Facebook about to jump the shark?

I don't blame Marky Mark Zuckerberg for going public even though they don't need the cash. Cashing out is more like it although I doubt he'll admit it.

Yes, every time they tweak the interface we, the users, get into an uproar. Or as Sarah Palin would put it, we got our panties in a bunch. Moose hockey!

Think about who the customer is. Hint, its not you. Or me. We are the wonks who voluntary put our personal information into a marketing machine so they can sell ads and services against it. So if timeline tees you off, well, tough. Now if timeline makes too many of us mad, then that's another story.

Jumping the shark is when an entity goes a little too far to be liked. Fonzie jumped over a shark pen on water skis when Happy Days jumped the shark (do I have to spell out its origins any further?).  I blogged about retail stock trading jumping when football coach Jimmy Johnson did an infomercial for trading software.  Come to think of it, male enhancement pills jumped when football coach Jimmy Johnson did a commercial for them. too. Johnson? I get it.

I am on Facebook all day long - only in part because I sit at this damn computer all day trying to earn a few bucks. I have a business page. I just posted my college ID card, complete with a giant 70s monster 'fro. And this week, I am going to grab a Starbucks with my best friend - when we were in 4th grade - who I happened to reconnect with on Facebook.

Does the word ubiquitous fit?

As you saw in my previous post, I am trying out all sorts of social media. Hey, nobody wrote in to tell me what Squidoo is really for! And I am trying digg, shareaholic, stumbleupon, viadeo and even myspace. Yeah, I still have 300 vinyl LPs in the basement, too.

Someone is going to challenge Facebook eventually. Facebook is going to tick off enough of us - one day - so that we try the other guys.

Marky Mark, kudos for your timing in terms of sharks and market peaks.

Do you think the Winklevoss' are lining up for some IPO shares?

Squidoo

My intern told me about another social site called Squidoo. I put up a post - they call it a lens - but now what? Am I really that old that I don't get it?  Well, that's why I got a college-aged intern so you can't say I am not trying.

Anyway, it is a story about why you should know the trend. Check it out at http://www.squidoo.com/charting-the-markets. And while you are there, hit the like or tweet buttons at the bottom. I want to see if this stuff works.

Ganja Mon!

Rise up this mornin'; smiled with the risin' sun.
Three little birds pitch by my doorstep
Singin' sweet songs of melodies pure and true; saying,
"This is my message to you-ou-ou.”

Singin': "Don't worry about a thing, ‘cause ev-ry little thing gonna be all right."
Sayin': "Don't worry about a thing, ‘cause ev-ry little thing gonna be all right!"

Three little Birds - Bob Marley & The Wailers (1977)

The Fed passed out the joints and the market smoked them.  More free money!

ZIRP until late 2014. The three little birds (Bernanke, Geithner and apparently Elijah the prophet) were indeed singing sweet songs of hope.

Too bad gold said otherwise. 

Don't worry about a thing? Be afraid, be very afraid. (The Fly, 1986).

More on Spirit

No, this is not another of my now famous rants against the airlines and Spirit Air an particular. No, this is about the spirit of the analysis of charts. You can check out an old blog post on this topic here. This is how it began:

I often look at charts with my right brain to try to understand what they are really telling us. This is different from the left brain approach we all take as we mark up the price action with circles and arrows and a paragraph on the back of each one explaining what each one was (Alice's Restaurant fans, anyone?). Seriously, we look at a handful of indicators, draw trendlines as if they really mean something and then come to logical conclusions about the odds of the market going this way or that.

It's good to see I was a song lyric fanatic back in 2009. But here is something I wrote this morning in Quick Takes Pro (when are you going to take your free trial?) 

Q - How complete does the closing of the gap (or the window) need to be? Especially when the "stem(s)" (for lack of a better word) appear close to closing the gap, but the rectangular boxes (candlesticks) are separated?

A - First, we have to reiterate that we see no reason why any gap or window needs to be closed before a trend can progress. How else can breakaway and continuation gaps be explained? But that was not the question.

If you are a stickler, then gaps/windows are not closed - period - unless they are closed completely. Bar charts measure it with highs and lows but candles have more leeway. Some patterns require shadows (wicks, stems) to overlap or not overlap, depending on the pattern. Others ignore shadows and only deal with real bodies (the fat part of the candle).

Our view is that we need to respect the spirit of any pattern and not worry too much about the letter of the law, so to speak. Opens and closes on doji candles need not be exactly the same. Island gaps reversals (abandoned babies) need not have actual gaps. Why? Because 24-hour trading, decimalization, derivatives, etc… have changed the landscape and what constitutes an open and a close is now a very fuzzy proposition.


The financial markets are radically different than they were last century, last decade and even last year. The spirit of the tools still works because humans do the same old dumb (and occasionally) smart things over and over. It is the actual rules of the analysis that are questionable so keep it simple and you should be fine.

Schwing!

If you are a Wayne and Garth fan, you know what the title means.

I took a look at the leading sectors in the market today (Wednesday) and just scrolled through their charts. Nothing fancy. What I saw in the home builders sure looked like it needed "schwing!" as its caption. Same for semis. And electrical components.

One of my warning stocks was Home Depot, which was in a solid up trend since last summer. Why is that a canary in the coal mine? Because it is a superstar that goes up no matter what. If it went down, then watch out. Well, it did not go down. And in fact, it deserves a schwing of its own.

I am the Vampire Squid of Wall Street!

Even the Vampire Squid (that would be Goldman Sachs) gets a schwing, or at least a "shproing" since it is still in a low-level range.

Semis are not overbought but homies and Home Depot are.

I wonder if the market got drunk again on global QE (thanks IMF!) and now it is thinking with its schwing, if you know what I mean.  Sentiment is rather bubbly, too, making this whole rally look like a house of cards.

Party on Garth!

Black Eye Friday

Synchronicity, serendipity or a simple case of "it just figures." That's what Friday's sell off feels like after nothing but bullish action in the stock market all year.  True, most days left spinning top candles of uncertainty so the rally is far from powerful. But up it went, volume be damned.  Volume? What volume?

And then there's Maude, er, a stern warning that Europe will be downgraded. Did anyone NOT see that coming? But it was indeed a black eye on a Friday and Jamie "King of the (Financial) World" Dimon did not help. He called JPM's earnings "mildly disappointing," which when coming from a CEO really means "we are in deep yogurt."

On a personal level, my server company moved me last night and this morning my newsletter archive was unavailable. And so were a few of the bookmarks I use to streamline the website editing and permissioning process. Another black eye for me.

And then the President does something very Ron Paul-esque. He wants to combine several Federal agencies to help streamline business. Of course, a day earlier he wanted to raise the debt ceiling by a whopping huge amount. So, small government types who had their panties in a bunch Thursday got a black eye when they got something they wanted Friday and could not criticize the "Socialist."

Newt got one when his capitalism attack on Willard, er, Mitt backfired. Barack got one when it was revealed Bain Capital helped on the auto industry rescue. And then Europe got another one just a day after some rather positive bond sales.

Let's not forget Jon Huntsman's black eye for finishing behind Stephen Colbert in a South Carolina voter poll.

It's time for the weekend.  Ketel, rocks, twist, repeat.

Musings on Market Analysis

Technical analysts have been fighting the ignorami and kool aid drinkers who profess that there is no value in looking in the past to try to predict the future. Tell that to the patrons of your local OTB as they pour over racing forms to check their mudders. Or your favorite Wall Street analyst as she talks about the trend in earnings (uh, trend - that a technical analysis term).

But lately, since 2008, I have to admit there is something to the argument that charting is less worthy than asking a company how they are doing and publishing a buy rating. We're doing great! Buy our stock!!

Mouth breathers.

But again, there is something to the argument that you cannot use charts to predict the future. No, I have not jumped ship. But think about how charts work.  They let us know what investors did in the past and then tell us if we have similar conditions in place.  Let me reiterate - Investors tend to do similar things when faced with similar situations.

Note I did not use the word "same."  You know, that whole "history rhyming" thing. Nothing repeats exactly but human nature is a constant and that is what charts help us exploit.

Charts measure the mind of the market and that means the collective thoughts of the masses. A free, liquid market is critical and right now with the small investor gone and the gubmint meddling in ways that have never been seen before there are no masses to analyze. There is nobody waiting in the wings for a chart to break out. More likely, there is a scalper looking to get out at the higher price and that is not how it is supposed to work.

Sure, I still use charts and there is still a good deal of value. Let's just say that a large box of salt grains is always at my side.

I had a little conversation with Alan Newman, proprietor of the unique CrossCurrents newsletter.  He wrote in his latest missive:

The financial markets have metamorphosed into the wildest of beasts, untamable monsters that would not resolve in traditional bull markets as commonly expected.

I said that I have suspected for a while (since 2008) that all of our analyses do not work as expected any more and will only get worse. He answered:

Obviously, I'm very worried about the capital formation system (at least it used to be). And you have pinned another important factor. TA can't possibly work as well as it used to because TA in its essence, is a distillation of sentiment (which affords us the right perspectives). With the public gone, sentiment ain't what it used to be. But it does work.

Two different paths to the same view.

The point of today's ramblings is that the pros are just as frustrated as everyone else. We need the government to step aside and let the market purge itself of all the garbage that has built up in the name of saving it. When true market forces come back into power, so, too, will the public.

As Colin Quin would say, "that's my story and I'm sticking to it."

Careful with the Dollar ETF

In doing research for this afternoon's Barron's Online column, I found an article by Richard Bloch on Seeking Alpha. It tells us what we should have already known about the currency ETF - that conditions in the futures market make a difference to this ETF.   It is the same problem that the USO oil ETF faces with contango - or, higher priced later-dated futures contracts. Everytime the fund has to roll to the new month, investors lose value. That's one reason they created the USL version of the oil fund that seeks to mitigate the problem by using 12 months worth of contracts.

Anyway, this chart should drive home the point. The US dollar index has been steadily outperforming the dollar ETF for many months. For those who want to dig deeper, the trend before March 2008 was down - meaning the opposite. I'll leave it to you to figure out what the structure of the futures market was back then (contango, backwardation or something else).

Airlines survey

This survey says American Airlines has the worst customer service of the major domestics. And it says Delta had the biggest turnaround.  I still think Delta is a flying sardine can with crappy seats, no room and lots of fees.

Worst Domestic Airlines

We've been restricting ourselves to JetBlue and Southwest.   I did have a rather nice experience on Virgin America but they do not fly nearly as many routes in the US as I'd like (this one was Vegas to NY - had to take Delta on the outbound - ugh).

Woozy Canary

In this morning's Quick Takes Pro newsletter, I wrote up a few of last year's leaders that actually fell significantly on a day when the Dow came roaring out of the gate (mixed metaphor - horses do not roar - but you get the point). Here is one of them - MasterCard.

Since this was one of 2011's superstars, it is troubling. I get that the loser banks rebounded big time but why was this sold hard instead of just ignored?

The canary in the coal mine is still alive but a bit woozy. 

Trannies up even with higher oil

I can see why everyone is so excited.

But just as a follow-through day happens 4-7 days after the supposed change, so too might be the return from a long, long break.