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.

6 comments:

la grande poussée said...

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

Fontimama 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?

Jan Allen 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
http://my.opera.com/prosperingbear/blog/show.dml/692888

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.

/Mouse

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.