Monday, June 25, 2007


Just a very quick early morning post to say that I've closed out all my index puts and have (on a smaller scale) gone long indexes for the time being. I think a bounce is in store, although whether the bounce lasts only an hour or two today or for a number of days in a row remains to be seen. Suffice it to say I'm pulling in my bear paws on indexes, although carefully-selected bearish stock positions remain in place with good stops. (Update: I actually 20 RUZ-GD at $25, sold them at $27.50 about an hour later, and went heavily short.......)

I have the good fortune of being related to an employee of Pixar, and as such, I get to see (with my family) their films in advance. Yesterday we went to the Pixar theatre and got to see Ratatouille.

Believe me, it is their best yet. Even better than The Incredibles. If PIXR was still public (as opposed to being part of DIS), I'd say buy it. Even if you don't have kids, it's a fantastic film.

And thus ends today's movies section!


Brett said...

Thanks for the movie review, Tim.

ONT is coiling up really tight in its symmetrical triangle. A break on volume today should send it soaring past $4 to new highs.

JakeGint said...

Well, good. I was figuring I was going to have to take the kids to it anyway, and I feared it looked, to tell the truth, "unappetizing."

If those Pixar guys (and I loved the Incredibles, btw) can make a rat being a chef into a passable movie... well, they really ARE geniuses.

Tim Knight said...

From what my brother-in-law (the animator) told me, the "yuck" factor was definitely and issue. But it's not a gross-out movie at all, and they do a brilliant job making the characters engaging.

I remember well the Oh-My-God feeling I had when I first saw Toy Story in the theater, and this comes close. You'll's astonishing.

JakeGint said...

Wow, now I'm really curious. I thought for sure, this was Pixar's first strike out.... (Cars was kind of a "balk," IMHO).

Tim Knight said...

I'll also mention that the new short they have, "Lifted" is freakin' hilarious; you will fall off your seat laughing.

beanie11111 said...

Solar stocks on fire yet again!!!!

Knockin the teeth out of the shorts who don't believe!


But HOKU is flyin like there's no tomorrow!!!!!!!!!!

HOKU could run like ELON did in the late 1990's. To $100, that is.

Solar stocks will lead the next gigantic bull market. Believe it!

Kevin Fickle said...

Funny...I was just looking at FSLR (talk about parabolic) time to short pretty soon here? Granted it's a GREAT product...but have we not learned our lessons with (over)speculation? I think most shorts are sitting on the sidelines like myself waiting for the drop back down to earth (or 60 or so). I'm watching the intra day action very carefully.

JakeGint said...

Hoku's the one to short... It was 4.50 a month ago.... I almost dumped it there... now, a couple of projects sound great, etc.. but they have a lot of rejiggering to do as well. That costs money.

Kevin Fickle said...
This comment has been removed by the author.
Gary said...

I'll answer your question from the last thread here. No the COT reports don't have anything to do with charts. That being said I do use some TA to get into and out of my positions when I get a long or short signal from the COT.
Here is the reason I watch the reports. First off the anybody who has a certain size in the futures markets have to report those poitions by law. So unless they can just afford to throw around a couple billion dollars to try and distract us I beilieve the positions give a very good indication of what the big players are doing with their money. These big players control about 75-80% of the money in the market. So it makes sense to me that if they have a net long position the market will tend to rise or vice versa if they have a net short position it will tend to fall. Not only must I have to be able to test a system and get a positive expectancy but it has to make sense to me. The COT makes sense and I have tested it and it does give a positive expectancy for the 21 years of data that are avialable.

JakeGint said...

Man, the volume is low today... for all the movement in price!

Tim Knight said...

For the record, I held on to those calls (for a $2,500 profit) for maybe an hour. And I bought a veritable buttload of puts on the $RUT and the DIA afterwards. So far, so good. The 120 point gain on the Dow is now in the red. Sweet.

newequity said...

Tim went long this morning, time to short?

bmbull said...


I know why you watch it - I'm familiar with the concept. I read about where the traders are positioned on the commodities all the time. I just think that it's another technical indicator, that's all. At the very least, a sentiment indicator of a certain group of investors.

As for today's market, a rather nasty reversal off the mornings highs, and new lows in the REITs.

newequity said...

Man the bears are out in full force. Will buy some futures before the close for the bounce tomorrow.

JakeGint said...

Playing with matches... someone gonna get burned...

JakeGint said...

How did that old disco tune go?

Shake shake shake!

Shake shake shake!

Shake yo' (portolio)!

JakeGint said...

errr, "portFolio."

Tim Knight said...

"Tim went long this morning, time to short?"

Hyuk hyuk hyuk.

Actually, I went long, took a nice profit when I saw the bulls were out of gas, then I bought a sh*tload of puts, all of which are highly profitable now.

So bite me.

Gary said...

Remember no one ever got rich by panicking. The market is panicking right now. Look at the waterfall decline in less than an hour. Keep your head about you today. Chances are there is an opportunity in the making. The SPY and DIA may close below the 30 level on the 5 Day RSI and trigger a VTO trade today. Don't know if the Q's can get low enough or not, maybe.

Brett said...

I realize there's still 1/2 hour left in the trading day, but my analysis is that the Bulls take over from here. The S&P is at support and the VIX is at resistance. Plus, if we hold (which we may not), we've got a shooting star after a downtrend.

Either the reversal confirms with a slice below 1490, or we remain in this channel and perhaps retest prior highs.

Kevin Fickle said...

We must not get too excited...There is definitely some technical work that must be performed this week to signal a more clear market trend.

The double top of the SPY/DIA did not occur on the NASDAQ which in my non-expert opinion indicates an elevated level of speculation in these markets. A correction might be healthy and very important for the bulls at this point.

Tim Knight said...

I agree 100% with Gary. I have sold ALL my DIA and RUT and IWM puts and, once again, have no index positions at all (just my equity shorts).

I hate the term "oversold", but that's a pretty apt description right now. I've had a day, and I'm happy just to let things ride out from here without me being involved.

Tim Knight said...

Umm, I meant, agree with Brett. Sorry.

JakeGint said...

Okay, this is a totally odd aside... maybe I need to check my glasses...

But did anyone else think (if just for a second) that Tim was using two separate slightly differnt pics... one for the right column outside and one for the message? It's just a trick of sizing I guess, but it looks like your eyes are half closed on the small icon, and that they're open as you blow it up. Just kind of a weird optical illusion I guess.

Tim Knight said...

"But did anyone else think (if just for a second) that Tim was using two separate slightly differnt pics... one for the right column outside and one for the message? It's just a trick of sizing I guess, but it looks like your eyes are half closed on the small icon, and that they're open as you blow it up. Just kind of a weird optical illusion I guess."

It's no illusion, and it's not deliberate.

Blogger takes the photo and makes a thumbnail of it. The effect is rather disturbing. I *hate* the thumbnail. So you're not imagining things. I have become creep-o-rific.

Brett said...


Have you seen the chart on RTI? Thing of beauty. Also I like SKX a lot, but it's cheaper.

Leon said...

Dear Tim,

After reading your blog for more then ayear I finally discovered why I couldn't post any reactions in your blog myself!! Finally, I can let you know that I really admire you transparancy and detailed graphs. They are not only free!!! but moreover extremely educational. Some visitors should really show some more respect for your postings daily!!

Now that I am able to add comments to your blog your will see more of them coming. As an Amsterdam based short term trander I am mostly active in the Dutch/German and French equity markets.

Today was special. Thank to the USA Friday we opened at a minus of 1% but recovered at closing due to your strong 'oversees' performance. And yes I feel fooled now, since my green tagged long position of today in ING Bank is being nuked currently thanks to US-indexes dancing into red area's (;-\

Although bearish on the markets I decided to go long overnight since my ING's were bought at day low and US-indexes being that strong. Boy, could I be more wrong!!

The strange thing is that although it will cost a buck (or should I say euro), the red bear move gives a strange kind of sensation.

Seeing the bulls running out of breath, after their global rush for gold over the last few months does satisfy me. Also the Dutch/German and French markets have been pushed near or over their ATH's and bounched off.....last week. Seems like we are getting ready for a global correction of 10-15% within the next two months.

I will watch during said period and being your blog with above average interest. Keep up the good work my blogging hero!

Best regards,


Momo Fader said...

This whipsaw behavior may be indicative of top nearby. VIX closed the day well up, which is bearish indeed. S&P and Indos came within a hair's breadth of rolling through June lows. Tomorrow is another day, and it may be THE DAY for that.

FSLR is an insider scam being pulled over on rubes in the general public. They have 3+ years of perfect performance already priced in, and the risks are all to the downside at this time. Risks there are many, coming at ya as soon as perhaps tomorrow but definitely by Q2 conf call. Seems that insiders and Goldman have kept the float tight as a drum, and it's worked well in their favor. They've played the market like a violin. However, today had all the indications of a potential top. Perhaps their orchestra has reached a creschendo. That company is worth no more than $30/share until they can prove at a minimum their execution risk has subsided. A stumble will absolutely kill those shares. Solar stocks have gone through at least 3 of these hype cycles since 2004. Nothing new.

bmbull said...

Very few groups performing well at this point. Brokers now rolling over to join the banks. If the financials don't pull it together, this market is toast.

Of course, I'm looking at more than just the next day or two...lots of short-term traders around here, I know.

Kevin Fickle said...

MOMO very eloquently put-- I definitely agree...the intra day activity becomes very important. How do you plan on playing this opportunity? Or do you already have a short in place...? I entered my short mid-day and covered once I felt the fear had disappeared.

Gary said...

Before you pile on the shorts let me just point out a few things. The market slump today was brought on by one thing and one thing only, the Bear Sterns debacle. If it wasn't for the problems in one single company where do you think the market would be today. was on its way to triple digit gains. Once investors calm down and start thinking clearly again the markets usually go back to doing what they were doing before they freaked out. I'm going to give you a few examples of what follows when markets freak out. A couple of months ago the Natural gas markets panicked because of the Ammarath blowup. After the dust settled the natural gas market took off for a 100% gain in 2 months. In 1987 the market freaked out. 2 1/2 months later the markets were up over 30%. In 2001 9/11 rocked the world 2 1/2 months later the markets were up by 23%. 3 years ago the Vioxx scare panicked investors who dumped MRK shares. 2 1/2 years later MRK is up over 100%. Panic is almost always a buying opportunity. Stay calm and ask yourself if the problem in one single company is cause for the every company in the market to be valued less.

bmbull said...

The BSC mess is different in that it cuts to the heart of the credit markets, which is the very mechanism that has been used to pump up housing and asset prices along with stock markets for the past few years.

Boom and bust cycles happen, in spite of (or because of) the best efforts of central banks. We've had a credit filled boom cycle - eventually, it will bust, and the bust will start in the credit markets. As a matter of fact, I believe it has already started.

What does that mean for stocks? No one knows for sure, but we're about to find out.

And the beloved BX ipo was down 7% today.

Bob K said...

Look at the S&P index on the hourly charts; it made a head & shoulders from June 8th through Friday. This morning was the rally back to the neckline. Hard to measure a precise target, I get something like 1460-1475; this would coincide with a 38% or 50% retracement of the March 14th rally. Sure looks like there's more downside coming this week.

Momo Fader said...

Gary we haven't even seen the tip of the panic iceberg yet. IMHO you're comparing apples and oranges in your examples. This is reality setting in. I thought that all of the subprime problems were behind us? That's what the pundits and analysts all told us back in April. What happened?

BSC is not an isolated incident, as BMB points out. It is a canary in the coalmine. This canary has been dead a long long time, but they finally marked his body to market.

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

Bob K-

That's not a valid head and shoulders since it didn't occur at the top of the trend. However, a close below 1490 and the point is's a reversal either way.


Gosh ,

I have to say this has been one of the toughest months trading in my career. The problem is at the end of a Bull market ....especially one 5 years in duration have so many crosscurrents...Like my favorite sentiment Indicator ...the simple II Investors Intelligence...I have 80 some indicators as most traders do but I sometimes just have to go with one that has served me best and it raised the red flag and continues to do so ...I thought I could get around it but the fact is ...when you start making excuses for your indicators and not letting them tell you what you already know are cheating yourself and your members. Very short term we will probably go very much lower as the II data along with the technicals ...breadth has been horrible for a while and is the typical leader along with the HUGE volume on the downside ...all I can say is that I want to be Bullish but have to revert to an all out bear call...I mentioned the beginning of a Bear Market hear a few weeks back and again ...economic date saved the markets and with the FED coming and data both Thursday and Friday ...maybe the FED will pull the market thru with just a 3-5% correction. But COT or not the chances of this market tanking 10% has increased to over 90% and my predictions of QQQQ and GS breaking records on the 4th of July are much like the SLOPE OF HOPE Tim will se inverse. The reversal today was the deathnell for the short term and SDS DXD QID look very chaep and bottomed out ...puts are expensive and shorting GOOG and AAPL are probaably wise bets along with RIMM and DE and POT and almost everything. I am a 5 year Bull market profit taking trader here and I will turn around on a dime to keep from losing money. Good luck all and we start something we havent seen since last May -July now and I do not think it will be pretty but I also do not think it will last as long


John said...

Wow, this is the first time in a long time that I can recall Tim actually praising an American company. Is this a setup so you can go long, Tim?

yuri said...

Let's face it, M&A activity has been key to sustaining this market uptrend. In that respect, seems to me that the rug is about to be pulled out from under the market. I hope like hell that we get a sucker's rally back towards 1525 on the SPX. Then we are going to take out 1490, then 1460 - once 1460 goes, the next stop may well be 1375 and a 10% correction. I'd be taking on the largest part of that short position up here where the air is thin, adding smaller pieces pyramid-style on the way down. As I write this the futures are positive, so maybe we rebound tomorrow(about 1/2 way up Friday's long black candlestick should offer some resistance - somewhere close to 1510).
But watch out for the FED - from what I've heard, somebody is putting a bug in their collective ear about expressing some concern about headline inflation being outside their "comfort zone" - i.e. Uncle Ben may depart from his obsession with "core" inflation, and mention that they are watching the headline number closely. The slightest whiff of inflation concerns will send the bond markets into a tizzy. What I am saying here is that we may have a "Perfect Storm" setting up here.
By the way, 1460 is exactly a 50% retracement of the move we got from the bottoming in early March to the June 4th high. I know 50% is one of the Fibonacci numbers, but I don't seem to be able to find many instances of these intermediate market trends retracing EXACTLY 50%. Nor do I think that the 50% level holds in this case. If we get there, we go lower!

Tim Knight said...

"Wow, this is the first time in a long time that I can recall Tim actually praising an American company. Is this a setup so you can go long, Tim?"

My iPhone post a week or so ago but extremely laudatory of Steve Jobs.

And why do you mention American companies? Have I been praising Belgian companies?

b.healed said...

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

Anonymous said...

Will the FOMC throw a monkey wrench into this machine.

tommy t said...

When the long-awaited iPhone hits store shelves this week, no doubt many Apple enthusiasts will adopt early as they've done in the past with other products from the company. But just how crazy it gets is anyone's bet.

Here’s what is betting:

* Consumers are reported camping out waiting for an iPhone—3/1
* Initial iPhones get recalled—30/1
* iPhone sells at least 12 Million units in 2008—5/6
* Apple’s stock jumps at least 10% in value in regards to the price on 6/30/07—1/2
* Consumers pay at least three times the original price ($1,500) on ebay—2/1
* The screen breaks/cracks like Apple’s first-generation nano (iPod)—150/1
* There are mass reports of the battery life being less than the promised 8 hours—10/1
* Someone is trampled while trying to get an iPhone—20/1
* iPhone spontaneously combusts—150/1

I am shorting the common on the news or into any large pop up before.

tommy t said...

Gary said:
Panic is almost always a buying opportunity. Stay calm and ask yourself if the problem in one single company is cause for the every company in the market to be valued less.

only one problem Gary, we haven't had any panic. Oh, don't worry about knowing what it looks like, you will know...I have seen a few in 25 years, and this is nothing...I'm not saying we are collapsing tomorrow, I am saying this is a tiny relatively calm pullback so far.

Brian T said...

Great blog you have here, look forward to visiting again.