Tasty Shorts

The market didn't do too much of anything today. Oil (and therefore OIH) softened up a tad, which is consistent with my speculation that the energy market is going to resume its downward movement. Gold, in spite of the metal's rise in price, softened too on the $XAU. The Dow just lost a handful of points. At least we didn't have some big 'recovery' day after Friday's nice drop.

I just wanted to share a few charts on which I own puts right now. Here's AMG. This pattern is basically in a "post-broken trendline" situation, which is a favorite of mine. The general uptrend has been clearly broken, and the stock has recovered partly or fully to the underside of the trendline. These often represent low risk/high reward trades. Let's call this kind of pattern PBT for the sake of today's entry.


LEN is just a nice topping formation:


NDAQ looks pooped:


TXT is another "PBT":


I've mentioned MRO a few times already:


Altria (MO), yet another "PBT", which seems kind of common these days:


The VIX went up some time, which is also consistent with my view that we've bottomed out on volatility and complacency. The market misbehaved badly in September and October (typically bearish months, yet the market went up) so let's hope the typically bullish months of November and December likewise confuse everyone! We bears could use a break. A sustained break.

Darkest Before the Dawn?

To All Disciples, Nay-Sayers, Hangers-On, and Stubborn Mules.......

I bet you didn't know this, but I used to sing. Yes, sing. Amateur level, naturally, but it was fun for a while. Allow me to share my sentiments for recent market activity with this bit of Latin I warbled at one point:

Confutatis maledictis,
flammis acribus addictis,
voca me cum benedictus.

Oro supplex et acclinis,
cor contritum quasi cinis,
gere curam mei finis.

Y'know, times like these so remind me of 1999. Basically smart, sober, thinking people (ahem.....) knew the market was insane. And they got their butts handed to them. Stupid, mindless sheep didn't have to think at all. And they got freakin' rich. The world just ain't fair, is it? Who said IQ pays?

I looked at the comments from yesterday's post and have a couple of replies. To Leisa, I'm delighted to have provided you a big "O" through this blog. Don't let my wife know. She's got me as an exclusive service provider on that front. And downosedive, I agree, we may be in an "overshoot" right now. Indeed, if you believe my 1972=2006 analysis, we're going to keep grinding higher until January or so.

Someone commented how my mood was a contrarian indicator. Perhaps so. Truth to tell, even as a permabear, I'm not bad at picking bottoms. Take a look at my post from July 15th. This marked almost to the day when the market turned around. Now, unfortunately, I've been fighting it ever since........but my point is that I did recognize when the selling was over.

In spite of a completely rotten week, my spirits are relatively good. Hope springs eternal in the bearish breast, eh? Let's take a look at some charts.

The NASDAQ, which I am painfully short by means of puts on the QQQQ, the $NDX, and the $MSH, has been super strong. It's wayyyyyyy at the top of almost every technical channel at this point. But - - that is meaning squat these days.


The Russell 2000 index is something I follow closely. If the market ever does start falling (which, I'm guessing, will be around the year 2039 or so) this one is going to get hit the worst. It's been quite strong and is approaching a lifetime high. I'll let the chart speak for itself.


The S&P 500 has been charging ahead as well. Unlike the Dow, it is not at a lifetime high (God forbid it gets there anytime soon). It's pushing its way toward its 78.6% Fib retracement. This is a heavily marked-up chart.


The $VIX is as low as public opinion of Congress right now. I mean, God almighty, just look at this thing. I've circled the prior nadirs (how often do you use that phrase in conversation?)


I bought calls on the $XAU a few days back and sold them today for a decent profit. Yeah, a wimpy little trade, I know. I'm just having trouble defying this huge head and shoulders pattern any longer. But it definitely bounced off that Fib line (and neckline) and could head higher - maybe even much higher.


Now on to some specific stocks. Here's AAPL. Doesn't the current action look just a touch like late 99/early 2000 to you?


Here's Allegan (AGN):


Boeing (BA) which - gasp - went DOWN today. Maybe the whole Airbus-sucks thing has played itself out. This is a broken trendline.


Black and Decker (BDK):


CMI which, umm, looks just a little overbought, wouldn't you say. I mean, God almighty, just look at this thing.


CTX.......


DE, which I'm not zany about, but seems vulnerable enough......


IWM, which is the ETF for the Russell. A convergence seems to be approaching.


Lehman (LEH).....


LEN.....


Our old friend OIH which, I confess, could go up. But I'm betting down. I'd say a stop at $131 would make this a relatively low risk/high reward trade.


Redback is something that I'm long. Goes against ever fiber in my body, I know, but it is one of the few decent looking bullish plays I see.


I will now grab my mango-infused rum, kneel down on the floor, and pray to the bearish God in heaven to smite those who keep pushing the market higher. Our time will come. Let's just hope we're not all wearing barrels by the time it does.