Tuesday, May 15, 2007

Immune

I'm not afraid.

I used to be. I really did. It's hard not to be fearful when a market has completely lost its mind. It's hard not to be afraid when tens of millions of Chinese investors - not a one of which has any clue what he's doing - are running around predicting their market will reach 8,000 now that it's reached 4,000. And it's hard not to be afraid when it seems the whole world has discovered how to print trillions of dollars (without inflation) that they want to dedicate solely to buying up companies.

But I'm not afraid.

A day like today is why. Because the Dow can reach yet another all-time high, and my portfolio.......which is 100%, All-American, red-blooded shorts and puts......goes up handsomely. And I can grab my XXL codpiece, stare the market right in the eye, and shout an obscenity which rhymes with "Truck Blue!".

Because the fact is, folks, if I can make money in a market like this, God help you bulls when it actually goes down. Because your days are numbered.

I find the Chinese prediction of 8,000 on the Shanghai index particularly amusing. I know that 8 is considered a lucky number in China. So - naturally - there's no reason the market won't zoom to 8,000, is there? Added to which, I read that many investors there decide that a share of stock is a good buy if it costs less than a portion of pork meat.

Idiots.

I've decided if my loyal readers and I decide to seek haven in a safe zone, we shall flee to the district of Yaroslavl Oblast in Russia. Their flag, my hand to God, looks like this:


A bear carrying an axe. We, my friends, have found our homeland.

Speaking of homes, the widely-reported slump in housing has not hit my beloved Palo Alto. On the contrary, prices have never been higher. Just a few doors down from my house is the following charmer. It features no landscaping. 950 square feet of living spaces. And sixty year old plumbing. It can be yours for $2 million. (Actually, I'm joking about that - - because it was snapped up a few days after they put a sign out in front, and it can, in fact, not be yours at this time).


The Dow Jones 30 - which is far and away where all the strength is these days - tried very hard to push its way up to the 13,500 mark. After ascending nearly 150 points, it went completely flaccid, and it wound up 37, creating this lovely shooting star.


Here's an update on my positions (newbies - click any image for a bigger version). Bold items are puts. Others are shorts. Not a long in the group (although I will mention that my long suggestion of ONT continues to explode higher).


My short in Akamai (AKAM) did great today, and what is more important, it is set up for a spectacular fall from here.


Acuity Brands (AYI) also has a hell of a lot of open air to collapse.


AutoZone (AZO) finally - FINALLY! - took a tumble. Much more to come, I think.


My puts in Bear Stearns also performed nicely.


Merrill Lynch is starting to deteriorate, now that it has made a base camp for itself at this key Fibonacci retracement level.


Lastly, the NASDAQ QQQQs slumped badly, just as my beloved Russell 2000 did.


So in spite of calming inflation news (ummm, fellers, how much good is a .25% interest cut going to do you when the economy is irrevocably crumbling?) it was a terrific day. Let's have more of the same.

I'm not afraid!

37 comments:

Jack Stevison said...

A bear with an axe! You must've been saving that one for awhile. Damn funny!

TOMTHETRADER said...

Tim,

I am right there on this market and have complained and even turned near NEUTRAL as the broader market has stoodstill while the generals get the glory...afterhours we had some panic ...so I don't know what will occur tomorrow. The reversal is more important psychologically now and the next 3 sessions will do in anyone who wants to buy puts and calls during options expiration week ...which I did ...
This is how I play the options expiration



Order Number: 3801264
Symbol: .SMHQU
Description: SMH MAY 37.5 Put
Stock: SMH at 37.95
Action: BOT TO OPEN
Quantity: 150 contract(s)
Price: $0.17


I hope the rolling the dice against the SEMI's was the right call and I hope this can maybe 10X or more ... Now it a should be selling at .60 or so 2k up ..I hope !!!

Tom

http://www.ttthedgefund.blogspot.com

Chris said...

Qs look like they're going to 44. A breakway gap down tomorrow isn't out of the question. Today was a beautiful reversal of the same set-up that has plagued bears ever since Feb 27th.

I almost feel bad for this poor market...

Glenn said...

2 mill? That is nuts. Good post Tim!

Brett said...

Tim,

you neglected to mention AMR continuing it's march down to $20.

Also, AVB's upgrade held it above the neckline for a couple of hours today before it refocused itself on getting back to $100 and dropped like it should.

Prometheus said...

I'm glad somebody else finally realized there is more going than a possible interest rate cut at some point in the future. Who cares if everything around us crumbles as long as we get a cut. That makes perfect sense.

Yuri said...

guess we got the confirmation on the NASDAQ Dark Cloud Cover formation I mentioned yesterday- still got my boatload of QQQQ puts. may start to get interesting now. double downed on my DIA puts, SPX puts lookin fine. these are the days Bears dream about.

wshhmm德州牌手 said...

Tim:

I would say Chinese stock market is very different from US. For the government, it is very hard to let the market down big because 1/10 people joining the game already, and government is trying to keep its poor party taking the power stably.

I think I know China much much better. I know the market is a bubble but it is hard to burst at current situation. 4000 might be flat for a while, then 8000 is possible next or next next year.

My short is good now and thanks for your blog.

Fund said...

Question for Tim

Why does the $TICK reading on Prophet.net charting read differently from 1 min after close and then at 30 min after close.

1 min after close today it was a red candle with O H L C of 152 1220 -1227 -72 , yet after couple hours it shows a flat bar with value of -98

I tried emailing support several times to no avail. Maybe either you or someone here can explain the discrepancy.

Good going on the shorts. There was some supply that hit the stock markets, but nothing that portends a big correctioion. My AZO puts did very well, unfortunately MMM and CROX ...... ah well. That's why we call it trading.

Fund said...

Interesting reading.

http://www.chinadaily.com.cn/china/2007-05/11/content_870395.htm

Louis said...

Hi Tim
Long time, not that you would remember...
By the recommendation of a friend, I started using P site, and now I am a trial Gold member.
I like simple & direct method of navigation and sharpness of charts.
I decided to make a short cut to you instead of tech support, if you don't mind.
Is there a way to tri-line the channel or increase parallel lines on a existing trend channel?
Thank you.

Lauriston said...

Tim

Please confirm:

- are the Chinese really predicting 8,000 for their market? Do you have a link? I would love to read about that one. I think the whole world is going nuts!!
- Was that house really sold/listed for $2m? Wow!!
Great post! I used to be a down and out bear, but recent months have turned me flexible! Right now markets seem to have bearish bias and I'll go along but very ready to turn on a dime if I see the bulls stampede as they seem to do everyday. Damn bulls!

Geoff said...

Fund,

I think that might happen because I'm pretty sure the quotes are delayed by 15 minutes.
So they probably change up to 15 minutes after the close, but don't change again after that until 15 minutes after the open the next morning.
You would have to read that somewhere to be sure but I'm pretty sure that's the case.

Tim Knight said...

"are the Chinese really predicting 8,000 for their market? "

Well, it's one of those things where you read, "Some are calling for 8,000" -- it wasn't like a government proclamation or anything. But I definitely read it. But, hell, it doesn't mean a thing. Someone could have said it's headed for 500,000. People can say any stupid thing they please.

Leisa said...

Today I wrote an online friend and said that I needed a lobotomy because the DOW was surging 100+ points at the time. I was happy to see that the market had regained it's sanity after I returned from winkie-land (an afternoon nap, sorely needed after running with my dog this a.m.--despite how our brains fool us to the contrary, our musculature always knows our chronological age).

The picture of that house reminds me how on target the "all real estate is local" adage is. All I can say is $2 mil for that (pejorative noun omitted)?

I love your bear with an ax.

Andrew said...

I noticed 3M disappeared off your list today. Did you get stopped out or decide to close the position?

william bills said...

man, i can't wait to read this blog when the market is off 5% from its top, tim may actually post a picture of that codpiece!

I'm a bull........yawn, but I'm finding that most of the strength is in the mega caps. They aren't falling as much. Everyone still has a lot of cash - hell, the only reason "the oracle" gets up out of bed is because he "wants to do a HUGE deal" i think these money guys are lagging big time, but at the same time they don't want to own the next AKAM, so they pile into VZ and the megacaps - to stay "safe". They're the one's who are afraid Tim. that my 2 bits.

love the blog tim, thanks

dbohntr said...

Tim, your post was short and no video but I found myself laughing, thanks. I was for some odd reason disappointed to not see AVB in your short list. For what ever reason it is always comforting to see a pro trading the same thing as me.
I will be saving the flag, it is perfect.

Rob said...

About the Russian flag: From the forest itself comes the handle for the axe.

JakeGint said...

Here's Fund's LINK on the nutty Chinese market that he provided above.

And Fund, here's a link for you to check out how to make a hotlink from a url address, simply and easily. Really, it's not hard, take it from the opposite of a tech geek.

JakeGint said...

Tim,

No need to move to a Russian Republic when you live in the People's Republic of Palo Alto already.

Please tell me there was some land attached to that $2mm shotgun shack... or a view? Is what Thomas Sowell saying about that area really THAT true??

Loved the AKAM call today (my second bite at the apple, thanks for the push). I think I will take my further vengeance on AZO tomorrow...

Glenn said...

I wonder how many bulls are bulls because they are not sure how to short?

beanie11111 said...

Permabears need to be afraid. You got about 1.5 months to slap the bulls around before the bull stampede arrives.
http://www.nytimes.com/reuters/technology/tech-climate-energy.html?_r=1&oref=slogin

Go long alternative energy!

beanie11111 said...

If you got puts from two months ago, you're still underwater.

You got 1.5 months to make it up. I doubt anymore than that.

Global warming is very real. The detractors are lying even in the face of strong conclusive research for global warming.

Be warned, permabears. The alternative energy hyper bull rally is coming. When it finally gets into the consciousness of the masses that global warming is threatening our way of life, all the money will be pouring into alt energy.

beanie11111 said...

http://news.yahoo.com/s/nm/20070516/sc_nm/climate_dust_dc

Rafah said...

Love the picture , and LOL funny comments.It is a day like this that would give us a good boost and affirm our direction to be of the right one :)

Tim Knight said...

"I noticed 3M disappeared off your list today. Did you get stopped out or decide to close the position?"

I got stopped out at a small loss. I had a pretty tight stop order on that one.

As for JakeGint's question about the $2 million estate........that really is the house, and there's not much more to it. It was sold as a tear-down, though. It is on a decent piece of land - 9500 square feet. Which around here is considered a "large lot".

My property is on 13,000 sq. ft. - - which is a tad shy of a 1/3rd acre. That's comically small in, say, Ohio, but around here, it's regarded as substantial. It's a crazy little burg.

beanie11111 said...

AAPL is a great short... May 105 puts. All or nothin.

beanie11111 said...

holy sh%t, our AAPL May 105 puts were just up over 400% due to this:
http://www.engadget.com/2007/05/16/iphone-delayed-until-october-leopard-delayed-again-until-januar/

if it gets to 98 by friday, we'd be up over 2,500%?? lol


www.beanie11111.blogspot.com

beanie11111 said...

AAPL:

more likely than not, this stock will see below 100 by friday.
http://www.engadget.com/2007/05/16/iphone-delayed-until-october-leopard-delayed-again-until-januar/


Wait till the downgrade comes in..lol

beanie11111 said...

oops, this AAPL piece may just be a rumor.


stay tuned..... those bastids!

beanie11111 said...

You know rumors like that can only come from the bears. lol

Prometheus said...

Drifting up on a boring day. Any comments anyone?

Humble1 said...

traders trade and make money off bulls and bears. the key is to know when the time is right to exploit either group. One day wonders don't make money. Fighting the trend doesn't make as much money as riding it. I am now under water by almost 400 points on my DOW short that I posted a while back [not really but I logged the trade just to make this point]. Yet, I would be up 400 points just by getting long on the dips until something changes in the techncial picture. This is what traders do.

TOMTHETRADER said...

Tim,

Could you post the results of the survey of portfolios we sent you quick as it will look good for me today ...but if you wait until Monday it probably won't !!! This market is incredible ..an ugly chart turns into swan and I never really knew how many Bears there were out there until I hit the blogs last night and everyone was a "Shooting Star" fanatic!!!! And add on some ridiculous US Gov't numbers that they said could be off by a mere 40% and you got yourself a rally.
Again I hope Tim posts again the portfolio he asked folks to send in as I am up another 5% plus since then and with options we are killing the market.

http://www.ttthedgefund.blogspot.com

Tom
24/7

Jonathan said...

I have had AKAM on the short radar for the last month. Its too early to short now. There is too much risk of an up move to drive in the shorts.

I figure I am going to wait until at least 5 months past the peak and short no more than one dollar under the 50DMA ON THE WAY DOWN.

I use only options, so entry price is really important on a percentage basis of total capital wagered.

JakeGint said...

Sounds like a sound risk averse and capital efficient methodology.

To be clear -- you start, or STOP shorting $1 below the 50DMA on the way down?