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.

Just. Plain. Weird.

Well, we bears started off with every advantage this morning. The Nikkei had fallen hundreds of points. China had gotten clobbered. The currency situation looked eerily similar to what caused the February 27th mini-crash. The GLOBEX was way down. And the market opened down, soon more than 60 points off the Dow.

And then what happened? Of course. The bulls came to the rescue. Incredibly, inexplicably, disgustingly, the market shook off the barrel-full of bad news and actually went into the green for the 700th day in a row. Un-{Nixonian expletive deleted} believable.


The most important "index" to me is my own portfolio, and I was glad to see that it actually moved reasonably higher today. Someone was asking in the comments section why I'm so hung up on the Dow. Two reasons. First, it's the most widely recognized and used index by the public. And second, I deliberately am seeking out the strongest index (currently, at least). If I'm bearish, I want to be in tune with the least bearish of the major indexes to keep an eye on its strength.


Perennial favorite $RUT (the Russell 2000) fell down today. It's interesting to see the candlesticks here. Three down days in a row, each one a little more strongly down than the prior one.


The S&P 500 was also down just a touch today. I see in after-hours trading that Google (GOOG) blew away its estimates (I have no position in GOOG) and it is up something like $13 per share. Obviously it will be interesting to see what the stock does in "real life" tomorrow. But the company's ability to print money is clearly undaunted.


My puts in $XAU are going great. The lower lows/lower highs is as plain on the nose on your face.


The NZD/USD has got to fall in order for us to see real weakness. It looks ready to turn, based on what I've marked here.


I haven't done this in a while, but below are my current positions. All of them are bearish. The bold ones are puts, and the regular ones are shorts.


Lastly, I haven't provided a video in a while. One of my favorite groups ever, Devo, did this video back in the early 80s (my own personal musical nirvana). With the crappy time we bears have had over the past two months, I thought it was time to "take a break".......

Eight is Enough

Well, the octet of upswings in the market met a welcome halt today. Between the real estate market going down the toilet and the Fed gritting their teeth and confessing that the economy is starting to weaken, the market got the kind of one-two punch in the face it needed.

One catalyst for the drop in late February was the carry-forward trade. The NZD/USD nicely captured this (shown in green). As you can see, this FX has been pushing higher and higher (in spite of staying obediently below the broken trendline). A weakening here would portend good fortune.


Much of the indices resemble the NASDAQ 100 ($NDX), shown below - - basically, a slip from the huge upswing we've seen over the past six weeks (which I consider a retracement that will precede a much bigger drop).


My favorite index puts - the Russell 2000 - had a pretty good day. I've adjusted the stop to 816.13 on these.


And here's the S&P 500 ($SPX). Check out the RSI and Slow Stochastic indicators.


Gold & Silver ($XAU) seems to have reached the top of its descending channel. I've got a big block of puts on this index now too.


One of the most resilient indexes, the American Stock Exchange Major Market Index ($XMI), may have double-topped. I hope so, at least. God can't hate me that much.


A high-risk bullish play might be found with - believe it or not - some of the battered sub-prime lenders. Check out Fremont (FMT). The monster volume and triple bottom might mean a nice bounce higher. Of course, you could also wake up one morning and find one of these companies has declared bankruptcy, a la NEW. That's why I'm not going to touch it myself.


General Growth Properties (GGP) finally took a tumble on some very sizable volume. Lots of room left before it hits that trendline.


Tired old has-been Microsoft (MSFT) seems to have a nice H&S pattern.


NutriSystem (NTRI), favorite stock of departed commenter hurricane5, is again in my portfolio. No surprise here, folks - I've got puts on it. Another nice H&S pattern, in my opinion.


PSB continues to shape up nicely. I'm jumping the gun a bit on the pattern, but as long as it's shaping up as roughly drawn here, I'm a happy fella.


Reynolds (RAI) is finally started to sink. It's about flippin' time.


Someone commented that getting a long series of modestly down days would be better than one whammo day like we had on February 27th. I'm inclined to agree. But cruel fortune doesn't care. We simply have to take it a day at a time.

Odelay!

The Bear: "Are you an assassin?"

The Bull: "I'm a soldier."

The Bear: "You're neither. You're an errand boy, sent by grocery clerks, to collect a bill."

Needless to say days like this make me happy. Particularly since today's 243 point drop on the Dow was within plain sight......two weeks, to the day........of the lovely 400+ point drop on the Dow on February 27th. A new force may be emerging.


Not that long ago - say, last year - I would have been jumping around talking about how it's the end of the world and the bears are going to own everything, and so forth. No more. I've learned a skosh of humility (and paranoia) since then. So I take it a day at a time. All the same, I grin when I imagine what that Australian touch-hole who called me must be going through. Although I'm assuming he has money to lose, which is probably a false hope.

On the occasions when I drive my family up to the mountains of California, we pass many towns that seem completely populated by those completely grotesque and utterly uniform beige-with-red-tile monstrosities that are advertised as "Homes" in the weekend papers. These vile creations seem to be the work of firms like Toll, Pulte, and Beazer, all of whom seem to be going to hell in a handbasket. Maybe there's a little justice in this sad, sick world after all.


The unwinding of the "buy and flip" insanity is crushing the sub-prime lenders which, in turn, is causing we few.........we happy few........to have good days like today. Here's Fremont....


And the poster child of this debacle, New Century. Thanks, fellers! We appreciate your bringing along the kind of disaster we need to start something really horrific!


The story for the indexes is the same across the board, so pay attention: if they can break the lows set next week, it's party time. If they stabilize and recover, we're probably going to be range-bound by something approximating today's range. Here's the NASDAQ composite with a potential target circled.


The minute by minute charts illustrate how the bullish breakout that was attempting to form completely failed. Disappointed bulls! Our specialty! Die, you weasels....


My favorite index, the Russell 2000, needs to break below $760 for us to continue to celebrate.


Here's a minute chart of the $RUT with more detail. An analysis of the psyches which pushed the market up, and then down, are provided for your convenience.


This is getting old, but here we go - the S&P 500.....


And the minute graph of the same.......


The $XMI is staring in the face of a grand breakout failure.


AutoZone, which has been up about three million percent in the past few months, is finally breaking. I've got puts. Lots of 'em.


Recent favorite CME is throwing lots of green into my account.


Oh, and then there's Google. The company that could do no wrong. These turds paid $1.6 billion for a web site where people could post mostly stolen content. And they haven't been able to figure out how to make money at it. And now they're getting sued for $1 billion. And I've got a hunch there are other big media companies that will follow. Nice goin', braniacs. Talk about buying at the top. Had they waited a few months, they could have picked up the same company for 1/8th of the price, I bet.


Ah, and Goldman. Yep, you've seen this mentioned here many times. My puts on this did great - - I bought a bunch at the top today. In spite of blowout earnings, they fell down hard on huge volume with a bearish engulfing pattern. Yes!


Wow, it's almost too much pleasure to take. Maybe the bulls will wipe some of the grin off our faces tomorrow, eh? We'll see. Deep down, I'm always hoping we're at the start of something very big that will absolutely destroy those creeps. Hope springs eternal! Go get 'em, a'ight?

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*.