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.

And So It Goes....

The bears continue to get shot in the head, one by one. The comments section of this blog is a mix of insightful commentary (from both sides) and sophomoric crap from permabulls. Of course, if the market was in a freefall, there would be sophomoric crap from bears like me, so I guess it all evens out.

Many indices and ETFs made lifetime highs today. Not yearly highs. Lifetime highs. Never-before-seen, higher-than-the-bubble highs. Get it? Look at MDY, SPY, $MID, and many others. We're into unchartered bullish waters. The $INDU, while not yet at a lifetime high, is threatening to make the highest level seen in years.


The $OEX pushed above a formidable Fibonacci level today. There's a large opportunity for this to push higher, based on the next Fib level.


The Russell 2000 also pushed to a lifetime high today. It, like the $INDU, is just kissing the underside of the broken trendline.


I mentioned recently that FMT might be a good bullish play. That turned out to be true. The stock was up over 30% at one point today.


Energy continues to be strong, as I've suggested it might many times recently. Here's the OIH.


About a week ago, one of the folks in the comments section asked about ONT. I responded in comments that it looked great, and I repeated that in the next night's post. Although speculative, this stock is doing amazing things, and the volume backs it up.


Energy play Schlumberger (SLB) continues to be strong. I point it out here due to its size and especially strong performance.


I guess one might joke....."How does one make a small fortune being a bear?" Answer: "Start with a large fortune." Things look grimmer than ever for ursine types. Valuations don't matter. Common sense doesn't matter. All the bearish arguments you've heard don't matter. All that matters is that (a) a lot of people with (b) a lot of money (c) don't know what else to do with it. So we go up and up.

Energy's Strength

It's true - the market (as measured by the Dow 30) was up for the 8th day in a row today. This hasn't happened since 2003. So the press is all over that.

Less touted is the fact that today, for instance, the Dow was up all of 4.71 points. In percentage terms, that's the equivalent of a person with a six-figure income rushing home to tell their spouse their gross salary is going up $37.45 per year. Whoo hoo!

One quick note on American Home Mortgage (AHM) before we get started in earnest..... the stock continues to tumble. The tough part - and this is always much tougher than picking out opening positions - is when to close it. I took a look at a long-term chart, and the next really meaty support level is literally in the $6.50 to $7.00 range. Does that mean the stock will go that low? I have no idea. But this short position looks even better today than it did yesterday.


As for the market in general.....same story from me. Take a look at the DIA graph below. The bulls just keep wrenching things higher, but we're still below that busted trendline. Looking at this one graph, it seems the bulls are losing steam. But we know how easily they can recharge those locomotives, don't we?


I've been impressed and surprised by the strength of energy stocks. I have a substantial investment in natural gas fields, so I'm happy to see NG prices creep higher. But my feeling a few days ago that oil stocks were topped out was off the mark.

What's tough about buying into hot stocks is that it's difficult to see them going higher. But they often do. Here's a great example....Entergy (ETR), shown below, had pushed into a new high of about $78. Not that many months before, this has been a stock trading in the high 20s. It's hard to get excited about getting into a stock that has risen hundreds of percent like this.


But look what happened after the breakout (shown with the same horizontal line). This sucker just kept climbing. I admit that I am lousy about getting into stocks pushing into new highs.....it just seems too risky. But the fact is that this is how fortunes are made. Technical breakouts on strong volume often indicate many more gains ahead.


But when thinking about energy stocks, it often helps to at least have a passing awareness of what the commodity itself is doing. The main one, crude oil, has a long-term chart shown below. Obviously oil has had an amazing push skyward since the late 90s, blasting off about 600%. I'll leave it to you to decide where you think oil might go next. I truly have no strong opinion.


Looking closer, it could be argued that there's a head and shoulders pattern in the recent history. Not a textbook-beautiful one, but a visible one nonetheless. That would suggest future weakness. But, again, I truly have no strong view on where energy prices might be going.


Having said that, here are a few energy-related stocks with impressive charts. Dril-Quip (DRQ):


Schlumberger (SLB):


And Questar (STR).


A couple of mentions that are not directly energy-related.....first, I got bounced out of Continental Airlines (CAL), but I'm still eyeballing it. I've inched the neckline up a bit to accommodate the price move. This is not as clean a pattern as it was, but it's still worth watching.


Lastly, Sears Holding (SHLD) continues to be amazing (for bulls). I've mentioned this beautiful cup with handle pattern before. I have no position in it now, but if I were long, I would be delighted. This is an amazing-looking chart.


That's it for today. Let's hope the market gets a little more interesting soon. Otherwise, we'll have a 9th up day in a row, and it'll be +0.35 on the Dow.

Bearish Hopes Battered

I'm not even waiting for the end of the trading day to do this post.

Now that the indexes have sliced through the highs of March 26, bearish hopes for a softer market are - for the umpteenth time - destroyed. At this point, only surprisingly weak Q1 earnings........or a totally unexpected world event....is going to slow this market down.

From a charting perspective, the market is in full-blown bull mode, with the only resistance being that major support line that was decisively broken in late February. The market certainly still has more room on the upside.


Since I'm weary of showing potentially bearish charts that get swept up in this bull mania, I'm going to switch hats and offer a few bullish ideas. Dril Quip (DRQ):


Greif.....just look at that volume surge.... (GEF):


Health Net (HNT):


Holix (HOLX):


Jacobs (JEC):


Schlumberger (SLB):


Questar (STR):


I'm sure the naysayers that hang out in the comments section are delighted at the misery of the bears (and, more specifically, me!) Well, that's the market for ya. 99 times out of 100, it belongs to the bulls. Days like February 27 come along only once in a blue moon.

I hope some of you find some good fodder in the charts above.