Tuesday, November 28, 2006

For Your Consideration

Well, after yesterday's 158 point drop, the market went up 14 points today, and CBS Marketwatch proudly trumpeted, "Buyers Come Back to Market!" Yeah, it's a veritable stampede.

The question over the coming days is whether yesterday's drop was a one-hit wonder or the start of something bigger. With the exception of mid-May to mid-July, the year 2006 has been largely a Big, Fat Disappointment to the brainy (and broke) bears, as the air-headed (and much richer) bulls have trampled all over us. Dogs do wonder when their day will come.

Take a look at this intraday chart of the S&P 500, for instance. The prior blue area was the last decent downturn. But as you can see, it only preceded yet another runup to new highs. There's every possibility this miniature rout could yield the same result.


The Dow Transports has been more consistently bearish than the Industrials. There was no rally today - it fell some more. This chart is probably one of the strongest reasons we bears have in our pocket for overall weakness in the future.


As mentioned a few days ago, the $VIX had gone (briefly) into single-digit territory (shown highlighted here). That didn't last. The $VIX exploded higher yesterday, and it seems to have broke its multi-month long downtrend.


I've augmented this graph of the Dow 30 with the Wilder RSI (shown beneath the price pane), and you can see the RSI has really tumbled hard lately. The Dow has plenty of room left to fall, even if the rising trendline stays intact.


The NASDAQ Composite has a similar story. There's plenty of open space (shown in highlighted blue here) between the current price and the supporting trendline. So even respecting the possibility that the bull market might be intact for many months to come, there's still an opportunity to make cash on the descent back down to the supporting line.


GOOG is a curious chart right now. One could take a very bullish view on this stock from a technical perspective, and it has had a very clean retracement back to its breakout point after having ascended well above the fabled $500 level. You be the judge.


Virtually everything about GOOG (except the bit about $500) can be said of SHLD as well, although it looks a touch more vulnerable to my eyes.


Now a couple of short ideas for you. NXY:


And U.S. Steel (X):


It was a pretty slow day on the market today, so that's it for now. I'll be traveling on business tomorrow, so my blog will probably be posted later than normal. I'll see you on the other side.

38 comments:

wincity said...

Transports came down because oil went up. Doesn't mean much, IMO.

Anonymous said...

i dont know why this market can't put in 2 good down days. Very Odd.

The SPY rallied and came to a halt at the the 20 ema.

The QQQQ is still above 20EMA. If this pull back has legs it HAS to continue tomorrow or else get long AGAIN!

The DIA is in a odd space.

CR

PB said...

NXY also has a nice rounded top.

The DOW will be setting in some more nice divergences. Don't be surprised if we power higher still in the next little while (maybe later toward the week.

Anonymous said...

I think it's time that we renamed this market the TEFLON market!

No amount of bad news will stick to it!

Boy wonder can do no wrong!

Trader Fred

Anonymous said...

I love this bull and will continue to throw my money on the long side of tech and retailers no matter what happens tommorrow.

Anonymous said...

i love being only able to make money in a bear market, you have know idea how good it feels to feed my 5 children romen noodle every night, with a peppermint for dessert!

traderdave said...

Tim,

On a side note... Finally got the chance to use Prophet Charts... 2 words... Kick Ass!

Thanks for keeping the posts coming.

Cheers - David

Anonymous said...

Man, this site sure attracts a lot of anonymous losers!!! At least post you friggin' name a-holes!

Benny

bsi87 said...

re:gold
If you looked at the $GOLD:$USD chart on stockcharts, you'd see that it was at the top of the range, RSI 70. Maybe not a short but definitely not a buy. Hank and Ben gotta jawbone the dollar and the Chinese.

Started buying some semi's for an EOM long trade. Larry Connors said anything the SMH is above the 200 day MA, buy the SMH at the close of 2nd to last day of month. I found that you can buy within the last few days of the month for better performance. I also break down the index to pick the better performers. INTC,KLAC,ALTR,and NVLS were the best for this month.

Do your own homework.

Anonymous said...

good luck the futures are already up a percent this morning bears.

Andrew755 said...

ATI is breaking out....hop on board........

Could get momentum.....

Anonymous said...

bears couldnt get 2 in a row, this is pathetic.

another pathetic day on wallstreet as it seems we will be right back at new highs very soon.




Trader 2006.

Anonymous said...

this is fucking crazy!!

Bernanke says that higher rates are more likely than lower rates and the market rallies. Too much demand for stock right now!!

FUCK YOU BULLS!!!

Anonymous said...

7:26 I forgot to add that in as well. The markets were flying high on the thought of an interest rate cut. Bernanke says higher rates before any chance of cutting them and the market takes off. Doesnt make much sense. I dont see a cut until 2nd half of 2007.


Trader 2006.

Andrew755 said...

Holy MOMO...... ATI is on fire....

And my Spy puts on getting hammered......

Anonymous said...

short aapl. waiting for something under 90 to cover.


Trader 2006.

Anonymous said...

Reckless, reckless, reckless!!!
I hope we have a bear market for the next 50 years!!!

This is ridiculous!!!

Anonymous said...

this is Fu%ked up. nearly all our losses erased in 2 days of gains...this is sick. Fu%k this.

PB said...

a revision to GDP on the back of inventory building, how the fuck is that BULLISH????

Anonymous said...

its a joke, a big fat joke this market.

Anonymous said...

doesn't matter what anyone says, this market is so near a top, I can smell it!! just look at the idiotic buying going on! All in the face of souring news? I think this market has finally fell into the control of IDIOTS!!!

Dan

Anonymous said...

This market is infuriating! I could rip a bull apart with my bare hands!! MOFO's can't even fill the gaps they're so in a hurry to buy!

Anonymous said...

i am actually pretty depressed the market is up again. i lost most my trading money this summer going short and it will take some time to make it back. follow price and nothing else. i hate the BULLS but just jump on their backs. Don't take sides.

CR

Anonymous said...

AAPL doing great on the short side...

Back to 90 it goes

Trader 2006.

Anonymous said...

this is the market we want to see. If it closes off its high or down this will be the game we want to play. Im noticing the transports are off today. IYT down again, would look to add a long position around 80-82, only for a bounce.

TRADER 2006.

Anonymous said...

What are roman noodles?

Anonymous said...

I can not belive this market with Xom up $2

Anonymous said...

of course what looked like a sell off mid-day is now a rally. Too funny. Guess will be back at All time Record highs by Friday.

amazing...

trader 2006

Anonymous said...

OIH at 146. WOWWWWWWW.


And to think I had some PXJ at 17.38 back 2 months ago...


trader 2006

Anonymous said...

this is IRRATIONALITY at it's finest!

Nothing like a bunch of dumb Americans willing and ready to throw money at the markets. Do any of these mofo's read??

Anonymous said...

"IRRATIONALITY at its finest".

Irony is that there are bigger idiots trying to short this trend before the onset of any transitional pattern for a bear market. The bear market will come, and it will hit hard, but the fact that there are eager bears means that the top will only get delayed.

Anonymous said...

up your bull ass 1:36pm!

So you are buying just 'cause every other idiot is?

Anonymous said...

Wait till the dollar falls off a cliff and inflation starts running up again.

Anonymous said...

Can someone please explain to me how markets go up because people are shorting (as 1:36pm) states above.

There are more buyers than sellers, the reason for this demand for equities is unknown at this stage, news is luke warm, but we still have buyers. Too many believers out there in the "goldilocks" scenario. I hope this market crashes over 60% and wipes all you mofo's out for two generations!

Henry

Anonymous said...

11:55

Ramen noodles are what Bears eat for breakfast, lunch and dinner. On occasion they toss a little Spam in the mix just to liven things up.

Anonymous said...

Wow, this board is getting worthless again.

Too many babies crying about the market going up. I'm just as perplexed as the next guy, but I'm not sitting here crying in my beer. Sure, it's hard to get a handle on linking the fundamentals with the market action, but what's new?? It's been like this since June. Get a grip.

I said it on Monday: yes, the selloff was nice to see, but unless there is confirmation, it's just noise. And we didn't get confirmation. So up we go, yet again.

Liquidity is fueling this market, plain and simple. It's not Bernanke, it's not interest rates, it's not oil, it's not commodities, it's not retail sales, and it's not the housing collapse. Just plain liquidity. Until the easy money stops rolling into stocks, the markets will go higher and higher.

I said it about a dozen times already, but I'll say it one more time: This is 1995 all over again.

-TonyB

Anonymous said...

WOW!!! What a wonderful time this is!!! Rode the Bear two days ago and rode the Bull for the last two days!!! Amazing what you can do when only reading and playing the techncals. Why complain day in and day out? Come fellow Traders -get with it and start trading the charts!!! Who really cares about the fundementals? Not me for sure. I have made real money all year - down, up and sideways!!!

Wonder what tomorrow will bring??? Oh well does it really matter? NO!!! Play them the way they move!!! Money is money and profits are profits!!!

one way stox said...

TonyB: You couldn't be more right