Drinking from a fire hydrant

Trading this market is worse than trying to get a drink from a fire hydrant; the volatility is that great. Up a 100, down a 100 and then back to even; 300 round trip if you will. If life was as simple as fading the moves eh?

So the second quarter goes out with good gains ... the statements are protected ... the sleepy investors will never know what hit them come next quarter. So it goes and so it continues. The saga of what is and what will be continues to be painted in broad brush strokes at an agonizing pace. It's a question of how long you can last it seems. I try to be patient and the Lord knows I'm not as patient as I should be, but man, trying to position for the coming fall ... it's been unbelievable. When the drop does come, it will be as the Street wants; no one will be there to take advantage of it. And so it is ...

Hope you had a good one folks. As for me, I'm still struggling with my commodities but I can see the light. Today looked to be the wash out day finally and it couldn't come soon enough. Have a great one and take care.

Note I have to begin making some changes to this site to comply with state regulators in conjunction with my Investment Advisor Representative license process. All performance data will have to be remove unfortunately and it is something I have always prided myself on. I'll continue to work to make the site better and will look to add more charting and a couple more commentators. Good night.

Once more, it's up and then back down

Are they selling the rallies here? I think the answer is yes. There's still optimism no doubt, but things have changed over the past few weeks and the tenor of the buying is different. It may take a little longer for this to finally play out, but the rallies are being sold rather than the dips bought. Accumulation has turned to distribution and its all over the tape.

Blue skies or Rain?

So what is it, blue skies or rain? Can you tell the difference or is it all just grey?

Yesterday we did the Fed dance, the up, then the down, then the drift. RIMM juices up the aftermarket with a 20% gain. Oh man, here we go again, the go-go days yet futures or down as most overseas market have or are trading lower. Metals are up as are grains in front of the USDA report. Bonds are trading 10 ticks higher yet the dollar is weaker again after the Fed held rates in check. This morning we get more economic data include the PCE deflator that supposedly the Fed pays more attention to for inflation data. Heck, they all just give the average Joe a call if they want a dose of reality.

So what does it all mean? From my perch afar the street looks a bit bloodied. We are definitely seeing a continued build out of a topping pattern it seems with the NASDAQ being the leader now instead of the DJIA. The leading has been on the back of the semi's mostly but that looks rather suspicious leadership to me and the news in that group has not been good and doesn't look to get any better any time soon.

In the SPX, the leadership has been oil services for a while now and that's a suspect group and not the one you want to lead. You want the financials to lead but instead they lag as the paper trail of bad debt gets more visibility finally.

I do see some deals going down again this week and although they are still evident, there isn't a gusher of money chasing deals any more but instead it feels like you or I would feel about refinancing our house or applying for a loan at the point where if we don't do it now, it will be too late. These deals have that "gotta do it now" smell to them.

So, the view remains the same; all is not well in make believe Wall Street land and as the rose colored glasses begin to fade I ask, is it blue skies or rain? Get an umbrella would be my advice.

A good close from a bearish point of view

They couldn't help themselves could they; the sellers that is. The burst higher was sold into and prices eventually sucumbed to that selling pressure. We closed mixed but there was no volume on the push higher and the sell off that ensued tells us that the sellers are still in control here. I pretty much stood pat all day with not much doing as I'm pretty full of stock already and with my commodities underwater it's hard to do much more buying or selling at these levels.

We could see some further drift but it still looks like the tops are in folks. Have a great one and take care. Check with you tomorrow.

Market seems to expect good news from Fed

Prices have drifted higher in anticipation of the Fed announcement. We will likely see volatility as we usually see when the announcement hits. It sometimes takes another day even after that to get true direction. We clearly are at a point where the market and it's participants are trying to decide if they need to be greedy still or fearful. Not sure this report will do anything to clarify that because typically one data point doesn't do so; but it will have an impact. My guess is that the report doesn't change hardly anything but may offer some words that the credit markets are not something to fear to greatly. If so, that could cause a bump higher.

Waiting game

The waiting game is already taking place; with little volatility out of the gate. Guess the players feel they are positioned appropriately already. Final GDP revisions released this morning showed growth a bit slower and inflation a bit higher. Metals are up across the board; the dollar weaker. Add to this the CDO problems and you can see what kind of pickle the Fed is in.

Not looking for the Fed to have much leeway to loosen rates or to raise them. Seems like they have to stick to the more of the same strategy as they try to talk a good show; out of both sides of the mouth.

Chop Shop!

When I looked back at the numbers last night I have to say they sure look a lot stronger than I expected. We did have volume expansion on the NASDAQ with the chips going goofy again. I'm sure a lot of it was short covering, but it is what it is and how it reads in the short term was a strong bounce ... a real strong one.

So now we have Big Ben to talk today; to tell us so eloquently that all is well despite all the undeniable issues that we face from a market perspective. Will Wall Street go back to Easy Street and look past the issues once more; push to higher highs yet again? Not so quick my friend. Take a look at the charts.

We saw lower lows yesterday on the charts. That's two sets of them now. No, they didn't stick and when they didn't it was duck and run back up which is what we thought could happen. But we are probing the lows and we are probing them with volume. Believe it or not, this is not the same market it was even three weeks past when all was well and all new was good. There is bad news out there now and it is finally causing some pause. As we know, it can change and we could be wrong once more here in our thoughts of a topping pattern playing out but I do believe it's too early to think that way. The bulls will have to do more than a one day hard short covering bounce. You need high volume follow through regardless of the direction to make a trend. Right now it's a chop shop instead.

We have the futures down a bit, the dollar weaker and the metals and oil up. Bonds are flat grains mixed overnight and overseas markets pretty much up in unison off of Wall Streets romp yesterday. It promises to be another interesting day for sure. Some faster trading early and then the wait until the afternoon volatility.

A hard push higher

Well, bounce them they did. I would use this strength to take profits if you have longs still and reposition some just in case. I do not believe we are simply going straight up from here. The possibility of a hard bounce higher was in the cards and it did play out. I'm shorting into the strength and setting up for what I believe will be a shake right back down. I do not expect strength to last this time.

Bouncing with negative internals

Still more stocks going down than up but we are seeing a bounce in the indexes as the buying pressure in those going up is greater than the selling. It's a tenuous bounce so far. If it holds for an hour or so it could then morph into something more dramatic mid-morning. Interesting the DJIA is the lead weight out there for now.

Like rats jumping ship

It's always amazing to watch a false reality unravel and it almost always seems to do so at a pace that seems unreal. Every little bounce is being sold now; every one of them. Two weeks ago the dipster were buying even the bounces having given up on materialization of a pullback. If you wanted in you had to pay up was the prevailing thought. The scene now is more like rats jumping ship.

We had green futures until enough folks woke up; saw something green and sold it. Bonds are up and the chart there is playing out like we thought it might although the impetus is becoming more clear now that it may be a flight to quality that is fueling the move. If and when we break down on the indexes and truly put lower lows on the charts, then we may see a nice spike in those markets that can be shorted. If you look around the world, bonds are breaking everywhere as the credit story and all the paper associated with it continues to get repriced more towards reality.

Metals are down again as the dollar strengthens. Take a look at the Yen as it is pressing on heavy volume back against a down trend line that has been in place for at least a year. The last debacle in the equity markets saw the Yen break topside of a trend line back then and short covering was huge.

I keep thinking that we could see a hard bounce in here somewhere but I'm not going to trade for it. I'll definitely take the other side of the trade if it shows; primarily on the small caps and NDX. Seems like every day is a big day and this one is no different.

Interesting developments

We are finally starting to see real cracks in the wall that the market had climbed so effortlessly for so long. We don't see the dipsters working at nearly the pace they had before. We are seeing the first casualty in the LBO market (the deal to finance the leverage buyout of Ahold's U.S. foodservice business has been postponed, according to S&P Leveraged Commentary & Data group. The deal was expected to price Tuesday, but had been cut in size twice and the expected coupon for the offering was revised 0.75% to 1% higher than originally expected) and we have seen afternoon selling almost everyday now for a week. The much ballyhooed Blackstone IPO went below it's offering price today and we are on the cusp of a more serious breakdown technically.

The counter to this is that the Fed speak comes up in two days, the end of the month is upon us and the Bear Stearns debacle is fading and the more details that come out lessen the seriousness of what was originally thought in terms of loss size.

I expected a bounce today. I expect it again tomorrow or Thursday. I will most likely short into the bounce and measured steps as I believe the end of this leg up is nearing. Hope you had a great one and take care.

All news is bad news?

Have the tables completely turned here now where rather than all news being good everything is bad? Starting to feel that way isn't it. How quickly the tables can turn.

I honestly expected that we could and would see tha drift higher today on lower volatility. The latter has occurred but not the former. Instead we still people willing to hit the bids; lower bids.

I'm really struggling here since the metals were decimated today. I was worried that I was too early and indeed that is now quite apparent. I'm reluctant to sell into the abyss though because on a longer term time frame there's nothing wrong with most of the stocks in the sector. Short term though, it's a real pain and I was a day late in recognition.

Looks like a limp to the close from here. This market has indeed changed its stripes and the next bounce; if it comes; is likely one to sell.

Nevous traders all about

The early trading underscores the nervousness of the traders this morning as they sold the early strength. Not out of the woods by any means but it looks like we could get a little more stability in the trading here this morning.

Oil services group getting hit again as commodities including oil are getting hammered pretty good early which is pressuring the SPX again. It's definitely a rocky start again and things could get ugly if we do start another dive as the last line of support is not that far away.

Things likely to quieten down over the next couple days

Almost all overseas markets traded lower off of our stupor yesterday but we see futures up a good bit this morning here. Dollar is weaker, oil and metals down, grains mixed. Given the higher volatility yesterday and the swings at the end of the day that were bought, today probably quietens a bit after the opening round and eeks higher. It's definitely nervous trading but just as the bulls haven't forgotten that you have to buy the dips (though that mentality is definitely being tested now), the bears haven't forgotten how they get squeezed. Look for profit taking on their side of the ledger to support prices. The wild card continues to be the woes in the bad paper out there but the market has a way of snuggling up to all the bad news once its been out there for a while.

It's hard to get too short or long in front of the Fed which also likely dampens the volatility the next couple days.

I'm a bit concerned that we may be too early here on the gold shares because they continue to trade in lockstep with the general equity markets. Probably a need to lighten up a bit there if we can do so at favorable prices shorter term and look to buy them back a bit later. Don't like that thought but I have to trade what I see.

Paper fears hit the market again

The fear of bad paper has taken a toll on the market again but the rebound off those fears is in full effect as we head towards the bell. Sorry about my lack of posts today but I've been torn in many directions outside of the markets today. Suffice it to say, the environment has definitely changed on the Street and there's a sense that maybe stocks don't just go up all the time. There's a lot of data this week including the Fed though and there's 2nd quarter window dressing pressure to hold things up so once more, I would think that it will be difficult to see the clean break this week technically. We are definitely building some steam though and sometimes the market does what the market wants despite all these other factors. For now I remain defensive with my ETF shorts but that is being offset by my metals and grain stance. Tough sledding indeed.

Week full of data meets quarters end

After a lull last week, we have a bevy of data this one including the Fed head and his merry men making policy on Thursday. A lot has changed on the landscape of interest rates since they last met and their words of wisdom surely will get the attention of the market one way or the other.

The eco data is likely market friendly type data and this market needs it right now as it's hanging by a string technically once more. If there ever was a rounding top formation, if you pull back your charts and look at them on a weekly basis you can almost see the top being formed as the advance has slowed to a crawl and the crawl gets slapped more frequently now.

Overseas markets were all pretty much lower. We have crude down a $1, futures turning red as I write after being up all night, dollar is mixed although down a good amount against the Yen which should pressure stocks if that holds. Bonds are up 9 ticks and the metals all trading lower in unison. Grains were mixed overnight.

I expect continued volatility leading up to end of quarter. Most notable this morning is the lack of deal making. For months now deals were popping left and right on Monday mornings. The CDO mess and the raise in interest rates seems to have put a damper on that orgy for now.

Last week I stated that it's time to start building positions for the larger decline. After flipping through a stack of charts yesterday, the opinion remains the same. I don't expect a give up without a fight but the fight looks to be a lot more two-sided now and after such a long and uninterrupted charge higher that's a big change.

If life were as simple as a clear signal

It almost always seems inevitable that clear signals are hard to come by when dealing with the market. What you typically get instead is a not so clear picture of what's happening. In the current market, there's factors like end of quarter, some liquidity still which has been fueling the deal making, and a couple of my momentum oscillators that are indicating that we may tread more water or push higher still. There's also the unwillingess to fold on these moving averages today. On the flip side there is growing evidence that problems are finally being recognized and they are becoming front and center at last. The deal making may be trailing off as the CDOs get repriced, the market is clearly struggling more now to move higher; more so than it has in a great long time. I've discussed a litany of issues over time and they are still present like inflation and stagflation.

The problem is always one of timing though and as I indicated earlier, I believe the timing for a more substantial pull back may finally be in the cards. That's still a hunch, not confirmed. How you play your hunches has to do with your risk profile as well as other factors. When we look back six months from now, we'll scratch our heads and say, oh yeah, that was so obvious. When you are in the thick of it, it really isn't though is it?

I'll call this the last post of the day as I've got to tend to some other matters the remainder of the day. Have a great weekend and enjoy the nice warm summer weather. Take care ...

Fingers pressing hard on the sell buttons

SPX is in no mans land here. A bit more to the downside and we are going to have some real problems technically. It's been looking more and more toppy of late and today definitely had that feel early as I noted. This is a rather concerning pattern for the bulls of which I'm not one as you know. If we get the break here around 1506 SPX, it's likely to get real ugly before the end of month.

Unloading

The early trading today is that of a market where someone(s) is unloading. There is continual pushes of larger sized positions into the market on any lift early. It's as if someone(s) has decided that it's time to unload. It's not clear and it won't be for a while whether this is important or not but there sure is some clear indications that someone is dumping a rather large position in the futures market.

A lot of time at the end of long runs, once most of what you have decided to unload has been sold, you begin to dump what's left rather than continue to work to distribute it. That could be what we are seeing here. My thought was that we would see this market propped up into end of quarter. It could be that things are unwinding faster than the larger operator(s) who's selling would like. Pure speculation on my part.

Whatever may be the case, I'm finally of the mindset that it's worth starting to build my longer term short positions now and adding to them a bit over the coming week or two if needed. I believe we are reaching a point where we can make another stand in terms of positioning for a larger sized decline. Realize that this could be a tough trade though for a while still.

Moving averages serving as support

Yesterday the SPX bounced off its 50 day MA as did the DJIA while the NASDAQ used the 20 day for support. All of them touched and returned to make highs on the days. They say it's hard to kill momentum and man old man is this an example of that. This large sideways consolidation has been dragging on for months now. If you look at these charts, although there has been a bias higher, it's mostly claw and climb for a while then take a good whacking. Each good smack takes back several weeks of gains or in some cases many weeks. Short term, timed trades, are the only thing that would have consistently made money unless you are an astute stock picker.

Today we get the Blackstone IPO (where trading risk is handed directly to the public in terms of paper), next week quarter end dressing, and then earnings reports. Sub-prime is back in the light again today as BSC mulls taking out billions in loans to cover its trading problems in the CDO world. Supposedly they are not the only one with such problems. That saga will drag on and on.

Asia saw profit taking, Europe is mixed. Bonds are down again and unless they catch their footing window dressing into the end of the quarter is going to be serious chore. Dollar is weaker against everything but the Yen (snicker, snicker), metals are trading higher and grains lower as rainfall meets the Midwest.

Though this market is putting a brave face on a bad situation, it sure feels like the curtain call is about over. I expect choppy trading to continue here as worries from the fear and the greed spill over into the market.

Should we have expected anything different?

This tired old song is rather predictable isn't it. Sell them off so you can buy them back a little cheaper; run them up and then do it again and again. It's hard to believe but it continues to unfold in the same old tired manner. End of quarter and month; do you really believe they are going to let them crack here. Blackstone IPO coming up next; no way we let that fail. Issues with CDO repricing ... ah shucks, that's still another week or so away ... not to worry now ... not when we can make all those mid quarter statements look like everything is rosy in Rosebud.

Get use to it folks the old man says as we wipes the smile off his face. Ain't nothing going stop this train he says with a yawn and at that very moment the bullet train called Wall Street blasts right by. Wow I say in wonderment. How do they keep all those balls in the air all at once. Slight of hand I hear from the back row; it's all an illusion afterall isn't it? And with that, the clapping begins as the old dog hasn't learned a new trick but has definitely become the master of old ones. Always amazing though isn't it.

I'm calling it a day and a day it was. Have a good one and I'll check in tomorrow when we get to see how, after countless up Friday's in a row; how this Friday is ... well ... the same! Good night.

Ripples in a sea of tranquility

From TheStreet.com, Cassandra Toroian about the ripples from Bear Stearns Failed Fund. This is going to have some effect just like the IPO that is being priced for Blackstone. Here's what Ms Toroian had to say ...

Most readers probably don't understand exactly what a CDO is. I'm not going to explain it at this moment, except to say that collateralized debt obligatons are a fixed income structured security with little after market liquidity when issued. Investors have embraced them because they typically have higher yields than a standard corporate bond. The problem right now is that because Bear Stearns fund is being forced to liquidate, the pricing on these bonds are going to now be marked at a value much less than par in most cases. These lower marks are going to affect any investor who has bought these for yield - that means banks and insurance companies who may have bought the investment grade tranches of CDOs are going to now experience negative marks on their price sheets. This may result in large losses, depending on the size of exposure to CDOs, on balance sheet through their "other comprehensive income" line. The next few weeks I expect some banks and insurance companies with these exposures to start to have to come clean about it in pre-earnings announcements. Stay tuned...I'll attempt to update as we see things unfold.

Trailing stops on remaining short positions

At this juncture and given what I said in my earlier post, I'm trailing my remaining short positions with stops and looking long in the metals shares again. Sell them higher, buy them back cheaper. Doesn't make much sense to press shorts in this environment quite yet. If we are fortunate, we'll get better prices to get short once more.

It's either consolidation or failure setup

In the larger scheme of things, the current weakness in share prices that has basically extended across several weeks now (yes we have trudged higher but quite reluctantly and we give it up on volume each time) signals either one of two events; either we are working off that last leg higher by consolidating in a larger range pattern or we are setting up for the failure leg back down.

My feeling has been and continues to be that the move higher we have made over the past six to eight months has been a false move and yes, that's a long time for falsity to rule the roost but it does happen from time to time. Look back at '72 to see the same phenomenon. If we consider where we are right now, I see the larger operators who still have stock to distribute wanting to hold this market up as long as they can while they push our the remainder of their accumulated shares from the past three to four years. Add to them, all the dipsters that haven't been bitten bad enough just yet, those who do short not having the will to get squeeze again, the end of the month/quarter upward pressure on share prices and the fact that we are still so close to the tops and you find it hard to see this market failing right now. It definitely could but it's hard to see. The likely scenario is to see this market ebb and flow a bit more. The bias may be down but spikes both ways still right into earnings season and that may be where the final failure is written for this bull run since '03.

We have the bonds weaker again this morning, oil bouncing higher, the dollar stronger, Asian markets up overnight but European ones taking it on the chin. The metals are lower across the board while the grains were up a tad overnight. Our futures have moved from +5 basis the SPX to flat overnight. I expect a choppy trading day where either side can win so fading hard fast moves looks in order.

Careful now ... you might choke on all that paper

They have papered over all the senses it seems and now they are choking on it. Is this the big cough where everything comes right back up? I have no idea although once more there is plenty to hang your hat on in that respect ... negative divergences, fulfilled targets, expanding volume on the push lower, and so on and so forth but we have seen that before. Will it matter this time, I wish I could say with certain. Yeah, it feels like it and the patterns are really starting to look right but I'll hold off on that statement a while longer. In the meantime, I'll just pick at the market here and there and try to make a few dollars while we wait to see what the bigger picture holds. Are we going to come tumbling down - yes most certainly. As I like to say, it's all about timing though so pick and choose your spots carefully. If you preserve capital and continue to work the trades in the micro that reflect the macro picture you see, eventually you'll get your due.

Have a great one and take care. I'll catch you in the morning.

Very choppy trading

The trading today is extremely choppy with oil dropping like a rock dragging metals with it yet the ag sector spikes. Oil related equities being hammered and the there's retail running like there's no tomorrow. Small caps can't decide. All in all, it's a lot of up and back and uncertain trading it appears. I'm finding it difficult to get any traction in my trades as a result.

Cough it up!

When a young one puts something in his mouth that he's not supposed to; you make him cough it up. So it is with the market as those good vibes cause us to gap higher and we have been coughing it up every since. I'm just trying to be opportunistic here taking short exposure early and working around trades as always. Time frames remain extremely short and though I don't like this environment on the macro picture, you have to trade what's in front of you. What this means is that you try to trade the macro picture on a micro level. It limits your risk and your rewards but in a mixed up environment like we have; it's not a bad trade.

So what does it mean to continue to add debt?

As I sat around late last evening I thought a bit more about what we see transpiring in these financial markets around the world; in a word the continued orgy of debt accumulation. I came at the thought from the other end, that is, who buys all this debt? I have colleagues who have taken to putting money into private placements; placements that offer returns of 20% per year. To do this you have to claim that you are a larger pea in the pod ... you know ... you have a net worth of $1M or annual income of $200K or so (not sure of the exact numbers). By either being in this league or just by claiming to be in that league, you can partake of this paper chase and yes, the last couple of years they have been getting their 20% or so return. Now their deal is a little different in what they are investing in but the theme is the same; private investors buying pieces of paper on faith of a higher return. Note that these little pieces of paper or basically debt and that the issuer may default and give you nothing back and that's what it comes down to in the end; who will be holding this debt when the music stops? We all know that the music stops eventually. Also note that debt of $1 ends up being $6 to $9 depending on the multiplier when all is said and done. Also note that this is just something I am observing as a tip of the iceberg. Consider all the large pension funds, etc., that are doing this large scale in all kinds of debt instruments!

I guess if you can get away with the above schemes on the original principal; after 5 years you won't care as your principal is safe. For my friends, this is year two. Will it last 3 more? I can't see it but trying to understand how far a pyramid can be built before it collapses is not a reasonable proposition. We'll see.

This morning we see strength in equities around the world starting in Asia and now throughout those markets on other side of the pond. The dollar is mixed and the Yen weaker, bonds are up (check out my Chart of the Day this morning once it's posted as the TLT short is setting back up again).and oil is trading down 40 cents or so and gold/silver flat. The grains took a big hit yesterday and continued to bleed overnight.

With the indexes all poised just below the highs of two weeks back, you know some stops have built up on the other side. Today is setting up as the day they gun for them.

Not much to write home about

It's been a second sloppy trading day with lots of smaller stocks doing their things but the big boys pretty tame. This market just seems to be working off the excess from the move last week while it gyrates in a nice tight spiral readying for the next move higher. To the mooooooonnnnnnn Alice!

I made what pennies I could today and then just pretty much took a long lunch as when the trading is this directionless you can end up giving back those gains if you are not careful. I'm not interested in holding large overnight exposure so back off, call it a day and pick up again tomorrow. This is two days of low volatility and with not a lot of news the remainder of this week, it may stay that way for the most part. If we hug these highs much longer, I suspect we see them gun for those stops that are just over the previous highs.

Have a great one and take care. Catch you tomorrow.

Go-go stocks not going anywhere

The momentum stocks that have been tells lately are struggling today. Look at AAPL, GOOG, RIMM, AMZN. Even GS is flat. There's a bit of struggle to get any traction to the upside here it seems. After the big advances last week, I'm sure there's a bid underneath but so far today there's not a bid overhead like last week either.

My focus continues to be short term just as my entry points have to be met in order for me to start a trade right now. Nothing worse than taking a so-so entry only to find out that the rush to get in ends up costing you.

Something to think about

So what if this market does put on a new leg higher; after all, it has been up here once already not that long ago? I just ran across this piece from Minyanville which is a counter argument to my concerns:

The latest Commitments of Traders report shows that large commercial hedgers (aka the "smart money") in the major equity index futures were net long to the tune of $10 billion+ as of this past Tuesday.

This is extraordinary, not just since they tend to sell heavily into rallies instead of buy, but that the amount of the net long position hasn't been this large since 1999. In the history of the data, it has gone over $10 billion just a few other times, mostly during 1994/95 and mid 1999.

On average, the most that the S&P 500 lost during the three months following the prior instances was around -2.8%, compared to an average maximum gain of +5.4%. This data has been urging bullishness for many weeks now, and so far has proven helpful in that regard.

1994/95 and 1999; now that was some juiced up moves and this one kind of feels that way doesn't it?

We have the overseas markets pretty flat, the commodities finally taking a breather (at least to start the day), the dollar showing some strength (yes ... even against the Yen), the bonds about flat. From a short term trading perspective, if there's going to be any kind of weakness between now and end of month, you gotta think its going to show itself here in the next two or three days. It's a weakness that may turn out to be hard to buy but probably makes sense to do so.

Summer trading in full swing

The volumes were apathetic today and the market felt that way as any little press lower was bought and any little press higher was sold. Flat all day long and it ended that way. A little sellng in after hours trading and though I can't see them selling this off hard into the end of the month, it's hard to see a new leg higher holding either; more likely a flush out of stops then the harder retrace to follow.

For now, I'm mostly in cash and just trying to eke out some smaller short term gains. I'm so distrustful of anything longer than a few days on almost all issues short and long that it's hard to do much.

So, as has been the case for seemingly forever, we seem to be stuck in a situation where making money without taking signficant risk remains quite hard indeed.

High flyers up up and away

There's no holding back in the buying of high flyers. The action in GOOG, AAPL, RIMM, AA, etc, shows that the speculative crowd is chomping at the bit to get more exposure on in this go-go momentum led move. The selling pressure is almost non-existent which is what breeds the enthuiasm and the feeling of getting left behind as the dipsters start paying up thinking there will never be another dip.

My caution tells me to wait for a price I can live with. If I miss a move, I miss a move. At least my portfolio remains as is rather than whittled away by bad entries that require loss liquidation. I don't expect a large drop but I need something beside higher prices to work in a few entries. Short term thesis sees higher prices into the end of the month so I'd really like to position a little more in that direction.

Sloppy trading

Market is trading rather sloppy this morning from options hangover. NASDAQ shows relative strength with AAPL and GOOG doing their thing. I'd like to see the NDX trade down to around the 1956 level and the SPX around 1542 basis the Sept futures in order to scale into a hedge trade long again ETF shorts. We'll see if they can get there. Gold shares are picking up a little steam here as the bullion isn't coming in as it looked like it might do. I'm not doing much today as I wait for better entry points.

Another failed failure

It's official now; another failed failure just like all the others before it. In technical analysis, a notion that is held dear is that after a long advance the susceptibility to a rest or a more significant pull back increases. When the selling occurs and when it occurs on heavier volume then is followed by one or two days up on lighter volume you usually have a situation that can be shorted. That bearish wedge pattern typically offers a very nice trade ... to the downside as it's a failure pattern that is unfolding.

As before, the failure pattern had setup again after the more intense selling that began a little over a week ago. Last week, the advance began offering the setup and then Wednesday they crushed the notion and the market has surged right back to the recent highs; another failed failure and another one is dramatic fashion. Also note that we had a surge in volume on Friday's options expiration on the up day; that is a change that bears watching.

We now find ourselves with two weeks remaining prior to end of quarter; end of half year. With the failed failure it certainly appears that we intend to probe for those stops on the NYSE that are likely not that far up. That could provide a new all time high (not just closing) on the SPX which is what you would want if you are a bull as that's advertisement and advertisement is what brings in fresh money. Every bull market needs fresh money to keep moving; there has to be the notion of missing the easy money to keep the sheep on the path.

Folks, you know I don't like what I see but I'd be a fool to not see it. That leaves me with one of two choices; play the game but play it as safely as possible, or sit it out. Naturally I choose to play the game but that means smaller size and shorter time frames and so it is ...

More merger talk again with Alcoa and a few other smaller deals on the wires. Bonds up, as are futures. China exploded higher again (as did their GDP growth again) and that's in the face of increased bank margin requirements and interest rates by end of week. Most overseas markets trading higher with some new all time highs sprinkled in. We have the dollar weaker (even a little bit so against the Yen) commodities mostly higher with the grains setting contract highs again pretty much across the board. I would expect some choppy type trading to digest the last three day surge and to allow more stops to collect above then the attempt to take them out.

There's an interesting pointer supplied over on the boards by Gary and if your not an waver it's OK, just skip down to the last 4 or so paragraphs as the talk of leverage; the central bank put, etc., is what it's all about in this world today.

Need overnight exposure to win

In this market, the last couple days we have seen the spike higher and then flat. If you didn't get up really early and take pre-opening exposure or carry it from the night before, you likely have greatly underperformed. Volatility during the day is what offers opportunities; like what we saw on Wednesday.

With but a couple hours remaining for the week, we now have the spector of prices trading sideways into the close as the deals are coming back to the forefront again, bonds are no longer an issue, we heard this morning that there is no inflation, yada, yada, yada!

So, I'm pretty much packing it in already. I sold a little more gold into the strength with the thinking being that it's not quite ready and I'll look to reload lower. I took off the added short exposure at a wash basically and I don't see a reason to try and gamble the futures either way at these levels on an option expiry day.

With the end of the month approaching and end of quarter as well, there's probably a huge incentive to hold these highs and get the public pumped up to buy more of this stuff because, as we all know, it can only go up from here. So, have a great weekend and I'll catch you on Monday.

Starting to fade this now

I've started to fade the strength a bit here selling into it. It's a hold the nose sell I have to admit and I'll probably lock in the added exposure (loss or gain) by mid to late morning. Everything coming up as wild jacks right now and even though the bull has taken the street by storm, a three day wild advance to the recent highs that holds seems a bit of a stretch to me. Looking for some profit taking to kick in here pretty soon.

Life is good at the top

So, there really isn't any inflation. I'm so glad to know that. I just wish I could get these guys that create these numbers to pay my ever rising set of bills. Oh, I forgot, that's the point. The government doesn't want to pay out more to the pension folks since the cost of living increases are tied to the CPI among other things!

Markets spike on the news since there's no inflation and reasonable growth Godilocks is on the loose again and when she gets out and about there's no reason to sell stocks; it's time to buy.

Again, I suspect they will fade this strength so don't get too comfortable.

So quickly forgotten

The past couple of days we have seen an about face in the market. No sooner than it had appeared that finally a little rationality and recognition of the problems that face this market were to be priced in that we quickly forget and become desynthesized to those issues and just move right on back up. I wrote a friend/long time reader last night that the market tends to quickly forget news once it has played out once or twice. Violence flares in the Middle East … heard that before. Iran being belligerent … yeah, what else is new? Interest rates at 5.25% on the 10-year … use to it already. How about oil closing near the highs of this cycle … got to get to $75-$80 before we notice again. You know what I mean?

We have the Yen melting again this morning which two readers have already written about, the dollar down elsewhere. The commodities complex weaker except those grains (wheat at all time highs now). Bonds flat as is oil. The world equity markets pretty much up in tandem all around the world.

In a bit, the CPI number arrives and I just have to wonder how they massage it this time. I remember back to the year 1972. Back then there was the nifty-fifty, a group of stocks that just couldn't go down. The world was crumbling around us but the market kept moving higher on less and less volume, narrower and narrower advances each time. Two years later the DJIA was cut in half. I'm not suggesting something that drastic here but I am suggesting that the futures so dark that I've got to put away my shades. As we all know though, it doesn't matter until it does and so far it hasn't.

Looking at just today, we have the options expiring and the CPI. Between them, any spike, up or down that is huge likely will be faded.

Fact sometimes stranger than fiction

Pull up a chart of the QQQQ or the IWM and take a look at how volume disappears on up days, increases on downs (generally speaking). Look at today ... going higher on absolutely no volume.

Pull up the internals and look at up volume to down lately or upside issues to down ones. Can you see why this market is heading higher? I can't but it is.

Sometimes fact can be stranger than fiction and it sure has been that way in this here market of ours. Da bulls simply don't want to give it up no matter how hard they are smacked. That's alright little bully ... we'll wait you out on the other side.

I'm pretty much through for the day ... made some decent trades and am reasonably positioned for tomorrow. As I alluded to in the latest edition of Naked Trades ... they make take this baby to new highs again but I don't think that will stop the selling pressure cause sometimes perception is reality until they all wake up!

Good night. Have a great one and see you tomorrow when we get to do it all over again.

Flat line

After the big spike early its been pretty much a flatline trade the rest of the day. With more inflation data tommorrow and a big run to get back to these levels, I can't see them pushing it higher into the close. I've wiggled back into some short trades for a trade; have lightened up a little on my gold holdings into strength here after wading through a pretty good draw down on them this week and generally am just positioning two-sided for tomorrow. With these markets fairly unpredictable short term and with volatility kind of high, I can't think of a better way to approach things short term. Never a dull moment ...

Are we back to all good all the time

Sounds like the Christian defintion of God doesn't it; omnipotent, omniscient and benevolent. Last week we had a total breakdown in the market; a need to call in the shrink. Yesterday and today, we've taken the shrink and put him in the straight-jacket. So where are we here? Heading higher of course.

This market really is interesting as they are jerking the trades around back and forth as if there were no tommorrow. We are at another inflection point here as I write; a point where the market has to make a decision. Pull back likely and then we'll see what they decide to do in front of tomorrows eco news and expiry. Can't get in front of this yet as it's starting to look as if they intend to retest the highs once more at this point.

On this mornings news, inflation is definitely out there although I do believe it continues to be underreported.

Emotions fuel volatility

Have you ever stopped to think about what causes spikes in volatility. Certainly there are the exogenous events that shake things up but for the most part its all about emotions. The volatility index has spiked again in main part because we are at one of those decision points again; do we go up or do we go down. You can see it in the trading where one day its all good and the next its all bad ... its like there is no in between.

When you step back a bit though you can see that there is a lot of in between but the emotions of fear and greed run rampant at such times. I've mentioned before the fear of missing the boat as well as the fear of missing your money and right now that's playing out on a daily basis. There are definitely some storm clouds out there but one spike down doesn't make a bear market; not after this long run.

On the flip side, a good stab down and some rather subtle hints that there is a change in character tells us it's not likely that we will just take off on another sustainable leg higher.

All in all, it becomes more like a trader would like, up and back and when the volatility settles down a bit we can play with a bit larger take and a bit longer of a time frame. Right now you have to choose one of these in your trading though; small positions with longer time frames or larger positions with very short time frames lest you become mincemeat.

We have overseas markets up big on the back of the rally here yesterday, futures up in front of the eco news of the day, bonds down a tad, commodities slightly higher (have you noticed the grains lately?), and the dollar up again. With options expiring tomorrow and data today don't expect a let up in volatility just yet.

What a day!

It's been a wild one today both inside and outside the markets. I spent the majority of the day in a dentists chair again; much to my surprise. What was a routine filling turned into a lot more. Good thing I had the old laptop with me as in between all the activity I just kept trading!

Not only did they rally these equities on the back of the beige book, they rallied them hard taking and squeeze those who would dare short. I've had a good day as a result of the trades that I could make and I have to say, other than the dentist's chair, I like what I see here. A nice push back higher will set up another chance for us to short ... in time.

More economic data in the morning on the inflation front (and Friday as well). It's great to see a two-sided market again finally. It's almost impossible to trade a market that goes straight up.

Have a good one and I'll check in tomorrow. Do note that is so-so as we close out the day and so far this still looks like a bearish wedge despite up 21 SPX.

Deliberate early trading

The failed rallies of late has the dipsters spooked a bit about buying this morning. We open higher and slowly fade but it probably is the kind of skepticism that breeds higher prices intraday.

Naked in the Wind

The market stands today in stark contrast to just a couple weeks ago. Before all was good no matter what all was; now all is bad even though all is pretty much the same ... save interest rates. Over the past couple weeks we have seen interest rates around the world make a move higher; pretty much in unison and the equity markets around the world have stood naked to the winds of those higher rates. If you don't grasp the importance of our intertwined financial markets and leveraged societies as well as the vulnerability that stems from that tight coupling; turn back the page a couple weeks and please review.

Overnight pretty much equities around the world have followed Wall Streets lead and have sold down again. Futures are up slightly this morning and gaining strength probably on the notion that the risk/reward of a trade here on the retest of last weeks lows offer upside potential. Kind of hope they are right as I don't care to see us tumble from here. With this month closing out the first half of the year you kind of would think that they will find a way to rally them from here.

The dollar is strong again as it makes it's way higher and that means commodities are taking a hit again. I believe that this counter trend bounce in the dollar is nearing it's end but, as we know, the market can overshoot when it gets going. There is protectionist trade legislation that will hit the floor of the senate this afternoon that could send the dollar for a spin (lower) so be aware.

The bonds are down half a point again as well and that continues to be problematic. Starting today we have three days of economic posts that are likely to either feed this decline or arrest it.

The latest edition of Naked Trades is out. We've changed the format a bit to give it a more polished look as well as to hopefully inform. You can register for it here.

Lastly, these markets are proving to be more and more volatile of late. That will ebb at some point but for now you have to factor that into your trading forays lest you be left holding a stinky bag of short term spoils.

Bonds wagging equity markets tail

The bonds are definitely wagging this market dog's tail as that last plunge in bonds turned this market on a dime and sent it wayward; not that it was already a narrow advance but before narrow advances didn't matter.

Nevertheless, they are stretched in bond land as well as equity land and the odds of a snapback rally is growing rapidly. With expiry a couple days away and with the oscillators now deeply oversold short term, don't expect the onslaught to continue easily. Add that to where price points are trading and you can see the easy trade is back the other way now for a bit.

This is definitely a nervous market and the big swing testify to it. I know my shareholdings are getting jerked around intraday and I'm sure yours are as well. All I can say is try to keep a cool head and trim where it makes sense as it makes sense. See you tomorrow.

Nothing pretty about the internals but ...

The market internals stink today ... big time but you, know, it's not about the internals right now just as it hasn't been for a while. This market keeps telling us that they don't matter.

You know, as I do, that they do but they do in time; not each and every day. Right now this market is refusing to cave on the back of another run on the bonds. There's pressure everywhere but they are holding price and if that continues until early afternoon, then you can expect a run on stocks just like we saw the run on bond this morning. There is a nervous crowd of traders out there right now; nervous that they will be left holding the back when share prices collapse and nervous that they will be left out on the next run higher. What to do? Options expirations this week folks. Watch out for a ghost run higher as a result.

Ugly but getting overdone already

The news is all bad now just like before it was all good. These markets look mighty heavy this morning but they are starting to get the feel of being overdone to the downside already. I wouldn't be pressing that way here. More likely we see some choppy action starting to take place here rather than a push one way or the other without any relief moves as counter trend trades. Many charts are starting to set up as nice buys now and if and when this sudden fear of losing rather than greed of missing passes, we could see the dipsters go to work. The bond still seems to be the issue and it needs to find a floor if that is to happen.

Are the technicals finally going to shine?

As in any game of chance, there are runs where what should happen doesn't. This streak of higher highs, of failed failures that we have witnessed may be coming to an end. Futures are under pressure this morning after a two-day bear wedge was formed after a leg down. Those wedges are meant to be sold and technically should reward the sellers. For months that has not been the case. It's early (like the market is not even open yet) but pressure overseas and here in the futures makes the thought more genuine.

Yesterday we saw the two high flying techs succumb to selling pressures (GOOG and AAPL) while the financial genius of GS bounced. These are the bellwethers of go-go right now so put them on your screen. Along with the Yen and the bonds, they are good tells in this market.

Commodities under pressure early, dollar flat, bonds getting whacked again (which is the major tell on futures this morning). If the dipsters don't step up and we drift towards those lows of last week, you gotta know there are stops on the other side.

Jostle higher on low volume collapses at the end

The markets pressed higher today ... right into resistance and then they sold off into the close. It was a low volume advance, the second such day and today it pushed equities high enough to encourage the short sellers to take another shot at the market. Unlike all the low volume pushes prior where volume didn't matter; today it did and today the prices didn't hold. Typically a good push lower followed by a low volume push back up for a couple days is a very good place to get short. We'll have to see if technical analysis is finally going to pay some dividends in this market again after being thrown out the windows for months now. I did end up taking and shorting the strength late in the day in time to catch a decent entry point. I'll play that initial position tomorrow to see if we can add to it. I find it hard to believe that we can continue the climb under these altering circumstance, but like most who disbelieve, I've been taught to respect the power of this market and it's desire to move higher despite good reasons that it shouldn't.

At this juncture, I'm still interested in find good entries on the short side and my thinking is starting to evolve to the notion that these trades are finally going to work but we are still at a point that we have to think the trading is likely to be two-sided for a while longer so we need to use that to our advantage.

Rationalizing away higher rates

We saw a few deals this morning despite rates kicking higher. It's been a slow climb this mornign as the market is doing its best to shrug off higher rates. I covered my shorts early this morning for pennies when we didn't get a big dip to start the day and am holding back on doing anything more on the short side for now. There will be plenty of time to consider that move later I suspect.

The first time you do something ... like crossing 5% on the 10year note; it's a big deal. After that, it's party of the psyche and it doesn't raise alarms anymore. That's what we see happening here with the rate structure. It pretty much gets accepted as is, carte blanc, and we just move on with another thorn in our side and higher risks. There will be a straw that breaks the camels back but that will come when the time is right. Like ACe said sometime back; it will be when the deals don't work anymore. That will be the signal that the money train has shot its last puff of smoke.

Volume is low here today and it feels like this won't hold, but I'm waiting to see how it looks early afternoon before committing to a trade either way. Commodities are heating up and that's nice if you have a stake. Getting into that market is hard as you have to buy higher but the bull is definitely loose in that arena and likely will be for sometime to come still.

Flat to slightly down opening

I see 5 or 6 deals on the tape again this Monday morning scattered through several industries. No blockbuster type deal though. Overseas markets strong after Friday's strong performance here. Commodities up across the board, bonds basically flat, the dollar slightly stronger and futures a tad weaker but off their worst levels overnight.

Yesterday I started working on another edition of Naked Trades; a more extensive look at where we are. I do believe that we are on the cusp of change in these markets and though not in a hurry to take sides, it's definitely something that requires attention on my part and thus I share the thoughts. I'll put the thoughts out today or tomorrow.

The next month or so I'll probably be writing less during the day as I try to focus more on finishing the first draft of my manuscript. It's been a long time coming but I can see the end of the tunnel now so I'll try to focus more attention in that area.

Lastly, it feels like a bit of a malaise has fell over traders here. It's interesting as the market ebbs and flows so do the thoughts. I see less activity on the boards, certainly less activity for chart requests. Usually that's a function of less excitement in traders. Makes me think this market is lulling everyone to sleep with it's methodical songs of higher prices. We may see higher prices still but this is not the time to let your guard down. The market has a way of punishing those who forget the past and the past tells us that the market travels in both directions; sometimes violently. Keep your time frames in the forefront as you trade and don't loose sight of them.

Just another buying opportunity?

Well, what do you know ... a straight up day that follows a straight down one. Will these dipping doodlers ever stop? Yeah, but not without a fight!

Today we saw a move right back after what seemed to be a fearful set of selling yesterday. It's worked for so long why can't it work longer?

Well, it might but the landscape is changing. The hard push was that this market continued to believe that the Fed will cut rates and this week that belief was partially removed. I say partially because we still see an inverted yield curve but that is slowly being taken away.

I don't want to continue to sound like a broken record but the theme remains the same in these equity markets; we go up on lighter volume than we come down on; we have increasingly negative internals with respect to up/down volume and price. All of this continues to bode as a bad sign and the dipsy doodling isn't going to solve it. As rates increase, the easy flow of funds becomes more difficult. Less money sloshing around means less deals; less incentive to put money in these riskier equities instead of the safe bonds; yada, yada, yada.

I dipped back into a few short positions at the end of the day today as a result. I'll try once more to build a position around the notion that we are heading down in a larger manner than we have done so far and for a length of time that exceeds 3 days. Heck, we are on the right path. Initially we couldn't get a 3 hour pull back; then we couldn't get a day let alone two. Now we saw three in a row and the last one big. I think there's a pattern here and one that I can identify with.

Have a great one and take care. Catch you next week. Oh by the way, great divergences in the metal stocks today versus the bullion. That's a nice setup and I'm trying to trade it.

Push back up comes on lighter volume

The bounce here in the indexes comes on lighter volume than the push down has been. Doesn't mean it can't continue but it's yet another warning sign. If it continue through Monday into resistance areas in this manner it will set up the short trade.

All the commodities were smacked hard again today but I continue to build gold positions into the selling with a longer term timeframe in mind. It's one of those hold your nose and buy type trades.

Bonds have found their legs

The washout in the bond market basically took place overnight as they have recovered a full point and are approaching 5% again. That sets the stage for a rebound. Price spreads are large today so be cautious on the size you use.

Futures down big

Early indications are for another down day as bonds are getting smoked again, all commodities down and the dollar stronger on the back of the bond news. Rates hit 5.25% on the 10 year bond overnight. How quickly things can change.

Just like the times where you fade the big up opening for trade this looks to be the opposite where a fade of the big down opening will work. Just have to have the stomach for it and the right time frame ... short.

Right now, complacency turns to fear and fear moves markets as fast as greed. Put/call ratio soars as insurance is bought which puts further pressure on the market the last couple days on a short term basis.

It's Friday and a bounce is likely in order for a couple days here. If there's no volume, which I expect will be the case, then they will press them again.

A trail of red ...

All you have to do is to look at the internals to know the score ... 10:1 down on the NYSE. Those are threshold type numbers, numbers where it becomes clear that the sellers are everywhere and in everything. Dump them they say - just get me out. Nothing like trying to get out of a theater when fire is being yelled. Well, maybe not quite that bad as even though we are down heavy across the board, it's not gut wrenching quite yet. Heck, they even tried to rally it like the last couple days but that's getting slapped as well.

Tomorrow is Friday and I suspect we'll see an abatement of the pain as the bears (if there are any left) finally lick their chops and take some profits while the dipsters regroup. Volume has expanded once more and I would sure like to see the low volume push back topside now the next couple days to set up some short paper again. After battling this monster of a market to the point where I was unwilling to throw money at it anymore on the short side but not willing to buy it lock stock and barrel. So, what does it do; well it does finally come in. As is many times the case, it does wear you out before rewarding and few are left around when the rewards are passed out.

Guess the guessing game is over

The markets have finally shown the true colors of a disturbed scene. For months on end there has been the facade of strength while underneath it was rolling over. The last 3 days are the true colors of this advance ... narrow and fragile. I'm sure we'll see some more dip buying materialize. So far, only the listed issues have given us the lower lows. OTC issues still holding. If we get the dip buying to take us up on low volume; that would be the ideal case. Many times the market doesn't give the ideal case though and forces you to wade in with fingers holding the nose closed. We'll see what they provide.

Everything getting smoked here today other than raw commodities and even there it's really just the grains and oil. That pocket full of gold I have is hurting right now but I believe that is temporary because it's just a matter of time before the counter-trend bounce in this dollar is done. When the dollar starts to lose steam again because our rates are not high enough to attract the flight to the dollar, then we'll see gold start to take off again. The world rates are all going up together; not just ours although it's only now that we are finally seeing it here. We still will likely see the dollar weaker overall despite our rates increasing.

At the end of its rope

Listed issues are at the end of their rope as I write. Much more on the downside and we will have a lower low and that will be the first time since March if my recollection is right. It's kind of do or die here now. Internals have not improved. Other than commodities, the dollar and some high flying tech stocks getting attention, everything else is heading lower.

Internals ugly to start but ..

dipsters are happy to by the go-go stocks this morning like AAPL and GOOG which has the NDX running higher out of the gate. We'll have to see if it broadens.

Bonds getting raked

Overnight interest in the futures dissipated as the bonds are getting raked this morning. We are once more at an inflection point in the equity markets, a point where they either tell us that these lies we have lived were indeed lies or that we can lie some more still. Personally I would like to see the weak bounce develop but seldom do you hand you the money on a silver platter. This weakness in the bonds this morning is the reason we are seeing futures deteriorate quickly as I drink my tea and strain my eyes. Going to be another interesting day to say the least.

We have the dollar stronger, gold down a bit, oil up. Overseas markets traded mix with mild bounces in Asia and flat to down in Europe. 10 Year notes are over 5% as I write ... and way over, not just barely in bond terms.

This early weakness could morph into a real downdraft. It's a real possibility. A low volume bounce to set up the right shoulder of a rounded head and shoulders top would be ideal but then again, it doesn't have to. If you have been riding the train and working that dipster game, here's your chance again. Just be aware that at these levels you need to keep some stops in mind so that your dipping doesn't turn into a dunking.

Not much time left

If they intend to do any kind of rallying into the bell, nows the time as time is in short supply on this bloody Wednesday. It's interesting that the big caps have taken the brunt of the selling the last couple days while the NASDAQ has kept up the hope. That's those big cap NASDAQ stocks for you ask they are keeping that index from getting smoked. Check out GOOG and AAPL again if you must. Green on the day.

This market is going to find the sledding much rougher and soon but I'm not looking for it to crack until we get the failed bounce. Once more we get the stab down. Now we need to see a failed bounce on light volume in the coming days. We'll see. For now, I've retreated to the sidelines with a pocketfull of gold. Give me a good setup for another failure in the indexes and I'll take it. Lord knows they have served it up before to give me a failure of a failure and I'm itching to see that trade once more.

Checkout KO if you are looking for a long here as a trade. Tested the retrace and it held. Should scoot higher as a result.

A very negative scene out there

It's been a long time coming and just because we see another real ugly day doesn't mean it will necessarily continue. We've seen the one and two day wonders before and I still don't see wholesale liquidation in fave names. Regardless, volume is picking up again today on the selling and that continues to bode for caution. The dipsters look to have their hands in their pockets today though as the bids disappear. Nothing like a good spanking. The selling broad based unlike the buying we normally see. Again, I wouldn't read too much into it yet other than the confirmation that this market really has some problems in front of it and they aren't going away.

Dipping the dipsters

They have been hammering the dipsters this morning for their continual cookie jar antics. Looks like they have pushed them over the edge a bit and let them suffer some losses finally so I wouldn't be surprised to see the market rise from here. I've done little this morning other than cash in a little and add some metals on weakness.

How long can you be negative?

I got a great question from my wife last night. She said to me, "Just how long are you going to be negative on this market?". Made me think a bit as it was kind of deep, if you know what I mean.

My response, after a bit of a pause was that I'll be negative on the general market until the general market starts sending different signals. That doesn't mean that there aren't a few places to put some money to work like the golds I've started jabbering about of late and the broader commodity sector of which I've talked about for a much longer time but the general market, nope, not that interested. As long as we have narrow leadership, expanding volume on the way down versus on the way up; not interested in making larger, longer trades in that direction. Just too risky. Look at the NDX yesterday. You had basically 5 stocks pull the entire index higher ... 5 stocks! I can't buy into that.

This morning we are seeing some early weakness again. The rise in interest rates is starting to get noticed. I talked about the bond yields pushing to 5% on the 10year note yesterday. That's a problem. You are seeing rate rises around the world. The Yen is continuing that move this morning and that's a problem. We'll see how the dipster behave today. Although I'm known to stick my toe in the water on the long side even here, you won't see much more than the big toe out there exposed for now.

To start the day we have the futures down a decent piece, bonds down 3 ticks, metals weaker, dollar mixed while the Yen is up while oil is trading flat. The inventory numbers come out there today.

You know it's bad when ...

you get a sell off in the markets and it doesn't even feel like the market went down. So it was today. Take a look at the internals ... a huge down day if you look at the internals yet the NDX was powered higher by about 5 large caps stocks and the NASDAQ finishes just barely down.

Once again, we see volume expansion as the selling occurs yet, as has been the case for many moons now, it really doesn't matter yet. In the end, the dipsters are still playing musical chairs as the jump on the latest greatest move and by virtue of their run for the roses, you get roses for that issue.

Problem is, the problems I've been talking about for a while are starting to really show their ugly heads. 10-Year note is right at 5% tonight after another down day in the bonds. The Yen pushed higher today and held today. If that continues, that will continue to be a problem.

We are starting to see the metals taking hold. They have some more work to do but now is the time to start looking them over and adding some. I did so again today.

I can only say, you have to be careful here. So many times we get so wrapped up in the desire to make money that we forget about the risk. I feel that is what continues to happen here as money is just thrown at anything that moves. Our fiat currency system is straining here. You can here it creaking beneath us at this time. You can't lose track of the risk ... because it really is there. Have a good one.

High flyer show speculation alive still

This little bout of selling; as negative as it has been has done nothing to high flyers like RIMM, AAPL, AMZN and GOOG which continue to show gains on the day. They make up a decent portion of the NDX 100 and their gains continue to keep this sell off from becoming ugly. All of them are extended but momentum knows no extension and their elevation emboldens the dipsters to continue playing.

The Yen has ended up holding the gains and things could still get ugly over the coming days if it begins to extend those gains but so far, this one day pull back looks like a string of pull backs. It comes on heavier volume signalling eventual issues yet it will likely be a one day dot on the chart given the above comments. I'm backing off, booking short gains and standing aside. Also trying to determine what to do with the little bit of GOOG I'm still short.

Dipsters are unbelievably bold

It's not as they even look to see what's happening anymore before they jump; these dipster are unbelievably bold in their moves anymore and that makes me think the moment may just finally be right for a bigger setback again.

Today we do not have the normal supporting pieces for the dispsters to succeed. That isn't to say that they can't as it won't be for a lack of trying. What gets me though is that there is almost reckless abandon with how they go at it anymore. They don't even look to see what's happening. It's as simple as "Is the market down?" and if the answer is yes, they start buying.

I've put shorts back on the table a bit ago as a result and we are seeing some share price pressure again as I write. If enough of them get underwater and it gets late enough, then the bids will disappear.

Yen and Yang

They are bringing that Yen right back down into the range now and that has me covering some shorts and taking small change for profits. Getting more volatile now and though I still think we chop here, that means you buy here, sell there and basically keep moving.

Dipsters have their work cut out for them today

The usual catalyst that support the continual comeback kid moves each day are missing today in particular the stronger Yen. I won't count this dipping crowd out but the internals are quite negative today and as the charts on this site show, the market is quite overbought currently making for very chopping trading near term at best.

Lots of moving parts

We have so many moving parts to this market that it is, at times, very difficult to keep your eye on the ball. First you have an advance that is unloved. Next you have a dollar that can't get off the floor. The devaluation in the dollar supports the market as all U.S. good are cheaper on a comparative basis; that includes stocks. Then there's the inflation story that is so twisted. There is no inflation (or at least it is reported as low) yet we all know that inflation is starting to run rampant through our own lives. Everything, and I mean most everything, that I buy is more expensive today than it was a few years ago. Then there's the interest rates. They have been rising. The yield curve has been steepening (the difference between short and longer term rates). For the longest time the yield curve has been inverted but that is changing (or at least heading in that direction). So why would rates rise if the dollar is cheaper? Is it because the demand for our paper is weakening and thus we have to pay more to have it bought? Just asking? We have a mountain of paper that we sell every day and lately those auctions are finding less and less interest.

Moving to the relationship of the dollar to other currencies. The one to really watch is the Yen as that is where all the liquidity continues to stem from on an intraday basis. Day in and day out, monies are borrowed overnight at basically no interest and used for short term trades, if you will, here in these markets and elsewhere. Tapping this free money pool works great as long as there isn't a currency risk and even better if that risk continues to move in your favor. The weakening of the Yen has continued to be that trade. Yesterday it began to bounce and today it's continuing. Way to early to think its anything more than a bounce, but a stronger Yen is a problem for the markets if it continues.

The there is oil. Oil, continues to hug the mid 60's price level while gas is at or near the all time highs. The oil complex continues to push higher and that is supportive of the SPX as it's a big percentage of that index. I don't know how much longer that continues to support. It's kind of like talking out both sides of your mouth. Oil prices are good because the oil complex keeps rising in price because they are making more money because they are taking more and more of your money but we don't count the fact that they are taking your money because there is no inflation.

Which brings us to the twisted logic of this whole era ... everything is good. It doesn't matter what is said or how it is said; all news is good news and that's because all news is overran by the simple fact that there is so many dollars out there that are looking for a place to make money. When there's too many dollars and too few goods, prices go up. You can say that there is no inflation but it doesn't make it go away; it's just that it takes a while before everyone realizes it and starts to do something about it.

Finally, the question of what to do. I've been inching back into the commodities market now for a while after having stepped completely out of gold a couple months back. I continue to think that real goods ... commodities ... are the only good place where the risk/reward favors the trade. Ups and downs yes, but there are too few goods for the world that is awash in cash ... not just dollars but all currencies. I like the way relative strength has returned to the gold market and that's where the long focus is along with the grains. Oil is up too much right now to chase there but there are other commodities that are available and I'll have to continue to focus my buys in these select groups while I wait for the realization that everything else is just playing musical chairs to the inflation song ... that quite song that supposedly no one can hear!

We have the futures down, overseas markets generally positive, bonds down again, the dollar weak, gold up a buck and the grains running higher overnight. Not much data this week and we are overbought short term. More chop.

Another advance on very light volume

The story is so old I'm tired of talking about it yet it is what it is ... another advance on some of the lightest volume trading of the year. Am I really the only one bothered that almost every mark up that occurs comes on light volume yet when they discount things and sell, volume rises? Should we not really be concerned that all news is good news no matter what the news?

It's a challenge to say the least to close your eyes and buy this mess but man that has been the longest rewarded trade I've seen in ages as the dipsters are rewarded almost without question. What few days haven't followed through have done so within a day at most.

So, as this day draws to a close, unless they sell them down in a hurry, we are going to end with plus numbers on the volume that is pathetic. It's almost as if you walk into the store, and although nobody is buying, you turn to the cashier and bid up the price of what you want to purchase to nosebleed levels. Kind of mind boggling isn't it?

I'll let this be the last post of the day. I'll catch up with you tomorrow.

Chop trading continues

It's as if nothing has changed in this market. There are more rumors than flies and the overbought nature of the move causes a lot of chop as a result. DJIA has lagged all day while the OIH has led the SPX. NDX seems to be taking the lead from AAPL and GOOG. Speaking of GOOG, I've had to work through some early shorting I did there that was a bit painful but patience has prevailed. We just got the bump up after lunch and we'll have to see if they are serious about trying to run this or not. My take is it's going to be very hard to push higher right now.

Soooo conditioned ...

Man these dipsters are conditioned. Any dip ... I mean any dip is bought. With a number of factors bearing on the market today, I did think that we would see the dipsters can a dose of medicine this morning on their buying. So far they are doing the exact opposite as they short covering they have spurred has served to cause pain to the shorts out of the box again here today. I still think we are going to see chop at best so that should provide opportunities near term to fade trade moves.

More deals but China and bonds beckon

There are more deals on the table again this morning ... not the blockbuster one two punch, but more deals nevertheless. Those deals are offset with China weakness once more; down some 8% more last night after a good 10% last week. Shaky as I mentioned last week. And then there are the bonds; approaching the 5% yield and starting to get attention. Fed consensus has finally moved from rate cuts to definitely flat to even the possibility of rate hikes (although hikes are still not consensus).

We have DRAM chips out the yin-yang with the Vista overbuild; and on and on. All things are not well but the market does that damn the torpedoes move higher. Oh well, if you fire all those torpedoes then eventually you are not going to be able to justify and higher move. I'm waiting.

Overseas weakness in equities as a result of China and bonds, dollar weaker, bonds flat, gold up a tad and futures pointing to some difficulty to get going. Can't wait to see how they dipsters act this morning.

Calling it a day

The intraday gyrations provided some trading opportunities today. Nothing much was settled on the larger picture and internals did maintain positive throughout the day despite some deterioration. Once again, they look to close them green here today as the party just rolls on. The higher we get, the more difficult it must be to hold this overnight exposure as the chance for a larger fall increases. Today we saw the bonds get smoked once again and that's pushing rates towards that magical 5% mark. With interest rates increasing, that eventually will provide the excuse to sell and to sell hard.

My take is that I can't put much exposure on up here; short or long without taking increasing risks. The momentum move has continued to frustrate anyone dumb enough to short the market on a time frame longer than a day while continuing to reward the long and strong crowd but at an increasing higher risk rate. Of course risk is not something this market cares about nor the players frolicking in the pool of green. They will get their day though I'm quite sure.

Have a great one folks. Take care and I'll catch you next week.

A never ending sea of optimism

As usual, there is always something to create optimism in this market; especially in the big caps. Today it's the WMT buyback annoucement ... up 4% and counting. Enough to hold those big caps in record territory and to keep all the other indexes snapping at their heels. The small caps are garnering interest as well as the flippers are hard at work with the mo-mo stocks. We had a bit of a letdown but not enough to carry us to red and then a buy program hit a little over 30 minutes ago breaking the trend down day that was in place.

Wall Streeters back from lunch here shortly and the programs kick in then. We'll have to see if they are sellers or buyers. In this market they can go either way at these levels. The bonds continue to sell down and I've got to think they are going to be noticed at some point.

China Shaky?

I noted the Chinese markets in my opening commentary being a bit shaky. Here's a post off of RealMoney from Helene Meisler showing the Shanghai Composite. Although anything can happen with momentum and greed in terms of timing, it does indeed look shaky to me.

In our markets, WMT announces a big buyback and that gooses the indexes for a bit. We'll have to see if that can hold them today. It's always something it seems. It is Friday, new month, and the weekend before the next round of merger and LBO news. That too could give support. If we are to break, it needs to come within the next hour and half in my estimation.

Serene waters belie the sharks that swim underneath

It appears all is well but underneath the surface of the otherwise calm waters, the sharks are circling it appears. We are slowly breaking down; in the higher flyer's; in the internals; on the DJIA, etc. There's still buying for sure but these waters are not nearly as calm as they seem. Careful where you swim here today as the waters could get quite choppy.

Numbers all in ... time to fade

All the numbers are in and no big surprises. I've finally made the fade trade and will not give it much room if wrong. Just trading against the trend for a quick move now that all the suspense is out of the way. From here you need more new money. Bonds breaking down and I think with them moving above 5%, they will finally be noticed.

30 minutes in

The second jolt of data comes 30 minutes into trading. So far, the jobs numbers didn't change anything. Still looking at fading the early move for a quick trade.

1 on 5 Wins ... how about 30 on 7K+

I watch a historic match last night with LeBron carrying the Cavaliers past the Pistons scoring all the points down the stretch ... like the last 7+ minutes of regular time and then double overtime. Can't say I've seen a performance like that before ... and they won.

Kind of makes me wonder about this DJIA carrying the other 7K+ stocks on it's back higher and higher day after day. Can it win too? So far it has.

This morning they are bidding the prices higher in anticipation of the jobs numbers. Gold is trading higher, the Yen lower and the dollar lower as well. Bonds are 4 ticks lower as well. Along with the jobs numbers are we'll get personal income and spending as well.

My thoughts last evening is a gap up may provide a nice fade trade. Well they are already on the gap up and if the numbers provide an even higher gap up then indeed, a fade trade may be in order.

Chinese markets were mighty nervous again last night. I'm wondering if that's going to be the catalyst once more for a spill over here. The weakest link is usually the issue. LeBron showed that it can be overcome for at least one game night. These markets have been doing the same. Eventually though ... the odds do catch up with you!