Monday, February 26, 2007

Crossroads

Greetings from the snowbound tundra of the California Sierras. To me, the definition of civilization is anywhere with an Internet connection, so I'm still quite content.


Today was a good day, but I can't help but be concerned that we will have, yet again, another swing up. I'm not saying it's going to happen. I am saying that it seems to keep happening, and the most polite word I can think to describe this wave-like action is "annoying."


What we need, of course, is a clear, obvious, idiotic-comments-suddenly-cease kind of break in the market. Until then, I have reduced my exposure somewhat with the worrisome anticipation that this stupid market might find its legs once again. The $NDX at least had a nice bearish engulfing pattern today.


The $OEX shows a wonderful example of just how monstrous the divergence is between the price action and the RSI. This market is running on fumes. But there are a lot of people who like sucking those fumes. The bulls always radically outnumber the bears. We are a lonely bunch, aren't we?


The S&P 500 is just another example of this higher highs/higher lows market. In fact, to make matters worse, the lows don't seem to be dipping as low. There are some bright spots, of course. The investment banks are starting to weaken. Some issues (like the CME) are finally making some real progress downward. But others - like RIMM and MSTR - have surprised me with their incredible strength (obviously I got stopped out on these - I may be dumb, but I'm not an idiot).


The Dow Transports, which I've pointed out should be providing comfort to the bulls, is at risk of breaking its inverted head and shoulders pattern. This could be nothing more than a pullback. But if it falls much more, the very clear bullish pattern will have been neutered.


I mentioned Continental Air (CAL) before. The head and shoulders pattern on this is forming nicely. We could be seeking a neckline break in a day or two.


And although CRDN as a whole isn't an exciting chart to me, I was blown away at the size of this bearish engulfing pattern. This is like the John Holmes of these patterns - I rarely see them this big.


Accept my good wishes that the higher highs/higher lows pattern be broken in the coming weeks. The bulls must be conquered, and breaking the pattern is the first step in breaking their spirit.

15 comments:

anunakki said...

RIMM was a shocker to me... I didnt see that gap coming at all.... I got nailed for quite a bit on that.

What do you think about FDX now ? You suggested it long and it did go to a new high..but then it took a beating today.. pullback or was that the top ?

Two shorts I got in first thing this morning were AVY and CMI....AVY looks especially good to me.

Ordered the book from amazon yesterday !

z-stock said...

Where did every body go!

I guess they all bought CALLS and are too depressed to post anything.

Or, maybe it’s SHOCK and AWE. The DIA really is going down this time.

z-stock

beanie11111 said...

lol... they all covered most of their shorts. But it's really goin down now...... The chinese got slammed.

MA is a short.

...and many more....

Leisa said...

A little salve for wounded bears. Is this a wisp of the acrid smoke I referred to yesterday? No girly-man decline here! I think that this will send a bit of a shiver through the markets today.

Chinese stocks post biggest fall in decade

By Reuters Feb 27 09:43:26 GMT

Published: February 27 2007 08:21 | Last updated: February 27 2007 09:51

China’s stock market, one of the world’s best-performing bourses, plunged nearly 9 percent on Tuesday as profit-taking by local funds snowballed before a parliament session beginning next week.

Lauriston said...

Today will belong to us bears for the whole session. Just one day in a long time for us to enjoy the sunshine! Long time coming, but it's gonna be juicy. Bears need a lot more patience than bulls!

Mysterious Q-Man said...

Hi Tim. Keep up the good work/posts. You have been around the market longer than I have, and I was wondering what sectors perform well in Bear Markets? I was looking into buying for the long term, but every sector I click on has a P/E over 20, which seems a little overvalued to me. Thanks in advance.

Dougo said...

WAKE UP SLEEPY BEARS!!!

Hibernation is OVER!

Nothing from Tim today? Health OK?
Heart Attack?
Puts.doing very well today, but trying to find a good bet for tommorrow!

mde said...

The bears have returned with a vengence.

tokyodiablo said...

-500? holy crap

http://countertrend.blogspot.com/

EddieFl said...

OH my lord,,,, it finally happened a truly bearish day... You all must be happy as pig in shhh..

IF you say it will rain everyday, eventually it will rain and you will be right.. Ancient Chineese proverb.


Good trading Bears,, hope you were short.

Dougo said...

I'll vent...
I HAD 126 puts on the DOW(ner).

Ouch.

CNN is in damage control mode, the denial factor is pretty high as well.

Keith Shepard said...

Ahh...a good trading day Bears. Hope you guys made some money today. I was stopped out of all my Long positions and had one small spot in the QID. Ddn't save my ass though. Hehe...

Cheers. :-)

Tim Knight said...

"How you feeling today, son?"

"Like a mean motherfucker, sir!"

- Apocalypse Now

Jeff said...

Weeeeeeeeeeeeee!!! (-:

PB said...

HOLY SHIT!!!

ABOUT TIM!! oooops, TIME!!