A number of readers have been remarking how strong the market is prior to the July 4 holiday, and how bears should sell into this strength as opposed to shorting too early (like last week). If today is an indication, it seems that was good advice. The market was strong across the board, with the Dow posting a better than 125 point gain.
My index-puts-of-choice are for the Russell 2000. I've got a pretty big put position on this index. As long as the series of lower highs and lower lows stays intact, I'm fine with this.
Remember, tomorrow is an abbreviated trading session (the equities market closes at 1:00 EST, three hours earlier than normal), so it's bound to be a quiet, low-volume today. I would think most of the pre-July 4 fireworks got taken care of today, but there might be another little push upward. The S&P 500 is also in a "lower highs" pattern, and it needs to remain so in order for the short-term bearish picture to remain decent.
One nice Dow stock for puts is Alcoa (symbol AA) which looks to be in the latter stages of a head and shoulders formation.
For big believers in the continuing ascension of energy prices, APA looks like a good bullish play. This is a really nice saucer breakout.
PSB is a short I closed a little while ago with a nice profit, but I re-entered it today, since it seems to have finished with its retracement.
This will be my last "introduction of the iPhone" post. Promise.
I have been mixed up with computers since 1979 and have religiously followed the characters of the Silicon Valley since 1982. I know the history of Apple particularly well, especially around the creation of the Macintosh. Thus, I've become acquainted with the stories of the players in that story.
Let me introduce you to three players in particular, numbered below. 1 is Andy Hertzfeld, one of the software geniuses on the original team (He works at Google now). 2 is Bill Atkinson, another of the software geniuses (he invented Hypercard, created the original MacPaint program, started General Magic, and is now an acclaimed photographer). And 3 is Burrell Smith, considered the hardware genius behind the product.
Here's another photo of them, taken on the day the Macintosh was unveiled. You can see how exuberant they look. Notice another circled face, that of Apple co-founder Steve Jobs.
Nearly a quarter of a century has passed since those photos were taken (incredibly...) So fast-forward to the present.....well, last Friday, when I was hanging around the Palo Alto Apple store. And look who wanders in......none other than Steve Jobs!
Now, you've got to recognize what a big deal this is. It's iPhone day. And this store is the epicenter of techies and geek-freaks. And Steve Jobs shows up. It would be like having a unveiling of a major new edition of the Bible and God beams down for a visit. You can imagine the reaction. So in this clip you see him checking out the store and deciding to go back across the street to grab his wife and bring her in too.
And once they are in the store, Jobs immediately sees the aforementioned Andy Hertzfeld (who, 30 seconds into the clip, you can hear saying "Bill stayed here all night", referring to Atkinson) and, at 1:00 into the clip, you can see Jobs amble over to Atkinson to chat with him a while. So it's like a micro-reunion.
So where was Burrell? That, to me, is kind of the sad part.
My understanding is that after the Macintosh-crazed 80s, he ran into some issues. Suffice it to say that I see him on the street at least a couple of times a month. He has a very long beard, partly grey. He walks at a quick pace, but looking at the sidewalk the entire time. And, to a random stranger, he might even look like a homeless guy (although I'm pretty sure he's living comfortably and likes to make regular jaunts to Whole Foods to get out and about).
What's striking to me is that most people would really assume he's just another homeless guy, without realizing what a major figure this person was in computers - and the Mac in particular - today. And his absence from all the excitement in the video above just reminded me of the juxtaposition. Because as the accidental reunion was taking place, their missing member was probably alone, walking to the grocery store, stare affixed to the sidewalk, destined to pick up another quart of milk.
Dedicated bulls should worry about this: the market is starting to make sense to me. Last week was a really good week. This week was a really good week.
Now, if we were at the tail end of a two-year long bear market, it would be easy to shrug this off. "Oh, yeah, Tim the permabear has been doing well because everything has been falling non-stop." But you know that's not the case. The Dow was at its highest level in human history earlier this month, and it still has over 98% of that value. So I've been able to score big profits trading virtually entirely bearish positions in a market which has been in anything but a free-fall.
So it's making sense. Leading up to this month, I was starting to lose my mind with how nonsensical, bizarre, and random the market seemed to be. It would be like living in a town where cars stop at green lights 80% of the time, pedestrians occasionally walked along the middle of the highway, and baby carriages were parked on the roofs of buildings. After a while, you start to lose your mind in that kind of environment and question your own sanity.
But the town I live in suddenly makes sense. People stop at red lights and go on green. Baby carriages are safe. And pedestrians remain on the sidewalks. And the market goes up when I think it's going to go up. And it goes down when I think it's going to go down. It's a nice change. Let's keep those buggies off the roofs for a while, shall we?
If you read my post from earlier today, you know I spent a little time this morning at the Palo Alto Apple store watching the crowds line up for the JesusPhone iPhone. If you didn't see the post earlier, check it out. It's got a cool little video I made.
I'm trading the Russell 2000 options actively, both intraday and on swing trades. A tight stop on the IWM ETF is at 84.19 right now, which was the high for both Thursday and Friday.
There's really no good instrument for trading the MidCap 400 ($MID), but it's a fascinating graph to me. The markets seem to be revving up to be in swoon mode.
I haven't traded the NASDAQ (either index or hardly any stocks) for a while. It's been relatively defiant of the recent weakness in the market. But I have a feeling this group is going to start joining the downdraft party.
Side note, now that I mention NASDAQ - congratulations to RIMM owners, particularly call owners. I see some of the calls were up literally quadruple-digit percent levels today!)
Oil services are looking terrific for shorts/puts. HES is particularly well-formed and liquid.
McKesson (MCK) is another beautiful stock. One of the best examples of exploiting Fibonacci fans that I've ever seen.
RadioShack (RSH) has been on an enormous upswing of late. (Rumor has it that AJC has joined the Battery Club multiple times to keep her bedside electronic accouterments fully-powered, thus the earnings spike). But - - just like JC Penney is JC Penney - - Radio Shack is Radio Shack. And that's all you need to know. I've got puts.
Next week should be relatively quiet with a big fat holiday right in the middle of it. Have a safe one (most of you, at least), and I'll see you on Monday.
Late breaking news! I was there for the Big Event (the 6:00 opening of the doors at the Apple store). It was a madhouse. Police, news crews, and hundreds of people (half of which were taking pictures).
You know the funny part? People waiting three days to be near the front of the line. And one hour later....one hour......I was able to just walk right in through the front door without a wait. Great use of three days (and nights), fellers. Anyway, here are my two iPhones perched on the kitchen bar:
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