Monday, June 25, 2007

Oh, Baby...........

I'm feeling a terrific sense of control over this market (at last). Recently, I've been doing extremely well. Even with intraday trading, I'll buy calls at just about the bottom, sell them at just about the top, then buy puts, and then ride those all the way down. I'm rarely this "in synch" with the market, but it's been a good feeling.


I noticed that Barron's this week features Blackstone's CEO on the cover, pointing out that a massive public offering of the largest private equity partnership clearly signals the peak of these beasts. I couldn't agree more. Oh, let's check in to see how the public's investment in the two-day old Blackstone has been faring.......


Of course, the big news today is that today's bounce from last week's downside action completely evaporated. The Dow surged 120 points higher (and I profitably closed out some calls I bought earlier in the day, then gobbled up a huge number of puts), then the entire gain by blown to smithereens. As you can see from the Russell, the medium-term trendline is now broken.


About half an hour before the close, I sold all my puts (DIA and $RUT), since I felt the selling was - - at least very short term - - overdone. Here's the S&P 500.....


In a broad sense, I think things have changed. It's been horrible awaiting the change, but I think it is finally here. In the broadest view, I think we have witnessed the passing of the Mother of All Double Tops.


This is not to say I'm speculating on outright collapse from here. On the contrary, I think we're probably due for another bounce up. But - as with today's - I may well decide that the bounce has exhausted itself just a couple of hours into a single trading day. My portfolios are devoid of any index positions right now, and consist of carefully-selected equity shorts, equity puts, and a couple of longs (DXD and BBI).

If you're just dying for a bullish stock, AutoDesk (ADSK) looks interesting:


Real estate has been in a freefall for months. I was thinking it would stabilize. But we might be in for some more downside action. Apartment Investments (AIV) has an impressive head and shoulders pattern.


My short in BEAS had a good day. I've put the clearly defined support and resistance horizontal lines here.


Bear Stearns was the "culprit" behind today's fall. I've been mentioning this as a short (or put purchase) for a long time. You can plainly see how, after its fall from its ultimate high, it tried to retrace........but the jig is up, and it's been falling ever since.


Looking at a broader chart, you can see a major, major supporting trendline has been shattered.


Goldman Sachs - employer of the hottie pictured at the top of today's entry - is suffering as well, although not to the same degree. My puts in this are up, and there's plenty of downside left on the stock, tinted here.


Another set of puts that's doing great is JC Penney (JCP). I've illustrated a potential target. Thank you, polyester! Thank you, leisure suits! Thank you, lawnmower care supplies!


Massey (MEE) is sporting a monstrous, gorgeous head and shoulders, and I think the retracement is complete now.


A bunch of people have written me asking to explain some options trading basics. I'll do it on a quieter day when the market is up half a point or something. I've had enough. I'm going for a swim........

45 comments:

b.healed said...

i posted this in the "very quick eerly morning post" comments so if you read it there, i apologize.

so maybe someone could explain COH. it appears that there is an H&S pattern developing since beginning of Feb...but it also looks like in the right shoulder starting mid may that there is an H&S pattern formed within the larger H&S...does this speak of pretty strong downward possibility? How would one target something like this? thanx so much

marxist said...

What is up with the Abbey J. Cohen anger?

Why not congress, or Kudlow or any one of dozen other folks who have gotten way too much press in the last couple of years?

newequity said...

That's a cute picture with your little baby daughter. She resembles you in so many ways.

Tim Knight said...

"What is up with the Abbey J. Cohen anger?"

You're right. Enough is enough. He's actually quite a guy, and I need to respect that.

2sweeties said...

If somebody here is interested to see the correlation between the mythical COT REPORT and the S&P500, the Dow, the Nasdaq, go to:

http://www.timingcharts.com/index.php

I suggest you to draw a S&P500 Day chart for the last 7 years and then check out the COT indicator trendline at the bottom of the webpage.

If you can see an evident correlation between the COT report trend and the market trend, well let us know how, because honestly it seems to be that there is NONE that you can make into an evident, constant or SURE trading rule!

COT REPORT seems much less useful than MACDs, Stochastics, or RSIs, to be clear...

If still you are not convinced about the fact that the COT report is not very useful, read this:
http://real-wealth-society.blogspot.com/2006/01/history-of-commitments-of-traders-cot.html

Good luck to everybody using this great trading tool.

By the way, the market looks ready for a fall, have a look to the perfect H&S pattern on the S&P500.

Funny, the COT said on Friday they were soo bullish...

2sweeties said...

I'm reposting the link to the COT article...

http://real-wealth-society.blogspot.
com/2006/01/history-of-commitments-
of-traders-cot.html

TOMTHETRADER said...

Tim,

I agree with your position and also plan to be in a short 50-100% position soon..only the FED can save this market now and the SLOPE OF HOPE is on the BULLS foot now ...It may turn into a very ugly end of the month

WE are shorting this market.

http://www.ttthedgefund.blogspot.com

Tim Knight said...

Tom (and Beanie........)

Please stop posting URLs to your own blogs. I will leave the comments up for now, but honestly, I'm going to start nuking any URL references that aren't mean to be new and helpful.

For instance, 2sweeties URL links are good information. (Although, per JakeGint's earlier comment, please learn how to use the a href so that people can just click the link).

william bills said...

this is setting up beautifully. bulls have been praying to god almighty for a pull-back - and thank god its here.

1450 should be the first "meaningful" support - i think we trade as low as 1420ish (+or- 20 pts) - and then - its 1600+ by Jan.

so, you should have some fun over the next 6 weeks Tim.


i've been good on this, but i can't let it slide anymore......................

WTF is a self-proclaimed Marxist doing speculating? I find it especially delicious that he's playing the short side. I guess it would be DAMN hard for a marxist to ever contemplate the long side. i'm not even going to get into the redistribution of wealth.........i think the irony is too sweet, but go on speculatin, CHE........i have to ask this, are you acting in your own self-interest by speculating? i wonder how Mao would feel about that. p.s. you know where i can get one of those cool bags cameron diaz has? does the central committee just hand those out?

Anyway, gentlemen. I believe the bears will have the best of the tape this summer, so let'em have it. I hope it gets real bloody. Cause we will need some disheartened fools for the fuel up to 1600+.

Gary said...

I answered 2sweeties post on the smart money tracker if any care to follow the debate.

Tim Knight said...

"WTF is a self-proclaimed Marxist doing speculating?"

I'm sure we're all curious to know (a) who you are talking about and (b) providing a reference for this self-proclamation?

JakeGint said...

There's a guy called "Marxist" posting on this site.

I just assumed it was ironic.

(Redistribution of wealth, etc... like, sometimes at poker games I become a "marxist.")

Desi said...

One wonders how you can speculate that the real estate implosion will work itself out quickly...when Bear Stearns et al are currently trying to jimmy-rig the market to get out of illiquid CDO's based (largely) on bad real estate loans?

This has long and very painful written all over it. Oh...and historically - the '29 implosion was precipitated by a real estate boom and meltdown. Just thought we'd keep things in context. :~)

b.healed said...

i am becoming kind of fascinated with what i am noticing now. even in the MEE example tha was given there is an H&S within and H&S. Look at the left shoulder of the H&S that given in the chart? there is a classic h/s that actually started the one on the larger scale. I wonder how common this is. (don't worry, i won't become a broken record about this...it is just something i am noticing)

b.healed said...

so the nzd/usd has broken past previous resistance. i guess that if the market begins to drop this would be the breaking apart of what has been a great leading indicator.

william bills said...

a - i'm talking about the poster who gives himself/herself the handle "marxist" when posting on this site

b. i just assumed since he/she goes by the handle "marxist" on their blogger profile, that was the self-proclamation.

Tim Knight said...

Oh. OK, good. I thought you were talking about me. There has been the occasional nimrod who calls me "anti-American" or some such thing simply because my assessment of the market is bearish. I was going to start firing with both barrels.

Thanks for the clarification.

yogi said...

Why would anyone think that having a different opinion is anti-American? I thought that was what America is all about. Without shorts there would be no marketplace.

Yogi

beanie11111 said...

HOKU is going to $100!!!!

like ELON did in late 1999.


Good luck.


Don't underestimate the power of solar stocks and the industry in general or you shall sorely regret.

beanie11111 said...

yogi,

Shorts no longer play fair. They propagate false rumors and wish nuclear devastation, and they naked short (if they were beautiful i guess i wouldn't have minded).

Geoff said...

That's the grossest picture I've seen all week haha. I almost puked on my keyboard.

Market Speculator said...

Actually, when shorting came to the media's attention WAY BACK in the day it was considered Anti-American to short.

Not so much now, just has a negative connotation to it. Everyone just assume stocks go up forever.

Day traders must be going nuts with these intraday reversals. Love it.

yogi said...

Beanie,

The way I see it is that the bulls don't play fair. The rules are changed to make it easy for the poor bulls to play. False rumors and stories are propagated by bulls as well but that seems to be fine. Do you read the news and hear some of those stories reporters come up with to justify the moves? It's hilarious. Bears learn how to play with the deck stacked against them. I play fair and don't think I'm cheating anyone going long or short. It's called having a choice and a part of being American.

Yogi

Momo Fader said...

Well Tim, it took a couple of days but we got BX to crack the offer price. That almost always means lower lows yet.

Beanie, I recall ELON from 1999. In fact, I owned it. I still classify that as one of my greatest stock market errors ever. I could have gotten out at $100, but I watched and waited and exited in the $30s. It was still good for a double, but oh my. I guess in hindsight could have done a lot worse. Dunno why you want to compare anything to that stock, since if you look at the chart it was an unmitigated disaster from 1999 to 2003.

HOKU is another scam. I'm not saying it can't go higher, or even to your outrageous target of $100. How many times have they changed their business focus since their IPO? Did you know they IPOed as a fuel cell company? LOL Solar stocks are just a load of hype, and they'll get kicked in the teeth one day soon. They should be underestimated, or otherwise you won't have the proper perspective to take gains when they turn on you.

myloveforflyrunsdeep said...
This comment has been removed by the author.
prudentspeculatin said...

Let me guess what happended.......you got long this morning and rode it to the top......then shorted at the top and rode it back down for a huge profit......you are pure compedy gold...

Thomas said...

I don't like to get personal Tim, but...Jesus Christ, that's an ugly baby!

1. Beanie1111--for the second time; you are an idiot. You'd be canned on the spot at any long or hedge shop for uttering aloud your silliness.

2. Tim being "in synch" with the market is a great example of how dedicated shorts make money. They protect themselves when the market is not trending their way (and I don't mean bull markets), beef up short positions on the way down, and trade the waves. Pikers take note. This is how the pro's do it. --Stealthelephant

JakeGint said...

Momo said:

Beanie, I recall ELON from 1999. In fact, I owned it. I still classify that as one of my greatest stock market errors ever. I could have gotten out at $100, but I watched and waited and exited in the $30s. It was still good for a double, but oh my.

Too funny, I told Beanz the same exact story yesterday on his own blog. I was in ELON in single digits, held it all the way through $113 or so (I was young, forgive me), and then watched it crater all the way back down... and I didn't get out until the mid-20's. I remember thinking I couldn't believe what I was seeing...

Talk about a life lesson.

PS-- I was in HOKU at 4.50, and out at 8.25.... another life lesson.

Tim Knight said...

"I don't like to get personal Tim, but...Jesus Christ, that's an ugly baby! "

Ummm, just in case anyone thinks that's actually what one of my children looks like......it's not. It's, errrr, a composite.

Thanks to my wife, my children are beautiful. And AJC and I have never been close enough to produce the dreadful offspring you perhaps thinks exists based on that photo.

Tim Knight said...

"Let me guess what happended.......you got long this morning and rode it to the top......then shorted at the top and rode it back down for a huge profit......you are pure compedy gold..."

Wow. OK. Let me reply in a way you can comprehend, using your apparent style of communication:

no that is not whut happended.... i have not ben buying calls... it has just been puts.... i am not a compedian and am just tryin to trade. a'ight?

AssetStrategists said...

Tim,

You are correct, Not a Comedian--PLEASE enough of the EBONICS!

JakeGint said...

Man, I thought the BX Homunculus was ugly... but that thing on the granite countertop takes the cake.

Boy, you better hope your wife isn't logging on to this thing.

Momo Fader said...

So Jake, you're telling me that Beanie was just using your story as grist for his mill? Pick a better example, if you're gonna tout that HOKU trash B.

I was so much younger then myself Jake. I was also pulling down a 6-figure salary for the first time, in a decent tech job in the Bay Area. To me it was all funny money. ELON marks the change of an era for me. At 100 I was the salaryman, thinking software engineering career for life. At 10, I had been laid off and seen enough of the world to conclude that life is too short, and I've been pulling my dime out of the markets pretty much ever since. Still haven't gotten back to 6-figure salary yet. But most of this time has been treated as an apprenticeship. Mr. Market is a harsh master.

And actually I don't think that ELON is a terrible company. They were just far too overvalued in a crazy overvalued market. Company is still around, which is more than you can say of most that went through such a move. LNUX is too. LOL

cantdrive55 said...

My wife just looked at the photo of the morph-baby with the superimposed AJC head (I guess).
She finds it a little disturbing how your holding/touching the kid.Hope thats not your own kids body with AJC's head.You want to remove something besides this comment...start with that photo.It defenitly "AIN'T winning you any points.

johndeere said...

If that is in fact a real picture behind that photoshop face, I suggest you do not hold the crotch of your child like that. Very disturbing image.

Tim Knight said...

Ummm, fellas, something tells me neither of you have kids or have even dealt with kids.

Holding an infant at the "crotch" as you put it, with two inches of cloth diaper and fabric between you and any naughty bits you are obsessed with, really isn't a problem. Particularly if you are trying to provide the child good balance.

Sheesh.

Leisa said...

I'm a Mom of two grown kids. I'm not sure how else one holds a baby in that position perched on a counter it appears) safely any other way than the way that he is doing it. Heck, I'm glad that he is a confident and involved enough father to hold a child that confidently. I would hold my children exactly the same way to keep that wriggling (and amply padded) butt from slipping off and causing an egregious injury.

HOwever, I must admit that it is disturbing to see AJC's head on that child!

AssetStrategists said...

FPL Rocks to the downside!

Tim Knight said...

Leisa,

Thanks for chiming it.

It's funny about the web - - even when one has virtually no information on a person, it's not that hard to divine conclusions about them if one reads between the lines.

I am quite sure, for instance, that cantdrive55 (who is, apparently, the nemesis du jour......) has no "wife" (unless this is the moniker he elects to ascribe to his right hand), let alone any legitimate children.

In any event, I've got my problems, but pedophilia ain't one of them.

AssetStrategists said...

SPY is dropping big time after hours. Should be an interesting open tomorrow. Can't wait to hear what you have in store for the blog today!

Momo Fader said...

Anyone know why futures dropped down another level after the bell? Bad news from someone? Surely it wasn't ORCL? Who else reported?

johndeere said...

Bears in control. Every pop is getting hit hard with sell volume. Tim is finally on the right side of the trade.

JakeGint said...

Mo --

No Beanie had made the same post on his blog that he did here, and I replied similarly to you.

My friend, we should have a beer sometime. I've got some stories I could trade with you about what a crazy ass time that was. I was on the IB side of it, and man, it was farking barking nutz.

Some perspective: I think I could have called the top of the market when Benchmark Capital raised a billion plus fund not for future deals, but just to REINVEST in "C & D rounds" of deals they already had in their portfolio that they didn't want to "sully" their original funds' returns (with what would be by definition later round, lesser returning, second or third investments in the same company... pooh pooh!).

What did Benchmark care? People were throwing money at them from passing buses on the 101.

Farking.... barking... nutz.

Remember those days Tim?

JakeGint said...

Gotta side with Tim on this one phreaks. Baby's at that age are pretty goggle headed. It's like trying to hold a heavy noggined Dapper Dan doll in place for a photo. Never comfortable.

JakeGint said...

Lest my confirmation be mistaken for approbation, I still stick to my first comment about any normal wife getting all slitty eyed at the sight of one of her babes vandalized for public consumption.

No matter how amusing.

_______________________

With regard to the S&P futures?

Whatchall you Willises talkin' about?