Any Gas Left?

Dow 14k is in the air, and it's all the pundits seem to want to talk about. I've already mentioned here that my 'upper limit' is 14,100 on the Dow based on its breakout. Even though the Dow was up today to yet another lifetime high, the broader indexes were down, and my overall portfolio climbed by 5%.


When I showed the "mother of all double tops" by way of the S&P 500 graph, many people remarked that the S&P was cheap since profits have doubled on the S&P 500 since the prior high in 2000.

That may be true, but the logic is flawed. That's the equivalent of a Republican declaring the White House could be won in 2008 if only they could find a candidate twice as popular as George Bush. Just because something is double something else doesn't mean the opposite result will take place. If the P/E in 2000 was 500, would a P/E of 250 make it a bargain? Of course, those weren't the real P/Es, but hopefully you can see my point.


The daily chart of the Dow 30 helps illustrate how this market is in the toppermost of the poppermost. I see a fall ahead.


On an intraday basis, it's clear to see how strong the price movement has been since the breakout. I've tinted in the target zone. We have moved through most of the pain already.


A daily chart of the NDX - which I've been avoiding for many months - suggests this graph could be running out of gas too.


My favorite, the Russell 2000, edged down nicely today.


Even though the Gold and Silver index ($XAU) broke above its channel, recently history indicates the RSI has been a reliable bearish indicator; note the areas I've tinted and the subsequent price action.


Akamai (AKAM) looks like a potential bearish play; note the series of lower highs.


ALB also looks nice for a short.


I bought puts on Colgate (CL) today.


I continue to hold onto my CROX puts, which are doing OK.


I also bought puts on CVX this morning. So far, so good.


And I shorted DST (a busy day.....)


I mentioned puts on FXI last week. These look better than ever.


JC Penney has been a favorite of mine recently. My puts on this stock edged higher today due to the stock's weakness.

NYSE, NASDAQ, GODOT

Sweet Jesus on a Biscuit......can we please get some direction? Yesterday's 148 point drop on the Dow was encouraging. But follow through? Of course not. We bounce back today by half that amount. Zzzzzzzzzz. Give us as break - literally - through one of those price lines!


Oh, a bit of housekeeping. I've made a couple of cosmetic improvements. First, at the request of a comment made to the previous post, I have reduced the number of posts displayed down from 7 to 3. That will speed up loading time and make for a shorter page to scroll. Second, I've changed the scheme of my charts to what I think is a much cleaner appearance. Let me know what you think. Oh, and in case you've forgotten, click on any chart to see a much bigger version.

Back to charts. The Russell 2000 is in the same boat every other index is - if it breaks beneath a very clearly defined support level, it's time to rock and roll. If it continues to fart around in this range, it's just going to keep boring the pants off of everyone. And if it breaks into new high territory, that's when I climb to the top span of the Golden Gate.


I bought a bunch of puts on the $XAU today based on its price position relative to its well-defined channel. A stop-loss on this would not be expensive, since we're mushed up so high against the channel.


Cardinal Health (CAH), mentioned here numerous times, is on the cusp of a breakdown. But until it goes beneath that neckline, it is a pattern in formation, and nothing more.


I found the puts on Chinese equity-based FXI were fairly heavily traded, so I acquired some today.


I mentioned McGraw Hill (MHP) as a short last month, and it has lost about 15% of its value since then.


Now, as you know, I acquired a couple of iPhones on National Steve Jobs Day, and I made a little video about it. It's a terrific product. There's a ton of wizardy and magic in it, and I'm proud to show it off.

But, Lord almighty, this thing has bugs. Bugs, bugs, bugs! And I'm not even a heavy user. I just checked, and I've used it a total of 9 hours and 36 minutes. That's decent, but it's hardly an exhaustive field test.

In that time I've tripped over a surprising array of really serious issues. Like the fact that the phone outright hangs so hard that I have to reboot it. And the lack of basic editing features, such as double-clicking on a word not selecting that word. Or the inability to insert a cursor within a word (e.g. if you misspell a word, you have to erase the whole frickin' thing and retype it instead of correcting the offending letter).

The worst bug of all is Safari crashing. Which it does. Constantly. So a typical example is like this.......you're cruising along, looking at a web page, scrolling up or down a bit. And then - bam! - it throws you right back to the "home" screen of the iPhone. No big deal, you say, I'll simply go back to Safari (the web browser). Sure, you can do that - - but you're starting at scratch again. The page you were looking at is gone.

This happens to me so constantly that I'm put off on looking at any web content anymore. It isn't just a nuisance. It basically eviscerates one of the principal reasons for having this thing!

Added to which, every time I plug the iPhone into its dock for some juice, this stupid window appears on my desktop, so I have to cancel out of it. Annoying as hell.


Luckily, someone has helped me to release some of my frustration by asking the question: Will It Blend?

Froth

How do you address the heartache of repetitious comments? How does one quell hyperbolic, bombastic touting of the same securities over and over? What can you do to temper a mix of English and Spanish comments? Yes, it's....


Sorry for the very late posting tonight. Long story. While up here in the (relative) wilderness, I was struck by this sign:


The Dow, although up, still didn't signal a break yet. We're still in this flag pattern.


Gold has had a very strong past couple of days, but it also is at the upper reaches of a well-established range.


I've been mentioned BEAS as a short for a couple of weeks now. It has a nice, clean stop at $14.20.


Sotheby's (BID), which I've succesfully shorted before, might have a nice double top here.


Honeywell might have registered a triple top. All these "mights" and "maybes" are annoying, I'm sure, but it's never clear until some time has passed. These are calculated risks.


Martin Marietta (MLM) is awfully lofty and seems to be losing its momentum at these heights.


On the bullish side, I mentioned SCHN back on April 14th when the stock was $46. It has had a strong run since then, with a particularly strong surge upward today.


Another old favorite, Taser (TASR) seems to have found its second life. It has run up a bit much for me to be interested now, but a pullback to its breakout would make this an interesting buy.

Prophet North

Up, then down. Up, then down. In spite of my optimism last Friday, I'm feeling that dealing with the markets these days is a Sisyphean task. We've been range-bound for many weeks, and it looks like we're at the top of that range again. Here's the Russell 2000 on an intraday basis.


Of course the big question......and it only gets bigger every time we find ourselves at the extreme of a range.....is "break or bounce?" As with anything else in the world of charts, the longer a time period that price action is range-bound, the more dramatic the "escape" from that range.

So whereas I was optimistic before when we were near the bottom of the range (emotion check: greed), now I'm concerned we could bounce above this range and get back into full-blown bull mode (emotion check: fear). It's pretty clear that this week will give us the bounce-or-break answer. Here's the S&P 500 on a daily basis, and you can see the consolidation period over the past five weeks or so:


On an intraday basis, this range is very clear to see. Although prices typically take longer to climb than the fall, it seems that within this range, the motion is happening with similar speed. It only took a week from me to change my attitude from "oh, yeah!" to "awww, crap."


I haven't been following gold too closely, but wow, the $XAU chart is really in motion now. It is still in the range shown here, but Friday was a big day for the gold bulls.


Akamai is in an interesting breakdown pattern, albeit at an angle. Worth watching.


Chicago Mercantile (CME) is a good example of why it's important to wait for patterns to complete (I am guilty of ignoring this rule on occasion). As you can see, it was in a tremendously toppy pattern, but then it skittered away from the breakdown point and has done sensationally well since to the upside.


If you do believe the market is ready to head south again, a short position on the DIA or puts on it are a pretty good bet, since both the stock and the options are so liquid.


Micron (MU) is a stock I've mentioned as a bullish idea for the past couple of weeks. It looks better than ever. Just look at Friday's push upward.


I'm sorry this post was late; as I mentioned, I was heading to Lake Tahoe and that took a big bite out of my day. Enjoy your weekend, and I'll see you Monday evening.

Sigh....

OK, this up-every-day thing is getting realllllllly old.

I'm started to become disenchanted with the Russell 2000. I wasn't surprised at the recent recovery. In fact, I sold a huge block of puts just before the bounce higher started (thank God).


What bugs me is that the bounce-back pushed higher than the point I thought things would soften up again. The entire area I've shaded in green here (a closer view) is basically the "WTF???" zone. Particularly the strong finish during the last few minutes of today. Disgusting.


The $XAU is sporting a handsome shooting star, and although I've had no position in this for a while, I picked up some puts on it today. Because of the behavior of the market these days, I've focused on deep in-the-money, far-out expiration puts. Low risk, low volatility (and consequently lower profits should a miracle occur and things actually start heading down one day).


I mentioned CRDN yesterday as a possible long. The awaited breakout took place today, although on unspectacular volume.


ONT, mentioned many times here as a long, had a terrific day. The volume in the past few weeks is sensational.


Akamai (AKAM) might be pushing back to a neckline, but this isn't a perfect head and shoulder, so no position yet. The right shoulder is higher than the left, and I tend to be a purist about these things.


Jones Soda (JSDA) got whacked today. Even so, it has a nice little head and shoulders pattern, and this could have another $8 to $10 to drop (based on classic measurement techniques).


The balance of today's offerings are basically "rollovers." That is, stocks I think have lost momentum and have a good chance of falling. They are......Caterpillar (CAT):


Hess (HES):


Noble Energy (NBL):


Potash (POT):


PSB:


I've had enough. Time to hang up the charts for the weekend.