Tuesday, November 07, 2006

Red, Blue.......and Green

Let's start off with a stock market update from Eric Idle:

Today was another rotten day for us poor, beleaguered bears. At least the bulls didn't get the satisfaction of chalking up another lifetime high at the closing bell. At this point, we can only wait and see what the morning brings once those "100% precincts reporting" notations are displayed. As of this writing, it's 0% reporting.

The S&P 500 is at a serious make-or-break time. If the market is strong tomorrow, and the S&P pushes above its recent high, we might as well hang it up until mid-January (at least). "Bullish" election results would pretty much be the final nail on the coffin.

The Transports are still in a bearish pattern, clearly showing lower highs and lower lows. As with all trends, this is breakable, but it remains intact for now.

The NASDAQ Composite pushed above its multi-year high today (on an intraday basis), and if the market is happy with the results of the elections, this could easily bound much higher. As for what defines a bullish result - - who knows. I can only imagine a Democrat sweep would be damaging. Just about anything else (Republican victory, gridlock) would probably mean more bull.

Interestingly, the Amex Major Market Index ($XMI) closed down today, in spite of a lift across the board on all other indices. This is quite a shooting star pattern we have here. You may recall I pointed to this index as bullish quite a while back.

During the summer, I had a great time shorting OIH and related stocks. It's not the slam-dunk that it was once, but there's definitely a pattern of lower lows and lower highs here (although it's softening). Shorting this with a stop at $140 seems like a decent bet.

Well, if we push higher tomorrow, I'll be tempted to stop blogging until the market gets fun again. But frankly I have too many readers at this point to walk away. So.....on with the show, I suppose!


trader said...

I'd be interested to hear,and I'm totally serious, what specifics about todays close makes you see a turn-a-round in market direction. I mainly ask because of all the speculating and hoping that last weeks decline was the beginning of a prolonged downturn by some of the readers.All pullbacks so far have only been 'very dangerous traps' for the folks that are dying to for a correction. It seems to me we now have a lot of inertia and momentum that will be difficult to stop and turn-around. Like an oil tanker thats full doing 30 knots going down a river. Hope to read your detailed explanation sometime tonite.

costas1966 said...

Tim, last time you were that frustrated was back in April 2006.
Actually you are more frustrated now than then. If stop posting on your blog is not capitulation then I don't know what is. I stopped posting as much on my blog about 2 months ago when the S&P 500 broke new highs, so I understand the feeling. I think there is hope that this market will start reflecting the weak economic fundamentals if it fails to make a new high and sells off on heavy volume. If there is any hope for that, it should happen the next 2 days.

anunakki said...


First post though Ive been reading for months.

You're obviously a very good trader...why are you so hung up on being bearish ? I agree with you that many factors suggest this bull market doesnt make sense.. but we all know we need to go with the trend and dude...this is a serious trend..the markets not wallowing.

I hope that didnt come across as condescending or like Im being a jerk..Im not.. its your blog and I respect that...I just think that if you take off your bear cap and put on the bull cap you will be just as profitable ( and give us some great suggestions along the way).

I love your blog and hope you continue while giving us some great bullish suggestions ( if this is the way the market continues to go ).

I know everyone here is big on options but truthfully I dont have the patience which is why I day trade. Does anyone know a good active forum for day traders ?

Lately its been shooting fish in a barrel just getting in on pullbacks after the first 30 min rally.

Finally...does anyone have fav charting software that is Mac friendly ?

Leisa said...

Toshi...I read your blog everyday, and if you were to stop posting the earth will get wobbly on its axis! You've been remarkably candid with your thoughts as well as feelings. Even saying that this market is ^#$%$^$@-up is important to hear. Yeah, I know the refrain...trade what is in front of you. But for those of us who are not traders and who want to hear overall market assessment, your insight, as well as that of your other bloggers is so welcomed.

Leisa said...

PS...plus I'd have to find someone else to call Toshi...

mac said...

pb & trader,

pb- if I'm right I'll take that steak!

trader- While I wish I could give you an indepth technical analysis of why I've formed my opion of a pullback I can only say that I am most successful trading when following my instincts. I can't always explain it but it works for me. Just so you know I trade options on the ndx on an intraday basis. I say this because I don't really care what direction the market is going in I follow the current trend. It is helpful to have an "idea" of the general market direction though. Here's my take- Last week the bears stuck a paw out of their den and shook a few things up. Of course, the bulls took care of that, very quickly, I might add. Today the ndx hit a higher high- then pulled back. The body of the candle is still in a sideways pattern. Indicating bulls aren't completely in control. We ran very strong yesterday and in the morning. In the afternoon, however, that strength wavered. This leads me to wonder how strong this leg of the bullish movement is. Tomorrow AM should shed some light on things. Will the market crash and burn? I doubt it. A real pullback would be nice, however. Make no mistake, if we break out to the upside I'll buy my own steak and trade on the upside.

trader said...


Thanks for the response.It sounds like you have the correct 'mindset' for THIS market.As they say,The market is never wrong,but sometimes people are.I really hope your instincts are correct.Good luck to all of us.We're going to need some to have some big money making trades again I think !

Active trader said...

Tim, i was wondering why you never mention DXD, or QID ?

Those 2 could keep us bears alive in this market.

just something different wondering what yourr take is on it.


ctkwtk said...

Markets won't be bearish until prices crash thru 50 day EMA on strong volume. And then watch 200 EMA for support. 50, that's the key. Midline MACD, 50 RSI, negative DMI. Mean reversion. When qqqq breaks down, look for prices back equidistant below 200 EMA as above unless supported at 200. When breakdown occurs, look for qqqq to go back to last big breakout around $37.50.

PB said...

the Q's have a date with 37.50 --- I just don't know when. As for this market, it's total BS. I just can't imagine the DOW closing up 14% for the year. Even if it gives up half that gain (we'd be at 11,500) it wld still be a good year, for the dikchead bulls of course.

It's not just readers of this blog that are confounded at this market. There are many other well known and respected people and institutions out there that have been calling for a major pullback since early '06 (if not longer) The housing market does and will have an impact, it's just a matter of time before the market decides to care. In the meantime it's building itself up for a pretty nice fall.

As for Tim's blog, I hope you keep posting, as this is the only blog I know that is focused on the short side with excellent charts and explanations. Everyone else seems to be pushing junk in my face!

Keep it up Tim, our day will come!

Cal said...

so you're thinking about closing your blog because the market is going up, and you have an anal retentiveness to be a bear by nature....hmm, take a step back, see something wrong with this picture?

Your blog shouldn't only encompass bearishness, you need to take inititive to give readers other ways to make money besides puts/shorts.

Come on, make that call, or shall I say long bet?

Tim Knight said...

Given the flogging Republicans are getting tonight, maybe there's hope for a down day Wednesday. But since the London bombing in 2005 and the Korea nuclear test in 2006 actually had the markets going UP, we could have a socialist government at this rate and still go to new highs. Grumble.

Leisa said...

HYDL--Tim, this stock had a huge surge yesterday on no news. Very odd.

PB said...





Tim Knight said...

Well, the entire country has swung WAYYYYYYY to the left, which is going to be VERY anti-business, and the Dow is down (drum roll, please.....) 20 points so far.


Gemma Star said...

I love your blog and check it daily.

The market must be exasperating to you. Well, it is to many.

You're the bright spot.


niko said...

Ya know, even in a bullish market, a bearish analysis is necessary simply to fill out the full picture.

For instance, I am up about 70% on IYR puts I bought off your exposure.

I'm considering selling simply not to be greedy, but I think it's still got about 3 points of downside before a pullback. Other opinions welcome.

The point is just this: though a bearish POV makes less money in a bullish market, the viewpoint is still necessary, perhaps moreso, just so you're prepared for signs of a reversal.

Keep your head up, TK. You may be miserable, but your words are still very valuable.

Tim Knight said...

Just a warning: if the Dow closes in the green today, I *will* throw up.

arswenson said...

PBT Excellent read...thank you. What do you think of this PBT on MFE?

Andrew755 said...

OMG.......this is MADNESS. What will it take? I am looking for things to buy and I can't find any...this is getting a tad ridiculous.

We have a month and a half left in the year....this if frustrating.

Leisa said...

Toshi, we should give you a free pass tonight.... I think it will be just fine if you did not do a post. Or, might I suggest a picture of Tony Soprano mouthing "What the F?"