Friday, June 08, 2007

Nice

After Thursday's big drop, I speculated that today we would see a short, sharp drop followed by a big rally. Well, even I can get it right every now and then. That is precisely, 100%, what happened.

I think there's a decent chance, however, that we may have moved into a new phase of this market. Maybe that is just wishful thinking. But I don't think today's big 150+ upside move on the Dow is the beginning of yet another assault onto new highs. Instead, I think it's just a pullback in what seems like could be a staircase down. We'll see.


One of the main reasons I thought we'd see a big move up today is because of the many instances of supporting trendlines around the closing levels of yesterday. This graph of the S&P 500 shows how the upper trendline of the (now broken) channel represented meaningful support for the index. Sure enough - boing! - it bounced right off of it. But I really think we're going to re-enter channel-land next week.


I tripped across Checkfree (CKFR) and got into a short position there. This is a honkin' big head and shoulders pattern, although as yet incomplete.


Goldman Sachs represents the kind of stock on which I'd like to own puts once the relief rally peters out (which could probably be about 30 minutes into Monday's session). I closed out the vast majority of my positions and am sitting on a ton of cash right now, waiting to re-enter shorts and puts at good levels.


NutriSystem is definitely on my list, too. This seems like a great bearish play, now that it has pushed its way up to formidable resistance.


I took the plunge with ONT today, buying a large block of shares. It's my only long. But this is a sensational-looking graph, particularly with the explosion in volume, and it has fallen to a price level that is reasonable compared to where it was at a couple of weeks ago.


Whirlpool (WHR) did what so many large stocks did this week........fell hard, and then recovered to a neckline (more or less) today. These are great set-ups.


Rock on. See you next week.

27 comments:

TOMTHETRADER said...

Tim ,

It would be interesting to know the % of losses you have endured to date ...nice to have a dowm week now and then but the 5 years of 90% up has had to have a dramatic effect on P/L. Buying PUTS on the leading stock in the world markets the past 5 years must mean you anticipate (as always) a bear market ..GS has constantl delivered earnings far exceeeding the expectations ..so it is different this tim...I think you will be shorting AAPL GOOG RIMMM soon or are they already in your short arsenal ...There may be a change of character if the FED doesn't come to the rescue but with the full faith and support of said governments , I think all you can get is sideways for now.

TTT

Bob said...

"But I really think we're going to re-enter channel-land next week."

Me too.. The chart you put up from June 06 on SPX to now says ALOT...

TTT- This government, PPT thing propping up the markets seems far fetched and paranoid to me. The Fed rate futures and what is happening around world tells us they will not cut...

Gary said...

They may not cut but they certainly won't raise. They've been talking tough on inflation for a year now and as gold has come back up to $690 and oil back to $67 what have they done besides talk. Not a damn thing. Raise rates right before elections and put more pressure on the real estate speculators that are now in trouble. I don't think so. They are going to try and pressure commodity prices down. That will give them cover to cut rates if the housing situation continues to slide.

Humble1 said...

I show small double top breakdowns on several of the indices. the DOW almost hit it's downside target before bouncing. Volume does not confirm a reversal.

Tim Knight said...

"I think you will be shorting AAPL GOOG RIMMM soon or are they already in your short arsenal"

I can speak for myself, thanks.

And, no, I wouldn't be shorting those, except maybe for AAPL near the iPhone intro only because there is no way the hype can match the speculation.

As for GOOG, I explicitly mentioned it as a buy earlier in the week.

tradertime said...

Tim what happened to your AKAM puts? It went up 8% on friday. Did you cover or are you going to continue to lose money (which you appear to be pretty good at doing). You thought that no one would notice but you have a serious problem of omitting the losers and only posting about your winning trades

beanie11111 said...

Thursday may turn out to be the MOTHER of all bear traps.

The Case For A Huge SnapBackityBack Rally:
www.beanie11111.blogspot.com

bearboydog said...

Mr TTT,
Since I cannot post a comment on your site maybe you could post proof that your hedge fund is up 10x this year. I believe you are a fraud and unless you post proof I am reporting you to the SEC. You are nothing more than a scam artist as far as I can see. You posted:

"The TTT HEDGE FUND has just finished it's first year and look forward to a new MEMBERSHIP promotion starting tomorrow !!!!

WE are up 10x this year and now want to get you infor the rest of 07 and 2008. There is a Bear Market coming ..but will there be one more run to new highs ????

New SUMMER PROMO begins tomorrow where you can get 18 months of the TTT HEDGE FUND 24/service for one low price ...check us tomorrow as we see if the Bear is here !!!!

Tom

24/7"

You are unable to punctuate your sentences correctly and I suggest you invest in some grammar books before you start your next scam.

Now I suggest you stop posting here at Tim's blog as you add nothing to any conversation that takes place here. You dodge all questions in hopes that a few suckers will sign up and send you money through paypal by posting ads on tim's wonderful legit site. You really ruin the comments section everyday with your BS and never back up anything you say with facts.

Bearboy

Tim Knight said...

""Tim what happened to your AKAM puts? It went up 8% on friday. Did you cover or are you going to continue to lose money (which you appear to be pretty good at doing). You thought that no one would notice but you have a serious problem of omitting the losers and only posting about your winning trades"

To respond:

(a) I covered my AKAM first thing Friday morning; I made a profit, and I was glad to have gotten out since the stock soared. I didn't have puts. I was short the stock.

(b) I actually omit commenting on a lot of ideas - both good and bad. For example, I suggested shorting BTJ earlier in the week, and it fell something like 8% on Friday alone.

step_investments said...

Hey Tim,

I came across these 2 that you might want to take a look at for a minute: PEG & IMCL. They look similar to your WHR example which you stated as being a great set-up. Someone else mentioned IMCL to me so I can't take the credit of finding it on my own. Anyways, have a good weekend.

Stephen

Gary said...

For all the bears. It wouldn't hurt to take a look at the article on shorting stocks that I posted today on my blog.
http://garyscommonsense.blogspot.com/

Holdem or Foldem said...

HMMM

The short theory is very interesting, however, I can't buy it. There is a up market there, there is a down market there. Actually cot showed more short in changed short position. I would talk reasonably.

Gary said...

Holdem,
You need historical data to read the COT reports. Just because the commercials increased their short position a bit doesn't mean the report is signaling a sell. The commercials are regression to the mean traders and will increase their hedging as the market goes up. It becomes significant when the net short level reaches an extreme level. Right now they are very, very bullish even after increasing shorts this week.

b.healed said...

Holdem or foldem said, "The short theory is very interesting, however, I can't buy it."
You are not supposed to "buy" it, you are supposed to "short" it....hehehehe

Holdem or Foldem said...

I believe I know cot data very long time agao and it was acurate but now it lost much more credit for some reason (simply for manipulation). You can check EURO, JPY, .. totally very different. In my opinion, it is better not to trade with COT even in mid term. Now I only use one indicator, only one, no more. Others are fake for me.

Gary said...

Holdem,
Actually it has gotten better at signalling intermediate moves with smaller drawdowns than in prior years. I guess it's just to much to ask some people to have an open mind and be willing to look at the market in a different light. You may be right and we continue down from here and if so congratulations. However if we recover and head higher again will you continue to argue with Mr. market as he takes more of your money away? You've been doing it for quite some time now. This has got to get expensive.

Mike said...

EXPE not a bad lookin short chart

Market Speculator said...

unless you can day trade EXPE I would not short this, still enough fire power around the 50dma for a quick run back above the 50dma.

I would definitely keep it on your short radar...if it rallies to is 50dma on light vol. it would warrant a test short.

Market Speculator said...

I just went over to tomthetrader's blog...just one giant pumping station for this so called hedge fund picks.

You can't post messages...

But, Tom, I wish you all the best.

On the Road said...

A few things come to mind at this point of the market:

1. It was interesting that Sam Zell
(a lead point man) cashed in at a very high level of his nvestments.

2. ETF's are the new (supposed) form of safety in the markets - and money is pouring in to them causing all the stocks therein to rise (one only hast to look at XHB (housing ETF) to see the lack of reality - it is now starting to
move toward 29 (from 35) where it belongs)

3. I have spent my lifetime keeping my clients from making bad investments in small businesses (non market) It has always amazed me (expecting them to go out of business) how long it took them to
(painfully) fail.

4. The private investment firms are beginning to go public - a form of cashing out for the owners
they want large cash amounts out of their investments (taking companies private - probably will be looked back at ...as a form of a baloon)

What I feel that your position, Tim, forward - we know that being right - but too early - is a losing game - but you are right Tim - so - I'm with you and reading all you project carefully.

It's coming - I believe this will be one of the biggest "leaving the small investor holding the bag (ETF's")

Thanks again for everything and helping me keep my head straight.

peachin

bh_prop said...

Humble1-

I have had intermittent problems accessing your blog, says I need invitation. Could you please advise how to join.

Sorry all to use this forum for this request

JakeGint said...

Izzat the one armed drummer from Def Lepperd? (sp?)

Always wondered what happened to him(?).

Appears he's (?) had a sex change operation to go with the original amputation.

AssetStrategists said...

Tim,

I can't remember if you have looked at TNH (Terra Nitrogren Co LP) as a parabolic stock that has shown some weakness in the past month.

I would be careful shorting it as it has excellent financials and other fertilizer companies have been doing well also. Summer is also when farmers buy tons of fertilizer so summer could be very bullish.

On the other hand, its industry group - chemical manufacturing - is losing some strength and if the market falls, it could fall long and hard because of its meteoric rise...

It is up a bunch today...

Chris

newequity said...

COT-damn this market is on fire. Bulls back at the helms and ready to explode back to new highs, hopefully of course.

Tim Knight said...

TNH is sort of like CROX - one of those stocks I've learned to run away from, shrieking like a little girl. I don't go near the stuff.

On the Road said...

I don’t want to bang on about one book too much, but Ken Fisher’s book The Only Three Questions That Count: Investing by Knowing What Others Don’t, is worth exploring in detail.

He has an excellent chapter on bear markets. Here are eight key points to come out of it:

1. There has never been a bubble widely called a bubble before it burst

2. Most bear markets last about 18 months

3. One-third of declines in a bear market occur in the first two-thirds of it. That means the steepest falls come in the last part. This is important because, as Fisher notes, most bull markets roll over rather than end sharply

4. Bear markets often end in V or W bottoms

5. Bear markets decline between 1.25 per cent to 3 per cent (or around 2 per cent on average) per month. So declines bigger than that could indicate it is a bull market correction

6. A correction defies the 2 per cent rule and is characterised by a 10 to 20 per cent short, sharp drop, which comes from nowhere and is supported by a ‘fantastic bearish story.’

7. If you’re bearing more than 3 to 4 times in two decades you’re overdoing it!

8. A fellow Forbes columnist Joe Goodman said investors should wait 3 months after you suspect a bull market peak has happened before selling

This was an online site discussing
the subject - however the real rights go to Ken Fisher

peachin

Winace said...

Take a look at todays retracement to resistance on DIA