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Tuesday, February 27, 2007

I Am Become Death

Oh, now you know I'm going to have fun writing about today. I can't wait. Come back later on. By about 5 p.m. PST or so.

Update! Folks, I am dying to do today's blog. But it's 6:30 p.m. and I've yet to even look at my first chart! And the comments section looks like a fistfight, which I always enjoy.

Please be patient with me. I don't care if I have to stay up all night, I am going to get this entry done.

But let me save you a little bit of wondering......

(a) Health Affair, no, I didn't "call" this fall, and I never would have claimed I did. Indeed, look at yesterday's post. I talked about how we were at a major crossroads. And how I had trimmed my positions somewhat (index only - - I kept 100% of my puts on equities).

(b) Every single one of my positions - every one - was a put or a short. Now, hurray for me, BUT, I left a HUGE amount of money on the table (to the tune of six figures) by bailing on my shorts half hour into the trading day. So don't ever claim I am saying I am such perfect trader. Good for me for hanging on to my 30 put positions. But SHAME on me for closing out my index options, ALL OF WHICH AT LEAST DOUBLED BY LATER IN THE DAY.

(c) As for tomorrow - - again, I haven't looked at a single chart yet, but my early guess is a quick drop in the first half hour and then a big rally afterwards. Not hundreds of point, but maybe 100. I'll say more once I've look at the aforementioned charts.

Have some coffee and come back later (or wake up early!) for more.....

Monday, February 26, 2007

Crossroads

Greetings from the snowbound tundra of the California Sierras. To me, the definition of civilization is anywhere with an Internet connection, so I'm still quite content.

Today was a good day, but I can't help but be concerned that we will have, yet again, another swing up. I'm not saying it's going to happen. I am saying that it seems to keep happening, and the most polite word I can think to describe this wave-like action is "annoying."

What we need, of course, is a clear, obvious, idiotic-comments-suddenly-cease kind of break in the market. Until then, I have reduced my exposure somewhat with the worrisome anticipation that this stupid market might find its legs once again. The $NDX at least had a nice bearish engulfing pattern today.

The $OEX shows a wonderful example of just how monstrous the divergence is between the price action and the RSI. This market is running on fumes. But there are a lot of people who like sucking those fumes. The bulls always radically outnumber the bears. We are a lonely bunch, aren't we?

The S&P 500 is just another example of this higher highs/higher lows market. In fact, to make matters worse, the lows don't seem to be dipping as low. There are some bright spots, of course. The investment banks are starting to weaken. Some issues (like the CME) are finally making some real progress downward. But others - like RIMM and MSTR - have surprised me with their incredible strength (obviously I got stopped out on these - I may be dumb, but I'm not an idiot).

The Dow Transports, which I've pointed out should be providing comfort to the bulls, is at risk of breaking its inverted head and shoulders pattern. This could be nothing more than a pullback. But if it falls much more, the very clear bullish pattern will have been neutered.

I mentioned Continental Air (CAL) before. The head and shoulders pattern on this is forming nicely. We could be seeking a neckline break in a day or two.

And although CRDN as a whole isn't an exciting chart to me, I was blown away at the size of this bearish engulfing pattern. This is like the John Holmes of these patterns - I rarely see them this big.

Accept my good wishes that the higher highs/higher lows pattern be broken in the coming weeks. The bulls must be conquered, and breaking the pattern is the first step in breaking their spirit.

Saturday, February 24, 2007

I'm Starting to Like This Market

I am starting to like this market more and more. Several reasons:

People are starting to wake up to what a train wreck the housing market and defaulted mortgages are going to be
We've got a new financial mania on our hands - insanely huge private equity buyouts - that provide a catalyst for financial catastrophe. Remember the failure of the Japanese to buy out UAL back in 1989? That alone caused the mini crash of 1989 - - and that is a puny deal compared to the absurd BSD type deals going on right now.
Upward momentum is rapidly waning
The charts I have been waiting impatiently to start falling are finally doing so - - the investment banks.....the financial service companies......the real estate con artists. They're all starting to crack

The Russell 2000 has been unkind, but I think we're over the worst of this. Here is a sixty day intraday graph; the head and shoulders target of 30 points to the upside has been plainly reached. Clear as a bell.

The S&P 500 is now on the wrong side of the tracks (for the bulls). Look at the broken trendline, and observe how the momentum is leaking out.

Cabot (COG) looks like a good short term bear play.

Lehman (LEH) is representative of the investment banks, finally losing their luster.

I don't have any particular on MWP, but this is a good example of hyperbolic mania.

Recent recommendation NVR had almost 40 points whacked off it yesterday.

Maybe our filthy paws are starting to get a grip on this deluded market. I hope so.