My favorite part of the day is reading to my beloved children at night. (Indeed, I have had such vast experience reading these books, I keep toying with the idea of doing an excursus for my readers on Curious George; one day, perhaps; and I'm serious about this.) Many of their books tend to be science-oriented, even though my kids are pretty young.
Tonight I was reading a book about genetics; I get a little sheepish when it gets to the sperm and egg part, but I did read the bit about how all human embryos start off as female but, after a few days, about half of them become male. A portion of the dialog with my son (who, by the way, is gorgeous, thanks to his mother's genes, not mine) went like this:
Son: "So everyone on earth would be a girl if that didn't happen?"
Dad: "That's right"
Son: "Oh, that's good. Otherwise it would be pretty unpleasant."
Oh, he's a wise one.
The big news in the market today was that crude oil took a wallop. But don't be confused. The past ten sessions have been nothing more than a trading range between about $131 and $139. The market doesn't know what to do with itself. If it pushes above $139, you're going to see an explosion to the upside. And if it breaks below $131, I think we'll easily move to $123. The longer this range persists, the more substantial the eventual break will be, regardless of direction.
The sucky part for me was that almost all the profits tacked onto my portfolio yesterday was eliminated today. I don't mind if I suffer a "wash" if the Dow is down 130 points one day and up 130 points the next. But if the market is down 130 points and then up merely 30, and I still am no better off, that worries me. Why shouldn't a 130 point tailwind help me more than a 30 point headwind?
Even more troubling to me is the graph below. Friday is quadruple witching, and the bullish engulfing pattern expressed by the NASDAQ could make for a bullish day. The market really needs to take it on the chin for me to have a good Friday. Otherwise, I think it's going to be in the hands of Beanie & Friends.
The Russell 2000, on which I own puts, has been stuck in its own trading range for many weeks now. This isn't at all a clean pattern. A break below 717.50 would be terrific, but I'm not holding my breath.
My bearish bets on crude oil may pan out after all, though. The MACD and Slow Stochastic both turned south recently.
And OIH, which came within two pennies (!) of my stop price earlier in the day, sported a nice bearish engulfing pattern. But let's keep in mind the range I was talking about. Unless crude slips beneath $131, we'll just continue farting around. And a push higher by crude could supercharge OIH above the $220 level.
GNK has, for three days now, been tickling its resistance line. Let's hope it stays beneath.
A number of red-hot stocks, like MOS, POT, and CNQ (below) had some pretty big dollar drops today. The next few days could be interesting for these issues.
I bought MDR puts today based on what appears to be a failed bullish breakout.
I also acquired, early in the day, puts on PXD.
I'll probably have more to say tomorrow (although if the market roars higher, I'll probably be too bummed to say much). I'm off to bed now. And I leave with you this – – a local story from Maryland, the state I am currently visiting. This has to be one of the best headlines. Ever.
