Friday, November 30, 2007

Bull Throttle

The indices are mixed at this writing, but the underlying action and internals are reasonably firm.

The bull remains afloat.

I continue to hold a smallish, long-only position while awaiting a confirmation follow-through session; but I am not afraid to be accumulating some, since the action remains formidible.

The worst are acting best today, namely homebuilders and financials. That's not surprising, but it was a pretty risky re-entry after the easy money there Wednesday. I missed the gravy train today there; oh well, I'll eat this stick of yak butter instead.

Given the liklihood now we will see a Fed cut of 50-basis points (not 25-bp) come December 11th, and the fact that the market is responding favorably to this reality, I think the environment is reasonably safe on the long side until that date at minimum; a full week from Tuesday. So while I'm not loaded to the hagfish gills long just yet, I am expecting plenty of opportunity to fire large between now and then.

I'm still holding pat bio's GILD and ONXX. Since the last entry I added a first tranche of solar play YGE (ave. 26.76), a slightly larger tranche of LOGI (ave. 34.07) and a dog as well: I went long DBRN (with tight stop) expecting it is poised to vault to its 50-day m.a.; up at the 15.55 area. I know this dog well, as I was short there the last several months; up until November 8th. I'll let it go nearing that level and then I'll leave it alone while it bores me to death for a while.

I'm sharpening my teeth on any piece of driftwood that floats by, trying not to buy too much too fast. Sea monkeys, whale bones and raw, pacific meal worms are a nice distraction. I want a body-fat of 96% before the 11th, just to be healthy and safe.

So while I let the other guys make most of the money for now, I am focusing and scouting new potential breakouts (leading, liquid, aggressive growth names poised to break above 6wk+ bases on 3-4+ x's normal volume).

There are nice bases in in many of these already, but not much in the way of breakouts so far. So while I'd rather load up on a JASO breaking above 62 (or so) on major volume, I'm settling so far for YGE to catch-up to the upper end of its range; a larger percentage move before it would challenge any serious resistence. The LOGI play is a similar formation, only this one really resisted selling-off in the down market. I'm aticipating adding to LOGI as it breaks out above 36.50 on volume, but I had to take a chunk now just because the voices in my forced me to do so...actually, I think this looks quite live, but I can't get over-aggro there until we break new ground on sufficient volume.

That's it for now. I've got more but I've got spearheads to carve...Good eating!

Thursday, November 29, 2007

Fork in the Roadkill

Sentiment has been nothing if not fun to watch recently.

The excitement of the new-found market following yesterday's rally was a potpourri of dum and dummer analysts and TV heads stumbling over each to welcome back their forever and permanent bull trend higher. The contrast from their sullen spirits on Monday was striking.


OK, we were backing and filling in the market early today, which is no shocker given the magnitude of rise yesterday, but the market has managed to reverse higher; nothing really spectacular either way.

As intended, I backed out of 75% of my exposure by the close yesterday and am staying settled-down just now, content to watch the leadership define itself and wait for the set-up for a follow-through confirmation day (O'Neil variety).

Yesterday was huge for me and I traded like a fiend throughout the session, but I did botch one thing up badly enough. Against my earlier plan, I dumped the FSLR position at the end of the day. What a dope! It could not move to higher-highs in the session, which put me on guard some and then when the name saw succinct pressure in the last hour, well I blew it out for a 1.5 point gain..!

Today, quite naturally of course, FSLR and the solar group as a whole are charging the moon. 1.5 points there isn't even enough to tip the waiter. It was up almost 25 an hour ago.

SOLF, which is no leader in that group, gapped-up a ridiculous amount on earnings and got the group going. The problem is you cannot be assured that a catch-up move in SOLF was going to be significant, since SOLF has been a dog among kings. I tried getting back the FSLR in the opening minutes, but it got away before I realized I needed to chase it. So I tried then getting a hold of YGE, but that vaulted into a moonshot as well. STP in the group managed new highs today (something to note) and JASO is back in vogue.

Anyhow, with me or without me, this group remains the hot money.

What am I doing about it? Well, talking to you I guess. I'm just leaving it all alone. I might pull in some YGE near the 10-day m.a. (currently 26.46), but I doubt that will be seen again today. In fact, if it sees that level late in the day I will likely just pass on it anyway. However, to get this name as the 10-day catches up to its price might be a fine and reasonable entry; we'll see.

As far as FSLR? This goes right back into the bag of potential stocks to trade long as soon as I can see the reason to fire further-long at the market.

You might consider this silly. Why not just buy these things if you are bullish and they are hot? Well, you are probably smarter than myself. But I really don't care what I miss - they can shoot the moon and I just smile. All I require is that when I am on-board (long or short) that the names I fire at are working. I won't get the market right every time (HA!), but I intend to get more meat out of the winning positions than is flayed out of me with the losers. With that formula I don't have to be right even half the time and I still come out ahead.

So for now, it is back to the Pacific, holding lightly long while watching and learning in this new and exciting bull market. I'm making fish-flake tostados just now, chewing on ginger snow-squab and waiting for the follow-through to set-up.

If we don't follow-through...well, we get bearish instead. But at this time of the year getting bearish means getting out and doing nothing. Tis no longer the season for Billybear and we made some kind of a bottom now in stocks; at least.

More on the follow-through watch as it sets up. Technically it cannot come before Friday's session (meaning we are not allowed to trust it until at least Friday's session), so let's trade light and eat heartily in the meantime!

Wednesday, November 28, 2007

Bank it Up!

Woot woot!

I'm taking most of the easy money off the table today, as the market is moving in that lovely too-far/too-fast fashion.

I've banked profits on ISRG(!), MICC(!) and 50% of my GILD positions. I've since been trading in and out long in the financials and homebuilders today, for only today; but I can't give all the details there (you would think I am some kind of maniac!). Let's just say those groups are up the highest today and the daytrading there (today only) is something like a day in the life of the internet stocks in 1999 (God I miss that year).

I did add FSLR long at ave. 114.24 early on today, but I never bot back into any GOOG or AAPL...and they are not exactly screaming at the moment; we'll look there later.

Daytrades within the financials and hommies aside, I am left long GILD, ONXX and the FLSR.

The good news about this rally is the surge higher in accounts here. The bad news is I never like to hold a negative market when it exhibits something of a buy-panic. I would expect we will close at the highs of the day (most indices at least), but the next day then is more cloudy.

I will be quite light then by the close and will look to buy again later; hopefully higher, which would mean an actual uptrend.

Take what the market gives you and leave well-enough alone. It's a great trading environment right now.

The Fed Beige Book is due out at the top of the hour. I am looking to re-enter daytrades following that report, but again I can't really detail it.

yada yada - cya

Tuesday, November 27, 2007

In Addition

Nice close today.

Most of the leadership names closed at their highs for the day, and on rising volume. Breadth was still modest on the NYSE, but >2-1 positive on Nasdaq.

I added MICC and an additional dose of GILD, to go with the ISRG and ONXX. These are my long names for the moment, as they are pushing the envelope higher right now. I would like to get AAPL and GOOG back into the mix, but one day does not make a new market trend and those two were relatively sluggish vs. the above heroes; at least today.

I cheated on the MICC. Earlier I mentioned I would buy >112.45, yet I backed into a reasonable size tranche at an average of 110.65 as we pivoted into the last hour of trading. Something about this chart is speaking yearbook volumes right now - we'll see, but I would guess it will be much higher at year end.

My average on the GILD today is now 43.63 for a reasonably heavy position. I was disappointed later to learn that Goldman Sachs had placed GILD on a new best-buy list for defensive plays. I say disappointed because I prefer my stocks are live without any help from analysts, but this chart looks very live at the moment, jacking-up from off of the 50-day m.a. and on strong, rising volume. If this name goes stale, I'll blow it out - but at the moment it looks like GS may have hit a chord.

ISRG and ONXX both closed above Friday's rally-day highs. That is the kind of action you want if you are dipping into the long-side early.

I say early because there is nothing yet which confirms any change in the overall trend. If I were still bearish I would focus instead on names and indices which can't help but make lower-lows on a day like today. At the moment though, these leadership stocks have endured now for too long and it is too late in the year, not to take serious notice.

If you were a money manager, paid to invest in equities, which names on at the end of the year would you like to show investors they have been long in this market? December is rapidly approaching - far and away the best window dressing period of the year. Additionally, if you are JQ Public, would you like to sell your biggest winners in December so that you can get a jump on paying those taxes on the '07 return instead of waiting for '08? These dynamics team-up and assist a further frenzy higher for the year's leading stocks.

We'll talk a lot more about that set-up as the year winds down. We need to determine whether this rally will have a sufficient lifespan first.

Tip, Toe and Go

Okay, I'm buying a little stock long today, but no clarion calls here yet. The path of least Resistance is by no means resolved, even if there is a hint of strength developing now.

My caribou snaps remain mainly on the drying rack.

We have a topsy turvy affair so far and volume is rising. After closing on the lows yesterday, in many cases new recent lows, we gapped-up today on news we were selling hunks of C-cheese to the Middle East, only to gush again lower following the lower than expected (what were you expecting?) consumer confidence report.

But the market doesn't give a rat's ass about CC reports, despite what you might read. That is old data and not exactly a surprise anyway. If it mattered I would have charged off of my own ass and bought-up this market, since the indices then managed to re-rebound above their opening highs. However, rebounding from the CC report was about as triumphant as swatting a fly; so I am still keen to wait.


And oh, I'm not exactly 'keen' either, since it is anything but keen to sit on one's hands and watch the screen collect dust while doing nothing in the market. Sure, I've fattened up considerably for winter by now, something good, what with non-stop helpings of Oyster bark, hagfish and Brylcreem.

I am shopping for potential longs more than I am actually buying. If we can actually generate a rally I will go heavier in the leadership stocks, but I am nibbling some so far. I was compelled to see that the leadership stocks still by and large above their 10-day moving averages, at the same time so many of the indices had turned belly-up again; closing on their lows and exciting the headline makers Fargo and wide. Sentiment is favorable at the moment and we are rallying on rising volume. New 52-week lows yesterday were considerably below their levels last week, another positive development.

And speaking of sentiment, did you see how rattled Cramer was last night? That is the least megalomaniacal performance from him I have seen from him ever - humbled even! I have to think the lawsuits might be pouring in over there. He was back-tracking his back-tracking - running away like a cat from the litter box who refuses to admit they just caused such a stink.

So far I bought back long my position of ISRG, (ave. 290.40, above where I took it off yesterday). I also bot a first tranche of GILD (ave. 43.48). Some others longs that might be tradable here are AMZN, RIMM, MICC (above 112.45) and ONXX (which I never sold).

AAPL and GOOG cannot be counted out, but they so far have failed to take out the opening highs, indicating a potential temporary fatigue...and since this trade may or may not stretch-out beyond today, or very far, I'll lay-off there until they are indicating otherwise.

I don't mind paying higher prices later - I won't add exposure here otherwise. This is not the time for bargains.

Monday, November 26, 2007

Back to Nature

I'm somewhere in the Pacific, listening to Vaughn Monroe while spearing and canning my own radioactive mackerel for the upcoming winter.

Back home I've got the weekend's kill of buffalo-elk and Bambi flesh strung upside down, dehydrating in the living room. When I get back to trading, there is nothing more pleasing than building positions while chewing on various species of jerky.

You guessed it, I'm almost entirely idle as far as stocks are concerned at the moment. And since short-sellers are first and foremost ruthless beasts - I've got to keep the teeth sharp somehow.

When the market next shows a big hand, I am going to move that direction. It would be convenient if that was to the upside (as in, the re-trend lower today amounts to a successful re-test of lows), because I would love to focus on the year's leading stocks driving higher into the year-end. But I'm not writing any script just yet. We have to prove something down here first.

Aside from the ISRG and ONXX, I unloaded everything by the end of Friday's shortened session. And if you had asked me over the weekend whether I was looking to bull or bear this market from here, I couldn't have answered with any certainty, but I was happy last week to have taken profits on the shorts and then bag a couple days gains out of the long-side without skipping a beat. I got the most out of that long-side trade, at least as far as low hanging fruit is concerned.

I should have beared it again today, obv., at least for a re-test. But now unfortunately I have to skip a beat while the market re-re-defines itself. While things are driving decidedly lower today, there is still out-performance from the leading NDX stocks (something bullish), volume is low (shows lack of buying is perhaps more to blame than heavy selling) and this retreat may amount to nothing more than a re-test of last week's lows (which is not much of a move from here).

I can see the bull case as the year winds down here, which is a change from my recent focus, but there are no flashing green lights following last week's easy scoop of Apple's and Oranges. This is the proverbial wait-and-see moment. Sell it lower or else buy it higher - but leave well enough alone now in the meantime.

I don't care which direction I fire next, so long as I can fire. If the picture remains cloudy, it might even be both sides in the nearterm - long the leaders and short the laggards; each side attempting to hedge the other.

I'm holding only the ONXX long (so far), as I banked the profit early today in ISRG, above 289. This turned out to be a few points below the high of the day, but my trade was prompted by the calendar; the magnitude of the moves in these stocks was not in my program (my pencil ain't that sharp, sorry).

Neither are my teeth. At the moment I have only my own gums to chew on while the tape is bleeding further red.

Friday, November 23, 2007

Shovel Up and Buck

The GoGo stocks are lagging so far in today's advance. Buying is indeed rotating to other areas. I thought this might happen, since 1.) the move in the GOOG's and AAPL's of the world were so strong the previous two sessions combined with 2.) the rest of the mkt was such shit.

I'm all the way out of GOOG, AAPL, MICC and FSLR. I swapped back into the SKF short (thus double-long financials).

I will unload SKF before the close, but the financials look to be the live play for today's low volume, post-holiday bounce.

I may or may not hold ISRG and ONXX further than today; but either way I am going into next week with hardly any guinea pig on my plate.

Also, I haven't had any time to edit these posts today; I'm sure there is a problem or two thERe.

Good weekend!

Thursday, November 22, 2007

Early to Bed

The market is set to gap-higher, and not a small amount.

I am taking half of this trade off now (selling this week's longs); both premkt and at the open. The other half I hope to hold until later in the session, but if the market action is not positive I will let unload and go hunting elsewhere.

This was a good trade. It is too bad I lost long-trade in the financials (I covered SKF on Wed.), but that was pre-mature stuff anyway. I only want the early returns on a move if everything is perfect; it wasn't.

The leadership stocks are still very strong on the charts, but pessimism is higher than it has been in some time. Even Santa Claus rally hopes are dim. There are other indications of sour sentiment out there - but no time here to get into that.

Turkey Biscotti

Sitting down for Thanksgiving here, but really I'd rather be eating crow claws out of the bag and trading this market instead. I love a market that's flying off the handle and driving higher at the same time...even more than this plate of fried's.

I kept on buying the second half of the day, adding a couple traunches of FSLR (ave. 209.54); So far so good there. Then when the NDX managed to go positive late in the session I cut back a tranche of GOOG above 669, but I am still over-weighted in that name for tomorrow.

Prices backed-off in the last hour and I was forced to unload the Ultrashort SKF short* (ave. 107.76), since the financials were not seeing anything like the life like we saw in the GoGo Complex. I still think that trade could set-up for tomorrow, but no sense having my neck in the fryer going into the session. Sellers maintained control in the overall market throughout the day.

OK, what's going on in the World today while we chop livers and fang glorious? Fortunately, Europe is not in the shitter - in fact England is higher by 1.25% late in their session; Germany and France are up .61% and .74% respectively. Asia was mostly lower again, but nothing overly dramatic.

That is all we need to help ensure a normal post-Thanksgiving day of seasonal grits. Normal action tomorrow would be a quiet, mostly boring affair, with a succinct upward bias.

I'm a tiny concerned that the GoGo portfolio here at the moment may have seen its strong day yesterday (Indeed I was up in all accounts yesterday, although fully long by mid-session). If buying rotates elsewhere tomorrow, such as the hardest hit financials, then my master plan may not work to the fullest unless I can rotate there first; which is difficult since by the time the light turns green most of the day's move may have already taken place.

I will however be looking for a set-up in the financial group, just for the day. If they are out-performing early I will re-short SKF as quickly as I can and if the GoGo's are lagging I will toss mine back to the sea earlier rather than later.
Either way I still envision unloading pretty much everything by the final minutes tomorrow**. I'm getting bullish here and I suspect the leading stocks are going to be in play for most of the remainder of the year and then potentially into a decent January, but aside from these temporary opps I'd prefer to see some confirmation before risking much.

After tomorrow I'll be laying low - maybe for more than a day, we'll see.

* Ultrashort ETF's are double-short their underlying sector or index. Thus shorting the double-short is the equivalent of going double-long (normal stuff, eh?). In the case of the financials, I know of no double-long vehicle, so I short the SKF in this case instead of just getting long the XLF.

** Tomorrow's shortened session closes at 1 pm est.

Wednesday, November 21, 2007

Quick Note

The market is rising off that low and I am backing up the truck some now.

I bot more GOOG and AAPL (heaviest on GOOG) and I added ISRG. I shorted more SKF (long the financials now - woot!). I also covered the retail shorts JCG and COH. Once we reverse, I will look to add more names from my yesterday long-list.

I'm naked and long now kids and the Nasdaq is still down 22 points.

That will turn higher quickly though, if I know what I think I know; which is that I am crazier than Belushi.

But sellers have done their handy work - we should start up now on seasonal strength.

GOOG is acting strongest, up more than 1% already.

Okay - I Didn't Mean Straight Up

Getting in front of this a day early was a bad idea; even though we got that lovely late reversal yesterday on rising-volume.

I'm stretched-out on the market rack, pleading for mercy - pulling turducken bones out of my ass and cursing the horse I rode in on.


Be that way.

Europe and Asia were not so impressed by our late comeback and we pummelled stocks to within earshot of yesterday's lows at today's open. As of yet, aside from a couple St. Sebastian's of strength, were still loitering there as I write.

If we break it open and drive to lower lows here (for more than a brief moment) - I have to take my lumps and unload this new plate of crow claws. At least I didn't stick my neck out to any terrific degree and so far I have not gone crazy today adding much more.

Yep, I did add a little, you saw that. But that is because they are so resistant in going down. I let out more GOOG and started the first nibble of AAPL.

Seasonal strength should begin right about NOW (for crying out loud) - so let's see if the market is really washed-out here or not.

The put-to-call measure's today are extreme and like all good seasonal strength, there is the tendency for sellers to get their selling done early; thus allowing the market to drift higher on lackluster volume the rest of the holiday week.

We'll see if it plays out.

Either way, I have to unload these titans by the close of Friday. Then we'll see if any meaningful signals show up allowing further long-side trading.

If we crash now, we'll have to do the first day without me. And yes, Friday could potentially see such a thing. In a scenario where Europe and Asia are severely pummelled while this country eats smashed potato's tomorrow, we'll be opening Friday's affair with very little liquidity; so the chance of doom then would be real.

Otherwise...well, we see a normal seasonal strength rally, or bounce in this case, which by my watch is about 30 minutes from due (~11:30 est).

Good thing, since the NDX is taking out the early lows now, as I eat this paper. I'm standing on an island. Why do I still think this trade will work?

Because I am nuts.

Enjoy the bounce. Good trading.

Tuesday, November 20, 2007

Turduck and Cover

Okay, there's a little more flesh on those short bones today and much of the market is reeling - but still volume is on the light side and the NDX continues to resist selling.

Oil is surging again, another financial shoe has dropped (FRE down >27%), the Fed is forecasting lower growth and new 52-wk lows continue to expand. Good game market, right?

I'm still not very satisfied.

I am actually accumulating a little long here (GoGo, hot-money names for the turducken holiday strength). Yes I am insane, thank you for noticing.

I'm not jumping up-and-down bullish and I remain light in overall exposure so far. But I will add longs aggressively tomorrow if we can begin moving higher; I think we will do just that.

I've taken profits on my remaining QID, and added GOOG and MICC long. I even went short a little SKF above 107 (double short financial ETF), but that should be kept quiet, since it really shows my madness. This too, is a temporary fling.

But I am looking to add more long-side trades tomorrow, assuming we are not still dropping.

Pre-holiday strength begins around late-morning tomorrow and runs through the close of the shortened session on Friday - I expect to be very light again, as far as positions, by Friday's final minutes; possibly net-short again, depending.

Long-side names I am considering for tomorrow are AAPL, ISRG, more MICC, more ONXX, more GOOG, RIMM, FSLR, STP, MA and TKC. I won't play everything here, but that is my Turducken Hit-List so far.

GOOG, AAPL, and RIMM all pivoted nicely off of their 50-day moving averages (MA). I like each of those stocks for a trade, but especially if they can get above their 10-day MA's; that would allow me to trade them heavily, if only for the 1-2 days.

MICC and ISRG are already above their 50-day and 10-day MA's. I played MICC so far, but would add more there and take on ISRG if these show strength tomorrow.

ONXX is well above the 50-day, a potential monster, but it is currently below the 10-day mark and I will add only if it wakes up. Onyxx is the latest, greatest cure-for-cancer play - I'll dump it like the plague if it doesn't kick-up by tomorrow.

FSLR and STP are high-ranked solars in the energy-other group and have maintained their positive relative strength throughout this decline. MA is a leader among financials and I am only considering a brief seasonal-strength trade here. TKC is a high-flying mobile phone play from Turkey and has so far showed no signs of retreat. This one also would be just a trade, trying to take advantage of the hot-money at a time when the market is rising...assuming it is rising.

We'll see what sets up, as you can see I'm really only interested in buying strength here, but if strength is good I will buy heavily.

If we crash instead, then I am as much a fool as anyone out there right now. I'll be bailing out as quickly as I can tell and hopefully snorting back my shorts in that case; but for now...

I'm loaded for Bear.

Monday, November 19, 2007

Shame in a Single

This is getting annoying.

The market is flirting with the recent lows, new 52-week lows are expanding nicely, breadth is miserable today - but where is the god-damned beef?

Volume is pathetically low, Financials are down again but refusing to make lower-lows and the NDX is still a hero; refusing to give it up on the downside.

I'm chewing on ham bones and beef jerky, drinking coffee and ice-water non-stop, throwing CNBC-clickers into the drywall - wondering when (if ever) I'm ever really going to be able to fire at this market again.

For now (forever! it seems), I'm holding my same paltry amount of short positions (retail uglies JCG and COH and I'm long a small length of Ultrashort QID),

To be honest, I doubt now we're really setting up to break this. Maria is way too excited and Bob Pissanti is pointing out as I write about all the clear breakdowns throughout the market. Who hired this guy - this is awful.

It's not that I don't think we will go lower - we very well might. But the set-up is not there and if it ain't right, I can't trade it; not with any meaningful sized position.

Hence the vehemence.

That might sound shallow, I suppose, but I just can't do it; especially short, since the counter bounces there can be so dramatic. I'm a little peeved that I let go of most of my position late last week and prices kept drumming lower, but still...I couldn't really justify it when the re-trend lower failed to impress on so many levels. Indeed it still does.

I need panic, I need blood, I need to see broken indices sticking bones right through the skin.

This is a flesh wound.

On top of that, seasonal holiday strength is coming Wednesday, so we are running out of time; as far as a green-light set-up is concerned.

So I wait; barely short; scrawling and drawling. I even bought a little ONXX long today (Ave. 56.675). That's how upset I am.

What a pisser.

Friday, November 16, 2007

Sleeper Waves

I was out of town today. Out of sorts and out of mind, I suppose.

Being almost entirely sidelined since mid-session yesterday, I was content to basically check-out, keeping abreast only in case we were setting-up for a break of recent lows.

But that didn't occur, even though we had a smattering of negative news to fuel new selling. Wall Street's brighter faces got to smear hopeful lip gloss all over again. Nothing unusual.

I was off the coast of N. Alaska all day, hunting polar bear and clubbing baby pup seals, but otherwise - no carnage to speak of.

Actually, it could have been a good trading day, seeing we opened up, reversed quickly down, reversed up again, then down yet again, but ultimately reversing up (yet-yet again) and closing higher at the end of the day.

All of this was on higher, option-expiration volume. zzzzzzzzzz.

Anyway, I don't really care about participating in any potential upside at the moment, as the risk remains too high vs. (what I see) as potential short-term reward. If we're not falling apart again by later next week, I will certainly trade a couple of leading stocks long for the US post-holiday session on Friday (generally this trade is best placed the 2nd-half of trading on the pre-holiday Wednesday and then sold late in the shortened-session on the next trading day, Friday.

But that's a mighty long time from now. From Monday until the first half of Wednesday I'll focus on the shorts and whether the sucking sound looks ripe to continue. Should we manage to re-approach the recent November 12th lows, I will get very active, very quickly; shorting as we approach those levels and then firing as much as I can fire upon breaking below there.

So basically, I am going to react to the market here. I'll lay off the short-snorts as long as we are rising or hanging tough in the face of further negative news. If we rally sharply, I will likely take some shots, depending, because I do think you can and should sell strength into this market. However, selling strength is really best for those stuck long. For the short bully's like myself, selling failure is where it's at.

Good weekend!

Thursday, November 15, 2007

Hold the Malaise

A Barnacle of Truth...

A broken market, when OVERSOLD, has a tendency to bounce sharply, but in 1-day hurrahs.

The CNBC faithful and virtually everyone I read or listen to was expecting Tuesday's heroic upswing to sustain at least throughout the week. So far that has not been the case.

Oversold readings are for losers.

Seriously, you can sharpen your technical pencils and pinpoint spastic-stochastic oscillation extremes until you're blue in the face, but at the end of your life you'll discover that trade had a negative expectation value.

If you look at crash-like declines of the past, in the indices as well as in individual equities, you will find one distinct commonality. They tend to come from an oversold condition.

So while you might see a majority of positive results stemming from buying these oversold set-ups, that is rendered insignificant once one little crash smacks you in the face.

Based on oversold technical conditions, Enron was a buy all the way to ZERO.

Ok, with that out of the way let's get to the point of the day. The market is under pressure again and breadth is sufficiently negative, but so far the major indices have not managed to hit fresh lows. You know I like to complain - well, my short-soup is a little luke-warm here. The decline is not yet accelerating.

Volume is also drying-up suddenly. Yesterday's volume was below that of Tuesday and today volume is declining again. That is not conducive with a market that is about to break apart.

Negative sentiment, meanwhile, has shifted back to worrying, having lost the hopeful luster from Tuesday. Maria is rattled. I don't like being short when she is rattled and we are not hitting lower-lows.

Further, new 52-week lows are not expanding and the NDX is declining somewhat reluctantly compared to the other major indices; the opposite of how I would write the short-script.

What's a trader to do? Well, take profits. While I was hoping to just keep adding more and more short into an accelerating drop, this mere malaise-decline has me unloading them now instead; at least for the time being. I"m taking profits today on all index shorts. I continue to hold short retail names COH and JCG.

I will be sleeping with sleeping with one eye open, however, in case things liven again; which obv. can happen quickly.

And hey, how about that silly Fed? Like Mr. Rogers recently said, that nut Bernanke is going to print money until we run out of trees. The Fed reportedly pumped another $47B into US money markets today, another post-911 record. Last week they fixed us with $32B and the week before injected our previous high, $41B.

I'm counting just under $150B now since October 24th. Wow.

Wednesday, November 14, 2007

Quick Note

I have swapped out of QID (39.27) and replaced it with TWM (Ave. 67.69), as the NDX continues to lead all averages on the day, while the Russell 2000 remains weakest. Holding COH short and SKF long and I'm still working the entry on a JCG short. If the market is not retreating by tomorrow, I will move back aside; however, if we are making lower-lows tomorrow I will let out more short; so keeping cautiously short until I see clear failure - then firing with both hands.

Firing Short Barrels

We gapped-up a little higher than I was comfortable with, but I did go ahead and stick my neck out somewhat and started scaling back into some shorts. This follows a small re-entry of QID just ahead of the close yesterday.

I'm now long Ultrashorts QID (average of 39.17) and SKF (average of 85.90). In other words, I'm short the NDX and the Financials. The SKF was a great entry, as it turns out. The QID is a little suspect, since the NDX is out-performing the other averages today. If that continues, I will unload it rather quickly and either wait it out a bit, or swap for the TWM (Russell 2000 Ultrashort).

I also re-entered retailer COH short today, at an average of 36.58. I am looking to enter JCG (shorting the turtlenecks), but nothing yet there.

While shorting the up-open was a bit scary today, the tone of Maria Bartiromo's voice lingering in my head from the close of trading yesterday gave me the confidence I needed to fire. Sure, the market made an impressive 1-day showing, but CNBC enthusiasm was far too high for the situation. At one point she blurted that even if the US is in a pinch, the GLOBAL ECONOMY is still very, very strong.

I keep hearing this, that the US weakness doesn't matter so much since we have a global economy, which will underpin prices.

I'm in a mild mood, so no tirades here (sorry), but good luck on that one Maria.

Breadth on the Nasdaq is already negative today and volume was notably lighter on the bounce yesterday than the declining days earlier.

It's still early, but nothing leads me to believe yet that yesterday was not indeed a 1-day hurrah.

Good trading.

Tuesday, November 13, 2007

A Day in the Sun

The bulls are in command for today. I've been Ripped, Torn and left for left dead in the baking sun; honey strewn about my stripped, flesh-eaten limbs; 1000 degree temperatures...and not a friend left in Miami.

Nah...just taking a day off here while we get this out of the system.

I covered in the opening 20 minutes today - everything short I never owned. I waited that long only in case this would be a case where we gap-up and open at the day's highs, only to drop, drop and drop from the first bell. Once it was clear the bull was really awake, I played run-and-hide.

Actually, I prefer it this way. If we have to see a bounce so soon (yeah, yeah, we were SO oversold, oversold, oversold - well, keep telling yourself that while I wipe the still-fresh blood from the 14,000 foot heights of my nose), I prefer we get it all out of the way in one day.

That's right, that's all you get- one lousy day.

But hey, don't complain. That day is still young, the sun is still high and the prices are likely to close at or near their highs.

That last part isn't guaranteed, but that is how the 1-Day Wonder routine plays out. Shorts cover, sideline cash afraid of missing the next move higher piles in, widows and orphans, who had became widows and orphans again only recently, hop right back on that bull. Volume runs high and broken stocks see rediculuos bounces. Icarus flies toward the Sun - it's a venerable buy panic!

Enjoy it while you can. In this zig-zag market world, you can play the zag all you want. I would too if I had the gumption. But hey, that was 20 years ago. Now I'm just an old toad, satisfied to wait for the next zig-entry. The next chance to short in this case.

If we close at the highs of the day, which I suspect, I'm re-shorting in the final minutes of trading. If we close off of that level, I may scale in some, but mostly in that case I will look to short an up-open tomorrow, somewhere not quite as high as today's highs.

New blood is the safest, until we can see the re-trend lower. That would be the NDX in this case and so I am looking to pile back onto the double-short NDX - QID. Once it is clear we had nothing more than a 1-Day Wonder here, I will look to fire again back into double-shorts TWM and SKF.

If I'm wrong and we blow right to higher highs tomorrow, well, I'll lose a little. I don't see going long then in that case either, but I won't stay in the ring for too much damage if I can help it. The main point is to look for the entry and bail out quickly if things do not transpire my direction.

But I won't be wrong (my opinion). This is not how markets bottom (this so-far, so-fast routine). This is how markets bounce.

Monday, November 12, 2007

Rotation Tanks

The new theme is continuing out there again today - leadership names are correcting further while the broken stocks are showing some strength. The financials are higher a second day today and now retailers, airlines and the broad market indices (Russell 2000 and NYSE) are either rising or showing resilience to the selling as well.

Up along the other side of the tracks, however, the market continues eating its children. Leading, higher relative-strength energy groups, solars, steels, fertilizers, metals and indeed the NDX Being-Supremes are getting woodsheded again.

What's going on then?

Well, volume is lower on both the Nasdaq and the NYSE, market breadth is relatively flat and new 52-week lows are not expanding from Friday's level. This suggests we are not going to see anything too severe just now (from here at least). Instead we are seeing a rotation of selling out of the depression stocks and into where gains are still to be had. Buy the C and sell the G; something like that.

This isn't particularly bearish, but it's not that bullish either. It's a kind of gut-check pause. Higher-up names and groups are selling-down towards the rest of the market, perhaps while we prepare for a test the August lows.

Once everything is more or less down to that level we should be ready to mark either an intermediate-term bottom or else break-down and start what would likely become a much more serious wave of selling.

Did that make sense?

In a nutshell, anything well-above the August lows is in the fast-lane headed down the last few sessions and those doghouse names and groups near the August lows already (or well below in some instances) have stopped hemorrhaging.

The Dollar is bouncing, Crude is selling, Europe was holding, while Asia saw further significant selling. I've been hot-dogging out-and-back-in-again my index shorts all day and I'm keyed mostly on the NDX still for now.

Overall though, I am backing off and taking profits short for the moment (the foot has been less and less on the accelerator as the day has progressed).

I'm not sure a bounce here would be particularly strong (if we bounce) and I would be happy to sell into whatever it can manage. Also, if we can't bounce in this condition I will sell it again later in the session today or early tomorrow. I don't mind selling lower if the internals justify it.

The NDX is down 1.23% and the Dow is higher by .44% at this writing.

Saturday, November 10, 2007

Bye Bye Miss American Pie...Charts

It was rough and tumble for the US markets this past week - virtually nothing was spared.

Highlights included:

A further break-down in the broad market.
Increasing panic within the financials.
A further weakening of the US Dollar.
Expanding new 52-week lows in listed equities.
A break-down in the Nasdaq and NDX indices; no longer bucking (and bucking!) the trend.
Nasdaq Volatility surged to the levels achieved in August.

If you're thinking this is going to be another routine correction for the US markets and that the rewards for buying-the-dip will be plentiful as always, then I envy your courage. But you sir, are no Joe Kennedy.

And there's really no need to rent any scary movies this weekend. These three charts will do the trick - though not exactly nicely...

Dow Jones Industrial Average - 1900 - 2007:

US Dollar Index since 1971:

NYSE Margin Debt since 1968:

*Credit and Historical Charts for the above charts.

**The DJIA chart is as of 19 October, 2007; the alltime closing high, 14,164.53, came 9 October, 2007. The Dow closed Friday at 13,042.74.

...I'll talk to you Monday; where if we are down more than .75% in the pre-market futures I am adding aggressively to index shorts before the normal trading session opens. Good luck out there.

Friday, November 09, 2007

A Frailty of Heroes

While the broad market has been in the doghouse for some time, this week marks the (welcomed) entrance of the NDX to the Street's anti-party.

Let's hear it for high-heeled boots! That venerable Flotsam of Jetsetters.

The hot-money, permanently-cheap-on-a-valuation-basis GoGo-growth names are now leading on the downside.

We're talking sucking sound here. A sinking, rainy-day-feeling-again cauldron of distress - A Costco of Canned Worms - A Chicken of Doubt...

And Google ain't even hit 1000 yet.

You could argue this is bullish. I mean, hey - the Financials are hardly falling any more, even in the face of further and unrelenting horror. That's gotta be a good sign Mr. Kurtz, right?

Indeed, the Financials are turning up-on-the-day as I write this - Woot! We're going up in the face of negative news. If that ain't the light at the end of the tunnel then I don't know what is. We have got to see a bounce in this market soon.

Or, selling has simply rotated and the weakest areas in the market are in a sort of dead-zone; too washed-out to sell much more and too god-awful to begin any sizeable recovery.

FWIW, here is my 2 cents: We could in fact be ready to bounce here, but if we do it is merely going to set-up for lower-high failure; even in the NDX. Otherwise, we will see a further, accelerating decline (accelerating in the Nasdaq and NDX at least) straight away.

The latter scenario is more of a lancing blow, which is probably more bullish as far as prospects for recovery in the intermediate term.

The former, set-up for failure scenario, I would argue is the scariest potential action for the near-term. I suspect it will amount to a Pied Pipering of individual investors who have so knowingly and lovingly learned to forever buy-the-dips, since they lead to ever-higher highs; and usually sooner rather than later.

In the old days, a lower-high failure after an initial break in the market (where some old index like the DJIA had made new all-time highs while the Nasdaq had...not) was a common kick-off to a genuine bear market.

I don't want to sound alarmist (Ha!)...but decent people should be very careful at this time.

...the rest of us should just be short.

Good weekend!

Thursday, November 08, 2007

GoGo Catch-down

Ok, Bernanke is off the air and the index declines have not abated. Actually, we're knifing-down in the NDX right now.

Cisco's Chambers mentioned a slow-down in business coming from financial institutions. That's provocative. Could it be the depression in the financial sector could actually cause problems elsewhere?

Unlike yesterday, however, the underlying internals remain firm relative to these index declines. This is likely temporary, but at the moment it suggests you cannot jump in whole-hog short right now. It is really only the best and the worst that are getting seriously clocked today.

Financials and hommies (the worst) are driving to lower lows and the go-go NDX branch is finally getting pelted. Apparently the widows and orphans are letting go of some of their GOOG, AAPL, RIMM, BIDU, etc., etc...

I'm feeling left out and lonely at the moment, having let go of the QID about 2 hours ago, but the time-of-day, combined with the lack of underlying carnage, means I have to stay on my hands at the moment. If there is no sizeable bounce in the NDX, I will fire again for the last 90 minutes of trading. I suspect it will be well-off the lows by that point however.

Time-of-day is a great trading tool. I'm not at all saying to buy any GoGo here (momentum is under a clear SELL). But freefall is better preserved late in the session.

Heya, CNBC talking about the possibility of $200 crude oil in a year. I guess sentiment is beggining to get negative out there.

New highs in all accounts here today.

Luke Warm?

Just a quick note. It ain't pretty out there and CSCO definitely helped to make my week, but...

Breadth is positive today on NYSE
S&P500 is hardly lower at moment
NYSE and Russell (broad mkt) are actually higher early today
Nasdaq breadth is merely flat, while hot-money NDX stocks correct

This is not the kind of action you like to see if a market is really breaking down and you are short. I just let go of QID, TWM and new DXD (from yesterday); for the time being. I will fire right back with these if we can eliminate these positives today. Not going long anything US in the meantime either.

Too bad, I was hopeful things might be severe today. Volume is very strong though, thus far, so keeping ready in case things worsen.

I did go long mainland China just now, on the pullback there (long small amnt of CAF; ave. 52.45).

That last part is ironic since today is the day that Ultrashort FXP is (finally) open for trading and I can't wait to get double-short Shanghai! ...for the moment I am long that world instead, but I am about zero-committed to holding if there is further weakness there; Shanghai was down almost another 5% today. Note: FXP will be very illiquid for at least some time.

Oh, the time stamps are all b.s. on this site at the moment; both the stamp on the webpage and especially the stamp posted on the email delivery are out of whack. Anyway, we are 70 minutes into today's trading at this writing and the indices are re-testing their day-lows. Email readers are getting this message in about 14 hours I think - which is pretty funny.

Wednesday, November 07, 2007

Root of Al's Evil

Wubba Wubba

Sorry, no time for much else at moment. Cisco tonight has the potential to break this friggin' NDX finally...or else buy yet another stay of execution.

I'm betting on the former, since the brkdwn in the charts is real at moment.

Good trading.

Tuesday, November 06, 2007

Woot! Shoot

Ok, things got exciting after all today - on the upside. Yep, we're on fire tonight baby - Woot woot!

I can laugh at least, since I'm almost entirely on the sidelines at the moment; Still wearing just a tiny Dress Barn short at moment.

Actually, I really should have jumped-in long, even if for the day. It was obvious by the time I hit the Send button this ship was headed up. A younger, more clever trader with 6 to 8 screens in front of him would have managed. I'm so last century.

Obv. I'm just an old toad, waiting to piss on everyone's party- and now I'm stuck. Stuck because it's not like I can chase this higher from here. If I had traded long I would have exited already by the close. That means I missed a decent opp. going up, only to be resigned now into the wait-and-see chamber - where I can't do much more than watch young guns try to make up for their recent whack-a-mole set-back. You know the type. The same people who said C was looking attractive in the mid-forties. Bugger!

Ok, the other pisser is this ass-savvy staff (of none) here is finding out today the new Subscribe feature (for email delivery) is not much better than waiting for land-mail in Kansas. Apparently Feedburner is not sending posts out upon publishing, but looking to send whatever new material a blogger can mustard only once/day.

That's tidier for them I suppose, but it's pathetic if you're actually trading this market and you might actually use this stuff (whoa-now - you should NOT actually use this stuff - what were you thinking? Read the disclaimer at the bottom and at the right side of this page - this is for info-tainment purposes only. My legal staff is smaller than my tech staff, which is non-existent next to my infectious diseases staff - so do not actually try this at home. Hell, you can't even get proper delivery on the micro-picture of how things are flying on and off the handle, so even if you wanted to attempt it I couldn't guarantee you any gains even if I am grinding out 200% - Get a life already!)

So I need a tech-staff. Great.

And piss-off to this market. After a day like today I just want to wait for Cramer and short his featured (ass)play in the after-market.

Yesterday he slobbered over NCR, which naturally opened at the high of the day today and then shat all over that smart-money Cramer crowd.

So at 6PM EST. turn on CNBC and turn OFF the sound (seriously). You don't need to know what he's actually mouthing. You just need to hot-dog short on whatever his big feature of the day will be (assuming he's jerked it up >3% - I'll give you the full parameters another time); the graphics will say all you need to know. Even better, call someone else like I do, so you don't have to see any of it.

Then turn the show OFF after the opening plug - the rest of his blather is not moving anything enough to fade it and it's certainly not worth the effort of having to watch his next zit pop (sorry, no link).

God, I digress. Heaven help the readers of this page when I am on the sidelines. If it takes more than a day or two, well, I apologize in advance.

Attila the Hum

The market action was mostly weak early today, but there was no real excitement this time. That concerns me some.

Never short a dull market, right?

Actually, it's a great rule.

Watching the paint dry, or in this case watching the dry tape, is usually not how serious plunder unfolds. I wish I could say otherwise.

So again I have been obliged to unload (short) positions; take the goods off the table; keep the powder dry; live another day; beat the hum-drum and then some.

I know, we've had pockets-of-plunder out there for some time. But I'm talking about the all-you-can-eat buffet.

A trader's life is so boring sometimes. Because the over-all market is such shit, I cannot partake in the popular, bucket shop party-time frenzy; in the two or three Googley names within a permanent cheap-on-a-valuation-perspective roaring bull market.

Sometimes you've got to just let the other guy make the money. Sit on you hands and wait for either A.) The market to improve enough to go long; or B.) Some friggin' blood in the water, thank you.

In the meantime, I still have my lovely Dress on, but I'm out of everything else for now.

If we aren't letting out a little more red on the tape again soon, it's back to finishing, err fishing school, for me. At least until something wakes up.


Monday, November 05, 2007

Fully Half Empty

Volume has let-up today, but otherwise today's internals remain mostly negative. Strongly negative breadth is particularly notable and argues we won't manage a reversal today.

I've re-increased the index shorts slightly today, but nothing dramatic and I may even have to let them go again before the close, depending. We opened more or less near the lows of the session (so far anyway) and the bulls can argue that as positive. At the same time we were unable to reverse higher on the day; so there is the argument for the bears.

It's a half-ass, empty glass...if you ask me.

Shanghai backed-off for the 3rd session in a row, after trading nearly to new highs last week. But Hong Kong was pelted 5% today, marking a succinct breakdown now in that market. Sub-prime Sublime.

What's a trader to do? Keep it short baby!

I'm not buying anything on weakness at the moment. But if we start something higher again, I will take my lumps and move aside; as I have done several times since going net-short in May.

All accounts are at new highs again and I'm letting the other geniuses buy-the-dip on this one - I will only buy/cover this market on strength. I'm not putting my head on any chopping blocks right now (long or short).

Buying the dips only works the first 10,000 times in a perma-bull market. At some point you become the dip.

Friday, November 02, 2007

Ben There Done That?

I brought up Jim Rogers here last week. He's on the wires and in the blogosphere late this week and it's pretty amusing; in an alarming sort of way.

Here is a collection of JR quotes put out today by the Bob Brinker Fan Club.

Rogers on Bernanke:

"This man is a nut. The dollar is collapsing, commodities are going through the roof, which means inflation's going through the roof.

"These people are leading us to terrible problems down the line.''

"Bernanke loves printing money."

Rogers says of FOMC chairman Bernanke's job performance:

“It’s been a disaster."

"If a 6% decline in the stock market causes the man to go and cut interest rates by a half a percent, when inflation is running rampant, when the dollar is under pressure anyway, what’s he going to do when the market is down 36%? What’s he going to do when we have a real crisis? He’s going to print money until we run out of trees. I don’t want to own U.S. dollars in an environment like that.”

He's going to print money until we run out of trees, you have to love that line. Unfortunately, it remains the case. Jimmy has become Bernanke's greatest critic and it's about time somebody with a big voice took the Fed to task.

Rogers suggests the dollar will now likely rise in the short term (now that every widow and orphan has gotten short), but longer term, “It doesn’t take a genius to figure out that it’s a currency that’s going to be going down for some time to come."

Pay Day

Ok, taking some of these shorts off the table; in case the market re-reverses higher today. The Dow, S&P500 are still down >1/2% at the moment, but the Russell 2000 is only down .25% and the Nasdaq and NDX are hardly lower now.

For a minute there it looked like a very nasty downside reversal was getting going - not so any longer. If we re-re-reverse lower...well, things should get rude and I'll be putting on individual shorts for the weekend.

Out on GRP short [oils and oil services are pretty resilient today]
Out on COH short [>25% profit there; will look to hammer again]
Reduced 50% TWM and QID [fat gains there, out of the super-sized portions for now]
Holding DBRN short [might trade out today if market makes new highs on day]

DBRN made a nice move lower. Besides the general weakness in the market, they pre-announced lower results yesterday.

I'll have more to say later if the action becomes dramatic; otherwise bon weekend.

Thursday, November 01, 2007

Downward Facing Dow

No time for chatter, but I piled right back in on my index shorts in the pre-market and at the open. Unfortunately I missed on the Financials double-short SKF (damn!), but as the broad market quickly blew through yesterday's lows I put on more short than what I had coming into yesterday's Fed cut. Internals so far are clearly negative and breadth is very negative (>6-1 negative on NYSE and >5-1 neg on Nasdaq.), but the NDX is not leading on the way down; as a result, I'm focused more elsewhere at the moment (keying w double-short Russell 2000, TWM today). Oh, I covered the opposite-Cramer play GLW at 23.85 ave. in the opening minutes.