Wednesday, January 17, 2007

When Great News Doesn't Help

After the market closed today, tech bellwether Apple, Inc. announced not just great earnings, but Oh My God blowout earnings. And how did the market react after hours? Well, both Apple and the NASDAQ fell. GLOBEX is down too. When stocks soften on amazingly great earnings, that's a good sign for us ursine types.

Some indexes pushed to lifetime highs intraday today, but ran out of steam. I do not see any sensational, obvious, the-world-is-coming-to-an-end type pattern. If the market falls, it's going to do so simply because there are no more Greater Fools. As for the S&P 500, shown below, it needs to break below 1,400 before things get interesting.

The Russell 2000 seems to be consolidating right now. I am hoping the current consolidation is similar to the prior one, both of which are shown in light blue highlighting here.

And check out the Transports - aren't trendlines amazing? The prices did a perfect about-face.

My AMLN short - so far, so good. It's down to $40 in after-hours trading. This is a sharp looking graph.

Bear Stearns has had an ungodly amazing run. Again, this isn't a slam-dunk bearish pattern, but more of a "this is stretched to the max" situation. But some maxes can out-max themselves, as we painfully know.

The same logic holds true for Goldman Sachs.

I rarely mention Nvidia, but puts on this stock could benefit greatly from any general downturn in tech stocks, given its huge runup.

Lastly, a suggestion for a buy (or calls)......Oil Services (OIH). My view is that the drop in crude prices has had its run. Take a good look at how strong volume has been recently, in the midst of the stock consolidating in the upper 120s. Stop-loss price on this one would be $125.80, in my opinion.


What If? said...

Is OIH setting up with a reverse head and shoulders - in the early stage
of the 2nd shoulder?

Lauriston said...

Even in this market where it is tough for bears to survive, I managed to close some profitable trades on IWM puts today. I have found that until we get a significant drop, bears have to stay nimble. When you see MER GS MS LEH and BSC drop 3-4% then you know it's bear time! Until then either follow the sheep long or stand aside. I think between tomorrow and Friday the bears might get something. Remember 1/20/2006?

EddieFl said...

Hey Timbo,

I see you followed my intraday recommendations on shorting GS and BSC. (Long PUTS). hahha,,, just kidding,

But those two have had a fast and furious rise higher,, they are gonna wanna take some money off the table soon.

All in all, GS, has had some nice trading swings on the 60 minutes charts. BSC trades with low volume, can have erratic moves.

Looking for a nice strong sell-off going into the weekend.

Jan said...

Thanks Tim for the Russell 2000 chart and info.

I see bearish factors in the $RUT as well so I wrote the article:

Hammer Candlestick In The Russell 2000 Portends A Stock Market Downturn

Best Regards

Jan Allen

Anonymous said...

With the SPY so far above the 271 EMA, there's no reason to even think about shorting this market unless you're a top/bottom picker ... and I think there are only 3 of those people left in the world.


EddieFl said...


I added to my GS short. (puts), its is acting sketchy, and weak today, like my some co-workers I used to have.

Leaving BSc alone, no additions, but still short.

Merril came out with good news, i think they selloff on the news..


EddieFl said...

"weekend at Bernakes",,,

thanks bernake for your comments, sink this market!!, your comments make my trading account larger.

I love that old bastard.


trader said...

These institutional traders that are partnered with the fed that are selling puts and offering "short" stock are having a field day with bears getting suckered into the trap everytime- 'hook ,line,& sinker.It's sad.I would'nt mind seeing this thing fall a couple of hundred points here but it probably just missed it's chance with oil just dropping another 2 bucks.Frustrating but fascinating !

Leisa said...

Toshi, are you feeling tingly all over with today's action?

David said...

I'd be wary of NVDA puts unless tech goes completely in the handbasket. They're looking for brisk business from people upgrading to Vista who'll need more graphics juice to see all the new eye candy. Even if Vista doesn't set the world on fire, NVDA looks to have a few very solid quarters in front of it.