Friday, July 30, 2010

Pass the Dramamine

And I think it's gonna be alright
Yeah, the worst is over now
The mornin' sun is shinin' like a red rubber ball
- The Cyrcle

Follow the bouncing ball. Turn your eyes into googly Cookie Monster eyes.

The stock market is reversing intraday nearly every day so you have to admit, Ben Bernanke got it right when he called the called the economic outlook unusually unclear.

We went long silver this morning.

Thursday, July 29, 2010

Forbes List of Wall Street's Biggest Bears

Granted it is a month old but is your favorite there?

Nouriel Roubini, economist (Dr. Doom)
David Rosenberg, chief economist and strategist at investment firm Gluskin Sheff
Mohamed El-Erian, chief executive of PIMCO
Jim Rogers, motorcycle hippie and cofounder of the Quantum Fund
Marc Faber, not the guy on CNBC
Arthur Laffer, economist
John Hussman, money manager
David Hefty, chief of Cornerstone Wealth Management

Richard Russell, although there have been bits of bull in there
David Levy, economist

After seeing the list in print, the amount of economists does make me a tiny bit skeptical

Wednesday, July 28, 2010

Solar flare

From a chat room posted by colleague Ed Carlson:

Earlier today (Wednesday), magnetic fields looping over the sun's southeastern limb became unstable and erupted. The blast produced a bright, towering prominence that attracted the attention of amateur astronomers around the world. Meanwhile, on the sun's northeastern limb, a big new sunspot is emerging and it is crackling with C-class solar flares. Visit http://spaceweather.com for images and movies.

Comments to this included that it will raise volatility. Online sources suggest it will disrupt electronics andthat would disrupt business and disrupt the stock market.

Wikipedia says we have 8 days before it gets here.

Is any of this reliable? We can hark back to Arch Crawford's hugely bearish call from last weekend (Arch follows the stars). But guess, what, late July is seasonally weak according to Traders Almanac so let's just say I do not believe the July rally was anything more than @#$% you bears.

Tuesday, July 27, 2010

Jim Sinclair on Gold

From his email missives on a day when gold tanked 25 bucks:
-----------------
Calls I am getting this morning are total capitulation calls. Emails are worse. Gold will trade at $1650 and beyond.

The timing remains the same. Gold will trade at $1650 on or before January 14th 2011. Martin Armstrong is eyeing a higher number, but later in June of 2011.
-----------------
I am not disagreeing. I'm just is correction mode looking for a nice fat pitch to hit (lower prices)

Cloudy weather?


I have to admit the tape is hot and bears are losing money. I recreated this chart after seeing a piece in MarketWatch showing Ichimoku clouds. Basically, they say resistance at the June high (and top of the cloud). If the market gets through there then kicking and screaming go I to the long side for a few weeks.

Monday, July 26, 2010

Arch Crawford VERY bearish

This is an edited (for font, size and alignment) version of an Arch Crawford advisory sent over the weekend.  Poo-poo astrology all you want (I do) but Crawford's record is pretty good for a very long time.  He does drift to the dramatic however, as ALL CAPS in the original suggest.

Quote (sort of):

For traders only - Short the major stock indices, now!
Looking for down market in size monday.
7 2-planet combinations vs. Normal 0-1 may drop prices sharply.
Only caveat: sun trine Jupiter can turn it up –But against 6 downers?
Full moon Sunday heightens downside probabilities
We are approaching the most powerful planetary alignment in all of written human history July 26-August 3!

That means the next few months could produce historic equivalents to WWI, WWII, Great Depression, Black Plague. Or the fall of Rome

Get positioned now for Monday's action.
Keep stops on all positions.

Friday, July 23, 2010

I need a drink

Here is a chart that makes me head for the bar. Source: CBS news via MarketWatch.

Thursday, July 22, 2010

Where have we seen this before?

Where have we seen a premarket jump up followed by no action and no volume the rest of the day (I write this at lunchtime Thursday)?  Oh, yes, the rest of the entire year.

Good news from Europe and up we go. Many stocks are still getting pummeled on good earnings. Admittedly, that condition is not so much in force today with CAT and MMM doing well. Hmm, I picked CAT last week in my column.

Anyway, indices are still below 50-day averages so I am sitting tight. Growling bear noises suppressed until the week;s range is taken out to the downside and on alert in case we get a (blank) you rally before the whole thing comes tumbling down - which it will. (Oooh, bold statement).

Wednesday, July 21, 2010

Bonds don't lie

An excerpt from this mornings - pre-Fed - Quick Takes Pro newsletter.

In the Treasury market, yields on the 10- and 30-year bonds fell back below their big round number levels of 3% and 4%, respectively. And in the 2-year, the yield spent most of the past week below 0.60%. That is lower than it was when I wrote about it as a harbinger of bearish economic trends in Barron's last month.

The bond market does not give its blessing to the recovery or to a rally in stocks.

Who do you believe? The bond market or BlackRock (notoriously bullish investment managers)?

Tuesday, July 20, 2010

Fed up, is more like it

While I really do not know enough about the topic of abolishing the Fed, they do seem to cause undue volatility despite their mission.

From the news

Federal Reserve Bank of Richmond President Jeffrey Lacker said Thursday that the U.S. is at risk over its sovereign-debt levels and that the newly passed bank-reform legislation could pose challenges for some lenders.

and

The U.S. stock market drew a Tuesday afternoon lift from speculation the Federal Reserve was readying to announce an effort to force banks to lend more.

So the Fed speaks and the market tanks. Then the Fed speaks and the market rebounds.  Yet, when you look at both cases the economy was still in trouble.

Monday, July 19, 2010

Gold oops!

Well, it did not reach my 1350 target but the war is far from over. Correction time for the metals but it is indeed short-term - at least based on the available evidence.

Here is what is really interesting - Gold has moved opposite the euro, not dollar, even though it is priced in the latter. When the euro finally runs out of steam, I'll bet that is when we'll see the correction low in gold.

You fundamental types would agree that the crisis in Europe is not over based on today's downgrade of Irish debt by Moody's. It was not a major downgrade but the fact that it is coming so far into this crisis means it has not turned around quite yet.

Friday, July 16, 2010

Flinging Poo

Now that I've whined about people flinging cyber poo at me for being bearish, a friend confided he wanted to tell a few blow-hards where to get off. Funny how the tables turn so quickly in the analysis biz.

Here's the deal. I did my analysis and though painful I stuck with it. One day does not make a bear market but I cannot be swayed by the day-to-day unless it knocks my analysis on its tush. The stock market will be lower later this year than it is now, in my view.

Take a look at gold, too. Short-term breakdown. I am still a long-term bull.

Have a good weekend. I am visiting my daughter at camp. And don't worry stalkers, my house is fully staffed with relatives while I am gone. I am hoping the teenagers keep the party to under 100 kids.

Thursday, July 15, 2010

Any way the wind blows

No, not a John Kerry attack ad or end of Queen's Bohemian Rhapsody. It refers to the fickle nature of retail investors these days. To wit:

This week's AAII Sentiment Survey Results:
  • Bullish: 39.4%, up 18.4 percentage points
  • Neutral: 22.8% up 0.8 percentage points
  • Bearish: 37.8%, down 19.3 percentage points
Can you say, "flip-eroo?"
Can you say, "useless sentiment data?"

Sure you can.

Poll Results

OK, not a scientific poll and not even a big sample.  But readers of this blog tend to agree with me that the decline we are in since April is part of something bigger or at least is not part of a bull market.

I would really like to know what those who feel this is a correction in a bull market see. What keeps you bullish?  It is always a good idea to seek out reasons why you (or me) may be wrong.

Tuesday, July 13, 2010

Mikey on the radio

Saturday, I got a last minute call from a friend looking for a wingman (co-host) for his jobs oriented radio show on a local Long Island station. He said it is the Internet audience that makes it worthwhile.

When he called, I was in the back yard shoveling mulch into my tree and shrub beds and I thought, what a great metaphor for Wall Street. Spread some manure nice and thick and what does not suffocate grows nicely. But the smell!

Anyway, you all know me as negative on the market despite the recent HUGE run higher. To make matters worse, the chief call-in guest to the show was Peter Schiff - a vociferous snarling bear on the economy thanks to government spending gone wild. Yes, Peter Schiff, senatorial candidate from Connecticut locked in a primary battle with Mrs. World Wrestling Federation (it will always be WWF to me) Linda McMahon. I look like a kool-aid drinking Henry Paulson disciple next to this guy! 

Anyway, despite what I think about stocks and the economy, the point of the show was helping regular people get back to work. I told my own story of being laid off around the time of 9/11 (not from the attacks but from stupid management of the company that employed me sending it into bankruptcy).  I moved 1/3 of my work over to another firm at 1/3 salary and decided to start my newsletter. Some of my subscribers are still with me after 8 1/2 years.

The secret? Write and network. While I work in a profession where this helps I still told listeners to get out there, volunteer, intern, write magazine articles for free, act like an expert in your chosen field and don't give up.

This market bear is a raving lunatic bull on the concept of America and pulling yourself up by your bootstraps.

You know something? I feel underemployed even with all the outlets I serve. I will take my own advice and resurrect my radio station speaking "tour" (that is a generous term, for sure) and look for more customers. Whether you are unemployed or underemployed, keep plugging. What choice is there? A sixpack, cheetos and watching the tube all day is not my style.

Monday, July 12, 2010

You want the truth?

Rant warning

The battle we bears fight every day is from critics, not the market. Someone told me I have been bearish since he has known me although he did temper that with acknowledging I went along with the 2009 rally (well, a good chunk of it). I got the same treatment last week when my intermediate-term call was interrupted by a short-term rally.

The truth is that bearish newsletters do not sell very well. I would love to be bullish and that was the impetus for today's Barron's Online column (commercial vehicles and trucks). It is one of those "in case I am wrong" analyses but it is dependent on the market firming. At least nobody can accuse me of not keeping an open mind.

Do you want the truth or do you want me to agree with your opinion? They may be the same thing but if they are not then you (and I mean the generic "you") are the one with tunnel vision, not me.

I want to be bullish for many selfish reasons including newsletter sales. Tell that to the market.

Rant over

Saturday, July 10, 2010

Friday, July 9, 2010

Poll time

Time for a new reader poll. --->

Just trying to get an idea of where we all think stocks are heading.

Thursday, July 8, 2010

Another rally, low volume

Once again, we have to decide if a low volume rally means it is not sustainable or we are a frog sitting in a pot of water slowly coming to a boil. The latter means that before we realize it, the market is up 1000 points and your margin call does not care it was on low volume.

But since there are still no technical breakouts our old friend resistance still has our backs.  Therefore, we are not frogs.

The Free Market

In running through the charts for this morning's newsletter, I came across Verizon. Lousy looking chart save for an oversold bounce possibility. But I got to thinking about the baby bells and "where are they now/"

From Wikipedia:

  • Ameritech — (acquired by SBC Communications in 1999)
  • Bell Atlantic — (acquired GTE in 2000 and changed its name to Verizon)
  • BellSouth — (acquired by AT&T Inc. in 2006)
  • NYNEX — (acquired by Bell Atlantic in 1996)
  • Pacific Telesis — (acquired by SBC in 1997)
  • Southwestern Bell — (changed its name to SBC in 1995; acquired AT&T Corp. in 2005 and changed its name to AT&T Inc.)
  • U S West — (acquired by Qwest in 2000)
This does not include indies such as Cincy Bell and Southern New England. The point is that of Ma Bell and the major Baby Bells, only two remain standing.  The government broke up the company and over time the free market put them back together again. Basically, all that was accomplished was altering who was running the show.

The free market knows what to do.

Wednesday, July 7, 2010

fun fact

Well, its not a actually a fact since I do not have the numbers to back it up. But isn't it true that the biggest one-day gains are made in bear markets, not bull?

Reader comments most welcome.

They are running in Pamplona!

Apparently, idiot production in Spain is not affected by their hobbling economy. Young and old from all walks come to run with the bulls in an age old tradition. Sorry, Spanish friends, I'd rather do Nascar. At least the vehicle is designed to protect me when I roll it. A bull is designed to stick his horns through my intestines and carry them through the streets like sausages.

The market methaphor to this picture is that today, the bulls win. But after all the fun skewering mentally challenged partiers you know where the bulls end up.

Volume is pitiful today. Yesterday's reversal was demoralizing. Enjoy today while it lasts.

Tuesday, July 6, 2010

Second verse, same as the first

I'm Henry the eighth I am
Henry the eighth I am, I am
I got married to the widow next door
She's been married seven times before
And every one was an Henry (Henry)
She wouldn't have a Willy or a Sam (no Sam)
I'm her eighth old man, I'm Henry
Henry the eighth I am

Second verse (second half of the year) same as the first
- Herman's Hermits

You can substitute lyrics to make this market related, like, "I got married to the bull market next door."

Today's action was very bad. I don't care that the Dow came back to up 57. It had twice that and gave it all back first.

And did you see this?


Oops!

Friday, July 2, 2010

The truth about death crosses

Run for the hills! The S&P 500 is on track to have its death cross today!! Women and children first! Batten down the hatches! The British are coming! (sorry, UK friends, it is the July 4 weekend here).

Drama Queen.

Let's not get too wrapped up in the actual signal as it is not a very good short-term trigger. Why? Because it is a long-term indicator and everyone looks at it in context of the ensuing short-term action. A cross means the market has already fallen quite a bit. Even the action of the past two weeks leaves it short-term oversold and vulnerable to a real bounce - maybe even back to the averages.

Look at it as a long-term, put you on the right side of the trend indicator. Waiting for the reaction gives us a nice low-risk (vs. reward) selling opportunity. And the stop would be so close that if we are wrong we stop and reverse with little damage.

Of course, what if there is no bounce? OK, we just delayed the shorting. But what if it craters from here? Tough call. But if you ignored the technicals of three months ago, and again one month ago, well, you are late to the party.

Thursday, July 1, 2010

Today's humor

I posted to LinkedIn that most commodities fell yesterday except for sugar. People looking for a pick-me-up from candy?

Angelo Susi commented - nose candy?

I asked if they traded cocaine futures.

Angelo said that it was listed with the crack spread.