Monday, October 16, 2006

It Must Be Frustrating.....

The closely-watched Dow Jones Industrial Average peaked at 11,997.10 today, a minuscule 2.90 points from the fabled 12,000 mark. At this point, it seems almost a foregone conclusion it will cross that level. I'd like to get it over with. It must be frustrating for all the media waiting to announce this big event.

The market reminds me of a popular toy from my childhood......


Given Friday's long, chart-rich post, this is going to be a short one. Here's the latest on the $SPX. There's plenty of overhead resistance from early 2000, and we seem at the highest reaches of a channel at this point. The fans you see traversing the screen date back to the Great Depression.


Fluor (FLR) looks pretty decent as a short to consider.


I've been short the Morgan Stanley Tech Index for a long, painful time. This one's been nasty. The stop is pretty obvious (and pretty close.......)


LUFK is another idea to consider for you shorties.....


If you want to bet against the red-hot REIT market, the IYR is a good way to do it. There are plenty of puts out there........not heavily traded, but not so thin as to be impractical.


This week earnings will be coming in hot and heavy. Apple, Yahoo, Google......tons of stocks. Should make for some clearer direction.

21 comments:

Denver_Investor said...

I hereby name this market not a bull or bear, but a vampire market.

Until someone or something sticks a stake in it's heart it's gonna just keep going.

but seriously...this is the NINTH day of the DJIA having a 14 day RSI over 70...now around 77. An extremely high reading, and *usually* it denotes being very near the end of a runup. But then..I said that about 7 days ago. The QQQQs and the S&P500 also have RSIs of 75 or higher.

This is just plain nuts.

Tim Knight said...

Wow. Just 1 comment. I guess the market has left people literally speechless.

bw said...

Three stocks I've been following seem way overbought - CMI, RIMM, and MSTR. Look how high above the weekly EMA those stocks are! I've already been burned a few times shorting into an uptrend - it is difficult to pick tops in this market. The problem is, I can't get long either because they keep going up, up, up without a pullback. That's frustrating.

The oil stocks have been good short candidates lately - FTO, KWK, NOV, DO - been even they have made a turnaround. It is difficult to pull the trigger. Add to that the earnings season, and maybe it's best just to sit on the sidelines awhile.

Sanjay Sola said...

as soon as the market starts going down, this board will see more comments. when it gets full of comments you should start thinking of going long.

when it gets down to a few comments you take profits, sit the sidelines, or go short.

the contrarian approach has been working pretty well lately.

Stuart said...

Tim, Great blog! is OIH an absolutely great short here? Its at two trendlines (long term uptrend resitence and short term downtrend) and is right at its 50DMA. http://img237.imageshack.us/my.php?image=oihmf3.png

Thanks!

chronictown said...

My $rut puts are at 00.30 cents. Whats a girl to do?? Im gonna go long in gold and the miners. I feel likewhen this thing tanks and the dollargoes to the poop house, gold should be steady, A safe place.tired of fighting this beast!Thanks for the great work Tim.

Leisa said...

I was listening to Puplova, and I heard something which made me gasp...he referred to Lowery's letter saying that the decline (which he was forecasting) was merely a correction in a bull market. Sine Barry R has quoted him, I've asked him to re-connect. Perhaps I misheard. But there is a lot of head scratching from some very smart folks (present company included). I'm happy to see BAC have a negative day at least.

J said...

"Until someone or something sticks a stake in it's heart it's gonna just keep going."

Did Goldman go full short yesterday and then stick a stake in the vampire's heart by downgrading INTC.....What a freaking joke this has been......hype till the day before the flop?

Sanjay Sola said...

it looks like we have a pretty substantial amount of correcting to do in this market.

the 50 day average for the Nasdaq is at 2200 and the 20 day is somewhere at 2270 or so (not sure exactly).

we're too far away from those marks still. so i would just sit tight if you are looking to buy. let stocks come down to your price level.

Andrew755 said...

Here is why this is a tough market....

Because like today, the futures gapped down hard.... so do you chase the weakness or buy it? I picked neither!!!

I think we are having a shakeout today and maybe for the rest of the week... at which point no doubt everyone will become bearish. The positions that I want to go long in will hopefully set up by then....

I think the trend is up until elections are over.....

But with so many people thinking that equities do best between Nov-May....watch out in November. Much like equities do worst in September and October....

costas1966 said...

The pattern the past 45 days has been, up then 2 days correction testing the 10 sdma and a bottom, then positive close on the 3rd day.
Then a new rally to new highs follows.
Volume has been heavy the first day of the sell off and then it dries out reaccelerating on the way up to new highs. If this pattern holds that means we will hit a bottom tomorrow or Thurday intraday. I have to assume that the pattern will continue.

What will change my mind will be if the sell off goes through the 10sdma and the volume keeps running heavy and accelerating the second day of the selling. That will tell me the pattern has changed and the next rally will be shortable. Untill that happens i will stay away from shorts unless they are intraday set ups.

The way I see it tomorrow will be the telling day. If the volume dries up and the 10 day sdma moving average holds then I am palying the long side and I dont care about the housing bubble or the trade deficits or the high debt levels or the ARMs that are adjusting higher or Korea or Iran or anything else. The trend is up and I will have to go with that untill it changes.

smallswinger said...

My Small Cap Swing indicator switched to SHORT on October 11. The LONG signal ended at +70 on October 10th. This SHORT signal is at -11 as of October 17, intraday.

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

09/12 . . +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%
10/09 . . +66 . .LONG . . . +0.6% . . . . +1.5%
10/10 . . +70 . .LONG . . . +0.2% . . . . +1.7%
10/11 . . -06 . .SHORT. . .-0.6% . . . . -0.6%(new signal)
10/12 . . -02 . .SHORT. . .+2.1% . . . . +1.5%
10/13 . . -00 . .SHORT. . .+0.7% . . . . +2.2%
10/16 . . -00 . .SHORT. . .+0.8% . . . . +3.0% THIS HURTS!
10/17 . . -11 . .SHORT . . .-1.2% . Intraday @ 11:30am ET

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

I remain 100% invested in SHORT small cap positions as of Friday’s close, 9/15/2006 (RUT=729.35 to 759.05 on 10/17, a +4.1% advance). I have lost too much since going fully SHORT, but just cannot go long at such extended technicals.

Too much money supporting the GOP election drive. Markets will likely remain extended til the elections are behind us – then watch out.

costas1966 said...

The way this market is setting up is one day correction and higher prices tomorrow. That is even stronger than the former pattern.
This is a rocket I would want to get caught short in this market that is for sure

ch7guy said...

does anyone know of any options traders who have blogs that deal with mainly expiration week plays?? i am also curious your opinions on the new option weeklys on the DOW and S&P?

PB said...

HOW THE FUKC DOES THIS MARKET RECOVER FROM AN 90 POINT LOSS?? i MEAN COME ON, LEAVE SOME BUYING FOR TOMORROW!! SHEEHS! NOW I REALLY WANNA KILL SOME BULLS!!!

PB said...

LOOKS LIKE WE'LL BE LEFT WITH A NICE HANGING MAN TODAY!

PB said...

MOFO ... maybe Cramer ws right with his MOMENTUM crap ... logic is out the window, just buy!

Andrew755 said...

As I was saying at about Noon, this is ridiculous....... Anyone who was short and didn't cover this morning, might get hurt by tomorrow....Unless you picked the right stock. Apparently bears aren't allowed to eat dinner anymore.... earnings tonight are meh..

Now I've got a list of longs/shorts....now if the market would cooperate......instead of gappy down 30-40 points or up that much.

Elections are Nov. 7...patience.

J said...

Pre-announcing DOW 12K for tomorrow.....INTC and IBM will ensure that.......

PB said...

INTC? when is a 35% profit drop good?

EddieFl said...

**********CHEECH and CHONG and the stock market**********************


"its like the more I smoke, well you know, the more I smoke"...Nice Dreams.

Like the market, the higher it goes , the higher it goes. Momentum begets momentums. The longer this rally lasted, the more indicators turned positve on the weekly charts and that brought in more money.

These ass-clown fund managers or hedge funds, dont want to explain to thier investors, how they missed one of the best bull market rallies in years. So they get in, it seems late in the trend, but to them it isnt, they just got in.

All indicators say sell or overbought, but the best indicator of them all PRICE ACTION, says buy or stay long if you already bought.

You can stand firm on your opinion or you can increase your account balance, usually the two dont go hand in hand.