Tuesday, May 22, 2007

Small Caps Catch Up

The market pushed higher today in fits and starts, and in the end, the Dow and S&P 500 closed down a little while the Russell 2000 - home of smaller cap stocks - pushed to a new high.

Even though the market seems unfazed by the weakness in NZD/USD, it is still worth watching. This currency pair has done a decent job indicating recent turning points in the market.


One stock I don't think I've mentioned before is Bunge. This has made a flag pattern recently. You can make of the pattern what you will:


BTJ has been a recent high-flier that might make a good short candidate:


CRS had a nice breakout a few weeks ago, but this breakout seems to be losing steam in a big hurry. Failed breakouts make great shorts.


Much of the housing sector - - lenders such as AHC as well as builders like BZH - had a nice bounce higher today. I took it as a good opportunity to enter some shorts of stocks that were retracing their head and shoulders pattern to the neckline, such as ESS, shown here.


Honeywell (HON) is starting to lose ground.


....as is Microsoft (MSFT)...


A couple of long suggestions. JetBlue, mentioned here not long ago as a potential buy, looks good. A series of higher lows and agreeable volume trends make this a handsome candidate for puchase.


And Questar (STR), also mentioned in the past, continues to prosper after its well-formed breakout.

15 comments:

z-stock said...

As far as housing shorts, i’m going to try some Wed, with very tight stops. LEN and CTX are almost at the 200 day, which look like good short signals,if they can climb one or two dollars above 200 day, that’s my CUE. And TOL reports Thurs, 12pm conference, est. TOL better beat street, or esle all housing will go down.
http://z-stock.blogspot.com/
zee
p.s. at my blog , last 23 picks, completely accurate, including XLE put, yeah.

Momo Fader said...

BTJ may finally be a good short with that rounding top. Nasty candlesticks littered the oil services sector. Just look at OIH for starters.

b.healed said...

PSB, a H&S short suggestion a couple of days ago is quickly moving back to its neckline. is it normal for a H&S to test its neckline this quickly?

b.healed said...

NZD/USD continues to show some weakness which is exciting, i noticed that sometimes it takes as much as 3 weeks for the us market to catch up to the NZD/USD. well, i guess we will continue to watch and see what happens

Safal said...

Tim,
How tight was your stop on RIMM? It went up on a rumor today.

Prometheus said...

I wouldn't count HON out yet. They were down today on some acquisition news, but they pay a decent dividend and are in the golden Dow, so I don't think their time has come yet.

TOMTHETRADER said...

Tim,

I am interested in your thoughts on buying calls on the VIX in here . I have noticed lately that before big economic numbers hedge funds are buying HUGE amounts of call options and then selling them immediately after the numbers come out as the last employment numbers there were some unbelievable volume...My work tells me that if we do get the correction I am calling for that the VIX will go back up and stay up for months to come ala 80-82...I know you don't use history but maybe you use the VIX ??? I am going to buy some VIX calls pre-memorial day and see if they pan out ...just an opinion..???

TTT

http://www.ttthedgefund.blogspot.com

yuri said...

The oil services certainly got waxed today - take your pick, HAL, NBR, BHI, DO, SLB, RIG. A bit of a pullback prior to the onset of hurricane season is not unlikely. Especially when you consider these were being hammered today as the ANOAA was simultaneously releasing it's prediction for a bunch of Atlantic hurricanes. Another day or two of weakness could lead to a selloff as stops are hit - many in this group have run up 10-15% in the last month.

william bills said...

I know you couldn't give a damn Tim, but I'll try anyway.

Standard & Poor's is estimating that the S&P 500 will earn roughly 94$/share in 2007. At 1530, thats a multiple of 16. And at 16 - that is roughly the average. Bull markets end when the market makes you pay a premium. 16x isn't a premium. That's fair.

I know if is for children, but if nothing out of the ordinary happens, this market should run.

Gary said...

Ahh...its just so easy to follow the smart money. Buy when they buy, sell when they sell. I'm just no good at picking tops so I let somebody much smarter and with a lot more money and a much bigger research dept. do it for me.

Jon said...

Gary is right... got tired of playing/trading short with Ultra Bear funds in my IRA. Went long on the RUT on May 17th and will be back to par by tonight, if things continue to play out by the open today. Whadda country!
(Now if I had only done this since the drop in February....cuddah, wuddah, shuddah....)
Watching over my shoulder for the confirmation of trend reversal, and will head "south" with all the big boys here. This is where the big pot of gold lives.

Little Jon

Any bets on the RUT, NDX et al tomorrow with the 8:30 AM release of durable goods and 10:00 new home sales for April? To be followed on
Friday by existing home sales for April.... anybody smell blood????

Tim Knight said...

"I know you couldn't give a damn Tim, but I'll try anyway."

That's not true. And it's not even that relevant. I'm just one person. Thousands of people read this blog every day, and a variety of opinions and information is always welcome.

TOMTHETRADER said...

Tim ,

We are 200% short using QID SDS and DXD to maximize profits on this upcoming correction that I called for going from 80% long to 200% short last Friday into Mondays close...I was hoping to buy some VIX calls but had all the Funds money tied up in inverse 2x's....Wandering if anyone tried it out as the VIX took off a bit at the Greenie comments.
Tom

http://www.ttthedgefund.blogspot.com

TOMTHETRADER said...

Z-Stock ,

went to your site and didn't see all winners ...kinda shocked to find a lot of weird stocks ??? Buying dips etc..in a straight up Bull..I could even do that !!!

let's see how you do in the next couple of weeks ..I would like to see you post your portfolio and purchase prices like Tim and I do ..if all your picks are up??? Congratulations , but if not ..let's see how they are doing ...an awful lot of buying dips at the end of a Bull run ???

Tom

ttt

http://www.ttthedgefund.blogspot.com

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