Poetry in Motion

I've got a riddle for you.

What well-known Jewish personality made a bundle of money on Wall Street today and needs to have their back hair waxed? If your answer is Abby Joseph Cohen, you are technically correct, but the answer I was seeking was Stephen A. Schwarzman of Blackstone.

OK, here's the second part of the riddle (isn't this fun, kids?)

What percentage of public investors have profits on newly-minted Blackstone Group (BX) today, now that the trading day is through? The answer: basically zero. Oh, I'm not talking about the midget founder of the place. He's doing just fine with his billions, thanks for asking.

I'm talking about the poor schlubs who thought they could get inside the club by buying into this stock. Virtually every single share bought is in a losing position. Nice going, folks.


Yesterday, if you'll recall, I wrote:

But tomorrow is - at last - the big day. That's right - it's Blackstone day. Apparently the demand for shares in BX is about seven-fold oversubscribed. Nothing would be more poetic than the market taking a fall tomorrow.

Well. Down 189 more points. Nice.

I actually had a great day, making money both on the short side and - for the brief bounce of the day - on the long as well. I remain cautious and humble in the face of a massively moronic and gullible public that could be coaxed into buying again. Thus I tighten my stops every day.


The Russell has been stronger (relatively) than I'd like to see. But it remains attractive to me largely due to its reasonable bid/ask spread on the options. I remain dumbfounded at the complete rip-off represented by the S&P 500 options market. It's just criminal.


Oh, speaking of the S&P - - - in spite of the recent fall in equities, we remain absolutely sky-high. Dare I even say grotesquely overvalued. Oh, well. It'll take years to sort out. Long story short, don't be fooled with the tiny inching down we've been doing. It's nothing compared to the radical overvaluation still present. Trillions of dollars of equity need to be destroyed before we are at interesting values again. Whether the top has passed it totally unknown. And it doesn't matter to me, as long as I manage and maintain these stops responsibly.


Symbol ALB bounced up to a perfect retracement, thus permitting me to re-enter the position which I closed profitably just a couple of days ago.


Symbol CAH isn't doing badly for me either. I own puts on this.


Although Cigna (CI) is too big to simply collapse, it's got a cute little H and S pattern whose neckline was broken today.


A new short I think I'll enter next week is - again - Malaysia (EWM).


I've got to hand it to Google (on which I have not had a position in a while) - - they seem to be doing everything right. This is a gorgeous bullish pattern - just beautiful - particularly in light of today's market action. Poor old Yahoo is just a mess. Why anyone ever used Yahoo in the first place - - I thought they sucked in 1996 when I first tried them - - is beyond me.


Goldman Sachs (GS) suffered some today, so my puts prospered. This isn't a big fall by any stretch. I guess maybe the lame-o BX reaction hurt them? I don't know.


I continue to hold my JC Penney (JCP) puts, which push a little higher into the green each day. This is a dynamite pattern. Never has polyester clothing been so good to me!


I haven't shown Meritage (MTH) in a long time, but I just want to use this to illustrate the kind of slow grinding death equities can go through. I think this is a good proxy for just about the entire stock market, although housing got a head start on the rest of us.


It's been a good week. Particularly since the detractors are too sheepish to show their faces around here during down days. So let's celebrate:

Ultra Chicken

I've been wrong enough to know that I'm not going to start cheering on a bear market. The market was down today. I'm glad. Maybe it'll be down a lot more this week. Which will make me happier still. But until we have a no-doubt-about-it rupture in the uptrend, I'm keeping my furry mouth shut.

The $VIX may have formed a "V" bottom with recent activity, which would obviously be good for both put holders (me) and bears (me again).


I've mentioned AMLN a bunch recently, and it continues to behave like a good little stock (on the short side).


I take pride in being such a pure technician that I know only the ticker symbol - - I don't know the company's name, and I certainly don't know what it does. The symbol is AXR. I shorted it Friday. And today it lost double-digits of points. Nice.


I got burned a couple of weeks back buying puts on superstock AutoZone (AZO). I'm ready for more punishment.


Cigna is a much less volatile stock, but I see a double top here and a stairstep down these Fibonacci levels forthcoming.


Shoe god Nike is another security on which I own puts. It took a nice little stumble today, but I have much bigger ambitions on this one.


I haven't touched NutriSystem in ages, but I'm ready to go back into the water. There's a small head and shoulders pattern here, and this is the kind of fad stock that can succumb to gravity.


RAI is a good short in the world of metals.


...as is RTI......


Sears Holding (SHLD) is another item I've avoided, only because it has the makings of such a sensational cup with handle pattern. But this pattern is starting to look shaky, so I'm OK putting some risk capital into some puts on this one.


Lastly, a bit from one of my favorite cartoons - Aqua Teen Hunger Force. This one is only a little offensive, so you are probably safe clicking the Play button, no matter how far away you live from the coasts of this great nation.

Earnings Season Begins

Earnings season is upon us again. So our chances of turning the corner downward appear briefly once more. Unless earnings are, on the whole, not up to expectations, Dow 13,000 seems all but inevitable.

Intel (INTC) is down after-hours, in spite of hitting expectations. And Rackable Systems (RACK) is getting completely clobbered:


My colleague Michael Kahn wrote this morning, "The rally rumbles on and quite honestly we are out of new ways to say that this should not be happening." Well said. The NASDAQ Composite is above even the high water mark of its channel. This rally is based on the same sensibilities as late 1999/early 2000. Just insane.


The S&P 500 is much the same story.


Of particular concern is the Dow Transports. Just take a look at how swiftly it has managed to retrace back to the descending trendline. I have a feeling it could pierce above this, which would weaken the bearish argument further still.


Looking at more history of the $TRAN, you can see how prior breakouts preceded substantial moves upward.


ANDE, mentioned in this space before, remains a good speculative bullish play. It all depends on the stock pushing above the neckline you see drawn here.


BP, which has been much in the news lately, looks like it is forming a tremendous top.


CCJ, although not in any crystal clear pattern, is a short I entered today. It seems to have a very good risk/reward profile.


And Cigna (CI) may have formed an important double top. As always, you must use stop-loss orders!


A short idea I haven't offered here before, I don't think - symbol GEF.


Now GOOG is interesting. It matched a lifetime intraday high today, but actually fell a little bit. Is this a double top? Or does it simply proceed a rush to $600 when they announce their earnings? I certainly don't know.


McKesson sports an interesting pattern with those Fib Fans as a backdrop. Might be a triple top here.


As for MLS, shown below, I'm not saying buy or sell. It's simply a fascinating study in how, once higher highs/higher lows are broken, the trend shift can be devastating. Because it completely morphed into a series of lower highs/lower lows. Fascinating stuff.

Trick......or Treat?

What a roller coaster of a day. I thought we bears were going to get a real treat (Dow was down over 50 points) but it turned out to be more of a trick (market went positive before the close, and finally settled down only 11 points). Here's a line chart of the action over the past few days on the Dow. Totally direction-free. What a mess.


I continue to tout the Russell 2000 as a good place to own puts if you think the market is going to fall. It's got a super-clean stop price too. Puts on this aren't heavily traded, but the bid/ask spread isn't too godawful.


The Transports are looking ready to begin a fresh descent. I like this progression of lower lows and lower highs. A clear tumble here would spook all the Dow Theorists pretty badly.


Bear Stearns (BSC) isn't in any textbook bearish pattern, but the puts on these will have a lot of juice if the steam ever starts to come out of this stock. It is high enough to make this a relatively low-risk/high reward trade.


A more conservative trade would be along the lines of Cigna (CI). I would buy puts many months in the future on this one, since a gigantic insurance stock isn't going to be horribly volatile.


Earnings season isn't providing the kind of clarity/direction I was hoping. Bulls and bears are both losing their minds in this market. So we wait.