Monday, June 04, 2007

How Now, Mao Dow?

There was a time, not long ago (like, ummm, early last week) that I would have felt cheated and flustered by the Chinese market's tumble not having a bearish effect in the U.S. But at this point, I am so utterly distrustful (and numbed) by this market that I'm not at all surprised.

The Shanghai index fell the equivalent of over 1,100 Dow points last night, and our market - of course - went up. I truly believe - and I am seriously not exaggerating - that a nuclear bomb on a major city would not cause a major disruption in this bull market. I swear to God, this market is insane, and even the death of a million people would not stop it. It has lost its mind.

So. Having said that, let's look at a few charts.

Crude oil is pushing higher. Looking at the continuous futures chart, it seems to have plenty of room on the upside.


The strength in crude is obviously good for oil service stocks. The OIH is at a new lifetime high and had a very strong day today.


I mentioned last month how bullish energy looked, and stocks like Apache (APA) have been stars.


Conversely, companies which suffer due to high fuel costs got hurt today. My short recommendation of American Airlines (AMR) is doing well.


One I don't think I've mentioned in the past on the short side is BEA Systems (BEAS).


I have, however, mentioned Bunge (BG) a few times, and this one is shaping up nicely.


Capital One (COF) is sort of stuck right now. I own puts on it, and they haven't done a thing, but I am still hopeful about this position.


Federal Realty Trust (FRT - "don't giggle at our ticker, please") looks like a clean bearish trade to me as well.


I don't mention Google (GOOG) much, but this stock looks like a strong buy (yep, buy). This chart is strong, and the volume has been inching higher. Obviously this company is an ungodly powerhouse and is doing well at the expense of poor Yahoo, which seems to be dying an agonizing death.


I bought puts on Honeywell (HON) today. Maybe a lil' double top here.


The investment banks seem to be edging south, in spite of the market's continued strength. Merrill Lynch (MER) in particular looks good for a short play.

34 comments:

TOMTHETRADER said...

Being a Bear Sucks !!! I never knew it could be so distasteful. I felt when we substituted PUTS for our Ultra Short shares we would have more leverage on the upcoming correction ..I was right for about 48 seconds this morning as the DOW was down over 50 points at one time !!! Well ..the ARMS Index is at another historic reading that has led to bad things ..last time we were here was last May !!! So maybe a nuclear bomb will hit this market and soon..because it is only going to keep me in the Bear Suit 2 more sessions !!!

Tom

http://www.ttthedgefund.blogspot.com

JakeGint said...

Tom is reminded of his frat pledge days back at dear old EFF ESS YOU.

Whilst being whacked repeatedly with a boat oar, he was required to say only:

"Thank you sir, may I have another?"


(There's no need to pledge this frat, though, Tom)

Dennis said...

No wonder bears are so hated right now. They are wishing for a nuclear bomb to hit an American city. How disgusting! If being a bear means wishing ill on your fellow humans then please count me out. I am a bull at the moment but if I turn bearish it is because of overvaluation of equities not death of your fellow humans. I was shorting the market into 9/11 and then it happened. Obviously I knew that the market would crash and I would benefit from my shorts but I felt no joy at all. I donated my winnings to 9/11 fund to help the victims.

marxist said...

I wish this discussion would get away from all the cyrstal ball readers and the subsequent sniping.

Lets say most if not all of us get it. The markets are on a tear. We know they should not be. Lets also for the moment skip the why's and why not's this is happening.

What I want is to hear how to trade this. We have a clearly defined pattern. Up for now. Big reversal coming. Don't know when the reversal will happen.

Give me a trade that will let me partake in the upside but protect me from a major downward move. I don't care about small 1 and 2% moves. Only a major move should it happen.

So, what makes sense here folks!! Strangles, calendar spreads?

What sectors are in strong trends. The same for individual stocks.

How about pair trades? Long one thing and short the counter move?
Example, long oil, short airlines.

What about volatility?

Thanks in advance!

P.S I would prefer option trades.

ctkwtk said...

In his first interview as the chairman of the Arkansas Republican Party, Dennis Milligan told a reporter that America needs to be attacked by terrorists so that people will appreciate the work that President Bush has done to protect the country.

"At the end of the day, I believe fully the president is doing the right thing, and I think all we need is some attacks on American soil like we had on [Sept. 11, 2001]," Milligan said to the Arkansas Democrat-Gazette, "and the naysayers will come around very quickly to appreciate not only the commitment for President Bush, but the sacrifice that has been made by men and women to protect this country."

Milligan, who was elected as the new chair of the Arkansas Republican Party just two weeks ago, also told the newspaper that he is "150 percent" behind Bush in the war in Iraq.

I guess this guy is one of them ole' nasty hated bears.

Holdem or Foldem 德州牌手 said...

"I truly believe - and I am seriously not exaggerating - that a nuclear bomb on a major city would not cause a major disruption in this bull market. I swear to God, this market is insane, and even the death of a million people would not stop it. It has lost its mind."

Well said.

Tim Knight said...

Ummm, excuse me, I didn't WISH for a nuclear attack. Read my post again. I simply said if an attacked HAPPENED, the bull market would continue.

Jesus.....

Holdem or Foldem 德州牌手 said...

TOM:

I am with you. This market is really suckk..

sysin3 said...

higher, much higher. Makes absolutely no sense to me .... but I can't even find decent divergences. Gee whiz. Remember, we thought it was insane in 1999 and the idiots just took it up .. day after day.

robert said...

my ist post .......kudos to tim for this blog,humor,sharing.....and thanks to all those who comment in a constructive way .....my 2 cents goes this way ....since 'hank' traded positions last july , the market has been very consistent.....eeriely so ....the ppt et al run the show ......it's a bull-shit market ....geo-political ....it's bush's only positive .......knowing this, why fight it ? who would bet against HAL at the start of the occupation ? eventually, fear will creep in ...either interest rates, carry trade balance, oil surging, whatever ....it will creep into the greed and eventually the momentum will shift ......waaaaaay down and that's my 2 cents worth ........cheers !

kapil khanna said...

COF is looking bullish. Tim, did you short AAPL?

Prometheus said...

Who thinks the iPhone will weaken the iPod powerhouse?

tommy t said...

TTT

The arms index is not a timing tool, but a red flag to exit longs if other tools line up with it. And right now there aren't many lining up. One has to remember that overbot in a strong up doesnt normally produce much for the bears. Check out ADX to measure strength of trend, and its still saying the uptrend is OK...Remember pullbacks to trendlines come before breaking of uptrends, and we can't even get many of those. I am not saying being a bull is easy, as I went to neutral a few days ago...but all out bear is a gamble.

william bills said...

seriously, what is so bad about using fundamentals ALONGSIDE technicals?

Prometheus said...

You can't just rely on technicals. Reality can crush even the best technical setup.

toober said...

June 520 Calls, market, at the open.
.GOPFV

TOMTHETRADER said...

Some good commentary but in the fullness of time there will be a correction and being a day or so early and not being greedy enough to take the last .5% I think my move to 200% short was the correct one ..I have all the historical and technical precedents and just because it doesn't roll over and go down 300 points in a couple of sessions ...so what ..I am down .28 % or so since I went BEARISH ...that is a couple of grand in my account ...if what I think will transpire over the next 3 sessions does my JUNE and JULY in the Money puts and the SDS and DXD will get me 12-15K ....so let's let this one play out and by Friday 4:00pm we will call the winners and losers ...Friday of Options expiration anyway !!!!

TTT

http://www.ttthedgefund.blogspot.com

b.healed said...

i think that if a nuclear bomb hit the people would be so out of sorts that they would accidentally press "buy" instead of "sell" thus causing the largest one day rally our market has ever experienced

Controlled Trader said...

Shanghai down 5.66%, Nikkei up 0.26%. US Market has been up everyday for last 5 days.

Futures are showing little lower open tomorrow. Same old story might repeat tomorrow, or might not! Bears' day should come. I'm going to puke if market goes up again tomorrow.

JakeGint said...

LOFL, Bhealed.

Vaporized whilst pushing the "buy" button.

That's our sequel to Strangelove, right there.

beanie11111 said...

You bears are sick. Looking for a nuclear holocaust to make money?

shame shame

Humble1 said...

Doom and gloomers "think" this market shouldn't go higher. If their thinking is based on what has been "fed" to them, they should realize there is a possibility they have been mis informed. The simple truth is, the market goes up until the money stops and no one will ever know just exactly when that will happen. That's what risk control is for. Sane people use it. If you don't know how to manage the risk, then find out, because the bears are missing one heck of a ride.

blure2 said...

Hi, Group;

Newbie here. This is a test message.

Bob

Market Speculator said...

Yeah Tim thought that was funny someone thought you were wishing for a nuclear bomb to go off in a city...

Anyway...being long is having its perks. AMZN GOOG ASIA RRST ARGN BCSI

Aloha!

downosedive said...

gary
i opened long positions yesterday evening and what happens? The markets down 72, typical. That is the reason, havnt gone long in the past and shouldnt have changed now. Never trust the trend

newequity said...
This comment has been removed by the author.
newequity said...

down,
this is one of many pullbacks I was talking about that you buy into so you don't complain when we hit new highs by Friday. I am sure you closed all your shorts and went 100% long yesterday "evening". You seriously think we believe you now.

Author Ego said...

A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.

-jesse livermore

JakeGint said...

GREAT call, Toober... and you could get em at a discount this morning, too.

Gary said...

Nose dive,
Do you really have so little patience that one down day will shake you out of your position? I suggest you stop looking at your computer. Watch the COT report on Fridays and sell when they tell you to sell. Watching your computer every day is going to cost you money. If we get another 25-30 point pullback in the S&P it will most likely be a buying opportunity. A 2-3% move down is noise and that's all it is. Just hold on until you get a legitimate sell signal. Today is not that signal. If the market is down again tomorrow it won't be a sell signal. Nor the day after.

Gustav said...

hey tim,
take a look at Cameco for a bullish play.
New ATH yesterday, as uranium prices are souring.
On the long side, expecially energy and ressource-stocks look pretty nice, still.

newequity said...

Do not forget to buy the dips and make some money with the crowd.

toober said...

Thank you, jakegint. Looks like one could have bought 2 at open, sold 1 at close and play with the houses money after commissions. I of course sold 1 from Friday on the way up and then the old brother-in-law called for directions and I missed opp to by it back cheaper. Holding 3 for a triple.

JakeGint said...

Gustav,

No doubt you're Swedish or something, so don't take that I'm criticizing your English.

It's likely far better than my Swedish, which runs to "Volvo," etc.

But I think you meant CCJ's prospects are "soaring" -- to which I'd agree.