Daily Archives: June 29, 2010

Treasuries (TLT) are suggesting that bad things are coming (Goatmug)

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 Here's a quick note as I'm still trying to get back in the swing of things after returning from Disney and the east coast beaches of Florida.

Just as we saw in October of 2008 we are seeing a move in Treasuries that is abnormal.  Buyers of Treasuries in size are typically NOT Mom and Pop (although I bet we have more Moms and Pops in there than 2 years ago).  Bad things happen when lots of people are willing to put their money away for 30 years and receive 3.94% or sock it away in the 10 year for 2.95%. 

This move in treasury rates is not good and I will be watching the bond market for additional signals that confirm this breakout.  This is not a moment to be a hero and take on a bunch of extra risk.  In fact, if we do get some sort of stock market rally, it must be used as a opportunity to unload some long positions.

ScreenHunter_01 Jun. 29 15.25

A further move up in TLT may portend a ride like this –

EVEREST-Drop-goatmug1

Goatmug 

 

 

Bear Markets and Former Leaders (by Facesincabs)

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[Editor's note:   Clicking on the links will transport you to the charts.  You could also save these links and keep an 'inventory' of charts that FiC watches]

Wow, what a nice
surprise today for "da bears"!

When a bear market
gets going, one of things that I do is keep an eye on former leaders at their
key support levels.  For example, let's
take a look at retail because a couple months ago it did not seem like it would
every stop climbing as it neared life time highs.  Notice that retail took out a key level
today.  That suggests to me that there is
more weakness ahead.

 

http://tinyurl.com/27bkarv
(retail)


Snap17


 

The other observation
that I have about today and the end of this quarter is that redemption selling
is back.  Usually the money managers and
institutions are protecting their quarterly profits on a day like today, but
clearly we have another shock event on the charts today and the selling by
institutions is persistent.  With that in
mind, here is a another fallen price leader.

 

http://tinyurl.com/24vtlwd
(real estate)

Snap18

 

Notice the "hole
in the wall" set up on this chart. 
If you are not familiar with this set up you can get a definition and
examples here … http://www.hardrightedge.com/trader.htm.  I expect that we will be seeing this pattern
on many charts after today.

 

That's all I have
time for now.  Good luck to everyone tomorrow.

 

My Day

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As you might guess, I have read virtually no comments over the past few days, so I am very "out of the flow" of things, which bugs me. I really like to read what people are saying and referencing. But a vacation is a vacation, and I'm getting a bit of leisure time.

Well, not exactly. My day began, as it did yesterday, at 5 in the morning, and I ambled down to the lodge to start the trading day. I had something like 25 longs and 48 shorts, and I was lightly positioned (maybe 30% of my portfolio; the rest in cash), and tilted somewhat bearish. I was struck with immediate disappointment when I saw the /ES was down 15 points already. I had really, really hoped the last two days of the quarter would be a bore, much like yesterday, but it was not to be.

What happened today sets us up for either an immediate (and it has to be immediate), hearty bounce, or we crack the neckline we've all been obsessing about for all these weeks. Look at the S&P:

Picture 3
 

If we break the neckline, a measured target would be around 875. At that point, I think the bear fun would be done for many ,many months. It would just be a range-bound grind from then on.

Ironically, it would be drastically better for the bears if we rocketed toward 1125 – – or even 1150 – – before softening up again. This would be a once-in-a-lifetime chance to load up on shorts at amazing prices. Sadly, that opportunity may not come.

The Dow Jones would fall to about 8250 (and I believe it will before October is over) in a similar scenario. The giant question is what will happen tomorrow. What could the Fed pull out of their backside at this point?

Picture 2
 

I have been somewhat hampered – – – but only somewhat – – by my remote location and paucity of computer equipment. To be brutally honest, had I stayed home, my results would probably have been extremely close to what I'm seeing thus far.

As of now, I have 87 short positions and 3 long positions (FXE, RTH, and TLT). Tomorrow is bound to be volatile, since today probably threw a lot of people into spasms. Whether it's up big or down big is unclear. I am shocked how fast the fall is unfolding. The bulls are in a much more pitiful situation than even I imagined.

15 Stocks the Street is Shorting (by Ryan Mallory)

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Here are 15 stocks that the street is continuing to get more and
more bearish on since the beginning of this year. Their short interest
has continued to rapidly increase against their historical norms,
and should be the leaders to the downside in the continued sell-off by
the market.

Quick note on this…7 new names on the list and all the ones from
the previous time this list was posted still remain.

Here are the 15 Stocks the Street is Shorting.

Checkout Ryan's Blog at SharePlanner.com


Your editor here…..I have created a FINVIZ screen for you for Ryan's pics.

http://tinyurl.com/37p4xzj

Breakdown or Bottom of Range?

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What happens for the rest of this week is a big, big deal.

We are at the precipice of a cliff. Or we're simply at the lower part of a very big range. I have no idea what's going to happen next. Looking at index charts, technology looks very vulnerable. Yet the Russell 2000 looks like it could make a big push higher from these levels. Just look at the $SPX:

Picture 1
 

The Powers That Be have an interest in defending 1040, and they've done it again and again. If 1040 breaks, the "obvious" head and shoulders pattern we've been discussing for three months comes into play, and we're looking at a hard fall to around 860 (far below my target of 925, often cited here).

At the moment, my portfolio is up 0.52% while the S&P is down 2.67%. You can imagine how I feel about that. I have 73 short positions and 2 long positions (BP and, much larger, GLD).

Today has been profitable so far, but I'm terribly disappointed, particularly since this end-of-quarter nonsense (risk-reduction on my part) has cheated me out of some substantial profits. Of course, it could have gone the other way, so I'm trying to remind myself of that.