Thursday, November 09, 2006

Sea Change

It was nice to see a good, solid down day. Particularly when the market blasted higher from the opening bell, riding on the wings of CSCO's strong earnings. The fact that the NASDAQ actually fell after such a strong opening is great. Green on the screen is a pleasant change these days.

The real change going on is in the political/social pulse of the country. 1994's Republican sweep into Congress preceded the monster bull market of 1995-2000. Conservative values, religion, the 'contract with America' - the whole schmear.

Now that the pendulum is starting to swing the other way, what do we have? Cover stories about aetheism, bestselling books about atheism, a very left-of-center Speaker of the House. It's like a mirror image of 1994. And don't you think the odds of a Democratic president in 2008 are pretty strong? The pendulum is swinging to the left, and I imagine it's going to be approaching socialism before it starts tipping the other way again.

How good do you think that's going to be for corporate profits? Can you imagine what kind of nuclear bomb will hit the market when the capital gains tax is eliminated and people must pay ordinary income on stock profits? After all, no more tax breaks for the rich!

Like I mentioned, the NASDAQ fell. The $NDX pierced its prior 100% Fib level (which, cough cough, I've conveniently skooched upward to today's high). I like the weakness today.


The Russell 2000, a perpetual favorite of mine, has puts which I've been gobbling up at these levels. Someone asked about IWM - to which I respond, yes, I like this for a short position. I wouldn't call it a head and shoulders, but I like how it is weakening.


I think I mentioned a couple of days back going long the $SOX. Nahhhhhh. I changed my mind and bought puts yesterday. I'm glad I did. This did well today, and it's got a really obvious stop price (and a really obvious this-was-the-right-choice price).


I've never drawn a trendline on an RSI until today, but it works rather well, don't you think?


The cool thing is that the $VIX is slowly but surely turning upward. A series of higher lows, marked by that ascending trendline, illustrates this. C'mon, $VIX!!!


Now for some specific short suggestions, all of which have put options available. AMG:


BA, which kissed the underbelly of its former trendline today:


FMX (no options on this, I don't think, but......):


HYDL, which busted its head and shoulders pattern, but still looks sweet:


TXT:


Hey, I could use another dose of Down tomorrow. We'll see.

6 comments:

walter said...

Tim,

Now that the dems have won the house and senate, i may actually turn bullish on the economy and stay bearish on stocks... dont you think bush, the iraq war, etc has contributed to us being bearish on the economy? it has for me...

Derek Scott said...

Ya I got this wierd feeling with earnings nearley out of the way, the election shit all done. I think end of of november is going to be a sell off. I think this is it, we'll see and let's hope so.

Unknown said...

Politics,schmolitics. When Bubba Clinton was in, the house changed to R. in '94, the markets just kept going up (accredited to Bush 1 and Reagan) , with a small hiccup in the '98 'asian contagion'. In 2000 when Bush and the R's controlled all, the markets went down for 2 years (blamed on Clinton), 'til the lowering of interest rates to near nothing and the beginning of the 'wars on terror' in '03. Just watch the charts folks. When we start making lower highs and lower lows under the 200 day moving average, we'll be in a bear market, regardless of who's in power.

Just Testing said...

ctkwtk, pubs didn't control the senate from 2000-2002. look it up.

briancarrig said...

Hey Tim, any thoughts on RIMM? Went short after that incredible run up to $115 but stops got taken out. Now trading at $125 am wondering if it is worth shorting again?

Andrew Wright said...

NYX is soaring today, but no news i don't think....odd. Cramer Cramer Cramer