Wednesday, November 08, 2006

All News is Bullish News

Now that the Democrats have captured the House (and quite possibly the Senate), they've already started rehearsals for the new government's parade in January. I managed to get a clip.......



I was watching the election returns until 4 this morning, and I kept watching the GLOBEX go lower, and lower, and lower. It was clear the market was going to open down hard. And in the back of my mind I kept thinking, "somehow or another, I bet this stupid market closes up for the day." And sure enough - a new high on the Dow! Disgusting, revolting, and sickening. I hate this market.

Bear markets aren't fiction. They really do happen sometimes. Let us wistfully enjoy the prices of yesteryear, such as the NASDAQ's plunge from 2000 to 2002.....


Boy, those were the days. But no more. You can see how the $VIX just keeps getting ground down to nothing. The last time the bears were partying was in June/July of this year. It's been unrelenting misery ever since.


The NASDAQ was especially strong today. It's about to push into wide open territory, with no recent overhead resistance. Cisco's strong earnings posted after the market's close today is only going to help the bulls.


The $NDX has a skosh more to go to get into the same "open air", but it's probably going to happen. At least I don't own $MSH or $NDX puts anymore (I dumped those yesterday morning).


The S&P 500's chart over the past ten years is a fascinating one. This chart still looks really toppy to me, pushing right up against the upper boundary of its ascending channel and smack dab in its retracement area. But, God almighty, if a massive sweep to the left in U.S. politics isn't going to ding the market, what is? It would honestly take a major terrorist attack, bigger even than 9/11, at this point.


The only slightly bright spot today was the $XAU (gold and silver index), on which I own puts. I've (badly) drawn the former head and shoulders pattern on this. One could be generous and call this a "complex" head and shoulders at this point. All the same, it's got a nice clean stop.

20 comments:

Scot Castle said...

Everything is coming up roses now that the Democrats have regained the House (sarcasm indended)

Democrats Poised To Retake Congress, Fix Everything
Click on this hilarious Audio Link:

http://www.theonion.com/content/node/54409

Andrew755 said...

Hi guys,

This market is absolutely crazy...money is chasing money...fundamentals don't matter at this stage. I've made trades here and there but.... I haven't bet against this since the summer. However I'm starting to look for shorts, but won't start purchasing until maybe early next week. It sounds like every bear has given up to me... there can't be any left out there....just wait until the money runs out... we aren't going to dow 15,000 before a recession.

The truth of the matter is Australia just raised interest rates, england may tomorrow....uh hmmm the fed can't be liking all of this excess liquidity especially now that the election manipulation (data, decisions, $$$) is over.....

"Before I get to one sector I'll be watching, I want to mention that the latest Commitment of Traders report was released late last week. It showed another increase in the "smart money" commercial net short position.

The positions are now truly at an extreme: The current $39 billion hedge against a market rally is now the second-largest in history, behind $40 billion on March 6, 2001, after which the S&P 500 lost 11% over the next month. As Jason Goepfert over at Sentiment Trader says, "This has been a yellow flag for a couple of weeks, but that flag is quickly turning bright red."

Everyone knows how extended this market is, but trying to call a top can be an expensive venture. However, pay attention to the professionals who are the closest to the action."

Cheers

PB said...

Oct. 30 (Bloomberg) -- Markets around the world are awash in excess cash, fueling a frenzy of investment from London to Tokyo that may lead central banks to push interest rates higher than investors now anticipate.

Money remains cheaper than in the 1990s even after every major central bank raised rates this year, the first simultaneous tightening since 2000. The cash glut is reheating the U.K. housing market, while in Japan companies plan the most investment since 1990. China's biggest bank this month attracted orders for more than half a trillion dollars with its initial public offering of shares.

Look no further for the reason for this rally! Nothing beats cash.

Andrew755 said...

oddly enough... http://www.bloomberg.com/apps/news?pid=20601087&sid=a46X5pPMmH1U&refer=home

Bank of England poised to raise rates..... Australia just did yesterday. Does anyone see the pattern??? I am betting that the fed raises rates one of the next two meetings now that the election is over. Let the market get nice and out of control before the next meeting...

We are no going to DOW 15000 anytime soon- this money chasing game will end shortly.

chanon said...

Think if the market in narrow moving range till christmas we could see DOW 12500 by year end.

Double bottom proved to be very powerful push past months.

DOW

Today's best double bottom: LVS

h. lovil said...

Well I am just about to cave in with my QID and SDS, so that may be a sign of the top.

The pain is too much.

Actually I am a democrat too- so continuing to be a crash and burn bear is too nihilistic here.

The bungling Rumsfeld is gone, the republicans have been chastened, I need to lighten up on my negativity.

mde said...

Now is the day to go short because it appears that the last bear "tim knight" has turned bullish. I will buy puts on the QQQQ tommorrow. Expiration Mar07 to make max profit. Mark my word now.

Matthew said...

Isn't a Head and Shoulders Pattern only a confrimed pattern once the neckline is broken?
Wouldn't that make this formation on the XAU still just a potential and potentially meaningless Head and Shoulders?

onewaystox said...

yup, that 'old resistance'-DJIA 11,750- seems like a long, long time ago. I thought any good TA guy would've seen that being the breakthrough point.

Andrew755 said...

I think it might be time to pull out my bear suit and come out of hibernation......

Lets see what happens this afternoon. Patiently waiting for buying power to fade.......

I'm starting to look ....

Red Dog said...

Has anyone noticed that we have not had a 100+ down day on the DOW since August 9th. In the twenty years of trading these markets, I can't ever recall a stretch like that. Thanks for the great Blog Tim.

Bob

Tim Knight said...

"Isn't a Head and Shoulders Pattern only a confrimed pattern once the neckline is broken?
Wouldn't that make this formation on the XAU still just a potential and potentially meaningless Head and Shoulders?"

I'm sorry I wasn't more clear. This is NOT a head and shoulders. That was violated when it moved above the neckline. I was being a bit facetious when I saw it could be a "complex" head and shoulders.

Particularly given its strength today...

Red Dog said...

Hey Tim,

I am looking at the IWM and it sure looks like a nice H & S pattern with a Negative Divergence thrown in. What do you think? Thanks.

Bob

PB said...

selling stock to-day for make benefit of bearz!

Denver_Investor said...

Today's post at stocktiming.com has a very interesting graph showing M3 and the NYA (NY Stock Exchange index). If the Fed cuts back on liquidity this market is toast. Note what happened in early May.

http://www.stocktiming.com/Thursday-DailyMarketUpdate.htm

I'm wondering about the absolute flood of flat screen TVs on the market. I'm expecting to see them for sale in grocery stores any day now. They have been opening new factories in Asia like crazy, and I think we'll see a glut on the market, if we aren't already. Walmart has announced they'll be cutting prices aggressively..just in time for the consumer slowdown.

Which gets me to Best Buy's stock. It just broke down through the 200 day moving average. An earnings warning about either slower than expected sales, or price pressure on flat tvs and I think we could see a huge one day drop...sort of like Whole Foods last week.

I just bought some BBY puts.

I would NOT (NOT!) short ANYTHING to do with gold/gold mining stocks here. This is the strong time of year for them, and they are really showing strength.

bsi87 said...

Well, I'm not going to spend a bunch of time forecasting what may or may not happen or call tops.

re:EEM. Looks like the final gasp (to me). It blew thru the 106 area (I'm sure to gun the buy stops and sell stops for the shorts). Volume has been suspect today plus I made up my mind that I would not close the short until it closes above 106.

re:OIH. If the economy is going to go into the sh-tter, we're not gonna need as much oil. Cue Boone Pickens, oil to $100. In any case, 140 was the line in the dirt, sand, whatever. They gunned this one this morning too. Volume is strong but it's trading below the open late this PM. About 45 cents from closing below 140. What do they say about the easy trade?

re:CSCO. Put a short on this afternoon at 26.88, about halfway between the previous close and the HOD. Low risk entry. My trailing buy to cover is 1.5X the ATR or 27.92. Exhaustion gap maybe?

re:Gold. Shorted gold a couple days ago. When I run the $gold:$USD and $gold:$tlt analysis, they're at the top of their range. In addition, gold this last time down broke thru a support line that goes back to August 2005. I'm not betting the farm but it was worth a shot IMO. Wouldn't short individual issues, too big chance of takeovers.

re:YHOO. Started lightening up this position. I had been pyramiding it after the earnings report which caused a tradeable bottom. It was the anti GOOG trade without going short GOOG.

Tighten my stops just in case and they're getting hit. Wonder if we saw the end of window dressing (month end) and beginning of new month?


good luck to all
bsi87

Andrew755 said...

Alert Alert- market is getting whacked... and I'm not participating yet.

EVERYTHING IS GETTING WHACKED....

the key thing today... remember those goons who kept saying "gridlock is good for the markets" THERE IS NO GRIDLOCK..... DEMS WON EVERYTHING.

Market doesn't like it!@

Active trader said...

ya baby, great break down for the close, i was nervous about my call spreads.

chronictown said...

miners are kicking tail. long Usgl,AUY,KRY, bought 20 golden eagles. Whats a girl ta do?

Sanjay Sola said...

lots of inflation right now. the move in metals is not going to help. next weeks' inflation numbers are going to be interesting. i'm in cash. no need to buy stocks near a double top. either buy lower or wait for the breakout, imo. the market is too hard right now. market has been too selective this entire rally. very few people made big money on this last run.