Monday, November 27, 2006

The Jerk Report

Did anybody notice, over marmalade and eggs
In between the princess' legs
What with wars and floods and beggars
Not to mention stocks and shares
If you have a moment to spare
Can you write and reassure me that I have seen
They're constructing a time machine
There will be no need for the obituary pages
We can have any hero from the bygone ages
'til the truth emerges, the argument rages
The major and the minor
Turn from tallow into tar
Should we leave them in their place?
Down in damnation's cellar

Ahhhhh. It was a nice, nice day. Best day in four months. The Dow down almost 160 points. The Russell, the S&P, the NASDAQ - all smashed.

But we must be careful here. The tyrannical bulls have fooled us many times already. Downdrafts have been short-lived. So as much as I'd like to see every bull on the planet get wiped out, let's wait a couple thousand points before putting any party hats on. It's just nice to get a good, solid, down over 1% (finally!) day under our belts.

Here's a chart you probably didn't expect. The traffic for f* (for your folks that bristle at anything more severe than "poppycock", I've politely included an asterisk). The schadenfreude that drove this site's popularity has clearly diminished with the market's health. Let's hope Phil Kaplan has plenty of reason to celebrate in the coming years as companies get nuked again.

The pattern we have seen recently certainly apes the one we saw in May before the delicious descent in June/July. One day does not a trend make. But it's a start.

The $MSH technology index had its breakout pattern shattered. Good. Poor old GOOG is beneath the nosebleed-high $500 mark.

The S&P 500 is probably the best index for options, given the relatively high volume and the volatility of the index. The bid/ask spreads still tend to be fairly gigantic, but on days like this, you can make some serious green.

Part of the profits stem from the fact that the volatility exploded higher. So the value of the options pushes up both intrinsically and from a time-risk perspective. Just look at this jump in the past few days.

I can't shake the $XAU as a short pick. It has come full circle back up to the retracement level shown here.

One last index to look at - the $XMI. It has tumbled quite a bit the past week. Breaking the line shown here would put a nail in the bullish coffin for this sucker.

My LEH puts are doing fine. Looks like some serious failure happening here.

Last week I pointed to HLT as a choice short pick. So far, I nailed the top.

AKAM isn't anything to write home about, but it's not bad for a short. I see some serious weakening happening here.

NVR is thinly traded, but it's a fun short on days like this. It can lose 20 or 30 points in one session.

This week is going to be full of economic data. Today's weak retail report was the first gift we needed. Santa, bring us more!


Anonymous said...

I'm not ready to call a trend just yet. I'd like to see some conviction behind this move before going short. I still expect the markets to keep floating higher, even though they've been overbought for a while.

The only "good news" for the bears is that the US dollar is very, very weak. I can't believe "They" let the dollar drop like that in the last couple of days. It's incredible.

Buy gold.


Anonymous said...

We might get an up day tomorrow but I think this drop was a wake up call for many longs entering the market above 12,000 who thought something like this wasnt going to happen to at least Jan or Feb. I think the DOW has a chance to fall below 12k again especially this week on all the economic data due out. If the dollar falls even further this marker can easily fall 2-3% by the end of 2006.

Tomorrow we get housing numbers and if they show extreme weakness expect another drop in the markets.

TRADER 2006.

Anonymous said...

"Tomorrow we get housing numbers and if they show extreme weakness expect another drop in the markets"

your fucking brilliant! any more golden nuggets?

Anonymous said...

daily traffic rank trend?

Oh my! I'm blushing pink here at the profencity! Uhhhh.

Those word verificiatino words are sure jumbly!

z-stock said...

06 Dec starting off
like 05 Dec
sloppy, narrow channel
Dia 50 day 119.34

Wmt numbers very nice.
Support @ 44.2/45
Rth 200 day = 94.84


Anonymous said...

If you eat buyab beans ... well, you'll get buuyaad out the arse!
(and the MACD will be all fkkd)

GemmaStar said...

I could hardly wait to read your blog, Tim. I knew I would truly enjoy your glee.

And I did.

I'm about half in cash waiting for this kind of thing to happen Big Time and I have a significant portfolio percentage position in GLD.

All of this "patience" and "waiting" business is beginning to pay off. Whew.

Tim Knight said...

"your fucking brilliant! any more golden nuggets?"

The irony of the above is the anonymous author wanted to chastise 4:32. Setting aside the fact that neither sentence begins with a capital letter, the howling mistake of replacing a contraction (you're) with a posessive pronoun (your) doubles the irony.


one way stox said...

Is it too late to get in the QID's?

Please post a QID chart.

Anonymous said...

Too late? QID has been up ONE DAY in the last 4 months.

And you think it's too late??

If this is truly a top, it will be a process, not a one-day wonder. Personally, I'm awaiting confirmation before going short. This market's been too whacky to trust a one-day decline right now.

That being said, I wouldn't mind at least starting to build a position in QID now, maybe 25% or so. If the market tries to rebound tomorrow, it might be a good opportunity to get a decent price on QID.


chronictown said...

dip buyers got hammered,This may lead to more selling. Trust me , I know what it feels like to be on the wrong side.Im probably dreaming but the market will punish the most people if it can.Lets see some more profit taking and let this bad boy put the squeeze on the longs and dipsters for once! made 50% on $rut puts, held them all, it will probably gap up tues. and hammer me again! Spot Gold cant take out 640,Its a bar fight! thats all i got, IM out!

z-stock said...

It seems like a top.
I got hammered on my calls…
Thankfully, I had
Vix 11 calls, up 70%
and Housing puts.

I’m going with…
Dia 119.34 to 123.50
Narrow channel.
Rest of 2006.

Dia under 119,
Might mean,
Look out below!
Dip Buying Gm Txu

chronictown said...

overseas markets having a bad day!big money pulling out of our market due to weak gold.IMHO Tim, show us the $RUT chart,looks like a waterfall. random thoughts of a sicko who cant sleep!

PB said...

The bearz desperately need confirmation now. To me, it looks like we broke below the summer trend-line, now we have to hold it there. I would've really loved a reversal day to go short, but this market went down right from the start. There are still many buyouts going on, so who knows, we could power higher still. On the other side, it sure looks good to start taking some profits here.

I totally missed a nice trade on GS and QQQQ. Damn, I ws gonna wait a day or two. Anyways, BBY made up for that.

Andrew755 said...

ATI must be bought here before its meeting with analysts tomorrow...... I think it breaks out....

I missed a trade on ESRX....

Anonymous said...


Nice poem! Are you also a poet? Do you have a blog for that?

Just kiddin'mate! It's lonely down here down-under! Sheila is away, so it's just me and da' sheeps!

Great posts! Gotta love the shorts!

Harry "pot" Err

bsi87 said...


Too late to buy gold. Shoulda bought it at the 20 or 50 DEMA, not the top of the 20 day Bollinger Band. Looks like a severe correction setting up for the miners esp since bonds look like they're hammering out a top.

shorted GOOG and BIDU but I was too darn early by 2 days and got stopped out for small losses. Watching GOOG for a possible entry below 460. Needs to show a reversal. BIDU around 95.

Also watching a small group of semiconductors for an EOM trade. If the trade goes, it'll be by close tomorrow.

stockshaker said...

Guys, its great to be back!

Pb, QQQQ is a prime target for a correction - and this would coincide nicely with the other major indices.

Just look at the beauty of a chart: switch the QQQQ's from a daily graph to a weekly graph, plot on the MACD, and just look at the overextension. It is approaching its usual overbought area where a correction is definately in order.

However, do not think that the last few months were just "fluke" - it is just doing as it is supposed to do, according to its cycle.

So for anyone who's saying that they shoulda, woulda, coulda - your chance to capture on the bearish pullback, which could easily last about four/five months - should just hang on for a couple weeks until evertything is confirmed.

I learned a hard, costly lesson about pulling the trigger too quick.

Speculation never pays.

I'm back, baby!

Cal said...

Great call on AKAM, originally I was long, but I sold out on the first sign of weakness. Maybe you could shoot me some ideas on puts? I'm new to the options ring. Thanks.