Wednesday, October 11, 2006

La De Da

It seems a tiny passenger plane accidentally running into an apartment building has more import to the world financial markets than a crazed dictator with nuclear arms. Go figure.

I thought we had 'em today, but the plunge protectors (or whoever.....) pushed most of the losses off the Dow. Phooey.

I had a great day with Legg Mason (LM) and, generally speaking, things were pretty good. I humbly offer up a few suggestions for shorts/puts, simply because I'll never wise up........

Alcan (AL), a lovely head and shoulders pattern....


Alexandria Real Estate - - many REITs have similar charts (symbol ARE):


Cleveland Cliffs (CLF), a nice Fib setup:


Lehman (LEH):


Nike (NKE) way at the top of what looks like a massive distribution:


Textron (TXT):

Nothing to say about the markets that I haven't already said. Best of luck to ya.

31 comments:

Uncle Jack said...

Fantastic. I heard Cramer loves Alcan and is a little bitter about Alcoa missing earnings. Charts don't lie, Alcan is next. Down elevator.

chronictown said...

Smallswinger, Ive been drilled by my $rut puts. I hope this baby falls by the 21st. You see that is my problem...Sitting here wishing.

ch7guy said...

can ALCAN get close to 35 by the end of OCT expiration?? i see the contracts going for a nickel, those things can go up 20X's if it gets hit hard

Old Soldier said...

Tim,

I am liking this new rule of making us posters actually publish our user name!!! Makes for a much better read for sure.

As for AL - I caught it back when it first broke the neckline and made some really good money when I sold my Puts at the actual upturn. I have been waiting for the retest to confirm and it has. Should be another good ride down!!!

Thanks for your time and efforts in maintaining the awesome site!!!

Regards,

Randy

Tim Knight said...

Wow, you guys are holding October puts! Now THAT is gambling! And remember index puts expire on the 19th, so your problem is even worse.

stockshaker said...

Anyone else looking at going long on housing? Its sustaining its bullish levels.

Im thinking about it! MTH looks like a really good bullish setup.

Michael said...

Hi Tim,

I have been reading your blog for a while. Your blog is clear and conscience to counter all ingrained bullish bias that always assumes the stock market always goes up. I have a question. Do you have any opinion on the current high number of open puts (some say historically high) held by small traders? Likewise the large commercial traders hold long positions. This is supposed to bullish because the commercial traders are so called “smart money.” The commercial traders certainly have much more capital to trade with so unless they become bearish in their positions it may be difficult for the market to decline substantially. This is, of course, all according to the theory. Your opinion of this theory would be appreciated. Anyone else is welcome to discuss this theory as well.

Thanks,
Michael

downosedive said...

As my previous posts, DOW will hit 12100 to 12200 within the next 2/3 weeks, then fall back maybe to 11700 intraday low, before bouncing back to its previous high by year end.
The current bullishness is exactly the same strength of conviction as in 1987. The difference this time is that the correction im predicting, is simply that and not a crash. I think there is another 3 months to 6 months of upward movement

Denver_Investor said...

I decided that in order to maintain my sanity I am willing to pay to make the market go down..at least for today.

So I bought 1000 QQQQ at 41.80 for a day trade in the first half hour of trading..

I guarantee you we will close the QQQQ below 41.80.....lol

lately everything I do turns against me, so for a few hundred dollars I figure I can cause a decline...maybe a substantial one!

good trading everyone

AT said...

This market simply won't crash as long as there are so many retail bears out there. The link I posted yesterday shows that retail short interest is at record levels, which obviously creates a great temptation for institutions to squeeze these shorts.

There is no real driver for this rally, like new technologies, innovation or general economic prosperity, which are seen during a true bull market. To me, it seems to be based upon liquidity being pumped in by the Fed, rotation of cash from real estate, oil and minerals, and short covering. Institutions are spiking prices higher, forcing shorts to cover, and then distributing. I've seen this pattern in several stocks I've been following - look at SIRF, QCOM, EBAY. Now its happening in AKAM, JWN and NVDA, and many other stocks.

Because of these actions, technical signals often fail, because the institutions know many retail shorts use them, so they act opposite to what you expect.

That's why I've started trading long, with tight stops. This has improved my results. But I'm keeping an eye open for the inevitable correction/crash. I think it will come soon after we cross Dow 12000.

bsi87 said...

re:DXD

long at 62.15. Looking at the $SPX:$VIX ratio and dia:$vix ratio,getting riskier up here. RSI is near 30. Low risk to take a shot at these levels instead of fighting all the way here.

re:KGC added to position at 11.55.

bsi87 said...

re:DJIA.

good luck on buying a breakout now. If one HAD to get long, I'd be buying retracements to the 20/50 DEMA which would be 11,700/11,500 respectively.

spagsmail said...

Ok Tim, I had to short PNRA today at 67.50, could'nt resist. I know I said PNRA was a bad short (trust me from experience) but this pig should fall soon. Placed stops at 69.50. Expect the DOW to fall from the 12925 area to 11500-11400 then make one more trip up to 12000. That's how I,m setting up my trades. Also, I think gold should bounce to 615-625. Keep up the great work. Sam.

Andrew755 said...

I swear I just heard GDP growth of 1.1% revised for the 3rd quarter????

1.1 is really bad correct? Especially if earnings are next week!

bsi87 said...

PS

Bonds esp TLT have been crashing the past several days. I expect an asset reallocation play to take place at some point where the big boys let their equities go for higher yield.

And the coal stocks (MEE, CNX) have been great.

JMO, do your own homework.

Andrew755 said...

They are running the market up heading towards the beige book. The fed should whack the market with a rate hike.......

Denver_Investor said...

The RSI on the DJIA is now 75.25

It has been over 70 for 7 days in a row now. It is getting stronger. This is a melt up. Unbelievable.

AT said...

Afternoon pumps in action.

DJ 11939 and change
Do they want to run it over 12000 today??!!

SPX 1360 and change
Will the long term resistance hold? If it breaks, watch out!

This bull still has lots of power.

Andrew755 said...

Errrr....there is no volume today....anemic. Look at your stock list and look at volume???HMMMM.....

Sanjay Sola said...

Dow 12,000 and Nasdaq 2350 right around the corner. who would have thought we'd see new highs in October.

AT said...

The volume on the DJIA is less than 200 million, anemic. But the volume on SPX is over 2 billion, greater than yesterday. Strange.

JWN, AEOS, GYMB, SIRF showing a good rally, over 1 point each. SIRF seems to be the most manipulated stock ever. They'll take it up to 27 and drop it back to 20. Good money if you play it right.

AT said...

Dow 12000 by tomorrow?

Amazing! Who would be crazy enough to buy at these levels? Do they think its going still higher -15000 maybe?

I've sold most of my long positions today. (Stopped out of my shorts long ago). Now I can't go long, but don't dare to go short yet. Sitting on the sidelines.

trader said...

12000 is the NEW 10000 !

AT said...

Not fair! Bulls get 60, 90, 120 point gains every so often. Bears get a measly 15 points after several weeks.

Nimesh said...

AT, what r u talking about. They going to hit 12000 today!!! Another day, another loss for me.

Nimesh said...

Tim, what is the stop on COF? Thanks

trader said...

We'll ,you know they aren't going to just sell this thing off at 12000,too many suckers looking for that. This thing may just shock the hell out of us going into next weeks expiration.Buying out of the money Oct. calls just in case.

AT said...

Is this the bull market of the 90s all over again?

Then, the Dow had to make a big effort to break through 10000, but after it did, it quickly corssed 11000 and topped out at 10700. A lot of perma-bears were slaughtered on the way up. Then it took out a lot of the bulls on the way down.

Now its almost broke through 12000. Will it run up to 13, 14 or 15000? Its risky to predict the top. As long as it rises, bears will be crushed, but when it falls, it will fall hard, and demolsh many of the bears.

Its a dangerous, dangerous situation.

Al_K said...

This is like watching someone building a house of cards. Everyday another card is added and the house just does a little wobble. We all know what will happen when the weight of the cards get too much or an unexpected wind comes along.

Al K

bsi87 said...

risk is increasing. VIX/VXN dropping. I started to build short positions. Remember what it was like in May? Dow 12000? Hello?

I'll have stops to take me out if I screw the pooch.

8% jump in MEE today. Coal stock?

bsi87

Sanjay Sola said...

i sold all my stocks. this is not a suggestion to short.

but the Nasdaq is up 60 points in a week. at some point people will take profits. this looks like a good place for me.