The Less We Say About It, The Better

Two good days in a row. I won't get used to it. The crapola bull-filled last 11 months has left me bitter and disillusioned. But seeing a bunch of green over the past couple of days has been nice. I was prepared for all the pointless "Buy the dips!" and "Get in now to ride to Dow 15,000" nonsense in the comments section. It's what you can expect.

The S&P 500 over the past couple of years was in a giant, upward-sloping channel. The highlighted area is the "above even the top" chunk. The madness exceeding the madness. At a minimum, I would expect us to at least re-enter the aforementioned channel.


The $VIX, understandably, has shot higher, given the approximately 200 points blown off the Dow 30. Fear is on the rise. Finally.


AutoZone is one of those nice shorts which has a tight stop but plenty of potential downside. It's one of those charts that could represent a major trend-shift but doesn't make you pay through the nose to see if you are right or wrong.


Bunge (BG), mentioned here many times already, is on its way to its target price. This is a short position (obviously).


A thoughtful reader sent me a suggestion of symbol CEG. This is a handsome looking short. I have no position in it, but I'll follow it from now on.


Big Blue, good old IBM, really got smacked today. I've got puts on both IBM and Honeywell (HON), both of which pushed much higher on the day.


I am showing NVR again simply because it is such a "Fibonacci friendly" stock, to use a phrase I coined a while back. The way it bounces off these retracement lines is really a sight.


I've unsuccessfully owned puts on Sears Holding (SHLD) in the past, and it has never worked out. Once more into the breach, dear friends.


Since I'm feeling a little better, I'll keep throwing the goodies your way. Here's the marvelous Naive Melody from you-know-who.

Yep

Thus ends another week. Now c'mon, folks, throw me a bone here - - I mentioned CRR just a few days ago as a bullish play ("For a bullish play, CRR looks like it is beginning to turn northward after a long slide.") and it climbed 40% in just a few days. That isn't bad, and it shows this isn't just an all-bears blog.


The Gold and Silver index is looking like a potential short.


Although the Transports broke above their descending trendline, the shooting star candlestick today is a little encouraging. The markets are sky high and simply seem able to propel higher each week.


The $OEX (S&P 100) is matching a recent high. This means either a double top or, with more strength next week, more kudos for the bulls.


I like the Morgan Stanley Tech Index ($MSH) as a place to buy puts. It's pretty risky, and the puts aren't that thickly traded, but the potential for a big reward is there.


The Dow 30 lost a little ground today, and it remains clearly beneath its broken trendline.


Check out NVR versus the Fibonacci retracement. I'd say it's ready to turn tail.


China has been going absolutely hyperbolic in equities. GCH is a short play on this. But what's more fascinating to me is how well it has played against its own Fibonacci lines. I've highlighted the "bounce points."


Cabot Oil and Gas (COG) looks like another relatively low-risk place to buy puts.


I sold my Cummins (CMI) puts at a profit a while back. The stock has recovered since then, and it's so close to a double top at this point that I'm ready to leap in again.


Good weekend to one and all.........

Making It Up to My Readers

Well, I'm going to make up for the lack of a decent post yesterday (although it certainly didn't seem to diminish the activity of the comments section). This is going to be a big 'un.

A couple of weeks ago I mentioned the disparity of wealth distribution in both the U.S. and the world in general. An interesting study came out about this in the past few days which illustrates that the top 1% of wealth holders control 40% of the world's wealth, and the top 2% control 50%. How about the bottom half? They have about 1%. That's right......50% of the world has 1% of the wealth, and 1% of the world has 40% of the wealth. Pretty skewed, eh? Here's the link.

Another interesting item I read in yesterday's New York Times was how bullish newsletter writers have become. The graph in the article shows, on the left side, the U.S. stock markets, and on the right side, the bullishness of the writers. They seem like virtually identical graphs. Make you wonder how much value these guys add. Anyway, again, here's the link.

Today was a nice (although modest) down day. Take a look at the Russell 2000, shown below (and, as always, clickable to be larger), which I've embellished a bit with some studies for those folks finding my graphs too plain. Examine the "waves" of the past, and notice how far the moving averages were at the peaks of those waves. Looking at the most recent data, the averages have never been farther apart.


The same can be said of the S&P 500. Just look how rapidly the index has ascended and how much distance is spread out among the averages. At the same time, look at the continuous softening of the RSI. Quite a divergence, wouldn't you agree?


The $VIX has finally gotten some legs. It seems to be pushing way higher, as the market seems to be not-quite-so-sure about the certainty of indexes rising every day of the year. And this is all in the context of the Dow 30 hitting a lifetime intraday high today!


Now, some specific stocks - most bearish, a few bullish. I've been terribly impressed with Akamai's (AKAM) strength. It seems to be defying any weakness right now. This is one of those stocks which, in 2002, you might have felt was doomed to bankruptcy. But it's been a barnstormer.


I must again offer Capital One Financial (COF) as a short suggestion. My puts on this are doing well, and I just really like the look of this chart.


My small bearish position on GOOG is doing OK as well. I do not normally watch CNBC, but at the airport yesterday I saw they were doing a featured story called something like "Can Anyone Stop Google?" That's my feeling exactly. People seem to think Google is perfect and unstoppable. A good time to fade the market's disposition. Can you imagine the collapse when they make their first earnings stumble? Whether it happens next quarter or in 2025, it will happen. And great will be the fall of it.


Being short investment banks has been tough lately, but maybe we've finally turned the corner. These banks got great news yesterday in the form of a very favorable court ruling, which stated that class action lawsuits against these banks were not permitted. I'm sure the 50 Goldman Sachs personnel getting at least $25 million each for their Christmas bonus (you read that right...) are having the time of their lives. But take a look at the graph below. How's that for a monstrous bearish engulfing pattern?


HYDL looks ripe for a short as well, with a nice, tight stop.


I've had puts on LEH for a few days (someone commented how I got whacked on it; I have no idea what they are talking about; I did not get stopped out). The way it's playing inside these Fib Fans is cool, and it seems to be losing its grip at this level.


Here's a longer view on LEH to bring more clarity to my explanation.


NVR has had a good run-up of late, and a look at the Fibonacci retracement levels gives good reason to short here, with a very tight stop.


I suggested Redback (RBAK) back on October 4 when it was about $14. It pushed to about $17.50 today on strong volume. This stock looks more bullish than ever.


I put puts on RIMM a few days ago for the worst of reasons - "it just seems really high." Luck has smiled on me so far and it seems to be tumbling more than a skosh.


I remain long puts on SHLD.


Apparently all eyes are on tomorrow morning's employment report, released an hour before the opening bell. It's one of those funny ones where if employment is strong, the market supposedly will take that badly, whereas if employment is weak, the market will respond well since rates are more likely to drop. Ya know, folks, interest rates are not the entirety of the economy! Take a look at Japan during most of the 1990's which was completely buried in recession and had negative interest rates. There's only so much good they can do.

Sub-12K. Tim Says Yay.

The Dow was able to close for ten days in a row above the 12,000 level. Not today, though. We're back into 11,xxx territory. Let's hope it stays that way! For years!

As usual, I've got a number of charts to share with you that you might find of interest. First up is a long (you heard right) suggestion, symbol CRR. Looks pretty battered to me, and the swell in volume recently indicates a possible change in direction.


Now onto more familiar territory - the shorts! Here's FMX:


LLL looks good:


I like how MCK is playing against these Fib fans:


MTW looks like a good double top:


NVR is thinly traded, but a good topping pattern:


Finally, these's QQQQ. Check out the similarity between the two sections of the RSI indicator. To me, this suggests the QQQQs (and, therefore, the $NDX) are headed much lower.

Stop New High Mania!

They just couldn't let us have a triple digit down day, could they? The Dow was down about 115 points earlier, but we closed down 80. Oh, well. Not a bad day, particularly since the media is all ga-ga over the possibility that the Dow is within spitting distance of an all-time high. It would be nice for that not to happen.

My portfolios were up today, but not as much as they might have been if oil had cooperated. OIH was up about 2% as oil and related companies tried to recover from its recent bashing.


The aforementioned $INDU gave back yesterday's gains and is clearly showing some respect for that trendline that it is under.


The $RUT is hopefully stuck in a rut. That horizontal trendline is the "throw in the towel" zone, and we do not want it to cross on the upside. This is a nice bearish engulfing pattern at this point.


More short ideas. Here's DST......


ESRX, offered up a week or two ago, is doing nicely.


As is NVR, also suggested a while back.


One I discovered today was Panera Bread, PNRA.


That's it for now. As always, good luck in your trading.