Friday, March 02, 2007

Bear With Me

(Note to my readers and purchasers of my book - - Amazon is finally letting you review it! So if you've got it - - or if you just want to pretend you do and want to do poor ol' Tim a favor - post a review! It's free, it's fun, and you'll feel good about yourself!)

This week was awesome. An absolute delight (well, kind of - more on that in a moment). This is the kind of week we bears love. The beauty of falls is how quickly they happen. The fraudulent bulls (redundant, eh?) have been skittering around talking about a "melt up" in the market. What utter crap.

I checked my records, and I've marked with an arrow the day that our Australian friend (well, at least he wanted me to think so - - I doubt even Aussies say "mate" every third word) left his wimpy voicemail deriding me for my blog. You remember him, right? The fellow who told me his girlfriend thought I was dorky looking? (And I didn't even know right hands could talk!) Here's what the market has done since he left his message:


There is divine justice in that. When the bulls become so cocksure as to take their valuable time leaving hateful voicemails (anonymous, naturally). In his clumsy English, he muttered something about a blog he likes where the permabull was "absolutely brilliant." Yeah, well. There ya go. I hope you loaded up on S&P calls they day you left me your voicemail, you complete twit.

The mainstream headlines show how biased the world is against us. Just check out this headline - "worst" week. Come on! It was the BEST week! That's like saying a rainy day is "bad" weather and a hot, sunny day is "beautiful."

Ya know what? I happen to love rainy days. And I hate hot sunny days. So let's stick to the facts, shall we? If the day is sunny, it's sunny. Not nice. And if the market is down, it's down. There's nothing "worst" about it. I am personally thrilled to pieces.


I haven't done this for a while, but here are all my positions. The ones in bold are options. The ones not bold are straight equity. Every one of them is a put or a short with two exceptions - Bowater is a long, and Sears Holding is a call. (And, huzzah, Sears managed to go up, even today!)


OK, now here's where I beat myself up and tell you what a complete idiot I am. One of my four golden rules of trading is Never Do an Ad Hoc Close. Now, what does that mean? Simple. A position is closed if it is stopped out or if it reaches a pre-determined target price. If the position is going my way, lovely - just tighten up the stop.

What I don't permit (theoretically) is on-the-fly position closings. But, on Tuesday morning, half an hour into the trading day, that is precisely what I did. The table below shows the profits I missed. The sum on the left is the profits I missed just today. And the sum on the right is what I missed since Tuesday. That's right - in just over three trading days, almost $300,000 in shoulda-been profits was missed out. Yes, ladies and gentlemen, I am a fool.


Enough self-flagellation. I had a good week otherwise. (Even though I'm still an idiot.) I have one chart here that provides a good case for a bullish bounce on Monday. Here's the S&P 500. It's hitting a major Fib level. And it's hitting the topside of that former resistance line. And the Chinese freak-out might take a break. Now, I have a buttload of Russell puts right now, so I don't want a bounce. But it could happen.


Most of the index graphs I have from here on point to plenty more room for declines. I'm not going to provide much in the way of stock charts today. I'm really charted out from this week. You should spend your time buying my book and reading it, don't you think? Anyway........

Here's the NASDAQ Composite. Plenty of room left on the downside of this channel. Man, I can't believe I dumped those $MSH puts. OK, OK, I'll stop.


A longer view of the $COMPQ shows just how sick this miserable index is.


The $NDX is somewhat similar.


And here's the $NDX on the long view (if any of you are n00bs, click the image to see a much bigger version).


The $OEX is at the midpoint between its Fibonacci retracement levels. (Don't understand what I'm talking about? Didn't I mention you should buy my book? Ahem!)


The Major Market Index ($XMI) could be argued as bullish. It had an explosive rise following the breakout above that horizontal line, and it's just about done fully retracing it. If the market does bounce, this would be a great short-term bullish play.


BP, which I've mentioned countless times, is swooning.


Umm, gosh, just one stock chart. Well, look, like I said, I'm charted out. But I have to piss and moan about something. And it's kind of relevant. Bear with me.

This has to do with FX trading. As you know, I've been hawking shorting the New Zealand dollar big time. And I haven't checked, but I'm pretty confident this has been the best performing currency play anywhere in the world recently. So - thank you, thank you, happy to be of service. However............

FX trading is highly leveraged. And the weird thing is that if you get pushed into a margin call, your broker (or at least mine) closes 100% of every single position you've got. So you can have a million dollars worth of positions spread across ten currencies, and if you get a $50 margin call, they will immediately close everything out! Is that outrageous, or what?

So, of course, that's what happened to me. Yesterday I shorted a bunch of NZD/USD. I woke up this morning to see it had completely collapsed. But did I have a profit? No. I had a loss. How, beloved Tim, is this possible? It's because my broker closed me out when the NZD tiptoed a little higher, closed my position, and then it collapsed into what would have been a multi hundred percent profit in one day.


The downward-pointing arrow on the left is a profit I did enjoy. The downward-pointing arrow on the right is the one I got cheated out of. So - you FX traders - is this the case with every brokerage? Let me know!

But there is something technically interested. Look at how the NZD plays off those Fib lines. I mean, my God, is that incredible. It's practically supernatural! And the marvelous way this exotic currency behaves makes me even angrier, since I totally understand this market, and yet my stupid broker's policies cheated me out of a lot of cash. Grrrrrrrrrr.

Anyway, I was wishing for a market that would start to pummel the bulls, and for this week at least, I got it. We bears have been cheated repeatedly out of our market, and I have been humbled enough to say it could happen again. This could be just another trick. And volatility might get pushed back down into the single digits. And we'll all be sitting on our paws again.

But, I've got to tell you, it's a fantastic change to see the bulls suffering. No one deserves it more, and no more deserves less pity. The bears are the ones with brains, and the bears.......for just this week, if nothing else......have bested their inferiors.

34 comments:

What If? said...

I have changed my trading (for a sinking market)

I float a ship - Large investment in an adverse (to the market) fund. I then send out small speed boats during the day to protect the ship - It's all set up around the $ndx and the daily quicks

include trading QID and QLD within the ebb and flow of the daily trend. If the market goes up - I'm protected by my counter action in the QD's If I catch a good wind My ship and the speed boats can triple up what is all ready being doubled. It has been working very well.

I have also had excellent help as this current dive happened leading into a Full Moon with a a total Eclipse (3-3-07) Powerful in Change.

Tim - Thanks - I have been following you daily for a long time as I know I am happier shorting than going long - maybe it's in the genes. I have ordered your book along With Brett's

I hope the tools are there to help in learning how to use Prophet

I spend so much time working daily on what I'm going to do that day and the next - that learning a new
system - seems very weighty. I know that Trader X missed the last few days, as his system betrayed him at a time of great importance.

Thanks again, paul

Lauriston said...

Tim, mate,

I was very bearish for most of Jan and Feb and I almost gave up because the bulls were just incredible at how they would suck up every dip! I have to remember next time we go into a persistent bull phase, and I need to also join them every now and then. I also got to thinking we are due for a bounce soon (next week?). But I am getting the picture from everywhere that bears are ready, like me, to short every bounce from here on! March is going to be the anti-Jan/Feb. Lastly, your book hasn't arrived from Amazon yet, but I hope I get it this weekend as we are due for some snow. Looking forward to your charts, mate.

j_vperez29 said...

Tim, with the market not acting like its supposed to for a while now and the volatility of late,you did what any great trader would have done. It is never wrong to reap some of your profits.At least you have the gonads to leave most of your positions open. The right hand joke is probably right on. That bloke is probably now broke! Looking forward to studying Your Book, Im sure it is more valuable than a subscription to a stock picking guru's newsletter .

Leisa said...

Toshi, Toshi--do not invoke the wrath of the trading gods by acting superior like those smug bulls. Hubris is unbecoming!

But...a little celebration after so much ill-deserved humiliation is certainly warranted. I lift my glass to you and your blog....cheers! clink. clink. clink.

Jonathan T said...

Hi Tim,

I'm are relatively new to technical trading. I was bearish as it reached the top and managed to get a decent position into the QID before Tuesday. Needless to say I enjoyed the week a lot. This afternoon I cleared out position in the QID. I didn't ride it as high up as the end of day close, but I didn't want to get greedy with the gains.

So I'm looking at this chart for the long term view (weekly periods)

http://stockcharts.com/h-sc/ui?s=$NDX&p=W&yr=3&mn=0&dy=0&id=p21068795959

And for the short term I look at daily periods:

http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&mn=3&dy=0&id=p42803745501

From a short term perspective it looks like the $NDX is approaching the oversold position in the short term. I'm wondering if we're going to see a small rally next week. Maybe up 1-2% ? Do you think it will rally and if it does would it be a good time to load up on QID and see see if the $NDX retests the 1635 support level within a week or two? So basically looking for an entry point around the 1760 level and an exit when it reachs 1635.

I would love to hear your and anyone else's opinion of this setup and trading plan.

Thanks,
Jonathan

stockshaker said...

TIM you SHOULD be kicking yourself! ;)

You've been waiting for this week since LAST AUGUST, and then you pull out too early?

Your lucky your taking about the STOCK market, because if you were talking about being on the DATING market, all the women would be making fun of your ... um ... performance...

jokes aside, great week for some major profits. The bulls will be there next week, but it will be short lived - this is only the beginning of the corrective cycle. I think we still have a couple months before seeing the bottom.

Tim Knight said...

"Toshi, Toshi--do not invoke the wrath of the trading gods by acting superior like those smug bulls. Hubris is unbecoming!"

Leisa, I think having called myself an idiot 20 times in this entry should appease the gods.

After all......I'm SOOOOOOO good!

AssetStrategists said...

Tim,

Just ordered your book from Amazon.com. Unfortunately, it's scheduled to ship 3/8...

I am learning a lot from your blog and use Prophet Charts a lot. Hey, I am bummed that you can't double-click on the graph to start a new trend line. Why did you take that feature away? Otherwise, I like the improvements and would like to send you a few more ideas that should be easy to impliment since they are already available in other modules of the program.

Please reply to me at AssetStrategists @ GMail. com (spaces added to prevent spam harveting)

Thanks soo much for the time you take to educate me several days a week.

Chris

wincity said...

Hey, Tim,

Congrats on your great week. I'm as thrilled as you're to see the stupid bulls getting kicked.

wincity said...

You're right about the headlines. Worst week! HA! Worst if you're stupid to buy ICE at $168. Or SYX at $31. Or ...

Louis said...

Leisa is wise, indeed...
In a blink of an eye, watcher of contrary indicator could be a someone else's indicator...maybe...
My young friend Tim, the"Charging Bear", as White Plains Apache called you, keep your humble eyes focused... AH might sneak up on U...

Market Speculator said...

Hi Tim...our Australian friend's GF is correct in her statement...you are dorky looking!

But, you analysis of these Wall Street "buy this dip" crap are just plain wrong. How can anyonen look at this market knowing: NO 10% CORRECTION OVER A FOUR YEAR PERIOD?

I am waiting for the cracks to turn to rumble over in the Asia/Pacific markets. Shanghai/Mumbai are ready to collapse...just a matter of time.

Enjoy!

Market Speculator

Market Speculator said...

Jonathon...

Email me and I can show you to embed the link in your post.

marketspeculator@gmail.com

Leisa said...

Toshi.... Yes, you ARE sooooooooo good--but illogical. Let me explain, for the gods (trading, sex, money, food, career housing--you pick) are finicky. Your self flagellation because you exited too soon is not appeasement enough to the trading gods. That's a personal failing on your part. (g) It doesn't exempt you from exercising some decorum with those ^!$^#$^$%&@$ smug bulls, which is another bucket altogether. Keep these separate and you'll stay in good stead with the gods.

Now, onto another matter that I feel important to address. (Not that you need me to come to your defense, but these labels of "dorky" looking cannot continue unchallenged). I don't know how many women post here other than Chronictown, Gemmastar and myself. As a woman I feel that I'm qualified to opine--you are an adorable bear-devil (so long as those are un-retouched photos; otherwise I may have to retract my statement). And I'd be pleased to do an objective rating of any who wish to have his looks calibrated against yours. I can assign a D-value (dorkiness rating). I'd ask folks to send their pictures to Tim and he can forward to me.

And FINALLY. . . THANK YOU for sharing your idiocy (said with respect and sincerity) in selling too soon. I have alot of admiration for your abilities and your success, and to see a goof like that reminds me that none of this stuff is easy--even for the experts.

It takes alot of honesty and humility (okay, the fact that you even bother to write this blog and confess these things earns to karma points with any of those gods!) to write this stuff.

Tim Knight said...

"Hi Tim...our Australian friend's GF is correct in her statement...you are dorky looking!"

(Editor's Note: GF=Gripped Fist)

Well, M.S., Leisa offers up the charming moniker "adorable bear-devil." I'll happily take the opinion of a woman over a man who cites the Chunda from Down Unda.

In any case, this isn't about my boyish good looks. It's about good versus evil. And, for once, the good guys won out. Let's see if it sticks.

Market Speculator said...

The Wall Street machine will be out in full force now. CNBC just one avenue it will spew its feces out on.

It is quite appauling at what the "Talking Heads" incl. Jim Cramer are saying buying these dips. All of those who read his book "Confessions of a Street Addict" know that he almost lost his shirt during '98 when he tried to "outsmart" the market. He is lucky that his wife and the market came together to bail him out. He is now repeating the same BS on CNBC.

I really see a collapse coming in China. No index can rise 300% in a year and a half and not utterly collapse.

It'll be interesting to see, the domino effect China would have if its Markets CRASHED!

Market Speculator

PB said...

Hey Tim:

Looks like you have a real professional broker. NOT! They're quite the losers for closing out your EVERY position! Aren't you ashamed of dealing with them?
Anyways, it looks like volatility is back, for now, which is absolutely wonderful for trading. The market has become quite a snooze fest for the last few months.

I think we are now in the process of setting in the left shoulder of a nice H&S pattern.

PB said...

This site is turning fast into a dating rink.

The drop was advertised for months ... just take a look at the divergences between market price action and ANY indicator, we have been diverging since early November, and that's where the price is right now. Looking for a bounce.

George DeTellis Jr. said...

Tim, When is your book going to available? Amazon just has the pre-order button?

George

Tim Knight said...

"Tim, When is your book going to available? Amazon just has the pre-order button?"

It's available NOW. It's in bookstores. I got my first copies 10 days ago. Order away! :-)

onewaystox said...

one of you asked me what I meant when I commented that Goldman Sach's bond were trading at junk bond prices, even though they are rated much higher.

Here's a link to the same article in Bloomberg.com. Tim, you should love this.

http://www.bloomberg.com/apps/news?pid=20601103&sid=a0j4oiYE3Bfw&refer=us

Alice said...

I bought your book this week on Barnes and Noble and received it Friday in two days. I first read the last chapter which is well worth the price of the book. Now have read chapters 1-3 and have learned a number of time saving ways to use Investools and Prophets far better than I was using before. Great book -- all traders can benefit, and partiuclary those who use Investools and Prophet.Net.

George DeTellis Jr. said...

Tim,

I bought your book on Amazon. Delivery estimate March 7th, this is for 2-day delivery service.

If it's available, have Amazon change the listing from pre-order to available in-stock. The pre-order page could be discouraging buyers.

Once I get it - I'll give you a review on Amazon.

How about a seminar tour? I live in Orlando.

z-stock said...

Cramer might be right to buy on the dips, if he were talking about these stocks.
RSI 20 buy ALERTS BBH*** JNJ***** MER*** LEH IBM*** ODP RAI SBUX*** UPS AMGN
I SEE 102/103 ICF bottom and I’m in.
I see CVX at 63/65 I’M IN.
Z-STOCK
QQQq at 41. I’m in…. And GOSU may be right. Little up / more Down ….style market till MAR 16TH. (3rd fri)

Kiso! said...

Hey Tim,
Is Prophet Patterns available on Prophet.net or is it only available through the myriad hoops at investools?

Pravin said...

dow futures are down another 100. eventhough I have been bearish for 6 months I am not participating in the downside I have been waiting for.

All I can say is, I am not a good trader. the worst I guess.

beanie11111 said...

RIMM is now the mother of all shorts.

135.4

beanie11111 said...

and yes, ICE going to 100!

beanie11111 said...

RIMM:

RIMM:

'Shareholders Lose

Of the grants the company made between Feb. 28, 2002, and August 2006, 321 awards had incorrect dates, Research In Motion said in its statement. That's about 63 percent of all grants made after Feb. 28 2002, the company said.

``The shareholders here are the losers,'' said Richard Williams, director of research at ICAP in Jersey City, New Jersey. He rates the shares ``sell'' and doesn't own any. ``Backdating creates greater dilution. More shares had to be created to pay for those greater profits.'' '

beanie11111 said...

Short RIMMM!!!!! 135

No hope left. No time left.


Long ALTI - the next Microsoft!!!!

beanie11111 said...

ALTI gonna lead the alternative energy sector and the market indexes to mega lifetime highs?

In a few months, it will lead is my opinion.


ALTI = microsoft in the making!!!

beanie11111 said...

Megabears, please do yourselves a favor and invest in ALTI.

I know it's hard to "invest" given your nature, but i think you've be very rewarded in time.


Good luck :)

Market Speculator said...

beanie11111 - why are you pumping this stock?

mde said...

Beanie is underwater and wants others to go long alti. What a joke you be.