Son of a (Triple) Witch......
Well, what a difference three days makes.
As of Tuesday's close, things looked just hunky-dory for the bears. Although such a rapid, 400+ point drop from the Dow certainly suggested it was time for a bounce up. But the very unresolved question is whether the bounce was the contratrend in the scope of a real downtrend, or whether the 400+ drop was no more important than the one from late February.
One trend is clear - - comments are up. Even with anonymous posters shut out of the comments section, activity has been ramping up in line with the market's volatility. Big down days bring out the snarling bears, and big up days bring out the told-ya-so bulls. Of course, beanie11111 alone was responsible for 15 of the prior post's comments, so a few people are largely responsible for the activity. (And Beanie - we get it - solar, solar, solar - enough!)
Looking at the $INDU, the best the bears can hope for at this point is a double top. A neat cascade of lower lows and lower highs simply didn't happen.......today's push higher broke that theory to pieces.
If the market does continue its descent next week, the Russell 2000 is, in my opinion, the best place to play it. Not only because of the relatively decent bid/ask spread, but also because it is relatively weak in its performance.
I don't think I've ever mentioned ACL before, but this looks like one which has turned the corner from uptrend to downtrend.
I got into a short position with BEAS today, and it's a bit in the green already, in spite of the market's strength. The right shoulder of this pattern is half completed.
I shorted BTJ successfully a couple of weeks ago. It has bounced high enough for me to be comfortable re-entering this short.
Cardinal Health (CAH), a short I got into a couple of days back, is doing pretty well. It is encouraging to see stocks act weak when the market as a whole is very strong.
Constellation (CEG) has a medium term downtrend that is intact so far.
One highly liquid, low-risk short (or put purchase) are the Diamonds (DIA). A clean stop here would be 136.84
Now that Goldman's earnings are out, I think the risk is much lower to short this stock. The blow-out earnings yesterday actually caused the stock to declined, and it seems toppy enough to me - and far enough away from the trendline - to warrant another attempt.
I first mentioned CRDN as a long back on May 3rd. Since that time, it has push much higher on very strong volume. I guess the war in Iraq is actually good for this firm.
McGraw-Hill (MHP) is a new short for me, entered yesterday.
I added to my MMM puts today, based on the big rebound in the Dow. It closed the day with a nice shooting star pattern and without penetrating its prior high.
I also bought puts on another megacap stock, AT&T (T).
The rails were very strong a couple of months back due to Warren Buffett's investments there. I think it's time to sell into this strength. I sold short a block of Union Pacific (UNP) today.
59 comments:
beanie...
when posting your blog site there is no need to put the WWW.
what do you think of the action in IYR?
it seems like it won't quite die...
it keeps muddlng at support.
Tim.
The bulk of the gains can be tracked to Options Expiration and the Fantastic Friday syndrome ..you have any idea how many Fridays in a row have been UP for the bulls. The good thing is for the Bears historically you have a lot going for you inthe short term ..the post OPEX sessions with a 3 day rally is highly vulnerable by the average of 1.1% over the following 3-5 sessions and negative returns usually last for up to 10 sessions ...so you can look for a pullback and then all time highs for the 4th of July.
Tom
TTT
Tim,
You are just going to continue to pick tops and short the strongest stocks forever aren't you. Why oh why can't you just have the patience to wait for the market to rollover? I just can't understand why an experienced trader would continue to make the same novice mistake over and over. Trust me I will tell you the minute the big boys start shorting this market. Shorting is dangerous enough as it is why in the world don't you just wait until you have the smart money on your side?
Gary,
Tim has total trust in his charting reading skills even though it is been conclusively proven that one cannot call a market top based on chart reading alone. In my opinion, chart reading can only be used for short term trading only (one or two days). For long term trend, fundamental analysis is a must. So Tim makes the mistake of using a very limited tool for the wrong situation. It is a deadly combination as he repeatedly demonstrates.
John,
I'm sure Tim's money management allows him to be wrong more often than right and still make a killing. He doesn't talk much about it, but I suspect even with his perma-bear demeanor during this energizer bull market, his money management has allowed his porfolio to break even or even eak out a modest gain.
Tim - any chance you can share your thoughts on position sizing and money management in an upcoming blog entry?
Tim,
You are just going to continue to pick tops and short the strongest stocks forever aren't you. Why oh why can't you just have the patience to wait for the market to rollover? I just can't understand why an experienced trader would continue to make the same novice mistake over and over. Trust me I will tell you the minute the big boys start shorting this market. Shorting is dangerous enough as it is why in the world don't you just wait until you have the smart money on your side?
Gary,
Tim has total trust in his charting reading skills even though it is been conclusively proven that one cannot call a market top based on chart reading alone. In my opinion, chart reading can only be used for short term trading only (one or two days). For long term trend, fundamental analysis is a must. So Tim makes the mistake of using a very limited tool for the wrong situation. It is a deadly combination as he repeatedly demonstrates.
My take on this is, Tim has enough cash to remain bearish till DOW 100000 and probably more. this loss is just a drop in the ocean. It's the readers that get screwed. Ofcourse Tim is not suggesting anyone to trade according to his ideas. Human psychology is complicated and people do feel confident because other people are also bearish. I have been bearish for the past 1 year and u know what happened. I survived ok till apr 1st 2007, I had 27500 profits. But the rally in April, some 27 of 30 up days killed me. I lost my 27500 profit + 27500 and got a margin call and had to close my account on May 2nd. I don't blame anyone for it. just myself.
I think there are lot of factors going on for the market. liquidity, earnings, manipulation by PPT, government agencies like BLS manipulating numbers. So just buy buy and buy is my suggestion.
Technical analysis does not work and has never worked. it is just hind sight, anyone can draw lines, change periods to create a chart to match his thinking, channels, heads, shoulders, fibonacci is all bull shit. It is a news driven market and the same news can be interpreted differently during different times. so, don't waste you time on charts.
..."Technical analysis does not work and has never worked."...
That sounds about as intelligent as ...
"That is why the stock market is going up. Bush is on the way out!!"
There is a book on charting your way to profits that you might consider reading.
I would stay away from short selling any of the DOW stocks. For that matter, stay away from shorting any company that makes a profit.
Every pull back is being bought. After the wave 4 correction, the US equity market is about to parabolic. Wave 5's are the worst for bears.
Why would anyone even short this market? The govt. is giving away free money. All you have to do is buy the morning dips and close out the position MOC.
aapl, though it gapped up today, didn't move much after the gap. it seems as though it did exactly what the compq did. so i guess it is looking good that aapl can still fall since it showed some weakness, in my opinion, with some strength in the dow. we will see what happens.
Tom (TTT)....question for you.
Is the quote below from your comment the result of original research or is it credited to someone else? I ask because at least one popular subscription service that specializes in historic trading patterns published very similar remarks today.
If your quote is a result of your own research, from what source did the raw data come from? If your quote is borrowed, from which source did you get it?
Quote was:
The bulk of the gains can be tracked to Options Expiration and the Fantastic Friday syndrome ..you have any idea how many Fridays in a row have been UP for the bulls. The good thing is for the Bears historically you have a lot going for you inthe short term ..the post OPEX sessions with a 3 day rally is highly vulnerable by the average of 1.1% over the following 3-5 sessions and negative returns usually last for up to 10 sessions ...so you can look for a pullback and then all time highs for the 4th of July.
Tom
Bear,
Agree, TA by itself does not give an investor an edge. The studies show about 1 to 1 odds of making profitable trades by TA alone. 50/50 is the same as a coin flip. I've shown repeatedly that the COT improves your odds of having a profitable short trade and offered repeatedly to give the info to Tim but he will not under any circumstances deviate from his bearish bias. Its been pointed out before the reason the efficient market theory is ridiculous is that investors aren't rational.
Bear said,
"Technical analysis does not work and has never worked. it is just hind sight, anyone can draw lines, change periods to create a chart to match his thinking, channels, heads, shoulders, fibonacci is all bull shit. It is a news driven market and the same news can be interpreted differently during different times. so, don't waste you time on charts.
I had 27500 profits. But the rally in April, some 27 of 30 up days killed me. I lost my 27500 profit + 27500 and got a margin call and had to close my account on May 2nd. I don't blame anyone for it. just myself. "
Maybe if you used a little technical analysis correctly you wouldn't have lost all your money?
Your suggestion to just "buy,buy,buy" is also a fools game, the same as short,short,short is. Learn your weaknesses and strenghts and trade accordingly.
I disagree with your "1 to 1 " analysis as well Gary. I think it gives much better odds when used correctly with-in the trend and accompaning fundamentals.
Gary,
you said: "...TA by itself, does not give an investor an edge"
I've been monitoring the market on a daily basis for a long time and it's only this year that I realized that nothing taken by itself gives an investor an edge. else. What gives an edge is the ability to read the general market conditions and this whatever method you use to get there be it TA, FA, COT, Voodoo or a combination or all of it.
I gave best odds to the bull side early August of last year and despite 2/27 and renewed recent sell-offs, I always maintained the bullish bias on the market. I was under the impression that TA was giving me the edge but in reality, due to a system I had developed, I was concentrating the TA almost exclusively on the big "tell" indexes, the large market leaders (GOOG, AAPL) and other indicators such as P/C, VIX, COT, etc, and this , without really knowing it, was giving me a good read of the general market sentiment and conditions. TA was just my tool to get to the general conditions. Could have been FA or mix TA/FA but each our own methods based on our abilities and personalities.
Livermore says it best:
"But my greatest discovery was that a man must study general conditions, to size them up so as to be able to anticipate probabilities."
The important thing is to find your system the general conditions and when that system if found to work, stick by it and set the proper stops. You found COT and it works for you. Great and congratulations. Finding a system that fits our personality and works is the holy grail in trading as per Darvas. Tim uses TA and it works for him. Each our own.
Just my 2 cents,
Best
Gary,
Where can I get your COT report?
You seem to be pretty right about this market.
Personally, I think that since bulls don't really care about headline inflation rates and only care about core inflation rates which are massaged by the government, bears simply cannot win in this environment.
Bear, you are a fool if you really gave back that much money in a few months.
Money is cheap right now-- equities are somewhat similar to that discounted item around thanksgiving time that everyone wants to get their hands on before the price goes up. The market will continue to be run by bulls until interest rates increase--simple as that. People are saying it's dangerous to be a short in this bull market--true. Then again it's also very dangerous to be a long. Notice how a slight increase in the 10yr t bill brought about a 400 pt drop? God forbid something bad actually happens this market will magnify what happened feb. 27th with an even SHARPER fall (thank goodness the market is now propelled by algorithmic programs that will automatically drop stocks with each tick lower). In regards to Tim's blog, he makes some great technical forecasts and is quick to sell when the technical pattern goes astray--much can be learned here. This is a great site for ideas...however the key is doing your own due diligence in addition.
PLEASE READ THIS:
(1) For those who think my suggestions are terrible, you can either not read this blog or, if you're really confident, fade every suggestion and make your fortune!
(2) For those who think technical analysis is useless, for the love of Jesus Christ, what are you doing here? It would be like me hanging around zappos.com every day and yet disliking shoes. What's wrong with you?
(3) Gary, you seem like an intelligent person with good ideas. I mean that. But you are coming off as really pedantic. I get the fact that you believe in COT. That's great. But the daily "tsk, tsk, when will Tim ever learn?" about my methods is getting insulting.
I appreciate Kevin Fickle's take on what I've got to say - - which is that T.A. has some merit, if used correctly, and I'm quick to close a position if it doesn't go as planned.
This is my own cash on the line, folks. I take this stuff seriously. I'm just sharing my thoughts for free just to get some good discussion going. And I've been doing this a very long time, so I've learned a thing or two in the past twenty years.
"I got into a short position with BEAS today, and it's a bit in the green already, in spite of the market's strength. The right shoulder of this pattern is half completed."
Another example of trading in anticipation of a pattern. Isint it prudent to wait for the right shouldfer to develop and the neckline to be breached before shorting this?
Bear, you are a fool if you really gave back that much money in a few months.
Yes, I have realized that and I have stopped trading since May 2 2007.
There is a book on charting your way to profits that you might consider reading.
If a book being published confirms that it works, you should surely read the following books.
1. how to retire at 25.
2. how to make a million in one year
3. how to beat donald trump
4. how to start the next google.
You know what the famous traders do. they write books and they teach classes. I've been to several of these classes. I asked them, How come you are giving away such great secrets of trading. they say "we want everyone to make money and spread the wealth" then I ask "why do you charge such hefty fees when you are making tons of money in the market everyday" and they mumble something incoherent like "our sponsors cannot give it for free they have to charge a minimum amount" i.e hefty fees.
Were you trading options or highly leveraged to one stock? A 55 thousand dollar swing seems a bit much unless your trading account is 300k+. I have had swings but not that large compared to my account size.
Were you trading options or highly leveraged to one stock? A 55 thousand dollar swing seems a bit much unless your trading account is 300k+. I have had swings but not that large compared to my account size.
I was trading index futures. I had a 100+K account
Bear said,
"You know what the famous traders do. they write books and they teach classes"
Theres an old saying bear "those who cant do, teach" or something like that.
My point is there are alot of wealthy traders who have never written a book. They just do what they do well. You have a valid point about the authors motives for writing when they make so much $$$ in the market. Some maybe are charletans some maybe more altruistic, but thats probably for the reader/student to decide.
good luck tho. Most of the time my losses come when I'm fighting what i SEE because I THINK something else.
When I get a position going against me, I'm reminded of a Steve Martin quote:" Sometimes punting on fist down is not a bad idea."
There are a million and one different ways to make money in the market. Everyone gets to make their own choices - that's what makes the market 'the market'.
If so many think that 'the market' is doing so well, then why are nearly half of Nasdaq stocks still below their 50-day moving averages?
Yes, there are a number of areas doing well, and the major indices look great. But take a quick look at the charts of the homebuilders, REITs, disk drives or the airlines - all in their own bear markets right now, with the health care stocks and utilities right behind them - and maybe even some of the financials.
There's almost always something in the market for everybody, folks. Ease up, and let others find their own 'comfort zone' when it comes to trading.
There's no 'right' way to trade. And I don't quite understand why some get so worked up about the methods others choose to use. After all, it's not like they're trading with YOUR money...
The old saying is:
Those who can...DO !
Those who can't...Teach !
And try to sell a DVD of their genius for $39.95 to the masses through some form of advertising.
And have seminars for $100 a head to sell various instructional material so "you too" can become wealthy by following proven steps.
Etc-Etc. You get the idea.
The real hotshots of the trading world and investing and real estate try to stay in the shadows and out of the lime-light and they prefer the general public NOT know exactly how they make multi-millions or billions.Why would they ? It deletes those opportunities substantially when too many wanna-be's suddenly try to 'get in on the action'.
It's like a fisherman telling everyone where they are 'really biting'. They don't do that.
However, selling a lot of "how to get rich" material is a really slick way to get a lot of cash comimg in WITHOUT risking their own money.Or. Having a fee oriented service providing trading advice. All scams. All Bulls**t.
Would anyone credible and successful with that kind of powerful information and ability 'sell' it to traders like us if it really worked?
THE ONLY ANSWER : HELL NO !!
Now that I have the tire tracks off my back....... I was wrong, and I did pay for it also. Let's hope Monday is better! On a brighter note, The Q's opened at a pretty easily identifiable trendline (starting on April 26th)and did not penetrate it. Looks to be an expanding wedge with volume expanding on the downsides. Expanding wedges lead to increased volatilty and typically end in a bearish nature. Shorts placed now with tight stops looks to be a low risk venture. Question for Tim: DIA gapped above both our contingent stops. What action did you take? My human nature succeeded over my mechanical nature and I removed the contingent before Fridays open because of the gap. I rode it through and closed it at the end of the day (Option expiration). Please, no comments on the June put purchase, they were deep in the money with minimal to no theta. And I paid enough already for the decision. How did you handle the exit?
Exactly what I was trying to say CANTDRIVE55.
Well said.
Just to go out on a limb and add insult to injury. I'm looking at the Q's opening at 47.52-47.53 Monday and nowhere but down from there. That would make a nice abandoned baby or evening star top to the second top of the double. Of course, there's always an exit plan if I'm wrong!
I can't stand the amount of infomercials now talking about making money in the stock market...
Turtles now coming out...Trend Trading...blah blah blah
Many ways to make money is right, so long as you cut your losses and let your winners run.
tim, well said.
i just like hearing ideas. no other blog have i found to be as enoyable. i enjoy hardrightedge.com but i don't frequent there nearly as often as i do here. i appreciate what you put out.
i appreciate the diversity of this group. the junk comments on the other hand by people who probably have great ideas but are ungrateful to others is a little annoying.
thank you for being simply being someone who enjoys trading and enjoys sharing ideas, Tim. I have grown quite a bit. I read charts better and I have gotten a broadened point of view.
COH a head and shoulders?
i have a question about putting together a watchlist. this is for anyone. what do people do in order to decide if a stock should go on a watchlist? do you just randomly pick 20-50 stocks or do you put it through a filter. do you only have stocks that are in a trend? when do you take the stock off of the watchlist? how many stocks do you have in a watchlist?
this isn't something that i find discussed very often with people i am around so i would just like to know people's thoughts and ideas.
watch list can be assembled around any criteria you choose. Purpose is to become familiar with a group of stocks technical picture, ( trend, battle zones,patterns, angle of slope of hope.....etc.etc. ). These are your primary source for trading ideas. Some possible sources for watch lists, IBD 100, Nasdaq 100 , S&P500, .......... Allways plan your trades- entry, sell stop, buy stop
All my data information comes from historical references throughout market history ..I tell all my members and in comments everywhere exactly what I think about the market ...if I were to quote every GURU out there ...people would be reading the same crap all the time ..I have my own proprietary trading dats and market timing signals and use Traders Almanac and Birini Associates Don Hayes Barron's New york Times and another million sources ...especially Marty Zweig . whom I admire as a trader and quote from his book to my members ...If you don'y learn from history you are dooomed to repeat it ...Right ???
TTT
Tom
Student ...there are 13,150 investment advisory services and blogs ...do you think you found something new ??? Historical precedences are one of the most tracked data on Wall Street ...Maybe you should expand your horizon a bit and READ !!!!
Tom
TTT
Plunger,
You just made my point. LOL You said TA works WITH general trend and fundamentals. That was my point that TA alone does not show a positive expectancy.
Dennis,
Here's the address of my blog http://garyscommonsense.blogspot.com/
Tim,
You are correct. I guess we're even. We'll just have to agree to disagree for now. When I get the sell signal we'll just have to see who can outdo the other for bearishness. LOL
Most of the time my losses come when I'm fighting what i SEE because I THINK something else.
Much wisdom, the young Plunger speaks...
Are you guys sure you're chart technicians? Or are you just hopesters?
What is one of the cardinal rules of TA? If a stock (or index) mints new 52 week highs in a bull market, the correct move is to BUY BUY BUY, not short!!!! The indexes are at new 52 week highs!!!!!!!!!!!!!!!!!!!!!!!
AET seems to be showing some weakness....maybe wait for a small rally and short it with a target of 47.50. thoughts?
RAIL ( they make trains, they are not like UNP.)short at 52 = 200 day ...or short at 56 = average price channel and EPS trend is lower since Feb high of $60 ish..so $60 is out...
z-stock
I see BHI at 92 or 94, shorting at that price becomes interesting...because that indicates an OIH top and probably SPY top....
50.95 I would set an a short entry for AET, That's if it happens within the next week. Without a pullback to that point shorting it could cost you. Target would be 47.00 till the beginning of August, 48.00 until the beginning of September. Weigh you time/return, make you choice, and pull the trigger! Set a tight stop if you get in at 50.95. (51.58 would be my recommendation, but take that for what you will, I'm just a pee-on!)
beanie, you internets retard, please remove the ! key from your keyboard. Just do something useful for a change.
The Sound Center Bleats:
beanie, you internets retard, please remove the ! key from your keyboard. Just do something useful for a change
British Tool: Better you should remove yourself from any American boards you might visit, rather than attempt foolish criticism of those who are clearly your superiors. Better to stay at home and stave off Islamostanis menace than to muck about here in matter beyond your understanding.
So many stock bottoms so little time.
AKAM, SBUX, WFMI, BRCM, MOT, and the whole shebang, all bottomed 2 thursdays ago.
They're trying to take down SBUX and WFMI, hopelessly. They have bottomed.
Thanks for reading this: http://beanie11111.blogspot.com/2007/06/case-for-huge-snapback-rally.html
Glad you were brave enough to scoop up some cheap shares.
oh man, AMGN looks hot!
AKAM blew away all the shorts to eternity. MOT, BRCM, DIS, DNA, all bounced like a pogo stick.
Solar stocks all bottomed intermediate term and ready for upside action. Do you believe they will be bigger than the internets of the late 1990's? Well, do ya, punk? lol
I am not super TA guy, but i tell ya this - new 52 week highs on the indexes in a bull market MEANS WE GO HIGHER!!!! Sorry Tim, i like you man but you ain't makin no sense with this permabear mentality at this point of the game. You win perhaps after 2011 but you will lose before that.
jakegint
Well actually Im inclined to agree with the sound centre - beanie's despate attempts to plug solar this and solar that, blah blah are laughable. The shares are doing well at present (at least the 2 I looked at are) and maybe they will continue that way, but seeing how many weeks theve been plugged for, anyone here who hasnt bought yet, isnt going to now. At least not as a result of the daily postings. Im more interested in daily COT updates from gary to be honest. That is broader in appeal and heck, he just might have a pretty damn good market indicator that could benefit us all, whether we are a bear or a bull
Dive,
Unfortunately the COT only comes out weekly. The best I can do is weekly updates. But that's good enough for me since I don't try to catch every little wiggle on the charts. I'm just interested in the big picture.
gary
Mistake in my wording - I know COT is fridays only, what i meant to say is....I would rather read your daily posts revolving around various COT comments, than read the daily multi posts by beanie plugging solar this and solar that! Your indicies indicator is of far more interest to me than any specific shares because i only specumate on the good 'ole DJA !! Even if you daily keep reassuring that the staus quo remains, that is better than plugging away on solar power!!
Gotcha, I personally rarely bother to trade individual stocks. History has shown that very few investors can beat the averages by trying to pick stocks. I'm under no inllusion that I'm special in that regard.
75% of professional money mangers can't be the S&P500 let alone avoiding drawdown years.
You old bears need to get hip and start buying with us young traders. No need to fight the primary trend, which is up. Another day, another dollar. More green is coming through on my screen this afternoon as expected. Good luck anyhow.
AAPL RIMM GOOG on fire.
Gary:
I very much appreciate the community that has gathered here. Deeply appreciate your contra view, Gary, of the markets and the chemistry it has created at this site.
Primarily a follower and trader of the RUT and NDX, I enjoy your charting and comments.
I looked at the volume and price last Friday on the RUT and concluded we "could" have seen a double top. Of course, we'll know better in another 10 days of trading.....Sat back today, not trading and watched the action. I often step aside and watch what happens, instead of being in play every day. I take notes on the day's trading and have learned much from this exercise.
I trade my IRA using the UltraPro funds and play the ups and the downs. My goal is 1% per week appreciation, with a 50% total value appreciation, annually. Currently ahead of plan. I look for the best trade possible and take what the market offers. Worst single daily loss, $1200, best daily gain $900. This is a lot like baseball, playing "little ball", hits and scoring runs wins games.
I trade to increase my pocket, obviously, but I equally enjoy the news spin, pundit spin, Fed Reserve
spin, the prognosticators spin and how often it all has little or nothing to do with the markets. There is a great need to filter the "noise". Comments?
Jon
COTSTIMER has some good ideas about COT.
Jon,
Boy I wish I could make 1% a week. No one in history that I know of has ever done it on a consistent basis. Just be careful your position size isn't too large. I really have no idea whether the market will put in a double top or not. Although with the COT report being as bullish as it is I'd say the odds favor that we go higher, maybe much higher. The combined COT reading from all the futures are simmilar to 94 levels and we all know what happened after that. Yikes, might not be a good time to be short.
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.
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