innocent civilians to a horrible, terrifying death, and the market goes UP? Even airlines ended the day in positive territory! What the hell?

I would like to provide a handy reference, based on today's action, for any future news and how it will affect the market:

  • Russia Declares Nuclear War on the U.S.: Dow down 37 points
  • Nuclear Strike Annihilates Free World: Dow down 52 points
  • Joe Lieberman gives George Bush a tongue kiss: Dow up 254 points on record volume.
This is just ridiculous.

Well, in spite of my pissed-off tone, my portfolio actually did OK today. The only reason is that (1) I closed out my SPX and OEX puts early in the day, since I could sense today's action was completely messed-up (2) I have a lot of oil-related shorts. But, even so, today's action was just stupid.

It took me one glance at one chart early in the day to know there was trouble. This is the S&P 400 MidCap (daily basis), and as you can see by my mark-up, we are not in the series of lower highs and lower lows that we need. This sucker seems to be strengthening.


I've bombarded you guys with enough charts over the past few days. I'm going to go stew for a while.

77 comments:

Anonymous said...

its the PPT

Anonymous said...

Exactly what I was feeling. This market is really resiliant: Huge deficits, slowing economy, Iraq, Lebanon, terrorism, and it still keeps up.

I wait a few days and then go long.

Then the market will obligingly fall 300 points.

Anonymous said...

anon -- i agree it was the PPT, or at least the expectation that the PPT would come in. When CNBC trotted out their graphics this morning showing how the market always went up after terrorist attacks, I felt certain that that the market would end down today, especially since the attack didn't actually happen. Oh, well.

NO DooDahs said...

My main beef is the airlines going up. Doesn't make sense to me. Otherwise, this is what I expected when I walked out the door this morning.

I wish I didn't have to go to work today, I would have margined all I could on SPY first things first.

Overall I did OK sitting on my 100% long portfolio.

Anonymous said...

By the way, I think anonymous 1 and 2 are different people. I am anon #3, who posted about CNBC graphics.

Anonymous said...

Patience fellow bears... I've really held back lately....People are really becoming complacent.... Look at the VIX today. Terrorism plot foiled and judging by the 'fear meter'...nobody appears to be concerned.

Oh hot of the newswires...-- U.S. and France agree the main points of a resolution to end fighting
between Israel and Hezbollah -- including on the sequencing of
deployment of the U.N. force, diplomatic sources say.

More ammo for a rally tomorrow morning.... which will be faded....

I cleared out my DIA, OXY and SLB puts this morning on the weakness... I'm hoping SLB goes up again tomorrow so I can reenter. This is a hit and run market guys!!

Wait until the CPI/PPI data next week shows that inflation is still out of control and the fed paused.... the market will freak.

I have no doubt about this.

Be careful about where you decide to start adding puts though... dangerous market. Individual stocks seem to shoot up and down like mad.

Anonymous said...

it's all that damned liquidity out there courtesy of the FED, the JAPS and the EUROpeans!

-Pete the Greek

Sanjay Sola said...

There's no volume at all lately.

still no market rally and there aren't many market leaders. 4 distribution days, with 2 reversal days in a week.

Tuesday and Wednesday will be big days with PPI and CPI data.

usually, the bears are right, but their timing is a little off.

btw, Don't you wish you shorted MOVI yesterday? down 50% in a day. ouch.

Anonymous said...

Who ever said the market made sense? Slow down coming, market goes up. Interest rates increase, market is up. War in the Middle East, market is up. This can't be the Bush market, is it? Charts are OK for books, but I'd hate to bet the farm on charts!

Anonymous said...

So, Tim, you said recently that the beta version of java charts will be part of the Investools toolkit. Does this mean it will replace Prophet java charts, or is the toolkit a seperate thing from Prophet?

Anonymous said...

Someone else already said it, options expiry tomorrow. Max pain levels have to be pinned.

I don't see any other explanation, really. I guess I can understand the resistance of the Dow to completely break down, as it's comprised of very large cap stocks, with a good distribution of utilities, health care, and financials. Those will keep the Dow afloat for a while.

The Naz and S&P are just following suit. I think they will diverge soon enough, and they could very well take the Dow down with them.

All in all, not a bad day. Just not quite what the bears wanted to see, that's all. But nothing horrible. No worries just yet.

If the Dow gets back to 11,300 and the S&P gets above 1280 again, then I might start to worry a bit. But until then, I think we're all right.

Remember: "Nothing goes straight down."

-Tony

Anonymous said...

TOny ,,, OPtions dont expire tomorrow, they expire on the 3rd friday.

Anonymous said...

Duh, you're right. Someone else mentioned the options expiry and I guess I didn't give it much thought.

Ok, then I guess I don't have any reason why people would be buying today :)

I still like AUY, VOL, COG, and GW as shorts here. PCU looks to be a nice swing trade on the long side. Possibly 10% potential upside.

Good luck out there.

-Tony

PB said...

Today was all a show ... down markets would have sent a bad signal to the 'infidels' ... they've would've thought they succeeded. The fundamental picture still screams 'GO TO CASH' but not many of the right players are listening. We are in a holding pattern 'till perhaps one more week, then the levy will break. The US consumer is all spent and they account for 20% of WORLD GDP, so playing for higher markets at this point is highly stupid, er, risky.

Tim Knight said...

"So, Tim, you said recently that the beta version of java charts will be part of the Investools toolkit. Does this mean it will replace Prophet java charts, or is the toolkit a seperate thing from Prophet?"

The Investor Toolbox is a product of Investools, of which I'm the SVP of Technology. It's separate from Prophet.net

Anonymous said...

DOES "CASH" not "ACCOUNT VALUE" in an account move with the markets yes or no?

thanks

Anonymous said...

anon Cash cash does not move, The account value does, now if you are short a stock thats a different story, the cash position will move with the markets.

Anonymous said...

Thanks. One last question I just opened up a new account with IB, I just started daytraded as well. If I call up asking these questions about margin, shorting, and those type of questions can they shut the account down or take away my margin because I dont know what im doing since Im new to this.

Gary

Cup said...

NVDA down 8% AH and ADI is down 12%. Hopefully this will wear on the techs tomorrow.

Anonymous said...

Gary, have to talk with your broker about that. And if you went through the fine print, it should be in there too.

mark

Anonymous said...

this market is smoking some serious crack. Airlines up TODAY? WTF ?

Anonymous said...

thanks mark....they wont shut down my account or take away my margin will they since I call up with these type of questions

Gary

Anonymous said...

gary,
IB lets you short and use margin if you agreed to it on the application. I would advise to start of without using margin if you are new to trading b/c you will lose money margining positions if you are inexperienced trading.

jj

Anonymous said...

It definitely is very odd... does ANYONE have an explanation as to why airlines were GREEN today??

I guess terrorist plots and airport delays are GOOD for airline business...??? Oh, and record-high levels of fuel costs must also be beneficial for their business models, right??

Unreal.

Just goes to show you that "They" can and will do anything with the markets to screw the most people out of their investments.

Keep that in mind.

John_Szente said...

To avoid the confusion of who posted what simply select a username other than "anonymous." The need to select anonymous when five other people have already selected it when you can use a fictitious name doesn't make sense to me...

north of 49 said...

The crazy thing about this market is that when it does break, it should be somewhat spectacular. Charts aside , pick the lame ducks that are over bloated on high P/E etc, that is if this nuttiness has caused you not to 'keep the faith'
Can't say this isn't interesting.

darcy said...

hey hey to you john
good point

but keep it light huh

Anonymous said...

I think today was nothing more than a relief rally. Relief that some good LE personnel in the U.K. did a great job of preventing what would have amounted to the next 911. That is thousands of innocents being murdered over the Atlantic by Islamo fascist that believe they will be rewarded with 72 mansions and 72 perpetual virgins. Had they succeeded western markets would have plummeted, which is what they want, and Bin Laden himself has said numerous times that war with the west is best fought through damage to their economies. Even the airlines went up due this "relief" that they are being protected. And I feel the reasons the market didn't go down is due that the free western world is well aware now that terrorism is a part of every day life. In short, after losing the big one(911), we keep winning. As for tomorrow the relief may wear off. Once it's realized that while governments must bat a 1000 - the fascist need only a half way respectable bunt.

Anonymous said...

bulls have spoken and seem to be chomping on bear meat tonight...

Red Dog said...

Today was a low volume bounce in a bear market. It won't last long with the negative news coming out everyday.

The fact that the terrorist tried again and the markets had not factored this event in should have raised the fear factor a lot. The markets will soon see this as the beginning of a more active phase of terror from our enimies.

They did not arrest all of the plotters and perhaps they have a plan B in the wings. If the reaction to the news does not make sense to you then it is likely a short term manipulation by the PPT.

It is great that we were able to stop them for now but now their resolve has just been expanded. I for one am afraid of what they plan to do to make up for this failure.

The next few weeks will favor the bears even if the PPT keeps the markets from falling off the cliff that is looming ahead.

The trend is your friend if you are a bear!

Anonymous said...

nvda and adi are down quite a bit AH. Semis going down tomorrow. Would be suprised to see if they actually turn around and end in the green.

Anonymous said...

Hey guys,

Any thoughts on airline shorts now? CAL is below the 200 day moving average and looks like it has good potential.

EddieFl said...

So when the market goes up: its an abberration, a trick, some kind voodoo, insanity at its best, crazy market maker hijinks, tri-lateral commission conspiracy etc... When it goes down: its all over, the country is going to hell, here we come dow 6000, this is so long overdue, this is the true trend... hahaha,

I love this board!!, Where is the middle? where is the balance?. where is wait for the trend to develop (daily) then pull the triggers.

I guess at a bullish board, its the opposite, naz, sp, dow going to 15k all of them, nothing can stop us, earnings are up on TGT etc, shorts are running for cover, i heard bernake is long the dow futs,, etc...

Its all really incredible to me, I guess that is what makes the market.

EddieFl said...

So when the market goes up: its an abberration, a trick, some kind voodoo, insanity at its best, crazy market maker hijinks, tri-lateral commission conspiracy etc... When it goes down: its all over, the country is going to hell, here we come dow 6000, this is so long overdue, this is the true trend... hahaha,

I love this board!!, Where is the middle? where is the balance?. where is wait for the trend to develop (daily) then pull the triggers.

I guess at a bullish board, its the opposite, naz, sp, dow going to 15k all of them, nothing can stop us, earnings are up on TGT etc, shorts are running for cover, i heard bernake is long the dow futs,, etc...

Its all really incredible to me, I guess that is what makes the market.

EddieFl said...

Sorry for the double post, i dont like standing on my soapbox that much..

Anonymous said...

EddieFl,

what are some the bull blogs u read? Just wanted to get an idea on their thoughts.

Anonymous said...

The trend of the market is down. This board kills me and Tim does make it quite entertaining. Look folks no market straight up or down okay. If you happen to be a bull there is not shi* to get excited about with today's action..any friggin' technician worth salt knows that today's action was on anemic volume at best and piss poor breadth...come on now..a friggin' blind man can see over the past few weeks that up moves occur on crap volume and down days with serious volume. If you're a bear patience and being quick on the draw if you're a short term trader is key. If you're gonna short an index for god sakes look no further than the COMPQ the shi* can't take out 2100 also a bear flag and rising wedge pattern what more does a bear need to see? The spyders and diamonds are far healthier and all your defensive stocks you can find with those markets. Death and misery thwarted and somehow that euphoria shouldn't spill into the market?! The trend is down...you perma bears/bulls are so damn silly....entertaining though!

Mark said...

I'm loving my CAT :) Just hope it doesn't scratch me!

chronictown said...

Tony, im short on Pcu @92.31 . I think it goes to 85.00.I will tighten up my stop. I shorted GW today, iI hpe your right on your target of 6.80!! Sanjay, Thanks for the breakdown of AAPL,i hope it continues its fall. I HAve astupid Qestion about a stock "filling the gap". Does that mean it should retrace those prices it gapped on the way down?? Thanks for all the great info Guys and gals. Goodluck to all! CHRIS

Anonymous said...

Hahahah, this is totally classic:

"The government reading on retail sales, due at 8:30 a.m. ET, is forecast to show a 0.8 percent increase in July, according to economists surveyed by Briefing.com, helped by strong auto sales and higher spending at gas stations. Sales fell 0.1 percent in June."

Bwahahahaha! Retail spending increase, helped by HIGHER SPENDING AT GAS STATIONS.

Oh boy, that's just GOTTA be good for the economic picture!!

-Tony

Anonymous said...

retail higher than expected, how could the federal reserve pause at the last meeting, if cpi and ppi are strong next week these markets are straight dowwwwwwwwwwwn. Federal reserve will have to do 50 bp to catch up...

Hbarr said...

Retail sales up higher than expected, meanwhile the savings rate is negative and the home equity tap is closed. One last blast on those credit cards to pay for gas during the summer vacation. It'll all come home to roost later this year with a lousy Christmas for retailers.

Anonymous said...

A 50 bp hike at the next Fed meeting would simply crush this feeble market. And I agree, if PPI/CPI figures are high next week, 50 bp won't be out of the question.

I see fresh yearly lows in all indices in October. Possibly a sharp rally from Nov - Feb (led by health care, materials, and metals), but then another crushing collapse into summer 2007.

The oracle has spoken.

:)

-Tony

costas1966 said...

Today looks like one of the days that when you are lonf it creeps up on you. It casually starts witha slow drift lower and then you are down 100-150 point before you know it

PB said...

The fed shd not be surprised at today's numbers. That is what we will see going forward, weak eco #'s but strong inflation #'s

The fed will hv to come back to raise, but they risk of falling behind the curve and future rate hikes might hv to be more aggressive even when the economy is clearly slowing/declining. So the fed is in a pickle and bulls are still stooooopid!

Sanjay Sola said...

The volume is just terrible. i'm covering some shorts because without volume we're just drifting along.

i'll add more shorts once i see some market volume, whenever that is.

Anonymous said...

Good news for AAPL!!! Cannot file 10-Q this quarter. And the stock goes up!!

Anonymous said...

My only concern with the markets is the unknown inflow of liquidity. With the M3 numbers not being reported, there could be absolutely HUGE inflows of liquidity into the markets to keep them afloat.

Liquidity addition is simply a huge wildcard in these markets. The inflows could be stopped altogether, resulting in a crash, or they could continue unabated until we achieve a hyperinflationary condition, after which point the markets would likely crash.

It all depends on what "They" want to do. If "They" want to keep the markets up, then they'll do so. If not, then they won't float the markets with liquidity.

But as I said, it's such a huge wildcard, there's no possible way to know what will happen next.

-Tony

Anonymous said...

You need to stop complaining about the market. It's not the market that's 'ridiculous', it's you!

Look, you and I make our living off... the market. It ain't gonna do you much good to complain about it. it's not 'cool', if that's what you think is the effect here. It's dumb!

You'd better learn fast that you're only going to make money with the market if you respect it and become 'friends' with it. In stead of expostulating about how 'you' disagree with what it's doing, try to learn something from it.

You'll be amazed at the difference in your trading.

Red Dog said...

If the markets seem confused and unpredictable on a short term basis, that is because they are. Move your time frame to the 120 min., daily and weekly charts and you will have clarity and it will all make sense. The longer term charts rule over the short term charts. Even the monthly charts are showing the Markets are overbought and starting to roll over. The MDY, IWM, QQQQ and SMH all have monthly MACD sell signals in place. Good Luck and Good Trading.

Anonymous said...

this market is impossible to trade, everytime I go short the stock goes up and everytime i go long it drops. Today after seeing NVDA take off I entered a short position at $25.40, think went straight up to $24.01 only to come back down to $25.60, sold out losing -.20 on the trade. Cant seem to time this market.

confused daytrader....

deadeyeca said...

So, will AAPL ever fill the gap below at $59.64? My puts are looking stale.

niko said...

Just a suggestion:

If you're going to post as "Anon", how about writing your name at the end of the post (like Tony)? Just helps the rest of us follow your thoughts from one post to another. I really value the posts of Tony, bsi, costas, Sanjay, etc., and it would be nice to be able to value yours too.

I'd also like to point out that although people are complaining about the lack of conformity with fundamentals regarding the macroeconomic environment, it seems like most people are trading based upon sound TA. I think that's a pretty good combination.

One last point, I love EddieFl. We need more bullish type people here, so please don't mock them when they rear their ugly heads (Hurricane5... *ahem*). A lack of a diverse posting universe reflects a possibly untrustworthy soundingboard. After all, aren't we mostly contrarians here?

Anonymous said...

deadeyeca,

I think the big boys want to frustrate the retail shorts on AAPL.

Apart from the slowing economy, rising gas prices, who the f*** has money to buy those damn IPods anyway.

AAPL cannot file the 10-Q for this quarter and the big boys manage it to keep above 60. With all the macro-economic news and the options scandal, I would have thought AAPL will be in the 50s by now. As expected, the big boys will try their best to enforce the opposite of what is logical.

I will hold on to my AAPL shorts still I see 50.

costas1966 said...

S&P 500

Intraday 30 minute chart has a clear H&S top forming, The neckline at 1262 is very important and I suspect it will break.


On the short term outlook, the bearish flag is still in effect. An attempt to break above it failed last Friday and now it is grinding down slowly frustrating the bears and keeping the hope alive for the bulls. This short term top takes more time than the previous two top in May but when it is complete watch out below, the decline will be more vicious this time. The fact that it takes more time means that at the end there will be more investors holding the bag at the top and it will make it less likely to bounce in any meaningfull way.


On an intemediate term basis.
10 month Head and Shoulder top . When the neckline gets violated
at 1246 and the breakout of the bearish flag occurs at 1225, whoever bought this market the past 10 months will be in a losing position and it will take much lower prices to attract new buyers.

costas1966 said...

Charts for the above observations are in my blog for whoever is interested

Leisa said...

Tim, today's action might bring a smile to your face for the weekend! Hope that you've not been stewing long.

After mulling over my bank thesis, I elected to enter a small put positions in WFC (Jan 65) (mortgage exposure) and BAC (NOV 50)(credit card exposure). I think that there is enough fear of additional rate hikes to put a lid on the top end for the next month, and gradually building expectations of consumer's debt load (today's retail numbers notwithstanding). Caveat...for any of you lurkers, I'm not a trader like these guys here.

PB said...

Underneath the surface this market is decaying. Liquidity is a factor, yes, but how long can they pump it up before people lose all confidence in the greenback? Also, massive liquidity will/does fule inflation, so the fed will hav to be that much tighter. Looks to me that it's the healthy corporation, merger trades that are holding this mkt up ... but this will also run out. Still going for DOW 10 thou before year-end.

Also, has any one here ever thought about how close we actually are to a wide-scale war against Islam?

Anonymous said...

I guess the morons who bought a 1B/1B condo for 400K in CA are the ones who are also buying AAPL here.

Anonymous said...

Are all you bears enjoying the PPT ? The news get worse. Inflation numbers this morning are worse. Airlines under severe threat, Israel starting ground invasion HORRAY ! market off its lows. WTF.

bill said...

Hold onto your hats next tuesday and wednesday, PPI, CPI and a other reports are coming out, if we are retesting support this month, then next week should show some conviction.

today its nice to see the market down, but volume sucks so its a scratch, but its great not to see follow thorough from yesterday, meaning both bull and bear have completely stepped aside today and are waiting for next week to come.

EddieFl said...

Niko, thank you for the good words.

Costas with an awesome posts, right on the money!!. I'll check your blog tonight, I'll have more time to look at it indepth.

costas1966 said...

They are defending and will defend the 1262 at all costs. They know the battle is lost if that breaks, the market will waterfall to the June lows. They will try to make everything possible to hold it. Who knows probably there are a few institutional investors that havent liquidated yet so they need to hold it until they will get out of the market.

deadeyeca said...

Costas, thanks for your insight. Where's your blog?

Anonymous said...

wait for ppi an cpi. if there both showing huge signs of inflation say hello to dow 10850 next week...

Anonymous said...

this market is bound to fall next week...hopefully. options exp is friday and then we should began to tank downward afterwards.

bearmoney

Anonymous said...

Well, bsi87, looks like you had a good call on GLD. Got stopped out at my $630 limit sell. Unfortunately, it closed above that level today, but I don't like the action anyways.

Looks like we could see some further weakening in gold... which is strange, because if the inflation gauges next week show higher inflation readings (which I believe they will), then gold should move up. But when the Fed paused earlier in the week and gold basically did nothing (except weaken), I was afraid something might be out of whack.

Anyways, looks like I'll be on the sidelines again with gold.

My other shorts (AUY, GW, VOL, COG) are all looking good. Too bad I didn't have any money to put into them :)

-Tony

Anonymous said...

What is 'PPT'? Its been mentioned several times in these comments.

Thanks in advance.

bsi87 said...

re:Options expiration. When I said ops exp would have an impact, it seems like the mkts move to that Max Pain area (where calls/puts balance out to tick off the most people) in the days ahead of expiration. And it's over by Wednesday's close.

Spy Aug max pain 127, Sept 128
QQQQ Aug 37, Sept 38
DIA Aug 111, Sept 110

re: Mkt frustration. Suggest using ADX to see if your stock/index is trending/non trending in the time frame you trade in. Many that I look at are nontrending which means shorting at resistance and covering at support which goes against most people's inclinations which to buy breakouts and sell breakdowns. Suggest smaller positions in any case. As Barry Ritzholtz has said, there are strong opinions lightly held. No need to be a hero/home run hitter, just stay in the game until we see proper trade signals, whether long or short.

re: the rally after the London plot. Why the surprise? Anyone who bought after the 9/11 week, the Madrid bombing, the Bombay bombing, and the London bombing, made money. They bought fear and then sold into the rally. This rally was muted in comparison. The trade works until it doesn't. One of these days the fear trade won't work and will take down a bunch of traders but for now, it still does work. Of course today, the markets were right back at the levels hit early yesterday. So not much convinction.

TA guys aren't supposed to speculate on fundies but what I'm reading (and I didn't parse the Fed statement)is the Fed said we're pausing...for now. So the possibility of one or more Fed hikes is behind the curtain. I think that's putting pressure on equities and gold. Doesn't matter much. The DJIA, for example, can't break and close above 11,250 or so (that rally on the 3rd was a helluva chance to short since it sure looked like a breakout to me but the volume wasn't there and hell, I was scared (GRIN)). And DJIA can't break down below 11,050.

So based on that, I closed my shorts, SDS, DXD, QID, in mid afternoon. Made 2-3% in about a week. Watching the VXN for now to see if Naz has a mild rally which would be another setup to go short.

Still carrying the gold and OIH short.

Sorry for the stream of consciousness rap. LOL.

Good luck to all.

Mark said...

My CAT is still happy. :) 500% happy. Will it be 1000% happy? We'll find out at the end of next week.

Had a heart-to-heart with the wife this morn, and she said that I could have money to trade with. I told her I'm not ready yet. So I have the green light when I'm ready.

Yeah, a different attitude from a month or two ago when I felt untouchable, but I realize that I can be touched and want to make sure I get my emotions out of my trading.

And I've noticed that I say, "I want it to go that way," and realize that is the wrong thing to say. I need to change it to, "I expect it to go that way." Until then, I'm parking myself on the sideline in the paper.

But I still wish I had some real CAT this month!

Why do I rave about CAT? Because it had the perfect TA setup to short light at the start on 8/8/06, then short heavy by the end of the day in my TA opinion. Even though it rose a little yesterday, it still was within the downward channel. In my notes I mentioned a possible pull-back on 8/10. If it rose much today, it would have been time to get out, but I didn't expect it because it isn't oversold.

Anonymous said...

ppt = plunge protection team

costas1966 said...

bsi good job. Keep posting

Anonymous said...

gYou people are laughable. Especially the Bears. Bragging everyday that you're the shit and poking fun at the Bulls for their weak rally attempts. At least they try! What the hell have you done all week? Nothing! Deer in the headlights -- talking shit, getting us all excited about gang-banging the bulls -- and we believed you! Loaded up on a double dose of viagra -- only to be left with a 12 hour erection and lightheaded from a lack of bloodflowing to the brain! Thanks a lot!

The ball is up in the air and no one seem to want to run with it. Bears-- Bulls-- I don't care who! Just do something already! These last weeks have been such torture!

--Furio

Mark said...

Furio, something is always moving no matter what the indexes do. Finding them is the hard part, ya think?

Anonymous said...

I do my best trading in a range bound market. Thank You! I hope we get sideway action for a few more weeks. Check out AORD in austrialia. Sideways for 5 weeks straight.

Anonymous said...

Furio, forget the Viagra & try a little lithium

onemilliondollarman said...
This comment has been removed by a blog administrator.