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.

Can I Buy an Emotion?

Wow. This market's a snoozer right now.

I know, I know, it's been up. But it's still a bore. Not even two weeks ago, the entire thing was collapsing. Now we're back to the markets just inching around, not really knowing what to do with themselves.

Speaking of boredom, here's my pointless social observation of the day. I eat out a fair bit. I eat a lot of Chinese food in particular - - most of it quite good, since I live in the SF Bay Area. I'd guess I've probably eaten at Chinese restaurants maybe 700 times or more.

I therefore have a pretty good eye about what to expect. Among the stranger phenomenon......which inexplicably bugs me........is the Person Reading At the Table.

Now, if some poor soul is by himself, by all means, read! I'd hate to see a person alone just staring into space. But when you're with a companion.....and typically, it seems to be a wife.....to whip out the newspaper and read it while you await your food is just plain rude.

And it's not like these couples are even exchanging opinions about what they are reading. Only one person is reading, and both of them are staying dead silent. The ignored one - the wife, typically - is just staring into space, probably wondering how she wound up with this total dork. The inclusion of other family members seems to diminish this desire not a whit. Weird.


Oh, yeah. This is supposed to be about technical analysis. Well, my blog, my space, right? But your wish is my command.....

There is formidable resistance around the levels we're at right now. The bad news for us bears is that, should this resistance be broken, it makes an easy argument for the Dow to blast about 400 points higher. I've highlighted the "resistance zone" as it stands now on the S&P 500.


A longer-term view - this one a minute graph of the Dow over the past couple of months - shows there's plenty of upside on the Dow if its only substantial barrier is the underside of that giant broken trendline. Now that would be a real shame. I imagine the bulls have already long forgotten what happened on February 27th. Another few hundred points would make them giddy again. And we all know how nauseating that can be.


The Russell 2000 shows very substantial resistance about the $796 zone, which is where two Fib retracement lines lay in the the same vicinity. A $RUT above $800 would depress poor old Tim mightily.


Just a short ideas to ponder today. CRS on the short side.


MCD also on the short side, with puts being attractive for you option players.


NBL, with a nice RSI signal and a potential double top, another short idea.


PICO, mentioned here a couple of times already, is having a nice run up. (Happily, this was one of my rare bullish suggestions).


I'm more animated and interesting where there's dynamism in the market. Particularly on the downside. Try me again tomorrow. The market muse may have smiled upon me by then. In the meantime, I'd like you to enjoy the adventures of.....Stedman!

Stalemate

In yesterday's post, I laid out bullish and bearish arguments for the market, since we seem to be in one of those awful stand-offs between the bulls and bears. Today played out in precisely that manner.

The widely-anticipated jobs report came out. The results were interpreted as bullish. The markets zoomed higher at the opening bell. Fibonacci retracements were touched all over the place, and then the market started to soften fast. It went negative. Then positive. Then negative. Then positive. And finally ended with about 1/4th of the gain it had at its high point. Just ridiculous.

I'm 100% in puts and shorts right now. Below are my positions. Boldfaced items are puts.


Here's the Dow 30. You can see it bounces off that Fib beautifully.


And here's the Russell. For the second day in a row, it bounced off the fib. It actually managed to sneak across the line a little, but not for long.


The $SPX is pretty similar to the $INDU.


I've got a couple of long suggestions. Here's Bowater (BOW):


And, and even better one, Pico Holdings (PICO), which has the advantage of a big volume surge recently.


A few short ideas. BBD seems to have retraced within the Fib retracement nicely.


MS, like a lot of other investment banks, has likely retraced to an area where I think it doesn't have the strength to climb any higher.


Microstrategy (MSTR) blew me out a couple of weeks ago, but it was a one-day fake out. This one looks weak.


Options on the QQQQs have the advantage of being penny-priced, which is much more fair to traders.


Reynolds (RAI) is retracing back to its broken dome pattern. I also have puts on another aluminum stock, symbol AL, but the chart isn't as pretty.


Lastly, symbol RYAAY looks like a low risk/high reward short candidate.


My kids have given me some kind of bug, so I'm typing this with the chills. Even though it is 70 degrees outside, I'm going to go sit in front of the fire! Have a good weekend!

Exodus 8:2

Things fall down.
People look up.
And when it rains, it pours.

First off, since my blog is suddenly so popular, a public service announcement: buy my book! Honestly, if you like charts, you'll love my book. And if you use the Investor Toolbox, you have got to get it - - it's the only way to become a ProphetCharts expert! Anyway......

Wow, no comments on how obnoxious yesterday's post was! I guess people have come to expect it. But that video was a kick, eh?

I woke up this morning - just like Tuesday morning - to a beautiful site. The GLOBEX totally smashed in by bearish action in China:


It was thrilling for a little while. The Dow plunged another 200 points. I watched my index puts (which I had stupidly sold Tuesday morning) move from $211,000 in "coulda" profit to almost $300,000. Ouch. Always nasty to see what could have been. The indexes were on a wild ride all day, at times even moving into positive territory. In the end, things were generally down a little.


I hate to say it, but I think it's more likely Friday is up than down. There are a couple of reasons. First, today's action was largely a freak-out session based on Tuesday jitters. Second, there are candlesticks all over the place - some of them gigantic. And third, people are talking bear talk now - - - it's best to maul bulls when they are not looking. That isn't the case now. The $VIX has exploded higher. (N00B alert: click on any chart to see a big version.)


A longer term look at the S&P shows how it could easily move back up to the underbelly of that broken trendline. At that point, it would be like shooting fish (or bulls) in a barrel. As it is now, I'm nervous.


It remains to be seen, but if we do sell off tomorrow, the Russell will have already accomplished its mission of pulling back to its own trendline. This is the only index on which I own puts right now. Puts are relatively expensive now, versus last week, because premiums have understandably exploded higher. So I'm afraid buying puts now is much riskier than just a week ago.


Just look at the candlestick on today's $TRAN action (wow, that sounds like something that would happen on a Castro street corner).


If we rally, the $XMI should do well. Look at not only the candlestick but also how nicely the prices have pulled back down to that former major breakout point (the horizontal line).


I bought some more CME puts today. It seems to me it has pulled back to resistance. I'd put a stop of $552 on these.


Here's a longer-term look at the same stock.


PICO, which I only just stumbled across today, has the makings of a good bullish pick.


I was really ticked this morning when I saw the NZD. I was short the currency. And it had plummeted overnight. So why I was upset, then? Because I had been stopped out on a margin requirement. See, this is something I hate about FX trading. It is so highly leveraged, it is very easy to get a margin call, and the broker will sell every single position you've got. So if you have a ten cent margin call, blammo, your entire account is closed out to cash. So I missed out on a huge move.


Just look at QID. Can you believe a security that started off with just over 100,000 shares traded in a day is now trading close to 20 million? What a success story!


RAI has formed a beautiful dome topping pattern.


And old favorite SHLD, my only bullish position, sported a nice candlestick today whose low met resistance. A stop on $172.49 is good for this one.


Friday should be really interesting, particularly since the weekend is upon us. If people are really shell-shocked and nervous, and they don't want to live through a weekend of uncertainty, maybe we'll get some downward pressure. But don't call me permabear if the market rallies tomorrow. I would say it's better than even odds on a good rally, in which case we'll have to sit things out until prices (and premiums) get reasonable again.