Is 14K Up Next?

On the whole, it was a great week for the bulls. The Dow, the S&P, the Major Market Index, and a host of others climbed to all-time, never-seen-before high prices. So where does it stop?

The Dow's high on June 1 was about 13,690. Its low on June 8th was about 13,250. That's a 440 point difference, and that's the approximate range of the rectangle out of which it just emerged. By traditional measurement, you take the high of 13,690 and add 440 points and get the target of 14,130. That's 223 points or 1.6% away. It won't take much to get us there.


The Russell pushed into new high territory, but by the slimmest of margins. I'm not sure I would call this a breakout on this particular index yet.


I rarely use arithmetic scale, but I am going to do so here on the S&P 500 to make a point. What I want you to see is the amazing drama that has taken place over the past quarter century, with the S&P exploding to a high in January 2000, collapsing terribly in a bear market, and then flying yet again to the prior high. Is this the mother of all double tops? Only time will tell. Although the bulls that visit this blog certainly would say no.


My puts on Baker Hughes (BHI) did well today. The oil service sector seems like it may be ready to drop a while.


Colgate Palmolive (CL) has tipped its hand by cracking beneath that supporting trendline. It also seems to be in the throes of a triple top. I'm going to buy puts on this Monday morning.


My CROX puts went up some today, as this high-flying stock actually eased a bit in an otherwise very strong market.


Chevron (CVX) printed a terrific shooting star candlestick today.


If you are dying to short (or buy puts) on a Dow stock, you could do worse than IBM.


My puts on Radio Shack (RSH) had a nice day too. It's pretty easy to see why. New highs on the market mean ecstasy without the need for batteries. Demand drops. Sales drop. Battery Club suffers.


Have a good weekend.

Seven Nation Army

I'm gonna fight 'em all
A seven nation army couldn't hold me back
They're gonna rip it off
Taking their time right behind my back

Another day, another lifetime high on the Dow. C'est la vie.

I mentioned BHI as a short a few days ago , and it got walloped. Even put options that are several months out doubled in value today. Oil in general (be it OIH or a component) is pretty attractive to my bearish eyes right now.


I'm pretty proud of this graph, so click it to see a big version. It's a minute bar of the NZD/USD forex trade I've been suggesting. The symmetry between the phases I've shown here is really intriguing to me. I've numbered it for clarity. I've been trading it both up and down (long and short) during the most recent cycle. I imagine we're about ready to head back into a long tumble now. This is a really fun currency to trade, in spite of the wide pip spread.


The Russell 2000 remains my favorite index on which to own puts right now. Put values have been getting creamed lately by (a) rapidly rising index values and (b) withering volatility premiums. A one-two punch. Call me crazy, but I am loading up on them at these levels.


Allstate (ALL) has a dainty head and shoulders pattern that I think is worth trading, since it seems to have fully retraced.


BBD has a clean relationship with its Fib retracement.


This is a bigger graph than I normally show - ten years - and it's of Goldman Sachs (GS). I still love this short.


HES is another fresh one I'd suggest you check out.


I've still got my IYR puts. They're under water, but just take a gander and how lofty this sucker is.


My MTH short is still solid. I am once again showing a bigger graph so you can understand how far this thing could fall.


OXY is another oil short worth examination.


PCU isn't as clear-cut, but it's at the top of a channel, and I'm going to nibble some puts on this one tomorrow.

Charts - What Else?

The Dow was up a whopping .07% today, so it wasn't exactly a barnburner of a day on the market. But there's always a few charts to look at, right?

Anderson (ANDE), one of the few bullish charts I've been posting lately, continues to inch toward its potential breakout point (the horizontal line I've drawn).


I'm seeing a lot of big oil stocks shaping up as potential shorts; BHI looks particularly good.


EMC has been in a trading range for literally years. It seems to be at the upper end of it. This makes for a relatively low-risk bearish play.


I've been mentioning SHLD for quite a while, but I've got to hand it to the bulls, this has pushed above resistance. It's a really sharp looking cup with handle pattern. The big bursts of volume have definitely been dying down (see trendline on the volume chart), but that isn't particularly significant.


I was (very profitably) short the NZD/USD, and now I'm in a contratrend position - - I'm long for the moment, but definitely not for the long haul. Nothing ever goes straight down, and this fell so quickly and sharply I am looking for a very modest rise before re-entering the short.


I have no position on NutriSystem (NTRI), but I'm presenting this graph simply as a suggestion that it might be OK for a short-term bullish play. It may recover back to its neckline (where it fell to pieces in a matter of 3 days). This is a relatively high risk trade, however. Plenty of stocks that are "broken" like this really never recover.


I don't know what MSFT is doing (although my puts on it happily rose). Maybe Vista is getting a "so what?" from enough places that expectations are dying down. I, for one, have no reason to upgrade.


Google (GOOG) keeps heading lower. The problem with puts on this (which I own) is that there is so much volatility built into them that even after losing 30 points, the puts are only up a little.

Money Shot to Start the New Year

Greetings, my beloved fellow bears.

I introduce this year to you with some of the worst album covers of all time. Just to lighten the mood before we get down to business.





A merciful God has spared us from listening to the contents of the above albums on this blog.

I have so much to say, but honestly, I'm on the world's slowest network. So I'll have to keep it relatively basic tonight.

I rarely read USA Today. It is to journalism what Pamela Anderson is to dramatic acting. But I happened to see its cover story on Ten Reasons the S&P 500 Could Make a New High in 2007.

It was the usually claptrap bulls - - including Abby (ack! cough) Joseph (hack!) Cohen - - like to smear around. I will spare you the list, but the 10th reason they provided: "Because records were meant to be broken." What a bunch of nimrods.

I was delighted, of course, with today's action. We entered this year with the bulls snorting like mad. The GLOBEX was up huge yesterday. Markets around the world soared, including the parabolic Chinese market. And every blessed article on the stock market talked about what a fantastic year 2007 was going to be for the bulls.

So the market shot higher by 130 points. And I gobbled up a ton of S&P puts. Then the market starting sinking. It turned the other direction 170 points, but finally closed the day up 10. All the same, I'm not complaining. Serving up disappointment to the bulls is always a delightful treat, and this is a great way to start the year.


Here's the daily view of the S&P 500. Just take a look at today's range! What a tug-of-war!


I've been promoting the $XAU as a short ever since about $149, and it continues to behave nicely. This is looking better every week.


Now on for the straight charts. I am posting this so late, I don't have time for commentary, but I'll just lay the symbols out for you. BHI...


CERN


FTO, whose head and shoulders continues to form beautifully:


GS:


QQQQ (again, just look at that range, highlighted in light blue):


RYL:


And gargantuan XOM:


I'm sorry for the relatively text-free post. But godspeed to you all, and for crying out loud, keep the comments germane (and non-anonymous, if you're able!)