Problem Salved

Bank stocks around the world are going through the roof, that's 'cause they've all been bailed out. You don't see the homeowners in Kansas going through the roof 'cause they're not being bailed out.

That's Jim Rogers referring to the nationalization of Fannie Mae and Freddie Mac.

And don't pass up the recent interview with Jim Rogers whereby Jim eloquently bashes Bernanke and the Federal Reserve and waxes historical precedence regarding the deterioration of America's economic dominance.

............................................................................................................................................................

As far as trading, I still contend that keeping it brief in this environment is the best opportunity for capturing volatile moves without the overnight risks associated with this market. I have roughly 100 names on my current Live Short List (all of which are related to commodities) and I think every one of them opened higher today than they closed; and virtually every one of them reversed lower on the day; clear distribution still for commodities.

There were some positives signs elsewhere in today's news-driven market, however, but I am going to save those for another time; until I see the market is able to rally further and reverse the broadly defined trend. Besides, if we rally further it may not be so dramatic for a few days or so, but if we resume downward like so many commodity-based and tech stocks did today, then that will be much more exciting as far as making money.

The heart must come first.

Longer term, I am not the most bullish sort (sot), but short-term I do recognized there is a chance for a September low in the market and I am not going to let my better judgments keep me from taking advantage. I'll keep looking to attack short for now, but I am quietly compiling areas of strength so I can adjust to that side of the tape quickly; should the overall market picture begin to paint a September bottom.

In other words, I'll keep firing until I get hit myself. Then I'll turn and run.

Smack Dab September

The easiest bugs to squash are those already bleeding.

September is a month to relish (above!), if not respect. The potential for an exquisitely tradable bottom, which lasts almost routinely into the year-end and even longer, is pretty much dependable it is so common. And on the few occasions a sickened market cannot bottom in September, a stock market crash in October makes for a nice possible alternative.

So what's not to love about this environment?

Clearly, the market is not appreciating lower commodity prices. Recall the good old days of '08 when we paid $5/gal. for gasoline and our long-side portfolios were rising? What's an Earth-plunger to do?

Well, don't do what I do (especially since I rarely give-out time-specific trades anymore). But Jesus Christ, if you can't clobber wounded seal pups in a line, then at least find a rock to hide behind until the flock stops bleeding. You'd rather be a hammer than the nail...I should hope.

Friday's action was nothing like an impressive reversal, indicative of bottoming action. It was an oversold reprieve, and it is only a matter of how much of a bounce we will see before the blood lets again. Even if a genuine bottom is only a week or two off, the screams are darkest before the dawn.

On that front, I can say this. If the market is truly sick, the bounce we saw on the second half of Friday will not last any more into Monday than perhaps the first couple moments. A sick market bent on going lower bounces for some or all of a day and dies almost immediately (or even gaps lower) thereafter.

So if we get an up-open on Monday, I'll be shorting with both hands. It is an easy play, since if I am doing the right thing I will know it almost immediately and the returns will be ample; whereas if the market is able to bounce further instead, I am stopped-out and back to the sidelines within the first 45 minutes (small risk vs. larger reward) + (up-opens don't tend to hold in a sick market) = (back up the truck - it's hunting season!).

Thing get more difficult if we open lower (which is why I did re-short some on Friday's close already), but after the first 45 minutes or so, if the internals are clearly negative, the opportunity for easy money remains high; since closing still lower is an easy spec.

It's hands-off from shorting only if the market either reverses higher or opens up and holds firm. In either of these cases, I would then ignore the calls of hope and promise and just wait for the further, inevitable darkness before attacking short again.

Gravity's a killer when the floor falls out.

Death Spiral Short List

Former momentum groups related to commodities have been hunted down and flayed. They might bounce now in the near term, but when groups break this badly they are best to short on bounces; or else daytrade short within sessions like Thursday (when downward momentum is clear and volume is high).

Otherwise, take a couple of week's off and embrace the sidelines. Life is too short to get caught long when the woodshed looms. September is still young.

Yeah, right. Well here's your live, category-5, short-list. Many of these were already on the short-lists from August 24th. Heads or tails, Friend-o?

LIVE SHORT LIST (1-5 day short-side trades, or potentially daytrades; rapidly deteriorating industry groups):

Machinery-Construction Mining:
JOYG
BUCY
TEX
CAT
ASTE
MTW

Agricultural Operations:
DAR
SYT
BG
MON

Chemicals-Fertilizers:
IPI
POT
MOS
SQM
CF

Machinery-Farm:
AG
LNN
DE
CNH

Metals-Ores:
CLF
BHP
TCK
CCJ
PCU
FCX
AAUK
ABX
NEM
GOLD
GG
AUY

Transportation-Ship:
DRYS
TGP (thin)
TBSI
FRO
PRGN (thin)

Oil and Gas, various - Drilling, Refining, Exploration + Services:
SPN
CXO
ANW
TPP
SSL
RIG
PTEN
NE
REXX
STR
BHI
HAL
SLB
HES
BP
SU
CNQ
TLM
SII
MUR
HP
PETD

Dumbed-Down Market

I'm focused much more on shorting this week, unlike the previous week's long-side ventures, but I am keeping to the theme of very short-term trades.

Quick and dirty with the meek and mealy.

The market may be in a ho-hum stage, given the lack of any major volume on this decline, but the action we're seeing is far from inspiring and given the calendar month I would not bet against things getting dramatically worse before getting better.

I'll be updating my (hit) lists soon, but those on the short-side (from previous post) are still quite live. On the long-side, I would eliminate anything at all related to commodities. In fact, at the moment I would not consider trading long anything except specific medical or biomedical types which are exhibiting clear resilience of late. Many of these are still viable.

Particularly concerning in recent action, virtually all leadership groups are getting maimed while road-kill types show signs of life. In other words, money is rotating out of leadership and into already beaten-down names; and cash and bonds, naturally.

The market's half-full glass, whereby the broad market and leadership groups were holding up while financials, airline and housing realms were obliterated, just became half empty; since now we've seen a huge bounce in things like airlines and housing, but coincident with first, distribution in the leadership names, and now a genuine drubbing in those concerns.

Did that make sense? Simply put, the cream at the top is now sinking; a potentially deadly trend if it lasts. I find that more important than any assurance from the fact that the market's shit is stinking any less.

Smiles.

Live Lists (the long and short of it)

Alright, Friday's advance was notable, but it was a low-volume affair and well shy of anything extraordinary. I still think a very short-term approach is best here, unless you're a lot smarter than I am. I'm not particularly biased in either direction for the time being.

This weekend I've scoured my screens and charts (foregoing my usual bender) and below is some potential ammunition for firing long and/or short; on a short or even shorter-term basis.

Widows and orphans be damned - or at least don't do anything I do...


SWING LONG (1 to 5 day long-side trades; live names within healthy industry groups):

Pollution Control
-TISI (thin)
-CLHB (thin)

Energy-Other
-MEE
-CSIQ
-ENER

Medical-Biomed/Biotech
-GENZ
-CELG
-ALXN
-CVTX
-VPHM
-UTHR

Medical/Dental Svcs
-PRXL
-GXDX (thin)
-ICLR

Medical Systems/Equip
-VAR
-ISRG
-MR

Electrical Equip
-AZZ

Machinery-General Industrial
-FSYS
-FLS
-DXPE (thin)
-RBN

Transportation Rail
-KSU
-CSX

Retail Clothing/Shoe
-BKE
-URBN (21% short int.)
-ROST

DAYTRADE LONG (Big-volume, up-days in the market showing a clear, broad advance):
-RIMM
-SOHU
-ISRG
-CELG
-FSLR
-SYMC
-ADBE
(**I'll be looking for other high-volume, news-driven names the day of the big up-days in the mkt, which very well may be the better daytrade candidates for that particular session)

SWING SHORT (1-5 short-side trades; poorly behaving names within recently deteriorating industry groups):

Agricultural Operation
-DAR
-SYT
-BG

Chemicals-Fertilizers
-TNH
-IPI
-POT
-MOS

Metals-Ores
-BHP
-TCK
-CCJ
-PCU

Machinery-Construction Mining
-JOYG
-CAT
-ASTE
-MTW

Transportation-Ship
-OSG
-DRYS
-TNK (thin)
-TBSI

DAYTRADE SHORT (Big-volume, down-days in the market showing a clear, broad decline):
-WYNN
-PCLN
-MOS
-BUCY
-CAT
-POT
-GM
-GRMN
-EBAY
(**I'll be looking for other high-volume, news-driven names the day of the big down-days in the mkt, which very well may be the best daytrade candidates for that particular session)

One tidbit of note, very many of the longs on my list have high short-interest ratios. Typically I do not like betting against a large amount of shorts, but in this case I am looking short-term enough that I am not overly concerned. Perhaps it says something negative about the market overall; I'm not really sure but I doubt it's anything positive.

And another note, I won't be daytrading anything that is not moving in the direction of the larger trend on the big market days. For example, sometimes you will see the Ag's up on a big down-day in the market. In that case, I simply avoid that group and look elsewhere.

Good luck this week.

In Off The Limb

OK, I went a little further up-river than I expected, but I'm back - in the US even.

I like to get away in the low-volume months of summer, as I've mentioned, but I prefer a mostly an auto-pilot strategy while traveling. This summer's market has required much more attention than that, so after a couple of days not getting it right, I took the occasion to ignore it altogether.

While I was gone, we saw a decent turn in market direction, in the broad sense, but it was led by ugly, broken groups and the more defensive medical and biomedical groups; not exactly what a healthy bottom tends to look like. At the same time the leaderships groups gave back gains in dramatic fashion. Oils, Agro's, Solars, Metals, etc. were smathered in the short-term.

This is a an interesting market, to be sure, but it remains a perplex mish-mosh whereby the glass appears both half-full and half-empty at the same time.

I'm trading again, but I am not going to pretend I have any strong conviction as to what will happen next (in the larger sense). The financial's may indeed suck the broad-market light into their apparent black hole, or the broad-market may instead burn brightly and drive higher after surviving dramatic negatives associated with the (concrete block around the ankles) financial's, rising inflation, economic malaise, the looming month of September approaching, etc., etc.

So while holding anything like a normal portfolio seems too risky at the moment, there are some reasonable swing and even daytrades out there. I'll try to point these out in the days to come; especially on the more dramatic sessions.

Talk soon.

Swing Song...Long

Here is a quick, unedited update since my market chops are watering...

I have (not) returned!

I'm remain deep up-river, presently on a distant and humid muddy shore, swatting ham-sized insects while shaving leeches with the same machete. However, I am buying stock (longs) in a big way today; even if just for a (swing) trade.

The market it at a key juncture, more or less, and if it is to hold, we have right now a reasonable and tradable rally into the holiday seasonal strength (which begins late tomorrow) and an easy exit then on Monday; if not later (the US markets are closed Friday).

Several factors give me reasons to buy right here and now:
-The NDX stocks are acting very strong relative to the other indices.
-The Advance/decline levels today are not extreme; especially compared to the flush-emotion this past hour.
-The time of day for today's emotional flush is bullish (assuming we do not blow through those levels late in the session.
-Several leadership stocks are at key buy-entries right now.
-Holiday seasonal strength begins the second half of tomorrow and extends into early Monday.
-The Dow is the only major index so far to have made new lows on this pullback and the NASDAQ and NDX remain well-higher, relatively (The S&P 500, however, is close).

Today I have bot QLD (double-long NDX, ave. 72.05); TITN (27.01); CSIQ (Ave. 37.55); DVN (Ave. 121.16); HERO (37.65); RIMM (for trade only, reversing up from near the 200-day, ave. 119.11); TNH (ave. 129.48). I had bought MOS the other day at 141.45.

I sold TTES, which is now extended, but I will look to trade back in on a pullback or after some consolidation.

If I am wrong, I will add crow to my plate tonight, as I chop-back positions and look for another potential entry tomorrow. If I am altogether wrong, I will likely turn and get short this market by Monday.

[Edit: The market is indeed catching a bid now. I further added double-long Financial ETF UYG at 19.80 and I traded into an additional solar, JASO. UYG is a brief 1-3 day trade, and JASO would be as well, although if I see a real turn there I may hold longer. The reason for the UYG trade is that early in a positive turnaround quite often the most beaten-down sector has the biggest percentage gain the following day. I will sell any emotional rally by tomorrow's close as far as UYG is concerned; and I will unload if it stalls first instead. I am not ambitious yet for any significant trend change in the Financials.]