Slope Of Hope with Tim Knight

Explosive Three Point Rally!

Today was a pretty lame-o trading day for me for a couple of reasons. One, I am heavily oriented toward bearishness on energy/ags, and those didn't do very well (in spite of crude oil softening up a little bit); and two, in hindsight, simply sticking with my index puts would have been better than trying to jump into index calls.

Now, before anyone thinks I'm suddenly a wild-eyed bulltard, I will remind you that my bearish positions (55) radically outnumber by bullish ones (6). But, based on the charts I'm looking at, I still think the market is due for a brief bounce. It tried to do so today, but I think the end-of-quarter craziness (particularly with such an historic quarter) distorted things pretty severely. In spite of my pain today, I am still embracing the thesis that energy prices will soften substantially, which will provide a "reason" for a decent equity rally. My positions are laid out for a one-two punch in this scenario.

Now, I know everyone refuses to believe we will bounce until the $VIX zooms past 30. I'm not convinced. Maybe people are used to things sucking now, so the "fear" isn't as prevalent as before (perhaps the $VIX is as much as surprise index as it is a fear index). I don't insist on a VIX spike.

If we have weakness again tomorrow, I will be double-bummed, not only because of my index calls (gack, it's hard for me to even type that) but because of my closed-out index puts. But looking at the $INDU, I would feel radically more comfortable buying puts if the bulls fought their way back to the area just below 12,000.

The QQQQs touched their Fibonacci retracement today. I'd like to see this bounce up to the next level higher, at which time I would re-acquire $NDX puts.

My Russell puts, which I sold late on Thursday, have continued to soar in "woulda/coulda" value. I'm leaving my tinted target there.

My one big index call position is on the SPX, which seems to be the most resilient right now. Mid-March lows are the obvious stop-loss on this.

I'll share a handful of positions now. I got some calls on JPM today. Considering LEH's 10% whack today, this one is holding up pretty well.

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My puts on MasterCard (MA) hold good promise, based on the clean pattern and high equity price.

I was waiting for another chance to get into AZO, and I got it today.

I am very excited about the ICE graph. This is a huge, HUGE pattern. Just a few more points, and we'll have a fully-busted neckline.

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I wasn't expecting PCLN to cooperate so quickly, but it did. A beautiful broken major trendline here.

Here's a close-up of SOHU, which is also a dainty H&S pattern. I also like the fact volume is picking up sharply as this starts to falter.

That's it for today, folks. Again, this will be a shortened week - - normal trading for just a couple more days, then an abbreviated session on Thursday. Thanks for stopping by, and good luck to all Slopers!

Looking Ahead

Thanks for your patience waiting for this post. I've been thinking long and hard about the markets, and I've got a number of things to share.

First, let me tell you something about me and bull market rallies:

(1) My timing tends to be very precise; ironically, my timing on bull rallies is way, way better than figuring out when bear plunges are going to start.

(2) My ability to trade them is horrible; in spite of me sharp eye for rallies, I tend to buy calls, get scared at the first inkling of trouble, sell the calls at a tiny profit, and "fight the market" all the way up, getting trashed all the way.

One day my knowledge of this behavior will cause me to - gasp - actually behave properly. Let's see if I can actually manage to get it right this time.

Let's take the last instance I was strongly bullish - in a post called, aptly, 180 Degrees, I stated (somewhat sheepishly) that I was bullish, particularly on China. The performance of the charts is shown below, with the date of the post marked with an arrow.

There's a lot of talk about how there isn't capitulation yet, so therefore the market has to fall a lot more. I'm not convinced. Let me put it this way - if the $VIX was a stock, I would short it right now.

As I look at the various indexes, I see much more likelihood of a lift than a fall. Here the $COMPQ shows a spinning top, right on its channel line. Notice the similar formation back in mid-April.

The $INDU is well beneath its lower Bollinger band. My feeling is that it will push higher toward the 12,000 mark, tinted below.

The $MSH behaved just as I thought it would, but I think it's ready to head back to the lower levels of that tinted zone.

And, in turn, I would look for the $NDX to get back to a level of about 1900, if not a little above.

Although I am still targeting the $RUT to fall to that tinted zone, I would feel far more comfortable buying puts if it fought its way back up to that $717 level.

Below I have marked the instances in the past couple of years where the S&P was at the bottom of its Bollinger range and the RSI has broken below the 30 line. As you can see, it typically occurs during a medium-range bottom.

Looking at individual equity, the carnage is simply amazing. I think it's time for a breather. Gigantic Bank of America has fully exhuasted its targeted range after it broke below this pattern.

Google is sporting a huge hammer formation based on last Friday's action.

Looking at the past couple of decades of JP Morgan, we are at a major lower, based on the supporting trendline as well as the broadening top formation.

Industry cousin Lehman Brothers is also at the deepest levels of the Fan lines, matching its mid-March lows.

PFG saw a surge in volume as it approach the lower supporting line of its descending channel.

And, as a person with many energy put positions, I was intrigued by the doji shooting star on the USO.

So, in sum, what I'm banking on is:

+ A drop in crude oil prices (and energy/agricultural equities)

+ A lift in equity prices, broadly speaking

+ An opportunity at a later date (how sure, I'm not sure, although I typically figure it way, way too early) to re-enter equity shorts for the next leg down.

And so, as midnight approaches on Sunday, I'm off to bed. This is a shortened trading week, but it's going to be a doozy.

Huge, Uneventful Day

The title seems contradictory, I know. But there was a huge amount of activity without much change in my portfolio. My feeling is that today representing a hammering-out of an intermediate-term bottom.

I've done a LOT of posts this week, and I'm going to take a break. I'll probably do something this weekend. Until then, thanks, and swing on back later to see if I've written anything new!

LEH, JPM Suggest Major I-Bank Bottom

Good Second Chance with AZO

Beautiful retracement here to the completed diamond pattern.

Really Rally

The index charts were screaming "buy!!" to me. That doesn't mean I'm dumping my gazillion equity puts, which I think have reasons of their own to fall. I have, however, bought into a largish call option on IWM this morning. Simply stated, when I look at the chart of the S&P 500 below, the technicals for a bounce are too compelling. I eagerly await the day when indexes are a "steal" to short again, but for now, I'm going to play this one long position.

I am selling selective puts right now, including RIMM, below (for a nice 80% profit over just a few days).

So What Next?

It Scares the Hell Out of the Slopes

Tim the Bulltard (Update: Flip-Flopper)

The same caveats as always..........take it as a contrary indicator...........call me a traitor.........and so forth. I'm buying SPX calls. I think we're in for a bounce. And I'm going to try to have the discipline to stick with it for more than, oh, a day this time.

Dow Approaching 38.2% Retracement

I have been relatively ham-handed this morning. I've got a ton of profits, but I bailed on my $RUT puts about $5,000 too early (e.g. left money on the table). I am, as a bear, nervously watching the $INDU (which is at new yearly lows this morning) approaching its 38.2% retracement level. It's a fantastic morning, but it's unnerving.

It's especially difficult for me since the $RUT seems to have plenty of downside left in it. What to do, what to do!!!