The Return of Sanguinity
First off, for those of you who can't quite get your fill of me in this blog (OK, that would be the empty set.....) there's a short interview published today you might find of interest.
It hasn't taken long at all for people to have utterly forgotten about February 27th. The $VIX has come full circle, sinking to levels not seen since the big break on that (not-so) fateful day. It seems the bulls are ready to party again. By the end of day tomorrow (post-Fed announcement), some of the smoke should clear a bit.
Index after index shows the same thing - - that we are at the upper levels of the trading range established after the 2/27 break. As I said yesterday, if we push above this trading range, the bulls are going to feel rightfully emboldened.
The $RUT has been especially strong of late.
Take a closer look at the $RUT and see how nicely it is bound by two Fibonacci retracement levels.
Same story with the S&P 500.
A closer look at the S&P 500.......with a different, tighter set of retracement levels...shows again we're at the highest reaches of the recovery since 2/27.
Research in Motion (RIMM) inched down a bit more today, which is good. Also of note is Continental Airlines (CAL), shown here, which has done a perfect retracement to its neckline (and, interestingly, its trendline). A break down and away from this neckline would neatly complete the pattern.
That's all I've got for today. If we don't see weakness tomorrow, it's going to only amplify the discouragement, disappointment, and frustration of the bears who had thought their fortunes had finally turned with the recent market break.
23 comments:
Tim,
After today, I think I'm gonna need that thing Tootie puts candies in.... Doubled down on what I thought was a "$RUT" slide this morning and ... ouch. Ah well, the lack of volume is encouraging to me (at least on the NAZ side). What are your thoughts on volume dry up?
Also, note how many QQQQ type leaders were only marginally positive, or even negative today.
Last, when you get a chance, take a look at the Wrigley (WWY) chart... one of the odder looking bull wedges (with a handle??) that I've seen... but perhaps a decent long here.
Tim, I thought you might have mentioned LXK, it broke down with good volume behind it today.
I think the bears have a short term shot at least to escape in the next 48 hours but the People who got LONG last week are set for a pretty good run. The QQQQ is overbought on a very short tern basis and so is IWM so a chance to at least get out of short positions will probably appear intraday tommorrow or Thursday. With record breaking put buying and most techies now in safe Bull intermediate mode ...an escape by the bears would be welcome. I would short the QQQQ at higher levels tomorrow ...hopefully a gap up morning and then buy QQQQ long after a full 1% or so drop and then stay long for the next 2 months. With sy=tock buybacks and buyouts ...your odds are better get a LBO than getting a Bear market now so try to get out of bearish positions in the next 48 hours and get long ...Tremendous work Tim ..what a wonderful site. Book is the best ..use it 5x a day or more .
http://www.ttthedgefund.blogspot.com
Thanks
TOMTHETRADER
TomTheTrader, thanks for the kind words.
The Fed's announcement is scheduled for 2:15 EST on Wednesday. Fireworks usually ensue.
I think it's short-sighted to try and daytrade tomorrow's response to Fed. This appears to be an inflection point with longer-term ramifications for positions than a couple of hours. We'll know by midday Thurs which way things are gonna break.
The markets clearly want dovish statement that suggests lower interest rates (loosening) as soon as the next meeting. Markets also want a tip of the hat to the sub-prime problem, with a "not an issue" wave, and boosterism towards the economy. I believe better than even odds that they'll suggest "further tightening may yet be needed", and that the economy is chugging along. Petulant baby markets won't like hearing anything resembling hawkish stance, and perhaps they might just sell off in a juvenile huff to show Big Daddy Ben who's really in charge.
I'd think by now that it's clear the Three Bear's house is facing foreclosure, they've been evicted, and Goldilocks is a squatter with maxxed out credit cards. But the professional pimps selling this stock market to the rubes have done a fine snowjob for the past few years. Perhaps they can perpetuate the shift of shares from smart to dumb money for a few more months.
Tim, I’m surprised you haven’t shorted FCX. It’s at the top of a quad top ..lacks the earnings to match 2006 performance…
PD acquisition, should help earnings, but who knows when…
Z, I'm of the opposite mind w regard to "help" from the PD acquisition. When I saw your recommendation on the FCX puts, I did some research and ended up agreeing not as much for the chart action, but for the PD acquisition itself, which came after a hefty bidding war with two other behemoths. Winner's curse anyone?
Excellent post, Momo Fader!
Oh my god, the next Microsoft?
lol
This market is getting ready to rip higher tomorrow after bernanke spins the outlook as rosy and outstanding.
Tim, can you give some feedback on MWP. I've been short that for quite a while now, but someone is doing a very good job manipulating it.
The precedant for corrections has been set time and time again. You bears are STILL in control until we break the 61% fib line ..and arguably unless we go to a new high !
Look at the past corrections and you can celarly see that most of the time there is a healthy bounce back up to a point which we are still not at ( but very close).
it took 24 days for the bottom to hit back in '06. That was an 8% correction
it took 30 days for the bottom to hit back in '05. That was a 7.5% correction.
it took 111 days for the bottom to hit back in '04. That was a 8.5% correction with a series of lower highs and lower lows.
I could go on and history backs up that THIS is too quick for a rally to resume !
We had a 6.5% correction...now tell me... with the economy as unhealthy as it is..do we really think that this is over ? I dont...
And Im no permabear.. I just call it like I see it.
IMHO sell the bounces !
Tim carry the torch dude...dont let a few healthy days ( by the by on REALLY crappy volume ) disuade you
J
Shiftpoint, I've been kind of disappointed with MWP. It's definitely inching up, albeit on pretty poor volume. The stop-loss point of 63.76 stands.
ICE ready for a comeback! All aboard!!
holy sh%t!!! Bear smasher rally!!!
going crazieeeee
As my previous post indicated there was an out for the Bears and then the move from the FED paid huge. Thanks Tim for the tremendous charts and the book !!! http://www.ttthedgefund.blogspot.com
TOMTHETRADER
Bears are getting hammered...wow
I haven't seen this type of market in a long while. Although, it seems more of a desperation on the part of longs...man if you are short you must be pulling your hair out.
I am glad I only have a small position in QID and SDD...otherwise my stomach would be churning right now...
Market Speculator
I am glad I hedged this morning with some $RUT calls... if not I would've been creamed... what the heck did Bernake say, anyway?
"The Helicopters will begin dispensing cash over the shopping malls immediately!"
i made some conservative short plays at the end of the day.
What happened today was expected if you look at past corrections.. we almost always have a rally back to the fibs/resistance.
I am glad I bought puts at the end of the day like everyone else. This market is done for now.
Tim, the interview was terrific, though you neglected to tell him that your nickname was Toshi and that you were soooooooooooo good.
I hope that you have not jumped out of a window after today. I find the entire reaction very strange. Herman Miller--leading indicator, commercial furniture (it's always the first to go) tanked in after hours. They had a terrific quarter, but they missed top/bottom numbers. Motorola had their come to Jesus discussion with the market after hours. Missed again...CFO without a job. I would never be a CFO with public company (well I was with a subsidiary of a public, but we were a gnat on their a$$).
Liquidity meetings on the Hill? THAT should be interesting.
The bull has completely shredded the sellers and the market will hit new highs next week.
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