Monday, December 04, 2006

More Cowbell!

Ouch. Another big up day on the market. New never-before-seen highs on a number of major indexes. These are the times that try a bear's soul.

I'm not going to share many charts today. Mainly because my picks have stunk so badly recently! I really wanted instead to address some of the comments I have seen recently in this blog.

From what I can tell, there are at least three different kinds of readers here. I'm sure there are others, but the three I've identified are:

The Ra-Ra: Tim for president! Tim is my hero! There hasn't been much of this lately due to the market exploding higher, but it happens on occasion. I don't deserve any adulation at all. If the market free-falls for a year, sure, I'll be glad to wallow in it! But until then, it's embarassing.

The Disser: Tim's an idiot. I come to this blog as a contrary indicator. Come on, now. That's just rude. The blog is free, and it takes effort on my part to do these posts every day. You don't have to be fawning, but don't be a jerk. OK?

The Even Keel: I come here to look for ideas. Some I use, some I don't. But it's nice to have another opinion. Yes! Right! That's all this blog is for!

Now, one criticism offered recently is that the blog simply isn't technical enough. One reader wrote:

I would think that with your book coming out, you would want to at least seem to make picks on technicals. That is why it is so confusing that you don't seem to use much of any technical analysis at all when pick stocks. You seem to just look for strong stocks with simple double or triple tops and say short them.

...and another reader....
I do have a question for you: when you trade by "technicals," do you actually use anything OTHER than Fib lines? I see a couple of charts here and there that point out simple candlestick formations, and maybe an occasional RSI line, but nothing else.

Let me be clear: even though I have access to every indicator under the sun, I use hardly any of them. I'm a simple soul. I'm interested in (1) patterns (2) trendlines (3) Fibonacci studies. That's really about it. I've been tossing in some RSI here and there to spice things up a bit, but honestly, if you're looking for something like the graph below, you might be better off hanging out at the public chart site of StockCharts.com (which is where this graph is from):


Oh, and there was one other (anonymous, of course) comment I must address.
I think Tim has a secret agenda. Tim is certainly not a technician because the number one cardinal rule is trend is your friend. He clearly violates that rule repeatedly. Personally, I think he subconsciously hates American capitalism. He wishes the economy will go sour and companies go bankrupt.

Ummm, actually, my love of America as well as capitalism runs pretty deep. Need I remind you that I built, grew, and sold my own company? And it continues humming along to this day. I am proud to have created employment, created value for subscribers and users, and made enough money to afford the overpriced real estate around here. So you, sir, are wrong.

As I mentioned, there were some new lifetime highs today on such things as the MidCap 400 ($MID), Russell 2000 ($RUT), and some others. The Dow 30 is within spitting distance of another lifetime high, and the S&P 500, while still a little ways from a lifetime high, pushed into territory not seen since autumn of 2000. The bulls are extremely strong now.


But getting back to the bit about being a technician. At the moment, this really isn't a technician's market. Sometimes the market is more favorable to technical analysis than others. And I'm speaking of both bullish and bearish plays. The kind of analysis I do, described above, really isn't yielding much these days. Yes, GOOG and SHLD could wind up being fantastic buys. I guess I'm just having trouble getting past their nosebleed levels to believe they would burst hundreds of points higher from here.

Let me point out one interesting parallel, however. Take a look at this graph of the Dow 30 leading up to the bear market of 1973-1974. What we have here are four interesting steps: (1) a gigantic secular bull market (2) a moderate bear market (3) a backlash higher, pushing the market back to its prior high (4) a push above the prior high into new record territory, although not much higher than previous.


Take a look at the Dow 30 of the present day. I've provided numbers for easy reference. Do you see the parallel?


You can tell I'm pretty disheartened since I'm offering not a single stock suggestion. But I at least wanted to respond to the recent comments and share some thoughts on what I see as an interesting historical parallel.

33 comments:

Anonymous said...

I think the various trading and credit derivatives, huge amounts of liquidity, international markets, massive hedge funds, private equity traders, and last but not least, the creation of the PPT are all noteworthy differences between the markets of 1973/74 and today's markets.

As was CLEARLY evidenced by the POSITIVE response to the WORST numbers to hit this bull market since 2002 (i.e., last Friday's figures), this market does not need any good news to move higher.

With all the M&A rumors floating around, virtually everything can go up every day. There is no profit-taking, because nobody WANTS to take profits.

This is 1995 all over again -- people will force the markets higher by pumping huge amounts of liquidity into it, only for the sake of competing with each other for better gains!! Nobody wants to be left behind, so they continue to pour in their money. (I'm talking about the Big Boys, not us retail investors)

Anyways, it definitely doesn't pay to go short in this market. The corrections are quick and brutal, but the bullish reactions are even quicker and more brutal.

Pfizer was down 16% today to start with, but ended only down 11% or so. Believe me, that wasn't all short covering. People were BUYING that dip.

Every dip is getting bought... just like it's been for the last 5 months straight. And personally, even though I started taking up some small short positions last Thursday, I don't see that trend stopping any time soon.

I'm afraid I'm going to lose money on my shorts when all is said and done. Only time will tell.

-TonyB

stockshaker said...

Tim: you are doing a fantastic job. You DO NOT have to provide any justification for anything that you do here - and to be honest, you should not have to explain yourself for not being able to predict the future in the markets.

I think anyone who has been coming here for a period of time, KNOWS that this is a great place to get a better understanding of the TA - a service that you provide for FREE, and should anyone have the mere balls to criticize should be very ashamed.

It is not just a place for gaining a better insight, but its also a community that you have built that should be commended. And I think instead of posting how Tim is doing, why don't we all just step back, and look at the big picture - TRY HELPING EACH OTHER OUT - this is a stock market blog, USE IT AS A STOCK MARKET BLOG.

Be constructive.

I would think everyone would have graduated high school by now.

stockshaker said...

Hey Tony - I don't know... it seems like a pullback is rightfully in store very soon. Personally, I don't see how anything is different than before, just take a look at the cycles on the RSI or MACD - everything is still in order, we are approaching the (usual) high point on the MACD/RSI and that tells me, that a primary correction will occur within the next month. And just as before, the bearish pullback will last 1 to 3 months.

Thats what I see - this hasn't been out of the ordinary if you look at the big picture.

The volume, as well, isn't confirming today's action. The QQQQ's did 1.5%, but way below Average 30 day.

To me, this seems like its going to be similar to Jan-Mar of the beginning of the year - almost like a tug of war between bull and bear. which means a top is in store...

I'm just getting ready for the green light to pull the hedge strategy.

Andrew M. said...

Tim:

I read your blog religiously every day, though I post seldom. I believe people are forgetting the spirit of the blog, which is to offer ideas and suggestions. No one is the be-all, end-all when it comes to picking stocks. Not Buffet, not Lynch, nobody. Everyone has their own rules and expectations when trading.

I have both made and lost money on your suggestions, but only after I reviewed them through my own trading criteria (INVESTools). I find this blog to be an excellent "fishing hole" for ideas, and I appreciate the effort (right or wrong) in pointing out interesting trends.

I find it humorous that the anonymous posters here spew drivel without offering any suggestions of their own. To quote my beloved late step-father "you are either part of the problem, or part of the solution." So while you may not always be right, you are not necessarily "part of the problem," whereas these idiots who gloat over others' misery are definitely not "part of the solution." To those anonymous posters who think they are better, log on with a user name, and offer your own blog so others can follow along with your "genius."

Finally, I believe I saw someplace that even the BEST traders, are right only 38% of the time, but that they let their winners run, and cut their losers short. The suggestions you offer usually have low downsides since they are close to their "peaks," the risk is minimal. The rewards when you are right, are substantial.

Every Dog (Bear) has its day.

wincity said...

Tim,

You're right that this market defies Technical Analysis. The chartist at briefing.com was joking recently about losing his job.

I don't think this market fooled only the bears. I believe most sane people are scatching their heads.

Anonymous said...

Tim,

Thank you for your blog. I trade the Russell 2000 and am intermediate-term bearish. I know you have a thing for the Russell so I like to check every day. Just wanted you to know I appreciate the time and effort you put in.

BTW, there's a lot of non-confirmation on the Russell today. Momentum didn't confirm, volume didn't confirm, new highs didn't confirm, McClellan summation indexes don't confirm.

My guess is that the index is putting in a terminal diagonal from early November and today was all or most of wave "C".

Anonymous said...

Tim

Thanks for the great posts you do to educate and inform many of us. Please do not pay too much attention to those who criticize you especially those who do it in a disrespectful way. I do not expect everyone to agree with you always or ever, but they are free to offer their counter arguments right here, respectfully!! If anyone has a different take, let them give it or provide a link to where they have a better or different opinion on their blog. The markets are not about perfect predictions, so anyone expecting you to be right on everything is quite clearly childish.

Anonymous said...

Tim,
I'm a new reader and check in regularly. I really enjoy and appreciate your consistent effort. In a short period of time I am reading several blogs each week but your thoughtful and basic approach is valuable to me. I don't use your picks as much as borrow your eyes to learn more. I use Elliot mostly but when stepping away from the indexes, experience is telling me, basic is best...especially right now. And until a technician's market returns, I appreciate your hanging in there. Thanks. Dave

stealthelephant said...

Today hurt. You don't need many of these to get shaken out of short positions that are still trending your way. So, I re-evaluated my big market analysis. My simple counts get us to 12400 on Dow and about 2600 on Nasdaq. We don't have a great deal to go...which demonstrates that calling tops is a fool's game. Nevertheless, the strength is convincing because the skeptic IS the mind of the market now. In spite of some signs of exhaustion, we've got nothing. You follow the trend. The Dow unconvincingly pierced its highs made in Jan 2000 and the Nasdaq is in a bull market (with lousy fundamentals) if one believes that the parabolic movement from the bubble is complete--as I do. I've been a bear for the last quarter...as much as I hate throwing in the towel. I might as well...it's not a bad idea to be playing defense on the long side but I'm afraid the only shorts that make sense will be the stocks everyone has already bought...large-cap growth.

Anonymous said...

Tim

Right now I can't tell shit from poopoo as i'm all new to the market. However I am quite impressed by what you see/say and think/feel.

I think you have a great site and no matter what one does, he/she will always have criticism and judgement calls made.

I say you are a champion and all the best to you.

RR

h. lovil said...

Tim

it is honest and refreashing to hear you admit your mistakes.

Here's mine. My only short to go down was KBH. CTSh, AMR and EEM roaored and I stopped out of most of these.

Lots of money out there. We can't fight it. The bear's temperament is a cheap-skate (I speak for myself) - we see over-priced garbage and refuse to buy BUT we shouldn't short it! There are still lots of people who will jump on garbage with P/E of 25 or home-builders that will losing money soon, just because they are going up.

If we had shorted real estate in Sna Diego when it started getting rediculous, we would be bankrupt by now.

Lets keep our money until we can see the trend break.

PB said...

stockshaker and andrew m. AMEN to that!

The comments section is the second half of Tim's blog. Reading childish comments is a waste of time and space. Please be CONSTRUCTIVE, all of you anonymous posters out there!

Buying dips has become so routine and easy, I am not sure how long it can last!?
Even the most ardent of bulls have been surprised at the strenght and lenght of this rally. What's is even more surprising is the lack of real pull-backs. Selling pressure fades quickly. I think that al of this merger activity is a sure sign of a top. Now don't get me wrong, the market won't start falling tomorrow, as this 'exuberance' can stay with us for a while. Until then, the trend is your friend! It's very hard to go long at this stage. I'd rather stay in cash until I can 'feel' this market better.

one way stox said...

Please show us what is meant by the term FIBONACCI EXTENSIONS!!

Is the first extension the DJIA's recent ALL-TIME HIGH of 12,361 an added 21% gain, or will it be a 27% gain?

Please show us a chart of this.

Show the shorts//bears what they're up against.

Leisa said...

Tim, I have a few blogs that I check religiously, and this is one of them. This is tepid adulation and should not cause embarrassment nor suggest that you are my hero. Nor should it be construed that I'd endorse your candidacy for any office but your home office.

Having said that, it does seem that the ursine POV does not get much respect overall, and that seems to provoke those "nanny, nanny boo boors"(sic). I note that there seems to be a higher % of posts here (as opposed to other sites) that are just outright rude and disrespectful. I ascribe that to the lack of respect for the short view. I agree with PB that the comments section is valuable as well, and it does seem like a high school dance at times.

I've resigned myself that my puts will expire worthless next week. Oh well...and least it was a prudent position.

one way stox said...

p.s. -- Tim, for the fib. EXTENSIONS, please use the move from the 10/02 lows

z-stock said...

Tim,
I want to thank you for posting. I check in at least twice a day. There are a lot of cool, calm and collected people, that also blog here. Those wicked, nasty Jerry Springer Types (anonymous) are easy to ignore. Pay them, never a mind. I’d also like to thank you, for not quoting any of my stuff.
z-stock
Xle break down at 60.70? and then, possibly, See Spy Die.

Anonymous said...

Tim great charts again, little upset seeing the russel 2000 break out to new highs. Its almost like this bull market wont stop. Everything is pointing to a recession yet the market just moves higher each and everyday. I tried going long AGAINNN on Friday but just didnt have the courage to, and today I regret it as everything moves higher.

What makes me think twice about this bullish market and how it can do no wrong is the housing sector. Many claim there is a bottom building, but in my opinion I dont see a bottom anytime soon, at least for not another 18 months. This economy is built on consumer spending and with housing falling apart where will the consumer go to next to borrow.

This week we get unemployment figures, anything to weak and it looks like the fed could be cutting rates in early 2007. December 12th they meet again and im sure they will just recycle the same words they have used at the last 7 meetings.


TRADER 2006.

GemmaStar said...

I will never get used to how poorly some people behave as guests in another person's house. This is your house; the boorish posters embarrass the rest of us.

We love your blog. Thank you for creating it and allowing us to visit.

I am now waving my magic wand: all those boorish, rude posters just went...POOF!

Whew.

MJL said...

Dear Tim,
here's a defoted reader from the other side of the atlantic, from old europe. I'm the even keel kind of reader and yes sometimes I do agree sometimes I don't.... but the main thing is that I'm really admiring the other sound regarding the market. I hope you'll continue to share your points of view for a long time with us and for the people who only come here to get free tips and don't think for themselves and don't make their own analysis better piss off... grow up, you've your own responsibility!


Greetz,
MJL

Anonymous said...

Somewhere above I read the expression that "the skeptic is the mind of the market" these days. I think thats exactly right and has been the case virtually since the last major bottom in '02. People tend to navigate the current market cycle with the lessons learned in the previous one. Conventional wisdom has been resisting these wild surges in price all the way up.

This blog is a fascinating read for the psychology of belief vs reality. All these tortured attempts to get the facts to fit one's hopes and expectations borders on lunacy. I'm not judging...I've vaporized some cash fighting the tape too. But until the skeptical camp gets converted, until their doubt turns to fear and abdication, this uptrend has all the components it needs to just keep going.

Jeff

Anonymous said...

Well 6 trading days before the pullback I came on here with my gazillion reasons for a 2% to 5% mini correction... but the truth is under the sheets I was a lot more concerned the things I care about- wage inflation and a declining productivity rate no body else seems to care about, I went to 19% cash. Now some of the very industrial stocks I sold are revving up and into what is supposed to be a slowing economy. Pretty soon we will be close enough to x-mas that a correction will be impossible- but for now I'm holding out for a 3rd slightly lower weekly close for stocks and I agree completely about SHLD, a massive and obvious short and I'd like to throw a name out there Jarden JAH, perhaps the readers can look into the name and I'll post my reasons for shorting JAH here tomorrow.~stonedinvestor

Michael Newton said...

I couldn't find a way to e-mail you direct, so I hope you read all the comments.

I just want to encourage you to keep up the good work and not get discouraged. I enjoy reading your independent view of the market, whether you are right or wrong in the short term.

I too have been bearish for quite a while. Over a year actually... But being bearish in a bull market doesn't make me wrong. I've been neutral most of the time, but sometimes I'm actually long. Just because I'm bearish, doesn't mean I'm against making money. But don't expect me to go fully long.

But being bearish on a market doesn't mean you have to trade that market. While I've been neutral on stocks, I've been making money betting on lower interest rates.

Maybe you should expand your range of interests to include bonds. I mean, if you are not in stocks, where is your money sitting? Cash? But how can be in cash when short term rates and inflation are also moving? You even have to do technical analysis on cash if you want to be long cash...

Any way, keep up the good work.

Anonymous said...

Just incredible, another up day. This is getting so F$#cking old its not even funny, the dow is going for another RECORD closing after its last dip. Seems like the buying DOES NOT STOP. I think Im going to go long now. GOODBYE.

LONG AT DOW 12327 NASDAQ 2457 and SPX 1413.

Call me the long bull.

Anonymous said...

This market only wants to go higher. It's a one way street for the time being. But don't be fooled. Cycles have not and will not be defeated!

Tim for Vice-President!

We love you buddy!!!

Da Bearz!!!

stockshaker said...

Well, I do not know about you guys, but this definately does not feel like a market that wants to keep going higher.

It really seems like we are about to enter a sideways market till about Xmas, as wall street-ers want to lock in a profit, and avoid losing on some nice Porsche bonus cash.

I LOVE the markets right now, and things are starting to look really good right about now ... good in terms for catching a nice downfall.

This will undoutedbly be a nice profit opportunity for those who can let go of their bullish emotions, and realize that things are starting to look a little gloomy.

Don't get me wrong, I am not a bull or a bear, so I am not biased in any sense.

I just love making money. And for those who capitalized on the swift fall close to the beginning of the year, and then the beautful uptrend that happened from august to present, will appreciate the next major leg, downwards ... coming to a market near you!

Did anyone notice HANS breaking out nicely?

However I am a little more conservative when it comes to playing bullish breakouts on a overbought market, HANS is a GEM of a company right now.

And for those who like to read financials for fun (hey, not all of us are TA-sided!), notice the fundamentals in this company.

Good luck, and keep posted.

Anonymous said...

It seems to me endless buying by bull.

I cannt belive this market

Anonymous said...

MORE COWBELL, WE NEED MORE COWBELL!!


HAHAHAHHA --- TIM, YOU"RE DA BEST!!!


NOW LET'S SELL THE SHIT OUT OF THIS MARKET!!!

uurwau

Anonymous said...

manipulation continues....

Fuc$king sad...

90 points yesterday and another 40+ today, it NEVER ends. Why do I feel another record close.

Anonymous said...

same old story, it never seems to end. It's getting tiring watching this market float up just for the heck of it!!

Anonymous said...

And I remember how bad these markets were in June and July as if buying stocks was the bad thing to do. Now you buy buy buy, everything goes up up up.

Anonymous said...

at what point are you going to realize that you do not no as much about the market as you think you do. even if the market tanks it will not all be in one glorious afternoon. trade with the trend you morons.

Anonymous said...

12:54 i would not call us bears morons. This market is being manipulated and im not saying that because im bearish. I would be saying the same thing if I was long as well but instead I'm short. Seems like the good news is GREAT news and BAD news, GOOD news. Were only 10 points from another historical high and I think of course they will push it up just to close it at another record high.

HOW CAN anyone not see what is going with this economy. INFLATION still a risk, falling dollar, oil going back up, housing sector falling apart, ARMS resetting, profits slowing, GDP slowing, consumer tapped out. Why the Fu$% are these markets moving higher. This isnt a "goldilocks" economy like kudlow says every Fu$king night on his show. ITS NOT. Market doesnt deserve new highs as we could be entering a recession sometime in 2007.

Just like we got that oversold rally in JULY the markets will get an overbought selloff that will push the dow back to the 11500-11700 range. TO think this market can still move higher without a pullback is foolish. Last mondays drop is only a sample of what is yet to come in this market place.

Anonymous said...

yes, we are the morons that keep pushing this market into the stratosphere! It is us who do not care what is going on with the working class. In this environment who cares?? Nobody cares that there are a few bubbles floating around, we'll wait 'till they burst and clean up the mess afterwards! I am the one who promotes recklessness in the markets. It's easier to clean up a mess than to prevent in the first place. Welcome to my world, or shd I say my nightmare!

Mr. Ben Bernanke