For Your Consideration

Well, after yesterday's 158 point drop, the market went up 14 points today, and CBS Marketwatch proudly trumpeted, "Buyers Come Back to Market!" Yeah, it's a veritable stampede.

The question over the coming days is whether yesterday's drop was a one-hit wonder or the start of something bigger. With the exception of mid-May to mid-July, the year 2006 has been largely a Big, Fat Disappointment to the brainy (and broke) bears, as the air-headed (and much richer) bulls have trampled all over us. Dogs do wonder when their day will come.

Take a look at this intraday chart of the S&P 500, for instance. The prior blue area was the last decent downturn. But as you can see, it only preceded yet another runup to new highs. There's every possibility this miniature rout could yield the same result.


The Dow Transports has been more consistently bearish than the Industrials. There was no rally today - it fell some more. This chart is probably one of the strongest reasons we bears have in our pocket for overall weakness in the future.


As mentioned a few days ago, the $VIX had gone (briefly) into single-digit territory (shown highlighted here). That didn't last. The $VIX exploded higher yesterday, and it seems to have broke its multi-month long downtrend.


I've augmented this graph of the Dow 30 with the Wilder RSI (shown beneath the price pane), and you can see the RSI has really tumbled hard lately. The Dow has plenty of room left to fall, even if the rising trendline stays intact.


The NASDAQ Composite has a similar story. There's plenty of open space (shown in highlighted blue here) between the current price and the supporting trendline. So even respecting the possibility that the bull market might be intact for many months to come, there's still an opportunity to make cash on the descent back down to the supporting line.


GOOG is a curious chart right now. One could take a very bullish view on this stock from a technical perspective, and it has had a very clean retracement back to its breakout point after having ascended well above the fabled $500 level. You be the judge.


Virtually everything about GOOG (except the bit about $500) can be said of SHLD as well, although it looks a touch more vulnerable to my eyes.


Now a couple of short ideas for you. NXY:


And U.S. Steel (X):


It was a pretty slow day on the market today, so that's it for now. I'll be traveling on business tomorrow, so my blog will probably be posted later than normal. I'll see you on the other side.

333

OK, I'm starting to enjoy the market again. Four down days in a row. Granted, only two of them were worth anything (today and last Friday), but I'll take what I can get. Red on the screen, and I'm a happy guy.

Today was actually my second-best day ever in percentage terms, and it wasn't even down that dramatically. It's finally becoming clear to the public that the economy is faltering. Bring on some more of that! I guess I'll only regret it when I try (again) to sell my second house here in Palo Alto, The market has become mushy around here, and I gave up selling it a few months ago. I was going to try again in spring, but if things keep going this way, I may wind up as a landlord far longer than I ever intended.

Many months ago I suggested ESRX as a short. It's worked out nicely. It never violated the stop price I suggested, and those owning puts have made out like bandits.


The NASDAQ is looking particularly squishy these days, which is terrific. Take a gander:


Similar action is on the $NDX. You can see a nice progression of lower highs here, and today's downdraft was a monster bearish engulfing pattern.


Also take note of just how quickly the air has come out of the S&P's RSI indicator. It's fallen from nosebleed levels to well under the important 70 line. Let's keep beating the spirit out of these bulls, guys 'n' gals. Shake them and break them.


I loaded up on $XAU puts early today, when it was high. It closed pretty much unchanged. This isn't a clean head and shoulders pattern per se, but it's got the markings of one. I like it.


The Fib Fans on ADSK are charming, to me, and it's got a nice, clean stop. Ummm, keep in mind that tight stops can get ignored by giant gaps up, such as I experienced with Cigna (CI) today. It basically opened at its high and fell the rest of the day. Grumble. But I digress.


I've been holding AGN puts for a while. Nice one.


For those wanting to take advantage of the sky-high REIT market, may I direct your attention to ARE?


ATI looks to have put in a lovely double top.


Capital One (COF), mentioned here on numerous occasions, is behaving like a good boy should.


NOV is a nice play on the OIH drop.


Finally, someone mentioned US Steel (X). I bought puts on this a couple of days back. I like what I see here.


In closing, I just want to say thank-you for the thank-yous. There are a lot of nice notes in the comments section, and believe me, I don't do this blog for the money (averting eyes....) I do it for the love! So I appreciate the nice words.

The Stampede Continues

Another day the bulls owned the bears. Big time. Google blasted toward $500 to a new record high. The Dow was up over 100 points early in the day and closed at a new all-time high. These are the times that try bears' souls. Assuming there are any bears even left.

Russell 2000 remains on my list of favored indexes to short (for those still insane enough to do so):


Capital One Financial (COF) is still on my favorites list (again, short).


Fluor (FLR) is doing relatively well (once again, bearish position) considering the market's strength.


I think NBL for a short position related to the oil markets.


Same applies to old favorite Oil Service Holders (OIH) which has a nice clean stop price for limited risk:


Another oil shortie, OII:


For a long position, think about Red Hat (RHAT) which has gorgeous volume to boot:


I finally (!!!) bought Sears (SHLD) today and am already in the green. Beautiful pattern here.


TSO is another short idea.


And, although higher risk than OIH, similar logic applies to shorting $XAU:


This is a rushed post, since I'm off to a business dinner. Considering how high the market is, my portfolio is pretty well intact. Hang in there, everybody.