Wednesday, October 31, 2007

700 Clubbed Pup Seals

Ah, don't worry about me. When it comes right down to it the market will do what the market will do, regardless of what spouts forth from this mouth.

Being a short specialist - that's it, a short specialist! means you're going to get run over now and again...and again. The key is to maximize profits when things are working and throw the women and children overboard when you're getting the worst of it. Fortunately, I was fairly light coming in today.

Now I am super-light, as far as current holdings, as my index shorts are all off the table. And though I didn't get stopped on the oil-service trade, I did reduce there; taking profits on SLB and holding the worser looking GRP. I continue to hold retail shorts COH and DBRN. Oh, I added short Cramer's newest feature-stock GLW, today at the open. That one gapped-up 3% on His Cramer's claim of being "cheap" and there is a simple benchmark in the 50-day moving average just overhead.

I hate "cheap" stocks and I love shorting Cramer's foaming-mouth once he's jacked a stock up a few percent or more. It's usually a very short term trade for me, 1-3 days and has been +EV for many a month now.

That's it, I'm basically retired at the moment.

Wrong. You should know by now I'm jumping right back in this market at the first sign of weakness. I'm licking my wounds at the moment, HA!, but I'm not done yet. I'm committed to this trade - I'll bite this market to death! . We're in-between rounds and that is all. I'm still convinced the best opp right now is picking the right spot to short. I know, yup, the market is so strong, what could I be thinking? Well, this is how the charts are working these days (on the indices at least). The moment we confirm something is for real (whether it is an upside trend or downside breakdown) is the moment the market has been inclined to shift the other direction. A pullback tomorrow, assuming the internals are clearly negative*, means that I am actively and aggressively - shorting! Okay, perhaps not 700-Club giant GOOG, but I'll be clubbing the NDX in that case, to be sure.

If I'm wrong, then not much happens as far as my results go. I stay on the sideline for a short bit and miss-out on whatever spectacular upside the market can mange; that is all.

But I'm not wrong. This market is setting up for more than a good trade and when it is finally! good and ready - I will be there. It's what I do.

*by clearly-negative internals I mean the number of declining stocks are at least double that of the number of advancing issues; both on the Nasdaq and the NYSE. Volume on the indices should be increasing (distribution); NL's should be expanding vs. NH's; Down-volume should swamp that of Up-volume; Maria Bartiromo's mouth should not-yet be in a panic; etc., etc., etc.

Tuesday, October 30, 2007

Aunt Bea and Nothingness


Woot Woot - she powers on!


In a session that would put back-to-school children to sleep, the NDX has managed yet another 52-wk high.


This time there are only 5 names among the 100 hitting NHs, with 1 hour of trading left at this writing. Of those, only AAPL and GOOG constitute any significant market cap.


Yep, there is a bull market out there - the AAPL/GOOG Index continues to scream.


The broad market is mostly lower and Energy stocks are getting weed-whacked today; which means I am happy. So far I'm still holding GRP and SLB shorts put on Friday.


I'm supposed to tell you why the market might drop like a stone following tomorrow's Fed action. Now I don't feel up to it. Yes, I'm rather busy at the moment - in fact I have more excuses than those kids linked above. But mainly I think it is better just shut-up until something starts up (er, down).


So, piss off. Go find your doom and gloom elsewhere. I'll be under this rock until Fed sundown.

Monday, October 29, 2007

Biloxi Calm

Today's action was rather dull, as the market waits on the Big Wednesday Fed cut to come.

Shanghai bounced another 2.83% today, but so far there is no new high in that index. A higher-high this week wouldn't be at all surprising, but a lower-high failure would mean I can begin to scale-in short, so I am sleeping a bit lightly.

Over here, the NDX yawned its way to another intraday high today, but closed below that level. This is another case where if the index fails I am jumping in to short (this one with both hands). If not, I am resigned to wait.

I mentioned at the previous NDX high last week that only 7 out of 100 names managed new 52-wk highs. Again today there were 7. Digging further, in today's NHs only FLEX and WYNN ended with any clear advance. GOOG stayed positive (nothing special), VRSN was flat and the others, ATVI, DELL and YHOO, all backed-off notably; ending lower on the session.

What will the Fed do Wednesday? There is a 98% probability that they will cut the FF's rate by 25 basis points, based on today's close in the November Fed Funds futures contract. Only the Fed's choice of language when it makes the announcement to cut and the market response remain to be seen.

Oh yeah, the issue of the discount rate also remains. Talk about good times.

Will we blow-off on the upside, will we drop-dead immediately following the cut(s), or will we simply continue this perma-bull collar of upward crawl for the lifetimes to come?

Tomorrow I will address the potential for the market dropping like a stone following Wednesday's rate cut. I won't guarantee this will be the result, but too much is in place, fundamentally and technically, to ignore it. Also, dropping like a stone is where a trader can make the greatest gain in the least amount of time, so hell if I'm not going to be prepared when the market sets up the chance.

For now, I digress to watch more paint dry.

Friday, October 26, 2007

5-Wave Spice Parabolic Chicken

The Shanghai index bounced moderately Friday.

I'll be talking a lot about Shanghai. It has emerged as the mother of all bull markets, eclipsing every bubblicious-move world markets have ever witnessed; in terms of how far-how fast.

How far? Here are some interesting facts reported today in a Forbes.com article:

The Shanghai index rose 500% in a little more than 2 years. Remember the pullback in February when that index smacked-down 10% in a day, sending the rest of the world into brief hysteria? Shanghai is double that level now.

How does it compare to other historical moonshots?

The Japan Nikkei rose under 300% over a longer period of time, before giving it up for good; so far.

From the '98 lows to the faithful high in March 2000, the Nasdaq Composite rose 240%.

And that Obscene Serene rise in the Dow during the Roaring Twenties? Up under 300% over a span of 5 years.

According to the Wall Street Journal, average first-day returns for Chinese IPOs in 2007 have been 192%. Think about that for a moment.

The Shanghai Composite index's price-to-earnings ratio of 68-times-trailing-12-month earnings is virtually identical to the Nasdaq early 2000 but slightly below the Nikkei's P/E peak of 73.

Obviously, this is the mother of all emerging markets (did I say that already?). You would be in the minority to claim that mainland China will not surpass every other major economy in the years to come, including US and A. Even Jim Rogers is willing to ride out a 30-40% correction. In his view it would constitute a natural correction within a much larger trend.

I don't mind 30-40% drops - as long as I'm short. Anyway, just salivating here at the moment. Maybe next week I'll enter the dragon.

I did short SLB and GRP in the Oil Service group today. That sector broke down pretty hard last week and the bounce has been peeked, even though crude oil stormed to higher highs this week. I'm benching Schlumberger on the 50-day moving average and Grant Prideco on the 200 (which it broke yesterday following earnings). As far as the rest, I haven't changed anything since cutting back the index shorts the other day. Prolly laying low there until Fed Wednesday.

Good weekend.

Thursday, October 25, 2007

Hams and Cheese

Waking up to the news that Shanghai finished down almost 5%, I had the sense today wouldn't be too nasty as far as further upside here in the US. And while the futures were trading higher pre-market, we are re-reversing lower; as I chew.

Under the surface it is Debacle City again as the rainy-earnings parade continues. Liquid names NIHD, FORM, ZMH, CMCSK, VDSI, WCG, PALM and even Cramer's very recent standout-buy, ALGN are all getting slackered. Booyah that you hamhead!

Solar stocks are still strongest as far as upside. Most notable today are STP and FSLR.

Today's big news (my book) is that Proshares is readying to launch a new Ultrashort ETF for mainland China (symbol FXP). Ultrashort ETF's for emerging markets (EEV) and for Japan (EWV) are also launching soon.

Ultrashorts are double-short ETF's, perfect for an aggro-madman like myself. I'm not suggesting shorting Shanghai here and now, but there is virtually no pure-play in the US to do so and having that capability is beginning to get interesting.

Speaking of China, the other notable news today regards Jim Rogers and his declaration he is selling his investments out of the US Dollar and opting instead for the Swiss Franc and Chinese Yuan, going forward. Rogers already opted out of his $15M spread in Manhattan and moved to Asia permanently earlier this year. Oh, the US in already in recession, according to Rogers, and he's not exactly bullish about soft landings and what NOT.

But hey, who needs advise from Jim Rogers - we got Jim Cramer!

Wednesday, October 24, 2007

Reverse Curse


The market managed to recover most of the early losses today, running strong on a rumor the Fed is set to cut the discount rate again; not just the fed funds. So much for a bounce in the Dollar, I suppose.

Tonight the CBOT just published their first CME Fed Watch numbers for next week's FOMC meeting. The probability now stands at an 86% likelihood for a 1/4 point cut in the federal funds target rate (FF's) and a 14% probability for a cut of 1/2 point. While this does not indicate anything regarding the discount rate, notice that we have a 100% probability (today) that FF rates are going to be cut next Wednesday.

Like last time out, the media will be reporting that many or most analysts expect a rate cut, but that will be child's play. The Fed WILL cut rates. The only question is how much and now...whether they cut the discount rate again.

And will it be bullish this time around? That also remains. I mentioned before I have to lay a little low ahead of the Fed, but I can't help but think the market is setting up for some disappointment. A mere 1/4 point cut in the FF rate may be too little crack to keep the party high.

Keep an eye on the CME numbers this next week; the closer they get to the date, the more you can be assured of the up-coming FF results. Of course I'll be jumping up and down about it all week, especially if that 1/4 point probability remains this strong. Who gives a shit about the discount rate anyway? We don't need no stinkin' discount rate.

A Gathering of Hunters

Okay, no day-spa - the market is eating its young today; somewhat.

The internals are nasty enough, with decliners leading advancers by more than a 4-1 margin; volume is rising and reasonably heavy. The Semi's, which have been making lower-lows each day lately while the NDX again managed a slightly higher-high, is getting woodsheded; the breakdown in leader BRCM is notable.

The higher high in the NDX yesterday saw 7 names within the index trade to new 52-wk highs (NH's). The previous high on October 12th saw 12 NH's in the 100-stock index. NH's in the overall market have been trending lower with each successive rally as well. The last NH in the Dow saw a pitifully low number of NH's in the broader market. Historically, this is a harbinger for hell in a hand basket...but that was then. This is...well, now.

I'm not going crazy yet, but I am staying reasonably short. Holding Ultrashorts TWM, SKF and even the fledger QID; still short COH and DBRN as well. As I mentioned yesterday, if the market improves I have to bail on the QID, but once again I have all the confidence of rotting fruit after seeing that peekid new high followed by today's uber-pelt.

The Fed cut coming with next week's FOMC meeting is also an issue. I would allocate more short today if that were not on the horizon. However, I might take further shots on any strength ahead of the cut and I expect to be taking larger shots once it is out of the way.

New highs in all accounts again here today, so the market can't be that hot, right? I've been net-short since before summer and I still manage to make a buck. Something is not right...hoping it is the market and not me.

Tuesday, October 23, 2007

Churn Baby Churn

AAPL eps last night set the stage to squeeze the shorts once again, but there is little power here at the moment. The real move was yesterday's bounce; today is met with high volume, flat breadth and mostly negative progress from the opening prices.

I'm actually up on the day thanks to good ol' COH's weak guidance.

Sold most of the TWM (Ultrashort Russell 2000) yesterday early (counting the aftermkt the night before as well) , but unfortunately held all the QID (Ultrashort NDX) since I am still playing for that index to catch up with the otherwise negative market out there. Indeed, the NDX is still king, that group of 100 Naz stocks which keeps the world so f-ing bullish. Shanghai was up a bit overnight, but no new highs there in a while. Staying short the US here, but plenty of dry powder. If we don't stop rising, I have to get neutral, or get out and visit a day-spa or something so I can find something new to complain about. If we do stop rising, I am going to short with both hands again. We're just off alltime highs in all accounts here, even though the market has been SO STRONG GOING HIGHER...HA!

Still formatting the new blog here. Going to keep it pretty raw though so I don't have to get distracted with all the fanfare.

Monday, October 22, 2007

Test


Publish Test
This is a Test
This is somewhere I would like to test in person.




YUM still a buy?