Friday, October 06, 2006

Bear Goggles

Lest anyone think otherwise, rest assured my bearish view on the market is still quite intact. It's been frustrating. It's been hard. It's been expensive. But I look at a lot of charts, and I am still absolutely convinced there's a lot more potential on the downside than the up. I guess I'm wearing bear goggles.

Take a look at one simple chart - the SPY. You can see the channel. You can see the median line. Now, regardless of whether you're a bull or a bear, tell me something: based on the behavior of the past two years, do you think it's more likely this will be lower or higher a few months from now? (dramatic pause) That's what I thought.


RIMM is looking sweet. It's got a beautiful shooting star candlestick pattern, and I think we can all agree this has had a fast, furious run-up in price.


For balance, I offer something that looks like a good buy. The symbol is BLUD. This is a solid looking pattern.


Here's to a better week next week, ladies and gents. This one can soon be forgotten.

27 comments:

Des said...

Mr. K.,

The Chairman and co-CEO of RIMM just bought the Pittsburgh Penguins. He must have sold a lot of stock at these incredibly inflated prices to finance the deal. Go Sharks, die RIMM!

Prabz said...

DIE RIMM DIE!! Thanks for the tip Tim..

Al_K said...

Boy, is it hard to get a user name but I think it is worth it. Now, there seems to be more quality reading on this blog and less noise. Hopefully, this works.


Al K

chronictown said...

Tim , Did you reopen your $rut position? Mr. T needs to get to work. Its tuff to be a bear at the moment,everything shall come to he who waits! 17th,18th lots of news,maybe we can catch a break.

RLgtGLgt said...

TK,
I like the S&P view you showed . . . that really should teach all the people (bull or bear - buyers or sellers) that we should respect and appreciate the trends and trend lines. You point out great sell signals "and great watch / buy signals".

Keep up the great posts. I have really learned to trust my trendlines and not to enter until I have a confirmation either bouncing, breaking or "resting" on those lines.

Can't wait til your book comes out. Do your loyal blog participants get a "signed" copy with a special code. I really would like it!!!! I enjoyed meeting and listening to you, would love to have an autographed book!!!%&**$%&(()#

Best of luck trading all (isn't that really what we are talking about?).

Tim Knight said...

Chronictown, yes, I did indeed re-open that position. If the market does weaken, I figure that one will weaken the swiftest.

DrFox said...

Dear Tim,

This is my first post on your blog. I am from Brazil and also run a blog on stocks.

First of all, congratz, you have build really nice material here.

Regarding your vision on the SPY, I was thinking.

There is a chance for a channel breakout. If confirmed we could be looking for an additional up moviment.

There is also the possibility that the index walk sideways until it touch the lower channel. Once there it will be possible to bounce or to break down.

Of course, this is just speculation.

[]'s

DrFox

Leisa said...

Tim:

I don't think that I was reading your blog at the time, but I today (a dreary, rainy day) went back and looked over your May posts. It was very interesting to review. Perhaps rather than block those anonymous bloggers, you should have merely redirected them to May.

John said...

Tim, I'm so glad you finally took action. Anonymity has its place in the world -- blog comments isn't one of them. I'm sure I'm not the only one that tuned out of the comments section over the past month and I look forward to the posts of substance that were once prevalent here. Thank you for sharing your knowledge even though you surely have what must be an insane schedule.

You mentioned bringing access (for a fee) of Prophet Charts to this forum -- will you provide details soon?

JS2

EC said...

I like no more anonymous comments. Bye Bye riff-raff. Usually those people have nothing of value to say.

Tim Knight said...

Agree! It feels like a cleaner place already. As for ProphetCharts, details on that will be out whenever it's ready.......shouldn't be long.

C'mon, Kim Jong Il! Test a nuke! We need something to bring this market down!

TallMan said...

dittos on the comments about anonomous posters. I posted a couple of times in the past anonomously (because it was easier) but this way brings some bit of accountability to those who take the time to reigster.

Looking forward to the reduced number but increased value of future posts!

niko said...

Your wish is Kim Jong Il's command, apparently.

http://news.bbc.co.uk/1/hi/world/6032525.stm

Des said...

Nuclear test claims, South Korean stocks plunge, oil moving up as a result of the latest from OPEC.. it just might be a good time to be a bear (oh please, oh please..)

Hbarr said...

Now that the comments section has gotten cleansed it's time for the market to get an enema too.

Gold is up on Mr. Kim's fireworks (Calling Team America!) and oil is getting support from an OPEC cut.

Maybe we see the moolah rotate out of overbought equities and back into commodities?

Tim Knight said...

Oh, this is too much. North Korea has successfully tested a nuclear weapon, and the GLOBEX is down mildly. Jesus H. Christ. What's it gonna take?!?!

Sanjay Sola said...

RIMM gets another upgrade. it's a strong stock. shorts are getting mowed over there.

Super Bull said...

---C'mon, Kim Jong Il! Test a nuke! We need something to bring this market down!

Trader Tim, when you depend on Kim Jong Il to make money, it shows that you are desperate and moreover, morally corrupted. I mean what's next, steal from widows and orphans?!

plunger said...

little insight on rimm from msn bill flickstein , just another opinion tho,

Fact or fiction? A company makes forecasts that, arguably, are questionable. Initially, it doesn't produce its financials. It stages the whole production in a bizarre manner. And then, it's cheered wildly as its stock explodes upward 20%.

Just another reality show on Wall Street, featuring none other than Research in Motion (RIMM, news, msgs).

Amnesia for fun and profit
The company's timing was most curious. Do you mean to tell me that it didn't know until sometime after 4 p.m. on the night in question that it potentially had an options-backdating problem, and consequently its financials would be delayed? (Sometime after the conference call, RIM released its financials -- which showed inventories up 133% year-over-year and receivables up 62% on a revenue gain of 30%. That made its "beating the number" look even more dubious.)
By Bill Fleckenstein- msn money

Tim Knight said...

"Trader Tim, when you depend on Kim Jong Il to make money, it shows that you are desperate and moreover, morally corrupted. I mean what's next, steal from widows and orphans?!"

I doubt Kim Jong Il is going to take any direction from me. I confess, perhaps my eagerness to see prices go down pushes my comments past the boundaries of good taste. I'll try to watch that a bit more.

J said...

Tim:

Congrads on ESRX, going down nicely..... hoped on for a ride when you posted the break down.

Thanks!

J

smallswinger said...

My Small Cap Swing indicator whipped back to LONG on Thursday, 10/05, even though in overbought territory with high stochastics. Because of the huge advance and high stochastics this LONG signal was at +54 as of Friday’s close and is at +65 already, intraday Friday, 12:00noon ET, at the normal maximum.

This whipsaw effect has not occurred that often with this indicator. I have checked back over two years and though it has happened before, it is fairly rare. This whipsaw in the indicator is much like the recent market prices, and lends support to the idea that this is a manipulated rally with many bearish divergences.

Here are the recent values of my Small Cap Swing Indicator for the last four or five switches.

. . . . . .Small
. . . . . . Cap . . . . . . . . .Russell
. . . . . .Swing . . . . . . . . .2000 . . . Cumulative
Date . . . Ind . .Signal . . % Chg . . . . % Chg

09/06 . . -19 . .SHORT. ..-2.1%. . . . . -2.1%
09/07 . . -43 . .SHORT. ..-0.8%. . . . . -2.9%
09/08 . . -61 . .SHORT. ..+0.3% . . . . -2.6%
09/11 . . -72 . .SHORT. ..-0.1%. . . . . -2.7%
09/12 . . +18 . .LONG . . +2.4% . . . . +2.4%(short-covering)
09/13 . . +41 . .LONG . . +0.8% . . . . +3.2%
09/14 . . +54 . .LONG . ..-0.4%. . . . . +2.8%
09/15 . . +65 . .LONG . . +0.2% . . . . +3.2%
09/18 . . +70 . .LONG . . +0.0% . . . . +3.2% (short triggered)
09/19 . . -06 . .SHORT. ..-0.5% . . . . -0.5% (& confirmed)
09/20 . . -05 . .SHORT. ..+1.2% . . . .+0.7%
09/21 . . -13 . .SHORT. . .-1.0% . . . ..-0.3%
09/22 . . -37 . .SHORT. . .-1.2% . . . ..-1.5%
09/25 . . -43 . .SHORT. . .+1.2% . . . ..-0.3%
09/26 . . -39 . .SHORT. . .+0.4% . . . ..+0.1% (long triggered)
09/27 . . +17 . .LONG . . . +0.4% . . . . +0.4% (& confirmed)
09/28 . . -19 . .SHORT. . .-0.4% . . . . -0.4% (whipsaw short)
09/29 . . -25 . .SHORT. . .-0.6% . . . . -1.0%
10/02 . . -48 . .SHORT. . .-1.5% . . . . -2.1%
10/03 . . -64 . .SHORT. . .-0.1% . . . . -2.2%
10/04 . . -49 . .SHORT. . .+2.1% . . . . -0.1%(short-covering)
10/05 . . +40 . .LONG . . . +1.3% . . . . +1.3%(whipsaw long)
10/06 . . +54 . .LONG . . . -0.4% . . . . +0.9%
10/06 . . +65 . .LONG . . . .+0.2% . Intraday @ 12:00noon ET

Normal LONG target: . . +65 to +75 (max: +95)
Normal SHORT target: . -65 to -75 (max: -107)

I remain 100% invested in SHORT positions as of Friday’s close, 9/15/2006 (RUT=729.35 to 739.81, on 10/06, a +1.4% advance). I haven’t lost much since going fully SHORT, but the vaporization of gains on 10/4 and 10/5 really hurts.

I am having just as much trouble as everyone else here rationalizing the direction of this market. Sure smells manipulated when the markets are up on Monday, mid-day, just when OPEC cuts oil production, oil futures move up on supply concerns, North Korea explodes a nuclear bomb, an emergency U.N. meeting is in session to condemn North Korea, and all equity indexes are in highly overbought territory on both a daily and weekly basis.

smallswinger said...

Error - It is at +65 intraday, MONDAY, not Friday.

Sanjay Sola said...

SAIA, UARM, and HITT look pretty good here. due diligence.

Sanjay Sola said...

what does it mean when an index pops out of a channel? the S&P is a little above the uptrending channel. is this good or bad?

PinoyTRADER said...

I enjoy reading your post even thought I don't necessarily agree with your LONG/SHORT opinions.

stockshaker said...

Sanjay, thats good (for bulls)! That means now it can use that upper bound for (yet, another) support should it fall due to overbought conditions.

However, I found that it posted thru the channel on Oct4, with very nice volume.

I'm long on commodities, steel has had a really good rally today. I had converted my bearish positions on NUE and X to bullish ones last week, and today its finally moving in a convincing way. About time!