August 12, 2008

BACK FROM DUTY

Finally, done withe Grand Jury Service, 4 weeks of interesting look into the legal system.

While gone, the market made the expected bottom, the once again reliable McClellan Summation Index. Energy and commodities have gone into bear market declines (20% drops).

It will take a few days to reacquaint. I am looking at the battered energy sector for counter-trend trading opportunity, but it remains a big if when you get a negative “tell” like FLUOR (FLR) which reports a beat, raises 2008 est., opens higher of 4 points and now trades down at recovery lows down almost 13 points from the days high. This is not how to find a bottom in a beaten sector.

As Macke on Fast Money says, buy the dips sell the rips. Then energy which is oversold should be getting close to a counter rally. Swing trading principals would dictate looking for a close above recent 2-day inter-day high to take a shot on the long side. Watch the charts. FOR TRADERS EYES ONLY!!

August 6, 2008

THE LOST MONTH

Only 3 days left on my Grand Jury Service.

This is how I spent my summer.

Not following market at all. CNBC has become hard to watch. Fast Money has become a comedy hour, with the once insightful Jeff Macke reduced to funny one liners.

At least I will save on my electric bill by watching less.

July 21, 2008

EARNINGS PICTURE — NOT PRETTY

Aftermarket, SNDK;AAPL;MRK;AXP all down. Problem — 2H:08 guidance not up to snuff.

I have been commenting that the second half of 08 in earnings is vastly overstated. This is going to be tough. If we were not oversold on an intermediate-term picture, I would be really scared.

On price, we may retreat to 1180-1200 SPX. We will stay oversold and remain committed to a compicated bottoming process before a trend develops, not just a volatioity based VIX trade.

FOR TRADERS EYES ONLY — Be quick and buy weakness in the few stocks that have constructive charts. I need to see a cross of the 20-EMA by the NYSI before I am convinced a trend trade is in effect. We do not have that now.

July 20, 2008

TECHNICAL CONSIDERATION

With the NYSE McClellan Summation Index (NYSI)finally turning up, after a prolonged almost 3 month decline, I cannot be short-term bearish. Putting aside all the bad fundamentals and the upcoming (IMHO) global slowdown, which is what I believe the commodity and energy downturn foreshadows, I will play the long side for now.

For a couple of weeks, I have highlighted my favorite technical indicator (NYSI), looking for a bottom. It has now turned up, and further confirmation would be a cross through the 20-EMA. This would identify that a trend has started, rather than a bottom.

SPX 1250 (at time of trend change)

July 18, 2008

QUICK RALLY

The tendency would be to sell into this rally and just say that downward we go again. Howard Lindzon makes a good point in looking for “tells” on the market. In this case, it is the financials and looking technically to see if they hold above previous bottoms or some gap zone.

The SPX 1200-1225 provided a trading bottom. The VIX got above 30. the McClellan Summation Index (NYSI) got as low -1200, not seen since 1998.

The energy long/financial short trade has blown up recently. Is it a trend change? We need a crude oil close below $120/barrel to start to make the case for a trend change. Commodity sector continues lower, with steel, ag leading the way. By the way, the Brazil market (heavily commodity) that many loved a few short weeks ago has now declined over 20% in that period.

Next week should pull back amid profit taking. If the NYSI has reached bottom at these oversold levels, a pullback and higher high should come in the next couple of weeks.

July 14, 2008

BINGO!

Today, I started a stint of jury duty, that lasts for 4 weeks. Out of the jury pool of over 200 people, 69 were needed. I felt safe that I was able to skate by and serve a couple of months down the road. As the names were read, i felt more comfortable about my chances. Down to #69 and here comes the ball out of the bingo machine. My name!!

With the commute to the court location, my day is shot.

See you in mid-August. Hope the market holds up. With the shape of the financial sector, the fear is building. Scary thing is we cannot even get an up day. Financial fear is now obvious, but the tech sector charts are not looking good either.

Oversold and overwrought.

July 13, 2008
CANCER SUCKS PART 2. Tony Snow.

CANCER SUCKS PART 2. Tony Snow.

July 12, 2008
CANCER SUCKS. A GREAT YANKEE IS GONE. GOODBYE BOBBY!

CANCER SUCKS. A GREAT YANKEE IS GONE. GOODBYE BOBBY!

July 10, 2008

MEDIA, PLEASE SIMMER DOWN NOW!

CNBC has formed too many panels and guests all trying to mold the opinion that we are near a bottom. All day long, especially the 4 pm hour led by DK and his non-factual reasons for being an optimist.

I believe that is why the VIX has not spiked. Too much chatter about being at a bottom, just because we have hit bear market (20% declines). Please be more objective and present both sides of the story and when you form your top notch “advisory panel discussion (led by journalists and editors)”, throw in some knowledge-based money manager who have performed well this year.

Then, again, why should they participate in such a foolish leadership panel.

Jeff Saut, a brilliant strategist at Raymond James, is looking for a trading bottom. My commentary remains consistent with his thoughts.

July 8, 2008

OSCILLATOR UPDATE

NYSE McClellan Summation Index (Ratio Adjusted)  -880

SPX 1252

VIX please spike!!

If there is indeed a price break in energy, AG, commodities like we have seen in the past few days, where is the money going? I do not see any rotation or money going to other sectors yet. Certainly, not in the financials.

If this market does turn for a trading rally, watch the your sectors closely. That is a clue for an up move.

Good news today — Bernanke gives good speech on extending credit facilitiy beyond his original time frame. This is a market positive.

I do not, however, look for any help from earnings to power the market. Rotation and money flow from energy, AG should be enough to pull out a long trade.

July 6, 2008

ANOTHER SCARY HEADLINE

Geneva - The global financial crisis could lead to losses of 1,600 billion dollars for financial institutes, according a report in the Swiss Sunday newspaper SonntagsZeitung. It quoted a confidential study by the hedge fund Bridgewater Associates as saying losses for banks holding risky assets could be four times greater than the 400 billion dollars previously estimated.

The hedge fund expressed doubts that the financial institutes would be able to drum up enough funds to cover the losses, something it said could exacerbate the crisis.  (SonntagsZeitung)

http://www.earthtimes.org/articles/show/217143,financial-market-losses-could-top-1600-billion-dollars-report.html

As I said in prevous posts,

It is time to get some religion.

OSCILLATOR UPDATE

NYSE McClellan Summation Index (Ratio Adjusted)  -800

SPX 1262

Now we  look for a tradeable rally, within a new bear market trading range.

Bottom —?

Top  —— 1350

July 2, 2008

BRAZIL

A few weeks ago, Brazil upgraded to investment grade as a country, years after severe currency and debt problems.

Result — Brazil market has dropped 16% since 5/20. Sometimes the action is already built into price.

The BRIC countries (Brazil, Russia, India, China) markets that everyone loved on a few short months ago have dropped significantly from their highs.

Answer — Global economic concerns seeping from the US to the rest of the world. There is no solace when Mr. Paulson says this is the worst crisis since the Great Depression of the 1930’s. That is a big and scary statement. It implies that previous economic slowdowns and/or financial crisis were one off events within a strong financial system. This statement implies a secular systemic failure that needs time and pain to overcome.

Time to get some religion.

OSCILLATOR UPDATE

NYSE McClellan Summation Index (Ratio Adjusted)  -650

We are in the zone of a bottoming area for the above oscillator.

Past bottoms in bear markets are more complicated than in bull markets. The bottoming process is usually not a “V” type rally, but some rally failures, re-tests where internals improve and an eventual sustained rally. Look for down days to enter the markets. We should start to see more stocks and sectors start to participate, other than the same energy, ag, commodity sector.

Mea Culpa: The market decline back to lows that I have referenced for the second half of the year due to the realization of overstated earnings occurred earlier than I thought. I did not model for a 40% increase in crude oil and the accompanying shock to the economy to occur that fast. The macro-call was correct, the timing somewhat off. Now we enter the next phase, as outlined above; looking for a tradeable rally.

June 30, 2008

OSCILLATOR UPDATE

NYSE McClellan Summation Index (Ratio Adjusted)  -588

Getting within range of -600 to -800 needed to consider a lower-risk entry point. New quarter and new opportunity; or new quarter and same problems. Your call!