« July 2008 | September 2008 »
Looking at the Russell 2000 (and, ergo, the IWM), it seems to me we've returned to June 16th. We're in a situation in which:
Some of my posts are measured in feet rather than inches. This is going to be a short one, because there's not much new to say.
As a thought experiment, I'm going to take the viewpoint that I'm wrong on the markets and that things are going to go the opposite of how I'm positioned (perish the thought!) I think it's healthy to look at what things would look like it they "went wrong" so you can be prepared.
The S&P is just grinding away at 1265. This is not good. This might form into a base from which a small rally could be launched. This level must break; there's just no two ways about it. It will take, I suppose, a catalyst in the form of one of the economic reports coming out this week to do so.
The story is much the same with the Dow 30. We have been monkeying around below the Fibonacci line, with the exception of last Friday's thrust toward the broken trendline.
Just to keep on the "worst case" theme, the $NDX (and remember, these are intraday charts, not daily) could be interpreted as having made a nice basing pattern which has retraced to the horizontal line, preparing for an upward thrust.
The Russell is somewhat more encouraging. It is plainly below the retracement, and it is making progressively (albeit very small) lower lows.
Lastly, USO could plausibly be preparing for a push higher here, having solidified in the 90-98 range.
There, I am through thoroughly scaring myself. But it is very dangerous to get totally wed to a certain point of view. You never know what form the next government bailout is going to take. And I'll be the first to admit that, given any reason to do so, the investment banks and financials in general are in a position for a big push higher, given how horribly battered they've been.
That's honestly all I have to say at this point. Maybe tomorrow will give us some direction. But some days are just like today - - - just not much to it, and not much to say!
And so, yet again, we are grinding away at about the 1265 level on the S&P 500. To say it's exasperating witnessing the support here is an understatement.
Stocks that are headed for oblivion - - think Enron - - don't go from $90 to $0 in one day. They get there in lurches.
It can be tempting to buy a stock for $5 that used to be $60, thinking how easy it would be for it to pop 25% overnight. It happens all the time. And for a few lucky ones, it can be really profitable.
But I urge you not to do this. The FRE and FNM of the world are very dangerous, and during each of the tinted times shown below, people thought they had nailed the bottom. I imagine most of them sold only when their profits had turned into painful losses.
Hi Everyone,
Not much going on at the moment; this is one of those comment-cleaner posts, mainly. As long as USO stays below 98.54 on this little bounce higher, I'm feeling good about my energy bearishness.
If things remain relatively humdrum through the day, I'll do a post after the close. Thanks for swinging by!
In this weekend's post, I wrote, "Zooming in to the intraday level, however, you can see how technically perfect all this price action has been. An ascending wedge, a break, and a perfect retracement to the underside. I would be very, very surprised (and disappointed) if we didn't see a down day on Monday."
Well, I was neither surprised nor disappointed. I got the "one-two punch" I was hoping for............a drop across the board in oil, gold, and equities. The notion that these are inversely correlated is, in my opinion, total nonsense, and I am positioned as such. Today's 241 point drop on the Dow was welcome, and the last three days of this week are packed with important economic reports.
Observant readers may notice that my performance figures have dropped from something like 95% to 77%. The reason for this is that we've changed how this is calculated. Last week, a reader pointed out what he felt was a mathematical flaw in the calculation; I agreed, and I asked an engineer to correct it. This has been corrected, but still, the figures shown are not bad! Please keep in mind my caveat about this figure, no matter what it says.
Today I'm simply going to show you my favorite current positions. I've got a total of 109 - - yes, 109! - - positions, every single one of them bearish. But here are my jumping-up-and-down favorite ones.........
No, no, not you. (Unless you're Ned). Me.
In spite of my three rules being very simple and easy to understand, I tend to blow it on the second rule ("never do an ad hoc close") way more than I should.
This morning I closed out my IWM and SPX puts (both at a profit) simply "because." Well, to be fair, the reasons were more than that, but none of them were based on technical analysis. I am a genius at justifying why I should sell certain positions; some of you might hear yourselves with this kind of self-talk: "Well, the market is down a lot this morning. I should take a profit while I can. And these are September puts. You don't want to hold onto September puts, do you? After all, these are the only Septembers you have. If you sell these, you can take your profits, and you can be devoid of any Septembers. Wouldn't that feel good?"
About sixty seconds after I sold these, the market plunged another 100 points.
I am writing this not just to bellyache or self-flagellate, but to say that even with an "expert" like me who has been doing this for a couple of decades, screw-ups still happen.
And, setting all this aside, let us remind ourselves not to become enamored of the material things of this world. Love and truth are timeless. Beauty fades..........and can even become terrifying.
It seems anything with the words "Central" and "European" has a pretty weak future ahead.
I'm glad to see that Slope isn't the only corner of the web dedicated to giving the citizens of the United States at least a 3rd grade education when it comes to spelling, grammar, and syntax.
This has nothing to do with charts, I realize, but I'm still recovering from seeing the ridiculously dishelveled and rumpled Mayor of London at the closing ceremonies last night, looking like a buffoon as the elegant and poised Chinese Premier and IOC Chairman passed him the Olympics flag. Wow.
Good (Saturday) morning, everyone. I was too wiped out Friday night to do a post, but here I am.
In spite of me being very "on" about gold, oil, and the dollar last week, it was still pretty much a grind in terms of portfolio value. In order to really blast my value higher, I need the "one-two punch" of both energy/oil/gold falling and equities falling. That will supercharge everything, based on how I am positioned.
Crude oil is really interesting. Although I didn't draw the neckline in the chart below, it cuts across about the $123 level. I'd say we're heading for the psychologically significant $100 level on oil within the next month.
I don't really look at commodities very much, but it is pretty remarkable just how fast commodities across the board have collapsed. I'm sure you recall earlier this summer how everyone was running around, screaming about exploding food prices, rationed rice at Wal-Mart, mega-wealthy farmers, and so forth. You could probably pinpoint the peak in prices across the board with all the squealing. Since then, things have absolutely plummeted. Just look at corn, below - from about $800 to $500 in a matter of weeks. I daresay the collapse in prices across the board has a long way to go.
As for equities, we continue to push into increasing complacency in bull-land. The VIX range since "the new market" began (that is, last July) has been from 16 to 37. We're at about 18 now. We are getting near the lowest levels of the VIX within this range. Historically, this means a nice surprise is around the corner.
The surge in equities Friday pushed things to very nice shortable levels. I also find it interesting to note how volume zoomed higher during the plunge in June and early July, and it has been withering away all through August. The market really doesn't know what to do with itself, and I think a lot of people are starting to lose interest. A watched pot never boils, and bulls and bears alike are growing weary of watching.
Zooming in to the intraday level, however, you can see how technically perfect all this price action has been. An ascending wedge, a break, and a perfect retracement to the underside. I would be very, very surprised (and disappointed) if we didn't see a down day on Monday. (this is Gary's cue to tell me that the 25th of the month is usually an up day 97% of the time.....)
My "short of the year" $UTIL has been higher, naturally, due to the recent strength in the Euro, but I think this is about to change. I say again: I think interest rates are heading much higher, the dollar is heading much higher, and the $UTIL is heading 20% lower.
Indeed, if you want a chart expressing the potential strength of the dollar, look at USD/CAD, below. If this was a stock, wouldn't you want to be long? Just wait until that descending trendline is broken. The push above the horizontal line you see was major news.
The IWM, on which I bought puts late Friday, also pushed nicely to its Fib level. I've boldfaced the two critical levels. We are just going to continue to watch (a) paint dry; (b) grass grow; until such time as that low Fib is snapped.
As for the rest of the post, a variety of charts I think bears may find of interest, some of which I've never mentioned before. Have a good weekend, and I'll see you Monday!
