Monday, June 18, 2007

Post Number D

Well, this is it.......my 500th post to this blog. I would have hoped for some kind of momentous occasion (like a corresponding 500 point drop on the Dow), but it was not to be. I never thought I'd be writing this blog for this long considering its humble beginnings as little more than a personal diary back in March 2005.

For anyone who has read my blog even a little bit, you know I'm a relatively incurable bearish sort. As such, the past couple of years have been rough sledding for me and other bears. Although there have been glimpses of hope (such as the early summer of 2006 or the brief plunge in February of this year), the market has, since October 2002, been owned and controlled by the bulls. Period.

Markets weren't always this way. Looking at over 80 years of the Dow in the 20th century, you can see a pretty even distribution of bullish years and bearish years (the latter shown in red).


But the past quarter century has been quite different. Offer any reason you like - globalization, mass credit, the benefits of computers - it hardly matters. The fact is that a down year in the stock market has become a rare exception.


And of course, the king of all bull markets, China, shows no sign of slowing down. The hiccup in February is becoming a speck in the history of this market. Except for a small ETF position now and then in some related Asian market, I stay far, far away from China (either bullish or bearish). It's a bubble that no one knows where or when will burst. A true bear market could be years off.


Closer to home, the Dow inched lower today, and a potential double top remains in place. Of course, one strong day could pierce that possibility instantly.


Most U.S. equity markets have a strong resemblance in that, over the past couple of months, volatility has increased (judging from the technical indicators), even as prices have plateaued into relative quiet. Here's the S&P 500......


And a very similar reading from the Amex Major Market Index.......


Today was a pretty hum-drum, do-nothing day, but there were pockets of interesting stuff. ALB, a short of mine, cut beneath its neckline nicely.


BTJ, another short, rose some. But I'm still feeling good about this chart.


Another short, Constellation Group (CEG), eased lower, and the reversal in trend seems convincing.


Housing stocks seem to be rather stuck, although they pushed down somewhat today. ESS is one of them, shown below. Many housing stocks bear a resemblance of this head and shoulders (ish) pattern, but the firmness seems peculiar.


I don't think I've mentioned Entergy (ETR) in a while. I entered a new short position on this today.


JC Penney (JCP), on which I own puts, also eased beneath its neckline (finally!) today.


I toyed with the idea of making my 500th post my farewell to this blog, but I figured that would be a bit too Nixonian. Plus, I do like writing this blog, for the most part. It's an honor.

The main reason I keep writing it is because thousands of people show up every day (for whatever reason) to read what I've got to say. And we've got somewhat of a culture built up around this place. So I might as well keep at it. And, believe me, I'm grateful for your interest and readership.

And, after all, every dog has his day. Stay tuned.

41 comments:

newequity said...

Jon- "My goal is 1% per week appreciation, with a 50% total value appreciation, annually."

If you do this for 10 years you will have 57.6x your investment. Have fun dreaming Jon.

z-stock said...

Congrats Tim,on 500
The AGG has replaced USO as my new short the market signal....and hopefully the market starts using AGG, too....or..... last week, was just a one time fluke....
I see AGG (iShare Lehman Aggregate Bond Fund (AGG) = total United States investment grade bond market)
at 98.4 = 200 day test...or 98.75...(gap test)...it’s time for negative..market action...
z-stock

marxist said...

Happy 500 Tim.
Nice to see that today comments so far are constructive. Just some nice trading ideas.

Wish I had one to add to the mix. I will say that I have been making money lately with SRS. An etf that shorts the reits. It is a very volatile thing. So be warned.

robert said...

congratulations tim ! good show ........i visit your blog daily ...you're a good teacher ...i learn ...yes, this market is very difficult to take down ...but my gut feeling is that it will come down in trickles , then , get out of the way ......like humpty dumpty ...all the kings horses and all the king's men ,,,etc ....thanks for your sharing

Thomas said...

Another chance to go after Yahoo; the news that Semel resigned gave the stock a pop. It will have to break the $32.24 close made in July 2006 before the massive gap down. The stock has not closed it. As it attempts to do so this time, TA-traders may want to short as it closes in on $32 as the probability is higher that it fails on this stiff line of resistance. Speaking of Nixon, if you are in NYC anytime soon Tim, go see Frost/Nixon. Langella is great as playing our 37th President.

Abdiel said...

congratulations! I am a new reader, and enjoy your comments regarding the market. Your commitment to your readers does not go unnoticed! Keep it up!

AC

2sweeties said...

Thanks Tim, for every day there is something to learn on your site and not only about stocks...

Great videos, great humour, some good lessons, all for free.

You're great.

dbohntr said...

Tim,
I liked the message in the video. 500, I know it's ALOT of work, thanks.
GILD is looking good with a nice engulfing candle stick right at the top of its bear flag.
I thought NYX broke nicely today.

Market Speculator said...

I am sure Beanie11111 will be waiting to pounce on the Dow going higher by 500 pts.

Congrats Tim on the 500th post

"Incureble Bear"

newequity said...

Tim,I love the video. 500 posts, I know it's time consuming work, thanks. Please don't take my bullish headed arrogance to heart.

TOMTHETRADER said...

Tim ,

All our best to you and yours for a great run and here's to 5000 more !!! Thanks for all you do for the average and professional investor !!!

Tom

TTT

Tim Knight said...

I am pleased and a little surprised people like the video so much. I think Nixon is one of America's great figures, and a human tragedy as well. I'm glad people are able to listen to the words without obsessing over the man's flaws.

As for NewEquity: "Please don't take my bullish headed arrogance to heart." - not at all.......you have been a good sport, and in doing so I have mellowed as well!

b.healed said...

little help with aapl...is there still hope on it dropping? hehehehe

HOORRAY! 500! *singing some random song in hopes to be convincingly congratulatory*

Edwardo said...

U.S. share markets may be up more years than not since The Gipper was Prez, but in real terms, U.S equities are losers since the 2000 top. This is what investors need to know; namely that one's money ought to be deployed elsewhere in other assets. The next shoe to drop will be when the U.S. market starts to under perform nominally.

That process will occur starting this year. The rest is just noise. By the way take a look at BTU and USU for shorts, they both look promising.

toober said...

Looking forward to the next 500 with anticipation. Best to you and yours.

b.healed said...

the video was fascinating to me. considering that watergate occured 7 years before I was born, i don't know much about it. but this was the first time have had the opportunity to see Nixon in a potentially positive light. the statement at the end is fascinating regarding his legacy remaining ambiguous. what did ever happen to him? can you imagine having a legacy that nobody knows about? or the only legacy that is known is a negative one at that. this will probably provoke some thought in me for quite some time

Winace said...

And from me, congratulations Tim. Although I just became an avid reader of your blog I feel as if it touches home. I am coming to the realization that I prefer winning on the bearish side also. For tomorrow I hope for a celebratory drop in the market. DIA, IWM, and SPY all show bearish engulfing patterns. Q's have a doji and hanging man. If it goes that way, I'll buy ya lunch!

canoegap said...

Great blog.

Always thought Nixon caught a bad hand and played it badly.

Winace said...

Newequity,
Don't discourage Jon. If you can't do it, fine. Jon sounds as if he has the control to choose his battles wisely. Last week I tripled my account. A good week, yes. That would take me 2 1/2 months to make a million at that rate. Unlikely, I admit. I also admit I may know squat compared to Jon, or yourself even. But why discourage others for your own inadequacies or confidence. While I'm at it, can't recall who made the comment to join the younger traders and buy, buy, buy. Man, what's up with that? Sounds like an attitude that may see an adjustment. Listen to any idea or suggestion and discard what does not fit your trading style. The "old" traders are probably the ones holding your money.

yuri said...

I had to laugh today to hear some analyst calling for DOW 15,000 by the end of the year. And as bullish as this market seems right now (it is up 25% over the last 12 months), we all know that it can flip on a dime.
Tim, if you want to see an even more perfect double top forming, check out DIA. We also had a bearish engulfing candle on it today. It is also backing down after kissing the underside of the trendline it broke a week ago Thursday - that is a triple whammy, and a very low risk entry point. Unfortunately, there is solid support only a point and a half below. That being said, it is about 150 points in a mini-DOW futures contract, and that makes some serious money, with alot less slippage. With the VIX so high, puts are getting expensive, and the spreads are widening.

Gary said...

winace,
I surely hope you were kidding when you said you tripled your account last week. If you in fact did then you are using way to much leverage. If you keep this up I guarantee you will blow out your account. Please tell me you were kidding. I hate to see people ruin their financial futures.

Doji Girl said...

Congrats on the 500 mark. Please don't stop. I read you every day and I have no idea what I'd do with my free time if you ever stop posting.

Seriously, thanks for the grins, the great trade ideas and the overall insight you provide.

Myles said...

I am a huge fan of the blog. I know, this market is giving the bears a fork in eye. But for what its worth, what goes up must come down, we just don't know when damn it!

beanie11111 said...

oh no, i sure hope permabears don't get discouraged, for that could mean a deep correction forthcomin.

Please stay positive and strong.

:)

bear said...

nice long article about apple and its ceo and the possibility/probability (like greenspan said on feb 26) of google buying apple.

http://nymag.com/news/features/33524/

AssetStrategists said...

Tim,

Congrats on 500! That is an accomplishment. Especially in light of all the grief you get in the comments section.

I enjoy dissecting your charts to see if they make sense to me. Usually they do but not alway. Occasionally, I trade the stocks you chart but only when I can make the trade my own.

Please keep up the good work!

Chris

AssetStrategists said...

NewEquity,

I hope to do at least as well as Jon plans to. I believe I am fairly conservative with my own risk management and have increase my Roth by more than 10% in the past 2.5 weeks with only 30% in the market at any given time. My most recent winners were MRO, CFC, and UIC. All of them hit their trailing stops Monday...Those stops were all set using TA.

Jon,

Keep turning your dreams into reality!

Chris

Goldenpiggie said...

I read your blog because you are a funny short sellers. Short sellers tend to be dour, serious sorts, but you are refreshingly different. Please keep it up, and most of all, keep up the jevenile taunts of the bulls when the market is down. The taunts are the best -- the more infantile they are, the better!

Kevin Fickle said...

LISTEN CLOSELY:


In a case dating back to the dot-com bubble, the high court ruled Monday that antitrust suits would pose a "substantial risk" to the securities market....

"If this case had gone the other way, the resulting uncertainty and increased risk would have had negative and wide-ranging consequences for underwriters and issuers, increasing costs to investors and roiling the capital markets, to the detriment of the whole economy,"

Intersting most big financial institutions....almost fully-vested using leverage?

Market Speculator said...

"Intersting most big financial institutions....almost fully-vested using leverage? "

This is nothing new...big boys have always used leverage.

Alok said...

Congratulation Tim on this milestone. a very interesting video, thanks!

Rafah said...

Congratulations Tim
your blog is a daily check for me,although I am not a Bear or Bull trader , but on the days I believe the market should go down , your blog is the right one to read , keep on the good job , we love your comments , and I would like to concgratulate you on your 1000th blog in future .

Pierce said...

And congratulations in the future for correctly predicting the great bear market of 2010-2012....

newequity said...

winace said:" Don't discourage Jon. If you can't do it, fine. Jon sounds as if he has the control to choose his battles wisely. Last week I tripled my account."

You only tripled your account last week with little risk. WTF are you talking about. There is no way you tripled a six figure account without taking on huge leverage and risk. Since this is the internet, I quardrupled my account in three days last year. I highly doubt you are telling the truth and if you are then you are an idiot, Sorry.

Gary said...

you might get lucky and run through the dynamite factory with an open flame but you would still be an idiot. If you tripled your account in 3 days you're playing with fire and you WILL get burned. Its funny how human nature works. I guarantee Winace won't heed a word we say because he scored big. So greed jumps on you and you think you are smarter than the market and you keep pushing your luck until the market decides to teach you a very costly lesson. Casino's operate on this very same principle. It's why they don't care if you are winning because they know that very few people can walk out the door while they're up. Consequently they end up giving it all back and then some. Unless Winace does something that very few people can do and by that I mean immediately following sound position sizing rules he will most probably blow out his account soon. This goes for Jon too. These are typical novice mistakes. They are looking into the future and counting their profits instead of worring about their losses. If you control the losses the profits will take care of themselves.

wincity said...

Congrats to your post #500, Tim.

Is it possible to move the link to comments to the top of the post?

Thanks.

On the Road said...

The Sport of Kings

When a great horse appears on the scene - like a great bull market -
They start adding weight to his back as they have started to weigh down the bull with bad news - can you imagine the lies about housing - calling inflation at bay, after taking out food and energy - food and energy is how we live...when EPS was faltering - they changed the talk to Forward Earnings per share - and when earnings were burdened - they changed it to ebida - when a company should have always been rated on cash flow
adjusted by loans, shareholder plusses and minuses. Can you imagine a clean cashflow per share
how simple.....I know now that
when you begin to tire - we have finally reached the top - a few more bad announcements and the weight added to the saddle is going to kill the horse (bull)

Tim D or no D you are one of my prominent barometers - I check in
however the market is going -

Thanks for your enormous contribution to my brain.

Leisa said...

Toshi--no swan songs, please~

Keep writing--Your "schadenfreude" value to perma bulls is priceless and you would not want to rob them of that glee.

I appreciate seeing the opposing view which you always present with intelligence, humor and sincerity.

Deric O. Cadora said...

Tim, I feel your pain. I blogged bearishly for two years into early 2007. It was rough-going, and I only stopped because I took a post on Wall Street, which for compliance reasons prohibits me from blogging about the markets. All I can say is I miss writing about what I see immensely. Given your keen and humorous writing style, I'm sure you would miss it, too. I hope you stick around.

Kevin Fickle said...

A few days before leaving office in 1929, Coolidge cheerily observed that things were "absolutely sound" and that stocks were "cheap at current prices".

JakeGint said...

Fickle... market didn't crash for more than ten months later... what's your point?

Don't mess w. mah boy Coolidge. He beats Nixon by a mile.

Hoover was the farking idiot.