Tuesday, March 13, 2007


The Bear: "Are you an assassin?"

The Bull: "I'm a soldier."

The Bear: "You're neither. You're an errand boy, sent by grocery clerks, to collect a bill."

Needless to say days like this make me happy. Particularly since today's 243 point drop on the Dow was within plain sight......two weeks, to the day........of the lovely 400+ point drop on the Dow on February 27th. A new force may be emerging.

Not that long ago - say, last year - I would have been jumping around talking about how it's the end of the world and the bears are going to own everything, and so forth. No more. I've learned a skosh of humility (and paranoia) since then. So I take it a day at a time. All the same, I grin when I imagine what that Australian touch-hole who called me must be going through. Although I'm assuming he has money to lose, which is probably a false hope.

On the occasions when I drive my family up to the mountains of California, we pass many towns that seem completely populated by those completely grotesque and utterly uniform beige-with-red-tile monstrosities that are advertised as "Homes" in the weekend papers. These vile creations seem to be the work of firms like Toll, Pulte, and Beazer, all of whom seem to be going to hell in a handbasket. Maybe there's a little justice in this sad, sick world after all.

The unwinding of the "buy and flip" insanity is crushing the sub-prime lenders which, in turn, is causing we few.........we happy few........to have good days like today. Here's Fremont....

And the poster child of this debacle, New Century. Thanks, fellers! We appreciate your bringing along the kind of disaster we need to start something really horrific!

The story for the indexes is the same across the board, so pay attention: if they can break the lows set next week, it's party time. If they stabilize and recover, we're probably going to be range-bound by something approximating today's range. Here's the NASDAQ composite with a potential target circled.

The minute by minute charts illustrate how the bullish breakout that was attempting to form completely failed. Disappointed bulls! Our specialty! Die, you weasels....

My favorite index, the Russell 2000, needs to break below $760 for us to continue to celebrate.

Here's a minute chart of the $RUT with more detail. An analysis of the psyches which pushed the market up, and then down, are provided for your convenience.

This is getting old, but here we go - the S&P 500.....

And the minute graph of the same.......

The $XMI is staring in the face of a grand breakout failure.

AutoZone, which has been up about three million percent in the past few months, is finally breaking. I've got puts. Lots of 'em.

Recent favorite CME is throwing lots of green into my account.

Oh, and then there's Google. The company that could do no wrong. These turds paid $1.6 billion for a web site where people could post mostly stolen content. And they haven't been able to figure out how to make money at it. And now they're getting sued for $1 billion. And I've got a hunch there are other big media companies that will follow. Nice goin', braniacs. Talk about buying at the top. Had they waited a few months, they could have picked up the same company for 1/8th of the price, I bet.

Ah, and Goldman. Yep, you've seen this mentioned here many times. My puts on this did great - - I bought a bunch at the top today. In spite of blowout earnings, they fell down hard on huge volume with a bearish engulfing pattern. Yes!

Wow, it's almost too much pleasure to take. Maybe the bulls will wipe some of the grin off our faces tomorrow, eh? We'll see. Deep down, I'm always hoping we're at the start of something very big that will absolutely destroy those creeps. Hope springs eternal! Go get 'em, a'ight?


wincity said...

Great day, Tim. I was watching GS every second today. The moment it headed to the red, I knew the bulls would be slaughtered today. Stupid bulls.

Sanjay Sola said...

once i'm done shorting, i will go long in rake in the money. we are already on leg 2 of the correction. a little more down side, a weak bounce, and then down again. and rally. looking for mid April-early May bottom. we'll see!

Glenn said...

Great Post Tim! Any reason why AZO is so high, I think I will add this one to my watch list and get short asap.

Health Affairs said...

Nice post Timmie. Very nice to see you being a little more humble. A huge improvement over your previous prognostications.

Any word on the book sales?

Mike said...


You NAZ chart with the channel is beautiful. I suspect 2175ish is where we go Boyz and Girls. Tim, Love that Abby Cohen Pik ... That worthless woman always comes out of the brothel when the markets start selling off to try and save them. She has been DEAD WRONG for many moons. Short away gang.

Mike said...

Next snap back is at the 2275 level on the NAZ. Notice the FIBs from the Summer lows (2010ish) up to the Feb highs (2530ish) .. The 50% retrace is down to about 2275. This will start our second snap back up is what I am thinkin.

tomthetrader said...

Just have to say from a bullish defense that if indeed you caught GS at 209 and got puts then that is quite a trade !!! 12:30 to 4:00pm...after 5 years of going up and printing money I guess you could have a 10 point move...very well-played...do you think that some people made money from 150 - 225 ??? How about today from 199-209 isn't it the same ...got in at 9:30 and sold at 12:30 ...I wouldn't call that much of a BEAR RAID ...bring it down to the 200DMA and call a victory for the bears !!! Great day ...I wish I would have stayed a Bear ...I miss it so much on days like this ...for now I have to say we are testing and backing and filling ( hopefully not like today !!) Great Job Tim and best of luck whichever way it goes ...I think the US government is on the Bull side and they will come to the rescue...should I trust them !!!!



JakeGint said...


Glad you're taking some pleasure in the move. Me too, and thanks again for putting me on to RUT (as in "Rut-roh, Raggy!" of Scooby Doo fame) puts, as they did famously today.

But let's not get too into the vindictive nonsense. This is about the money, not rubbing it in anyone's face. We don't want to bring ourselves down to... Aussie levels, do we?

Okay, it's a little about rubbing it in someone's face, but let's not get carried away. (g)

Lauriston said...

What a day! Since last week, volatility is back and traders are celebrating! I hope we can keep volatility up for a while. Those days of inching up and down 0.5% are killers! Well done Tim! Always great charts

Adam said...

With all the money Abbey has, why can't she stop by Sephora at least once?

Good call on Autozone! I'll put that in my watch list.

Leisa said...

Toshi--I raise a celebratory glass to you and the steadfast bears here---bearing undeserved humiliations for the prognostications of the real and inevitable end to Bubble-land.

We will hear the soothing voices of TIC's (Those in charge) who will tell us that all will be right in the world. I also listen to Gary Kaltbaum (garyk.com)--he's a techinician like you--cept he's androgynous--both bull and bear while you're in the bear (adorable bear-devil) camp (with respects to your wife).

So....I had this moment yesterday where I could have bought a boat load of MS puts based on the research that I conducted and their exposure to NEW (which I published on Bill Cara's site), but I lacked testicular fortitude. Not only do I not have testicles (but I have a proxy set of steel balls given to me by a former employer, that were well deserved and I'll tell you the story one day), but I lost so much money on my other "great ideas" that my conviction has been tempered. I'm reduced to an eunoch.

That's probably not a bad thing. but I'm not a trader, but I do believe that we are at a market inflection where bold moves will be amply rewarded.

I still have ample cash and about a nice position in QID. I also have this little speciality healthcare stock HRGD that was up over 3% in this malaise.

Good luck to all of you who have stuck by your convictions during this time of dynamic change.

Tim, keep those charts coming, and I'll take testosterone shots in the meantime.

Yuri said...

Just a quick technical note – as I was redrawing the Fib Retracements from the July 06 low to the Feb 20th high – using the great feature in the new Prophet Charts that lets you move or drag objects around instead of having to delete and redraw them, I was struck by how perfectly the SPX has found itself sandwiched these last few days between the 38 and 23 Fib levels – almost to the penny if you are looking at candlesticks. Of course I was doing this alternately with reading “The Book”, and yes with Tim’s help, many of us can be “Charting our way to Profits”. Thanks again, Tim for your contributions to our education – it has been making an impact. I took my own advice and had puts on the SPX and IMW (Tim’s favorite) in 3 different accounts – Fabulous Day!! As I had felt, you seldom get such perfect setups with such a convergence of indicators- Fibs, candlesticks, oscillators. Charts are where it’s at.

Tim Knight said...

Health Affairs - don't call me Timmie, lest I extract a portion of your surname and refer to you as Fairy. As for my book - I don't know why you're so interested, but the rank on Amazon is posted every hour!

Leisa - 'Adorable Bear Devil' is a welcome moniker, particularly in these rare, happy times. I refer to you Alec Baldwin in GGGR for a set of brass balls.

Yuri, glad you're enjoying the book.

As for why Abbey never went into Sephora.........there are some things, ladies and gentlemen, that even our best scientists and cosmetologists cannot fix.

stockshaker said...

Well, I polished off my fat juicy steak tonight. Not to mention patted off my mouth after poppin Dom Perignon all over the place!

Well done to all!


I think I'm gonna put in that order for the Enzo after all.

Ok, to business. Tim, you are spot on for the indices. However, I think your a tad bit too optimistic on having the SP500 fall that much.

It's easier to gauge the drop by looking at the Nasdaq, as it is very much rangebound.

I think we only have maybe two to three months before seeing the bottom

AND DOES ANYONE HERE know how to take advantage of the opportunites that exist in foreclosures? Please let me know.

There is plenty of money to be made, that is for sure.

Mhashe said...

Take a look at AAPL. I picked up June Puts on AAPl, also reloaded the boat with IBM Puts.

Good charts Tim. Love 'em. Btw, CME has been leading the US equities indicies.

Thaddeus said...

This post goes to the "Tim Hall of Fame." Spot-on technically and laugh-out-loud funny. Where is the "All is Well" crowd now? Oops, there's Paulson on bubble-vision now....

Jeff said...

Pls say some nice things about ANDE...poor guy is getting crushed and so are my Jun calls )-:

Tim Knight said...

The dow just broke 12,000.

Hey, bulls! Ya haven't seen this in a while.......zzzzzzzzzzzip! Enjoy!

Leisa said...

Toshi--I have a testimonial...

Fresh off your book, emboldened with my new found knowledge of the mysteries of chart reading (well, I do have you nestled in there with good company, PRing and Murphy!)....I was scanning my watch list and came upon SNE which looked perkier than it had a right to. Isn't it dependent on the American consumer. It had run into overhead resistance, and I can think if NO fundamental reason that it will push through that in the short term. I bought JUL 50 puts.

mde said...

The bears like yourself are getting stampeded over and it will not stop until new highs. You had your bear market, it is now our turn timmy.

Louis said...

Everyone is getting way too personal here, makes me wonder allya in this for the money? or to stake ya life, name, honor & justice.....hhhh, too much....

JakeGint said...

Gotta learn to take profits... that's my new mantra. Anyone got any cheat sheet tips on when to close out a successul swing trade?

tomthetrader said...

I think everyone should be happy !!! The bears got a unbelievable run down that everyone should have made $$$ on ...except the PIGS !!! And the Bulls got a well deserved reprieve from the attack BELOW 12K...the enemy is the STREET and the expration as---les...look at how many charts got stuck on option strike prices today ..1000's it is sick and makes me think this is a rigged game at times ...but where else can you go to get great charts like Tim's and conversation !!! Congrats on the run and huge profits all of you made and hopes that the volatility continues and we can all beat the street.



z-stock said...

Hey Timothy, oops, I meant TIM…..
Here’s a Thought…..Don’t know if it’s right or wrong….
We’re never going to (DIA) $128. (current cycle) Therefore…..

We’re just going lower and lower till the 200 day gets tested. $117/$118 or 10% = $115

Like the Energizer Bunny, in reverse.

JakeGint said...

Tom the trader... I'm no pig, just someone who had to take a phone call. I guess the answer is "set stops" right? But then every other serious trader I talk to says "don't set real stops, set 'mental ones'." LOL.

Still made dough today, just not as much as I coulda shoulda woulda...