Monday, March 12, 2007

Can I Buy an Emotion?

Wow. This market's a snoozer right now.

I know, I know, it's been up. But it's still a bore. Not even two weeks ago, the entire thing was collapsing. Now we're back to the markets just inching around, not really knowing what to do with themselves.

Speaking of boredom, here's my pointless social observation of the day. I eat out a fair bit. I eat a lot of Chinese food in particular - - most of it quite good, since I live in the SF Bay Area. I'd guess I've probably eaten at Chinese restaurants maybe 700 times or more.

I therefore have a pretty good eye about what to expect. Among the stranger phenomenon......which inexplicably bugs me........is the Person Reading At the Table.

Now, if some poor soul is by himself, by all means, read! I'd hate to see a person alone just staring into space. But when you're with a companion.....and typically, it seems to be a wife.....to whip out the newspaper and read it while you await your food is just plain rude.

And it's not like these couples are even exchanging opinions about what they are reading. Only one person is reading, and both of them are staying dead silent. The ignored one - the wife, typically - is just staring into space, probably wondering how she wound up with this total dork. The inclusion of other family members seems to diminish this desire not a whit. Weird.


Oh, yeah. This is supposed to be about technical analysis. Well, my blog, my space, right? But your wish is my command.....

There is formidable resistance around the levels we're at right now. The bad news for us bears is that, should this resistance be broken, it makes an easy argument for the Dow to blast about 400 points higher. I've highlighted the "resistance zone" as it stands now on the S&P 500.


A longer-term view - this one a minute graph of the Dow over the past couple of months - shows there's plenty of upside on the Dow if its only substantial barrier is the underside of that giant broken trendline. Now that would be a real shame. I imagine the bulls have already long forgotten what happened on February 27th. Another few hundred points would make them giddy again. And we all know how nauseating that can be.


The Russell 2000 shows very substantial resistance about the $796 zone, which is where two Fib retracement lines lay in the the same vicinity. A $RUT above $800 would depress poor old Tim mightily.


Just a short ideas to ponder today. CRS on the short side.


MCD also on the short side, with puts being attractive for you option players.


NBL, with a nice RSI signal and a potential double top, another short idea.


PICO, mentioned here a couple of times already, is having a nice run up. (Happily, this was one of my rare bullish suggestions).


I'm more animated and interesting where there's dynamism in the market. Particularly on the downside. Try me again tomorrow. The market muse may have smiled upon me by then. In the meantime, I'd like you to enjoy the adventures of.....Stedman!

14 comments:

Monster Rules said...

Bernie Schaeffer: Pessimism Provides Market Support

http://www.forbes.com/2007/03/12/pessimism-options-dow-pf-gurus-in_bs_0312outlook_inl_print.html

Overall, traders have responded to the 2007 decline with overwhelming pessimism. The 10-day moving average of odd-lot shorting activity has not only taken out its second-quarter 2006 level, but it is now resting at its highest level in more than six years. This spike in shorting activity comes as the indexes test longer-term support. Such activity might exaggerate declines, but it also represents future buying power that can help support an advance.

Overall, traders have responded to the 2007 decline with overwhelming pessimism. The 10-day moving average of odd-lot shorting activity has not only taken out its second-quarter 2006 level, but it is now resting at its highest level in more than six years. This spike in shorting activity comes as the indexes test longer-term support. Such activity might exaggerate declines, but it also represents future buying power that can help support an advance.

This wealth of put activity in these ETFs is mind-boggling, especially within the context of the CBOE Market Volatility Indexes (VIX/VXO) being 50% to 100% higher during the course of the past couple weeks. In other words, investors are buying portfolio insurance en masse at exorbitant prices relative to late January.

==============================
The 2nd leg probably starts next week instead, too many weak & newbies shorts

David said...

Reynolds American, Inc., through its subsidiaries, engages in the manufacture and sale of cigarette products in the United States. It offers cigarettes and other tobacco products under the CAMEL, KOOL, DORAL, WINSTON, and SALEM brands, as well as ... Tim:does this change your view on this short?
thanks a zillion for your blog!

TradingGoddess said...

That pic is very sad...

Thanks for the reminder that the grass is not always greener on the other side of the bed.

:)

Mike said...

This is the 5th day since the doji. In general, if the market does not follow thru off a doji bottom by day 5, it is due to resume its down trend shortly.
We shall see.

toober said...

He's diabolical.

Tim Knight said...

What, no comments on the Stedman video? C'mon, it's awesome!

Leisa, the review you mention - - is it on Amazon? There are 4 reviews there, and I don't think I see yours.

Good start today........

- Tim

Leisa said...

I posted my review on Amazon and then posted it here. I see that it is not on there, but they don't post the reviews immediately. If I don't see it by the end of the day, I'll repost.


I loved the Stedman skit though I dream of Frylock!

Leisa said...

Per the Amazon Terms, reviews are published in 5-7 days. Given that your book was released just a week or so ago and folks will need to read and digest it AND it takes a couple of days for Amazon to post reviews, I imagine that you will see more review activity.

Leisa said...

No ZZZZZZZZZZ's today!

Remember my early putson BAC, WFC and MS? Well, I re-entered puts in MS and WFC. So far so good. I only wish I had bought more. But I'm still smarting from being afraid of being "early". No danger in that I don't think.

Monster Rules said...

100% short now, increasing from 25% last Friday;
2nd leg down ....

good luck to all bears;
we'll save the market, when CNBC says SELL SELL SELL @ the bottom

Rob said...

I wonder what its going to take to drive Abby Cohen off the Dumbarton Bull.

ODA125 said...

What? No comments about the market close? Where are you bears on a day like today? What an awesome afternoon it was!!! Tim - great posts as usual this week!!! If you get time please take a look at my DIA charts on my blog. I have been using it as a classic example to watch and learn (of course it also makes for a good trade oppourtunity) :{). You will also notice my charts look very similar to a prophet chart.... :{) I am a diehard chartist and enjoy your style. Thank you for your book - I hope the masses will also buy it for their library of ONE!

Oda

http://optionstheeasyway.blogspot.com

JakeGint said...

Suffered through the early pain of owning GS puts, but ended up with my best day of 2007. Thanks for the RUT put idea Tim, I stuck with it and increased my pile by more than I deserve.

Now... rebound tomorrow, or more pain?

niko said...

WFC catching the subprime blues. SGMS has upside.

Look at the VIX. HUGE trend change. Looks like whipsaws for weeks. IIIS is compressing. Wonder if SP500 will see its old boundry bottom at 1280.

Have fun ya'll.

http://hoodoggy.blogspot.com/