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! :-)
I bet you never thought you'd associate Devo with technical analysis, but check out their song "Patterns":
Patterns all around you patterns everywhere patterns of behavior sometimes seem unfair can you recognize the patterns that you find?
Patterns unfamiliar patterns lead you through to patterns of discovery tracing out the clues can you recognize the patterns that you find? stuck in your mind
In this land where stability is hard to find you can rearrange the patterns so unkind don't bother asking why a pattern never cries old patterns never die they just go on and on
Patterns multiplying re-direct our view endless variations make it all seem new
Cool, huh?
I read an interesting article about Richard Russell throwing in the towel. He has been a bear for lo these many years. Now, at long last, he's saying it's bull market time. Draw your own conclusions.
Oh, and don't forget to sign the petition to keep Paris out of jail. As the petition declares, "...She provides beauty and excitement to our otherwise mundane lives." God knows that I'm grateful that an illiterate, insipid member of the lucky sperm club gives me a reason to wake up in the morning. I only pray that they don't do a reality show of her incarceration.
One of the readers, Keith Shepherd, mentioned this interesting article about the similarities between the "melt-up" in the Dow recently with the Nikkei back in the final weeks of 1989. Whenever I read that the current market resembles a certain period of the past, I check it out, and usually the graphs don't really match.
Because I adore my blog readers - well, most of them, anyway - I made the effort to fire up Photoshop and blend the recent history of the Dow 30 with the Nikkei 225 during the last portion of 1989. Even I was surprised at the results. They are virtually a perfect match, right down to the doji hanging man pattern created today.
Let's back up some. Take a look at the Nikkei through the 1970s and 1980s. An amazing, incredible, "let's all learn to speak Japanese" (remember that?) kind of market. People were freaked out, and the Japanese were snapping up the Empire State Building, Pebble Beach, and everything else in sight.
Looking closer, you can see that practically every day was an up day. Now let me ask you - - and I'm directing this at the bulls. Where was the warning sign? Where did it show a top was in place? How could you tell that this was the end? Imagine you were massively long this market. How would you know the party was over?
I don't need to tell you what happened next.
Let's take another, smaller example - Malaysia. This little country had a great run-up in their share prices.
But notice what happened after the melt-up. Things went to hell in a handbasket. (I sold short a bunch of EWM today, with a stop at 12.11).
OK, back to the present. DRQ represents a potential buy. In this kind of market, I'm really reluctant to go long, but if you must, this is worth checking out.
I would say the same thing (with similar warnings) for former shining star JetBlue (JBLU), which seems to be in the process of forming a series of higher highs and higher lows, having suffered terribly over the past year.
Oh, and MicroStrategy (MSTR), mentioned on this page many times recently as a short candidate, finally paid the piper. I've marked the failed bullish breakout earlier this year which preceded this nasty tumble.
Your video entertainment today combines two of my favorite cultural touchstones: Star Trek and Monty Python and the Holy Grail. The few moments with Captain Pike is alone worth your time.
You can thank the good people of United Airlines for my ability to get this post done relatively promptly. My brief flight from Seattle to San Francisco has been delayed three hours. So here I sit on the plane, waxing poetic about this insane market.
By the way, does anyone find this image from the login page of TMobile to be strangely suggestive? (Long, uncomfortable pause). No? I guess it's just me.
Here's the NZD/USD - - what I have to say about it is basically the same as what I've got to say in the next paragraph.....
As long as the dollar remains weak, there's going to be yet another reason for stocks to go higher. Looking at the EUR/USD chart, it's clear that we're at an extreme point, but (obviously) it could push to yet another extreme. This chart, in case it's not clear to you, shows the strength of the Euro (and, conversely, the weakness of the dollar), so mentally invert it.
What's interesting about the market is just how swiftly it has pushed higher. Look at the chart below. I've highlighted each of the most recent three "surges", and as you can see, each surge is happening with greater speed. The two lonely down periods here were last summer (oh, how I miss those days....) and - ever so briefly - about eight weeks ago.
The NASDAQ Composite is still within its rising channel, at the tippy-tippy top. Clearly Apple's (AAPL) sensational earnings will push both Apple and the NASDAQ higher first thing in the morning.
The S&P 500 is clearly above its channel. An overshot, or a whole new ball game? Search me.
If you want a truly bullish picture of the market, take a step back and look at the long-term $XMI. This is a chart of an amazing breakout, a perfect pullback, and a subsequent push to new highs. This is exactly what bull markets are made of. Astonishing.
I have suggested Akamai (AKAM) as a short before. It didn't really perform until today.
I like looking for weak stocks on a day like today, because if a stock can't get it up on a day like this, it's in sorry shape. Check out ATI.
Same goes for Colgate, which actually opened higher. Look at the honey of a bearish engulfing pattern on this one.
CRS, mentioned here yesterday, is failing its breakout, and it fell today on strong volume.
Dril Quip (DRQ), mentioned in this blog before as a buy, continues to perform well. Just about anything to do with energy (either classic or alternate) seems to be zooming these days. I can at least take heart that I am in a natural gas partnership.
General Dynamics (GD) looks like a potential short. It busted its trendline a number of weeks back, and it seems to have double topped today, falling when everything else was rising.
I don't have any particular opinion on GOOG, but it only rose one tenth of one percent today - - pretty feeble, wouldn't you say? I think it may be telling. I'd also point out that all the gains from its fantastic earnings report a few days ago have vanished. Everyone who bought into that rally - even at the day's low - is in a losing position now.
I like Southern Copper (PCU) as a short at this price.
Schnitzer Steel (SCHN) - - man, can you imagine being the receptionist there and saying that name all day long? - - continues to look fantastic as a bullish play. Wonderful strength on handsome volume.
Questar also looks good on the long side.
Given today's action, I'm glad the readers voting to take anonymous comments down. You can imagine what much mud slinging would be going on right now.
It's true - the market (as measured by the Dow 30) was up for the 8th day in a row today. This hasn't happened since 2003. So the press is all over that.
Less touted is the fact that today, for instance, the Dow was up all of 4.71 points. In percentage terms, that's the equivalent of a person with a six-figure income rushing home to tell their spouse their gross salary is going up $37.45 per year. Whoo hoo!
One quick note on American Home Mortgage (AHM) before we get started in earnest..... the stock continues to tumble. The tough part - and this is always much tougher than picking out opening positions - is when to close it. I took a look at a long-term chart, and the next really meaty support level is literally in the $6.50 to $7.00 range. Does that mean the stock will go that low? I have no idea. But this short position looks even better today than it did yesterday.
As for the market in general.....same story from me. Take a look at the DIA graph below. The bulls just keep wrenching things higher, but we're still below that busted trendline. Looking at this one graph, it seems the bulls are losing steam. But we know how easily they can recharge those locomotives, don't we?
I've been impressed and surprised by the strength of energy stocks. I have a substantial investment in natural gas fields, so I'm happy to see NG prices creep higher. But my feeling a few days ago that oil stocks were topped out was off the mark.
What's tough about buying into hot stocks is that it's difficult to see them going higher. But they often do. Here's a great example....Entergy (ETR), shown below, had pushed into a new high of about $78. Not that many months before, this has been a stock trading in the high 20s. It's hard to get excited about getting into a stock that has risen hundreds of percent like this.
But look what happened after the breakout (shown with the same horizontal line). This sucker just kept climbing. I admit that I am lousy about getting into stocks pushing into new highs.....it just seems too risky. But the fact is that this is how fortunes are made. Technical breakouts on strong volume often indicate many more gains ahead.
But when thinking about energy stocks, it often helps to at least have a passing awareness of what the commodity itself is doing. The main one, crude oil, has a long-term chart shown below. Obviously oil has had an amazing push skyward since the late 90s, blasting off about 600%. I'll leave it to you to decide where you think oil might go next. I truly have no strong opinion.
Looking closer, it could be argued that there's a head and shoulders pattern in the recent history. Not a textbook-beautiful one, but a visible one nonetheless. That would suggest future weakness. But, again, I truly have no strong view on where energy prices might be going.
Having said that, here are a few energy-related stocks with impressive charts. Dril-Quip (DRQ):
Schlumberger (SLB):
And Questar (STR).
A couple of mentions that are not directly energy-related.....first, I got bounced out of Continental Airlines (CAL), but I'm still eyeballing it. I've inched the neckline up a bit to accommodate the price move. This is not as clean a pattern as it was, but it's still worth watching.
Lastly, Sears Holding (SHLD) continues to be amazing (for bulls). I've mentioned this beautiful cup with handle pattern before. I have no position in it now, but if I were long, I would be delighted. This is an amazing-looking chart.
That's it for today. Let's hope the market gets a little more interesting soon. Otherwise, we'll have a 9th up day in a row, and it'll be +0.35 on the Dow.
I'm not even waiting for the end of the trading day to do this post.
Now that the indexes have sliced through the highs of March 26, bearish hopes for a softer market are - for the umpteenth time - destroyed. At this point, only surprisingly weak Q1 earnings........or a totally unexpected world event....is going to slow this market down.
From a charting perspective, the market is in full-blown bull mode, with the only resistance being that major support line that was decisively broken in late February. The market certainly still has more room on the upside.
Since I'm weary of showing potentially bearish charts that get swept up in this bull mania, I'm going to switch hats and offer a few bullish ideas. Dril Quip (DRQ):
Greif.....just look at that volume surge.... (GEF):
Health Net (HNT):
Holix (HOLX):
Jacobs (JEC):
Schlumberger (SLB):
Questar (STR):
I'm sure the naysayers that hang out in the comments section are delighted at the misery of the bears (and, more specifically, me!) Well, that's the market for ya. 99 times out of 100, it belongs to the bulls. Days like February 27 come along only once in a blue moon.
I hope some of you find some good fodder in the charts above.
Tim Knight founded Prophet.net, considered by Forbes and Barrons to be the #1 technical analysis site (sold in early 2005 to INVESTools, where he is the SVP of Technology now). Tim has been trading actively since 1987 and focuses mostly on option positions. He is a dyed-in-the-wool technician, leaning heavily on marked-up charts for his analysis. The contents of this blog are NOT to be considered investment advice, and you should know Tim may or may not have positions in the securities mentioned here.
