I See Debt People

I made a remark (shortly before last Tuesday's huge drop) that I was starting to feel good about the market again. I believe that even more strongly now. This market is actually starting to make sense again. And act rationally. And predictably (to a degree). Maybe some sanity is coming back.

I was also gratified to see that someone finally posted the first review on Amazon of my book. Those of you who have purchased it, please do the same!


Today's market reminds me of the contrast between fantasy and reality. See, the market people were all swept up with (until quite recently) looked a lot like this:


But the market I see (and, believe it or not, it's the exact same person in the photo above and below) is something I try to view with clearer eyes and a more logical mind:


The market is older, more tired, and more dangerous than the glossy photo shoots on CNBC might make you believe.

I continue to be fascinating by the NZD/USD trade. I don't think I've ever seen a market bounce off Fib retracements this predictably. It is incredible! Continued weakness here can only be good for U.S. stock bears.


The behavior of the Dow recently has been fascinating. (1) shows the point where the market was bottoming out and beginning to get the confidence to turn back up. At (2) it completes a beautiful saucer pattern, and it accelerates to (3). The market begins softening, which causes short-term worry, but then it regains its strength and zooms to (4). Now the bulls are starting to feel really good. But the drop from point (4) to point (5) is what this market is all about.......dashed hopes.......and, to me, is a strong sign that we may be headed for more marvelous weakness.


Here's a short term chart of my favorite index short, the Russell 2000. I don't know why the bid/ask spreads on this, a much more thinly traded option, are so much more reasonable than the gigantic S&P options, whose bid/ask is a complete rip-off. In any case, the horizontal line at 782 is my stop loss point.


A longer term view of the same index reveals the many Fib retracements I've laid down.


Now for a few short picks. Bank of America (BAC) seems to have exhausted its recovery.


Continental Airlines (CAL) is right at the cusp of a full blown breakdown.


I am madly in love with my CME puts right now. This stock looks so juicy you can just about cut it with a steak knife.


I haven't touched Google (GOOG) in ages, but I picked up some puts today.


MWP looks like a good short play on a hyperbolic stock.


And Reynolds (RAI) is a very clear toppy pattern.


I read the big economic news isn't until Friday morning. In spite of that, both Thursday and Friday are bound to be fascinating! See you again soon.........