GOOG DOOM

Friends, let's pause and reflect a moment on a recent anonymous post, in response to my brilliant GOOG analysis. He writes:

Google is going to rock to all time high very soon. Time to close your put position and buy some call position now if I were you. The stock market is in a super bull mode right now with $rut, $mid, $nya, $tran, $util, $bkx, $xbd, $xoi, $osx all in or near ALL TIME HIGH. Dow, S&P and Nasdaq are near multi-year high. This is no time to be bearish.

Well, you 1999-on-the-brain bullish twit, now that GOOG has reported their earnings, how are they doing? Down about $70 in after-hours trading. That means your call options - of which I hope you owned a boatload - are going to get wiped out. Whereas my puts are going to go up hundreds of percent instantly at the opening bell.

I resolved earlier this year to be a bit less dogmatic with my bearish views. Screw that. Let me lay out The Truth for you.

Bulls brought us Enron. Bulls brought us Excite. And Worldcom. And CMGI. And HealthSouth. And all of the rest of them.

Bulls have a stench of fraud to them. In a market this wildly overvalued, the world is fed to the teeth with these charlatans trying to convince you that stocks are worth anything close to these prices.

Bears, on the other hand, are truth seekers. I offered the truth in my GOOG post. And the truth is out now.

It's going to take some time for the market to get wiped out. Probably years. But when NTRI is at $5 (or 50 cents......) and GOOG is about $20 and the Dow is at 6,000, it might be amusing to reflect back on this blog and see what I was saying back in the day.

And to all you GOOG bears out there - - well-earned congratulations. It's time we finally had our place in the sun after 24 years of bull lies and tyranny. Enjoy the ride down. There's going to be a few pops up now and then to get the bulls excited and provide them fodder to try to defraud the unsuspecting.

But, slowly but surely, this market is going to be utterly laid waste. Trust those noble bears who are seeking the truth. And remember who brought you the bubble of the late 90s.

Bull Run or Bear Trap?

I've been tracking the Russell 2000 ETF (symbol IWM) not only because it is a very broad-based instrument, but also because it's been by far the strongest of any of the index ETFs for the past year. If the IWM really starts to break down, it's a serious bearish signal. So far, this has not happened. On the contrary, the IWM has shown amazing strength and resiliency. Click on the image below to see a larger picture:


As you can see, the index has been creating an ascending wedge. Although it has historically bounced off its support and resistance (indicated by the arrows), it did appear to break beneath support in September, highlighted here with an orange circle. However, this was a false breakout, and it pushed back into its wedge and has been moving up pretty much ever since.

I stated in an earlier post that the IWM was pushing on a resistance level again. As you can see, it has now broken above this level. So the question at this point is whether it, like its cousin in September, is a false breakout, or if it represents a true breakout above the wedge.

We should know in the next couple of weeks. If the price can stay above this trendline, then resistance has changed into support. However, if the price sinks the trendline back into the wedge, this is just as bearish as the push away from the false breakout in September was bullish.

Q up 11% since Last Month's Post

Regular readers of this blog may remember that I pointed out the beautiful head & shoulders pattern on Quest (symbol Q) back on December 8th. Well, the stock has performed very well since then - up 11% since my post. Let's revisit the chart and see how handsomely the price is moving up and away from its breakout:


I'll also mention (hat in hand....) that NTRI has gone to a new all-time high, rendering my recent suggestion of it as a short moot. As I mentioned in that post, any price above $46 should be taken as a stop-loss, which it has by now. It seems a very bullish analyst report has pushed the stock skyward. It's still below its ascending trendline, but the cold fact is that it's not breaking down at this time.