The Waiting Game

OK, I've got a confession. All that stuff about the bulls being in control and the bears needing to hide in a cave? Deep down, I don't really believe it. I think the market has been living on borrowed time, and it's all going to blow up at some point. It's waiting for that "some point" which is exasperating.

I looked long and hard for stocks to buy in the current market. In spite of being labeled a permabear, I'm honestly quite good at finding bullish charts. But all I see are hyperbolic insanities. I have no basis of declaring that HANS won't double or triple even from these levels. But I simply cannot buy a stock that looks like a hockey stick. It's the "greater fool theory" once again - these securities just keep getting bid up, ascending higher in price based on little more than momentum.

Very little happened in the market today, so there's not much to say about current action. Even with Dell offering an after-hours earnings warning, which slammed its stock, the Globex isn't budging in either direction. I wanted to point out a couple of interesting short plays. Neither of them are slam-dunks, because they've been quite strong over the past couple of years, but they are worth considering.

The first is Allegheny Technologies (ATI), shown below. I've mentioned this one more than once, but it's an intriguing chart. It's clearly below its ascending trendline, and the ascent over the past few months has been so massive (with diminishing volume) I'd say this was a pretty good short, with a stop price at $80.


A similar short suggestion, with similar rationale, is Carpenter Tech (CRS) with a stop at $140.


The "very bullish" chart of the American Major Market Index ($XMI) should be taken in context, by the way. If you look at the chart of the past several years, including the highlighted inverted head & shoulders, you can see that it's nothing to write home about. Even if it manages to hit its full inverted head & shoulders target, it's not going to get to any new lifetime high.


Lastly, take a look at the (recently very boring) GOOG. Its nearest Fibonacci retracement level is $394.58 by my calculations. Just look at this intraday chart over the past week or so - it is just amazing to me how the price is clinging - closer and closer, in fact - to the Fib level. Spooky!

Strength Begets Strength

Ugh! OK, the bulls are completely in control of this market. Bulls everywhere - be they oil bulls, precious metal bulls, stock market bulls - have the world by the horns. We bears better hide in our caves and peek out until the weather is better for us. This is nasty!

The Dow is just a couple of hundred points away from its lifetime high, set in January 2000. The green stripe here illustrates how close the lifetime high is. It's hard to believe in 2002 we were 3000 points lower than this.


The S&P 500 has smooth sailing, from the Fibonacci perspective. As the shaded area illustrates, there's about 4.5% left of "open air" until the next Fib is hit. This index has shown amazing power and resilience.


If you need any evidence that the stock market is once again very visible in the public eye, look no farther than the home page of CNN.....


....or FOX news. One might consider this a contrary indicator (witness the manic coverage about stocks in 1999), but who knows. It's impossible to know what a market's really doing except in retrospect.


One other very bullish signal is that the American Major Markets index ($XMI) finally broke above its inverted head and shoulders pattern.


My difficulty with this market is that there simply aren't any bullish chart patterns that I like. There are certain stocks which seem to keep pushing ever higher (take a look at HANS, for instance). But I just can't get comfortable diving into something which is already up hundreds, or even thousands of percent.

This market puzzles me. But one thing is sure: the bulls are in charge, and, rational or not, the market just keeps soaring.

A Great Day! (for the bulls......)

Will wonders never cease? Take a look at the Dow Transports ($TRAN). Up well over 3%, fueled in large part by EXPD, which itself was up nearly 20%. And the Dow Jones Composite had a.......


Ugh! I guess this bull isn't so wimpy after all!

A strong retail report sent stocks solidly higher. And the ever-strong sectors stayed strong - - oil.....gold.......copper.

I was taking a look at some long term (multi-decade) charts of gold and silver. They are worth a glance. Take a look at the Fibonacci levels, and notice how both markets are coming right up against resistance. Worth noting, since these metals have been on a trip straight to the moon for quite a while. Here's gold......


....and silver......