Monday, October 09, 2006

Even a Bomb Can't Stop the Bulls

Set aside all the dogma. All the points of view. All the rationale. It boils down to this simple fact:

The mentally-unstable leader of a country widely recognized as one of the most hazardous and threatening in the world successfully deployed a nuclear bomb.

And how did the market react? It went up to its highest point in human history (as measured by the Dow Jones Industrial Average).

Something is very wrong here. I can't explain it, and I certainly can't fight it. I'm sick of it, but that obviously matters not a whit. I haven't thrown in the bear towel yet, but it's definitely balled up in my right hand, and my right arm is extended behind my ear, ready to hurl it.

In the meantime, I've been scaling out of short/put positions (including indexes) and moving into long positions. I do this with some trepidation, especially considering how in relative terms the market seems so high these days. Take note of this Dow 30 chart (in spite of the Dow's pushing a bit above the upper resistance line):


One recent suggestion that did quite well was Express Scripts (ESRX) which has been falling nicely (I've circled the point where I suggested it as a short).


Google, mentioned last week as a long, is likewise prospering. I'd add to this "the market is insane!" notion the fact that they just spent $1.6 billion on a company which has never made a single penny of profit and is threatened on many sides with horrendous potential legal action.


US Steel, also mentioned as a long candidate (at the circled area) is also on the rise.


I don't have time for a long entry today, but I'll reiterate that BLUD looks sweet as a long. It had another good day today. This is a beautiful saucer pattern, folks.

16 comments:

walter said...

anyone notice the pathetic volumes on the indicies today... isnt that what us bears are looking for? a new high on one of the worst daily volumes in a long time? doesnt the market do the most obvious thing in the least obvious way? - that means its going down, we just arent sure how/when...

and c'mon - who cares if some aggregate of 30 stocks goes up (i.e. Dow 30) - there's lots of horrible charts out there and we are ignoring them here...

we are doing exactly what the bulls want - capitulating... i am not saying fight the tape, but we should posting chart after f-ing ugly chart here and picking our entry points...

c'mon!

Tim Knight said...

If you see ugly charts, tell us the tickers. I love charts. Share!

walter said...

on the following charts, i am following trendlines (thanks to you) and price and volume mechanics with some candlestick analysis where appropriate (many of these may sound familiar):

AKAM
BIDU
BA
CHRW
COF
CKFR
CTXS
DST
FMX
GOL
LLL
MON
NTRI
OSG
RIMM
SNDK
UARM
UBB
UNP
WMT
WYNN

now, these charts look great in the sense that you would be crazy to go long on them, but i am a permabear - i am only interested in shorting, regardless of what the rest of the market is doing. a bull may see something totally different...

thanks!

matte351 said...

Please post what charts look bearish. They all seem to be turning upward.

walter said...

now, i am not saying that all of these will go down, but i do feel that they show a lot downside potential given those issues i mentioned above...

Unknown said...

Tim,
XAU is retesting it's old support as resistance just at the neck of the head and shoulders. What news is out there that would keep you from a put w/a tight stop if it starts to go down w/any conviction?
Kevin in SAC

Tim Knight said...

Gorgeous looking graph, chickin6! A beauty!

niko said...

Look at ATLS. Looks like a long, flat H&S on a weekly chart. The sloped neck puts the breakdown at about 37.5 or so.

On the upside, check out PHRM. It ought to test the gap at some point, and I'll probably get in around 20.25 or so...

stockshaker said...

so gorgeous, I have no idea whats going on with it!

I can see where you get 41.72, but I would think 42 is a better top out point right now, before going down to about 40.95, or even 40 for a much better support, and then going back up.

TK, steel is doing amazing. Good call on X. I'm very, VERY glad to drop my bearish sentiment on that one last week!

I'm watching a lot of oil, commodities, and such, and all of those look like its stabilizing. Isn't it nice to see all these stocks just poised to go up? It's like a freakin gold mine out there with all these stocks, they all look so cheap!

Which i think if those go up, isn't there some type of negative correlation to the general markets???

And I think that is the only way we'll start seeing the pullback in teh indices, based on the oil recovery. There are too many outside factors with respect to the oil industry to just believe a breakdown of a 130 support level on the OIH will suddenly cause oil to fall to sh*ts.

now if only housing started falling again, these sideway ranges are starting to get annoying.

stockshaker said...

dammit niko, beat me to the posting! Kiddn'

My last message, I was refering to QQQQ for the support at 40, and 40.95 (early part of message)

Niko, ATLS looks like a nice long setup. Look at the industry of that company: Oil and Gas Drilling... are you surprised?

Chris said...

Hi Tom,

Once again good post and details. I think you are right on the money with GOOG. These people running the company have done a fine job for awhile, but now I think they are just sticking their heads in the sand. They are spending money hand over fist aquiring YouTube, which as you pointed out, has earned absolutely nothing, and is under fire from legal and competitor websites. I think this stock is going to be in huge legal trouble when click fraud is becoming more mainstream. I mean, this stock is worth 140billion market cap from just a search engine? I think this pig is going to get slaughtered and will drag the market down with it based on fears of another 2000 disaster.

walter said...

MON took a dump this morning... I like it short in general, but tomorrow it releases earnings - anyone got any thoughts here?

stockshaker said...

Does anyone know why Housing is rallying like crazy? DOES anyone know why its breaking through a sideways trend to the BULL side, despite all the data?

Take a look at MTH. Broke 45, on really good volume.

Does anyone have an explanation?

walter said...

housing is value play now

Jennifer Owens said...

DNA stangles tonight, this thing has been basing for year and half gonna to move big time........

Jana said...

Many housing stocks were upgraded today-hence, the rally.

Nevermind the giant cuts and incentives, industry layoffs and stagnation of new permits.

Let's buy, buy, buy.