Once More into the Breach

Well, I'm glad we got that bit of business out of the way!

The stock market did its usual spastic freak-out the moment the Federal Reserve Statement was issued. First it lurched down. And then up, big time. And then down again. And it spent the rest of the day generally heading south. It wasn't a plunge, by any stretch, but it certainly nuked a very healthy rise in equities into oblivion.


Looking at the candlestick chart of the IWM (which is the ETF for the Russell 2000), you can see a picture-perfect shooting star. My feeling is that tomorrow will be a down day, and we can get back to the business of shorting this market.


Colgate (CL) is a relatively stable/"no surprises" stock that might be worth acquiring puts against.


Coventry Health (CVH) appears to have failed to break out of a normally bullish pattern, which is bearish. I'm short the stock.


I've mentioned Jet Blue (JBLU) for the bulls out there. I stand by this position. Maybe this former high-flier is getting its act together after many embarrassing fumbles.


I bought puts on MCK today based on a small head and shoulders pattern plus a falling-away from a Fibonacci fan.


Oils are looking pretty good for put/short opportunities too. I bought puts on OXY just before today's close.


Same story with Southern Copper (PCU).


Potash puts are fairly heavily traded, thus the bid/ask spread isn't atrocious. I picked up some of these today (as with all the other trades, well after the Fed craziness).


...and the same for Schlumberger (SLB).


.....and Exxon (XOM).


I stopped trading Research in Motion (RIMM) ages ago, since the stock is just too weird for me to understand. Congratulations to those long the stock (and, even moreso, long the calls). RIMM had oh-my-God earnings after the close today and, last time I checked, was up 12%. Poor old Fred Hickey can't seem to live this one down.

The Show Must Go On

It was another relatively uninspiring day on the markets......but I dare not let a post go stale! So, as always, at least a few thoughts.

Akamai (AKAM) is a peculiarly slanted head and shoulders pattern which inched lower today, in spite of some general market strength.


Albemarle (ALB).....and, good technician that I am, I have no clue what they do.... continues to fall nicely. There is really very little in the way of support on this stock, so I'll just keep tightening up my stocks.


Just to show again I am not a bear a bear only, I've got a couple of bullish ideas. One of them is Blockbuster (BBI) which is trying......apparently with some success....to change their business model in the age of Netflix and Apple TV.


Another bullish idea - well, kinda - is DXD, which is a double inverse ETF based on the Dow 30. It's incredible how popular these things have become. Just look at that volume.


A bullish idea I've mentioned before which is moving in the right direction is JetBlue (JBLU).


My crusty old short in Sears Holding (SHLD) is ever-so-slowly moving downward. It finally edged beneath the support line you see drawn here.


I'll see you here tomorrow.

Small Caps Catch Up

The market pushed higher today in fits and starts, and in the end, the Dow and S&P 500 closed down a little while the Russell 2000 - home of smaller cap stocks - pushed to a new high.

Even though the market seems unfazed by the weakness in NZD/USD, it is still worth watching. This currency pair has done a decent job indicating recent turning points in the market.


One stock I don't think I've mentioned before is Bunge. This has made a flag pattern recently. You can make of the pattern what you will:


BTJ has been a recent high-flier that might make a good short candidate:


CRS had a nice breakout a few weeks ago, but this breakout seems to be losing steam in a big hurry. Failed breakouts make great shorts.


Much of the housing sector - - lenders such as AHC as well as builders like BZH - had a nice bounce higher today. I took it as a good opportunity to enter some shorts of stocks that were retracing their head and shoulders pattern to the neckline, such as ESS, shown here.


Honeywell (HON) is starting to lose ground.


....as is Microsoft (MSFT)...


A couple of long suggestions. JetBlue, mentioned here not long ago as a potential buy, looks good. A series of higher lows and agreeable volume trends make this a handsome candidate for puchase.


And Questar (STR), also mentioned in the past, continues to prosper after its well-formed breakout.

I'm Turning Japanese

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.