Daily Archives: August 19, 2010

40 Stocks Prime For Shorting (By Ryan Mallory)

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The screen below are for those stocks that have been on a solid
uptrend of late, but are starting to show signs of breaking down
along with a loss of interest by the street as a whole. So if
you are looking to short this market (which in my humble
opinion, is a great idea), use the list below as bit of a primer to
get your bearish energies flowing. Most of these stocks look pretty
good when just looking at price and volume from a long-term
perspective, however, what is concerning is some of the glaring
bearish divergences that are popping up. One such indicator is the
Time Segmented Volume – TSV that shows all of the stocks below in the
negative, which is a good indicator that the longs are starting to
get a bit skittish in their current positions, and are taking profits
as a result.

The industries popping up the most in the list below are Farm &
Construction Machinery, Air Delivery, Semiconductor, and Oil & Gas.
So zoom in on those guys first.

Here are 40 Stocks Prime for Shorting

Check out Ryan's Blog at SharePlanner.com

A Quartet of Failures for Our Bull Friends

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I got a very late start this morning – – – I was up at 6:35 a.m., which is a couple of hours after I normally wake up. I dashed downstairs and was pleased to see things leaning my way. They've been leaning my way progressively all day, which is obviously encouraging. I have been adding to shorts most of this week, and I presently have 241 positions. I covered day trades on GLD, SLV, and GDX at handsome profits earlier today, and have returned to avoiding precious metals like the plague.

Early this week, the bulls had a golden opportunity to push things higher. Even with the OPEX advantage, they've already blown it. Allow me to point out 4 failures on their part.

0819-es

Failure (1), they could not even manage the strength to get the /ES back to resistance at 1103. Failure (2), they managed to push the market higher for a second day in a row, only to fail at the exact same spot. Failure (3), prices cut through resistance at 1084, which destroys any basing pattern that might have been forming.

Finally, failure (4), on the EUR/USD below, they completely muffed the chance to complete the IHS pattern into a surge (which would have flowed directly into an equity rally).

0819-eur  

The dreaded OPEX week is almost over, and the bulls have already tripped on their own ambitions. The bears have the baton. A drop below 1066.25 on the /ES will allow the bears to beat the bulls over the head with it.

Still in No Man’s Land (by Springheel Jack)

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Bears were very excited about the pullback from the double-top
yesterday. I've been considering this carefully this morning, and the
evidence for an imminent pullback doesn't look overwhelming to me as
yet. The bear case for the next few months is very compelling, is
supported by numerous patterns, and it has economic logic behind it, but
it still isn't necessarily going to happen.

One of the most compelling patterns for it is the possible bearish
gartley pattern building on SPX. Here it is in its full glory:

100813_SPX_Possible_Gartley_Pattern_Building

This pattern came into focus when the move from March 2009 peaked at
an almost perfect 61.8% retracement of the 2007-9 bear market. While
most would doubt that we could move down to the 870 area and then move
back up to challenge 1350 to complete the pattern, I think it looks very
feasible as the first leg up would be QE1, and the second would be QE2,
with the whole forming an ABC corrective move before another bigger
move down. If SPX drops back below 900, I would expect that there would
be another big stimulus package and the quantitative easing printing
presses would be run round the clock to try to reinflate asset prices in
the fond hope that this would revive the economy. That would probably
work, for a while at least.

After a year or so of QE2, and the unprecedented fiscal blowout that
went with it, I'd expect a bond market revolt to rein in  government
spending and to shut down the printing presses, and then we'd have the
final bear market of this secular bear market cycle, uninterrupted by
these tedious and counter-productive keynesian interventions.

I'm working on a full post fleshing out this scenario and will definitely have it posted this weekend.

Short term I'm seeing no technical damage as yet to the  multi-week
uptrends in the two most important markets that I am watching, namely ES
and EURUSD. ES is still in the rising channel that I proposed as a
likely candidate at the beginning of last week. Support is at 1074.5
today, and only a close below it would unambiguously open the path to
new lows. The increasingly impressive looking IHS that I suggested might
form three weeks ago with a bounce off 1130 ES to make the right
shoulder is now well advanced and looking increasingly scary from the
bear perspective:

100819_ES_Daily_Rising_Channel_and_IHS

EURUSD is much closer to a breakdown, and tested support on the
broadening ascending wedge again last night, but support held, and only a
close below that lower wedge trendline, currently at 1.279, would open
the path to new lows for 2010:

100819_EURUSD_Daily_BA_Wedge_and_HS_Pattern

Short term on ES the double top that we have seen on ES the last two
days, coupled with the three bounces off the strong resistance turned
support level at 1084.5 since ES broke up through it, give the look of a
(70%) bullish rectangle with a target at 1112.5. A break downwards with
conviction through 1084.5 would open the way to a test of main rising
support since the July low at 1074.5. A conviction break of 1074.5 and
close below it would clear the technical path towards new lows for 2010
with a likely target IMO below 900 SPX, but I'm not going to get excited
about that until I see it happen:

100819_ES_15min_Rectangle

The copper chart still looks fairly bullish, as the broadening
descending wedge defining the recent pullback broke upwards last night,
and the action over the last few weeks has something of the look of a
bullish pennant. We hit a major resistance area overnight though, and we
could easily see a pullback here:

100819_Copper_Daily_Pattens

As I write I see that ES has plunged down to test 1084.5 again, but it
is holding so far and EURUSD has been moving up while ES has fallen.
We'll see how that develops today, but on a swing trader basis, there's
nothing to see here yet.

Bonding with my Friends (by Nathaniel Goodwin)

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I was just informed by the Colonel that my week long banishment from our apartment needed to be extended, so it looks like I’ll be sleeping outside with my homeless friends a bit longer.The Colonel feels that I do not yet fully recognize the severity of violating his sacred space in our apartment. He also said that by kicking me out of the apartment,  “I’m giving you the gift of street cred, Cuz! You’ll need that if you want to make it on Wall Street playing with your stupid stocks with all the other fancy pants dweebs.”

Stun Gun has been taking me to Times Square every morning so we can watch the outdoor stock ticker while we sit in filth and ask for change. The one thing that has really been aggravating me more than being kicked out of my apartment is the bond market. TLT’s breakout on Monday was a surprise to me, and Wednesday's open made me want to dump all my TLT short.  Stun Gun said that I was acting like a girl-scout and should be selling cookies not stocks and bonds. He told me to push my retracted balls out  then showed me these charts.



TLT
TNX
  

It looks like TLT is sort of in no-mans land. It seems it could go up to $108 easily, but needs to hold that green trend-line which was breached already at the red 8 ($99). If it loses that trend-line, it could sink to around $95 if it breaks below $100.  $TNX is about to hit a support fan, maybe it will bounce here.


I then tried to push my balls out of my stomach cavity, and added to my TLT short even though I’m down right now. I do have a stop on this trade, but it has not been hit yet so don’t dump on me for “adding to a losing trade”. I have enough problems finding a safe dry place to sleep at night, cyber-heckling is the least of my worries. I’m also going to  put a time stop on this one since it is a pretty boring trade, and the money could have gone to something much better. Stun Gun said to not reveal the stops here since the black helicopters following us have Internet access and are watching us.

(Disclaimer- Short TLT, technically homeless and Stun Gun claims to be able to fly around the city fighting crime at night. I’ve only seen him huff paint until he passes out.)