Immune

I'm not afraid.

I used to be. I really did. It's hard not to be fearful when a market has completely lost its mind. It's hard not to be afraid when tens of millions of Chinese investors - not a one of which has any clue what he's doing - are running around predicting their market will reach 8,000 now that it's reached 4,000. And it's hard not to be afraid when it seems the whole world has discovered how to print trillions of dollars (without inflation) that they want to dedicate solely to buying up companies.

But I'm not afraid.

A day like today is why. Because the Dow can reach yet another all-time high, and my portfolio.......which is 100%, All-American, red-blooded shorts and puts......goes up handsomely. And I can grab my XXL codpiece, stare the market right in the eye, and shout an obscenity which rhymes with "Truck Blue!".

Because the fact is, folks, if I can make money in a market like this, God help you bulls when it actually goes down. Because your days are numbered.

I find the Chinese prediction of 8,000 on the Shanghai index particularly amusing. I know that 8 is considered a lucky number in China. So - naturally - there's no reason the market won't zoom to 8,000, is there? Added to which, I read that many investors there decide that a share of stock is a good buy if it costs less than a portion of pork meat.

Idiots.

I've decided if my loyal readers and I decide to seek haven in a safe zone, we shall flee to the district of Yaroslavl Oblast in Russia. Their flag, my hand to God, looks like this:


A bear carrying an axe. We, my friends, have found our homeland.

Speaking of homes, the widely-reported slump in housing has not hit my beloved Palo Alto. On the contrary, prices have never been higher. Just a few doors down from my house is the following charmer. It features no landscaping. 950 square feet of living spaces. And sixty year old plumbing. It can be yours for $2 million. (Actually, I'm joking about that - - because it was snapped up a few days after they put a sign out in front, and it can, in fact, not be yours at this time).


The Dow Jones 30 - which is far and away where all the strength is these days - tried very hard to push its way up to the 13,500 mark. After ascending nearly 150 points, it went completely flaccid, and it wound up 37, creating this lovely shooting star.


Here's an update on my positions (newbies - click any image for a bigger version). Bold items are puts. Others are shorts. Not a long in the group (although I will mention that my long suggestion of ONT continues to explode higher).


My short in Akamai (AKAM) did great today, and what is more important, it is set up for a spectacular fall from here.


Acuity Brands (AYI) also has a hell of a lot of open air to collapse.


AutoZone (AZO) finally - FINALLY! - took a tumble. Much more to come, I think.


My puts in Bear Stearns also performed nicely.


Merrill Lynch is starting to deteriorate, now that it has made a base camp for itself at this key Fibonacci retracement level.


Lastly, the NASDAQ QQQQs slumped badly, just as my beloved Russell 2000 did.


So in spite of calming inflation news (ummm, fellers, how much good is a .25% interest cut going to do you when the economy is irrevocably crumbling?) it was a terrific day. Let's have more of the same.

I'm not afraid!

Stalemate

In yesterday's post, I laid out bullish and bearish arguments for the market, since we seem to be in one of those awful stand-offs between the bulls and bears. Today played out in precisely that manner.

The widely-anticipated jobs report came out. The results were interpreted as bullish. The markets zoomed higher at the opening bell. Fibonacci retracements were touched all over the place, and then the market started to soften fast. It went negative. Then positive. Then negative. Then positive. And finally ended with about 1/4th of the gain it had at its high point. Just ridiculous.

I'm 100% in puts and shorts right now. Below are my positions. Boldfaced items are puts.


Here's the Dow 30. You can see it bounces off that Fib beautifully.


And here's the Russell. For the second day in a row, it bounced off the fib. It actually managed to sneak across the line a little, but not for long.


The $SPX is pretty similar to the $INDU.


I've got a couple of long suggestions. Here's Bowater (BOW):


And, and even better one, Pico Holdings (PICO), which has the advantage of a big volume surge recently.


A few short ideas. BBD seems to have retraced within the Fib retracement nicely.


MS, like a lot of other investment banks, has likely retraced to an area where I think it doesn't have the strength to climb any higher.


Microstrategy (MSTR) blew me out a couple of weeks ago, but it was a one-day fake out. This one looks weak.


Options on the QQQQs have the advantage of being penny-priced, which is much more fair to traders.


Reynolds (RAI) is retracing back to its broken dome pattern. I also have puts on another aluminum stock, symbol AL, but the chart isn't as pretty.


Lastly, symbol RYAAY looks like a low risk/high reward short candidate.


My kids have given me some kind of bug, so I'm typing this with the chills. Even though it is 70 degrees outside, I'm going to go sit in front of the fire! Have a good weekend!

A Good Start

I have been in Lake Tahoe this week, just like last year, and it's been snowing like mad. Here's a picture I took of - what else? - a bear yesterday, covered with snow (OK, it's a statue, but still). His eyes are totally covered, and he's got sort of a "where the hell am I?" look to him. I can relate.


I enjoy checking out The Kirk Report regularly, and a recent entry showed the fascinating fact that twenty out of twenty sentiment indicators are bearish now. Even I find this amazing. And, believe me, Charles Kirk is no permabear - so you bulls might have a bit of respect for what's been said.

The graph below is one I find troubling. It shows the median value of real estate prices in my part of the country (the initials represent local counties - Santa Clara, Santa Cruz, San Mateo, and Monterey). Now, as you know, I normally love to see a graph that is primed for a fall......this graph, although crude, is pretty obviously a head and shoulders. But I own not one, but two, houses in this area. And it's no secret that housing is in a slump - maybe even a prolonged one. Not good!


Another macro trend (which had everyone in a panic early last summer) is the descent in crude oil prices. When crude was at about $80 per barrel, people were freaking out, and $100 per barrel seemed a foregone conclusion. My view of this market is very bearish. The break below the trendlines you see here is significant.


The NASDAQ exhibits something about trendlines that I've mentioned before, and which I always find fascinating. That is, the act of the trendline changing from support to resistance. Look how the market took its first fall last summer and spent most of 2006's second half climbing back up to kiss the underbelly of the trendline. Now the descent begins anew.


And look how the RSI in the Dow 30 keeps slipping away. The first trading week of 2007 seems off to a great start.


And the Transports have a good chance of cracking the enormously important trendline you see below the current price level.


Lastly, the Dow Utilities got clobbered today.


Now let's look at some short ideas. CBE:


CNX:


COF (mentioned often before):


CPT, a good real estate play:


ETR seems to have peaked out and slipped nicely today:


GS:


OIH may have bottomed out for now, in spite of my bearish view of crude oil. This may see an upward bounce next week.


RIMM worries me, as does Google. This is amazingly strong. Just look at the accompanying volume as well. If it busts above its lifetime high, marked here, I'm going to hang it up for now on this one.


If you've gotten this far, here's your reward......a mash-up of two of my favorite movies: Rudolph the Red Nosed Reindeer......and Full Metal Jacket. Those easily offended, don't even bother clicking the Play button.

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!)