Saturday, February 24, 2007

I'm Starting to Like This Market

I am starting to like this market more and more. Several reasons:

  • People are starting to wake up to what a train wreck the housing market and defaulted mortgages are going to be
  • We've got a new financial mania on our hands - insanely huge private equity buyouts - that provide a catalyst for financial catastrophe. Remember the failure of the Japanese to buy out UAL back in 1989? That alone caused the mini crash of 1989 - - and that is a puny deal compared to the absurd BSD type deals going on right now.
  • Upward momentum is rapidly waning
  • The charts I have been waiting impatiently to start falling are finally doing so - - the investment banks.....the financial service companies......the real estate con artists. They're all starting to crack

The Russell 2000 has been unkind, but I think we're over the worst of this. Here is a sixty day intraday graph; the head and shoulders target of 30 points to the upside has been plainly reached. Clear as a bell.

The S&P 500 is now on the wrong side of the tracks (for the bulls). Look at the broken trendline, and observe how the momentum is leaking out.

Cabot (COG) looks like a good short term bear play.

Lehman (LEH) is representative of the investment banks, finally losing their luster.

I don't have any particular on MWP, but this is a good example of hyperbolic mania.

Recent recommendation NVR had almost 40 points whacked off it yesterday.

Maybe our filthy paws are starting to get a grip on this deluded market. I hope so.


Lauriston said...

MWP says it all. Our time will come, but I am going to game the upside too if they try more tricks going forward. I have already missed 2-3 great bullish opportunities in the last 2 months. Next week I have a feeling the Fed may try to keep the flame going especially they seem to be focused on keeping the housing market up and up until this admin. retires next year. Last week all the Fed speakers were in synch saying everything was OK. Yet we can see gold says otherwise, subprimes etc and now financials are voting otherwise too. Good luck fellow bears, but be alert- this market likes to punish us every now and then...

Kunal said...

I would agree with L. But you have to account that people will start to pull profit-taking calls.

I've already started seeing a ton of new websites/articles on frontpage calling for a bearish turnout.

We all have been calling for that, but this kinda news spooks the un-educated.

But again, we've been waiting for a pullback since early Jan.

Kunal, the guy behind - The Super Hot Stock Market: Bull-ying the markets one day at a time!

Humble1 said...

What's to say this won't just go sideways again at this level. No top in site as of today. If there is one please point it out.


Humble1 said...

z-stock said...

I was researching Puts on IBB, then I thought about Tim’s bullish outlook on DNA,
(Tim drew a really great chart for DNA, folks) and after reviewing the other IBB holdings,

I came to the conclusion, that the IBB is setting up to test the
( March 06) $85.7 target. (and higher).

Just look at these forward earnings. (AMGN BIIB DNA ) They are fantastic.

AMGN . FEB 9 07/08* EPS hot 4.42/4.95 DEC 15 06/07* EPS hot 3.93/4.41

BIIB FEB 22 07/08* EPS hot 2.57/2.90 DEC 15 06/07* EPS hot 2.26/2.55

DNA FEB 24 07/08* EPS hot 2.87/3.46 Dec 15 06/07* EPS hot 2.16/2.66

GILD BIIB and AMGN drawing the line in the sand.
DNA holding the GAP.

TEVA AND GILD will stay lofty, until the rest catch up..



I’m sure all you will be too busy bottom fishing MER MS BSC GFIG ITG AMTD FED WM ,
( I’m sure they’ll get themselves together again, sometime this week) to pay any attention to my meanderings. That’s ok.

(I’m only trying to defend in my mind why I bought the AMGN calls In the first place.

Anonymous said...

I love their data to support their hypothesis.

What does the housing market have anything to do with the Stock Market. As far as I know the housing stocks have already priced in the decline.

We only have 1 distribution day for the Nasdaq and S&P 500...we have massive index put buying, bearish bets are being placed. This isn't a euphoric state. This will turn into the longest bull (without a 10%) in the market's history.

Market Speculator

Lauriston said...

Although I am short-term bearish, I have to agree with Market Speculator. I just looked at put/call ratios and they are shooting thru the roof. It will be hard to have a market decline with this kind of bearishness displayed in option puts. Also TXU and DOW news tomorrow is only going to embolden the bulls to squeeze bears esp. put buyers! Glad I closed all puts last Friday, now I only have RIMM short position with tight stop. If we rally tomorrow I will jump in some long positions short-term. these bulls are nuts, but they are winning since July 2006 (well, really since 2003!)

Tim Knight said...

"I love their data to support their hypothesis. "

God knows bulls never do this (rolling eyes.......)

Anonymous said...

Its great being neither, just making money on the long side. There will be a time to be short, just not now.

chronictown said...

gold is blowing up.long and strong!

beanie11111 said...

Secretary Paulson was hired to destroy the naysaying permabears. Why else? lol

Bull market to 2010-2012!!!!!!!!!!

Get on board for the bull run of your lives!!!!!! Hey, a correction first would be nice.

The worst case is a quick correction this year (maybe next month), but that's all the bears gonna get! Several weeks ago, the nasdaq broke out of a seriously significant resistance dated back to 2000!!!

The best time to short is somewhere 2010-2012 when the baby boomers start retiring enmasse!!!!!

38.2% retracement of 2000 high is 2620! See ya there!

Granted, the charts resemble that of 1987, with silver skyrocketing and the US Dollar tanking, but the market is still not rolling over for the bears.

Only one more chance for bears to redeem themselves before they get cooked!!!!

z-stock said...

FROM CBS Marketwatch

“In the next few weeks, Dow will get a takeover bid worth up to $54 billion from a consortium of private-equity firms, the report said.

However, the report is from a publication

NOT WELL KNOWN for its mergers-and-acquisition coverage --

the U.K. TABLOID the Sunday Express,

which also offered its readers a compact disc from the Culture Club.

The newspaper didn't identify the source of its information.”


Leisa said...

""As far as I know the housing stocks have already priced in the decline.""

Yeah, yeah...the housing stocks have priced in several girly-man declines (I think that they are on their third pricing exercise and the second one after Greenspan and others declared a bottom), but not the real testosterone laden decline that comes when you have asset write downs--which the housing stocks are just beginning to do and over the last couple of quarters these guys have expressed "surprise" over th markets (which really is covering for their not writing down SOONER). I'll also remind that for most of last year the treasury markets were pricing in a rate we are with not one in sight.

My point? The market isn't terrible efficient at pricing....yes, I know that it can outlast our capital...But as I understand it, and I'm no expert, the market is pretty swift in righting its perceptive shortcomings--that swiftness combined with the stop loss "insurance" (which will surprise a lot of less-savy folks when their stops get blown out, and they sell for lower than they bargained)will ensure an over-correction.

We have to see Wells Fargo (20%) and Wachovia (who owns Golden West who has much exposure in CA) start to write down their loan receivables for the acrid smoke in this theater of the absurd to fill the nostrils of this bull market and cause it to shake and snort. I'd be astonished if we do not see these write downs. In fact, I was flabbergasted that FED did not have a greater write down in their last earning report. Their stock, though, is NOW reflecting the same investor sentiment. I'm glad I had this epiphany through my reading of their filing and headed for the exit sooner than they. Fundamental analysis does have its place and can exist quite nicely with technical analysis. You will remember when Tim had HYDL as a technical short, and I said that the group had lots of attractiveness for takeovers given MVK and NSS buyouts so that such a short cold be dangerous. I'm not trying to sound boastful, but merely point out that the fuller picture helps one assess risk and increase probabilities of hanging onto your money.

Anonymous said...

Tim is going to be right. We are going to correct...but when? That remains to be seen.

Market Speculator

z-stock said...

“In the Heat of the Night” starring the BEARS.

Hang one light in the bell tower if the DIA is going to test the 50 day. Hang two lights in the bell tower if DIA is not.

Twas the night before X-mas, and the ghost of Alan Greenspan, knocked on the door. Oh my, Was that spooky or what?

“Speaking in Hong Kong, Greenspan was quoted as saying that there were signs that the six-year economic expansion was coming to an end in the U.S., including stabilizing profit margins.”

Several analysts are forecasting a decline in stockpiles of heating oil when the government issues its weekly inventory report on Wednesday. (higher OIL)

GDP forecast 2.0% (Wed)

Retail (negative forecast this week) Durable Goods down (negative) 5% forecast. (down goes WHR and INTC) (Tues)

And mar 1 , ISM at 50% , That’s a non-signal…..If 49.9% It’s going to be a down day for the DIA.


MSTR (hit new yearly high.) Just as I had suggested. EPS trending higher.

MSTR deserves higher price. PUT target @ $137. ( but I won’t write that in stone, just yet) MSTR trades at a 21 multiple.