Monday, May 14, 2007

'Til Tuesday

It's really simple.

Tomorrow morning, the CPI will be released. The market will react. If it reacts poorly (which means down, which is a good thing), it's party time. If it finds the report vigorous and exciting for some reason, that's a bad thing for us. Because, simply stated, today made a lot of sense to me, virtually all my positions went up, and all my charts are positioned for juicy profits tomorrow. But a perverse reaction to the CPI could muck that all up in no time.

I said last week that Massey Energy (MEE) was looking like a good short, given its head and shoulders pattern. One person wrote in that evening's comments section.....


I'd stay away from shorting MEE... One of these Merger Monday's it's name is going to be on the "acquired list" and that's going to suck for anyone short it. Crappy management, but great reserves, and the coal bidness ain't going anywhere soon....

Well, the stock took a big fall today, and based on this pattern, there could be plenty more room to fall.


Indeed, some of the put options on this went up literally thousands of percent. Not bad!


On a more bullish note, another stock I've been mentioning as a beautiful buy is ONT, and it continues to do terrific. Check out the strength of that volume!



Because the market is so complacent right now, many puts are being sold on the cheap. Check out this chain from earlier today for MMM. Just look at the October put. For 63 cents (if you strip out the intrinsic value)......63 cents per share!......you get the right to sell the stock at a fixed price of $95 any time between now and October. Even more interesting is the fact that time premium is just about zilch.....July is the same as June....is the same as October! Incredible.



The Major Market Index ($XMI) does a nice job of showing where this market stands. If - - and I say if - - the market even freaks out a little at the morning's CPI, tomorrow is going to be a fantastic today. Today was really good, only because I was running around buying puts when the Dow was up 50 and everything else was basically stalled. I knew it wouldn't last.


I've got to blast off to a meeting, so I'm just going to throw you raw symbols now, all of which I have either puts on or I am already short. Here we go.....AKAM:


BEN:


CROX (can you say fad?!!?!):


CRR:


DE:


EWM:


INFY:


MMM:


RIMM:


WHR:

16 comments:

JakeGint said...

That was MEE talking about that coal company with schit management, thanks for not publicly flaying me on it.

It's done this drop before... don't wait on it... profit and go.

Love the AKAM and CROX (o'schite) calls. Can't argue with the bulls on CROX w. regard to mo-mo, but mein Gott, I've already seen the knock offs by the bunch-load... where's the long term branding strategy here?

JakeGint said...

Tim,

Just checking out the chains on MEE, and it's a shame you didn't get the June 20's (also up 400%).

Not for the price appreciation but for the name...

"MEERD"

wshhmm德州牌手 said...

I said yesterday in my blog it was a bull trap today.

From SP future action today, it seems the big guys bought the game again in last half hour.

Tomorrow will be a decisive day for bulls and bears

Safal said...

any (long) views on ONXX, looks like it's going to be the stock of the summer.

Yuri said...

It was a strange day overall, which left me with the abiding sense that market participants were merely biding their time till tomorrow's CPI. And let's face it, with earnings season essentially behind us, it is going to be much easier to spook the market.
The Market is following a familiar script one finds before pullbacks - NASDAQ weaker than the other indices, higher volatility, less volume on the up moves, manic intraday swings, etc.
I had to be heartened by the big move in the VIX, relative to all else - my SPX & QQQQ puts were up markedly, even as the underlyings were posting moderate gains - tells me there's a bunch of people buying puts today ahead of the CPI#. I, like Tim, was noticing that the DOW was going nowhere, and I picked up some puts on the DIA.
As I write this, the QQQQ's are down almost another 1/4 percent afterhours.
And of note: bearish engulfing candle on the DOW transports (God bless Charles Dow), and most important to me (I've got a boatload of puts on the QQQQ's, which can have an eesny, weensy spread of only a couple of cents)- a Dark Cloud Cover formation on the NASDAQ.

Market Speculator said...

Tim...

Your Crox upper channel is incorrect...drop the slope a bit to where it should...

It is a FAD, but as we know like TASR and TZOO these things can RUN like mad...for me this stock is too extended to enter a long but too much of a fad to go short just yet.

I would be patient with CROX

TOMTHETRADER said...

Tim,

WE are holding on to 1500 SPX and 1885 NDX like a fly on fly paper as the Bull is losing some steam but there is enough juice with this hold and getting short term overbought to once again run us up to 1510 where I personally will be shorting with 20% cash ...look out below if you get "honest" inflation numbers and watch out also as BOND surrogates like ZTR have caved in the last few sessions which usually tip off extra risk coming into the market as rates rise which can kick off sell programs. The A/D line was hideous today for an up 20 DOW and we will pay for it soon. NOK calls and the stock treated us well but the average stock over the last 15 sessions is DOWN so we are in that area where Bear Markets have staryed ..I am only looking for a 3-5% correction but if some things fall into place and the Bears start adding ammo to their case .i.e. recession and high inflation ( which I believe is closer than ever )...we may get whacked.

http://www.ttthedgefund.blogspot.com

TTT

Robert said...

Alot of metal stocks have run up huge and might be worth a small starter position (short)...Have a look at X NUE CRS CLF

FWLT coming back to earth too....

william bills said...

between the hedges posted something interesting. http://hedgefundmgr.blogspot.com/


"The total value of U.S. shares contracted last year, despite the 15.8% rise in the S&P 500, by the most in 22 years as a result of booming M&A activity, giant corporate stock buybacks, muted IPO activity and limited secondary offerings."

stay put in that bunker.......its gonna be a long hot summer.

Humble1 said...

What an edge..... waiting for the news to see if things work out. Tecnical analysis at it's finest....whoops it's hitting the fans boys and girls.

JakeGint said...

"William Bills."

That's awesome.

JakeGint said...

Yen carry trade... check it every morning...

Fund said...

Hello Tim. Thank you for the Charts. I think MMM and CROX are good charts for PUT buying today and will get some far out strikes.

Take a look at AZO, I bought PUTS yesterday on AZO. Although the Chrysler buy out news will be good for automakers and auto parts, I think AZO is extended and ready for a small correction from current levels.

Longer term I am still a buyer of US equities. We are far from any significant top. This correction is simply the smart money taking profits and plumbing for new demand. They're building cause for further move higher. My analysis shows 1560 to 1580 on the SnP500 cash to be the next significant corrective top.

Good trading and continued success to you.

Oneway said...

...LIKE I'VE TRIED TO TELL YOU ALL SINCE LAST JUNE>>>

DJIA FIB.EXTENSION UPDATE

REMEMBER, WE'RE USING THE DJIA 11,750-TO-7200 TRADING RANGE, OR 4,550 POINTS.

A 'MEASURED MOVE' = 11,750+4550 = 16,300 (a 100% 'extension', got it?)

1ST EXTENSION (38.2%)=DJIA 13,488
2ND EXTENSION (50%)=DJIA 14,025
3RD EXTENSION (61.8%) = 14,562

...right now the DJIA is up 96pts. @ 13,444

ericbolling said...

the markets are just getting started and you bears have a great chance to cover and get on board.

Market Speculator said...

thanks ericbolling

but the Nasdaq is heading for its 4th Distribution day in as many weeks, 4...