Trade Chatter

Cliff Dwellers

2007-08-03T14:37:00.000-06:00

The only running the rabbits did today was for the cliff. Put them in with the cliff dwellers at this juncture as they are ready to jump.

I had entertained the notion that we would get more of a push before the fall. Maybe the situation is as bad as I originally thought. I've talked for months about the problems facing this market and have had to caveat that each time with the thought that "It doesn't matter until it does". Well, it does and today it did.

I'm tired and ready to call it a day. I'll be switching the DNS to the new site a bit later. I hope you find it fresher and it continues to be informative. I have the framework to expand to add additional commentators over time and to serve up fresh content including some of the tools I use and am writing about currently in my manuscript. In case things go awry, here's a hard link to the site. This will get you there until the DNS servers catch up with you.

New TAToday

Again, hope you had a great one and as always, I continue to value your trust and readership. Tell a friend or two about what we do if it is valuable to you. That's how we can grow and become a more informed community of traders. Have a great one and I'll see you Monday morning.

Run rabbit run

2007-08-03T12:10:00.000-06:00

Will the rabbits be on the run this afternoon? After two consecutive days of squeezes into the close, the rabbits may be on the loose again into the close. They are threatening to stampede again.

I've been reticent to do much at these levels on the downside. A couple quick shorts intraday but I'm still looking for that porcupine spike back to those resistance levels we have talked about previously. In this market, the greatest asset is your patience. Wait, wait, then pounce.

Pressing too hard today

2007-08-03T09:28:00.000-06:00

The bears are pressing these markets too hard here today. Yes the data was bad but you have a very oversold market that is like a coiled spring right now and pressing hard against that backdrop can cause alternate effects. I'm patiently waiting and working only my gold holdings. I'd love to see the coil unwind here and get the porcupine spike.

Employment number shakes up the futures

2007-08-03T06:35:00.000-06:00

We had traded flat to down over night but the jobs number was release a bit ago and came in softer than expected. That's not what the market expected and the higher futures prices hikes that occurred just prior to the report were given back quickly. Slower growth is not what this market wants.

Slower growth with potentially higher inflation is a recipe for stagflation and it will be interesting to see how the jobs numbers are spun today and what kind of damage they end up doing. This is an extremely tricky period to trade as we have bounce off the bottom now, the spreads are wider (beta higher) and we still have an very oversold market. If the bears press to hard they could get squeezed higher. That would be that porcupine spike I was talking about yesterday.

Although I'm itching to put out some short positions I don't want to do so too quickly lest the timing kill me so I'll wait for those targets that I laid out previously.

Overseas markets were mostly lower last night, the dollar is weaker and the Yen is actually stronger as well. You have to keep your eye on the Yen here. Bonds are flat, oil is up a bit and the metals slightly higher. Grains were up overnight again.

The volatility is likely to continue today. The Fed is up next week and the swings of the last couple days intra day are likely to continue. My gut feel is that we work higher over the next few days with false starts and emotion swings. One of those markets where you have to work smaller if you are trading intra day and you have to mostly close your eyes if your time frame is intermediate term.

Looking for that Porcupine spike

2007-08-02T15:59:00.000-06:00

After a long volatile day of ups and downs, they finally finished the day strong with a lot of green on the major indexes. The setup is there. After a long bull run we had a serious hiccup in February and now in July. In February the bull just roared back and the dipsters had to pay up to play once it got rolling again. I'm sure they remember that. Buy and holder said "I told you so".

Now we have the latest hiccup and, being creatures of habit, it won't take a lot to get the short covering underway again. We have the employment report in the morning. If it's strong, look for the rally caps to get dusted off. The setup is definitely in place for that. Fear will quickly turn to greed again and that porcupine spike higher will come about.

As you know, I'm much more skeptical of what lies ahead and that spike, to me, is to be sold as we move into the resistance areas that I've outlined. July is not February. The tables have turned. They say the market climbs a wall of worry. Well, the worry out there is of the aspirin type; take a pill and go to bed and all is well the next day. The only worry soon will be the worry of getting left out again as the train leaves the station. Folks, the train will leave but it's heading south this time. We won't know that for a while but the odds on bet is to short the first porcupine spike and do so with enough firepower to peel off some profits and on the retest of the recent lows. That spike could come as early as tomorrow. More likely it's next week. The retest should be a week to two out from the lows. Those are the general parameters I'm working with. Today's volume numbers continue to support this notion. You fall on heavy volume and rise on light volume. That's all in keeping with this thesis.

Hope you had a great one. I'm apologize for not having sufficient time to put up a Chart of the Day this week. Time just doesn't permit. I've not been able to update the thesis neither. We will cut this site over this weekend and I'll have a hard link to the new site as the last post here just in case the DNS servers don't pick up the change over the weekend. So, if www.tatoday.com brings you back to this old look, then click on the hard link I leave in the last post tomorrow and that will get you there. Until tomorrow. Have a great night and chat you then.

Look at the calendar

2007-08-02T09:41:00.000-06:00

Tomorrow we have the employment number. It's likely to be favorable. Next week, the Fed. At this juncture at least the anticipation of their meeting should be favorable. We have an oversold market and though no bounce is guaranteed, it is indeed very likely.

This morning they are very hesitant with chips and oil service acting as lead weight. Give it some time though. Not the time to be shorting here. That will come.

Now a stab higher

2007-08-02T05:26:00.000-06:00

Looking back, yesterday was a hectic day for the market as they ate away at support around the 200 day MA on the SPX and at the critical line in the sand on the DJIA. What we have seen before is that each time the market has had a stumble it was short lived and onward and upward after that. I believe that the majority believe that this time is no different. As a result, we should see follow through buying today as the dipsters go back to work. If they don't then the change I see in the market is not only worse than I think, but is going to unravel even faster than I plan.

What I expect to happen here is that we will see folks began to work their way back into the market with a thrust back up occurring on the indices as a result. It's always greed and fear. Lately fear. Today and the next week or so; greed.

What we have to look for as we rise is the quality of the rise. If that rise comes again on lower volume, then that will telegraph yet another warning sign that this market remains in ICU even though its smiling and reward you with higher price points. That could go on for a week or two but I doubt much more. Watch the price points to see where the resistance resides.

On the SPX, the resistance range of significance is 1492-1504. On the NASDAQ its 2608-2650. I know these are wide ranges but this is a reasonably wild ride right now. Those zones should turn back the initial thrust. That reversal should set up the middle part of either a W formation or eventually a M formation. What that means is that once it reverses, we will need to retest the lows from yesterday. That retest and the volume that accompanies that retest will tell us a lot. If it fails, then its obvious as to what that means. Given this long bull run, I would expect it to hold. If so, then we bounce up again and once more attack the same zone as indicated above. If that fails, that will make the third trip back towards the bottom and if volume picks up on that move, it's going to get very ugly. PPT, manipulation, whatever you wish to think or call it won't matter.

This morning futures are higher after trading negative most of the night. Overseas markets all lifted off of our move yesterday. The dollar is weaker except against the Yen. Bonds are losing their flight to quality premium; down 9 ticks. Oil is down a bit more off of yesterdays inventory numbers reversal and the precious metals trading higher. Grains were solidly higher overnight.

It's been a wild ride of late. I've been concerned that a big spill was coming and indeed it was in the cards although it took forever to play out. Now we should see the bounce. My larger concern has been and continues to be that we are entering into a bear market for equities. Although the average investor will likely look at this latest hiccup as only a hiccup, I believe it continues to telegraph that worse times are ahead, not better. You can believe what you want as its your money but if you are working this bounce that's unfolding, you had better at least consider the other side and what you are going to do about it if it unfolds against you.

Tenous but holding

2007-08-01T09:51:00.000-06:00

I've got to head out early here today and though I'll check back in and maybe get another post in before the bell, just wanted to leave with the thought that the equities are holding the early lows here and unless another bombshell hits these markets, they look ready to run them higher.

If they can hold prices for an hour look out

2007-08-01T08:09:00.000-06:00

If they can keep these prices propped up for an hour, the dipsters will come in. The price action is futures driven so far as internals are negative. Looks to me like some market stablization forces are at work here trying to build confidence. Part of it is also that we are quite oversold short term and that helps.

AAPL upgrade

2007-08-01T05:23:00.001-06:00

Futures markets pushing back higher on AAPL upgrade. Talk about timing ....

Greenspan put ... put out to pasture

2007-08-01T05:12:00.000-06:00

Over the term of Alan Greenspan, the market had come to expect that if anything bad happened to the equity markets, Greenspeak would be there to bail them out. It became known as the Greenspan put. In 1987, 1989 and later during the Asian contagion, Long Term Capital Management, the implosion of the dotcom era as well as 9/11, Mr. Greenspeak was there with a helping hand bailing the markets out with excess liquidity. He's off to pasture now and the Bernacular seems to be singing a different tune. The result is some serious red on the screens overnight as they started selling the futures after the close yesterday and continued selling them overnight.

We will see a big gap down opening; a gap down that destroys a lot of equity and that truly starts to put some fear into the players out there. It's a gap down that the dipsters likely won't want to touch (although if a gap down holds and they close it, the whoosh up to form the middle part of the W will be underway and that will come somewhere in this move down). A gap down that will will show huge volume once more to the downside. If we needed a sign post that the party is over, this gap down will do it. The game is over and now the bear is back and in full coat.

Yesterday I sold down my holdings more, spread my gold a little but mainly raised cash into the early strength. I will get hurt today just like anyone holding anything, but if you have to choose a sector to sit in, precious metals is not a bad one. Like oil, they are printing money right now and they will be one of the first ships to right when the turbulent waters calm.

The real place to be of course is short; heavily short into this melt. I did get off some shorts yesterday morning but got to cute and cashed in late in the day. Definitely too early given the way the futures look this morning. I hope that you took my writings to heart this week and saved yourself some pain as pain is what they are dealing out today. They are taking the price gains back to zero for the year. It's August and though the bear is a bit early for winter, he's definitely strutting his stuff today. As for my particulars, I'll look to average into precious metals in a melt, but have no desire to work any other long trades.

Futures have stabilized and actually picked up a bit since I started this piece, bond are moving back towards flat. The dollar is gaining strength and the Yen also. Note the Yen has been a great indicator of late. Oil is down half a dollar and the spot metals are down a percent across the board. Overnight grains showed strength. I would stay away from risk here as much as you can. Fast markets can cut you faster than imagined. If you play, you have to play smaller.

Lower Lows ... already!

2007-07-31T13:58:00.000-06:00

I thought we might get a swift move down and then a try at a continuation bounce but we are hitting lower lows as I type and the tape gets uglier. Like a good bull market which won't let you in; a good bear market is one that won't let you out and that's what we are seeing here. Closing on the lows and with volume selling to higher levels, this market looks very sick now and anyone holding significant longs is getting hurt. I used this mornings strength to spread and peel off some precious metals longs and lock in some gains thinking they would allow us to buy them lower. Took off some more of what little longs elsewhere I possess and worked some shorts today to pad the books a bit. The volatility is offering up opportunity for sure; or pain if you are on the wrong side. Now that we have lower lows which serves as a continuation move still, we could see the market work lower in the morning washing out further sellers before finally getting a real bounce. If you were doubting the ability of this market to work lower, today should serve as a bit of a notice. Things really have changed.

Hope you managed to take the talk here today and make use of it. Have a great night and I'll catch you tomorrow.

AAPL in your eye

2007-07-31T11:08:00.000-06:00

For so long AAPL has taken the NASDAQ higher. In fact it was the leading horsemen of the four technology horsemen I've talked about many times. Last week it reported earnings and though they talked a good show I shorted those earnings and got my head handed to me. I shorted because the projections for upcoming earnings were horrible and I felt they would sell off as a result.

Well, teflon Jobs talked about selling a million Iphones and the next thing we know AAPL is up $10+ after hours and the shorts were squeezed. Next day it held as the market sold off and it cushioned the NASDAQ; in particular the NDX and QQQQ. Today we are getting the inverse. Finally someone has noticed that they don't plan to make as much money going forward and it finally matters. Timing, timing, timing!

So, while the rest of the market hums along today, the NDX is taking a bit of a licking. It's a weighted index and AAPL has a lot of weight. Internals are not bad but volume is running light again on the push higher and you know how I feel about V shaped recoveries given my last post. Let's give it some time and see how this works out but the GOOG has fell off it's horse. AMZN has had its last squeeze probably. RIMM looks to be working off of one leg and now AAPL and its earnings are drawing attention. Looks like a decent setup for a retest argument to play out.

Forget P's and Q's, think V's and W's and M's

2007-07-31T05:31:00.001-06:00

In the technical world, V shaped recoveries are extremely rare. What you find in stead is a V that morphs into a W. You get a plunge down follow by a whoosh up that wears itself out and falls right back down again. If it successfully tests the earlier bottom of the V (a little higher or lower), then you get the last part of the formation that ends up being a W. Now once you have the W, it it breaks higher than the middle part of the W, then you are off to the races again. If it doesn't then the W can turn into a M and M's are murder because they lead to even lower thrusts when the bottom of the W is taken out and the M reveals itself.

So mind your own P's and Q's and pay attention to the V's, W's and M's as those are the formation that can help or hurt you depending on your posturing.

We got the early morning push that is now coming back in pretty fast. The retrace up was about a 38.2 Fib retrace. That may be it for this round and the W could be on the way already.

A whoosh back up?

2007-07-31T05:31:00.000-06:00

This morning we see strong futures markets pushing higher. After the beating last week, we are poised to see some type of recovery ... the bounce move back up after the stretch down. Yesterday was the beginning and it came on lighter volume. Today should be the extension and if it comes on lighter volume as well we should see buying enthusiasm fade and what would seem like a more orderly market develop (less volatility for a bit). All of that should lead to a retest of the lows of yesterday sometime later this week or more likely, next week.

It's going to feel as if all the problems have been swept under the rug and that last week was an aberration. There's going to be talk that, like February, this was just a quick dip that you have to buy. I wouldn't jump into that camp easily. If anything, wait for the retest and then decide if there's muscle behind the move higher. My take is that we are far enough along and that with tightening credit worldwide that we will likely see a different path play out this time. It may be the same old song and dance but the risk this time is even greater that a more substantial pull back is in store; one that last weeks and months, not days.

The dollar is weaker again as that Treasury intervention wears off a bit while the Yen is weaker. Bonds are down a good bit. Oil and the metals are showing strength and grains were mixed. Overseas markets rocketed higher and that's what has us up strong to start the day.

Follow the bouncing market

2007-07-30T14:55:00.000-06:00

The bounce took front and center today. The early action worried some more longs out and the later action caused some shorts to cover. In between, lots of money turned over from one set of hands to another as volatility was still in vogue.

In between the lines, we bounced on light volume and though the point spread was good and though we could bounce a bit more, I suspect we are going to see this market roll back over rather quickly and retest those bottoms. It could be in a day or two or it could be in a week to two, but it will almost certainly happen. If volume remains low on the push back up, given that kind of selling we saw last week, they will most certainly entertain the thought of a lower low.

Looking past the short term retest, the question is "What do you do on this bounce?". In my opinion that depends on what you did prior to the fall; how much inventory you are holding and whether or not you think this time is different; i.e., do you believe we simply start heading higher again like before.

My opinion is that it is different and a primary reason is how we have traded now for the majority of this year. The push lower in February came after about a couple months of distribution. This fall comes after another five months of distribution. The deep pull back on heavy volume takes prices back three, four and five months compared to recent price points. What that says is that any buy and holder since three, four and five months ago is underwater on their trades. To wipe out a quarter's worth of earnings is tough to swallow. Half a year is a killer. Technically this pull back cut across a lot of trend lines and MAs. All in all, I can't see us just running right back to the highs. In fact, just getting a Fib retracement of 61.8 is a stretch.

Hope you had a good one. Take care and catch you tomorrow.

Market finally breaks over the early highs

2007-07-30T11:15:00.001-06:00

The market finally breaks over the early highs which sets up the bounce we have been looking for. How far?

Again, I think the first bounce is sold but eventually it could bounce as highs as 1494-1500 SPX. 1475 to 1480 on the first bounce is probably as much as can be expected. They will short into that strength and try to break it down further. Volume so far on this bounce is not as heavy as the selling which keeps me thinking that this market continues to telegraph it's troubles to everyone.

I'll be looking for some short exposure into this first bounce for a flip.

Dipsters choose fear over greed

2007-07-30T08:46:00.000-06:00

The dipsters have started to abandon the notion of always buy the dip. The fear of what can happen and maybe the inventory they are carrying right now has made the dipping a thing of the past.

We are deeply oversold short term and what kind of a bounce that produces will be just as informative as anything. Typically you get a quick one to two day bounce that is sold hard which leads to a retest of the lows. If that holds, then you get a real bounce.

So, I'm attempting to sell the first bounce and see what the retest offers but until we get a bounce, it's hard to sell.

Look for a weak bounce

2007-07-30T05:07:00.000-06:00

After being hammered last week, the timing oscillators we watch have hit extreme levels. The damage is done though and unlike February, this is no buy setup ... but a sell the bounce one.

Take a look at the 10 day NYSE net differentials numbers. This kind of extreme reading coming at the top tells us that we should see a bounce almost immediately, that the bounce will likely come quickly and will be sold into. After that, we'll see the retest of whatever the lows are. Given that we are starting this morning near the lows of last week, we could see lower lows to get the week started which actually would be the best setup for a bounce.

Overseas markets were mostly flat to slighlty higher and the futures here are flat this morning although they've been up and down overnight and still remain volatile. Bonds are up again and they have been on a heck of a quality run since the volatility hit last week. Oil, having hit new highs last week is down half a dollar and most of the metals are trading higher. Grains were up in the overnight session.

The volatility is likely to continue. Huge technical damage has been done and the tables have turned. I'll update the thesis later today. I've been so busy readying the new face lift to TA Today that I've been unable to spend as much attention to commentary. Still shooting for a cut over this weekend. More on that later this week.

Huge price spreads today

2007-07-27T12:59:00.000-06:00

With five minute bars on the futures showing 6 point ticks, the price spread today is very large offer both danger and opportunity to anyone willing to tackle such a beast. After this week, it's not me. I'm just trying to limp home and lick my wounds as my mettle has been tested this week on my gold shares.

I have to cut out early today so this is the final post. Pretty good push back up from the brink. Would be a feather in the cap if they could run them green by days end. Financials actually indicating its possible. Selling elsewhere off setting it though right now. I'd give the benefit of the doubt to a push into the close though. Heavy volume once again today which, given where prices have traded is another bearish signal longer term.

Taking a beating

2007-07-27T10:43:00.001-06:00

The markets continue to take a beating here revisiting the lows of yesterday. If there's a place to jump start a V'ish rally it would be from this area but it takes a lot of guts to step up to the plate with the fast ball being thrown like it is here in front of a weekend after an onslaught that has worn patience thin. Gut feeling is that someone will though as the money to be made fast is huge.

I'm making small adds to my core gold holdings but honestly this is getting old quick. I need some relief as does the general market.

Another market pillar starting to crumble

2007-07-27T05:00:00.000-06:00

There has been the Yen carry trade. It's appears to be starting to end. The devaluation of the Yen may fool us again but this time, if you look at a chart, it truly appears as if it has put in a decent start of a bottom which would project higher longer term. That process will take a while most likely; like months but it's starting.

The other pillar, the weakening of the dollar has continued which actually helps big cap companies as it makes their overseas earnings that much more when repatriated.

The last pillar was all the M&A that was the result of cheap money and liquidity. No failed deals yet but a number of them on the ropes and money is definitely getting tighter so deals that have not happened are less likely to do so.

Which brings us to the thought that things are finally different; different in a more fundamental way. Unfortunately for myself I let the market wear me out mentally before the rewards were delivered on the bear side. When the big drop came; and it did come yesterday as volume skyrocketed to confirm the move; I was left watching rather than participating. Of course that's what makes it hurt that much worse. Knowing that the problems are out there and continuing to position for a coming fall yet not having the conviction to stay with it night and day month after month despite the knowledge that it's coming is very frustrating to say the least. Timing is everything in the markets as if you miss the mark on timing the rest of it just doesn't matter cause in the end its money in the bank that tells the story.

Futures starting to sell off again this morning. Yesterday was a washout and although we may trade lower today as well and mop up the remnants who can't stand the pressure, a heck of a bounce in just around the corner most likely which can be shorted. Stepping back and looking at a very large picture, if this is the start of a bear market sequence rather than a couple day pullback, there's still at least another 150 SPX points to give up over the course of a few months. The key words there is that "if this is the start of a bear market". That remains to be seen but the conditions are ripening.

To start the day Asia was down hard, Europe is bouncing a bit, futures are still falling as I write, the dollar is up big, oil is higher and all the metals are pushing lower. There's GDP numbers up an hour before the opening and a continuing of earnings reports. This is not a time to sell or to buy but to wait. We have to catch the next bounce for a sell which likely starts today or next week. Given the new lows list expansion it's likely to be a good bounce that doesn't last long.

Unwinding of Yen trade smacks the markets

2007-07-26T14:49:00.000-06:00

There's word out that it was subprime scares, etc. That's been with us. The real problem is the Yen carry trade unwinding and doing so fast. That carry trade is the easy money that's been sloshing around. Will this be like February where they simply start afresh and the carry trade continues or is it somehow different. Clearly the risk is back in the market and my endless concerns for a sick market that has been propped up in the hospital bed for months now but dressed in silk suits has been undressed again.

My disappointment is that when the big one did come I, like many others probably, had no short exposure left on the table. They milked us dry and then smacked us hard. If there's any pleasure it's that we were not long the broad range of stocks that have been farmed out, but have a lot of exposure in the metals sector hurts just as bad short term.

Oh well, it's life and it's the markets and they are a bear to bet. If you were caught on the wrong side lately and if you didn't pare down exposure early enough, recognize that we are way oversold short term now and a good rush of buying is likely to ensue soon. Look back at the February charts, as this one will look the same. A rush higher and then some sort of retest. If it holds, then it's the old game again. If it doesn't, then the bear market finally will be in vogue. Realize we are later into the game now and problems of the past have continue to mount and multiply. Unfortunately the dipsters didn't give us that one more run higher than I had crossed my fingers for yesterday. Just when you need them, they disappear.

Hope you managed to make it through the day. Catch you in the morning.

Brutal!

2007-07-26T09:35:00.000-06:00

This some of the heaviest selling and volume we have seen since February. I believe we are finally seeing a wash out here with the SPX down 30+. The whoosh back up is likely as a result. I have suffered greatly in my gold shares but have the resolve to stick with the idea that they work higher over the next few weeks and months. That's why you take some profits when they run and scale back in when they fall.

I'm still amazed to see APPL up $10+ in this environment when what they reported was not good going forward. I guess the charm of Jobs is to much to ignore. What a day already.

Fear starting to set in

2007-07-26T05:36:00.000-06:00

Futures are down big this morning and given where the market is, this could be another attempt at a wash out followed by a bunce. There is real fear out there about everything unraveling finally and the sellers just keep showing up. AAPL looked to come to the rescue as that PR machine reported lower project sales and earnings yet the PR in the conference call took it up 12% after hours. This morning, the selling seems to come on no real catalyst. The only thing I see is oil heading higher again (kind of been the story for a long time there) and the Yen trade unraveling which has been occuring for a few days now. Maybe it's just emotions doing the market in as lots of profits sitting on this table although in many cases now, there's losses to cut on the long side as well.

Dollar stronger after Treasury intervention yesterday to prop it up, metals down again as a result. Bonds up almost a half point on the strengthening dollar and flight to quality out of stocks. Grains were strong overnight. Looks like another volatile day on tap. It's been that way all week and doesn't look to change just yet.

Pushing volume at the lows

2007-07-25T12:19:00.001-06:00

The volume increased today as the volatile trading occurred with new lows recorded. Again, we get the same old story there with volume increasing as we press against the lows. After hours AAPL is halted and looks to open much lower. If so, that's another horseman going down. So far 2 of the 4 have crapped out. Only AMZN has worked higher off of earnings. With the market already struggling here, that's going to pressure the NASDAQ come tomorrow.

It as an interesting day once more. Treasury looks to have boosted the dollar bring it above 80 and pressuring gold as a result. I had to buy more on that news. The volatility is getting hard to deal with an although I'm carrying a pretty full portfolio, it's mostly in the metals and the metals are struggling here. Longer term that still looks to be a good place to be but in between ... well you know how that works.

Oil took off today and spiked to new highs again. Oil service stocks rose with the crude.

Everywhere the activity continues. An oversold market short term gets more oversold yet the pressure continues to be applied. If this market just works sideways for a while then a bigger fall will come from these levels. I'd much rather see a weak climb higher to allow us to scale back in for what should be the short we have been looking for. Hope those dipsters haven't given up yet as I actually need them now. Have a great night folks. Catch you tomorrow.

Where did all these sellers come from?

2007-07-25T12:19:00.000-06:00

You would think that after this mornings panic, most of the selling would dry up but they just keep coming. Nervousness will cause that as folks will dump first and ask questions later. This bleed is going to set up a good bounce and a bounce that I think we have to look very seriously at shorting. There are enough problems out there now and enough divergences setting up that we should see a good, prolonged push down the next time around. If it comes to bear, it will be well worth the wait. For now, still looking for the bounce.

Now that looks more like a wash out

2007-07-25T08:56:00.000-06:00

The panic we just saw looks a lot more like a wash out. We are already oversold short term and a panic that forces folks to throw stuff out we'll cause the bounce. I've purchased into the washout in the golds and I was able to get one ETF short off early that I've covered now. We should see a recovery from here as the damage is done.

A bounce indeed

2007-07-25T05:28:00.000-06:00

After being drubbed in the short term, the market does exactly what it should do this morning; it gets right back up and starts heading higher early. I've been up for about 15 minutes now and the futures are on a tear pickup doubling their gains in that short time. Folks like to get started early.

The oscillators I watch and which are available to you on this site show an extremely overdone move down short term and a heck of bounce should unfold. Seems the market is finally catching on to the idea that there may be a few problems in la-la land and all I can say is that its about time.

AMZN did pull another rabbit out of its hat and all those folks who decided it was better to continue to short there are going to have to give it up finally. The denial turns into anger and soon acceptance as positions have to be bought back. It's up some 22% this morning.

Elsewhere, overseas markets were generally down but not hugely as would be expected. The dollar is catching a bounce and that is pressuring the precious metals. Bonds are flat and oil down slightly. The grains were up slightly overnight. We've probably seen the worse there at this point as they've priced in a excellent harvest which leaves little more downside.

How far they can run this thing back up is debatable. If we take a gander at the major indexes we have the DJIA that is still above its breakout area. Same is true of the NASDAQ. The SPX has broken to a lower low and is back into the lower range once more. The Russell never made a new high and is actually the worst index currently. What support that is out there is centered in a cheaper dollar (big caps) and in technology and the oil sector. The latter seems way over done and technology depends on greater consumer consumption and in plant and equipment purchases. Both of those depend on debt and that is become a more scare commodity so longer term that doesn't fly. That leaves a cheaper dollar and the big caps. Nothing to stop them right now as the cheaper dollar continues to be the theme. A cheaper dollar props the precious metals up longer term as it breeds further inflation domestically. That's the bigger picture from where I sit.

Talking of sitting; I've been busy putting together a new site. After almost six years running, a face lift is due and we are nearing that point. I'm looking to add a couple new fresh faces to the site as well with a little more diversity in opinions. Hopefully you will find beneficial. There are a lot of good minds out there who are working the angles and having them share there thoughts with you will be a bonus for all. I will be busy next few days readying for the cutover so if my posts get a bit more sparse, you know what's happening. Once done, I'll turn my attention to the last piece of the puzzle which is to push the book out. It's about half done and my aim is to finish it by the fall. We'll see if I can meet that date as well.

AMZN plugs some holes

2007-07-24T16:33:00.000-06:00

After a virtual beating today, AMZN has assumed the dubious position of a leader for tech and after hours they are squeezing that larger short position higher. AAPL is up next and it will need to find a way to press higher despite the huge run it has already has lest AMZN will end up being a one day wonder.

The timing oscillators are strongly suggesting a bounce here and I have no short exposure to speak of after trading today. We will need to consider rebuilding that exposure in the coming days though as the next trip down could finally be a larger one assuming we can mill around a bit beforehand. With a tech squeeze higher that indeed could finally develop. The problem with this market is everything seemingly comes in a day or two on the downside which wipes out a month or two of upside action and no one escapes. Up/down volume today was something on the order of 6:1 downers.

Hope you managed to find a way to survive this downdraft. Although I continue to respect the downside knowing that eventually that is the side that will pay dividends, it continues to be an extremely hard trade for both those wanting and willing to be short as well as for those insisting on being long. Have a good night.

A virtual flood of selling

2007-07-24T13:43:00.000-06:00

So the dipsters got their fill finally. Hope they loaded up and are barfing it up now as their time was way overdue. This markets inability to face reality has gone on way too long and today the confluence of events are unfolding sharply and slamming all those long only babies that have grown complacent about risk.

I've not faired well myself as the dump has occurred in the gold stocks as well. I did take some profits early again today as I have the last couple days but when you are holding a large set of stocks in a sector you don't care to push out, you just have to eat this kind of a move and prepare for where you add back in again.

As for the rest of the market, we are doing some damage once more and that damage continues to come on heavier volume. It continues to tell us that all is not well in this market and that the continuance higher is not only unlikely but some sort of fictional illusion.

Given that we will be oversold by end of week and that we are being literally taken apart today I would think that we'll see some sort of milling around now price wise while we build further strength to take out the lows and to do so with authority. That could take another couple weeks. If we take them out sooner then we'll see a heck of a bounce again as a result.

Pressure everywhere

2007-07-24T11:27:00.000-06:00

Markets under a great deal of pressure on price but the interesting thing is that the NASDAQ is unwilling to give it up still. With but a couple hours until the bell that may change but clearly there are still dipsters at work out there and the complacency of their actions continues to point to a buy the dip no matter what mentality. We'll see if it pays dividends once more or not. A bit of a dangerous game they are playing.

Few clean setups in this market

2007-07-24T09:17:00.000-06:00

As you know, I've been working a few smaller long positions looking for a little gravy on the side but what I'm finding is that there are few clean setups. One stock I highlighted recently was DD. Earnings today were flat; down 5%. So much for that thought eh? There continues to be very little in the way of clean setups; positions that you can take with any certainty. It's tough sledding indeed.

We are seeing Yen strength continue this morning as it builds a base for a larger move (read strengthening). A stronger Yen takes away from the carry trade and makes the progress of the market more difficult despite a generally weaker dollar. Internals are horrible this morning and though they have been painting the tape higher on this bounce off the early lows, with these kinds of internals to pull this thing to even will be quite a feat. I remain bearish in thought as a result for the day. More likely we get a trend day down than a rescue raid higher.

Small caps are abhorent here as they are breaking badly. The only safety continues to be commodities (outside of oil today). Hunker down as the complaceny ride may get bumpy here.

Dangerously complacent

2007-07-24T05:47:00.000-06:00

Nothing in life comes for free. There are people and there are times where we think that this arrangement has changed but it never does. Right now the market thinks that the bull case is free ... but it isn't.

New highs are shrinking, new lows expanding. Not a good sign. Price action is sloppy with volume still expanding on the downside, shrinking on the upside. A worse sign. Markets around the world experiencing the same phenomenon. An even worse sign. Dollar threatening a real breakdown. Get a straight jacket because if and when that baby breaks we'll see a fast move and fast moves in currencies usually lead to real disruptions in the equities markets.

Overseas markets mostly red overnight. Europe down a decent amount. Dollar indeed wants to work that 80 number again as its weaker once more. Bonds are flat but the dollars weakness is the precious metals fuel as they work higher early. Oil down another dollar on news that OPEC may increase production. Fat chance. All the grains worked higher overnight. That DBA vehicle is a nice trade up and down. I keep working it from a long bias at the edges.

I see early pressure in the NASDAQ once more as the semis work lower and the three and a half horsemen (remember GOOG got GIGGED last week) lead it lower. AAPL is so extended, RIMM has been working higher on one leg for a while and AMZN likely is out of surprises at this point. Shaping up to be another interesting day. Equity market oscillators telling us that we could catch a decent bounce in here somewhere. I'm not trying to play it as much as respect it and short into it. I've some long exposure outside of the metals that I would peel off into a lift but it's a small portion of the overall load.

Slip Sliding Away

2007-07-23T14:28:00.000-06:00

This market is harder to catch than a greased pig as it slip slides up and down. DJIA gets a boost with MRK making its move off earnings and the financials not stinking up the tape for a day. Listed over OTC today baby!

We have a slew of earnings hitting the tape after hours with TXN hitting as I write and more sell the news kicking in. That's another of those chip stocks dragging its feet.

I'm still working shorts on the indexes and that still looks to be a decent trade here while we hang on to some newer longs and of course the metals. I was looking at some of the various price increases in raw materials this year and they are truly hard to believe; things like 35% for corn, 100+% on milk ... etc. Can't see a bad trade on the metals if you define your risk and time frame properly.

Hope you hung in there today as the market slid around. We could see some slippage off these earnings coming into tomorrow and with the market continuing to act worse than a flea infested dog with respect to its internals, when this baby finally does break its going to be uglier than that same scratching dog.

Hope you had a good one. See you tomorrow.

M&A continues to mask problems

2007-07-23T09:43:00.000-06:00

The M&A activity once more takes the spotlight and despite earnings generally being sold this time around, the M&A is enough to get the juices flowing again. We have the oil sector extremely active and bits and pieces elsewhere as well. The listed issues are leading rather than the small caps and the NASDAQ. As you remember, they led on the way down last week. Guess the CDO related debacle has become back burner today and all the loan problems are put off for another day.

Again, this all just a lot of up and back at this particular point as the buyers are willing to believe still and those that doubt like me continue to sell into strength as it were. In this space between the tops and the breakout area of a couple weeks past, it's just backing and filling until the next battle erupts.

Eco news and Earnings light the path

2007-07-23T05:45:00.000-06:00

There is an abundance of economic news this week coupled with a continued earnings deluge. Earnings so far have been sold for the great majority of stocks. That's very different than what we saw first quarter and represents a real challenge going forward. The SPX acted very weak last week with the financial sector dragging it further down. The saving grace from a collapse was the oil sector which continues to work higher and higher. This morning there's a merger in that sector on the wires and we'll have to see if they can continue to work north in light of that.

In the tech sector we saw GOOG get smoked; down big off its earnings and MSFT couldn't provide any juice either. INTC was knocked for a loop earlier in the week. All in all, tech looks like it wants to come back to its breakout area and then see if it can move higher from there. The small caps never even broke higher during the last manic rush up.

This morning we see futures up on some earlier earnings and mostly strength from overseas. That green tint from elsewhere looks like a weak bounce after a good beating as most were hit hard last week. The dollar is mixed as it flirts with 80. I would think after the drubbing it has taken it probably has to work sideways to up for a little while before attacking that mark again. If so, that probably works against gold near term. It's down slight this morning while the rest of the commodity sector sees red. Crude oil is half a dollar lower but still fetching over $75 per barrel.

The market has its work cut out for it. This week will likely see more choppy trading as we come off options expiration, are in a historically weak part of the year; have not responded kindly to earnings; etc. I'll continue to work both sides of the table here in particular names with good charts and with ugly charts although most of the shorting remains in the indexes when they push north rather than individual names. The liquidity dragon still has fire in it and can smoke your trades if you are caught short in the wrong names.

Whack the Mole

2007-07-20T13:16:00.001-06:00

When the kids were younger we use to play a game we called Whack the Mole. You sit there with a rubber hammer and smacked one of six moles that would pop up out of there hole. As the game went own, the moles would pop up simultaneously rather than sequentially and the action got faster and faster. These markets remind me a lot of Whack the Mole. We seem to be in about round 8 of a 10 round fight with the mole and he's getting faster and faster.

They tried to play ping the tail on the dog pushing the futures hard for a squeeze of the tape into end of day but there is just too much dead weight out there to lift. Other than AAPLs shine in tech and a few other numbers reporters like ISRG, this tape stinks worse than a pig pen today and getting a push into the close is unlikely in my opinion. I'm nibbling at a few issues here but very small. Just a few long names like CFK, MTOX, SVVS, ATHR, INFA which all have pulled back today but sport nice charts and good Cube stats.

Have a good evening and catch you next week. Enjoy the family and all loved ones. The days are long but never long enough when it's close friends and family around you. Good night.

Dipsters beware

2007-07-20T11:58:00.001-06:00

The Yen carry trade is unwinding big today as the dollar flirts with levels that are large. The Yen has been building a base to attack higher highs and need I remind you, the last time this happened, we saw quite a fall in this domestic paper we trade called equities. As rates around the world ascend, it puts incremental pressure on all these deals that are either announced or in the works. My guess is we will see a high visibility failure at some point that folks sell into. That failure would be a better time to skinny dip than right here in my opinion. That failure might be closer than you think.

The sting of options

2007-07-20T10:34:00.000-06:00

Options are some highly leveraged instruments. They can bite your hand off in a heartbeat or end up buying that diamond ring you've been eyeing all in a day. There was serious issues today in that arena as I watched the 1550 strike S&P puts sky to a 700% gain. Unreal!

The pressure options put on a market are huge if they size of that option pool is large as the underlying assets are bought and sold to hedge the risk. Today's dive (as I wondered what might happen in my opening missive but dismissed as unlikely to happen) was driven by some big options players being caught on the wrong side. Someone walked away with a lot of money today ... from someone else's pocket.

Back to the market though. This continual drive to new highs only to get whacked is getting a little old don't you think? A close under 1540 SPX is a close under the breakout point. The other indexes have a lot more room though as the DJIA needs a close under 13700 and the NASDAQ needs to lose another 50. That's a lot of room to the downside just to get back to the latest breakout area. Note that the Russell never even broke out though. Small caps are sucking wind still.

What does all this tell me? Tells me that the problems that I have harped on for so long are still real and the market continues to be smoke and mirrors as well. Don't look for the bullish forces to roll over and play dead. A retrace. Sure, they'll grant that cause it allows the dipster mentality to live on and profit. Ha!

Once again, heavy downside volume

2007-07-20T10:05:00.000-06:00

It just doesn't change does it? When we go down, we almost always are doing it on heavy volume. Today continues to underscore that fact as we are going to have huge volume by the time the day is out. I tell, this market smells of a rat but it is quite difficult to stay short it to say the least.

I got caught in a spread a bit ago that went awry and though the gold bullion is up, the stocks are suffering under the weight of this heavy selling so there's pressure everywhere. One of those days that you just hunker down, look for an opportunity here and there but mostly stay out of the way and let the chips fall where they may.

China raises interest rates and market stretch higher

2007-07-20T07:55:00.000-06:00

Rates keep going up. All around the world we are seeing interest rates rise but it continues to feel like we are on the Boardwalk in Ripley's Believe it or Not. Bad news just keeps coming but, Believe it or Not, we walk this market higher and higher. Somebody get me a chair as I'm getting dizzy from these price mark ups. Its as if someone knows something that no one else knows. Is it just a game the greater fool?

Yesterday Glenn posted a comment on these pages about the island top and how that just wouldn't be allowed. I sure thought that it would transpire and took some overnight short exposure on a bounce thinking just that. Well, a minute till the open the futures shoot up and erase the gap on the opening. Who else out there is in the know?

We see some heavy lifting setting up today. MSFT isn't propping us up nor is the high flying GOOG. That's one of the four horseman falling off the proverbial horse. That leaves RIMM, AAPL and AMZN and other than the Big APPL, they are pressured to keep up the balls this morning. Will another magic hand appear if one of the balls looks to fall?

Don't expect them to take all the chairs away today. Option expiry probably rules that out and besides, as I showed yesterday, the oscillators swung back to a point where they support the market near term. Just looking to make another buck or two on this good run I've been having then step aside and wait for the next push. Eventually something or someone will come along and knock the legs off this magical chair!

Chop Shop

2007-07-20T06:22:00.000-06:00

The market seems to be the equivalent of a chop shop this week; steal some money here, stash it there. We are seeing fast money move faster than a speeding bullet escaping one trade and chasing another.

The bullish theory is that the financial drag that comes in the way of bad debt is no different than it ever has been and that it is regulated to a small portion of the market; namely the banks within the financials. So far that is true.

The bearish case is that it's much more widespread than that but it just hasn't shown the full extent of its reach yet; the best is yet to come.

The arguments continue regarding liquidity and the easy money. Rates are holding steady and likely will continue to do so some will argue whilst others will suggest that they are about to explode higher and take the market south.

Seems we are always at a crossroads in these markets of ours. The dollar was scraping off of 80 yesterday ... a region it has seldom crossed in the history of the fiat currency systems. Is this time different? Need I say it's weak again this morning?

The precious metals continue their rise uninterrupted. Can anyone truly say that inflation is under control?

We have options expiration today; a day where the big money pins the tail on the smaller foes. Nothing like take premium off the table. That likely suggests that even if this market had a notion to fall hard today, it should receive and underlying bid. The risk is that the bid fails and the options exacerbate the situation (we fall further and faster). With a lot of money to be lost, a lot will be expended to keep things in line one would reason. So, look for some volatility but for the range to be respected. Nothing under 1550 SPX sticks today.

Pushing higher on less volume

2007-07-19T14:27:00.000-06:00

The saga continues with higher prices and fewer buyers. I truly wonder just how long this can happen as its so counter-intuitive but if we remind ourselves that we keep making all U.S. assets cheaper on a daily basis by devaluing our currency in a steady and diabolical way. Hard to keep making sense of these moving parts but so far that's the way it continues to play out.

As earnings come in this afternoon, GOOG is getting slammed; down some $40 after hours. MSFT also selling down to flat after being up 2+% today. Tomorrow likely to be interesting. Take a look at the chart from today on the NDX and NASDAQ. Gap up that held. Tomorrow we could gap back down and leave an island top. Now I wonder if the momentum folks might take a look at that picture and pause .. at least for a few days?

Have a great evening. Check in tomorrow.

Financials continue to lag

2007-07-19T10:38:00.000-06:00

The financials, after hitting resistance yesterday, are selling off again today but that doesn't seem to be phasing the buyers elsewhere as they are seemingling convinced that there is no risk of contagion ... only problems for the banks that are actually holding the bad loans. I think the problem is much bigger than that but what we think doesn't matter until it does. For now, they continue to push and try to break topside once more. So far no dice though but they are still trying.

I've done very little today other than to add a little more gold early on swing point takeout candidates. That's the one area that we have scored in a larger way this year so milking that move as much as I can.

As I said earlier, if they can't take out the highs, look for them to sell back down. They've the rest of the day to try. MSFT and GOOG are the big earnings numbers tonight. GOOG is rather unpredicatable but they've been on quite a run again into earnings. MSFT is rather predicatable and typically sell down each time they report. They also have ran higher into earnings on expectations of an upside surprise.

Volume flows and internals still don't undermine higher prices

2007-07-19T09:08:00.000-06:00

If you look strictly at volume flows and market internals, you would think this market would be lower, not higher. That's not the case though. It's been, and continues to be, a narrow advance higher but yet it does go higher. That's the frustrating part of all of this. It goes higher even though it shouldn't. Until something changes in that equation it will continue to be frustrating I suspect since it's hard to buy a lot of anything unless you are seeing volume flows and internals that make sense.

Look at the precious metals markets for example. The volume flows show greater excitement when the stocks rise than when they fall. The internals are broad; across most stocks in the sectors. That's a bullish sector. Other than the oil services sector, we don't see that in the broad market. We see a hodge podge of activity across many sectors with seemingly little rhyme of reason. That's a hard environment to consistently make money in.

We got the early squeeze and now the back off. Next is the retry for the early highs. If it succeeds, then short covering. If it fails, then profit taking. That's the way it shapes up here. Note that Fed is speaking and at noon there's the release of the minute meetings which could cause a bump up or down.

Net Differentials say we can rally soon again

2007-07-19T05:22:00.000-06:00

I was looking at my oscillators last night and was kind of surprised to see just how fast they fell back to an oversold condition. Here's the 30 day oscillators for the NYSE and the NASDAQ . The 10 days differentials are even more striking as seen here . So what does it mean?

The most obvious thing it means is that the majority of the stocks have sold off (these are moving averages of the net difference between stocks going up and those going down) but it happened when the indexes ended up giving very little of their gains up. Call it a narrow advance and a broad pull back, but whatever you wish to call it, it speaks to the fact that odds are we will soon head back up again and with the momentum this market has had, that's not hard to believe. The melt up continues it appears ... at least for now and the futures are confirming that this morning as the are up a good piece. Dollar is mixed; bonds down almost half a point. Those bonds are right at first resistance again. Metals are up across the board although somewhat smallish. Gold bullion pushed right to its breakout point (break of a swing point) and looks to be holding there now. Wrote about it yesterday on Chart of the Day.

If there was a need to convert the remainder of the folks from fence sitting to outright bullishness its taking place here. We have a major break over what had been a consolidation that looked to have a good chance to be the beginning of the end. Instead, we push higher and take out those highs. We didn't do it on volume nor did we do it with great internals but we did do it. Now the follow through push is occurring. Yesterday's push lower for the majority of the day that ended with a big press into the close only convinces those who would doubt that there is no doubt ... buy, buy, buy! What a crazy market! For now you either have to stay out of the way or work the tape with these crazy folks with a ear or two close to the ground.

Nothing quite like a market that believes

2007-07-18T11:56:00.000-06:00

When things go awry, there's nothing quite like a market that believes as the believers provide entry after entry point on the way down. What I mean is that they come in buying thinking, OK, here's the turn and then they cough it back up again. Very much like those who believe in shorting a market that's going up and are forced time and again to cough those borrowed shares back up again.

This will be the last post for the day as I'm heading to the race tracks with the kids. Catch you tomorrow.

What a site to behold

2007-07-18T06:33:00.001-06:00

Gold breaking higher and the stocks walking up. Dollar crumbling further and even against the Yen and of course equities heading south. What a beautiful site for a trader. I can't get too euphoric here but I have to say it's a nice day for a trader who has reluctantly continued to disbelieve in this market. One day doesn't change things and indeed, given some more selling there will likely be some buyers lurking, but for now it's Katie bar the doors as this market is struggling mightly coming off the recent highs and I couldn't have asked for anything more.

Looking to see if they can get a little bounce here before the afternoon selling sets in. I've been selling the bounces all morning and buying back cheaper. Would like to see one more to sell into if the hopes of the bulls comes back into play once more today.

Yes Virginia, there is in inflation

2007-07-18T06:33:00.000-06:00

Getting kind of hard to sweep this inflation bug under the rug. Headline numbers a little worse than expected and although it continues to be underestimated, yes Virginia, there is inflation. In fact Virginia, it's going to be stagflation before you know it. Slower growth and higher inflation; a world where things become hard to navigate for the average Joe six-pack.

We have a confluence of issues coming to head here this morning. Almost everyone of the companies reporting earnings last night and this morning are down 2 or 3%. The dollar remains down after the data (not as bad though) and the Yen up. Gold is starting to creep higher. It's looking like a tough day to be long.

Where's your eyes?

2007-07-18T05:20:00.001-06:00

Where are you looking this morning to make the call? Are you focused on INTC and YHOO? Is it PFE that you should be staring out? How about taking the other side and examining the probable winners in the reporting mess like JPM, UTX and JCI?

No, that's not where I'm looking. I continue to be focused on the financials (BKX) and the dollar woes; especially the Yen as that's where the action is and will be the trigger when this all blows.

We have futures down sharply this morning but working their way higher as I write. The dollar is down once more and the Yen is working higher. Its on the cusp of breaking the latest down trend line (of 6+ months in length). A short covering rally will ensue when it does and the last time it did this was late Feb. You remember late Feb don't you. Wasn't pretty for a few days back then.

Bonds are trading smartly higher and precious metals up a bit in front of the CPI number. They have been hanging stubbornly up here and seemingly gathering strength for the next run. Grains all bounced overnight over the latest kill the long speculators move.

With Bernacular speak up this morning and a restless set of eyes and ears in the chambers we may see some more pointed questions finally. "If there's no inflation how come my constituents back home are scraping to get by?" would be my first one. I'm sure we'll get the mumbo jumbo obfuscation stuff though in response. Say and lot but make sure you say a little.

CPI could be an interesting bit of news. We see the Bear Sterns mess continuing to unfold like a bad dream. Worthless paper. There's a whole lot more where that came from.

All in all, with options expiry just around the corner, today could be a bust day as they take them down. I'm reading it that way early.

Complacency so thick you could cut it

2007-07-17T13:09:00.001-06:00

By the end of day today, the complacency was so thick you could virtually cut it with a knife. Market players had pretty much decided that it doesn't matter anymore; just buy and hold and buy more if it goes down. Well, looks like they'll have a chance to buy more because after hours it is going down. INTC takes a nice big write off, YHOO can't hit their numbers either and they sold down as well. CPI tomorrow, Bernacular speak, a host of other numbers in the morning, etc. Is this the death spiral? I doubt it. Could we get a serious retrace. Quite possibility. Will it be bought? Most likely because tops are very seldom inverted V's. Support is down at the breakout areas and you can bet the buyers will be sniffing around down there.

See you in the morning.

Market showing no fear

2007-07-17T13:09:00.000-06:00

If there is any concerns they were papered over with cheap puts as this market is steam rolling into tonights reports without a doubt that prices will be even higher tomorrow than today. The buyers are stepping up on light volume once more although at least today the internals are actually positive as well rather than outright 2:1 negative like yesterday. The Yen continues to grease the carry trade wheels and there seems to be more fear of missing the move than paying up. We'll see in about an hour whether the greed masters were right. I guess they could be wrong in the short term and still be right though as the second part of the equation has been that this market will bounce right back up no matter what the short term set back so again; there's no reason to fear buying ... just step up and take your plate.

A constant spin

2007-07-17T11:27:00.000-06:00

I want to go back for a minute to the PPI numbers this morning. The PPI rate comes in higher than expected on the core number, but lower overall. What do we hear in the press? PPI lower than expected. What do we hear when it's the opposite situation (higher overall, lower core). PPI lower than expected!

It's spin ... all spin. Talking about having your cake and eating it as well. I don't know enough about other countries measures of PPI but I see that elswhere inflation is higher than in the U.S. and that doesn't fly. If anything it has to be even higher here given the constant dollar devaluation that is occurring. Inflation is the notion that more dollars are chasing fewer goods and thus the price of those goods are bid higher in an attempt to equalize the equation. I see it in everything I buy. The only place I don't see inflation is in the numbers the government reports.

Anyway, the market continues to drift along; tech still strong as is big caps on the DJIA (although it's more narrow there now). Finanicals have come back in though as has oil services and that's pressuring the broader SPX.

Banking on technology

2007-07-17T09:12:00.001-06:00

Looks to me like the jovial crowd is banking on blowout technology earnings tonight as they are bidding up the likes of the chips and their equipment suppliers. If AMD and INTC are making money hand over fist then I guess the thinking is that they will spend it as well and thus the suppliers are fair game.

Oil services and financials are chipping in as well but what I am noticing is that those that have already reported are mostly selling off on news (look at KO for example) save some of the financials which were quite oversold coming into the earnings period. Something to keep your eye on.

Price points are higher again today as the dollar sinks against everything but the Yen. How worthless can the Yen get?

I'm still thinking that some selling in front of tonights earnings could still be in play.

Notable strength in the financials

2007-07-17T07:53:00.000-06:00

After underperforming for a couple months, financials are jumping on earnings reports today and that is supportive of the SPX. They have been a laggard there for a while now. Oil service stocks up again as well. These are good underpinnings for listed issues today and unless technology rocks the cart, the bulls may be able to push this further given this mornings earnings.

PPI showed further inflation concerns but like usual, that doesn't get much negative press but instead is spun in a good light. If this market continues to hold we should see the bulls press once more within the hour.

2007-07-17T05:08:00.000-06:00

Overseas markets rather weak overnight and that is weighing on futures as they have turned red as we slept. The meat of earnings starts this morning with some tech titans starting to report as well as more blue chips. Another buyout or two on the wires as the America on Sell theme continues given our worthless dollar. Dollar actually trying to weakly bounce this morning. Bonds are flat and precious metals are down in front of the PPI. Grains were also down again overnight.

Yesterday showed us again what this bull market is made of with the small caps down significantly along with negative breadth while the DJIA set new highs and the large indexes off slightly. It's all smoke and mirrors up here in my opinion. The smoke is the data sets we are continually fed like there's no inflation. The mirrors are the constant devaluation of the dollar that allows highers prices for equities that do nothing more than keep them the same or lose less in real value.

Earnings are likely to set the tone now with expectations high once more. If we are going to falter, we'll roll and there will be dipsters along the way as they have made some kind of living on their incessant dipping and that won't change until they are truly punished and their porridge taken away.

Two day pull backs are usually good buying opportunities in a strong up trending market. Same goes for a strongly trending down market. Today we may get the actual pull back in preparation for the run into options expiration. Oscillators support that notion. If you are willing to sit on a potentially losing intraday positions, selling any spike could prove fruitful for a quick counter trend trade. We are starting to see one as I write this morning as earnings trickle in.

More selling than buying yet prices advance

2007-07-16T12:57:00.000-06:00

Talk about the continuation of a pattern, today we have negative internals but higher prices. What else is new?

I'm just dinking along making smaller buys and sells as I navigate the mismash of activity. Tomorrow things will likely heat up with the PPI out before the bell along with earnings. Be prepared for volatility as we have an overbought market heading into the heart of earnings.

The deals keep trickling in

2007-07-16T11:09:00.000-06:00

McKesson to buy Awarix and IHOP taking down Applebees keeps Merger Monday's name in tack it seems. The biggest of the big are pushing forward as if there is no tomorrow as a weak dollar makes the repatriated gains even that much larger for the bottom line. Most of the market is flat but look at the DJIA ... it isn't even thinking about a break yet. Other than grains down limit and bonds bouncing hard again, everything else is pretty flat and quite. Big earnings start to flow tomorrow, with the Bernacular on tap for Wednesday and Thursday on the back of PPI and CPI, there doesn't seem to be moment of inaction the remainder of this week.

Overbought market in need of a rest

2007-07-16T08:10:00.000-06:00

All the short term indicators are indicating an imminent rest if not a pull back. Internals are negative this morning and not improving. On the other hand the latest buzz is a takeover of VZ that is putting juice in the DJIA and helping to hold things up. On the NASDAQ, it continues to be AAPL, RIMM and GOOG that powers it while most everything else continues to lag. I continue to look to add a little long on a 1 to 2 day pull back for a trade, but I'm not willing to pay for anything.

Dollar getting crushed

2007-07-16T04:59:00.000-06:00

The biggest story is not front page news anymore. The once might dollar conntinues to get crushed on a daily basis and now the Yen seems to be becoming a part of that crushing. When the wheels finally come off this roller coaster ride, the strength in the Yen and failed deals will finally mark the spot I suspect so it's something to keep your eye on.

In the meantime, it's earnings season, there's new highs and why worry? Oil at $74 per barrel. No problem. Most indexes at all time highs; what's new? A blow off move awaits us maybe?

I'm always suspicious of fast moves and false moves because they can collapse of their own weight. That realism always is in the back of my mind. The current fast move doesn't quite have that feeling just yet. There are some deals that are on the ropes for sure and that could be the early warning sign but it's way too early to bet against this market on an intermediate term time frame. A stab here and there with the idea of a quick trade maybe, but for the most part you just have ride the tide or stay out of the way for now as the momentum and lack of fear is feeding on itself.

Earnings season gets underway in earnest over the next 3 weeks. In that period of time, the vast majority of all stocks listed will report. The trick of parsing the news is partly what they report and prognosticate and a lot of how the stocks react as there are always expectations. The first reports were not good news but the general markets were bid up anyway. If that continues then more highs are to come. We'll just have to keep our eye on thing, stay mostly long and keep looking for signs of trouble.

Overseas markets were fairly flat and futures are shaping up the same here to start the day. The dollar is getting whacked and if it trades under 80, I suspect we'll finally here the media pick up on the thought that this might not be a good thing as it's been falling pretty fast. Bonds are up 5 ticks while oil is up another 20 cents and precious metals up as well. Grains were clocked over night as weather reports were favorable for the farmers. Not much in the way of deals on the Merger Monday which is a slight negative.

It's never easy it seems and the next few weeks likely will be the same. Looking for a pickup in volatility as a result with some sort of one or two day pull back to shake out some longs and allow more dipsters to do their thing.

Consolidating the gains

2007-07-13T11:40:00.000-06:00

You couldn't ask for more if you are bullish as they are not giving back anything from yesterday. That continues to show bullish behavior and though volume is back in the doldrums, the fact that they are holding price suggests a further extension to come in time. I've done very little although I was able to start a couple positions in 10 candidates that I had coming into the day.

Sitting here reflecting

2007-07-13T07:05:00.000-06:00

As I said yesterday and again this morning, the DJIA was what led the way yesterday. I surmised that it was the weaker dollar at work being that these are large cap multinationals and that they benefit greatly in that case. As I ponder this more, I wonder if it was just as much the fact that this index was a proxy to get everything going again. Think about it; a concentrated set of buying in an index that had been leading which consists of only 30 stocks with a technical pattern that was set up perfectly to storm higher. Once the resistance was taken out, new buyers would come in and whatever shorts stops lay on the other side would fuel further buying. Once the DJIA pushed higher, then you get the cascading effect where you really want it which was the SPX and on down the line. Don't know anything more than that. Just thinking.

After such a big romp, you have to expect a little let down and we may see that a bit today. It's Friday on a summer day and volume likely tapers off as the day wears on. I wouldn't chase things but am looking to buy a few stocks I've identified yesterday evening as having momentum and decent setups. Of course, my favorite group continues to be the metals and I'll pick away there as I have been for the past month as opportunities arise.

What's most amazing to me is that with such a mess brewing, how can the market simply look past it all and decide all is OK? Yes, the economy has derailed; I understand that but the debt levels are high, they are getting worse, not better as rates rise around the world and yet we trudge higher as if this was the begginning, not the end. Seems a little dangerous so although I maintain my thoughts that all is not well in Tinsel Town, for now the momentum is on their side once more.

Huge day higher yesterday

2007-07-13T05:34:00.000-06:00

Yesterday all index trends were reset to point higher with the exception of the Russell as the market answered the bell once more. I definitely had my doubts that it could do so, but once the DJIA got going on a weaker dollar and expectations of another good quarter of earnings, it simply never looked back after taking out resistance at 13700. What a run I must say.

The strength was the DJIA yesterday ... 30 stocks that reflect the global economy more than the domestic one; 30 stocks that reflect a deteriorating dollar which serves to boost their earnings. 30 stocks!

There will need to be a confirmation day in the next week or so; a day where we get larger volume on another push higher. As I look back at the final volume numbers this morning, they actually did pick up after my last post and came in decent rather than lighter. You would expect more on a breakout move, but we just aren't seeing those kinds of numbers overall. Point is, they stretched price higher and now they can take it further.

Are there problems still? No doubt. Is this where you short. Only if you like losing money. Look for these markets to work higher now although a pull back to the breakout point on the SPX and a drop of a 100 to 200 points on the DJIA would not be out of order in the coming week. With earning set to hit and with timing my oscillators pushing to the tops of the charts, that would make sense but that would simply set up the charge for the follow through move.

At this point, I have to accept the fact that we look to move higher and that I should look to add stocks as appropriate for a while. We have a good setting in the precious and industrial metals. Now I need to broaden to some other sectors and stocks in the coming days that show individual promise as the bull run looks to be extended for another month or so.

Overseas markets all shined as would be expected over night, the dollar is weaker once more, bonds are flat and our futures are up a tad. Oil and the metals are trading higher.

DJIA takes the rest of the market with it

2007-07-12T13:36:00.001-06:00

So, we have reversed full circle and now we are back to the 30 chieftans that sit on the DJIA. With the dollar being devalued minute by minute it seems that the large multinational equities couldn't be happier since, afterall, they get to repatriate their sales in cheaper dollars which boosts their results. Although there are some serious downside risks to a dollar that depreciates too fast and with the dollar approaching all time lows that could come back to haunt us, in the meantime it's "Party on Dude" as there's nothing but blue skies again.

I pull stakes and headed for the hills this morning when it became clear that today looked to be one of those trend days higher. I tried to pick at some long in the DJIA but it's hard to chase these things so I'll stick with the stuff I already have and look for an opportunity down the road. With earnings about to hit full stride it looks like we will have to see if AA, HD and the few others that have already reported were an abberation or the mainstream. So far the market is saying, no problem; bring it on.

I can't help but note that once more we are pushing highs with lighter volume. Volume preceeds price and without volume, there isn't conviction but as we have seen so many times, price is what controls your profits and losses short term and right now price continues to advance despite a lack of volume conviction.

Have a great one. Catch you tomorrow.

An illusion or the real deal?

2007-07-12T10:10:00.000-06:00

There's no way you can look at price here and say that this market isn't bullish. NASDAQ, DJIA, NDX all at new highs. SPX just crossed the swing point high from 3 days back as well. No argument there. In this time frame the bulls have the muscle and they are flexing it ... big time. It's a trend day up today and I don't see that turning unless some exogenous event occurs which is a long shot.

With this price push, that puts the SPX in play for a test of its highs now as only it and the Russell are lagging without higher highs. With the momentum behind the bulls backs once more, you would think that it would come soon. With earnings hitting in earnest next week, it's now looking like that may provide the catalyst. Unless this entire push is simply a fake out (a move that goes over the highs and then immediately comes back in) you have to think that's what's in store.

Yes, all the issues are still out there and at some point they will matter, but 800 pound gorilla called momentum is at work again and it's smashing everything that stands in its way. I'll fight it at another price and another time. Not here.

Stretching them higher but ...

2007-07-12T08:26:00.000-06:00

The oil sector and financials are strong this morning as the higher AL bid has the buzz going again. Note the NASDAQ though which is being pressured lower. Every time we get these pushes higher anymore, the sellers come in. This is very different than before because before the sellers would be overwhelmed as buying pressure would take us higher. It was almost as if there were no sellers which is why you would see higher prices on lower volume. Now you see the opposite, sellers come out and greet the excited buyers. Same story, different twist. That tells us the selling/distribution continues right into the latest frenzy.

Metals are running like crazy here with gold pushing +$9. The dollar is looking like its going to at least bounce here yet gold pushes higher. The normal relationships are skewed currently as the faster moves are causing traders to chase and dump which results in decisions that are not always in synch with longer term relationships. I know, I feel like one of them this morning.

Retails sales very sluggish

2007-07-12T06:02:00.000-06:00

As I glance at the retail sales numbers reported this morning, they are very sluggish with same store sales actually down across most shops. It will be interesting to see how the RTH trades with this backdrop today.

DNA reported rising sales. Its been in a funk for a while so again, another good measuring stick as is MOT which warned a little bit more than last time about lower sales.

I've started posting to the Chart of the Day again as an absence due to lack of time. Take a look.

On a hope and a prayer

2007-07-12T05:25:00.000-06:00

The markets bounced higher yesterday on, you guessed it, lower volume than the prior days selling. Seems the well trained dipsters were busy doing their buying since we all know that the market will go higher still. Seems the greater fool theory is alive and well as now the hope is that second quarter earnings will turned out to be better than expected and as a result they can sweep the rising rates interest rates around the world along with the crumbling dollar underneath the rug. Well, maybe that's a prayer instead.

The two to three week picture still looks like they could bounce these markets higher while the two to three day picture looks more like a further push down. Make no doubt about it, there are no real bears out there anymore as they have been so beaten down that they are totally unwilling to take a position and hold it. After all, can you blame them. Doing so would have caused you to double down into oblivion in this long drawn out slow push. The shorts that remain, in my opinion, or those that are simply buying puts to protect the longs that they wish to hold.

To start the day we see most overseas markets trading modestly higher, future are slightly higher as a result have been in the red until a bit ago. The dollar continues to lose ground now pushing under 81. Remember, it's only traded under 80 a couple of times since the fiat currency system was implemented. There are not technical guidelines if and win it breaks under 80 and holds.

Bond are slightly higher after getting slapped back down yesterday while oil is up; trading over $73. Precious and industrial metals are tagging higher prices again this morning after a small setback yesterday.

We have M&A on the news wires today with a bid by RTP topping the AA bid for AL. That likely sends AA higher since, if its rival is worth more, then by deduction it should be as well. It's interesting that we continue to see these headlines on higher and higher bids coming forth but we don't see the failures that are starting to creep into the system. Yesterday, Liz Rappaport detailed the financing struggles and failures that are starting to occur in the M&A craze. It's an eye opener. The $25B SLM deal is facing troubles as well as a host of others ones like the $29B deal for FDC, DG, IQW and SVM deals as well. As rates go up, these deals get harder and harder to make.

Reeling the big fish back in

2007-07-11T12:56:00.000-06:00

Market tried to gallop higher after a one day retreat but the dipsters look to be having a harder time of it here today than of late as the market is reeled back in due to more distribution occurring. Seems those who wish to sell have ample opportunity to do so as the number of willing buyers; those with hope of earnings being better than expected continue to pile into their favorite names. I sold a little more short into strength but in the current environment it pays to be a bit more cautious about where you enter as a bad entry almost guarantees a loss. Either you play smaller so your timing doesn't have to be perfect (add and subtract after the initial buy for example) or you stand to lose as the volatility bounces you around. Doesn't mean you have to be in cash since you can play smaller on an individual stock basis as long as those stocks don't all reside in the same sector. Another way to look at it is on different time frames. You have a core position that you are working on a 6 month time frame and then you step in and out with other positions on a shorter time frame as price permits.

With but an hour to go, it looks like we could finish pretty flat on the day. The dollar gained a bit as the day progressed and the Yen backed off some. Metals finished down and the floating of notes by NEM is hurting that stock on the day. Still likely a buy come off this news in a couple days though. Hope you had a great one. Catch you tomorrow.

Tentative buying

2007-07-11T09:11:00.000-06:00

Although tentative, things are a bit more calm after yesterday's little storm. Dipsters stepping back up to the plate so to speak. Technically we still have yet to see the proverbial nail in the coffin as NASDAQ has made new highs while the listed issues have languished. Although that's bearish divergence, divergence takes a while to resolve and unless we get a big break here that makes the NASDAQ bearish short term also and allows the SPX to trade under its recent lows, its a mixed market.

Although I'm concerned about the outlook, this long and slow distribution process has reinforced the view that things simply don't happen overnight (for the most part) and a patient and methodical approach is needed to profit. I would expect some more selling short term but I also expect that hope is still out there for tech earnings next week and that will limit the downside thrust if it occurs.

Wall Street ... meet Main Street

2007-07-11T05:05:00.000-06:00

They say that professors live in ivory towers. Well, there are times where you can say the same for Wall Street and for the past 9 months that has been the case. Wall Street needs to come down and meet main street and to some extent we are seeing that again. Each time the Street wakes up, we see heavier selling come in as the rats scurry ... but then we watch in amazement as the ivory tower goes right back up; the sellers disappear and prices are once more extended to the upside. Could it be that the larger operators are just feeding the fish? Might it be that the ivory tower is nothing more than fish food?

Folks, if you own many million shares that you have accumulate at price points that were some 50% lower and it took you a good many months to do so when volume was more pronounced, do you think it only takes a few days to move them back out to the public? Isn't it a bit more logical to consider that it would take weeks or months to do so? It's call distribution and it comes at the end of bull moves. It's where, as Livermore has described, the large operators manipulate the stocks to entice buyers to bite while they sell.

Futures were up overnight but around a half hour ago the sellers work up and went to work and now we are viewing red. Asia was down, Europe is trading down, Canada raised rates yesterday and the dollar is getting wacked again. The dollar is the wildcard here as I remarked in a comment on these pages yesterday. A fast destruction of the dollar is a dislocation in the market. The surge in the Yen is a big part of that. The Yen is threatening to finally appreciate. Imagine that. Look back at your charts. The last time it happened (threatened the down trend line) was a big surge at the end of February. Equity markets didn't exactly applaud the move if you remember.

Bonds are up on a flight to safety. I took what little profits I could out of those yesterday assuming we would see the flight here. They'll simply give us another entry point probably. The Fed is stuck between a rock and a hard place. I've said it many times already and I'll repeat once more. You have one life preserver. The dollar is sinking into oblivion. Do you throw it the rope? Do you raise interest rates and kill the economy to save the dollar or do you let the dollar die and keep rates at the same price point or, even worse, do you lower rates to stimulate the economy? You can think through the implications. The only way to magically produce to life preservers is to get the rest of the world to work with you to lower their rates so that in a relative sense your dollar becomes more valueable. Since currencies are just a reflection of relative worth, that would work. Oops. Small problem there. As the leader of the free world and with our arrogant sense of self worth we have pretty much alienated the rest of the world. Why would they seek to help the U.S. in such an endeavor. Ain't going to happen in this administration! Take your pick; more inflation and a weaker dollar or a stronger dollar and huge pressure on the economy. Talk about painted into a square.

Oil is slight down; copper flat and the precious metals trading higher again. They did take out the first swing point yesterday by the way. It's looking like we are going to see further pressure to start the day and unless the dollar finds some footing soon, it's going the slide is going to turn even uglier before the day is done.

The pattern continues

2007-07-10T16:00:00.000-06:00

If you ask most folks, "When you think about the market, what pattern have you seen repeated over and over the past few months", the answer you'll get is that the bulls buy no matter what. That's the flip side of the pattern I see though. What I see is that the bulls buy on days where no ones buying and they mark up the prices as a result. What I see is that every time we get a hard day of selling, volume inevitably expands and we end up taking a huge bite out of the gains of late. What I see is a pattern of continued distribution to all those bulls that buy no matter what. Hope you have enough sense about you to protect yourself if you are one of those buying bulls that buys no matter what because at some point in the not too distant future, the market isn't going to go back up no matter what.

We saw the dollar crushed again today and a flight to quality in the bond markets. Like the big push back in February in bonds, we are seeing a collapsing dollar again and it threatens to run this market over again unless it finds some legs soon. This time it is collapsing from a level that is historic because we have never traded much lower than we are now. If the dollar goes the way of the Yen, oh my look out below.

The financials are taking it on the chin and they are doing so in a big way. As they head south it gets harder and harder to keep the bullish argument alive. Sure, we could bounce back yet again. What else would be new? That's the modus operandi isn't it? Struggle higher on light volume then swat the market back down again.

It was a busy day today as I kept moving around all day in and out of trades on the indexes. I'll be looking for some further damage the next couple days and as we pull back into the breakout area on the NASDAQ, we'll see where we find the listed issues. If they are at lower lows, I'm not sure the NASDAQ can save them this time. If my friends on the boards are right though, the NASDAQ strength combined with the huge short interest may buy yet another reprieve. If so, good as we can eek some more gains out of gold shares in the meantime and set up again for the bigger fall that's coming.

Have a great one. See you tomorrow.

Rotten to the core

2007-07-10T12:15:00.000-06:00

So one good AAPL doesn't make up for many many rotten ones after all. We are getting some better selling now as the Bernacular speak radiates across the airwaves. Note, a pull back of another 30 points or so in the NASDAQ is reasonable so we could see an even lower low on the SPX before its all said and done. Just depends on how bad they want to sell those financials because thats where the real rot lies right now. If they sell them down far enough, then we can see them lift into their earnings reports which is what they look to be doing now (and have been doing for a few weeks already).

I continue to work mostly my index trades and have been lightening up a bit on my DBA ETF long into strength thinking that we could see another retrace there soon. So much depends on what happens to the dollar near term as its driving dislocations everywhere now.

An APPL a day keeps the sellers away

2007-07-10T10:27:00.000-06:00

It's getting mighty lonely at the top. Today its pretty much AAPL keeping the NDX afloat and with that heavy lifting, a broader sell off is stayed. What could have been very ugly is just unattractive as there's a little bleed but nothing big ... not yet at least. We are defintely seeing some profit taking if nothing else and unless someone else steps up to the plate here, I'm not sure how AAPL holds everything up into the close but then again, its about 10% of the NDX at this point so it does have a good amount of muscle.

Internals are terrible, volume heavier, commodities picking up the pace in price and the dollar getting racked again. Whoever is buying whatever they are buying they are doing so with knowledge that I'm missing; that's for sure. I don't see anything good about the way things are shaping up here short term. Looks like we are both due and about to get a pull back and we'll have to see how it unfolds to understand what its implications are.

First sign of weakness bought

2007-07-10T08:17:00.000-06:00

Buyers chomping at the bit here as the first sign of weakness is bought; particularly in the NASDAQ where AAPL pushes to a new high. Three to one negative internals and volume, although heavier than that of late is not historially heavy yet. I've been repositioned a bit into the weakness this morning on the index shorts as I expect they would buy the down opening and sure enough they did. The question is do we have something a bit larger happening? I suspect the NASDAQ will trade back to its breakout point before the small correction is done and then make another run for highs. The issue will be what happens to the DJIA and SPX in the interim. The financials are extremely heavy and they continue to take on water here. A few more holes for the ship of holes it appears but so far, most of those leaks are not causing the ship to sink. Rough waters? Yes. Enough to sink the ship ... it remains to be seen.

Earnings flight

2007-07-10T05:12:00.000-06:00

The initial reaction to earnings is not exactly what you would want as a bull as the bulls have grown wings and are in full flight. Futures lower and continuing to drop as the morning rolls around. Retails sales figures being reported are showing a strain at the checkout counter as the invisible inflation continues to take its toll on the nations pocketbooks. AA showed that in its report last night as the cost of doing business ate away at the profits. SHLD shows weaker sales this morning as does Kmart. If the consumer is tapped out or getting there, its one more brick in a wall of worry for the bulls to climb. Enough bricks and the wall becomes unscalable.

Asian markets settled mixed after hitting new record highs while European markets are trading lower. Oil and metals are basically flat with bonds trading higher. We'll have to see if bonds are putting in a higher bottom here or just dead cat bouncing before resuming there push to new lows. The dollar is generally weaker once more.

It's not a pretty scene technically as this market has risen on the lowest of volume pushes right up until the day that earnings season kicks off. The first quarter earnings surprised mainly because there was a notable absences of worry about second quarter earnings. The concern I have expressed here repeatedly is what happens when the rosy little picture of future earnings becomes faded. With the CDO market in disarray, with a consumer that is not spending as much either because they are concerned or because they simply can't and with a market that seems priced not only for perfection now but in the future, it could become a slipper slope. Watch to see how volume shapes up today if we do indeed continue to bleed red as the day develops. It continues to be the biggest tell out there along with the financials which are threatening to break down further.

Drifting in front of earnings

2007-07-09T12:24:00.000-06:00

We have drifted today as the earnings loom. I ran across a piece a bit on CBSMarketWatch which stated that "Seven out of 10 of the biggest leveraged buyouts have yet to be financed in debt markets as concern grows over the weakening of financing conditions" which is very interesting as the last shoe to drop, in my opinion, is the financing of deals. When that begins to fail, we will have what we have been waiting for. As for today, it's a wash it seems as they look to close near flat into the bell. I've a couple meetings to scoot to so see you in the morning.

An air of confident arrogance

2007-07-09T10:17:00.000-06:00

It's interesting that this market has developed to the point where there is seemingly a confident air of arrogance on the part of the bullish forces out there. It's almost reached the point why fear a drop as we know it will come right back.

Folks, when things are so obvious then they are in fact more clouded. There is no free lunch on Wall Street. One way or the other you pay if you are so cocky as to know. Pay day may not come for a while, but cocky attitudes tend to get, shall we say, slapped up a bit when they get overly boisterous.

We have light volume again and we are seeing buyers show up on every little dip still. Each day I look to see where I can put on a bit more short exposure in the broad indexes and if my timing is good, I then look to cover that exposure with a tight stop opening up the possibility for a good payday if and when the cocky ones get their due. Today is no different. Without volume though, odds are they will take out my stops and I'll have to repeat the process tomorrow.

Elsewhere, I'm reluctant to take individual stock exposure in most places in front of earnings. I'd rather wait and look to individual names after they report. The only exception is my positions in the metals. More of the same I'm afraid.

Gold Glitters

2007-07-09T07:05:00.000-06:00

Gold is having a breakout type move this morning. After languishing for months, we started moving back into it about 3 weeks ago and now the forces are taking shape. There's been a lot of talk about it over on the boards and now we see that talk turning into actuality. Folks, inflation is out there and it's worse than reported. You know it as well as I do. Add to that the problem that the Fed and Treasury department have a real dilemma on their hands. Do they raise rates to ostensibly fight inflation and thus kill the economy or do they debase the dollar further even when it's sitting on cusp of all time lows to keep rates lows? Neither option is palatable. I believe what you will see is that they will defend the dollar in some form of fashion as best they can but in the end, it won't matter. This liquidity train has already carried too far. Having your cake and eating it too is unlikely to work longer term. Like everything, it's a matter of time as they say.

Get ready to rumble

2007-07-09T05:34:00.000-06:00

Earnings seasons is upon us once more with AA reporting after the bell and heavyweight DNA on the 11th. It's been a toxic ride higher in these markets with a steady push higher by technology and oil. What doesn't kill you tends to make you stronger and that appears to be what's happening here.

Overseas markets where higher, the dollar weaker and metals up across the board as a result in the early going. Oil is trading down half a dollar and bonds flat although they are flirting with rate levels that continues to pressure the financials.

We are at another juncture here where the two sides are facing each other across a narrow strip of land; having dug in their heels and being unwilling to back down. That is how battles develop. In particular, the listed issues indexes have moved back near their highs while the OTC have already overran the other side. Such manuevering usually leads to the laggard coming around and joining the leaders. If so, then a breakout on the DJIA and SPX are to follow. New highs there would signal another comeback of reasonably epic proportions as a tired market facing headwinds of tremendous strength somehow struggles all the way back once more on feeble volume and declining internals. Not a textbook advance by any stretch of the imagination but given what we have seen over the past 9 months, I guess we would have to concede that it's appropriate.

The oscillators are pushing back to the point where the likelihood of another short term correction is higher so we may see some profit taking this week in advance of the deluge of earnings that start next.

Stretched tigher than a kite

2007-07-06T12:27:00.000-06:00

Man on man ... momentum is always a beast to behold isn't it. When they ball gets rolling and its heading down the hill, it gets harder and harder to stop it let alone reverse its course. The early weakness was bought quickly as there are clearly too many folks thinking they are missing the next run. If you add in ACe's and Pauls thoughts (see the message boards) that there are too many shorts as well, then I guess we can explain the slow wall of worry climb we see here.

We have higher interest rates, some weakness in what were the leaders all week and a push to secondary names as the intraday rally broadens and the internals improve. Doesn't change the larger picture of a market going up on absolutely no volume, but stuff like that doesn't matter as long as the amount to be sold is less than that bought as price outflanks volume in the short run. With merger Monday in front of us, I'm not looking for it to subside into the bell.

I'll be calling it day here with this post. Yesterday's close above resistance on the SPX indeed held so it looks like they are going to attack those highs once more now.

Buyers more deliberate

2007-07-06T09:06:00.001-06:00

The buying has become more deliberate today but the buying pressure persists nonetheless. We seem to be in that state where all news is good news again as the market wobbles towards earnings season on a high note. There is persistent buying out there. Once again the internals are weak, volume is light but the buyers still outnumber the sellers and that in and of itself creates more buying.

Gold equities have taken off like a rocket ship today with many swing points being taken down. NEM seems to have excited that group.

Bonds under pressure

2007-07-06T06:33:00.000-06:00

Bonds are selling off again after jobs numbers release. They don't like the inflation picture it seems. That's pulling the equity futures down as well.

Coming to a head

2007-07-06T05:08:00.000-06:00

The relentless push higher by a narrow group of big cap Nasdaq stocks is setting up a decision point and that point will soon be decided. The question is, "Is the reasonably narrow advance on light volume going to pull the rest of the market higher to breakout levels or is it likely to turn and give it up on price and volume once more?" At this point, it is starting to look like the former but we are at that critical stage where the decision will be made so why assume but rather wait and see? Even if you want to take a position, it's always the same exercise. What's your time? What's your entry price, your reward and your stop loss in case you are wrong? Given those factors you can make a decision if you have a leaning.

Payroll number up this morning and though they continue to be important the main drivers of this market now are the continued liquidity flows and crunch and the upcoming earnings season. With the push higher in front of earnings, it makes the bar higher for companies in order to lift share prices further. On the liquidity front, the latest round of M&A is relieving some of the fears which has supported prices this week in addition to the more seasonal support of the 4th.

Since I don't publish my numbers anymore nor my stance, let me say that at the time of this writing, I remain heavily long the gold sector with indexes shorts as well. One is a drag, the other boon currently. A number of the gold stocks are taking out their swing points now which is a very good sign despite gold languishing in the same area. NEM announced last night that they have completely removed their forward sales hedge which has put demand into the market. We'll see how they act today on the news. If that stock has really turned the corner it should see its share price move higher and take out its swing point on volume.

Elsewhere we have futures up a bit, markets around the globe trading mostly higher, the dollar is a bit stronger while bonds are flat. Metals are down a bit. We'll likely see a pop one way or the other off the jobs number but they have stretched this market quite a ways using the NDX as the tool of choice. GOOG and RIMM are showing signs of age while AAPL just keeps chugging along. We'll see if the bad press on the battery affects AAPL today. Mo-mo is in the store in that sector and we know how unruly that can be so I wouldn't assume anything, up or down there.

Negative internals yet we drive higher

2007-07-05T12:25:00.000-06:00

With the NDX being an index that is weighted you can get four or five big names driving the index higher with the majority of the stocks in the index losing ground. That's what we are seeing here today as AAPL, GOOG and RIMM all continue to attract buyers but that buying doesn't broaden. How long can it go on. Well, we saw with the DJIA that it went on for many weeks so don't believe it has to stop immediately. Will it do so; anyone's guess! Will it drag everything else higher? Yes, if it goes on long enough unfortunately and so it goes ...

We are seeing bond dropping a full point today and that's big. So in the face of rising rates, a thin advance continues and does so on holiday light volume. Not what I would be buying into but momentum is momentum and mo-mo traders will take it any way they get it!

Same story; different index

2007-07-05T08:14:00.000-06:00

For the better part of the first half of this year, the market moved higher on the back of an advance in the listed issues, in particular a narrow advance in large cap shares. The last couple weeks we have seen that advance now being led by a similar advance in the OTC market now and again on a reasonably narrow advance in the mo-mo stocks. How long can it go ... well longer than you expect is the simple answer. When momentum is working, they push them and push them and push them until they no new pushers show up. That's what we see in RIMM, in AAPL, in GOOG right now. This momentum is carrying and holding the rest of the market up ... just like Paul has argued over on the boards.

Elsewhere, the dollar has reversed and found strength despite the rise in rates in the UK. That is pressuring the metals. So far today looks just like Monday and Tuesday. The traders are pressing their bets on the upside and unwilling to back down.

Financial problems being ignored

2007-07-05T05:19:00.000-06:00

To look at what's happening in the economy and to say there are no financial strains here and abroad is to ignore the obvious. Contractions and expansions in the economy are largely tied to credit expansion and contraction and contraction is what's starting to happen. The orgy of mergers in the second quarter to me appears to be a last gasp, get it why you can push. Will there be more; sure. Will it be as much as before; doubt it. There's definitely activity still though as BX (which happens to still be trading below its offering price) moves to take over Hilton Hotels now.

On the subject, ACe has weighed in saying technical issues but sentiment not right. Over on the boards there's a discussion in the same vein with pros and cons being noted. All good points.

Looking at the charts, NASDAQ is pressing higher on the backs of its darlings RIMM, APPL and GOOG mainly but with the $SOX trying to retest it's breakout are as well. Second quarter earnings are but a week away and no one is fessing up to problems which is bullish. It could very well be that we see another push higher still. With the SPX recapturing ground that I thought would be difficult on Tuesday's shortening trading day and with light volume probably continuing through Monday of next week, what's to stop the festivities?

It's almost always all about timing. Riding the crest of the wave always looks simple but most fall off rather than complete the ride for one reason or another. I'm looking for early pressure from buyers and then we'll have to see how the test of the lows go as I believe today that will occur rather than the slow melt up. It's more likely to be slow and more choppy now that the bigger gains have already occurred. Overseas markets mostly weaker, futures are flat. Bonds are trading down 10 ticks and the dollar is weaker. The dollar is falling fast here and that is pressuring rates higher again. As for the metals, it helps and they are trading higher across the board. Oil also higher.

Buyers still out there

2007-07-03T09:40:00.000-06:00

Holiday festivities continue as the buyers do their thing despite the bonds begin to roll again. Today is a lot flatter than yesterday as the internals are much more in balance. AAPL is driving the NDX higher while the financials were supporting the listed issues earlier although that has cooled. Just saw some numbers that M&A activity was up 55% over last year so far ... to the tune of trillions of dollars. I can't even fathom numbers that large.

Next week is the official kick off to earnings season and the real issue will be whether CDO exposure starts to kick in on the bottom line. If it does begin to show up, the exposure risk will really begin to be apparent and it will have an effect. Until then, it's buyer beware although beware simply means to buy more short term it seems.

I wish I could kick this notion of problems just around the corner as I've been so contrained as a result. I've got to take a vacation and turn off the computers soon if this market doesn't start to see things my way because I'm slowly giving back everything I've earned for the year.

Opinions are worth a dime a dozen

2007-07-03T04:28:00.001-06:00

There is definitely a difference of opinion as to where this market is heads. I see it with ACe's observations and with Paul's over on the boards and I've heard it in emails and I see it in the charts. Why is this any different than what we saw as the low in early March?

I would have to tell you that the difference is in the financials. They are below their moving averages; all of them and they are not participating at all in this move back up. They are a tell. Could they be wrong right now and ignite a further rally once they join? Sure, anything is possible.

The gauntlet is laid here. The folks buying this market now clearly believe this is another March 2007 and that they need to buy before it's too late. Other believe it's not. There's a body of evidence in the way this market has traded in terms of how it advances and declines that suggests we are not at the beginning of another leg up. There are literally trillions of dollars tied to these collateralized debt obligations (CDOs) that have to be marked down in value now that a market price has been established rather than a backroom, pull a number out of the air exercise. Whether that is reflected in the balanced sheets of those who hold that debt this quarter or next is the question. The establishment of a benchmark price came very late in the quarter so its up in the air as to when it will show.

Time, volume and price are what drive markets. Currently price is all we see. Volume and time are not on the side of another advance of substance. It's just an opinion, and opinions are a dime a dozen. Take it for what its worth.

As for today, it's a jovial time again in front of the holiday, with first of month money and low volume so prices get pushed around. The dollar was slammed pretty hard yesterday and is bounce a bit this morning. Bonds are down after a rally yesterday as well. Note that they are pushing back to a serious resistance zone and this notion that yields are going to drop back to where they used to be seems like just another fantasy on the Street. Metals and oils are down a tad. Overseas markets were all stronger. Resistance of significance is about 3 to 4 points over yesterday's close on the SPX and a likewise percentage for the DJIA. If they hurdle those areas and close above them, that sets up a good chance that we would go all the way back up to the highs on the listed issues so we are at a critical juncture once more.

Closing at the highs

2007-07-02T15:26:00.000-06:00

Well, they didn't reel them back in today after all. Tomorrow is a holiday shortened trade and it's likely to have a positive bias if like most holiday season trades. Although I continue to dislike the tape its pretty hard to ignore the rise by the NASDAQ. As ACe points out, the short side is a crowded trade if you look at the numbers he's looking at.

I continue to bide my time and wait mostly. I had a bad 2nd quarter and the 3rd quarter doesn't feel any better yet. Of course, we're only a day into it so I won't jump to conclusions but we will probably know pretty soon (read a week or two at most) as to whether this consolidation is going to turn into a downdraft of larger proportions or whether it was simply another rest before the next move higher.

A thinly traded advance

2007-07-02T08:29:00.000-06:00

So they jump the gun, buy the opening and surge to new highs on the NASDAQ. Sorry folks, but it's just a low volume push out of the gate on the third quarter and nothing more. Look for them to reel this move back in again. This is not the time to trust a breakout to hold.

Holiday trading to contain bullish bias?

2007-07-02T06:32:00.000-06:00

Usually holiday trading contains a bullish bias and there might be the same effect this week. I see a number of deals on the table so that nukes the idea that the rise in rates killed deals ... at least so far. The latest high profile terror incident hasn't caused any major drops in world equity markets although Europe is trading weaker. US futures are higher. AAPL release the Iphone and the public media event there is finally over. Gold and metals in general are trading higher and threatening to take out their recent down trend lines while the dollar trades weaker. Oil is flat as are bonds. Grains were up overnight.

With a full day today and only a half day tomorrow before Wednesday 4th celebration, there's likely to be less volume and more volatility; if that's possible. We have seen quite a bit more volatility of late. There's quite a bit of economic data on the slate this week and earnings kick off next week. Given all of this, it would seem that fading the jagged moves might be the move as we bounce around in some extended trading range on the intraday charts while passing time here for the bigger news and larger volumes that are another week out. While the holiday trading may not be overly bullish like usual, I don't see it overly bearish just yet either.

Drinking from a fire hydrant

2007-06-29T16:15:00.000-06:00

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

2007-06-29T11:37:00.000-06:00

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?

2007-06-29T05:32:00.000-06:00

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

2007-06-28T16:44:00.000-06:00

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

2007-06-28T12:04:00.000-06:00

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

2007-06-28T09:14:00.000-06:00

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!

2007-06-28T05:18:00.000-06:00

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.