Wednesday, October 18, 2006

Done and Done

OK, let's get this over with. Let the gushing begin. Fox News (with a custom-made graphic, no less):

CBS MarketWatch:

So, unless you missed it - - the Dow crossed 12,000. Finally. Whether this is a one-day wonder (which, as of this writing, it is) or a permanently new plateau of market strength remains to be seen. I was heartened to see that, in spite of the Dow's fireworks, my portfolios were holding steady. That's probably because the advance is so narrow, and most of the Dow's strength is coming from IBM. The fact that the NASDAQ is down on such a momentous occasion is interesting.

One reader wrote to me this morning and pointed out the gent (the one weighing less than 200 pounds) from yesterday's commericial bore a striking resemblance to Larry Kudlow. One of those separated-at-birth things. I am inclined to agree.

Of course, I have trouble explaining my fascination with the commercial. Perhaps it was the Ricki-Lake lookalikes that struck a chord. Besides being a little soft around the middle, I share with them the complete absence of any remaining dignity.

Turning our distended bodies to the markets, my gaze falls upon the NASDAQ 100. I dunno, to me this doesn't look like a market that's about to explode higher. Particularly since its larger brethren (the Dow) has been making such headlines of late.

Here are a few specific stocks I like (for shorting/put-buying, as you might guess). CBE:



Deere (DE):


Monsanto (MON):

And Marathon Oil (MRO) which seems to be at an apex of sorts....

Sorry I didn't get to do a posting yesterday. I met a ton of people at the (regretably named) Money Show yesterday and wasn't in front of my computer until midnight.


downosedive said...

Im just wondering........what if, what if the major supporters of this market have programmed in sell orders above the 12000 level. Looking at recent trading behaviour is clearly showing that whilst the intraday highs are still getting higher, the actual close levels cant hold 12000. The whole scenario is just starting to look as if support to push higher and hold MAY not be there after all. Speculative desire to push higher IS there as witnessed by the daily intraday new highs each session. I cant help wondering whether just maybe any further advance might be put on hold for a while. Im not suggesting a crash or even a downward consolidation of much consequence, just a tiredness in the upward trend. Those who didnt cash in on this mornings 90 point plus rise, must now be cursing

trader said...

Yahoo is a dog with fleas.
Do your own homework.
Nothin' spoils my my day more than losses sport !
Greed is good ! Greed works ! Greed clarifies !

Andrew755 said...

I'm just getting irritated....they gapped up the market 40 points.... it is way to risky up here for my liking to do anything- especially with your election a few weeks away.

Everytime the market goes down... the PPT buys it all earlier today. I don't think the bulls will rest until a DOW 12000 close.

Lets see what happens in the next hour- 3-4. I think they will try to push it near the close.

All the retailers are on their way now....its rather pathetic.

downosedive said...

Short Marathon Oil? Oh come on have a heart, I used to work for their UK operations! Oh bears can be sooooo cruel at times!

downosedive said...

People - are we starting to get a consus here? Suggestion of around 7th Nov elections as being a turning point. Interesting thought. Maybe, just maybe...... This market is sentiment driven, it just might be that with the 12000 level hit and together with the elections, a sense of anti climax may occur and some correction with it??

Sanjay Sola said...

most stocks are getting crushed afterhours, excpet for Apple and a few other.

i think there's a great opportunity to short stocks into earnings since they've run up so much.

bsi87 said...

re:EEM. Made a note to myself to look to short EEM anytime after Oct 13 which was 30 days from the Economist cover. Note today's action that EEM had a large reversal.

re: DJIA. Also noted to look to short DJIA Oct 25 or after based on DJIA was the lead story on GMA/Today shows.


Watch for reversal tomorrow. MACD diverging. If it breaks above 25, I would expect massive short covering. I'll put my sell stop below tommorrow's LOD.

do your own h/w


Sanjay Sola said...

Google looks like it could be a good buy. earnings are tomorrow. the 3 month chart is interesting. stock is at the bottom of an uptrending channel. do your DD.

bsi87 said...


volume picking up on the downside. Would look at a long around 50 DEMA (404).

No position.

PB said...

Nouriel Roubini has a video on the --- calling this a sucker's rally built on the expectation that the fed will cut and the economy will only soften. He thinks we may last at these or slightly higher levels until the close of the year. But given the stretched levels, we might take a pause after earnings are out of the way. Just picture the charts going this way until the end of the year, very low probabilty of that occurence. At least test the former high at 11,725-ish.

As for GOOG, more money than brains at this point as illustrated by their purchase of youtube - complete waste of money

AT said...

So they finally broke through 12000. But strangely, could not sustain it. And the NASDAQ actually declined.

Did you notice the lack of conviction of the cheerleaders on CNBC as they put on their silly party hats and tried to fake up some enthusiasm? And the total lack of enthusiasm on the trading floor? It seems everyone knows that this is a sucker rally.

I remember the rally in the 90's. You could feel the excitment, not only on TV but in everyday contacts. The economy was doing well - there wasn't this anxious waiting for PPI and CPI numbers or hairsplitting between decimals. People were atually prospering and building savings and wealth, not getting by and increasing their level debt. Productivity was increasing. There wasn't any dark overhanging dread like the one arising from the current housing collapse, trade deficit, budget deficit, social security and medicare bankrupcy, and geopolitical issues. Yes that was a good rally, except when it peaked and collapsed in 00.

This rally is ridiculous. Its just going straight up over the last few months, as if there is no problem in the world. Where are the pauses, the consolidations, the small pullbacks you see in any other rally?

I can just feel it collapse soon, like a house of cards.

btw my favorite, AKAM fell hard today. I had shorted it yesterday, but chickened out and covered when it started moving back up this am. Bad move. I missed out the better part of the fall. NVDA and BRCM also fell hard today, but to fast to take advantage. All of these still have lots of room to fall. I'm going to play the downtrend. Also watching JWN, AEOS and GYMB as they lose momentum and start turning downhill.

chronictown said...

Bsi87, are you still long USGL? Ive been looking at KRY ,any thoughts on gold or the miners?

Tim Knight said...

Great post, AT.

Jeez, I don't miss the anonymous hoards one bit.

costas1966 said...

CHRW is the best looking bearish chart that I can find. I thought I share it with you. Chart analysis is in my blog
Remember set your stops before you do anything.

AT said...

Thanks Tim, great blog. I enjoy being here.

In his Daily Market Outlook, David Fry confirms my suspicions that this rally is unnatural

"The Fed has injected over $65B in liquidity to its 'primary dealer' network recently which includes Merrill Lynch & Co. Inc. (MER), Lehman Brothers Holdings Inc. (LEH), Bear Stearns Companies Inc. (BSC) and Goldman Sachs Group Inc. (GS), among others. All of these firms own sophisticated computer trading software and have reported spectacular earnings using your money! ('RoboTrader' at work.)"

Thats why this market just won't quit, and why the big brokerages are making fantastic profits.

Denver_Investor said...

another good comment on the 'unnatural market' is from Russ Winter at his Xanga site:

quoting: "What I'm about to say, may seem wild eyed, but this "stock" market has an almost unprecedented pinned looked, as if there is an historic manipulation going on in the futures pits, or with some type of Robotrader derivative trading. Free, non manipulated markets just don't act this way. I really don't think it's the Fed although they are negligent. It could be a Pig Man operation, they've captured the market, at least for now. Maybe some modern day Jay Gould and his henchman Fisk in the garb of electronic trading? Market and banking oversight today has morphed back to 1869 defacto standards for sure.

Another theory, is there might even be a rogue trader or group of rogues, who have been allowed in this unregulated environment to accumulate some massive leveraged equity futures or option position, and in the short term literally hijack or at minimum strongly influence the market? Don't think so, well it's happened before. A slightly different twist, is that a thousand Riskloves and crazies are all trading the same black box program at the same time. If that one is valid, someone will trip them, just as sure as the sun goes down at night. When you look at measures such as TRIN, it just doesn't look like real money is driving this, but more like synthetic trading of some type." end of quote
I agree, watching the NYSE 1 minute tick chart has been informative for the last several weeks...continual and constant spikes to +1000 and higher ticks any time the market steps back even momentarily, and very few minus ticks of any size. THIS IS NOT NORMAL. It has a manufactured look to me.

EddieFl said...

VIVA HEnry PAulson.

In less than one year, he manages to get the Dow to all time highs, despite a war and a lunatic setting off a nuclear bomb.

He also works up his magic and makes oil go down , im sure getting together with his plas from wallstreet.Diffusing the real threat that those Middle East countries have, is thier oil prices. They cut production twice in in two months and just cut production again, but Oil is not going up. That is the middle east real power and he is making it a non-issue at least for now.

That is called manufacturing a win, making it happen. and serving the Untied States best interest, i think he will be in that position for a long time.

bsi87 said...

re:Chronic. I bought some KRY yesterday. Have a buy limit order in for some IAG. Have some KGC. Looking at IVN on a retracement under 7. USGL doesn't look as good as others IMO.

re:CHRW. Was hitting the 30 RSI in 2 time frames in last couple days. So I bought some yesterday. Guess that makes a market. I'll put a sell stop under the low of past 2 days to protect my equity.

re:PFE. Short at 28.51 pre mkt. Their "earnings" are so cooked. Making numbers thru cost cutting and share buybacks.

re:Paulson. I think he has a chance to be the Jim Baker of the new century,e.g. bring the house of cards down. JMO.

Seeing a lot of energy plays making bottoms. I'd be looking them over.


trader said...

Regarding Paulson and/or Bush manufacturing or manipulating higher stock prices and lower energy costs,99.9% of the the public will take it and they don't really care how it happened.And we have to admit that in over 5 yrs. the "terrorists" haven't been able to do one little thing to threaten us. I don't know if it's luck or Bush's Homeland Security but it looks real impressive on paper and in a speech.
I started playing the market right out of high school in '82 and I was all dumb and optimistic for that reason alone. I really did'nt know or care at that time that the market had been trying to bump through 1000 for the last 10yrs.It just seemed like the market liked going up more than going down.You had a million analysts saying at 1200 and 1300 that the makt was way over bought and was out of control.Like Joe Granville if any of you out there are mkt historians.But that was not to be and made fools out of most "experts" and did not have a correction again until it doubled itself again. And even then it never got close to 1000 again.Then of course as we all know it sailed through 3000,4000,6000,etc,etc.This market may have just decided again that "it" and everything else in the world is worth more than we think it is going to take the bull by the horns again.Two yrs ago I thought we could re-test the lows of "03 (7700),but right now I think it will be hard to re-test 11700.Something definetly has changed and we better adjust NOW !

Sanjay Sola said...

it looks like there's a cyclical market correction taking place. everyone is expecting a dip, but in strong markets sectors correct, while others move up. everyone is expecting a dip, but i'm not sure it will happen like that.

Andrew755 said...

Hmmm.... there is alot of low volume stocks today, not quite sure what to make out of it. I don't think any big decline or correction will happen until after elections though. I'm actually waiting for a quick pullback next week though.

Interesting to note I am making lists of all the stocks that gapped down this week and it is getting HUGE-the interesting point is that the earnings aren't HORRIBLE...but stocks have run up so much, it is a sell the news.

Man this patience thing is killing me, I haven't made a trade in a while. I've done a heck of alot of research lately though....

Here are some charts to check out, triple bottom on ARG- measures to 42. H&S on HOT measures to 70 over 4 months, same with ENER and ZOLT....


PB said...

I can see the headlines now ... all of the manipulators being indicted on some count or another for fuking up this great american machine called the stock market. Through their current actions they will bring this market to it's knees and a generation of investors will have been completely turned off the markets. Sorry, but this is not 1982 all over again ... if anything it's 1966!

EddieFl said...

trader 6:57a.m.,

Your first sentence says it all on your reply.

99.9% of people dont care how it works, they just care that it works. They are unaware and busy with thier own lives.

If they become aware, it is much to much work to figure out.

They want to be safe and happy, and however that may be is good for them. Try explaining how a short position to somebody not involved in the markets and look at the puzzeled look in thier face.

PB said...

The only reason they are able to manipulate right now, is 'cause the market has no direction. Many are afraid to take long positions and whatever they wanted to sell has been sold already. They can creep the markets higher 20-30 points at a time, but anything more is beyond their scope. I just don't think exiting will be as orderly as this slow creep upwards. What will happen when growth starts to dissapoint? A nice rush for the exits. By the time it's all said and done, we'll see the underside of 10k --- sometime in '07

bsi87 said...


Look at bill cara's blog. Does an excellent job of reviewing the miners.


Sanjay Sola said...

someone is working hard to keep the Dow at 12,000.

PB said...

this market reminds me of Star Trek and William Shatner:






Captain ...







Leisa said...

Oil and metals are strong today!

bsi87 said...


Bought it with a trailing buy stop.


Looks to me that it's about sold out. (Famous last words). But everyone hates YHOO, loves GOOG, and expects nothing out of the former. Anything positive that happens would cause a sell covering rally. JMO.

re:OIH. Hitting a resistance line that goes back to the May high. Everyone is excited that OPEC is gonna cut. The cheaters will make up the difference so I think this is a blip. Adding to short position. Stock moves 4 bucks on average daily basis so up 3 isn't any big deal. Plus the volume is just average.

re:PFE. A lotta PFEBOID bulls out there, thinking that it's gonna capture the lighting again. I got a news flash. It ain't gonna happen. No EPS growth till 2009!!!! I got short preopen at 28.51 and I'll look to short at 28.30 limit order tomorrow.

do your own HW.


PB said...

oil and metal strength still indicates a strong economy to me.
I'd rather see them weak along with the mkt in general.

The Philly report was negative, slowly this ship is turning around. Michael Khan at Barron's has been writing more bullish articles of late ... sign of a top?

Andrew755 said...

What a snoozer today..... 2.5 weeks until this election stupidness is over....there is no volatility in the market and that or a full fledged bull market is what makes everyone lots of cash.

This is neither.

I still can't bring myself to buy anything long quite yet... this market isn't about to run off on us, with companies earnings and profits not expanding.

Anyways....lets just get them to close the market over 12000 today, enough already..... I want to get back to the business of money making.

bsi87 said...


Feels like we're close to a bottom in bonds. Look to close short positions and go long in the next day or so.

do your own HW.

bsi87 said...


good call. Be nimble.

trader said...

We'll, we are going to get a melt-up on this market at this rate into the end of the year.Google up 35 in after hours.Apple up 5 today.
IBM up 3 1/2 pts. yestrdy.These things are "ramping".Tons of "easy" money on the upside.Someone around here was predicting Google was going to 20,thats right 20, on the blog about 6 months ago or so ago.Hope they did'nt follow they're own advice.Anyway ,it should be an interesting market into the end of the year.Luck to all !

Andrew755 said...

Apple Google and IBM are all good companies, and I wouldn't be short anyone of them..... not in this environment anyways.

When the bears start turning into bulls, then that is the sentiment I want to says that we are getting close to a top...not that I'm trying to call one.

But keep in mind that the yield curve is still inverted- and 90% of the time a recession has followed, stocks have rallied for the past three months (not on fundamentals but on performance chasing), the transports which should confirm a breakout on the DOW are laggards, tech and semi's are lagging. The way the market is behaving I am assuming that there will be no slowdown.....but there will and equities are not priced for it.

Oh and I forget....the elections are in 2 weeks and isn't it ironic that gas is at year lows and the stock market is at all time highs as the Republicans trail in the polls....oh and who appointed Bernanke.....BUSH. Oh and every piece of bad news is ignored while the $VIX is at its lows....COMPLACENT.

My point is this, enjoy the rally...I'm keeping an open mind but I plan to get short within the next 1.5. Breadth is horrible...It's amazing the media coverage outside of the US- its so realistic and doesn't paint such a rosy picture like the CNBC cheerleaders!!!