Wednesday, December 20, 2006

Baby Got Redback

As regular readers know, although I'm a bear (in both real life and my Second Life), I do publish bullish charts some of the time (maybe 10%). One stock I've consistently point out as having a handsomely bullish pattern is RBAK, which I first mentioned over a year ago in my September 2005 post. At the time, RBAK was about $9 per share. It was purchased today for $25 per share, and the stock price actually closed north of that.

The calls I bought on RBAK a month or so ago more than tripled in price over a small amount of time. Now this is a beautiful example of an inverted head and shoulders pattern in action!


What's funny to me is some highly-paid analyst published a report in the wee hours of this morning stating, in brief, (1) RBAK had reached its target price, so they were downgrading it (2) a buyout was not likely "in the near future" (which, given the outcome, I guess meant within the next 30 minutes following the publication of the report).. Wow, what an embarassment. Analysts have never been worth a sack of crap, have they?


The $INDU reached yet another all-time intraday high today (turd monkeys!) but closed down a bit. The divergence between the RSI and the price action is absolutely huge. Come ON, you stupid market, would you fall already? Jesus H. Christ!


The NASDAQ continues to look weaker than the U.S. stock market as a whole.


...and the Dow Transports continue to act (alone) in a truly bearish fashion.


CDX, a short I've suggested before, had a nice down day - - I suppose led by FedEx's action.


And speaking of FedEx, another item I've suggested shorting, it had a nice down day, although it certainly was no demolition of the stock. These things can take time, I suppose.


One could make a flimsy argument that GOOG is sporting a petite head and shoulders pattern. I wouldn't even mention it. Oops, too late. Anyway, I have high (low) hopes for GOOG in January.


Finally, TSO continues to be well behaved. This looks like a nice, fat toppy pattern to me.


Someone commented (and let me say, I really appreciate the comments section - - I read it religiously) that yesterday's graph of the coming disaster in Medicare has nothing to do with stocks or the financial markets. I dunno, I think the insolvency of the United States will surely be germane at some point.

Oh, I forgot. Liquidity. There's liquidity. And all that money needs a place to go. (Where it came from, no one knows - - actually they do - - leverage, leverage, leverage. Which, oh, is a two-edged sword). Anyway, liquidity is the current This Time It's Different argument. Just like how the Internet's productivity enhancement changed everything and justified the valuations of 1999.

People just never learn. Never. I simply cannot wait for those Liquidity twits to get blown to hell. Then at least we can wait a few years before we have to endure them again with another fabricated story.

17 comments:

Anonymous said...

I think you forgot the XBD index of broker/dealers, which is also diverging from the US markets (Dow Jones and SPX). So the list is long (semis, XBD, transports etc all diverging). You have been spot on on FDX and others! Excellent work Tim. Caution: I think they might try one last push up tomorrow with GDP, if they dont then it is 200pts down on Dow!!! My swing trades are published LIVE and FREE for public perusal at http://lauristonletter.blogspot.com/

Keep the Religion!

Anonymous said...

No need to hyped up your blog on here you spamma.

PB said...

Hey Tim:

Love the new look! Although I will miss the 'old school' type.

Anyways, the comment that the Medicare deficit has nothing to do with financial markets is beyond ignorant! Must be a bull that posted that one!

Does any bull care to look into the price-to-book ratio, price-to-revenue ratio and still come to the conclusion that this market is undervalued? Come on you fools! Exercise a little discrimination in your buying ... it WILL end bad for you!

p.s. DON'T FORTGET THE DIVIDEND YIELD, OR THE LACK THEREOF!

Leisa said...

HYDL--an oucher today. No position.

Anonymous said...

Goldman CEO's $53.4M Bonus Breaks Record

Any comments? Tim!

Michael Newton said...

The Dow Theorists must be having a field day with the divergence between the DJIU and the DJTA. Or maybe they just ignore it...

Anonymous said...

Anyone read ETFdigest.com, every night David Fry puts together a bunch of charts on certain ETFS and comments on the markets. He mentions some interesting things from time to time. He notices the same things the bears are talking about. One thing are the injections of money and program buying these markets have seen over the last 6 months. He refers to the people behing wallstreet as "DA BOYZ".

Some comments from his post today:

While “Da Boyz” are away spending some their $24B in bonus money, they’ve no doubt left a few junior troops on watch to protect their positions thru the end of the year. Now you think I’m sour about all this right? Well, yeah!

The firms that constitute “Da Boyz” network [GS, MS, C, JPM, BSC and so forth] are publicly traded companies. Notorious hedge fund managers can make a lot of money as well; but, the difference is that investors in those funds hope and expect the fund managers to make big bonuses. They know it going in. Many investors were shocked by the $40M bonus MS’s Mack earned this year and GS chief Blankfein topped that today with $54M. One of the disturbing things is that GS isn’t paying any significant dividends to shareholders. Sure, the stock has appreciated substantially, but why not share the wealth with your shareholders?



TRADER 2006.

Anonymous said...

The law needs to be changed. Allowing these firms to be marketmakers and at the same time take in investors' money is weird!!! Even Livermore would be proud of the insider dealing that goes on... GS leads the crooks...

wincity said...

Tim,

Congrats on your RBAK win. I was tempted to short it in after hours yesterday when it traded at $22.44. I decided against it after checking the volume: there're several thousands traded around that price.

You're right about the ANALysts. I have a section in my blog called "stupid analysts".

Anonymous said...

Tim,

If the markets do finally roll over what index do you think sells off the hardest on a percentage basis? Also if a sell off does pick up momentum what kind of magnitude do you think we are in for? Bill Cara the other day contemplated a 1987 style sell off. You think there is any remote possibility of anything like that?

EddieFl said...

Entered a heavy PUT position on GS late today.

I think the news has been all played out , it cant get any rosier for those guys. When we sell off, it will fall hard...


YEs i am short,, it is not a typo..

Jan Allen said...

Thanks Tim for the nice chart of the Nasdaq starting to fall; I took the liberty to use it in my article 'Bears Rout Bulls: Down Turn In The Stocks Is Imminent' where I commented the routing resulting in the following financial results for the Bears QID ProShares UltraShort QQQ closed up 0.55 , 1.05% at 52.98 which came from the fall of the Nasdaq by $0.40 as is seen in its chart provided by Tim Knight in his article Baby Got Redback.

I produced a very lengthy article on how the Profund's Bullish ETFs suffered fractal breakdowns and how the Bearish ETFs came out as winners today.

Gold mining stocks have detached from the price of gold and will be going lower; but now is not the time to short sell them; they are not quite "ripe" for picking yet.

For more details simply enter prosperinbear in the google search engine to find my blog site with todays article.

Today is a pivot point in economic history: the tides of economic changed from prosperity to ruin; gold and gold alone is the means of wealth accumulation and preservation.

Best to you and all

Jan Allen
prosperingbear

EddieFl said...

Prosperingbear must have been hurting bear,, ruffled hair-bear the last oh , say 6 months.

I dont understand why people refuse to play both sides of the coin, at a minimum you increase your chances of making money.

I dont understand and honestly i really dont want to understand it.

That being said , I am short GS, SPY, IBB with PUTS.

I will ride them up or down. "whose side am I on" ?.. I am on my side, the side that makes me money. I think that is why we are all here.


Eddie

z-stock said...

Someone came in and bought a half million dollars in Iyt ($trans) calls. I kid you not! That was enough of a signal for me. I bought Unp calls. 6% pullback = (96 down to 91) target 96..
Durable goods order tomorrow, positive report, sends the Q’s flying higher.
z-stock
Commodities in general look like they found support. Btu, Xle, Xom , Fcx Ati,Aa, Zues, Gdx + 30 more…

Anonymous said...

I bought some SMH into the close at 33.50, expecting somewhat of a bounce to the 34 area, will sell anything above 34.

The Phiadelphias economic index this afternoon was NOTTTTTTT good, last time we saw these numbers was April 2003. For the markets to withstand such a number to me is total manipulation at best. -4.3 vs 5.1 in November. COME ON. Dow of 42 points, were still above 12400. When will the market just decide to give up and selloff. I think its sooner than later. This is getting a bit out of control. The dip was bought again today, I really thought we were headed for triple digit losses on the DOW.


TRADER 2006.

Anonymous said...

z stock the IYT under 82 is looking good, I think it could easily trade as high as 83.50 by early next week.



TRADER 2006.

Anonymous said...

RE: Eddiefl

Well said. Permabears and permabulls are different names for the same type of fool. In the case of the permabear, when the market finally falls 10%, they say look, I was right all along - except the market has rallied 20% since they started shorting the market. Permabears have a weaker case going for them - the market will not fall to zero. 1987 will not occur again.