Somnambulant

Holy God, will someone please make me up whenever everyone gets back from vacation? I haven't had a vacation in years. Where is everyone? This is nuts!

OK, rant over. The market, once again, puttered, farted, and lolligagged all day long. My twin-disc DVD set ("Grass Growing" and "Paint Drying") is providing excellent entertainment in lieu of the markets. I think all market commentators should get time off until Tuesday, September 6th. It's just not right!

I really have nothing new to say about the markets. If things don't start getting zippier, I'm going to have to start posting old baseball statistics. Here are just a few charts. The latest on the S&P 500...........which way will it go? Hopefully next week, the first post-summer trading, will yield an answer.


The oil services sector, which fell nicely yesterday, went up a touch today. We still need to break below 130 to make this exciting. I've put a rounded rectangle to indicate the space OIH needs to traverse to make this H&S pattern complete.


The VIX is still stuck in neutral. Complacency abounds.

Oil Slips, Market Blips

It had to happen sooner or later. I'd like to proudly announce the Technically Speaking Shameless Commerce store. There's just a few odds and ends there to proudly display your bearish disposition. Enjoy!

Even though the market rose again (grrrrrr........) my bearish portfolio rose too (hurrah!) mainly because I have so many oil shorts. Oil fell nicely, but it still hasn't broken its neckline. The magic number on the OIH is 130, folks. Go, OIH, go!


Did the S&P 100 double-top as of today? Only time will tell. I think almost everyone who reads this blog is sick of waiting for the market to run out of steam. I certainly am.


The $NDX (NASDAQ 100) is kissing the underside of its former supporting trendline. In fairness to the bulls, it seems the NASDAQ Composite ($COMPQ) overcame a similar trendline today. Here's the aforementioned $NDX.......


If you want to see proof of the volume withering away in this summer market, look at the SPY graph below. It isn't just a "last week of August" situation. For three whole months the volume has been shrinking. How's that for divergence when compared with the price action, eh?


The $VIX is screaming "complacency." It just grinds lower and lower. I guess people expect boredom and smooth sailing until we have active colonies on Mars.


A reader wrote and asked me to take off the bearish headpiece and point out a couple of bullish charts. I'd be happy to do so. The American Stock Exchange's Major Market Index ($XMI) is really good looking. The only reason I wouldn't rush headlong into buying this is because it's a freak. All the other major index charts look neutral at best. But, on its own, this is a fantastic looking chart for bulls.


As for an individual stock, it's not going to make anyone multi-hundred percent gains anytime soon, but Genentech (DNA) has been very firm. A nice saucer shape has been forming.


Now go buy a t-shirt! And I'll see you tomorrow......

Bulls Free to Run

Good morning.

There is - unfortunately! - a fair bit of "open space" for the bulls to roam upward. There's really not much in the way of overhead resistance on the major indexes and, by and large, there's a decent amount of space between current prices and the next Fib level up (which is where they peaked last May). Not a great setup going into what is usually a "bear's month", September.

Take the $SPX (please!) I've marked in yellow the wide open space that bulls could trample upward, if they've got it in them (and, in the past month, they certainly have).


Much the same can be said of the Dow Industrals.



The NASDAQ is a bit more of an exception. It's approaching a fairly substantial trendline from down below.


Being exasperated gets old. I'm just going to keep sitting and puzzling. Weird, weird market....

Fingers of Instability

A reader of this blog (Old Soldier) was kind enough to forward me a fascinating article by John Maudlin called Fingers of Instability. It'll take you a little while to read it, but I highly, highly recommend it. It's fascinating.

Extracted from the Comments section - - some other interesting tidbits about the housing bubble and the credit which made it possible:

• 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000;
  
• 43% of first-time home buyers in 2005 put no money down;
  
• 15.2% of 2005 buyers owe at least 10% more than their home is worth (negative equity);
  
• 10% of all home owners with mortgages have no equity in their homes (zero equity);
  
• $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.

Just For Fun

The Dow was up over 100 points today but then started to ease back to close up 67 points. One reader was puzzled by my mention of the market being in the 'doldrums.' I guess the Dow up that much isn't exactly doldrums, but my portfolios were basically unchanged. So it was pretty boring.

Just for kicks, let's take a look at some of the mentality back in 1999. All these books were published within months of each other in late 1999. Great lesson in contrarian thinking........


Not to be outdone.....


And then, in a desperate bid for attention......


Where was the Dow 1,000,000 book? I guess the market crashed too soon.

In last Sunday's NY Times there was an amazing article on the real estate bubble. I know this is a really tired subject, but this one graph is breathtaking. The latest surge in real estate completely dwarfs anything seen in the U.S. (...said the man with two overpriced houses in Palo Alto, California). Scary, scary stuff:

Last Week of the Doldrums?

The market is up fairly substantially this morning (Dow +75 points as of this writing), but my portfolios are pretty much unchanged. The reason is that any losses are being offset by my shorts in oil- and gold-related stocks, both of which are having a down day.

The market has been in a low-volume funk for a long time. Word on the street is that, once Labor Day is passed us this weekend, we'll return to normalcy. I sure hope so. These markets are really dull right now.

The S&P 500 is terrifyingly close to crossing its 78.6% Fib retracement (sort of the last holdout....) at the 1303.80 level. It's less than a point away from it now. Not the end of the world if it crosses it, but it puts another thumbtack into the bearish coffin if it does.

In the meantime, here are some interesting looking short possibilities. I've put a red "stop order if crossed" line on most of these........

ADBE:


DRQ:


EOG:


HAL:


MCK:


RIG:


XAU:

How Many Ways to Say "Nothing"?

Each day I read fellow analysts Charles Kirk (of Kirk Report fame) and Michael Kahn (of Barron's fame). I notice they're in the same predicament I am.....how many different ways can one say, "there's nothing else I can say!" Posts are getting smaller and shorter every day!

Honestly, this has been a completely boring week. Everyone keeps saying all the traders are on vacation. Is that really the case? It's astonishing to me that an entire stock market can be so dulled by a portion of people taking their summer vacations. Oh, well. The volume is more telling than my opinion.

If a light strikes me this weekend and I think of some more good graphs to share, I will. In the meantime, here are a few interesting charts from my forthcoming book. Make of them what you will! (They're from the chapter on Head & Shoulders patterns)

Full Body Cavity Search

If you're ever going through airport security and you spot this Dell laptop.....


be sure to say hello! That would be me.

A Watched Pot (Again)...

Oh my LORD the stock market is boring lately. Sheesh! I've elected to put up a YouTube movie of paint drying (with grass growing in the foreground) since it's more enticing.

So I'm just going to toss out some more interesting short ideas. The first of which, BBBY, I offered a few days ago, and it's started to leg dow nicely.


CAT (getting near the end, or a trendline break instead?)


CERN


MRO


MCK


MSTR

Are We Finally Turning Around?

Below is the intraday S&P 500. Does this look like a top to you? At least for the short term? I think so. I sure hope so. An honest to goodness down day was a pleasant change.


The $VIX has been ungodly low lately, and that also seems to be turning around. It sure makes put options cheap at these levels.


The Dow lost a little more than 40 points today. Looks like it's backing away from that ascending trendline.


The NASDAQ 100 bounced away from its own trendline beautifully......


On a daily basis, the S&P 500 has been quite strong medium-term, but so long as that trendline holds, we've still got a bearish disposition on this one. As always, click on the image to see a much bigger one. This chart is loaded with embellishments, which I hope make sense to the most of you.


Gold hit a medium-term high today before turning around into a loss. This could turn out to be a beautiful short, but it's going to take a couple of months to see. It's been unpleasantly strong until today.


The $XMI has either hit resistance for the third time or is about to produce a marvelous breakout (for the bulls......) This could be a great cup with handle pattern, or we could simply be bouncing off that resistance line again.


Here are positions from two of my accounts (I've got others, but I couldn't fit all the symbols on the screen.......) This time I'm using symbols to make it easy on you.

Your Morning Inspiration

Tough markets call for tough inspiration. Start your day right with two of my favorite clips of all time. The Alec Baldwin speech from Glengarry Glen Ross and R. Lee Ermey's brilliant scene in Full Metal Jacket. Enjoy!

Socionomics and Frank Quattrone

For those who didn't notice, Frank Quattrone basically got a walk for whatever his sins of the past may have been. I think fans of socionomics may seen a bit of a pattern here. When the market was insane and sky-high, Quattrone was a hero. When the market took a huge dump, he was a villain.

Indeed, do you want to know when his trial was? That's right - October 2003- the bottom of the market.

Now that the market is - yep - insane and sky-high again, society gives him a walk. Coincidence? I think not.


Also, a tip of the hat to The Kirk Report. I appreciate the mention!

Empty Motion

Yawn. Oh, is the market closed now? OK. Yeah, the market was down a bit today. Big deal. There's still clearly no firm direction.

I've noticed things have become so placid that there are instances where puts many months in the future are basically free. Take a look at the chain below. At the time this was taken, the intrinsic value of a $30 put was $6.61. And what's the bid/ask of the April 2007 put? 6.60 by 6.70. (The 5 contracts you see are mine - I was the only volume). Notice also that the ask price is the same month after month. How's that for low volatility? If you take a look at the stock chart, you'll see maybe it shouldn't be so...


And what's the most boring stock of all? How about multi-billion dollar powerhouse Google? This used to be all the rage. Now it's just sinking into a modest sine wave of nothingness. Look at the past ten months on a percentage scale, shown below. 0% change. Whoo-hoo!


Here are a few more short ideas on this otherwise ho-hum day........Adobe (ADBE):


AIG International (AIG):


Black & Decker (BDK):


Chicago Mercantile Exchange (CME):


And even Microsoft (MSFT) which seems to be bumping against the other side of its long-ago broken trendline.

Wedding Bell Blues

The Dow getting whacked more than 50 points this morning has me in good spirits, so I thought I'd do an unusual intraday post........

I went to a wedding on Saturday night. It was spectacular. I'm not at liberty to disclose who was getting married, since it would upset a lot of guys out there! But I've never seen such a star-studded gala. A lot of Internet luminaries, venture capitalists, hollywood producers, and the like. Plus little old me.

But here's why I'm telling the story. One of the fellows there - the founder of a major Internet company that I guarantee you've been to - is someone I know, so I introduced him to my wife and chatted with him a bit. I remarked on how bearish I was, and he smiled and shook his head and said, "Not me."

He went on to say that basically everyone learned their lessons during the bubble. There was no more over-hiring. No more buying too much inventory. No more waste. Not more bad decisions. Therefore - - no more bubble, and no more bust.

I've got to say, it was a little disconcerting to me. I mean, here's a guy who is really successful, really rich, and really smart. He went on........."As long as there are guys like you who worry, I know things are going to be OK. Because the markets are going to climb a wall of worry on the backs of guys like you. When you stop worrying, then there's trouble."

And I thought to myself - sheesh, that's kind of a shitty remark! I mean, what he's basically saying is that bears are sort of like canaries in a coal mine - - just really stupid ones. We are wrong all the time, so much so that when we decide the market is going to go up, that's when it's really going to get hammered. So until that time, it's all wine & roses.

I have a hard time dismissing this gent's comments out of hand. I mean, he's a really sharp fellow. But I also recognize that he's an incredibly successful Internet entrepreneur and, as such, is going to be highly inclined toward a bullish view of the world.

Food for thought.......

How Much Longer?

Strength begets strength. Today the markets continued to push higher. Most of the push was left for the end of the trading session - perhaps today being an options expiration was a factor here. In any case, thus ends a nasty week for the bears.

I wonder how long this push upward will continue. We are, across the board, getting to some dangerously high levels which, if pierced, stab at the heart of the bearish arguments. I feel as confounded as I was in 1999 when everyone on the planet seemed to be a bull.

Let's take a look at some major indices and how much room is left to surge on each before they do major damage to some bearish trendlines. First, the Dow Jones Composite. The rounded rectangle indicates how much wiggle room is left:


The NASDAQ Composite is basically out of room at this point. There's a tiny amount left between today's close and the resistance line.


The Dow has been pushing toward its resistance line. It's not even that far away from its all-time high. As long as we're below resistance, I'm relatively OK with it.


The NASDAQ 100 is completely out of room. If it pushes higher on Monday, that's going to demand re-evaluation.


The S&P 100 has been remarkably strong, and it is getting very close to its high set last May.


The S&P 500 is approaching a Fib retracement level.


Earlier today, the Gold & Silver ($XAU) looked fairly weak, but it regained strength and finished in a hammer candlestick pattern. This chart is looking very indeterminate at this point.


The $XMI pushed to a new medium-term high today, exceeding the high set last May. This, among all the charts, looks the most bullish. Last May, however, you could have said the same thing, and that was the high water mark.


See you after the close on Monday - - - although the market couldn't care less, I hope next week is better than this one!

A "Relief" of a Rally

First, a tip of the hat to fellow blogger Charles Kirk for mentioning this blog a couple of weeks back in addition to pointing out this interesting article. The thrust of the article is that we're only about a third of the way through the secular bear market which began in 2000. It's fascinating stuff.

I've looked at hundreds of charts (as usual) today, and in spite of all the hand-wringing yesterday, my belief is that the bulls have pretty much shot their wad as of today. It's been very rough for us bears of late, but I think we may be at a turning point.

My first indication was this morning. Even though the market was up nearly 50 points (again.....) I noticed just about all my portfolios were showing nice profits. Part of this was due to the weakness in oil, but the fact is that the rally was losing its breadth. The only number that matters, after all, is the Profit/Loss column each day, and when that's green, I don't really care what the market is doing. The fact that the market's surge withered away to a 7 point gain today was obviously a relief.

Below is the minute-by-minute chart of the Dow 30 over the past sixty days. I've highlighted the "higher highs" that have been happening for most of that time, connecting them with arrows. My sense is that this is a high-water mark. A very strong Friday tomorrow would absolutely flabbergast me. (Could happen - never say never!)


Oil is still teasing us with a head and shoulders pattern in-the-making. Of course, until that neckline is broken, which may or may not happen, this pattern doesn't mean squat. I'm still short a lot of oil/oil service positions, so I'm jumping the gun, I confess. It's got to push through the area I've highlighted in yellow, and then it's going to get the crap kicked out of it.


I'm only going to post one stock chart today - SHLD. This has all the markings of a beautiful cup with handle pattern that is failing. A failed bullish pattern makes a fantastic bearish pattern.


Below is a compilation of the items I am probably going to buy puts on as well as my current short/put positions. Not a long in the bunch.


Let's hope tomorrow is a good day to an otherwise crummy week!

What a Drag..........

Dear Readers,

I gotta level with ya, it is not fun to write this blog in this kind of environment. Another nearly triple-point rise today. Ugh. I notice the comments section has gone stark, raving mad - nearly 200 comments. If the market had been slammed today, I'd love to go check out the comments. As it is now, I'd rather not see what people are saying!

Well, as has been pointed out by readers before, there is no right or wrong in the market. There is simply the market. It seems hard to believe that less than a month ago (July 18th) we were flirting with breaking Dow 10,660 and heading into a major descent. Seems like a million years ago, doesn't it? Sad. My only hope is that my emotions tend to inversely correlate to the bearish prospects of the market. I'm feeling like crap, so maybe we're at a turning point, eh? Or maybe not.

The $INDU has risen to the point where it's become very demoralizing for the bears. There's really no "line in the sand" left to speak of. If the high set today is crossed anytime soon, the only goal left to conquer is the high set back in May (and, if that is crossed, the all-time high set in January 2000). The Dow "should have" (definitely in quotes....) resumed its fall where the green arrow is pointed (remember, click any image to see a much bigger image). But the bulls grabbed this ball and ran with it.


The NASDAQ 100, like many other indexes, is just underneath its former support line. There is a chance (hope springs eternal!) that this could be a turning point, since the former support is now resistance.


The S&P 100 is in a similar position.


Here is a heavily marked-up S&P 500 chart. We're still in the lower half of the channel that extends back for quite some time. I'm not exactly sure what to make of this graph, except that it sure was more fun to be a bear from June 1 to July 15 than it is now.


The Dow Utilities are looking pretty toppy right now.


The Amex Major Market ($XMI) looks like it's making another serious attempt at a breakout. The last time it did this, marked in yellow, it failed. We shall see if it fails again or pushes off to blast away from this consolidation zone.


The energy shorts I've got were just about the only bright spot in my portfolio today. There is some weakness here, and this is about the only graph I can point to as looking really primed for a fall.


What a bummer of a day. Yuck!

It Sticks/This Sucks

Ouch. The bulls finally got what they've been wanting: a large rally which lasted through the end of the trading session. No more "pop and drop" today! It was nasty.

Below is the minute bar graph of the S&P 500. There was a solid lift right from the opening, and it basically gained strength from there. At one point it looked like a repeat of yesterday, with a triple-digit rally fading quickly, but it recomposed itself and squeezed a lot of bears out of the picture. Again, ouch.


The $VIX is extremely low right now, virtually at a record low. This indicates widespread complacency among traders. Generally speaking, no one is fearing a fall.


I've still got a few charts up my sleeve though. For your consideration, here are some possible short candidates. First, Aetna (AET):


CERN:


ESRX:


MBT:


MOT:


Tomorrow morning the CPI figure and Housing Starts are released at 8:30 EST. Given today's excitement over what appears to be an ease in inflation, it will be interesting to see if the bulls add to today's gains or if we're still stuck in up/down/directionless mode.

Fade Away, Again & Again.......

We once again pull out our friend Bob Dole to represent today's action, which is great for us bears. A huge, instant, triple-digit rally followed by a spirit-crushing fade. Huzzah! Another great day on the market. Oil being down hard was helpful, too.


On a daily basis, we've got a nicely formed shooting star. I'll say what I've said so often already - until we break below 10,660, all this shouting about ups and downs is just for fun. We're not in a bull market OR a bear market. We're in a farting-around market, and I'm sure we'll all be glad when we finally get direction (It'll come one day, trust me!)


The reduced tensions in Israel caused oil prices to ease, which did great things for my dozens of oil service-related shorts and puts. The OIH is still a head and shoulders in the making (not completed yet), so, again, it's nice to see it sink, but it's not party time until it breaks that neckline.


The S&P chart doesn't look so different from any of the other major indices - a shooting star, more or less. The bulls are surely frustrated, since they can't seem to make any rally stick. Tuesday and Wednesday mornings will have some key interest-rate data, so that should make things interesting.


I'm about to hop aboard a plane (again....) so I'll sign off. Good one today, bears!

What a Week.....

The week started with hand-wringing and anticipation about the Fed's announcement on Tuesday. By the end of the week, terrorist fears had people asking "Bernanke who?" It seems like a hundred years ago already.

I've been bellyaching a lot, but I've actually had six profitable days back-to-back, so I guess I should cheer up. I remain confounded at the market's curiously positive reaction to the horrible terror threat, but Friday seemed a little more in touch with reality.

We haven't looked at the Dow 30 in a few days. This is a bit of a wider field. Not much has changed here. The golden number is still 10,660. We can't really start to take over earth until this is broken. Until then, we're just kind of jerking around.


The S&P, like the MidCap and the Russell 2000, is at a bit of a juncture right now, although it seems to be tipping downward. I actually - gasp - bought a bunch of MidCap calls (yes, calls) early today, but I dumped 'em at a loss later when it was clear no rally was going to take place. Things are still mushy, slightly favoring the intelligensia (da bears).


The gold & silver index finally started weaknening again. If this starts to gather speed, it'll be terrific, because this could shape up into a marvelous downward pattern.


Starting with Bed, Bath, and Beyond, here's a slate of cool looking short possibilities. I've got 80 - yes, I can hardly believe it myself - 80 different positions. Out of these 80, 80 are bearish and 0 are bullish. So I guess you can say I've got a slight bearish disposition.

BBBY:


BBD:


CERN:


CME:


DNR (what a ticker symbol, eh?):


HAL:


HLX:


MBT:


SPG:


UBB:


Hope you have a good weekend and don't waste it on something as lowbrow as a golf game. Ta-ta...........

What's It Gonna Take?

OK, so let me get this straight. The world narrowly avoids having a slew of commercial passenger jets being blown out of the sky, sending thousands of innocent civilians to a horrible, terrifying death, and the market goes UP? Even airlines ended the day in positive territory! What the hell?

I would like to provide a handy reference, based on today's action, for any future news and how it will affect the market:

• Russia Declares Nuclear War on the U.S.: Dow down 37 points
  
• Nuclear Strike Annihilates Free World: Dow down 52 points
  
• Joe Lieberman gives George Bush a tongue kiss: Dow up 254 points on record volume.
  

This is just ridiculous.

Well, in spite of my pissed-off tone, my portfolio actually did OK today. The only reason is that (1) I closed out my SPX and OEX puts early in the day, since I could sense today's action was completely messed-up (2) I have a lot of oil-related shorts. But, even so, today's action was just stupid.

It took me one glance at one chart early in the day to know there was trouble. This is the S&P 400 MidCap (daily basis), and as you can see by my mark-up, we are not in the series of lower highs and lower lows that we need. This sucker seems to be strengthening.


I've bombarded you guys with enough charts over the past few days. I'm going to go stew for a while.

More of What We Want

Today's action is exactly what we want to see. Good news in the market. Excitement. A big up opening. Chip, chip, chip away at it. And wind up with a big loss. Perfect. Even the commenters on this board were talking about an up day and a two day rally. Come on, folks! Are you kidding me? Cisco? Do you really think anyone cares about that dog anymore? How 1999!

A few have asked me to look at NILE. I did, and I moved on. It's an awful chart. I couldn't tell you whether it's going to go up or down. It's just a mess and not worth following.

Some people were puzzled at my dismissal of Cisco. Yeah, it's a big company, but so were Ford and GM. Cisco is yesterday's news. I mean, look at what it's done over the past two years. A 0% change. Wow, that's a barn-burner.


The Dow Transports got ripped today, and they are decisively below both a major ascending trendline as well as the Fib level. Nasty. Great for us bears, though, especially the Dow Theory fans.


Once again I offer a handful of my charts that I'm short (or, more likely, am long puts). This is just a smattering of my 50 or so positions. Here we go.....ATW:


BSC:


CERN:


CME:


COG:


DO:


FMX:


The key is to keep hacking away at the bulls, day by day. One day things are going to break hard. But we need to break their spirit first.

Fed Day is Out of the Way

Well, today's post-Fed rally lasted about as long as a bull in bed: 30 seconds or so. These guys are such turds. They bid up the market like mad in anticipation of a pause. BFD. Is a slowing economy great news for earnings? The market is doomed, people. Get real.

Here's a minute by minute chart of the DIA. You can see the massive micro-rally take place here if you look really close:


The $VIX is well positioned for a long, meaningful upswing. That'll be great for the bears.


Oh, do you need a good contrarian indicator? Check out Business Week's cover story. It features this kid on the cover claiming he's made $60 million on his Internet idea. He hasn't. It's bullsh*t. The editors dreamed up some hypothetical value for his firm, multipled it by his stake, and came up with the figure. I have no doubt this chap will get rich, but isn't this jumping the gun a bit? Smells like 1999, doesn't it, folks?


I've got something like 50 positions in the market, all of them puts or shorts. There's no way I'm going to show you all the charts, but let me throw a few interesting ones your way. Setting a good stop price is going to be up to you.

CAM:


IPS:


LEN:


OIH:


PBR:


PD:


Oh, let's do a hurricane5 update. Nutrisystem - target price of $600 - current price today, after getting smacked over 7% - is $45.58. And Hansen - target price $120 - currently at $29.45. Way to go, 'cane. I wonder if he is lurking to see what people are saying. Nah, I doubt it. Way too painful.

Anyway, congratulations to all of us for having the brass nads to get through this ridiculous Fed nonsense. Now we can turn our attention back to grinding bulls into hamburger.

HANS & Fans

Let us all bow our heads for a moment of silence out of respect for fallen superstar HANS (long-time favorite of wayward poster hurricane5, who set a price target of $120 for this stock). At long last, this thing is getting clobbered.

HANS has fallen 40% in less than a month. Why, oh why, didn't they ever have options for this thing? Well, truth to tell, there were a few options, but just a handful, and the bid/ask spread was wider than Roseanne Barr's waist.

Anyway, here's a daily graph of HANS, accentuated with a Fibonacci fan (long term) and supporting trendline (medium term).


A closeup view of this stock indicates that, for now, we're close to a bottom. I've covered my short on this at a handsome profit. I think that, long term, the stock is headed way, way lower. But I'm happy to take my fat profits for the moment.


Few things in life are certain, but this is: tomorrow is going to be bananas on the market. Which is probably going to take a lot of the excitement and participation out of the market today. I probably won't have a heck of a lot to say until after this Fed madness is past us. We'll see.

Why Is this Man Smiling?

Before I forget, thanks to everyone who posts to this site. Yesterday's blog entry got over 100 comments so far - a new record! There's quite a sub-culture growing in this blog! We should get t-shirts made or something :-)

This is a very unusual intraday post.

When I saw the market up (another) 70 points this morning, I was pretty cranky about it. Because, believe it or not, I'm not going to keep generating excuses for a bear market (e.g. "Big, round numbers are major resistance points, so there's no way we're going to cross 20,000 on the Dow today!") I'll eventually give up if this keeps going higher. But not yet. And here's why.

It's the charts. What the charts are telling me is that the Fed rally is already done. We don't have to wait until Tuesday's insanity. The bulls have enjoyed this ride already. The futures market is pricing in an 85% probability of the Fed pausing their rate increases. Which is what the bulls have been praying for. 85% is pretty damn high.

When I was first working on this post, the market was near its daily peak. It's already softening fast. But that's not why I feel confident. It's the charts. Like I said. Let's take a look.

The VIX has finally come alllllllllll the way back down to its trendline. It touched it perfectly this morning. All the fear seems to have been squeezed out of the market. The markets having everyone smoking ganja again. So puts are cheap.


The Dow 30 is, among the index charts, the most disappointing for a bear. If you look back at the chart I made of the Dow back on July 28th, you'll see that four out of the five "do not cross this level!" points have been blown through. Being beneath the ascending trendline (not numbered, but shown in the graph) is the last line in the sand to survive.


But the charts of the indexes - even the $INDU - still suggest the miniature rally we've been suffering through is over. All the indices are bumping up against trendlines that will be tough to cross. Here's the Nasdaq Composite:


The S&P 100:


The S&P 500:


The Dow Utilities may have put in a major double top (which is important, considering how key interest rates are in the market recently):


The the American Stock Exchange Composite - the $XMI - has, for the umpteenth time, made a run at its resistance level. I imagine it'll despair and fall away as it has so many times before.


I've been recommending shorting oil service stocks (OIH, DO, RIG, and so forth). Those are doing terrific. As is AAPL. If I get time, I'll do another post today or this weekend. Good luck! And here's hoping for a shooting star (or better...) today.

What the Health?

What a day.

It started off well enough, with the GLOBEX in the tank and an instant 50 point chop off the Dow. From that point until almost the end of the day, the losses got chipped away, and eventually the bulls took the upper hand and pushed the Dow up about 70 points. By the closing bell, the Dow closed up about 42. So they took another one away from us.

It seems the increasingly active 'comments' section of this blog has become a commiseration center for us bears. I can sympathize! It's frustrating and maddening to witness this market's continued strength. There are pockets of weakness - such as good old HANS finally getting kicked around some - but, by and large, the bulls are still running the show. (I don't get real hung up on conspiracy theories about the Trilateral Commission manipulating prices..........the fact is that virtually all investors out there are, by their nature, bullish, and that have a lot of money to push this market higher).

I've been very focused on the Dow, which has been relatively strong compared to the Nasdaq and S&P, and - unfortunately - it finally crossed above the "line in the sand". It doesn't mean the bear case is vanquished. It does mean, in the short term, that it holds less water. It would actually make a lot of sense if we had a big rally tomorrow, from a technical perspective. A crossover is a crossover, and there's no doubt prices violated this resistance line.


Looking at the minute-by-minute chart, you can see some very plain, broad Up and Down trends. The time is right for it to turn back down. But nowhere is it written that this up and down cycle will continue. The market should have started going down today (and, at first, it did), but the bulls overcame that weakness.


What never ceases to amaze me - and I mean this, because I've been doing trendlines forever - is how much power trendlines have. I mean, Good God, just look at it - once the price crossed above the trendline, it "obeyed" it beautifully, coming to a gentle rest at exactly the trendline. This will be the launching off point starting tomorrow morning after the jobs report (either up, which is sadly more likely, or down).


I humbly offer a few short suggestions for your consideration. Here's Motorola:


Transocean (RIG), suggested earlier in this blog, which showed some nice weakness today:


And aging handsome dude Ralph Lauren:


Two big events are coming in the next three trading days: the jobs report (Friday, tomorrow) and the Fed (Tuesday). This is really our last, best hope to get the downward market we "should" get based on the market's behavior the past couple of months. If this strength continues, we're really going to have to re-evaluate.

Drumming Fingers

My relationship with the market is pretty bad these days. I find it irksome and frustrating. Everyone seems completely obsessed with next Tuesday's Fed announcement. So everything is in kind of a weird holding pattern until then.

Just as yesterdays 100+ point drop got shaved before the close, today's 100+ point gain got shaved too. The Dow 30 is still below (but, again, just barely below) the "safety line" shown here in red. This is an agonizingly tight spot. If the market continues to be strong, it's going to completely screw up mid-term bearish arguments. If the market falls, it will be textbook technical analysis. But if we have strength, it's time to get out and get out fast.


During the peak today, I felt a lot of oil service stocks had really reached their limits, so I bought some more puts there. OIH softened up a bit. I'd still say $152 is a good stop loss point for OIH and, in principal, the component parts of it as well (at different prices, obviously).


The S&P 500 is clinging to that line like there's no tomorrow. Click on the image to see it more clearly. There's an ascending resistance line that the price is just smooching, day after day. It's kind of weird, I must say, but at least it's predictable for the moment.


If the markets move higher, I've got to believe $TRAN will be especially strong. It's had a horrible time recently, losing the equivalent of about 1,800 Dow points from its peak. But it's at two major support zones right now, and it could easily bounce higher from here given any general market strength.

Down is Good

I was pleased the Dow was down 100 points earlier today. However, looking at the chart, I had a feeling it probably wasn't going to go down any farther, at least for today. As the pink line shows below, there is a fairly prominent "line in the sand" indicated by the Fibonacci retracement at around the 11,090 level. I had a bunch of August puts (and with only 13 days left on them, I was getting jumpy) so I got the hell out at a good price. Moments later, the market started to gather up to strength, closing down 60 for the day.


I have a lot of work to do (again, I've got a real job, folks!) so I'm going to keep it short today. Read yesterday's long-ass entry if you haven't already.

Oh, and someone asked for my current positions. Here you are, courtesy of Mr. Indiscrete (click image to actually read them):