Spock Grok

I was going to write a huge entry today about emotions and the market. But it's already four hours after the close, and I'm still stung with guilt pangs from such a late posting last night, so I'm going to leave my essay for another day.

I will say, though, that I yearn to be like Spock during times like this. The problem with these range-bound markets is that, for a bear, (a) when at the low end of the range, I'm flush with profits, I'm totally committed to my positions, and I'm into way more risk than I should be since I've been doing so well; yet (b) when at the high end of the range, when I'm sacrificed some or all of those aforementioned profits, I'm skittish and risk-averse. Obviously being just the opposite would be helpful on both counts. Spock is a cool customer.


Of course, we're all only human, and markets run completely contrary to human nature. That's why there are a handful of big winners - - those that defy the greed/fear trap - - and the rest of us are just schlubs. Let's face it - emotions and the financial markets are just another example of one of life's bad combinations.


I haven't mentioned China in a while. I'll say this.........long term, I think China is going to be king of the world, or at least a prince. Whereas its neighbor Russia will, in my opinion, collapse back into socialism or communism within the next decade. My optimism for China's long-term prospect's aside, what we're witnessing now is a bubble, pure and simple, driven largely by embarrassing naievete on a greedy yet clueless investing public.


The Dow fell 148 points today. It doesn't mean much until and unless we break 13,250. If we do, I'll probably return to being the arrogant pr*ck you all love so dearly. Until then, my hands remain peacefully clasped on my lap.


The Russell 2000 had an even worse (that is, better) day. My index puts on the $RUT did great.


The S&P is approaching the re-entry point on that channel is busted above a number of weeks ago.


I've stopped buying puts on AutoZone - there's only so much punishment I enjoy - but this stock is really looking toppy.


Ol' beanie has mentioned BIDU so much I might as well put up a chart. My hat is off to any chart that can do this on a day like today.


I added to my Capital One Financial (COF) position.


The DIA puts aren't as clean a deal as the IWM or RUT puts, but they're OK - - decent volume and a 10 cent not-too-terrible bid/ask spread. I did a day trade on these today with good results.


Goldman Sachs (GS) continues to be a put position I believe in.....although the big plunge never seems to happen to AJC's employer.


I've mentioned McKesson (MCK) many times because of its Fibonacci fans. Add to this now an imminent head and shoulders breakdown.


Someone mentioned SHLD in the comments section today.......thanks very much! I've mentioned Sears over and over. It's been inching down. Only today did it really take it in the groin.


VMC is kind of an interesting pattern, inasmuch as it seems to be breaking below a pretty wide consolidation rectangle.


I heard this tune today, and it reminded me of the markets.......to everything there is a season. Bears: I swear it's not too late.

The Less We Say About It, The Better

Two good days in a row. I won't get used to it. The crapola bull-filled last 11 months has left me bitter and disillusioned. But seeing a bunch of green over the past couple of days has been nice. I was prepared for all the pointless "Buy the dips!" and "Get in now to ride to Dow 15,000" nonsense in the comments section. It's what you can expect.

The S&P 500 over the past couple of years was in a giant, upward-sloping channel. The highlighted area is the "above even the top" chunk. The madness exceeding the madness. At a minimum, I would expect us to at least re-enter the aforementioned channel.


The $VIX, understandably, has shot higher, given the approximately 200 points blown off the Dow 30. Fear is on the rise. Finally.


AutoZone is one of those nice shorts which has a tight stop but plenty of potential downside. It's one of those charts that could represent a major trend-shift but doesn't make you pay through the nose to see if you are right or wrong.


Bunge (BG), mentioned here many times already, is on its way to its target price. This is a short position (obviously).


A thoughtful reader sent me a suggestion of symbol CEG. This is a handsome looking short. I have no position in it, but I'll follow it from now on.


Big Blue, good old IBM, really got smacked today. I've got puts on both IBM and Honeywell (HON), both of which pushed much higher on the day.


I am showing NVR again simply because it is such a "Fibonacci friendly" stock, to use a phrase I coined a while back. The way it bounces off these retracement lines is really a sight.


I've unsuccessfully owned puts on Sears Holding (SHLD) in the past, and it has never worked out. Once more into the breach, dear friends.


Since I'm feeling a little better, I'll keep throwing the goodies your way. Here's the marvelous Naive Melody from you-know-who.

Thanks, Alan

The market surged again this morning. The S&P 500 was at a new lifetime high. As was the Russell 2000. As was the Dow 30. It looked like Dow 14,000 was just around the corner.

Then Alan Greenspan - bless him - threw some cold water on the excitement by speculating the Chinese market was overheated and headed for a fall. That's all it took to render the breakout (shown in green) moot (shown in pink).


Now, the Old Tim would have been dancing around shouting about how it's the end of the world. But the New Improved Tim With Integrated Timing (figure the acronym out for yourself), severely humbled over the past year, will do nothing of the sort. Indeed, if you think back to Greenspan's most famous declaration ever - - "irrational exuberance" - - it might be instructive. He said it on December 5, 1996, and you can see the brief aftermath here:


But if you take a longer view, you will note that the irrational exuberance had barely even started. The market went up hundreds of percent more, as measured by the NASDAQ.


Not to say that I'm unhappy with today's small tumble. A look at the major indexes shows they are very tired. Here's the S&P 500:


And here is the broader Major Market Index ($XMI):


There's an interesting article by Herb Greenberg about the fact that brokerage margin debt is at a never-seen-before high. Obviously people are willing to go into debt on a widespread basis to buy into the recent mania. If you think the shorts are only going to get squeezed worse, you might want to check out this blog which focuses on opportunities to go long on stocks that may be squeezed up.

I am still short Akamai (AKAM), and its head and shoulders pattern (an obvious favorite of mine) is nicely intact.


AutoZone (AZO) is finally getting serious about falling.


Carnival (CCL), which had some recent strength, is again at a relatively low-risk zone for shorting.


Housing stocks, strong yesterday, are a safer short now. Here is Essex (ESS):


Infosys (INFY) is inching ever-so-slowly toward its neckline. If and when the neckline is broken, a substantial fall would seem in order.


Martin Marietta (MLM) may have double-topped here, and it is far above its supporting trendline.


Morgan Stanley (MS) is sporting a nice shooting star today. Granted, many recent shooting stars have been rendered moot by the market's strength. Still........


And Whirlpool (WHR) is likewise far enough above its supporting trendline to present an attractive short (or put-buying) possibility.


There's a ton of economic information coming out tomorrow morning. It should make for an interesting session.

Immune

I'm not afraid.

I used to be. I really did. It's hard not to be fearful when a market has completely lost its mind. It's hard not to be afraid when tens of millions of Chinese investors - not a one of which has any clue what he's doing - are running around predicting their market will reach 8,000 now that it's reached 4,000. And it's hard not to be afraid when it seems the whole world has discovered how to print trillions of dollars (without inflation) that they want to dedicate solely to buying up companies.

But I'm not afraid.

A day like today is why. Because the Dow can reach yet another all-time high, and my portfolio.......which is 100%, All-American, red-blooded shorts and puts......goes up handsomely. And I can grab my XXL codpiece, stare the market right in the eye, and shout an obscenity which rhymes with "Truck Blue!".

Because the fact is, folks, if I can make money in a market like this, God help you bulls when it actually goes down. Because your days are numbered.

I find the Chinese prediction of 8,000 on the Shanghai index particularly amusing. I know that 8 is considered a lucky number in China. So - naturally - there's no reason the market won't zoom to 8,000, is there? Added to which, I read that many investors there decide that a share of stock is a good buy if it costs less than a portion of pork meat.

Idiots.

I've decided if my loyal readers and I decide to seek haven in a safe zone, we shall flee to the district of Yaroslavl Oblast in Russia. Their flag, my hand to God, looks like this:


A bear carrying an axe. We, my friends, have found our homeland.

Speaking of homes, the widely-reported slump in housing has not hit my beloved Palo Alto. On the contrary, prices have never been higher. Just a few doors down from my house is the following charmer. It features no landscaping. 950 square feet of living spaces. And sixty year old plumbing. It can be yours for $2 million. (Actually, I'm joking about that - - because it was snapped up a few days after they put a sign out in front, and it can, in fact, not be yours at this time).


The Dow Jones 30 - which is far and away where all the strength is these days - tried very hard to push its way up to the 13,500 mark. After ascending nearly 150 points, it went completely flaccid, and it wound up 37, creating this lovely shooting star.


Here's an update on my positions (newbies - click any image for a bigger version). Bold items are puts. Others are shorts. Not a long in the group (although I will mention that my long suggestion of ONT continues to explode higher).


My short in Akamai (AKAM) did great today, and what is more important, it is set up for a spectacular fall from here.


Acuity Brands (AYI) also has a hell of a lot of open air to collapse.


AutoZone (AZO) finally - FINALLY! - took a tumble. Much more to come, I think.


My puts in Bear Stearns also performed nicely.


Merrill Lynch is starting to deteriorate, now that it has made a base camp for itself at this key Fibonacci retracement level.


Lastly, the NASDAQ QQQQs slumped badly, just as my beloved Russell 2000 did.


So in spite of calming inflation news (ummm, fellers, how much good is a .25% interest cut going to do you when the economy is irrevocably crumbling?) it was a terrific day. Let's have more of the same.

I'm not afraid!

Odelay!

The Bear: "Are you an assassin?"

The Bull: "I'm a soldier."

The Bear: "You're neither. You're an errand boy, sent by grocery clerks, to collect a bill."

Needless to say days like this make me happy. Particularly since today's 243 point drop on the Dow was within plain sight......two weeks, to the day........of the lovely 400+ point drop on the Dow on February 27th. A new force may be emerging.


Not that long ago - say, last year - I would have been jumping around talking about how it's the end of the world and the bears are going to own everything, and so forth. No more. I've learned a skosh of humility (and paranoia) since then. So I take it a day at a time. All the same, I grin when I imagine what that Australian touch-hole who called me must be going through. Although I'm assuming he has money to lose, which is probably a false hope.

On the occasions when I drive my family up to the mountains of California, we pass many towns that seem completely populated by those completely grotesque and utterly uniform beige-with-red-tile monstrosities that are advertised as "Homes" in the weekend papers. These vile creations seem to be the work of firms like Toll, Pulte, and Beazer, all of whom seem to be going to hell in a handbasket. Maybe there's a little justice in this sad, sick world after all.


The unwinding of the "buy and flip" insanity is crushing the sub-prime lenders which, in turn, is causing we few.........we happy few........to have good days like today. Here's Fremont....


And the poster child of this debacle, New Century. Thanks, fellers! We appreciate your bringing along the kind of disaster we need to start something really horrific!


The story for the indexes is the same across the board, so pay attention: if they can break the lows set next week, it's party time. If they stabilize and recover, we're probably going to be range-bound by something approximating today's range. Here's the NASDAQ composite with a potential target circled.


The minute by minute charts illustrate how the bullish breakout that was attempting to form completely failed. Disappointed bulls! Our specialty! Die, you weasels....


My favorite index, the Russell 2000, needs to break below $760 for us to continue to celebrate.


Here's a minute chart of the $RUT with more detail. An analysis of the psyches which pushed the market up, and then down, are provided for your convenience.


This is getting old, but here we go - the S&P 500.....


And the minute graph of the same.......


The $XMI is staring in the face of a grand breakout failure.


AutoZone, which has been up about three million percent in the past few months, is finally breaking. I've got puts. Lots of 'em.


Recent favorite CME is throwing lots of green into my account.


Oh, and then there's Google. The company that could do no wrong. These turds paid $1.6 billion for a web site where people could post mostly stolen content. And they haven't been able to figure out how to make money at it. And now they're getting sued for $1 billion. And I've got a hunch there are other big media companies that will follow. Nice goin', braniacs. Talk about buying at the top. Had they waited a few months, they could have picked up the same company for 1/8th of the price, I bet.


Ah, and Goldman. Yep, you've seen this mentioned here many times. My puts on this did great - - I bought a bunch at the top today. In spite of blowout earnings, they fell down hard on huge volume with a bearish engulfing pattern. Yes!


Wow, it's almost too much pleasure to take. Maybe the bulls will wipe some of the grin off our faces tomorrow, eh? We'll see. Deep down, I'm always hoping we're at the start of something very big that will absolutely destroy those creeps. Hope springs eternal! Go get 'em, a'ight?