Seven Nation Army

I'm gonna fight 'em all
A seven nation army couldn't hold me back
They're gonna rip it off
Taking their time right behind my back

Another day, another lifetime high on the Dow. C'est la vie.

I mentioned BHI as a short a few days ago , and it got walloped. Even put options that are several months out doubled in value today. Oil in general (be it OIH or a component) is pretty attractive to my bearish eyes right now.


I'm pretty proud of this graph, so click it to see a big version. It's a minute bar of the NZD/USD forex trade I've been suggesting. The symmetry between the phases I've shown here is really intriguing to me. I've numbered it for clarity. I've been trading it both up and down (long and short) during the most recent cycle. I imagine we're about ready to head back into a long tumble now. This is a really fun currency to trade, in spite of the wide pip spread.


The Russell 2000 remains my favorite index on which to own puts right now. Put values have been getting creamed lately by (a) rapidly rising index values and (b) withering volatility premiums. A one-two punch. Call me crazy, but I am loading up on them at these levels.


Allstate (ALL) has a dainty head and shoulders pattern that I think is worth trading, since it seems to have fully retraced.


BBD has a clean relationship with its Fib retracement.


This is a bigger graph than I normally show - ten years - and it's of Goldman Sachs (GS). I still love this short.


HES is another fresh one I'd suggest you check out.


I've still got my IYR puts. They're under water, but just take a gander and how lofty this sucker is.


My MTH short is still solid. I am once again showing a bigger graph so you can understand how far this thing could fall.


OXY is another oil short worth examination.


PCU isn't as clear-cut, but it's at the top of a channel, and I'm going to nibble some puts on this one tomorrow.

Profits in the Face of Gains

It was one of those nice days where the market went up but my portfolio went up as well (in spite of being completely short). Weakness in oil and gold were the reason.

Taking a look at the NASDAQ Composite, it's pretty plain that the market is at the upper boundaries of an ascending channel. Setting aside bullish/bearish arguments, don't you think it's time for the market to take a breather? Even if we're in a bull market for years to come, it doesn't go straight up. This graph alone should persuade you that it's more likely to ease off than push above the bounds.


The same argument, but for different reasons, applies to the S&P 100 ($OEX). Look how far above the 100/50/30 day moving averages the price is. It hasn't been this lofty since December 2003 (and you can see the softening that happened afterward). We've come very far, very fast.


As I mentioned, gold was weak today. I like how this graph is shaping up. The stop remains the same as noted earlier.


Now here's an interesting and unusual graph. I plotted YHOO and GOOG onto the same chart, each with their own independent axis. What's fascinating to me is that during the first half, the stocks tended to share the same fate. But during the second half, it's clear that GOOG has kicked YHOO's butt, and there's a growing rift between these two. Does it mean that GOOG will eventually "catch up" with YHOO by drifting down sharply? Or that YHOO is simply a company of the 90's and will never catch up again? Time will tell.


Now on to some specific short favorites. Here's AEM, which takes advantage of gold's weakness.


AL is a good play on weakness in industrial metals.


ARE is a very clean short in the world of real estate.


I like MRO as an energy short.


COF is shaping up nicely. I've mentioned this numerous times.


HYDL is another sweet looking short.


We're still in "a new high every day" mode. This can't last forever. You know that as well as I do.