Vox Populi

All right, the votes are in!

I appreciate so many people voting - well over 600 took part in the first "Technical Analysis with Tim Knight" poll, and the results are illuminating.

The first question was to address whether or not anonymous posters should be allowed to comment on this blog. I've flip-flopped on this decision (alone) many times. Sometimes I open it up to anonymous posters, since it increases the activity of the comments section and makes it easy for everyone to post. But then, once a few bad apples spoil things for everyone else with abuse and pointless put-downs, I decide to shut them off again.

So I decided to take this issue to the voting public. Watching the results was like watching a horse race. It was neck and neck for a long time, then "Ban Anonymous" starting to take hold. In the end, the majority voted to eliminate anonymous posters. I guess the verbal fistfights got to be just too much. So.......you have to be a registered user to post here. That definitely means the comments section will be a lot less active, but it will by the same token be a lot more civil.


The next question I asked was how to improve the blog - - unfortunately, I only gave three choices: more index analysis, more stock analysis, or a reduction in the comedy. I didn't include a forth choice, "Everything is Fine", which apparently a lot of people would have checked had they been given the chance.


Those that clicked Other entered nearly one hundred specific suggestions, most of which were along the lines of "Leave it just the way it is." So - - will do!


Finally, out of curiosity, I wanted to see if the readers of this blog tended to be bulls, bears, or simply rational non-animals. It seems that most people claim to be agnostic, neither bullish nor bearish. I guess this is similar to asking whether a person is liberal or conservative, and they answer "economically conservative and socially liberal." It's a nice, safe middle ground. So be it.


In spite of the Dow's strong run today (and its continued attempts to crack 13,000 - - come on, can't you get it over with?!?!?) the Russell is still looking good on the short side.


And the Gold and Silver index continues to behave nicely within its descending channel.


I entered a new short today, CRR.


I don't have a position in CRS right now, but it looks like a potential short, since an otherwise beautiful bullish pattern isn't seeming to catch fire - - added to which, the volume has been slowly dying down for over a year.


I like the looks of MicroStrategy (MSTR) for a short position too.


...same story with MWP. As you can see, I'm using a trip of moving averages to help drive home the waning momentum.


As for ONT, the stock I keep mentioning as a long - - it continues to look good, and on sensational volume. Remember my cautionary tale from yesterday, though.


Lastly, my X puts finally started pushing up in price. It's about time.


Everyone is obsessed with 13,000. As I said, I (strangely) want to cross it. "13k and out of the way", so to speak. I imagine once this barrier is crossed, people will check that off their list and start selling into it.

Oh, and.......

Cocksure

Out of the past 24 trading days, the Dow Jones has been up 20 of them. The market has been on a basically unstoppable rise since July of last year. And, since October 2002, the market across the board - particularly in Mid Caps - has been zooming higher.

Even the strength since February 27 of this year has made the bulls nauseatingly cocksure. Here are some recent quotes I have extracted from the comments section of this blog. Keep in mind that bulls aren't exactly the sharpest knives in the drawer, so you'll need to look past the grammatical errors and misspellings, all of which I've left intact:

you morons are shorting into the next largest bull market. who gives a damn about volume when price pays boys.

Ahh another up day, the bears cannot catch a break.....fu$king sad. UP UP UP, the dow has had its longest winning streak in 4 years. WTF is wrong with this picture?

bullish is the way to live the good life and buy index options for the weekly runs to maximize gains

take that bears, nice rally for all you moron put buyers.....

everyone including the parents were waiting for this rally. believe me short tim it is far from over pall

Trader time, wrong again,.. When will you admit to being wrong earlier with regards to your bearish predictions and puts? Why are you still in denial? Stop being a n00b and admit to your errors. Why do you keep relying on technical analysis while oblivious to fundementals, which is what really drives this market? Anyweay best of luck cause yoru gonan need it.

So your thankful for 'helpful' advice even if it is wrong advice? That makes a lot of sense.

I don't think the market is half as frustrating as you are silly. I said all along, if there is a top, identify it with a name.....silence. Soon it there will be another sell off, but you will have much more trouble picking it out verses buying the dips till they don't work no more.

i hope you shorts get hit with huge losses trying to go against the great American way of everyone prospering together.

bend over shorties.....

take that bear shorty, new highs galore across the board and time to buy calls with all dry gunpowder to leverage the coming upside in the next few weeks.

Chart more long positions so we can actually make money...lmao...

And there you have it. Bullishness in a nutshell. One might want to acquaint any bull friends with the difference between a possessive pronoun and a contraction. Or the proper spelling of the word versus. Or the fact that terms like "lmao" were used by folks like me back in 1980 - nearly thirty years ago - and seemed trite even back then.

It was recently offered the the logic for being bullish was that Warren Buffett was rich. I could use the same logic to start my own digital animation company and personal computer manufacturer since Steve Jobs is rich.

This site is about charting the U.S. markets (primarily). Everyone should keep in mind that I take my valuable time doing this blog not because it makes me any money, but because I like looking at - and talking about - charts. This blog has earned a well-deserved reputation as a safe haven for bears. But, since the spirit is willing and the flesh is weak, bears have been dropping, one by one. Even my old friend Dennis turned in his virtual bear card last week.

My disposition remains unaltered, not out of stubbornness, but out of thoughtful analysis. One need only examine the comments extracted above to comprehend the depth of thoughtfulness bulls can conjure up. They have been right, to be sure, over the most recent years. And, broadly speaking, they have likewise been right since 1982. But, I say again, my present point of view remains unchanged in spite of the market's recent strength.

The Dow Jones 30, shown below, had another positive day today, although this evening's GLOBEX markets are rather weak. (Yahoo, in particular, is kept walloped by nearly 9% as of this writing). There is, as always, a potential to mark a double top here, but broader indices (such as the $MID) recently went on to new highs and negated their potential double tops. It would take very little additional strength on the Dow's part to do the same.


A look at the $MID, embellished with Bollinger Bands, indicates we are stretched almost to the breaking point at the high end.


Take note of the Russell 2000 as well, which actually went down today in spite of the market's general strength.


The S&P 500 is also way at the top of the Bollinger bands, and the RSI is just peeking over the 70 level, meaning a weak day tomorrow would give us a sell signal via the RSI.


I bought puts on the $XAU today with a stop at $150.


The $XMI seems profoundly overbought to me.


My short in MWP is doing pretty well. This is quite a hyberbolic stock (I won't bore you with ONT today, but that in hyperbolic in a good way - - bulls are doing great with it).


Just to give you some perspective, here's U.S. Steel (X) over the past ten years. I'm sure the bulls will quickly explain away the 12-fold rise in price. But try to be rational, even for a moment. Look at the graph. Tell me this isn't overbought.


People never learn. It's always "different this time." There's always a new excuse. Years ago it was the Nifty Fifty. Or the One Decision Stock. Or the New Economy.

Or, now, the Goldilocks economy. And the sheep..........I mean, the bulls........are happy to go along with it every stinking time.

Special Bull Challenge! For those of you convinced things are Different This Time - - instead of prattling on, tell us what to buy! I'd like any of you bulls to provide ticker symbols, target prices, and stop prices. Since you seem convinced of your rightness, lay it on the table. Tell us poor saps what we should really be doing. We'll see how your picks fare. Please post these in the comments section........

I, For One, Welcome Our New Bull Overlords.....

Thanks for coming back this weekend (or Monday......) to see my post. I had to do some thinking, charting, and scanning to reassess the market.

Oh, before I begin, a shameless plug: for those who have been holding off buying Chart Your Way to Profits, check out the reviews of my book. You'll be able to get some third-party opinions from those who have actually read it. The one negative review was from someone who didn't realize the book was largely about ProphetCharts and JavaCharts. So, consider yourself warned.

I really tried to look at the whole market with a very open mind, because the strength of the bulls since July has been frustrating, confusing, and vexxing. I keep coming back to the graph below, which shows the S&P 500 over the long haul. I simply cannot see that we are set up for a bullish surge. I don't want to hear about liquidity, the global economy, or the trillion dollar oil surplus seeking a home. This blog is about charts, and the charts, to me, don't say "buy."


Looking at a short-term S&P chart, we can see that we're getting dangerously close to the high set back in February. It isn't the all-time high (set early in 2000), but it's getting close to that as well. The big question now is, does the market (a) sink from here (b) push up to a double top and then sink (c) blow past the February high and make an assault on the all-time high from the bubble.


To me, an important indicator to watch is the NZD/USD market. The New Zealand kiwi has been extraordinarily strong. The weakness in late February was a good early indicator of the tumble the markets took. But, since then, this currency has basically been going straight up.


Another item I watch is China - one shorthand way to do it is via GCH (Greater China Fund). One interesting tidbit is that it seems to have retraced up to a retracement level. We'll see if it backs away or not.


I wanted to show a few examples of why it's careful not to fall in love with a particular point of view. In particular, why it's important not to anticipate pattern completion.

Technical analysis is a helpful tool - especially in markets that are friendly toward one's general investment disposition. For instance, if the market were, by and large, weak, the short ideas I've suggested over the past months would have been quite successful. But the fact is that we're swimming against the tide, and that makes it very, very hard.

And I'm not saying the market would have to be in some horrendous free fall. But if things were easing down, week to week, and month to month, that's where using T.A. to smoke out good short opportunities is invaluable.

But when you're swimming against the tide, you have to be extra vigilant. Take BP, for instance, shown below. I mentioned this as a potential short. It had a beautiful topping pattern. It broke below its neckline. And it started falling.

But what happened next? It got strength. It went above the same neckline. Thus, the pattern was rendered moot. And then it soared! Being able to escape the "jaws of death" like this is a real sign of strength that must be feared by bears.


Here's a similar situation with FTO. A gorgeous head and shoulders in the making. But the pattern did not complete! You can see what happened next. That's why scoring a little more profit by seeing a completed pattern in your mind's eye is seldom worth it.


For our next example, here's HES. I've often pointed out how, once a trendline is broken, the price obediently stays beneath it, and maybe "kiss the underside" of the trendline. That's all well and good, but it doesn't mean a collapse is at hand. A price can stay beneath its trendline for a very long time and still make tons of money for the bulls.


My general feeling toward the index is simply that I don't know what the hell is going on. A terrible confession, eh? But these markets are bewildering these days. You're going to hear the same story from me - - we're pushing toward either a double top or to new highs. We're awfully close to one or the other.


$NDX is a skosh weaker. It could back off from the horizontal line I've drawn. Or not.


I was blown out of my precious $RUT puts. But that's what stops are for, right? I don't like the look of this index nearly as much as I used to.


Some indices - such as the $XMI, shown below - have wasted no time in going to new lifetime highs. Disturbing. The bulls are in their ninth month of totally owning this market.


Most of the strength these days is in really "old school" stuff. I'm talking about Steel.....Uranium......Copper........and, for God's sake, Railroads! This is no "new economy" play here. It's 19th/20th century stuff. Here's uranium company CCJ, for instance:


Goldman Sachs gave me at least a little relief. Even on a strong up day, it was weak.


Tech giant IBM, on which I also own puts, also was surprisingly weak.


I'm looking at MLM for a new short position.


I've been short MSTR for a couple of weeks, based on the failed breakout you see highlighted here. So far, so good.


MWP is in a tight range. It's going to break one way or the other soon. I have no position at this time on this one.


Someone mentioned last week the stock ONT. I felt strongly bullish on it based on the breakout and volume strength. It has moved up handsomely since then and looks better than ever.


SCHN (Schnitzer Steel - try saying that five times fast) has a hugely bullish pattern too.


SWN, mentioned here bullishly before, looks even better.


If you think oil stocks are going to weaken, XOM is a pretty-good looking short/put candidate.


As you can see from today's posting, it's more of a bullish/bearish mix. My frothing-at-the-mouth bearishness has become really attenuated by the market's action recently. It's disappointing. I shall continue to watch, wait, and hope.

Grace Under Pressure

The market by and large meandered today, moving slightly higher after yesterday's big push upward. The Russell 2000, on which I own the most puts, actually inched down in spite of the other major indexes pushing a bit higher.

The Major Market Index ($XMI) does a pretty good job representing where I think the market is it, which is at the upper reaches of a retracement. For it to move beyond its February highs would require surprising strength. It could happen, and if it does, it's time to return to the bear cave, perhaps for a long while.


The Diamonds (DIA) also do a pretty fair job - this time with some trendlines I've drawn - illustrating the retracement.


Capital One Financial (COF), which I've been mentioning forever, is finally starting to move meaningfully lower. It's about time.


Markwest Hydrocarbon (MWP) has had a huge run up the past few months. But look how the volume has softened up. It has been consolidating for a few weeks. This could mean a breakout, of course. This would be a more interesting short to me if the volume weren't so thin.


Pico Holdings (PICO) is something I mentioned as a long a while back. It seems to have run out of gas. I'd actually look to this as a short (with a tight stop) at this point.


Lastly, Ryan Air (RYAAY) is behaving in accordance with its broken trendline - - that is, moving away and down from it. This stock had been hyperbolic until that trendline was snapped.


Tomorrow will end this shortened trading week. Someone in the comments section has observed that most recent shortened weeks have been strongly bullish. We'll see if that's true or if people get jumpy enough about three days of a closed market to sell instead.

I'm Starting to Like This Market

I am starting to like this market more and more. Several reasons:

• People are starting to wake up to what a train wreck the housing market and defaulted mortgages are going to be
  
• We've got a new financial mania on our hands - insanely huge private equity buyouts - that provide a catalyst for financial catastrophe. Remember the failure of the Japanese to buy out UAL back in 1989? That alone caused the mini crash of 1989 - - and that is a puny deal compared to the absurd BSD type deals going on right now.
  
• Upward momentum is rapidly waning
  
• The charts I have been waiting impatiently to start falling are finally doing so - - the investment banks.....the financial service companies......the real estate con artists. They're all starting to crack

The Russell 2000 has been unkind, but I think we're over the worst of this. Here is a sixty day intraday graph; the head and shoulders target of 30 points to the upside has been plainly reached. Clear as a bell.


The S&P 500 is now on the wrong side of the tracks (for the bulls). Look at the broken trendline, and observe how the momentum is leaking out.


Cabot (COG) looks like a good short term bear play.


Lehman (LEH) is representative of the investment banks, finally losing their luster.


I don't have any particular on MWP, but this is a good example of hyperbolic mania.


Recent recommendation NVR had almost 40 points whacked off it yesterday.


Maybe our filthy paws are starting to get a grip on this deluded market. I hope so.