Wednesday, August 31, 2011

On the Shelf

You all are going to love this. My new fall project at work is to be trained on, coordinate installation, and be in charge of......a huge robotic system! You cannot make this stuff up. How will I cope? I feel I am betraying my own kind. Going to be a long Autumn.

On the Shelf
August will be gone and I don't think any market players are going to miss it much. It's been a wild mess, and plenty of hits taken and given.

There was more FED hints today, more volatility, more confusion. More of the same.

While I have not placed a trade since the beginning of the month (two losers YMG and OCZ) I had planned to try GME and NI this week. Both would have been ok winners, but various things kept me out of the market. The most important one was that I felt I would really have to keep an eye on any position very close, and that is not always possible with a real job. As is, August likely would have carved me up anyway so maybe it was for the best.

Some important economic numbers are set for tomorrow and Friday (ISM and Jobs number) and then it is the long weekend. Been on the shelf for August, why not a couple days in September too?

Vote for Best Sci-Fi TV Theme Song
Go and vote at io9 tonight:
Vote for the greatest science fiction theme song of all time
I had to go Knight Rider!

Hayabusa Project a Wild Success
Japan launched a space probe in 2003 that was tasked with returning a sample to earth of an asteroid. The return capsule landed in June and information is now just coming out. Very exciting project, read about it here:

Have a good night.

Tuesday, August 30, 2011

More Than Two Shakes and You are Playing with It

Just swamped at work as of late. Just have not been able to get the time to do much else during the day. I am going to need this long weekend for sure.

More Than Two Shakes and You are Playing with It
We have gone from headlines on Friday screaming "FED signals no more QE" to having it all but guaranteed by today. That was fast.

One of the three dissenters on the last FED meeting was Minneapolis Fed's Kocherlakota. Not anymore via Zero Hedge:
Minneapolis Fed's Kocherlakota Down, Two Dissenters To Go Until QE3

On CNBC today FED member Charles Evans was even more upfront about what he thinks the FED needs to do:
Fed’s Evans backs more easing

So QE1 sort of worked, QE2 was a total failure so I guess going to the well again makes sense right? My dad always said "More than two shakes and you are playing with it". The FED seems intent of playing with their monetary tools again.

Looking around, it is not like the commodity complex has been crushed price wise. What are you paying for gas? Still high right? It's will go higher. Food prices are still elevated as well. This is not the same environment as last summer when everything had been poleaxed.

I am against anymore FED intervention but it's coming anyway. Last post I went over why I thought long trades were safer and why. The run up to the September FED meeting should provide a lift, but the S&P is already withing 40 points of the 1250-1260 area. Headwinds after the month of August will come in the form of bad data on many fronts. What will prove more important going forward? New easing or a crumbling macro picture?

Last year after QE2 the hope that things would get better held firm and even though its took many months for economic numbers to improve, most were willing to wait. After the fizzle of QE2, will they wait again? Biggest question going forward here is what the half life of QE3 is going to be.

Have a good night.

Monday, August 29, 2011

Running Room

I am probably taking Friday off to De-Hurricane my yard. Total mess. At least the Comcast cable is back on though.

Running Room
You may or not know but it was a true FACE-RIPPER rally today. Last night I was thinking all the ingredients where in place; low volume this week due to power outages and the coming vacation weekend, a market that has been sold very hard for some time, and a new short interest high for the NYSE. Perfect set up for a real squeeze higher.

Here is my clumsy graph for the S&P 500 after today (click for larger):
Please note:
-I have been stressing a close OVER 1180 would get me more interested in the market as a buy
-1200 is another important level
-Market is above both now
The volume today was about as bad as it gets, but you cannot have everything. If trading was easy we would all be rich. And bored.

So is it all honey and sugar from here on? Do markets crash again? How would I know, I just work here!

Seriously, what I think we have now is the best long trade environment in some time. What makes it so good? The trades are backed by some key levels and the exits are clear as can be. All the "bottoms" and all the "important candles" of the last month or so never had everything working for them. Now they do.

I have been on the sidelines for a while because the market did not support my trading style. I cannot be on top of things all day long, I have to work. With a bit of support now and clear areas that signal trouble, stop losses might even be in place again! Amazing! For weeks if you were playing a spot a stop loss or cover was sure to get you executed during the wild swings that have been happening. Consider that if the general market can trend to the marked area of S&P 500 1250-1260, or even if it starts to roll over again:
-There is support at 1200 now
-Cut all trades at 1180, no wishful holding
Simplified trading. No emotion, just numbers. Like chips in poker.

I would point you to my "Go To" guy for these things, Mr. ChessNwine. Back on August 17th I noted a great post by Chess which set out the following scenario going forward:
" scenario that I am seriously considering is that we actually start to roll over for a few days and see shorts scramble into those bear flags proving true. At that point, we make a higher low on the S&P and then stabilize and turn higher. Since the market will usually do that which frustrates the majority, I think this scenario will frustrate those who have committed substantial capital looking for a market bottom as well as those bears looking for confirmation of bear flags in order to short. Here is what it would look like.."
I did not include the chart, but now I have secured permission, here it is:
That's messed up! That's why you need to read this guy. Thanks Chess.

To sum up, this is a supportive environment right now for long trades. The best in a while. Discipline on the last few drops really broke down, but now is a good time to make some moves but be ready to stick to your targets. Both to the upside AND downside.

I am so behind, and would like to do some screening tonight so that is all.

Added: Not all! Check out the only thing worth seeing from last night's MTV's VMA award show. Adele with "Someone Like You":


Have a good night.

Sunday, August 28, 2011


All is well here. The storm really weakened, so no real damage here except the yards are a mess of broken branches and junk.

I still have power but no cable. Hence I am writing this post on my phone. It's annoying to do. I will post tomorrow if the cable is back up.

Have a good night.

Saturday, August 27, 2011

Bristol at Night

Tonight is my favorite NASCAR race of them all, the night race at Bristol Motor Speedway:

The track is just a half-mile, but the extreme banking in the corners (now 28 degrees after resurfacing) allows the cars to carry a huge amount of speed around the track. The G-forces holds the cars down. It's wild! Add to that tempers flare at the rough track and it's a mix for some great action.

The late Dale Earnhardt got into a few scrapes with Terry Labonte here over the years. In 1995 (skip to 5:00 mark):

and again in 1999 (skip to 1:40 mark):


Even if you hate NASCAR, you may want to check tonight out, I think it will be worth it.

Have a good night.

Friday, August 26, 2011

Tropical Storm Friday

Confusing stuff here. Weather guy on one channel at noon said high winds and 2-3 inches of rain. Weather guy on usual channel tonight says sustained high winds and 8-10 inches of rain!!?? So close, so far away. In any case it's going to be a real mess here Sunday.

Spare some Time for Claudia
Some people hate James Altucher and I think I know why. He challenges conventional thinking. He puts you in a state of unease with your long held beliefs. He also makes you think. I like him. A lot. James has written that his beloved wife Claudia has been diagnosed with Lyme disease so I would ask the readers to stop by and send some good feelings to Claudia and James:
Claudia Has Lyme Disease

Jackson Hole Post Mortem
It's Friday so I don't want to spend too much time on this. Bernanke had nothing to go with today, but used cryptic language about extending the September FED meeting to two days. The wording was "to fully explore all tools" or some stuff. Take home point:
QE3 of some sort WILL be announced at the September meeting.

Markets dropped at first on the release but then the magic words were found and a huge move ensued.

I will recap strategy going forward on Sunday (weather permitting), but it's safe to say the preternatural bid behind stocks will now return and there is going to be a huge run up before the September meeting. Bad data will only make things go higher as QE 3 is a done deal. Amazing stuff. Disgusting and sad, but amazing.

Friday Night Entertainment
Need a break after this week? You have come to the right place!

Apple is Worth More Than....
My man Joshua Brown thought up this great idea to discuss just how massive the Apple company truly is. With a market cap around 350 Billion dollars (wow!) you may be shocked to see just how much that is in comparison to other things.

What is super-duper exciting and very humbling is that Josh has allowed me administrative access to the site so I get to post ideas for the page! So awesome!! Please stop on over and take a look at the work so far:
Apple is Worth More Than....
Fortune Magazine's blog has already featured the site!! It's hard for me to explain how cool this is for me:
Apple is now worth more than ... the Great Wall of China
Let me know in the comments if you have a good one! Full credit will be given. Thanks Josh.

Fun for the eyes.

So this is how unicorns where made?:
wtf photos videos - The Origins of Unicorns
see more WTF Pictures and WTF videos by Picture Is Unrelated
And I thought it was magic!

I have NO idea:
funny pictures - work it, girl!
see more Lolcats and funny pictures, and check out our Socially Awkward Penguin lolz!

Film Clips
Scouring the files of my mind to bring you quality things to see.

An under rated film is "Midnight Run". Great actors, great pace, the film is wonderful. Check out this scene as the cash strapped duo pose as the FBI and steal cash:

The litmus configuration?

Found this really nice tribute video for "Gladiator" on YouTube. Check it out:

Not bad.

Rock Blogging
Hit the dial to 11, it's louder!

Reader Sovereign Bohemian was looking for some old Eagles tunes. What's smoother than "Tequila Sunrise"?:

Love that one.

Heard this one on the radio today, good stuff! A-Ha with "Take on Me":

Ok, I know I repeat but I love this song:

We need some Crue! "Kickstart My Heart":


Two songs left. Let's close the show.

For hurricane Irene lets hope people remember Irene Cara! "What a Feeling":


Last call! Grab a girl, a drink, and some lighter fluid.

Going with Golden Earring and "Radar Love":

Have a good night.

Thursday, August 25, 2011

The Black Hole in Wyoming

The news is really playing up the hurricane coming this way. I am all set though; 10kw Generac generator run on an underground natural gas line; enough SPAM, rice, and bottled water to last a month, and a sense of humor. Seriously, this is not going to be that bad.

The Black Hole in Wyoming
So tomorrow is the day. Ben Bernanke gives his Jackson Hole speech on FED policy. It's the event of the summer and you are all invited. Dress nice folks, this is the big time!

Title of this post was inspired by that atrocious sci-fi movie long ago, "The Black Hole":
Yes it had robots of course:
Who remembers this film?

Emotions are high and guesses run all over the place. My ideas on what will happen, and their chances are:
1.) Full blown QE 3 for 1 Trillion announced (will begin in October). Markets go full lift off and it will be weeks until anyone looks back. Bernanke is the hamburglar stealing any chance you have at saving anything.
chance: 25%

2.) Bernanke uses soft words to say that QE will come, but not right this second as he downgrades economy. Markets protest for Friday, but solid uptrend starts next week.
chance: 60%

3.) Bernanke says FED will be on watch, but that the US CONgress should get involved in stimulus and not rely on just the FED. Markets close for Friday afternoon.
chance: 15%

Of course it will be some kind of blend of 1 and 2 most likely.

Even after a year of all the green shoots and being welcomed to the recovery, markets need help and another housing hand out is on the way, from Trader Mark:
White House Considering Plan for Country Wide Refinance of Government Backed Mortgages
It's never going to end. It's not. Stop pretending it will.

Freedom Rock
Classic commercial time:

Have a good night.

Wednesday, August 24, 2011

Ear Muffs Time

We have a new critter in the yard. A monster red tail hawk! Maybe all the trees we had removed allow him to fly easier into the yard. The chipmunks and squirrels had better be wary!

Ear Muffs Time
I could not make heads or tails of today's action. Reading did not help too much either, people are seeing all kinds of stuff. Some I see, others I have no idea where they are getting it.

I think I have covered what needs to be covered. Friday will be the big reveal show for the market going forward.

Steve Jobs Resigns as Apple CEO
This just came across tonight. It's all you are going to hear about for a bit.

I think Jobs is the greatest innovator of the last 30 years. I hope he can take some time and get rest. I fear he is very ill, but he has worked miracles before.

I have no position in AAPL stock, but I don't think it should drop much here, it's not exactly a surprise. If it does I could see buying some for myself.

Have a good night.

Tuesday, August 23, 2011

Ben Bernanke: Follow for Friday (#FF)

I had the tree removal crew here today to do some serious tree cutting. Plenty of trees never really made it back from the huge ice storm 3 years ago. Others were just so overgrown it was crazy. My yard expanded by about 100% but now I will have extra yard work. I should have thought about that.

I was sitting at my lab desk when the earthquake hit today. I felt a weird rolling sensation and the liquids in bottles on the shelf were moving! It stopped, then happened again. Bizarre feeling!! A bit unnerving. Anyways, no problems here from the quake. That was a first for me.

Ben Bernanke: Follow for Friday (#FF)
Markets blew up sky high today. It was just like the old days; rumors, scared shorts, natural disaster. Crazy stuff.

Today was a monster day because:
-Shorts running for hills before Friday's Jackson Hole speech
-Rumors about short bans being extended
-Rumors JPM would take over BAC (??)
-People were bored of red numbers

In any case, I did notice many that were in a mode of "sell rallies" did the 180 and became bottom buyers right here. I see no reason to get involved until I know what the FED has planned for Friday. If we get some crazy QE iteration with cash raining down from above, markets could rally for months until they figure out it did not work. No reason to get in right this second. If Bernanke plays hands off and yells at CONgress to get something done, being long is not going to feel good.

Besides, the S&P 500 has not really breached an area I would feel strong about getting long yet. A close and hold over 1180 would be a start. It might happen tomorrow. Pragmatic Capitalism had the perfect note on this today:
The bigger news of the day is the widespread belief that Bernanke is going to whip out a bazooka this Friday. If you’re a short seller heading into Friday you’re rightfully afraid. Why would you risk being short into an announcement by a man who is overly in-love with market performance and persistent in building up the Bernanke Put? The right answer is that you’d have to be borderline insane to be heavily short into the Jackson Hole speech. Bernanke’s baby is crying and he’s been prone to give it what it wants every time it cries hard enough for it. And as markets sink in recent weeks there should be little doubt that Bernanke will ride to the rescue, pacifier in hand, ready to insert into the crying mouth of this bloated baby known as Wall Street.

Anyone that heeded my metals note last night can hit the DONATE button, you are welcome!

Great Photo
Via Geekologie (click for bigger view):
This is the photo taken 45-years ago today when Lunar Orbiter 1, tasked with locating a suitable landing zone for the future Apollo missions, turned around and took a picture of earth from the moon.

Have a good night.

Monday, August 22, 2011

How Important is Friday?

I don't like Mondays. At all.

Metals Gone Wild
Gold is going crazy and silver is the first bubble that burst then came right back to life. I don't want to get into a long discussion about the metals. Long time readers know my beliefs on precious metals and how they compete with what I call the "notional" idea of fiat money.

That said, I see plenty of new born metal traders getting long the metal ETF's and especially the miners. This is no joke, the miners will crack your skull. Always one run up away from some wacko secondary offering that dilutes you dead by 20%. Miners tend to over correct when bullion does and only party to the upside a third or so of the metals themselves. Not saying you can't trade them, and you are all adults. Just don't be surprised in a week or so. And there will be a gold/silver correction on the way, believe it. I am not a hater by the way:

How Important is Friday?
I think this week will be muddled until Ben Bernanke's Jackson Hole song and dance on Friday. Expectations run from nothing new to targeting the long end of the yield curve (Operation Twist) to full blown QE3. As recently as a few weeks ago I figured QE3 (and 4,5-etc) was an easy prediction but now I am not so sure.

The total failure of QE2 is now clear. What is more important is even the street guys are saying it out loud. There is real pressure on Bernanke this time to stop fucking around. I really have no idea if he will or not. I am always pretty hard on the FED, but they are in a tough spot. Monetary policy CANNOT fix the structural issues we face, but an inept CONgress cannot get anything done and instead put all the pressure on the FED to create miracles. Miracles by interest rate manipulation. Wishful thinking.

Business is not going to hire more people in the face of a worldwide slowdown, I don't care how much lower rates go. And anyone that is honest will agree rates are as low as they can be, it's still not doing anything. The cost of borrowing is not a consideration right now.

Anyways, I think there is a real risk that the FED does not do anything new on Friday. As mentioned in the lead off section, the metals won't like that and neither will the equity market. I still think they roll out some new fangled trick, but the risk of that not happening has gone up quite a bit over time.

Have a good night.

Sunday, August 21, 2011

Sunday Stuff

I spent about 2 hours looking over charts tonight and running PPT screens. Not much jumping out at me and even worse plenty of things are saying "danger" near term. Was hoping to maybe play around in the market this week but I am going to pass for at least the next couple of days. It's a slow motion crash or something.

I hate always running Josh Brown's posts over here, but I cannot help it if the guy is spot on all the time. I read a post over at TRB today that made me feel sort of guilty for not ripping into things like I used to. A sample:
First, I hope the Fed does not embark on QE3. After 40 years of pain avoidance, can we just rip off the f**kin' band-aid already? Enough with the asset price protection, it is the root cause of everything bad about the economy right now. Had we saved the banking system and said f**k the banks themselves, we'd be two thirds of the way out of this by now. Had we gone Swedish instead of Japanese and said the banks are now "Wards of the State" until cleaned up, then yes, we probably would have seen Dow 5000...but so what? Was stopping at Dow 6500 so much better? We would have had an unencumbered financial system at this point, one healthy enough to cope with a new leg down in housing, rather than the debt-ridden George Romero zombie film we find ourselves re-watching every quarter.
Much more and it's required reading for anyone so here is the link:
Jackson Hole Preview: The Difference is Why

My buddy Jonathan Lundberg just started blogging but he writes like he has been doing it a long time. While this post is sort of political, I think it has real value when thinking about the total lack of leadership right now from both the President and CONgress:
For The First Time In History The U.S. Has No President

I have bought a ticket to The Big Picture Conference to be held October 11th at the New York Athletic club. Speakers include Barry Ritholtz, Josh Brown, James Altucher, James Bianco, Joe Weisenthal and more. One problem, I have never been to NYC! Anyone that can help me with hotel ideas and any helpful hints? I am not 100% sure I am going, but I got a ticket anyway. I would like to go.

Added: I promised my friend David I would post some blade pictures, so here a few of mine:
The flamberge sword is nasty fast!

Have a good night.

Friday, August 19, 2011

Shelter from the Storm

Wild pop up thunderstorm right as I was set to drive home. Have I ever told you how much I love my Infiniti G35X? Makes an impossible ride home possible.

Shelter from the Storm
What's left to talk about in the markets? Another ugly day. Still no real panic or capitulation, but it has to be coming.

After the last month you need to get some shelter if you have been taking hits and forcing losing trades. As guidance I can recommend two stops to keep you centered.

Josh Brown, The Reformed Broker has been a great voice for keeping out of trouble. Today he opines on how to survive a market crash. You should read the whole thing and scroll through the posts as of late, plenty to learn:
Downtown’s Rules for Surviving a Crash

I rely on charts in trends for short term trading, but it always pays to be aware of macro issues especially if you are a long term investor. Inflection points are by nature very difficult times. As data changes and slows one cannot fall into a trap of thinking it will all be fine no matter what. You have to be aware of the entire landscape. More and more I find the work done by my friend Tony over at Macro Story to be a must stop for me. Check back over the last two months of Macro Updates, you will see what I mean. Here is the site:
Macro Story

No questions from open thread night, so that's it for the week for things economic.

Friday Night Entertainment
Needed now more than ever.

Obligatory Robot Warning
This headline via Geekologie is all you need to know I am losing the war against robot domination:
That's...A Really Terrible Idea: Army Considers Building Autonomous Robots Own Base
Still I endeavor to persevere.

Comic Scenery
For a chuckle.

What kind of weather is that?:
epic fail photos - Things That Are Doing It: It's Going To Be a Long Hard Day in The Windy CIty
see more funny videos, and check out our Yo Dawg lols!

Enjoy the summer, I am hitting the beach:
wtf photos videos - It Will Relax You Immediately
see more WTF Pictures and WTF videos by Picture Is Unrelated

Film Clips
Stuff to watch.

I loved the first "Underworld" film so very much. The second was just ok, and I did not see "Rise of the Lycans". There is a new film upcoming, and the trailer looks pretty good. "Underworld Awakening":

Will have to see.

After all the beatings the market has handed out, lets get in shape for when things change by training with Balboa in "Rocky II":

Not the full clip, sorry.

Rock Blogging
Bringing the hits since 2007.

Wanted to give a happy birthday shout out to loyal reader and published author Jennifer Hillier who celebrates hers on Monday!:
As is custom JH has asked for a song by Adele, but did not specify. Let's try a live show of "Someone Like You":

Wow, that's a good one.

Traders across the world went out early today to grab at least "One Bourbon, one Scotch, and One Beer" requested by Sovereign Bohemian:

Sounds good!

Best wishes for my friend Soleil and she was looking for Florence and The Machine with "Dog Days are Over":

Excellent pick.

Watchtower alerts me to a 1980's movie I HAVE NOT SEEN!! Stop the presses! I have never seen "Heavy Metal", bizarre I know. Anyways I will check it out. Until then let's try Blue Oyster Cult and "Veteran of the Psychic Wars":

For the AC/DC maniacs, "Back in Black":

Never gets old.

Two songs left, two gems to find.

A little Ramones goes a long way. "Somebody Put Something in My Drink":

Last call. Grab a drink and a lighter!

It's getting late in the summer. That means it's time for Don Henley's "Boys of Summer":

Love that one.

Have a good night.

Thursday, August 18, 2011

Open Thread

Heat has returned!!! Super muggy here and hot. In the Boston area we would say it is a "skortcha!".

Get your Friday Night requests in as well, we need a good show.

Open Thread
Another ugly day, I can't really recount it all. I posted this last year on November 3rd, 2010 when QE 2.0 went into effect:
"QE has been ineffective in much of anything useful. It has set a real bid under commodities and equities, but those are not reflected in the CPI anyway.

The yield curve will remain steep which will aid the banks in case mortgage losses and putbacks end up not being solved through legislation due to the new makeup of CONgress.

So what does this all mean?

Short Term (next 8 months or so)
-equities will rise
-commodities will rise
-gold and silver will rise
-junk yields will soar

Basically what you have seen for a while will continue on. I can see a scenario where a monster move up occurs in stocks to a blow off top, but I think it will more of the stair step 1% days as far as the eye can see kind of thing. Commodities may see a more violent surge. This is not a good thing but it may support aggregate demand if folks try to stock oil in tanks under their home. You have heard of contango, right?

What can you do? Well, savings are trash and cash is dead. It has been and I had hoped for a more sane policy and reform but then I am a fool. Some ideas:
-Past a POMO day schedule near your desk and if you can day trade move with the POMO schedule as detailed many places like Zero Hedge. One note: this has been so obvious and written about the real players may try and move this around a bit but the vicinity will remain.
-Buy broad equity indices and hold them.
-Buy junk bonds
-Buy bad muni bonds
This is almost Tepper-esque in the "can't lose" sense.

This is not advice. Here is what I aim to do.

I am going to really spend some time looking at buys that I can stomach. This will exclude broad indices and in particular anything financial, housing, or US automotive. I am looking to start trying to get some return on my money that I can play with, plus it would be more fun.

To this end I am using my own way of looking for buys and I will be buying and testing the iBankCoin PPT as another tool. I will test some ideas out on the thing and see how it fits my way of trading. I hope it proves useful.

Long Term (who cares, we are all dead right?)
This move serves as a start of a long term commitment by the FED to markets for support without end. While this did not work well for Japan, things are a bit different here. Nothing over the next year will really get much better in the real economy, but that hardly matters when banks are making serious coin, corporations can get money on the ultra cheap to buy back shares, and expansion overseas where much of the free cash will be deployed will prove a hit."

And here we are today. Not much to add.

Open thread night then. Ask me about anything you want me to answer or talk about and I will tonight in the comments or in this post. If I miss anything I can get to it tomorrow night. If you are on Twitter, find me with @GYSC16, same avatar.

Have a good night.

Wednesday, August 17, 2011

No Cure for the Summertime Blues?

My Star Wars desk calendar character today was Jar Jar Binks. I skipped to the next day, insulting to any real Star Wars fan.

No Cure for the Summertime Blues?
Another messy day for the markets. A day like today you cannot win unless you are moving in and out daily. Plenty of chop.

I have been pounding the table about how mutual fund redemptions are going to skyrocket after the drop of the last few weeks. Sure enough (via the iBankCoin news feed):
Mutual Fund Outflows Surge After Downgrade

It is almost too many contradictions running headfirst into each other. Consider:
-Ultra low rates make saving via cash a waste
-Everyday people that are investors are doing less with the stock market because they don't want to chase

Where is this money going? Probably US bonds. Who needs QE3 right?

I will admit I am getting bored right now. I would love to open up some positions, but this is not my kind of market to trade.

Value investors get paid over time. Swing traders get paid during a trend. Day traders get paid by the hour.

My general type is more a longer term value (as I see it) type and I trade a bit in a pure swing style. I can't do much in this market, I cannot watch the tape all day long.

ChessNwine had a great thought today that I am partial to going forward:
" scenario that I am seriously considering is that we actually start to roll over for a few days and see shorts scramble into those bear flags proving true. At that point, we make a higher low on the S&P and then stabilize and turn higher. Since the market will usually do that which frustrates the majority, I think this scenario will frustrate those who have committed substantial capital looking for a market bottom as well as those bears looking for confirmation of bear flags in order to short. Here is what it would look like"
Click the link for a chart of the idea. Would make sense!

Have a good night.

Tuesday, August 16, 2011

Reading Night

I had to do some errands when I got home and now it's almost 7:30. Filler material coming up!

If you are into high tech companies I can point you to a new blog that just started. Fellow Bostonian Jonathan Lundberg (@BreakoutBull on Twitter) has opened up his own site and it's pretty sharp. Take a look here:
Jonathan Lundberg
Congrats man!

Reading Night
I need to get some sleep tonight and luckily it is reading night! Tuesday and Wednesday nights I dedicate to reading a book or two. Super bonus, I forgot I ordered the new Star Wars novel which came in the mail yesterday!:
Star Wars "Ascension":
Should be good!

What else have I been reading? All kinds of stuff. Here is a book list in case you want to pick something up to read.

"Handling the Undead" by John Ajvide Lindqvist:
Another zombie novel? Not even close. A totally novel take on the genre. This book is painful, sad, and moving. I can highly recommend.

Jennifer Hillier's "Creep":
Several readers got a free copy from me a while back. So much to like here. Sharp dialogue, fast pace, characters you want to hate and like, this is a great time. What's better, if you like it, the sequel is on the way!

"The Lost City of Z: A Tale of Deadly Obsession in the Amazon" by David Grann:
Ok this one was on tap for this week but got bumped by Star Wars. Looks really interesting in a high adventure sort of way.

Jack Finney "About Time":
From the author of maybe my favorite book, "Time and Again". A collection of short stories that are all excellent.

"Under the Dome" by Stephen King:
So an entire town gets trapped inside an invisible barrier? Sounds stupid right? He makes it work!

Have a good night.

Monday, August 15, 2011

Pump Down the Volume

Huge rain storm today here! Many streets in Cambridge were under water. Luckily the ride home was not too bad. No need to water the grass this week.

Pump Down the Volume
One of the things I really pay attention to is volume in the markets. Buyers and sellers vote with their feet and will run into or out of a stock at various points. One of the more frustrating things the "new" market since 2009 features is a real lack of volume, especially in uptrends. Zero Hedge had this headline up today that many were calling whining:
Market Stages Tremendous Rally.... On 40% Of Recent Volume
To be fair, all the heavy action the last couple of weeks was on very high volume so a drop off is not strange in and of itself.

So is volume important anymore? It's a good question. I still will base a buy on volume backing up something I see. With all the money that has left the markets over the past couple of years maybe volume is not that big a deal anymore. Surely as it relates to the major index trackers it's all but useless.

The rally from last Thursday to now has been large, but is there anything behind it? Here is a chart of HRL, note the volume at the bottom of the chart:
It is clear the recent bounce has come on less shares being transacted.

I wrote in my trading notebook (yes I still write stuff like in the dark ages) last Friday:
"Worst case is a huge bounce on no volume; not tradeable"
Yup, and here we are.

The chart for the S&P 500 shows the same, and note the levels I have marked off for the index as the moves seem to find old levels. This is where charting is helpful:
I had figured a close over 1200 would come this week and I was thinking of getting involved should it do so. Of course it did it today. Another V shaped blast off on the way? I would not be shocked, but this time the technical damage is so bad it would be far better and constructive for the market to base sideways for a time. A furious run up from here is not going to have a calming effect. Turnaround Tuesday is on tap, will see how it goes.

Robots On the Rise
My friend Mark seems to think his post tonight is funny, but it's just another sign of human handing the keys over to the robot overlords:
The Future American Worker
President Obama gave a speech at a robotics manufacturer and said:
"You might not know this but one of my responsibilities as Commander in Chief is to keep an eye on robots, and I am pleased to report that the robots you manufacture here seem peaceful, at least for now."
Total slip! He gave it away but acted like it was a joke!

Have a good night.

Sunday, August 14, 2011

Patience Can be Boring, but It Doesn't Cost Much

The NASCAR race at the Watkins Glen Road Track was rained out today. I love watching that race as the NASCAR guys have to take all kinds of turns and not just drive in circles. It is on tomorrow morning at 10am, bummer.

Patience Can be Boring, but It Doesn't Cost Much
I went over both market index charts and about 30 single names this evening. Not much is jumping out at me, a few good looks here or there. This week should answer some questions about the Thursday/Friday rebound days and whether they will have staying power.

It gets boring being on the sidelines. It's more fun to be placing trades and making moves. You have to know your own style here; a daytrader may be having the best few weeks of his/her year while a swing trader either has been chopped up a bit or has been in cash watching the drama.

Patience can be boring, but it doesn't cost much. Getting involved in a volatile tape that still has a real chance of breaking down is just going to cause frustration. Going short right here has headline, FED, and face ripper rally risks.

ChessNwine notes tonight:
"Better to be boring than an Idiot."

Tony of Macro Story has a good run down of big picture items tonight, why not take a look at what is facing the markets:
Macro View August 15, 2011

The tug of war between bulls and bears has been a tough go. Reminds me of a scene from the film "Once Bitten" where Jim Carrey's character is torn between his high school sweetheart (in white) and the dark vampire (in black, played by Lauren Hutton):

Nice. Which one would you go with?

Free Courses on How to Help Robots Take Over the World
Sharp eyed reader Watchtower alerted me to a disturbing development in my personal war against the coming machine age.

Just look at this (via Mish):
Stanford Offers Free Robotics and Artificial Courses; 10,000 Already Sign Up
Here is the deal:
Stanford has been offering portions of its robotics coursework online for a few years now, but professors Sebastian Thrun and Peter Norvig are kicking things up a notch (okay, lots of notches) with next semester's CS221: Introduction to Artificial Intelligence. For the first time, you can take this course, along with several hundred Stanford undergrads, without having to fill out an application, pay tuition, or live in a dorm.
Enrollment is over 56 thousand right now.

So what's the problem? Usually cutting edge breakthroughs come in the controlled atmosphere of a University or a technology company proving ground. Now an untold number of eager and energetic maniac will have Stanford University AI and robotics training? Anyone see the problem here?

The machines are upping the ante here by multiplexing their advancement across multiple users. The rate of progress will likely go up geometrically now! Well played robos, well played. We are all doomed.

Have a good night.

Saturday, August 13, 2011

Summer Saturday

I just felt lazy today. I probably could have/should have cut the grass but I did not feel like it. I could have washed the car or any number of things. I felt like relaxing and so I have been. Totally chill Saturday. Nice.

I did grab some steaks for an early dinner today. I had a huge ribeye and the wife and mom in law got filets. Pre-cook:
Just about ready to come off the grill:
I made some asparagus too, you know, to round out the meal.

I may add some stuff to this post later, or not.

A couple things to add.

Jake from EconomPic put me on this great song by Foster the People called "Pumped up Kicks" which is really good. Thanks!:

My friend ChessNwine celebrates his birthday today and I had no idea! Chess is the best chart maker I know and a good friend. It was mainly due to Chess that I started to trade again because it became fun again. Happy Birthday! Here is your Herbie Hancock tune:

Very smooth.

Have a good night.

Friday, August 12, 2011

Churning Lots of Butter Friday

Just think, people that don't care or follow markets probably had a boring week.

It was heavy dose of churn the later part of the week. Not much is clear from today's action. I figured this might be a chopfest for a while. You just never know. With so much said all week I can leave it to the better writers out there to pontificate what will happen. I think it's time to move on to the weekend.

Friday Night Entertainment
Stuff you just won't find at other economic sites. I am cool like that.

Department of Annoyed
Hollywood is pissing me off. I am getting aggravated something fierce. First it was stupid remakes of legendary films (Red Dawn, Conan the Barbarian), but now they have gone TOO FAR!!!

Headline from iO9:
World War Z movie synopsis is nothing like the book, internet melts down
Travesty what is happening.

The World War Z novel is one of the best books I have ever read. If you think it is a zombie book only, you have no idea the portrait of the best (and worst) in humanity the novel weaves. A classic. So what does the movie business do? Make another stupid zombie movie out of it. From the article:
"The story revolves around United Nations employee Gerry Lane (Pitt), who traverses the world in a race against time to stop the Zombie pandemic that is toppling armies and governments and threatening to decimate humanity itself."
No thanks. Write your congress member today and get this blocked. Carry on.

Captured Critters
The deer are still coming at night to clean out the birdfeeder! Check out this guy with a nice rack of antlers (click any pic for larger view; all pics from my motion camera):
Two female deer caught in the act:
They eat a lot of birdseed.

Good finds from the Web.

Tell Charlie Daniels:
funny pictures history - The devil's in the house of the risin' sun
see more Historic LOL

Thinking about changing my avatar. Which one do you all like best?

Darth Bane:

My old one with Darth Vader:

Darth Malgus:
Let me know!

Film Clips
Movies you may or may not have seen.

In one of the more disturbing, hilarious, wildy uncomfortable scenes in cinema history, we learn way more than we need to in the film "Clerks". ***WARNING***: Not suitable for all viewers, raunchy stuff here so you have been warned:

OMG!! "Hey you, get back here!"

In the film "Rock Star" Mark Wahlberg gets an audition for a famous metal band and he makes it count. Skip to the 3:55 mark:

Very good.

Rock Blogging
Bringing the tunes since 2007.

Reader Watchtower pinged me with a GREAT find! Please enjoy Stevie and Lori Nicks performing "Nightbird" live:

Wonderful picks, thanks man.

Everyone is AC/DC crazy as of late! Reader Gawains had a whole list, let's try "Night Prowler" which is a touch of the blues:

Like that one.

Ok, this one is a mix of music/film. "Lunatic Fringe" by the Canadian band (side by each?) Red Rider was perfectly matched into the film "Vision Quest":

Now I want to box someone! I miss jumping the rope like that.

I am trying to get some Twitter song picks but as of writing no dice. What can you do, right?

I found an acoustic cover for one of my favorite tunes. Please take a listen to this stellar show of "Tears of the Dragon":

So amazing, I have no words. Wow.

Ok two songs left.

Had it on before, will have it on again. Best Van Halen song ever, "Atomic Punk":

Kick ass.

Last song!

Real talent? Forget those crappy TV shows, here is some. Evanescence on Letterman with "My Immortal":

Unreal. So pretty.

Have a good night.

Thursday, August 11, 2011

Decidedly Undecided

Quite a bit going on tonight including the New England Patriots first preseason game. While another crazy ride today in markets, not much ground was gained/lost nor answers found.

Banning Short Sales 2008 vs 2011
Back in the depths of turmoil at the last crash, short sale bas went into effect for US financial companies and their European equivalents. Well, it's back in some European countries:
Belgium, France, Italy, Spain Overrule European Regulator, To Impose Standalone Short-Selling Bans
This screams desperate, but whatever. Traders were overjoyed at the prospect of support like this. In 2008 this was scary; today it shows the market will be protected no matter the rules in place. Disgusting. It is what it is.

Decidedly Undecided
Not much to say about today, it's been back and forth quite a bit. The kind of monster ranges we are seeing are not usually indicative of a good market. Small chart for a look:
Some notes:
-tight but huge range seen between 1120-1172.
-volume is decreasing; mixed signal. Can mean a bottom is forming as players exit from the game. I like this, means resolution should be coming sooner rather than later.
-1180 still has yet to be hit, and 1200 would suggest real improvement.

Of course I can sum all the market action up easy.

Markets went to crap when Josh Brown and Barry Ritholtz made public they were "lightening up". Today both were either "nibbling" or "scaling in". Obviously this means not only is the bottom in, but strap in for the rocket ride!

Have a good night.

Wednesday, August 10, 2011

Hurry Up and Wait

Blogger was down as I was getting this post done, so now I am out of time.

Hurry Up and Wait
Still plenty of drama today in the markets and every new day brings new calls for "The Bottom". Kid Dynamite has a great post about where things are tonight and I would point you over there:
The Market Does Its Slinky Impression – Desperation Time

With all the wild gyrations over the last few months, a sense of time gets lost. We have had a significant drop that has damaged charts and psychology in a way that will take time to repair. Is this as low as we go? I don't know. What I do know is a rocket ride back to recent highs would be both unlikely and damaging as well. Some ideas on how long a good base may take to form? Here is a simple chart I made to offer as at least a start (my charts suck, if you want great ones go bother ChessNwine ok?). Click for larger view:

To be fair, I am cherry picking the 2009 bottom. The market cracked back in November 2007 and ran down until the boxed area in 2009. Still, the boxed area shows the bottom that was finally built up over 5 months and acted as the springboard for a furious run up.

A more similar example can be seen last summer, and that bottom took 3 months to get resolved (and some FED help as well).

We have been moving down for 2 weeks.

Now a base can form right here, it could form higher up, or lower. A sustained move is going to require some kind of believable support.

So my advice is to hurry up and wait. Maybe grab a Hoodsie Cup and enjoy some summertime:

Have a good night.

Tuesday, August 9, 2011

Long See-Saws and Rubber Bands

There was a big accident on the highway I use to get home so I am way late and short on time. Not that anything interesting happened today anyways.....

Long See-Saws and Rubber Bands
First off lets give credit where credit is due. Josh Brown of The Reformed Broker fame has been making calls that would be helpful to listen to. From going to cash last Monday to suggesting a Face-Ripper rally would happen, it's all working out. The Face-Ripping theme has exploded all over the place, some where put in mind of this Oscar winning film:
"I'm Castor Troy!"

The FED signaled today that they will never raise rates ever again. This was new news I guess, but you have been reading that here for years. Low rates are a structural necessity of our "new" economy, there will be no going back.

Markets opened way up, about crashed lower, then rallied to new daily highs. It was pure mania all around.

All time low yields on the US 10 year are suggesting an economy that is going to further slow.

Markets are so volatile right now only people sitting at a trading station can play this market. If we are in for a multi day rally here, key levels to watch will be S&P 500 at first 1180 (probably bust that at the open) and then a test at 1200. Fast chart below:

The 10 year and the FED declaring no end in sight for their accommodating stance implies real weakness going forward. Maybe that has been priced in here. Maybe not. For me I am still waiting for some stabilization here, a bit higher, or a bit lower to get involved. If I had to make a call I would say today was bears and shorts getting out while the getting was good and a lack of pressure on markets made them explode higher. Not exactly a trend situation.

Have a good night.

Monday, August 8, 2011

Knocked Out

What. A. Total. Mess.

Tonight's post will have two parts, a market observation half and the other half more of a rant. If you don't to read one or the other (or neither) you have been warned.

Shots to the Head
Roberto Duran KO8 Davey Moore (MSG, 1983)

I spend a ton of time on charts, various indicators, and screens to find short term trading ideas for my trading account. Vicious sell offs like this one are easy to dodge, just don't play. When the markets are getting dusted by combinations to the head leaving stocks dizzy and off balance, everything gets sold. Everything.

In my long term holding account I do have plenty of gold and silver (yeah!) but look at Hormel Foods (HRL), Hershey's (HSY), Coca Cola (KO), and McDonald's (MCD). I hold all of these from years ago. They are slow growers but are solid companies and pay nice dividends. All are getting whacked down. A drop of 10-15% for these types of companies can take a long time to recover from.

I am not selling anything here and won't unless I need the money (I won't). I am just trying to show you that even conservative portfolios are not spared in market massacres. If you invest in any way you have to accept this.

Everyone wants to know if this is THE bottom. With the FED on tap tomorrow there could be a setup for one amazing rally in short order. If the FED is not helpful, a crash is a likely occurrence in this environment. I have zero interest in playing that trade either way. I am on hold trading wise until we stabilize at SOME level and then move sideways for a bit. Right now if you are of the longer term investment mind set, many companies have been destroyed beyond reason here. Barring a global depression (who knows) some leader names are attractive. Write them down and keep an eye on things, there may be a chance to grab some good things at good prices.

Crippled by Body Shots
Julio Cesar Chavez KO12 Meldrick Taylor (Las Vegas, 1990)

I gave up on writing about the ills of the economic world around this time last year. The US federal Reserve started Quantitative Easing 2.0 (QE2) in an effort to, well, who knows what. Instead of market players and people in power asking the right questions and stopping such a gross application of liquidity most just jumped on board and looked to make a killing off it. Hope they did.

So what now? Record food stamp usage; no jobs; a slowing economy (wait until the market drop hits confidence, you ain't seen nothing yet!); and another historic stock market collapse. Want QE 3? Many are asking, no begging for just that. For what? Another rally fueled by nothing but air, then another collapse?

In boxing shots to the head can be overcome, if you can hold or get to the end of the round. Body shots sap the very heart of a fighter. When he goes down, he does not want to get up. We are at a point where belief in our government, faith in the FED, and trust in markets are putting people down and they don't want to get up.

Watch mutual fund redemptions. Regular folks never really dove back into the markets and those that did probably just got in a few months ago, just to get flushed again. While sitting in cash at 0% return sucks thanks to the FED, it beats getting murderholed to the tune of 20% or more.

Will the general community finally apply the pressure to get some reform? I want to think so. Will the people of the United States send every single incumbent packing next election? I want to think so. Will we finally start to have an adult discussion bout the economic future of this country? I do want that.

Instead, look for QE 3 in whatever form and the real issues to fall along the wayside once again.

Have a good night.

Sunday, August 7, 2011

The World is Miss-Priced

It is Sunday night and if you follow things economic then you know there are some serious issues going on right now.

I could write about all the moving parts for hours, but let my sum it up so that we can skip the long stories.

Ever since the subprime debacle and subsequent financial crisis there is a belief held firmly by central banks and others that there is a temporary miss-pricing of assets. Mortgage pools are not worth zero, just worth zero for a small window of time. This goes on and on to Italian bonds not really needing to be sold at over 10% yield to a suddenly falling stock market. It's all temporary.

Temporary has lasted for years now.

Freshly printed money and a never ending stream of liquidity is required to keep the temporary price of numerous assets "higher than they otherwise would be". As soon as the real market price come back to where it "should" this can all stop.

When do you think that will be?

Have a good night.

Friday, August 5, 2011

Chill Pill Friday

Had enough drama? I think this week featured more drama and angst than a John Hughes film. Think "The Breaking Trendlines Fast Club." Any ways, it was another crazy day and there is word tonight of a possible S&P downgrade of the US credit rating. Wonderful. I may have more on markets this weekend, but for now I think it best to move on to other stuff for the sake of sanity. Here is a daily chart of the S&P 500 if you want a graphic of a tough run:
Red and going down is bad for the new chart readers.

Added: S&P has downgraded US debt to AA+, outlook negative:
WSJ Coverage
There is so much more to this debacle I cannot cover it tonight. Holy shit.

Chill Pill Friday
No better place to relax than here on EconomicDisconnect's world famous Friday Night Entertainment.

Water on Mars
Lost in the mix this week was the exciting proof that water still exists on Mars. This has major implications, I love this stuff:
Scientists find evidence of liquid water on the surface of Mars
Jupiter's moon, Europa, is thought to harbor a vast liquid water ocean under an ice covering as well.

Another cosmic mind bender? How about this:
Way Too Deep For Me: Our Universe Shows 'Bruising' Evidence Of Running Into Other Ones
Multiverse theory? Wild.

Film Clips
Movie time!

Great clip from the classic film "Dune" where Paul Atreides shows the weirding way to the Fremen:

Love that film.

You have not seen "Big Trouble in Little China"? Why not?:

Rock Blogging
Lots of requests so here we go.

Birthday girl C-T was looking for more Depeche Mode and I cannot deny a birthday request unless it involves the band that cannot be named. Found a great live version of "It's No Good":

Great performance!

A great way to get a request on is to have a tune with a steel guitar involved. Try out Sovereign Bohemian's pick of "4th of July" by Shooter Jennings:

Fellow 12631 member Mda1125 was looking for Lyrics Born and "Hello" and this is some serious techno funky music!:

Wow! If you are in the market, mda1125 is a guru for fitness and you can check out his site here:
Marc David

Gawains was thinking Rolling Stones and "Hand of Fate":


My man Tony of Macro Story has nailed the last 2 months pretty much exact. You should be reading his posts. AC/DC was his request so here is "Hells Bells" from a get out crazy show at Donnington where legends play:


Ok, last two are my picks!

We need a consolation tune, and Bette Midler's "The Rose" is as touching as it gets:

Unreal pretty tune.

Last call! Grab a beer and get some cash from the ATM while you can. Got gold and silver? Too late now.

OAR with "Shattered":

Have a good night.

Thursday, August 4, 2011

Market Meltdown Observatory

Personal Reflections
I am going to offer up some observations on the monster market drop in the next section. First I wanted to talk about me for a minute.

In the new year I wanted to become active in the markets. I enjoy trading and I have really met and learned from a great set of people. I was doing just fine; my year goals for return are only 10% so it's not a huge number (I am up 3% in my trading account for the year as of now). Around late May I noticed a change in the tape, I wrote about it on the 23rd:
Today was a bit more of a dangerous move down as buyers did not show up after lunch like usual. I am not looking for a usual 1-3% blip to get involved. Here is where charts are helpful but sometimes you have to make a call that lies outside the lines sort of speak.

My trigger was S&P50 at 1280 and it got there, from June 8th:
This morning I opened positions in both SH (S&P Short Fund) and PSQ (Nasdaq Short Fund). The market was about even and I figured a later day sell off might happen so I pulled the trigger. The S&P closed right under my target entry area of 1280. To be fair, I wanted a rally back to 1300 to open these positions, but it never shaped up this week. It still may by weeks end, but I felt like it was time to go on this one.

What is great about this trade is there are clear places to walk away. If the S&P breaks back over 1300 and holds, that would be step one out the door. A close over 1330 is step two (should leave) and if we arrive back at 1360, it's a busted trade without too much damage done. Otherwise it is in play along the new trendline down to the 1180-1190 area I have targeted.

I got closed out on the huge rally in late June to early July, and noted on June 29th:
I closed out my positions in SH (-2%) and PSQ (-1.2%) today. Minimal losses, and I had already set the exit point (S&P 500 over 1300) so it is what it is. I was wrong; I thought the market had been pricing in slower economic data as well as the problem QE 2's end would pose to cash flows into stocks. Even me, the perma bear, bear shitter, gloom and doomer, glass always half empty (a scientist says the glass's volume is .5 actualized, HA!) never spent a pixel on the Greek debt situation except in passing. I never figured the 100% sure bailout was ever worth getting scared over, certainly not a "second Lehman", geez cut it out already. This week the market recouped almost all losses since the big downturn a few weeks ago on Greek debt rollover news. Ok. I was wrong here and what can you do. When the actual traders get back next week and volume picks up, I expect the S&P to rocket to 1400 or more no doubt.

I never once believed in that rally. Not one bit. I backed off anyways due to set strategy but my gut was screaming at me to stay the course. I only played small spots after that on the long side. This missed opportunity bothers me to no end. I don't give a shit about the money I may have made, I felt something very strongly and I let it go. Maybe it was the 2 years of never ending market uplift or whatever. I will never be ok that I gave that one up.

Market Meltdown Observatory
There was too much going on today to make any sense of it. A list of observations for future reference and historical record:
-Some people know what they are talking about, the other 90% don't.
-Trend rider bulls are totally annoying, as annoying as the bears were near the end of the financial crisis.
-Technical analysis has rules and criteria; these should not change depending on how you are positioned.
-When markets were near new highs Wall Street cared not for Main Streets woes, now they want government action and FED help to "fix the economy". Been broken for years boys, you just got a taste.
-3.5% moves down "make no sense" but 3% panic buying moves up are "signs of a strong market". Symmetry is not just a concept.
-What fun is a market collapse if Zero Hedge is NOT AVAILABLE!!!!!!!?
-I think this is a correction of an overvalued, overhopeful market. This is NOT 2008 all over. Either this is a mimic of withdrawal of excess liquidity to get QE3, or QE3 is not coming.
-Fair value by metrics I use puts the S&P 500 at 950-1050. I have no idea if we get there (I would be a big buyer) but if your well being requires higher than 1200, you may want to rethink that strategy.
-We are not going to see another sub 900 S&P 500 print in my lifetime.

I had a bunch more but enough for tonight. As always Friday Night Fun night is on for tomorrow. I believe it is reader C-T's birthday as well so if you stop in (not many do) please request a birthday tune!

Have a good night.

Wednesday, August 3, 2011

Middle of the Week

It's Wednesday and I am working on some stuff tonight. Short recap of the days events.

Market Operations
This morning markets were very nervous and a big drop soon followed. I was stopped out on my two positions in YMI and OCZ, both losses over 3%, yuck.

Overall Commentary
Huge reversal intra day resulted in numerous hammer prints across almost every stock out there. The Maginot line of S&P500 1250 is where it's at, no reason to beat it to death. At a minimum the buy volume today has market a near term reversal.

That said, I am not feeling too aggressive here. I am working on a couple ideas tonight. If things turn around great, if not I will be sidelined until we hit areas further away from now to the upside or downside to apply ideas. Keep your cash safe!

For a hammer to be proven correct, it requires confirmation by the next day's candles. One stock I missed out on and one I missed a sale on may be leading to a short term answer:

I may try these because I am crazy like that.

Have a good night.

Tuesday, August 2, 2011

Battle of Helms Deep

Plenty to discuss so let's just do it.

Market Operations
During the day today I made two buys. The first was YMI based on some candle work I did last night. I should have seen it as "Why am I" buying stocks today! This one actually held up ok and did not violate the candle that I had decided to buy on.

The second was another candle and PPT scoring find, OCZ. Quite a bit of "other" stuff going on with this stock including a conference call tonight. Will keep an eye on it. No reason to get way long right now.

Battle of Helms Deep
Today after the market close I was driving home from Cambridge and a huge rain storm with dark clouds blew in. Reminded me of that scene in "The Lord of the Rings" before The Battle of Helms Deep when the rain starts falling.

By now you must know that markets took a dive today and it was not pretty. Significant damage to long running trendlines was done. Major moving averages were breached. Chart for S&P 500 for a look:
So where are things?

I wish I knew. I will offer up my own ideas and then do some linking to better observers than me to round it out. Here is what I think:
-Volume was not the massive dump off that usually comes from a panic bottom. This could mean things are not as bad as they look, or a bigger washout is at hand.
-Time was efforts in Washington usually were a good thing. The FED is really on the spot at the end of August.
-I love technical analysis and use it for near term trading. One of my only reservations about TA is it reflects everything that the market knows right now. Unfortunately the market tends to ignore stuff for a long time and then discover it. Chaos ensues.
-Along that line slowing economic data has been ignored as price action has been good. Price action is not good now.

In general I think it will be smart to watch the next few days. Obviously getting involved is risky. I would rather miss the next 5-7% move up in the indices and wait for a real trend to emerge that try to stick a bottom call here and get washed out. Many will try though.

The best stuff I saw today.

The Fly tells it like it is, in his unique style:
"If this market trades down tomorrow, that will make 9 straight days down. This is a KARL DENNINGER, ZEROHEDGE, DOUBLE BLUE BLAZER, APOCALYPTIC dive lower, no safety net. If you are a bear, this is your chance to kill everyone and eat their brains. You must pray for state failures and civil wars, famine and pestilence. Throw in a little epidemic, and I believe this market can go lower."

Barry Ritholtz and Josh Brown have been getting lighter on holdings as of late. Thanks for the tip.

Downtowntrader has advice I find to be spot on:
"Even if the markets do bounce in the next few days, the odds for a flush out first are probably better than your odds at a Casino. While it appears the worst is behind us in this debt deal nonsense, the markets showed very little strength today and futures are flat tonight. Until they show some semblance of strength, its best to keep your exposure to a minimum."

Three notes from me via Twitter today:
-With all the news of spanish and italian wide spreads one would think economics was actually sexy.
-I find it better to observe bottoms instead of picking them, even if itchy to do it.
-Today confirmed the feared over the shoulder double boulder holder pattern and you KNOW what that means....

Stay sharp folks.

Is Nothing Sacred from the Robot Revolution?
While we are concerned about debt defaults and imploding markets, I cannot allow the robot revolution to go unnoticed. To temp children and girls alike, a fire breathing pony robot is a threat to us all (via Geekologie):

Oh my.

MUST See video, this cat saw today's close:
Thriller Dance Kitteh

Have a good night.

Monday, August 1, 2011

Going Too Far?

Last night it was cool and nice here but tonight the heavy humidity has returned. Yuck.

Market Operations/Observations
The market spiked up right at the open, but not as hard as I would have thought. Then there was a huge insta-reversal and everything was lower. Puzzling action. The numbers for the ISM were pretty bad which is another data point saying things are slowing down. More debt drama during the day and it was messy all around. No positions right now and chasing this market all over the place does not interest me. I have complained before about how slow things happen in finance and now is a good example; lets have a flush out and move on or leave the 200 moving day hugging and move higher and move on.

I will probably look at a bunch of screens tonight and will update if I see something. Would have to be a very appealing idea for me to want to get active in this tape.

Going Too Far?
The debt ceiling deal has passed tonight so the end of the world has been circumvented once again. Rejoice and all that.

With that mess hopefully in the rear view, I did want to say a few things about what I think about all this. But first, I have to set it up.

When you have a teenage kid you do your best to give them room and let them operate on their own. Within the boundaries set up, hopefully the kid plays by the rules and everyone is happy. This does not mean the kid is not out smoking stuff, drinking, and getting naked with others, it just means they are not throwing it the parents face who can then pretend it's not happening. Everyone is happy.

What happens when you have a kid that is sleeping in and missing school because they are drunk? What about the newly formed stoner who cannot act normal and will not stop eating all the chips? What happens when the police drop off the kid because they were caught "parking" in a state forest? I think you know, the clamps come down. Rules are increased and behavior more closely monitored. Maybe the parent will stop taking the kid's word anymore. It happens.

Is there a point? The kid here is the United States.

The US has the world's reserve currency. This rocks because we get to do all kinds of stuff no other place can. Kid Dynamite mused the other night:
It is this very reserve status that enables us to get “away” with some “imbalances” (I almost used the word “shenanigans”) that other countries might not be able to get away with, and if we lose that privilege it will accelerate our fiscal demise.

The whole debt debate was never a real issue. What is troubling is how quick and loose the US is using the reserve status to do whatever we want. Consider:
-Unlimited swap lines with foreign banks
-QE light
-QE3 by September (my guess)
-Deficits accelerating
-Forcing interest rates down for years
-Massive asset bubbles
-A financial bust that almost ended the world (so they tell me)
-Lack of political will to change anything
That is quite a list.

Now don't panic. No one is in any position to do anything about this. If the US wanted to print up 20 trillion next month to make every voter a millionaire, it would be tough crap for the world. Inflation expectations may actually go up so don't put this past someone like The Krugmonster. Still, the kabuki theater vote today and how poorly managed the whole thing was has got to start the wheels turning for the world at large. Being the world's reserve currency has special obligations and responsibilities. The US is a teenager drinking a 40 of St. Ides while driving dad's Porsche and texting all the way down the highway at 120mph. At some point you have to take the keys away.

Have a good night.