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.

A Call For Bull Content

Over the past 25 trading sessions (March 29th through May 3rd), the Dow 30 closed up 22 times and down only 3 times. That means only about 12% of the time, we were down for the day. The net change was up 941 points.

During the 25 trading sessions prior to the above (February 22nd through March 28th), the Dow 30 closed up 12 times and down 13 times, meaning the Dow closed down 52% of the time. The net change was down 438 points. Quite a change, eh?

Given the above, you can imagine how the brawling in comments has been getting worse (and only God knows how bad it would be if anonymous people were still allowed to post). Back on April 17th, I asked all the bulls to make some recommendations. Only a couple of folks did. One of them had a bunch of options, which frankly I'm too lazy to look up, and another - TomTheTrader - listed a bunch of equity symbols.

I decided to do an experiment and entered a hypothetical portfolio of 100 shares of each of his recommendations, using a price of the opening on April 18th (the morning following his comment). In other words, I'm assuming you decided to buy, at the opening price, an equal number of shares of each of the stocks suggested (the weighting would vary quite a bit, obviously, since the share prices were so different). The symbols and their "entry" prices were:

DOW 45.29
EMC 15.12
GLW 23.40
GSK 58.4573
GS 213.75
GSF 62.31
INTC 21.35
MYL 21.60
MS 81.50
NDAQ 31.20
SMH 35.22
QCOM 43.19
QLD 85.85

By way of comparison, I decided to compare it to the Russell 2000. Over the period since Tom's suggestions, the Russell has moved up from 827.41 up to 828.87, which is a small change of 0.18%. Tom's suggestions were also up .18%, but with a 3 in front of the decimal point as well (e.g. 3.18%). So - - great work, Tom!


Now, as regular readers know, we get our fair share of bulls in the comments section that yell and scream daily about how stupid bears are. That's fine. But what interests me is to find out how smart our bullish colleagues are. Specifically, I'd like to hear what they have to say (in a constructive sense).

So here's my offer - - anyone who has bullish recommendations, commentary, or market views, I'd like you to send them to email address (which you can find in my profile). I will print any specific suggestions or market analysis without comment or editing (except for spelling). Consider it an opportunity to demonstrate the market prowess which you possess.

The NASDAQ is threatening to push above its resistance line, similar to the fashion that the S&P 500 did a few days ago. If tomorrow opens higher, we can pretty much count on a new surge by the NASDAQ. It's all up to the employment report.


The Russell 2000 is also threatening its stop-loss price of 835.17, which is its lifetime high.


Notice how the S&P 500 is staying above its former resistance line. Even earlier this week, on the one day the market dipped lower, the S&P closed above this former resistance line.


I shorted BID yesterday, and it fell nicely today.


I am also short CCL, which seems to have a lot of potential to fall.


InfoSys(INFY) is in a small H&S formation. Plus, when a major stock like this goes down on such a strong day, that's a good sign.


Retailer JC Penney (JCP) remains below its busted trendline.


I went long CCJ (the uranium producer) today, and it's already in the green.


CRDN is shaping up as another prospective long, assuming it breaks above the line I've drawn here.


WBD has been on a tear for months, but I shorted this one earlier today, and it fell nicely. It is sporting a hefty bearish engulfing pattern, although for a stock that is relatively thinly traded like this, it isn't such a big deal.



Finally, just to ensure I am going straight to hell, I offer you Merrill Howard Kalin, who is a mentally retarded adult that broadcasts his own cooking show. And does imitations. Poorly. This must be seen to believed, but if you're the impatient sort, skip ahead to about 4:30 and watch it until the end.

The Wow Starts Now

I read today's trading described as "erratic." That's an understatement. It was a madhouse. For most of the day, it seemed that the market wanted to freak out the final weak hands. But as if that weren't enough, at the final portion of the session, the daily lows were cracked, and the market plunged even further. All of which makes me angrier at myself for the $350,000 in profits I walked away from less than a week ago.



Those of you who took advantage of my New Zealand suggestion (made precisely at the top), send me some flowers or something! I mean, I nailed this thing totally on the head. Little did I know that this currency flux would be driving a worldwide plunge in equity markets.


Part of the freak-out today was from the continuing damage caused by feckless "flipper" real estate twits. Just take a look at sample financing company getting trashed.


My suggestion on BP continues to do well.


And Carnival, purveyor to obese, bored "travelers", continues to fall as well, as I've mentioned it would many times.


Take a look at the Fibs on the Greater China Fund. Looks like we're in for a bounce, doesn't it?


Lehman is just one example of many of stocks that seem to have had the air taken out of them but are reaching support levels. In this instance, based on Fib fans.


Another victim of the housing collapse - MTH. Once again, a short I suggested many, many points ago.


But today was just maddening, as I said. Look at SPY. The horizontal line shows what I thought would be the support level. In the morning, we started bouncing higher (as I imagine we will tomorrow morning). All day the market farted around. And then, as shown by the highlighted area, we got whacked.


One long idea for ya - UNP.


I've got to scoot. My equity puts have been doing fantastic. But I'm a complete moron for selling those index puts. Ugh. What a rotten feeling. I can only hope we get a nice fat bounce so I get a second chance. *Sniff*.

Grinding the Gears

I appreciate everyone's patience while I got my entry done for the day. I went on a whirlwind adventure to Florida to speak (five times) at an investment conference.

Many people were asking me about my book. You can buy it from Amazon right now, and I imagine it will be in your local bookstore within a few weeks. I see it's zoomed from #400,000 to #3,800 in just a couple of days. Harry Potter, look out!

I was really disappointed in the market on Tuesday (yesterday). It started with a quick drop, and then it punched and clawed its way back up to another lifetime high on the Dow.

The bulls are ungodly powerful right now. The reason is simple. This entire basis for people buying into this market is no different than the reason any six year old offers for doing anything..........."everyone else is doing it!" And that kind of sheeplike behavior has been creating graphs like that of the Dow Composite, which is straight up, grinding higher, and higher, and higher, annihilating us poor bears the entire way......


The Dow, which fell nearly 50 points today, continues to offer a flicker of hope for the ursine among us.


The S&P 100 likewise shows a continued reduction in upward momentum as viewed via the RSI.


Today I'd like to offer a mix of both short and long suggestions. As always, check them out more deeply for yourself. Let's start with the shorts. BP, mentioned here a couple of times, pushes closer and closer to breaking its huge head and shoulders pattern.


Carnival, also a repeated mention, looks better too.


CNX is another short energy play, in spite of recent strength in the OIH.


EXC seems to have clearly broken its upward trendline.


Now let's break tradition and pull up some bullish ideas. The balance of today's post is bullish suggestions. Starting with Genentech (DNA), where I've highlighted some similar patterns in the past and their subsequent upward breakouts.


FedEx, moving on to new highs.


HOLX also looks good, and has strong volume backing up its breakout.


IPS is also good for aggressive bulls.


The trouble I am having with conjuring up bullish ideas is that it's tough finding safe bullish patterns in a market this high. I could point out plenty of momentum plays, but I'm not really into taking advantage of the Greater Fool theory.

Good night, and I'll see you after the close Thursday.

Engulfed

What is with this crazy market? Don't get me wrong; a triple-digit down day on the Dow is terrific. But this market is heading for the nut house.

Over the past trading week, there have been two instances of big bearish engulfing patterns on the $NDX. Today's was a whopper. Having a superstar like EBAY up in the double digits at the open and yet have a wipe-out like this is really encouraging.


The $SPX bounced off that resistance line beautifully. The market still has no direction, though. It's neither bullish nor bearish. Just schizo.


The rest are straight-up short ideas. AMX:


AutoZone (AZO), still in the stratosphere:


Carnival Cruise Lines (CCL), approaching resistance:


Black and Decker (BDK):


Goldman Sachs (GS), finally getting a reversal:


LLL:


NutriSystem (NTRI), with its cup and handle pattern failing:


RTI:


Sears Holding (SHLD), also weakening:


Now for your occasional clip of the day! The world's worst weatherman. Brace yourselves.