Tuesday, March 20, 2007

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.

26 comments:

JakeGint said...

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.

dbohntr said...

Tim, I thought you might have mentioned LXK, it broke down with good volume behind it today.

TOMTHETRADER said...

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

h. lovil said...

Agree it is make or break for the bulls/bears.

What time is the Fed out with it's pronouncements tomorrow?

Tim Knight said...

TomTheTrader, thanks for the kind words.

The Fed's announcement is scheduled for 2:15 EST on Wednesday. Fireworks usually ensue.

Momo Fader said...

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.

z-stock said...

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…

JakeGint said...

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?

Tim Knight said...

Excellent post, Momo Fader!

beanie11111 said...

Oh my god, the next Microsoft?


lol

RogerRush said...
This comment has been removed by the author.
mde said...

This market is getting ready to rip higher tomorrow after bernanke spins the outlook as rosy and outstanding.

shiftpoint said...

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.

anunakki said...

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

Tim Knight said...

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.

beanie11111 said...

ICE ready for a comeback! All aboard!!

Super Bull said...

Hehehehe, Bears are DEAD, DEAD and DEAD! Bulls rule!

Da Super Bull

beanie11111 said...

holy sh%t!!! Bear smasher rally!!!

going crazieeeee

TOMTHETRADER said...

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

Market Speculator said...

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

JakeGint said...

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!"

anunakki said...

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.

mde said...

I am glad I bought puts at the end of the day like everyone else. This market is done for now.

Leisa said...

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.

mde said...

The bull has completely shredded the sellers and the market will hit new highs next week.

R.I.P.P.E.D. Weight Training said...

7 Ways To Earn More Income Online With Forex Trading
(c) Copyright 2007 by Steve Gwillim

Did you know that... hundreds and thousands or forex traders trade in the forex market online every day... and make an absolute killing at it. How do they do it?

Well I am going to give you 7 easy tips that will help you make more money with forex trading.

Tip #1: Knowledge is Power.

When starting out trading forex on the net, it is an absolute must that you understand and become good at the basics first. Once you have a good concept on the basics then you can move forward.

For example, one of the major forex influencer's are global news events. An ECB statement is released on Euro interest rates and this will cause a flurry of activity. Most newcomers will get scared and wait until everything calms down. If you hesitate you are likely to miss out on some great trades. You must act when the market is in volatility not when it is in a stand still.

Tip #2: Independence

When you are new to Forex you will be trading yourself or have someone else do it for you.

Obviously you will make more trading yourself, but you must know these things.

If you have someone else doing it, don't interfere what he is doing... he has a strategy that may take some time, let it ride.

And if you are doing it yourself... don't get too much information... if you try and get too must information from too many sources this will result in only multiple losses.

Take a position, ride with it and then look back and analyze what has happened. Be independent and stand strong.

Tip #3: Don't Get Over-Confident

Take tiny margins. It is one of the biggest advantages in trading forex. It allows you to trade amounts far larger than the total of what you have deposited.

But don't get over confident with this... some rookies get greedy and this destroys many traders. Only increase depending on your experience and success.

Tip #4: Trade When It's News Time

Most really big trade occur around news time. Trading volume is high and the moves are noteworthy.

This means there is no better time to trade than when the news is released. This is when the big guns adjust their positions and prices change resulting in a serious currency flow.

Tip #5: Exiting Trades

If you place a trade and it's not working out for you, get the hell out of there. Don't multiply your mistake by staying in for hopes sake for a reversal. That is very unlikely to happen. And on the other side if you are winning a trade don't pull back because of the stress levels.

You must learn to tolerate the stress, it is natural to trading, you must get used to it. Tip #6 Don't be smart The most successful traders keep their trading basic. The don't analyze all day or research historical trends and track web logs and their results are excellent. They spend their time in the stress zone not in the library.

Tip #7: Build Your Confidence

With Experience If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-loaded; learn the business before you trade.

Knowledge is power when coming to trading, remember that.

------------------------------------------------------------

Forex is a game of knowledge... you must know about the business. That is why I recommend you check out the soon to be released groundbreaking forex trading system at ForexAIM.com.

Now, it is time to put this information to action... How are you going to gain unless you put this information to action... you will simply not.

------------------------------------------------------------

We Took THREE Beta-Testers That Knew Nothing About Forex Gave them The New ForexAIM System ... Result $319,221.00. PROOF HERE:

==> Forex Trading