Wednesday, February 11, 2009

Tree Prints and Goose Pimps

While we didn't drop 4 or 5 percent, there was nothing encouraging about today's action.

Financials led, but remain mostly horrific on the charts. Except for the Gold/Silver group, higher-ranked stocks were lagging or trading lower.

Meanwhile, negative developments are on the rise. The flight to safety in the bond market remains back-on (this might be part of the super-conspiracy to get this week's mega bond auction done for Uncle Samuel, or this might just be the kiss of death for the re-flation trade - you decide); the materials and commodity-related groups, which had been quite constructive are suddenly acting terribly; the price of oil broke to new lows and other commodities were also pummeled (more anti-reflation evidence); the Dow closed below 8000 for the second day in a row for the first time in more than 5 years; tech-favorite gRIMM was woodsheded after warning wireless sales are no longer waxing; gold and silver names are the only highly-ranked stocks still showing real leadership; the isles of Langerhans are rising on Elliott Wave charts; and the oldest dog known to Westminster was winner of the annual dog and pony show.

Seriously, the charts just do not look very inspiring at the moment and every rally lately is a bit of a rush-panic upward that ultimately slips back again. These are news-driven pimps in price (today's being that the stimulus package will be cleared), but they are not able to do more than goose the room warmer. Then after the heater is off for an hour the fact that it is 50-below outside starts to effect the comfort of the place.

To be sure, there are a couple of good gooses still in the chamber - 1.) we'll get some amount of yelp higher from the decision to tinker with the mark-to-market methodology; 2.) at some point we'll get an announcement from the all-new and naturally improving SEC that they're bringing back the uptick rule to help stave off those wicked short-sellers; 3.) we're going to get more than vague vagaries from TG and the Treasury plan - since a.) the bond auction will be out of the way and they can stop worrying less about stocks for the moment and b.) it is pretty clear the Street wants something in the neighborhood of details about the promised plan as opposed to someone instead stressing over and over again just how "uncertain" everything is (uh, the Street hates uncertainty...p.1 in your manual).

That and 25 cents should soon be worth a cup of coffee - I'm still short here.

Current Shorts (according to size): SDS-long (dbl-short SP500), SKF-long (Financials Ultrashort), SRS-long (Commercial Real Estate Ultrashort), STI(new), MAT, VMI, PCU(new)
(Note: the SKF and SRS cannot be held for any great length as their inverse-short formulas cause severe bleeding relative to the underlying indices - 1-3 day trades here only)
Current longs (according to size): AVAV, ATHN, CEPH (reports Thurs, after close)

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