Thursday, June 14, 2007

Nattering Nabobs

It's a pretty predictable trend. It the market goes down hard, the comments section is filled with kudos, praise, and huzzahs. And if the market goes up big, the comments section is filled with barbs, told-ya-so's, and permabulls. Either way, it's pretty tedious.

As I've said many times, this blog's purpose is for one person - me - to share his thoughts about the market via some charts. Nothing more. You can get ideas from it. You can take those ideas and turn them upside down (short everything I buy and buy everything I short). It's really up to you. All I hope for in the comments section is a place for other people to offer other ideas. Because there's plenty of interesting opinions out there.

Today, like yesterday, was another "up" day (although not nearly as dramatically). That's fine by me. Now, if tomorrow is up too, I'm going to start to worry. A healthy snap-back rally is terrific in the scheme of establishing lower highs and lower lows. But a continuous push higher can result in what we saw back in early March, where the allure of a drop was squashed and the market simply sashayed its way on to new lifetime highs. My view of the S&P 500 right now is along these lines:


I've got some puts on the DIA with a contingent stop at 136.16.


Symbol CEG has a nice series of lower lows/lower highs. I'm short.


Malaysia (EWM), mentioned here before, continues to look toppy in spite of recent strength in Asia.


I mentioned Goldman Sachs (GS) before. It had pushed its way to a new high yesterday, but once earnings were released, the stock fell on the news. It's not that the earnings were bad - on the contrary, they blew away expectations. But "buy the rumor, sell the news" is as true now as ever.


My puts in JC Penney (JCP) continue to do well, although nothing really great is going to happen unless/until the neckline shown on the pattern breaks. But it could be soon.


Gary mentioned my "bearish" energy suggestions; not at all. I think in passing I mentioned CVX and/or XOM for those who considered energy overbought. But I've devoted whole entries recently (such as "Sheer Energy") to the fact that this is the one sector that looks really bullish. The new high on the OIH today is no surprised, nor is the strength of such stocks as APA, SLB, and SWN.


PEG is another promising-looking stock to short, similar to CEG's pattern.


Finally, your clip of the day. This beautifully captures how I've been feeling about the comments section (especially the TTT situation). There comes a point when I just want to jump off the train.

70 comments:

bear said...

George Bush's approval rating had dropped to its lowest ever level in the United States.

Mr Bush: Not very popular A survey for NBC News and the Wall Street Journal puts it at 29% - down six points on April.

Pollsters say the fall is due to the growing concerns of Republicans.

In April, 75% approved of the President's efforts, compared with 21% who disapproved.

Now only 62% of Republicans think he is doing a good job, with 32% believing he is not.

That is why the stock market is going up. Bush is on the way out!!

dbohntr said...

I was hoping that there was a fundamental reason for stocks going up. Then there would be a good fundamental reason for them to go down in the near future. Do you really think it has to do with the presidents approval rating?

The Video was right on target again!

Dennis said...

First of all, kudos to Tim for calling the AAPL top.
I sold all my positions today because I think inflation is still a problem. I know the core inflation rate is OK but I don't know anyone who doesn't use foods and energy. The headline inflation rate is troublesome. Plus the housing market shows no sign of bottom and with rate going up, it can't be good for housing industry. That will eventually affect the whole economy. Maybe next year we will see a recession.

JakeGint said...

Bush isn't "out" for almost two more years, dumkoff. The reason his approval level has plunged to almost Harry Reid-like levels is he's p-ssing off even his supporters with this Kennedy Amnesty Plan. Get a clue.

Is there no place on the internet one can be safe from Bush-deranged leftists?

Edwardo said...

Before we get back to the stock market, here's something for yas. The teenager has the moron in chief down cold.

http://www.jibjab.com/view/125614

Now for stocks. Here's an illustration of we are about to have a king hell sell off.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1544663&cmd=show[s50779172]&disp=O

robert said...

thanks tim for the timely video ......some of these comment guys need to go to different blog ...perhaps ..second life .......i totally appreciate your blog, your teachings and comments .....admittedly, as mentioned previously, this is a political market where ta takes a back seat ......soon there will be balance ...it will fall from it's own weight ......cheers

bear said...

Is there no place on the internet one can be safe from Bush-deranged leftists?

Bush is the one that is deranged, not the leftists, no way, never, ever.

Gary said...

Your list of shorts or puts the other day included XOM, CSX, HESS, MRO & CVX. If your bullish on oil then why the shorts? Trust me as soon as I get the signal to go short I'll make Tim look like an amateur. BTW I seriously doubt that housing is going to cause a recession. It just doesn't affect enough people. Oil on the other hand affects everybody. As I noted on my blog today oil has broken out of a 2 1/2 month consolidation. If oil spikes to $85-$90 then I think there's a very good chance of a recession to follow.
Ed,
Are you seriously still making investment decisions on predictions of future chart patterns? When will you people learn that it's impossible to see the future.

Winace said...

Can you predict future price movement from past performance in price/volume activity? Hmmmmm..... Gary, I believe your at the wrong site! Can you predict how news is interpreted? Housing is down! Hooray! Now we can buy them cheaper! Oh no... I mean boooo, that is bad news. blah blah blah..... Earning are better than expected! Why is my stock plummeting??? Ooooops. Was the market up today? Yup. Everything is interpreted good. The charts (predictable) determine how the news is broadcasted. For instance: A highjacked place is shot down over a major city. Good news? or bad? Market is up. Good news, attack thwarted! Market is down? Oh no, more may be on the way and innocent people died. blah blah blah. I trade, I do okay, I do not. Repeat. DO NOT watch the news, or anything concerning the market. Until after the trading day, when I can see what lame excuses were concockted to explain market behavior. See it again and again.....

Winace said...

Tim,
I do not use you as a contrary indicator. Just found it humorous, you seemed so disgusted, and then the bottom fell out. I do not use a TKO (Tim Knight Oscillator) or anything! Keep up the good work. This is the only internet content I read. I appreciate your thoughts, opinions, and ideas. I do not let anything sway mine, but I am open to reveiwing an idea to see if it confirms mine. Subjectivity..... an art of course, not a science. Have a good day tomorrow!

tommy t said...

"Now, if tomorrow is up too, I'm going to start to worry".

Tim, at this stage of expo week, you start dealing with "other" forces. The bias for most expo weeks holds into the program on Fridays close...I 'm sure you would have no problem saying that bias is up. But one tidbit on your side might be the fact the like 13 Fridays in a row have been up...yes 13...so, are we due for a down one? or will expo hold true?? I say short any expo close if its up for the next pullback due to start.

Winace said...

And another note. I short the Q's. About hmmmm.... everyday. Yesterday I broke even (was up until I attempted a second trade). Either way, I do not want to be on the long side of the market when the bottom DOES drop out. At least not with the leverage I use. On occasion, like tonight, I will hold a trade overnight, but only when I know it will be profitable! Also, keep stops tight. I may lose 30% of the time, but loses are cut short (and admittedly, winners sometimes too). Permabear? No, just using some common sense. Channel all the major indicies, although channels eventually fail, I do not think it will be this go around.

Gary said...

Winace,
Huge leverage means huge risk. Eventually a rogue move will ruin your account. I would seriously think about what you are doing. Just look at what happened to Ammarath.

hong said...

Tim:

First, My apology. you are very smart trader. much smarter than those Buy-The-Dip guys. You can make a lot money in a bull dominant market while 80% of most bears are been KILLED in this market since middle of last year(shows in statistic). My point is, NOT EVERYONE CAN TRADE LIKE U. Tim. Most people will easily get confused when face the unknown in this market and looking for a direction, a tip, a hint, a slope of hope...etc. and yet you are keep point them at the wrong way. Although I truely understand that this is not your intention at all.

when we put our money in this market, We are actually in a war. A very cold Bloody war and the market have no mercy.

Please, have some mercy for your fellow Fans...

The will be my last post. Thanks.

Thomas said...

Seconding Hong's thought. Many of your most annoying followers don't understand your bearishness. Nor do they understand that you WON'T get killed when the market goes up. The bottom line is that it doesn't matter if you are a bull, a bear, or neither...as long as you make money. I assume that you make money Tim. I read you because you have excellent short ideas, funny commentary, and excellent taste in video clips. On the short side--please look at HLS. A broken stock in a poor pattern after its reverse split. Falling through two points of support at $22 and $20 as well as a 3+ year consolidation pattern. There is no wood under this chart and I can see it back down to $10. This will do poorly in any market. Best, Tom (e.g. stealthelephant)

Market Speculator said...

bear said:

"That is why the stock market is going up. Bush is on the way out!!"

Hardly the reason the market is going up...come on - no logic in that statement whatsoever.

Market Speculator said...

edwardo...

Those are some INTERESTING charts. However, everyone thought that 2/27 was the start of a big bear market, rational logic from lots of people said it was. Guess what, conventional or RATIONAL thought was WRONG. WHY? Because the market is traded by humans who are naturally flawed and trade with EMOTION. Emotion is not rational thought.

But, if you like a buys chart you've got one. I notice Tim here has nice charts and doesn't over complicate the situation.

Tim great job...whether you are wrong or right you at least take the high road here and it is much appreciated.

Market Speculator

tt said...

Tim, hang in there and whatever you do ..... DON'T JUMP OFF THE TRAIN! She's rounding the bend, picking up steam and headed down the grade (for those not familiar, refer to Wreck of the Old 97) ..... AmuckTrader

P.S. Ignore your detractors and ne'er-do-wells ..... you'll have your day soon and can gloat to your heart's content.

tt said...

"everyone thought that 2/27 was the start of a big bear market" ..... one big fundamental difference with this market event. Recently, the big down days are on very high volume and the up days are on much lighter volume. That's distribution. Quoting Barron's Online, "this month's action has had a few underpinnings that are very different than before (February). This time, volume that has changed hands on days when the market was falling hard was elevated, and that means there was an urgency to get out". Time will tell ..... AmuckTrader

Winace said...

Gary,
Thanks for the advice, and I extend Gary's advice to everyone. If you do not have CONTROL, as in self-discipline, DO NOT attempt trading of that sort! Trade delta neutral, it's safer. I have my way, you have yours, and everyone finds one, if persistant, that works for them. I can make 80% in a day, or lose 20%. Not holding overnight and placing stops immediately when my contingency orders are filled is how I limit my risks. .03 is what I need to break even on the Q's, I do this with T/A, which proves more right then wrong. I also do not use many, if any, technical studies. They are open to misinterpretation and only display what is on the chart in a more colorful manor. A MACD Divergence I typically wont pass on though! The thing is, the more you study and learn, the more you learn to keep it simple. Don't attempt predicting the market, play the action that is unfolding.

dbohntr said...

Good choice on the banner. It got my vote and it looks sharp!

Market Speculator said...

tt - thanks for the info but take a look at 2/27...look at the price movement and how much volume was on the NASDAQ. Now I want you to look at the volume since...

from the close of 2/27 to now the NASDAQ is up 7.96%...yet the volume on that day WAS THE LARGEST BY FAR.

Hey, not arguing we are nearing a correction/bear market just a fools game by trying to call a top. Just the fact that 2/27 was the single LARGEST day of distribution. And since you quoted Barrons, I am almost certain we'll continue higher.

MS

Winace said...

Follow one stock. You'll get to know it immitately. I follow 4. DIA, SPY, IWM, and QQQQ. Today may have been a right shoulder day. Notice the decrease in volume with the increase, just not much interest there. Volume expanded down from the head. I could be wrong.... but..... Well, just a heads (no pun intended) up. By the way Tim. A second retracement on DIA, note the trendline follow and MACD divergence, along with any other study you pick (all diverging). I'll stick to my DIA short (put) recommendation at least until 136.08 is broken.

TOMTHETRADER said...

Tim,

You got some good news late in the afternoon when my short term porp indicator said sell and it usually holds for 2-5 sessions so a short term selloff is in order ...maybe the selloff can gain some legs ..maybe you could post the market timing calls and post them ...I fee like the bears have at least ket the Bulls at bay the month of June after the runaway month of may..Maybe it is time for a rest or a quick run dowm to 1501 ???

TTT

Tom 24/7

Winace said...

Notice it closed (DIA) at it's 78.6% retracement. Have fun!

Winace said...

By the way, excused the mispelling of "intimately" above. (note to Tim: Spell check available?)

Winace said...

Just found it, DIA double tapped resistance to allow SPY to do a full return to it's trendline. All the indices are correlated, when they all yell at once, that's when the gettin is good.

Edwardo said...

There are a number of things one could say by way of response, Market Spec, but for now all I am going to offer is this: Lets see what sort of emotion grips the market when people discover that the steady flow of funds that once buoyed the market are no longer there.

tt said...

MS, I suppose we could debate all night on some of these points. Barron's is definitely a contra-indicator when it comes to their misinformation and opinion. But their statement about high volume down days is based in fact. As for 2/27, that was an aberration ..... an over-reaction to one single event that caused knee-jerk panic selling. This slow evolving correction is very different and based on several factors coming together in a short period of time, not just on one event like 2/27. This time involves no panic, no over-reaction. Look at a chart of the Q's for the past few weeks and notice all the volume spikes corresponding to big down days while the big up days are on much lower volume. That's very telling and, as I said, shows fairly orderly distribution ..... AmuckTrader

Market Speculator said...

tt - i'm not in for an all nighter...so I'll just give you data.

this is for the NASDAQ Composite from Yahoo, not infront of my Bloomberg terminal.

3/1 Volume: 2,710,750,000
3/2 Volume: 2,352,790,000
3/5 Volume: 2,291,680,000

I skipped 2/28 because it was an day in which the market rebounded but the volume on that day was: 2,620,450,000

Two days come close to the volume on 3/1, we'll keep 2/27 out of the picture for now.

4/25 volume: 2,644,120,000
(BTW Nasdaq gained 23.35 pts)
6/07 volume: 2,716,240,000
(Nasdaq lost 45.8 pts)

So now lets see the volume on 2/27 because you can't ignore this type of action.

2/27 volume: 3,037,380,000

Clearly selling came hard and fast in Feb/Mar and was higher than it is now. Just check the data.

william bills said...

Tim,
I aint no hater. I just have a hard time understanding how such a smart guy like yourself keeps fighting the tape for over two years.

Another thing I don't get entirely is the obsession with calling tops on stocks. What about TOL, YHOO, or SBUX. I don't think I've ever seen them, or other stocks hitting 52wk lows mentioned in the last 6 months, but they are clearly not participating with this bull move. Yet, you gotta pick on the leaders.

You did not have to short the NAZ at 5000 to do very well making $ on the short side. I just don't understand waiting until the market give you the signal.

I gotta know. Cause it aint the busted trendlines, or the busted resistance lines. No way, not after two years. There's something else that keeps you down on stocks.

Thanks as always for your replies.

Chad Rich
Durham, NC

beanie11111 said...

ok shorties, on Friday you might get a chance to pounce on the longs as we are immediate term overbought.

Good luck. But we going much higher this year.

Gary said...

Chad,
I've wondered this same thing many times. There will surely come a time to short. I don't know why the permabears just keep doing the same thing over and over with the same result. Picking tops is a losing game. Catching bottoms is much easier. However when we get signs of a bottom the bears completely ignore them and then end up giving back their profits when the market rallies again. We just had typical bottoming action and Tim is again holding onto his shorts letting his profits dwindle away. It's almost like watching a mouse in a maze. Just a little patience is all thats required. There will be another bear market I guarantee it. Shorting is dangerous though so I think I'll wait for it to get here and not jump the gun.

X-er said...

This market is just plain weird. Nothing makes any sense at all. I don't think it's about the charts or about the fundamentals. It's about the psychology of crowds and greed.

I don't think we are going to see the change give any warning in the charts. We might get clues from the news. When markets act like this we start to get certain types of news stories in the MSM. Ones that talk about how to stay the course, invest for the long term and our favorite, "It's different this time".

When we start to see news stories that talk about the market reaching a permanently high plateau then the market shift is coming.

Until then, I'm sitting on the sidelines. It's to frustrating (and a tad to scary).

newequity said...

up big on great cpi,

Gary said...

X-er,
This is the strongest bull market since 99. Notice how quickly the small pull backs are erased. This is the time in the bull market when big money is made fast. Instead of being timid now is the time to be aggressive. For some reason the bears think that the market will all of a sudden crash overnight. That's not the way bull markets end. They roll over slowly. It takes a while to erase extreme optimism. There will be warning signs as the bull comes to an end. As I've stated before there was actually plenty of warning before the 87 crash.

beanie11111 said...

WOW, bears are finito!!!!!!!!!

Game Over.

Thanks for playin.

bear said...

Now, if tomorrow is up too, I'm going to start to worry.

ok, Tim, bring out the worrying cap from the closet. and watch the RUT puts waste away 50%, BTW TTT is 80% long making big bucks

Gary said...

Too many people concentrating on the daily action. I put up a quick little post on my blog on determining market direction.

damarketman said...

Tim, if you happen to cash in those AAPL puts and make more than $200 profit on them, you win. And I you should seeing the profit cushion you still have, so congratulations in advance! Told you I would come back even if I'd lose. I exited my Oct calls this morning for that small profit after being down $2K Wednesday. When options go quickly and strongly against me and a chance to get out at or near breakeven appears, I take it. Will reconsider AAPL long or short on Monday.

I carry a very nice profit in those DIA calls though and I am considering taking the profit today. Sorry for you to say it but the double contra signal Tim/TTT of earlier this week did work but hang on, bears will have their turn soon. Thanks.

Bear: I asked TTT to post his monthly statements for him to prove going from 20K to 231K in less than a year. Still waiting.

damarketman said...

And thanks to you Gary for COT!

cantdrive55 said...

Abby Joseph Cohen wants you packed up and out of town by sundown!
And yes...you should be worried !

robert said...

the commercial traders will not go short until they have all the retail short money ........then the retail trader will go long and the pros will go short .......it's an old story

kapil khanna said...

Tim,
Trade the trend dont anticipate a reversal. Identifying tops in a bull market are a sign to lighten long positions and use those pullbacks to buy not sell.

John said...

Wow, this market is flying. Time to long.

Gary said...

Robert,
Absolutely correct. I don't expect a top until I see the volume completely dry up in the QID's and SDS's. Right now there is still huge volume as the amateurs continue to try and pick a top.

Market Speculator said...

actually, tims head and shoulders pattern for shorting is by far the best pattern. It confirms the downtrend in price...but as far as picking tops for stocks that is a deadman's game.

Philippe said...

Damarketman, you disappoint me. You already sold your AAPL calls? While you still have all this time until October?
In August or September all glitches will have been ironed out of the iPhone and it will become obvious what kind of success it is. Better buy them back fast.

beanie11111 said...

Big Bullami comin this year to take away the shorts. lol

beanie11111 said...

philippe,

AAPL will selloff on the release of the iPhone. Bank on it! It's the biggest 'buy on rumor and sell on news' out there. Believe it!

Philippe said...

"APL will selloff on the release of the iPhone. Bank on it! It's the biggest 'buy on rumor and sell on news' out there. Believe it!"

Hmmm, not so sure about that. I admit that maybe some profit taking will take it lower for a while, but the intrinsic value of Apple will go to 140 this year. You can bank on that, because Stevie still has some things up his sleeve. iPhone is not the end.

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

My index short hedge got stopped out today on the big run up. I am guessing all the index put buyers from last downturn got knocked out also with hefty losses.

damarketman said...

"Hmmm, not so sure about that. I admit that maybe some profit taking will take it lower for a while, but the intrinsic value of Apple will go to 140 this year."

Philipe: You are making my case. This is exactly what I'm counting on. The plan to get in lower for the ride to 140. Could be foolish timing strategy but it's worth a try. And the market is quite overbought now so a re-test of 115 is very possible.

beanie11111 said...

My friends, you really need to be in TSL if and when it breaks $44, the prelude to a monster rally.

beanie11111 said...

I should change my blog name to 'The Slope of Despair'? lol

beanie11111 said...

If the QQQQ doesn't close the gap soon, DA BEARS CAN ALL BEND OVER AND SQUEEZE THEIR ANKLES!

Market Speculator said...

beanie11111 - why the hostility?

Where is the love?

beanie11111 said...

market speculator,

i luv ya man. Love Tim too.

Just havin fun with da bears is all.

:)

beanie11111 said...

Solar stocks leaders STP, FSLR, SPWR, TSL are flyin! They are incredibly cheap stocks. No serious love yet, but i am pretty confident the masses will eventually love them to death.

beanie11111 said...

TSL has a wonderful chart that any bull will drool over. Go long.

Tim Knight said...

"I aint no hater. I just have a hard time understanding how such a smart guy like yourself keeps fighting the tape for over two years."

I suggest you read
Why I am a Bear

Author Ego said...

I didn't think it was possible for nattering nabobs to make insightful comments.

Jon said...

RUT didn't fool me this time. Went long and have had a couple of nice days. Just go with the trend. Just as she slips down (smart money to the doors?) the crowd (new money and doubters) come to the rescue. We'll see if we hit a round of new highs in the S&P, Dow and Russ2 next week.
Ready for the next rocket stage to blast us up again. The only thing that makes sense is to ride the mighty missile.

beanie11111 said...

wow, INTC on fire!!!!!!!!!! 150 million shares traded today!!!!

wow!!!!


With Intel leading the way, it would really be surprising if the market tanks next week. Really surprising.


Good luck.

Abdiel said...

nicely said, I recognize your point of view! Helps me stay grounded! The chart is the chart, make the market work for you!

beanie11111 said...

It was Cisco that kept the market afloat second half of last year. Now it looks like the torch is passed to Intel.

Big tidal wave Bullami comin your way to wash out the shorts?

Stay tuned.....

beanie11111 said...

Nobody likes AKAM more than this guy:

www.beanie11111.blogspot.com

beanie11111 said...

My goodness, solar stocks, their charts, look very very BEAUTIFUL. More than just beautiful, it's GORGEOUS!!!!

SPWR
TSL
FSLR
STP

william bills said...

thank you tim for your reply - i had read that post, but it escaped my memory..........

i would like to address the revenge post first. you say you felt cheated by missing out on the "madness" as i shall characterize it - well, given your disposition, i assume you played the market from late 2000 onward from the short-side. A 50% correction wasn't enough? Personally, i was looking for the 61.8% decline, but it didnt happen - lord did i try even after the july lows to push it down, but it was tough sledding. then the war boom began - this is a war rally - just like in olden times (IMO). so, given that this blog began in 05 - and the post you referred me to, you were still bearish when the war began?

rational - we as a nation are fat, dumb and happy. i will agree with you on that. however, have you noticed? the U.S. market is lagging all other markets. so, there's your justification. still though, our political system, as it tends towards protectionism and socialism is still the freest (politically) of the developed nations. as long we don't overtax those fat dumb and happys' they'll spend it, and create incentives for the masses to finally join them. as an aside, western europe is benefiting greatly from lifting up eastern europe (IMO). thats why i think those fat, dumb, old, and happy markets are rallying.

i can't really address the personality issues - those are your own. but "unconventional", as you put it, was being long this entire time. why? the only retail traders left after the carnage had a predisposition to the bear side - thats what got us here. so, actually i believe, you were being "conventional" in believing the bull couldn't go on.

where we are now - personally, IMO, we still have a long-term potential double top in the S&P. i would need to see a meaningful breakout to around 1800 for me to believe that the market as a whole has broken out. - thats what i don't get. after the war rally broke out, i figured the S&P could make a run toward the old top - here we are - we have yet to eclipse the highs. i say 1800 because 1600 is just euphoria from "leaving it all behind". 1800 - will be meaningful. why? because we could easily drop 20% from there (classic definition of a bear market) and bottom out around here or slightly lower, and be in good shape, technically over the long haul.

what i can't figure out from the archives - and looking back to the 70s, where we broke to new highs only to come back down again several times. this is our first go at the old highs. so from 05 onward - the fact that we couldn't even make a long-term double top is hard for me to believe that it didn't cross your mind.

so, with that in mind, given the back up in rates - i can see us pushing towards 1600 - and still have double top. and we could push down 30-40% if inflation runs away from us. i'm guarded, but i'm bullish. i have to be. and until the market tells me otherwise - i have to play it that way.

to be honest - the way stocks shrugged off the bear in bond land tells me we could get real nutty this summer. you said you were a long term chartist. and we could see a long - wide range that could keep us hemmed in still.

well - thats my take.

thanks tim. you do rock! i gots mad love for ya bro.