Wednesday, February 21, 2007

Grinding the Gears

I appreciate everyone's patience while I got my entry done for the day. I went on a whirlwind adventure to Florida to speak (five times) at an investment conference.

Many people were asking me about my book. You can buy it from Amazon right now, and I imagine it will be in your local bookstore within a few weeks. I see it's zoomed from #400,000 to #3,800 in just a couple of days. Harry Potter, look out!

I was really disappointed in the market on Tuesday (yesterday). It started with a quick drop, and then it punched and clawed its way back up to another lifetime high on the Dow.

The bulls are ungodly powerful right now. The reason is simple. This entire basis for people buying into this market is no different than the reason any six year old offers for doing anything..........."everyone else is doing it!" And that kind of sheeplike behavior has been creating graphs like that of the Dow Composite, which is straight up, grinding higher, and higher, and higher, annihilating us poor bears the entire way......

The Dow, which fell nearly 50 points today, continues to offer a flicker of hope for the ursine among us.

The S&P 100 likewise shows a continued reduction in upward momentum as viewed via the RSI.

Today I'd like to offer a mix of both short and long suggestions. As always, check them out more deeply for yourself. Let's start with the shorts. BP, mentioned here a couple of times, pushes closer and closer to breaking its huge head and shoulders pattern.

Carnival, also a repeated mention, looks better too.

CNX is another short energy play, in spite of recent strength in the OIH.

EXC seems to have clearly broken its upward trendline.

Now let's break tradition and pull up some bullish ideas. The balance of today's post is bullish suggestions. Starting with Genentech (DNA), where I've highlighted some similar patterns in the past and their subsequent upward breakouts.

FedEx, moving on to new highs.

HOLX also looks good, and has strong volume backing up its breakout.

IPS is also good for aggressive bulls.

The trouble I am having with conjuring up bullish ideas is that it's tough finding safe bullish patterns in a market this high. I could point out plenty of momentum plays, but I'm not really into taking advantage of the Greater Fool theory.

Good night, and I'll see you after the close Thursday.


Pravin said...

looks like DOW 13000 is inevitable.

traderdave said...

Hi Tim,

I am confused. What is wrong with taking advantage of the Greater Fool Theory? The way I see it, the market and its participants have no friends, nor do they want to be your friend. I am with you. I am a bear at heart and have little faith in the rising market. However, I have made more money lately eating my own than feeding on the bulls in the pasture. While I make money, I will debate my ideals with my friends over a drink or three...

I look forward to reading your book. It is some where between Amazon’s Richmond center and my home. You have helped me greatly in my quest to become a profitable trader. The least I can do to repay you and show my appreciation is to buy your book!

I like your HOLX suggestion.

Cheers and thanks for your blog – David

z-stock said...

I like the BP chart. I didn’t realize XLE in general, was in this much trouble. Revising XLE put target down to 49/51.

CNX 36.8 = 200 day. I’ll wait for double top, 38.5 target.

IPS might fall now. FDX, too. (Oil pit guys, shut down two refineries.) Seems unrelated, but could gain significance. Higher oil?


Gold up $20. One day wonder? Now starts downtrend?

beanie11111 said...

NYX all aboard!

MRVL breakout!

beanie11111 said...

short ICE!!!! back to 150 it goes.

IM said...

The lower than average volume on the Qs is concerning during this run up.

z-stock said...

WMI SUPPORT AT 33.20. Makes a great double top short. Too bad everybody missed it, myself included. ( Tim, where were you, when we needed you?) (Disneyland) 32.8 even better = 15% historical retracement avg. or WMI hit bottom today. Short term target =35.8=200day Longer term 38.7.

MDT CALL alert . controlled profit taking. Over reaction to earnings call. Earnings call (neutral) at best. Buy on the dips.

BIIB controlled profit taking. Target 49.5 and longer term 52.5 ( eps estimates trending higher.) (past 7 months**) Extremely bullish signal. Already found support $47


(Note to myself) …”If I can’t make money off of these picks, then I don’t know what’s wrong with me.”

beanie11111 said...

Are you shorties gettin pulverized yet? lol

Sanjay Sola said...

the Fed isn't going to do anything for a while. stay long until the distribution starts piling up. the top will coincide with a Fed meeting where the Fed makes a move.

anunakki said...


Can you explain why FDX is a buy for you as it looks like a short/double top to me... with resistance at 120.01.

Not being argumentative..just elarning what you see that I dont see.