Froth

How do you address the heartache of repetitious comments? How does one quell hyperbolic, bombastic touting of the same securities over and over? What can you do to temper a mix of English and Spanish comments? Yes, it's....


Sorry for the very late posting tonight. Long story. While up here in the (relative) wilderness, I was struck by this sign:


The Dow, although up, still didn't signal a break yet. We're still in this flag pattern.


Gold has had a very strong past couple of days, but it also is at the upper reaches of a well-established range.


I've been mentioned BEAS as a short for a couple of weeks now. It has a nice, clean stop at $14.20.


Sotheby's (BID), which I've succesfully shorted before, might have a nice double top here.


Honeywell might have registered a triple top. All these "mights" and "maybes" are annoying, I'm sure, but it's never clear until some time has passed. These are calculated risks.


Martin Marietta (MLM) is awfully lofty and seems to be losing its momentum at these heights.


On the bullish side, I mentioned SCHN back on April 14th when the stock was $46. It has had a strong run since then, with a particularly strong surge upward today.


Another old favorite, Taser (TASR) seems to have found its second life. It has run up a bit much for me to be interested now, but a pullback to its breakout would make this an interesting buy.

The Pain Grows Stronger/Watch It Grin

Years ago I remember seeing a Dilbert cartoon where Dogbert had yet another get-rich-quick scheme. This one was a generic newspaper which featured headlines about "Unrest in Middle East" and "Government Proposes More Taxes". It was basically a newspaper you could read any day for the rest of your life, and it would always be true.

Much the same can be said of the market - at least in terms of the Dow 30. I'm starting to lose track. What would today make it......the last 27 out of 30 sessions up? Something like that. It's starting not to matter. As you can see from the graph below, it essentially never goes down.


I am staying far away from SPX puts (or DIA puts, for that matter). The only index put I've been accumulating is on the Russell 2000. Earlier in this cycle, the Russell was strong than the Dow, but recently, it's been falling behind. It also has the added advantage of falling faster on the rare occasions when the market is weak (notice the recent dip, shown in blue).


A closer look at recent activity illustrates the relative weakness better. Today the Dow was up yet another 50, whereas the Russell - a broader index - actually fell.


The NASDAQ Composite is also relatively low on steam compared with the mega-caps.


And the $XMI is continuing the exhibit the rather fascinating "hug just beneath the broken trendline" phenomenon.


I have no position in the CME, but it's interesting how this is shaping up recently. It's not really a head and shoulders pattern, but it definitely looks toppy.


My puts on INFY did pretty well today. Infosys (INFY) fell on a good pick-up in volume.


Symbol MEE is a pretty massive head and shoulders pattern, although frankly patterns this big don't have as much weight with me, since it has already kind of done the retracement-and-fall-again dance. But your eyes have every right to make an independent judgment.


Symbol MS is doing the same shtick as $XMI.


Airline RYAAY finally took a tumble, losing about 20% of its value in the past week or so. It was really overheated earlier, and I don't see any clear pattern at this point.


Long suggestion SCHN continues to do well, although I'm sure the massive buyout news regarding AL/AA had everything to do with today's rise.

Yeeeeeech....

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.

Finally!

At long last, the Dow did not go up today. A one-day respite, at least, from the torture!

A lot of people are responding to the poll I posted earlier today. For those that haven't responded yet, please do so.......

Should this blog allow anonymous posters or require registration?


What's the one thing you'd like to see that would improve this blog?


What kind of trader are you?


Thank you. I've been watching the results accumulate today, and it's very informative.

All eyes have been on Asia, particularly since the 2/27 blowout. People are wondering when the mania is going to end. God only knows, and He ain't telling. Here's a graph of Malaysia. I mean, these aren't magical fairylands, people. Have you been to Malaysia? I have. I think it's a hole, myself. But then again, I'm an Ugly American.


Even though we haven't crossed the fabled 13,000 mark on the Dow, the press is already impatiently looking for the next big milestone. ''We could be looking at 14,000 by the end of the year,'' said Robert Froehlich, chief investment strategist for DWS Scudder. Yeah, fine. Whatever.

Anyway, the S&P had a touch of weakness today, but notice how it stayed perfectly above its former resistance level. In other words, now that line represents support.



The Morgan Stanley Tech Index looks like it could fall badly, but unfortunately, the spread between the bid/ask on these options is wider than Rosie O'Donnell's underwear. (I wonder to myself just how long people will pause before clicking that link.)


A couple of cautionary tales for you. First - - - American Airlines (AMR) appears to be a lovely head and shoulders pattern.


But look at Continental Airlines (CAL), which I was mentioning as a short for the same reason a few weeks ago. It pushed above its neckline twice. And then - finally - started to fall. All I can say is that, because of this, AMR doesn't' excite me as much as it might, and this serves as a reminder of the importance of stops.


Another cautionary tale. The stock ONT looks like a honey of a buy. I've mentioned this before. Great volume. Great price action. All the right moves.


Let's look back a few years, though. A similar situation with the same stock. Let's presume you jumped in and bought a bunch of this.


What happened next? The technical term is that the stock farted around for years to come. In fact, the aforementioned farting was down at a substantially lower price. So although the burst above the saucer was great for those who got in early (and got out), it wasn't so hot for the buy-and-holders. And that's not because the market was bad in general. On the contrary, the market was very strong.


Capital One (COF), which I mentioned as a short countless times earlier this year, continues to fall.


Lehman Brothers (LEH) has a fascinating interaction with those Fibonacci fans. Investment banks have had huge runs up (yes, yes, I got blown out of GS) but this is worth watching.


As for Southern Copper (PCU), I think one glance at this channel would suggest that, no matter what your viewpoint on the stock, we're certainly at the northern end of this channel.


Check out Potash Corp (POT). That's quite a shooting star, yes? A short on this with a stop price just above the high today may pay off nicely.


Finally, Schnitzer (SCHN) continues to act bullishly. I'm including its former breakout from years ago to indicate what a handsome move this stock has made in the past from a similar breakout.


I'll post the results of the poll tomorrow and indicate what, if any, changes I'll be making to this blog based on your input. Thank you!