Monday, October 22, 2007

Monday Update

Just wanted to let any readers know that I will be taking the week off for a little vacation. I will be back to resume posting Oct 31. Just a little sun and diving in St. Croix.



An e-mailer asked what are my outstanding positions. When I started this blog I was only posting chart comments. Now I am posting entries and exits, mainly as a journal or log to help myself with improving my own trading. Therefore included below are outstanding positions. Only positions that were posted (on this blog) as being entered, as opposed to letting readers know after the fact, are included. Here they are:


  1. Long 3 units Ultrashort Financials ticker SKF @ $72.50 stop $72.50


  2. Long 3 units Ultrashort Real Estate ticker SRS @ $81.50 stop $81.50


  3. Long 2 units Currencyshares Japanese Yen ticker FXY @ $84.25 stop $84.25


  4. Long 2 units U.S. oil fund ticker USO @ $53.20 stop 53.20


  5. Short 1 unit Sears Holdings ticker SHLD @ $154.60 stop $154.6


  6. Short 1 unit JC Penney ticker JCP @ $62.90 stop $62.90


  7. Short 2 units Chevron ticker CVX @ $92.25 stop $92.25


  8. Short 1 unit Citigroup ticker C @ $44.70 stop $44.70


  9. Short 1 unit Goldman Sachs ticker GS @ $226.85 stop $231.29

  10. Short 1 unit Marathon Oil ticker MRO @ $57.90 stop $61.24


  11. Short 1 unit Garmin ticker GRMN @ 113.20 stop $117.24




Recently closed out losers with their losses include the following.



  1. Ratheon ticker RTN 1 unit @ $3.00/unit loss


  2. Ratheon ticker RTN 1 unit @ $1.50/unit loss


  3. Crocs ticker CROX 1 unit @ $4.20/unit loss


  4. Las Vegas Sands ticker LVS 1 unit @ $5.90/unit loss


  5. FTSE Xinhua 25 ticker FXI 1 unit @ $11.40/unit loss


  6. Clean Energy ticker CLNE 1 unit @ $1.40 loss


Good trading to you all and see you next Wednesday.



Charts of Marathon, Garmin and The SOX.







Friday, October 19, 2007

Google

In honor of Henry Blodgett, Jack Grubman, and Mary Meeker and all the financial acumen, integrity and foresight they represent I want to go on record as setting $999 price tag on Google. Just like the game show The Price is Right, if you go over you lose so hence the $999 price target. How did I come to this conclusion you ask? Simple, hours upon hours of exhaustive, extensive, painstakingly intricate industry analysis and company specific fundamental research. What, who does that anymore, but shhhhh don't tell anyone, truth be told I took everyone elses' Google numbers and just multiplied by a fibonacci 1.618 (besides 999 is 666 upside down). Why go through all that work hashing through the numbers, turning over rocks looking for clues, no need to re-invent the wheel, that's already been done. Now I could have said something really ridiculous like $1500 but that would draw too much attention and after discussing it with Mr. Blodgett, who said after all the initial media attention, fawning and accolades though really intoxicating at the time wear off , you stick out like a sore thumb and as that Chinese proverb says the nail that sticks out the most gets hammered, so belatedly I decided to pass. Anyhow, the end justifies the means, doesn't it, seems I heard some motivational speaker at a training seminar say that and it sounded cerebral to me !

Thursday, October 18, 2007

Countrywide, Chevron and Goldman Sachs Charts




A beautiful looking pennant. Watch out below ! Again if you are a depositor, please make sure you have no more than the FDIC insured limit.








Still short 2 units of Chevron @ 92.25. Crazy being short an oil stock here.... maybe, but the stock refuses to make new highs as crude pushes higher. 94.69 is the stop now.





Suffice it to say I am highly skeptical of Goldman's latest quarter. (chart top ). I have a suspicion that a whack of that 8 billion of trading revenue was of the tier 3 (make believe)variety. Besides, how long can you go losing 19 billion on operations and borrowing 23 billion. To this simpleton this math doesn't add up. As my notes on the chart indicate I need someone to explain how GS is immune to the sickness that ails the others. I know you are supposed to put our rocks in the wettest bags as they break most easily but for some reason I am drawn to the the 'masters of the universe' and central banking breeding ground Goldman Sachs. You can't tell unless you bet so I go short here at 227 with a stop above yesterdays high at 231.29. Maybe they are the smartest guys in the room, we shall soon see.



Wednesday, October 17, 2007

Charts on Ultrashort Financials, Real Estate, Home Depot and Citigroup.

Added another on the break out, now long 3 units on SKF


Also added a 3rd unit here as well. Commercial real estate is the next problem child.


The Home Depot weekly chart(above) says it all.


I don't know him and I am sure he is super guy loved by many but Mr. Prince, he of music playin' so we be a dancin' fame, may have to brush up on his lawyering skills as his days are numbered. Either that or audition for dancing with the stars, global finance edition.
Good trading to you all.




Mid Week Thoughts.

Okay so Ericsson misses big time but everything is okay in tech land right? Goldman Sach's numbers are coming under some scrutiny/analysis, remember that level 3 stuff, mark to make believe? D.R. Horton, the nation's #2 home builder announces plunge in orders.

Key Bank out of Ohio has big trouble and this is a safe regional player, right? Rising oil good for the markets, right. It means a robust economy right. So ergo $110/bbl oil would be a fabulously robust economy. At some point the market starts to add it all up, no? They want it both ways, massage everything to fit your stance.

Then we have the automakers like GM moving on the union news. Has anyone looked at sales numbers? Last I heard you have to sell cars at a profit to continue as a going concern, but why let facts get in the way of a properly programmed black box. Look at the Chinese stocks as an example, the black box says buy and they buy, just like those same boxes told them to buy sub prime CDO's. and momentum.com. BIDU at 70x revenue now, yes you read that correctly 70x revenue, if you believe Chinese accounting. Lets just say I had a relative try to do biz in China some years back and I have my doubts, to put it mildly.

To the China stock longs whom I do not begrudge one bit I say, enjoy the party or as Chuck Prince of Citicorp likes to say "the music is still playing so we need to get up and dance". I hope you leave the dance with some profits. Like I said the other day the same people who told you everything was contained and there was nothing to worry about either lied or were oblivious and both are bad.

I want to take this opportunity to remind people that the until the facts of housing, sub prime, credit, leverage, derivatives, accounting gimmickry change I won't. There will come a time when just like energy and gold in 1999-2000 you will be laughed at for buying. Most of the traders out there are far to young to remember that equities were anathema back in 1979-1980, right as BusinessWeek published their infamous cover 'The Death of Equities". Everyone wanted commodities, precious metal and energy stocks in particular. You couldn't give away a basket of mainstream(S&P500 type) stocks. Just as they were embarking on a fabulous bull run. Market participants were still smarting from the Nifty Fifty fallout.

Those who don't learn from history are doomed to repeat it. I will have some charts posted shortly.

Tuesday, October 16, 2007

Charts of Bank America, Capital One, Merrill Lynch, Mastercard, Clean Energy, Kinross Gold and USO

The above chart of USO (daily) has met target (65-66) on the inverted head and shoulders I had noted in prior blogs. Oil bulls can enjoy this and ignore the incessant media coverage over will or won't oil hit $100/bbl. $100 will be a major psychological level and more than likely just a rest stop on the onward march upward. to 150 and then possibly 200. Supplies will determine it as demand is insatiable and getting worse.




























Monday, October 15, 2007

Charts on Garmin JC Penney and Moody's







Charts on the Financials, Citigroup, Barclays and Deutsche Bank










































Random Monday Thoughts

Back to posting after a short break. Looks like I have not missed much in the way of action. So a couple of quick comments in this post and some charts later today. Being away from the quote terminal often provides a little bit of perspective given how one can get caught up in the day to day action of the market.

I want to start by addressing the purveyors of calm as I like to call them. The people out there proclaiming that the credit crisis is over. You know the same ones who never saw it coming in the first place, denied its existence thereafter and now emphatically conclude it being over. I really do not know what to say to you if you are listening to these purported experts except to say I wish you luck you will need it.

Next I want to comment about all the excitement about the fed cut of 50 basis points. If I remember correctly back in Jan 2001 the Fed under Greenspan cut rates 50 basis points and the market rocketed about 6% only to plunge 45% over the next 18 months. Not much has changed I would guess.

The banks fessing up and taking hits, along with a failure (Netbank). Again I go back to Dennis Gartman's cockroach theory as there is never just one. If you all believe that the impairments announced by Merrill, Citi, et al is the end, well then again I offer luck because that is exactly what will be needed to extricate you from those position.

I have always been a follower of the action of the tape. It is what counts towards your month end statement. And yes, the action of the tape has been up, no question about it, but there are times in the market when the action of the tape has to be questioned and this people is one of them. There is significant fundamental deterioration happening underneath this market and to ignore it is folly of the first order. The quant (black box) funds are buying just to buy, so they can push their 4 horsemen as much as they want as the leadership gets narrower and narrower until one day the programs no longer say buy they say sell, and yes sell they will do to a level like now that will defy underlying fundamental logic. I see a lot of gunning the tape as some call it where resistance levels are pushed through triggering stops on shorts and new buying only to reverse thereafter. For those new to the game this is done to create a market unto which to sell. It is a technical version of spreading a false Warren Buffett rumor but succeeds in accomplishing the same thing, a market unto which to dump a very large positon.

If you are long and strong, mainstream equities, admit it for what it is, you are riding the wave of momentum without care of anything but price, and will be able to find a seat when the music stops, because this is exactly what you are doing. To claim anything else you are only deceiving yourself. You can pull a Jack Grubman/Mary Meeker/Henry Blodgett on me and rationalize that BIDU, RIMM, AMZN, GOOG, or AAPL trading only 150 times 2010 earnings is cheap but mark my words sanity will return. The economy which is 70% consumer driven will punish those stocks, and by the way AAPL , RIMM and AMZN are consumer stocks not tech stocks.

Suffice to say that very soon risk/reward will be uncovered to the light of day. Please make sure your positions are skewed toward trades that are heavy in reward and light on risk ! Good trading to you all.

Friday, October 12, 2007

Technologically Inept

My apologies for not posting as I have been away on a short vacation/business trip to South Carolina. I thought I had posted notice of that but forgot to click 'publish post'. I am back and will resume posting today. Hope you all had a great week.

Friday, October 5, 2007

Central Banker Applied School of Mathematics

I was confused for so long and now I have seen the light. Seems like enrollment at 'THE SCHOOL' has spread from Central Bankers to Wall St. Hope you enjoy this !

Wednesday, October 3, 2007

Chart of Xinhua China 25 ishares


Would you partner with a Chinese business ? Could you trust their bookkeeping ? Well, you do if you own the stocks. I know owning inanimate stocks is so easy and fun you don't realize what it is you own. After some time they all look feel the same, until one day they don't ! It is time to watch this very closely now. So many have been so wrong/early so often. Today's range is very important as it gives us our rules. A break below today's low confirms island reversal and break of today's high(and trading there for 1 hr) negates is. Simple is good (for me)! Good trading to you all.

Charts of Chevron, Ratheon, Ultrashort Financials & Real Estate











Tuesday, October 2, 2007

Updates on the Yen and Others



This weekly picture (above) of the Yen looks okay to me. We are still north of the 40 week ma and the MacD is positively diverging. The action since August looks to be a pennant formation which is a continuation pattern and is usually resolved in the direction of the preceding trend. This is still the stock of the global speculative soup and until this breaks down decisively the global bull is suspect. No one can really put his/her finger on the size of the yen carry trade, so suffice to say it is enormous.



In a recent email I was asked why I focus on the longer term charts so much. The reason I do is simple. The longer term charts smooth out the short term neurotic buying and selling that the market tends to experience. These spikes if sustainable will show up on the chart besides the weekly is less vulnerable to whipsaws, not entirely but less so in my experience.


Quick Hits

Ratheon(RTN) popped but still looks vulnerable to the downside. 63.50 is now my new short entry with stop above recent highs of 65.50.

Meritage Homes(MTH) broke the 15.50 level of the descending triangle and is now rallying into the level which should act as resistance.

Chevron(CVX) grinding here, but stops not violated. I will add to the short as the reaction low of 91.45 is taken out to the downside.

JC Penney(JCP) is just biding its time, though a break of 63 should kick start the downside train.

Don't look now but Int'al Coal (ICO) is starting to percolate.

Crude oil (USO) needs to hold 60 or a healthy short term setback will be upon us. Manage your stops !

Gold (GLD) has had a great run and a pull back to 68-69 cannot be ruled out.

The grains (DBA) touched 31 the other day and look to consolidate again 27-28 looks like a decent enough area to do the work.

Good trading to you all.

Monday, October 1, 2007

Monday Thoughts

Regarding those buying Citigroup and UBS today .... please remember, there is never just one cockroach. I know the phrase is getting overused but for anyone who caught Richard Bove, the financial analyst of Punk Ziegel today on bubble TV, his comments continue to be refreshingly candid and spot on.

Is today's action short covering ? Is it panic buying ? Who knows and who cares we must concern ourselves with the tape. I try to trade when the technicals and the fundamentals are lined up in tandem. The problem I have is the significant underlying deterioration in the fundamentals contrasted with a market that refuses to recognize. Will we get through this unscathed as Mr. Market is telling us is the case or will it be a case of mistaken identity like March of 2000 when the party ended while so many refused to believe. I am still short and profits still remain but have eroded substantially ! Happy? Of course not ! Frustrated ? Yes but this is what the market is about and we need to deal with it. The market cares not a whit for what my positions or wants or needs are. The market will do as it will do in he short run but in the long run the facts will obtain. It is our job to react to the market, not anticipate it. New highs are being made in the Dow and Naz yet not in the S&P and the Russell 2K. The financials are lagging rather than leading. MY old chief strategist Don Coxe was on bubble TV today and made a very astute comment regarding the financials when he said in times like this they trade on the balance sheet rather than income statement. How do you value the balance sheet here for a financial with off-balance sheet conduits, portfolios of mark to make believe positions. The many bulls will counter as Maria did with Don when she said what does the market not get cause its going up.





A friend in politics(behind the scenes) always has reminded me that when you are explaining you're losing. I continue to listen to pundits explain why housing doesn't matter. Why debt doesn't matter. Why the dollar doesn't matter. Why oil doesn't matter. Why inflation doesn't matter. I am always asking myself what happens to this market when it does matter. At some point it will, about that there is no doubt. There is a lot of hot, fast aggressive, highly levergaged institutional money flying around the globe leading to market moves that a fast and furious if not fleeting. If aggressive day trading is your game this is your market, no question about it! This is not a market for the faint of heart, the slow or the indecisive. If you are one of the fair weather fans who only jump on the bandwagon when the home team is winning please be careful. Yes, you know who you are, the type who buys any and all reactions (the dips) and will hold good companies forever(like you did in mid 1999 thru 2000). Did you learn from that experience? If you are not using tight, judicious stops you learned nothing and are going to regret it enormously, maybe even more than you did in the tech bubble. Bubble TV will not be there to help you when this rolls over. Jim Cramer will have no answers for as disconnected as this run up is from the underlying fundamentals so the ensuing decline will be as well. Enjoy your gains but that means hanging on to them. As perverse as it sounds, the fear of missing out can make you do foolish things and make you forget about the fear of losing.