Oh, Baby...........

I'm feeling a terrific sense of control over this market (at last). Recently, I've been doing extremely well. Even with intraday trading, I'll buy calls at just about the bottom, sell them at just about the top, then buy puts, and then ride those all the way down. I'm rarely this "in synch" with the market, but it's been a good feeling.


I noticed that Barron's this week features Blackstone's CEO on the cover, pointing out that a massive public offering of the largest private equity partnership clearly signals the peak of these beasts. I couldn't agree more. Oh, let's check in to see how the public's investment in the two-day old Blackstone has been faring.......


Of course, the big news today is that today's bounce from last week's downside action completely evaporated. The Dow surged 120 points higher (and I profitably closed out some calls I bought earlier in the day, then gobbled up a huge number of puts), then the entire gain by blown to smithereens. As you can see from the Russell, the medium-term trendline is now broken.


About half an hour before the close, I sold all my puts (DIA and $RUT), since I felt the selling was - - at least very short term - - overdone. Here's the S&P 500.....


In a broad sense, I think things have changed. It's been horrible awaiting the change, but I think it is finally here. In the broadest view, I think we have witnessed the passing of the Mother of All Double Tops.


This is not to say I'm speculating on outright collapse from here. On the contrary, I think we're probably due for another bounce up. But - as with today's - I may well decide that the bounce has exhausted itself just a couple of hours into a single trading day. My portfolios are devoid of any index positions right now, and consist of carefully-selected equity shorts, equity puts, and a couple of longs (DXD and BBI).

If you're just dying for a bullish stock, AutoDesk (ADSK) looks interesting:


Real estate has been in a freefall for months. I was thinking it would stabilize. But we might be in for some more downside action. Apartment Investments (AIV) has an impressive head and shoulders pattern.


My short in BEAS had a good day. I've put the clearly defined support and resistance horizontal lines here.


Bear Stearns was the "culprit" behind today's fall. I've been mentioning this as a short (or put purchase) for a long time. You can plainly see how, after its fall from its ultimate high, it tried to retrace........but the jig is up, and it's been falling ever since.


Looking at a broader chart, you can see a major, major supporting trendline has been shattered.


Goldman Sachs - employer of the hottie pictured at the top of today's entry - is suffering as well, although not to the same degree. My puts in this are up, and there's plenty of downside left on the stock, tinted here.


Another set of puts that's doing great is JC Penney (JCP). I've illustrated a potential target. Thank you, polyester! Thank you, leisure suits! Thank you, lawnmower care supplies!


Massey (MEE) is sporting a monstrous, gorgeous head and shoulders, and I think the retracement is complete now.


A bunch of people have written me asking to explain some options trading basics. I'll do it on a quieter day when the market is up half a point or something. I've had enough. I'm going for a swim........

Snoozer

I see several dozen people have signed up for MyBlogLog. Cool. Basically what it lets you do is sign up with your name and a photo, and you can check out what your fellow readers are also reading. It's a pretty cool way to amble around the community of readers we have on this blog and find interesting new stuff.

Today was a rather yawner day. The Industrials crossed above the 13,500 market, and then slumped in the last part of the day to close slightly down. The Dow is really running on fumes at this point, given its rapid ascent.


I keep an eye on the currency markets too. I've mentioned the NZD/USD here many times before. As you can see, there is a very strong correlation recently between the NZD/USD and the U.S. Markets (I've used the S&P 500 here).


The $XMI is also a good illustration of how the market may be in a position to "roll over" after this explosive upswing.


I'm hanging onto my BSC puts. They are doing OK - nothing spectacular yet.


Energy stock DRQ, mentioned here bullishly before, looks better than ever. I'd put a stop of $44.11 on this.


A reader mentioned ESS as a good short idea today. I agree! (A similar conclusion could be had with VON).


My InfoSys (INFY) short is also doing pretty well, although it needs to break that neckline to get juicy.


It might be a good second chance for those of you wanting to be short JC Penney (JCP) to get in at a better price now.


PSB - like many real estate stocks today - fell pretty hard, and it is right on the cusp of violating its neckline. Lovely!


Another bullish energy play - SWN - looks terrific.


Go sign up for MyBlogLog if you haven't already! :-)

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!

Grind It Out

I know a lot of you spend a lot of time worrying about a gift to buy me, particularly since no one was able to come through with a C3PO tape dispenser. I will welcome this surprisingly frank Batman water pistol in its stead.


And for your daily Unlikely Juxtaposition of Books, I offer this snapshot I took in my local Borders bookstore. It's not crystal-clear, I realize, but on the right of this New Non Fiction selection is Hillary Clinton's "It Takes a Village" retread, and on the left is a book about sexual pleasure for women. I'm surprised one of these books did not leap to the floor under its own power.


Oh, yeah. Charts. I almost forgot. Today was one of those grind-it-out bore-fests where the markets.......how do the rah-rahs say it?........oh, yes, "digest" their gains. This still falls in line with what I was looking to unfold: specifically, the end of a full retracement before the fall resumes.


The daily candle yields a similar picture. Notice the spinning top today. I've marked another recent spinning top, which happened to be at the very peak of the market.


All the charts that follow tell the same story, so I'll just net it out for you here: (1) plunge after 2/27 (2) consolidation (3) turbocharged retracement to approximately 2/27 levels. My speculation, and where I'm putting my cash at this point, is that the markets will resume their fall. The rest of today's entry will be little more than tickers and graphs. Here's the gold and silver index (XAU):


AHM (part of the sub-prime world):


BAC (a huge bank, but a beautiful chart nonetheless):


Bear Stearns (BSC):


Continental (CAL), mentioned countless times here, having completely a lovely head and shoulders retracement to the neckline.


Brazil iShares (EWZ):


Goldman "nut" Sachs (GS):


PSB, part of the commercial real estate crowd:


Oh, speaking of Hillary......your video of the day. This is what all the fuss is about regarding the repurposed "1984" commercial. Hearing her nasal voice patronizingly talk about "conversation" this and "chat" that is truly nauseating. Anyhoo........enjoy:

Shave This....

Let's face it. The whole world's gone crazy. The Dow is pushing toward 13,000 just for the sake of going to 13,000. A third-rate Marilyn Monroe dies and creates a courtroom circus. And a rich, beautiful young woman loses her mind and decides to pattern her life after Colonel Kurtz...


A quick entry tonight. First, for you FOREX types, the NZD/USD seems to have pushed high enough to once again represent a low-risk short trade. I'd put a stop at .7070


The NASDAQ 100 has been terribly strong - - reaching a six year high today in the face of a weak day on the Dow. It's tough to short in the face of such strength, but at least it's clear the $NDX is at the top of its rising channel.


ANDE, a long suggestion I've made many times, has all the right stuff.


Bear Sterns (BSC) sported a nice bearish engulfing pattern today. I'm going to buy more puts on this tomorrow.


I've been hanging on to my CME puts for ages, and I was starting to get bored of them. Today the CME fell over 17 points, and it's potentially going to snap its trendline. Now it's getting interesting.


Research in Motion (RIMM), the stock that never seems to break, is high enough to keep the stop-loss level reasonable.


Finally, Ryland (RYL), mentioned here as a short on multiple occasions, is accelerating its downward trek.