What's it going to be like when the markets move up or down just a little each day? What are we going to do when the biggest financial event in a quarter is a company bumping up its dividend a little? What will it feel like when a 100 point move on the Dow is pretty big news? We have gone through the looking glass, folks, and entered a totally new world. Someday it will get back to normal.
The reason for the title of tonight's post is that some people were actually ticked off (or "fading" me) since I had "turned bull." (To be clear, I was going long calls on specific sectors). I received a few emails from people, as if I had turned my back on "the cause." I am not here as a representative of the Financial Al Qaida; I don't pray for the destruction of the United States and its assets. I simply want to objectively take advantage of the insights I gain from charts. I may seem like a raving bear sometimes based on the juxtaposition between (a) what I see and (b) what the talking heads are saying; but reality and the charts have gotten a lot closer together lately, so I'm a pretty mellow fellow.
Suffice it to say that it is my life's goal to shake my permabear tendencies and be as dispassionate as possible. My "bullish calls" today are a symptom of my attempt at personal transformation.
The volume on AIG – – just one stock – – was nearly 1.2 billion shares today. It had a multi-hundred percent intraday range. And tonight, after hours, it is getting slammed yet again. I imagine this will be the big story on Wednesday, one way or another.
Now, a lot of folks have been needling me about a "pledge" to do just one post a day; you misunderstand – – I meant the final three days of this week. I'm going to be very tied up with "normal" work. What I wouldn't give to have three quiet days on the market! But that's not going to happen. What I'll probably do is just write a one-sentence post so that people don't lose their minds posting comments; in other words, I don't want people to have to load 15 charts every time they post a comment; and, at the end of the day, I'll do a regular post (OK, I guess that's two per day).
Looking back, I think I'd give myself a solid "B+" for my performance today. I dumped a huge number of puts early in the day, most of them at very good prices (although I painfully noticed that CEG, on which I owned puts a few days ago, was plunging like crazy!) I was kind of ham-handed with a few positions, notably RUT and OIH. But on the whole it was a good, profitable day, and I can't fault myself too much given the insanity of (a) the general craziness we're going through (b) Fed day, which is always nuts. The $VIX, not surprisingly, poked into "maybe this is the bottom for now" territory, as you can see below. This is only the 4th such instance pushing above 33 in at least the past five years.
As for what's next, it's tough to say; as of now (just a few hours after the Tuesday close), the GLOBEX is down mildly hard. As you can see from the DIA below, we bottomed nicely at mid-July levels and covered the entire Fibonacci range today, closing near the highs on huge volume.
The SPY, also sporting gigantic volume, opened down very hard and created a sizable bullish engulfing pattern (although let's remember last week's similar pattern didn't mean squat).
And then there's the IWM. It's pretty easy to see in all three of these ETFs how, even if they open stronger tomorrow, they might bump their heads pretty hard at the respecting overhanging Fib levels.
I should note for the record that I have no index options at all right now. I did buy some NDX calls, and I closed those for a few thousand bucks profit (I couldn't stomach the idea of a big call position overnight). I did go long a wide variety of issues, almost all energy- or gold-based, as I described in the prior post.
Looking at the S&P 500 daily chart, it's pretty easy to make a case for today's low being the intermediate low for a while. Just look at January (and, later, March) of this year; it hit that Fib level and spent months climbing higher. I think the culture, if you will, of the market has changed enough to shorten the countertrend. But I have trouble picturing the S&P just slipping right past 1170 and heading down to the next level of 1075. If we did "crash", however, that's where I'd say it was going to fall.
Another reason for my slight case of bullishness is the NASDAQ and, more specifically, the $MSH. The pattern below is hardly a marvelous long-term hold, but it certainly looks like a decent bounce point; failing Tuesday's lows, however, would really crush this market. The new "oh sh*t!" point in many cases are the lows from Tuesday morning.
Here we see crude oil (on a continuous basis) spanning back ten years. You can see how it "overshot" its trend very significantly. Likewise, it has "undershot" the trend here. I think that long-term crude oil is going to be bearish, but in the short-term I think it could make a push back to the very low triple digits.
I will close by saying this – – I'm tired! This "bear market" stuff is really exhausting. The thing which stinks about the slope of hope (not the blog, but the market) is how it requires such riveted attention. I could have lost a ton of money today if I simply ignored the market. The "wall of worry" (a climbing market) is great because it's plodding, deliberate, and non-volatile. So that's probably the main reason I would love to see us enter a bounce for a little bit; I could really use a break from all this! Something tells me the market doesn't care a whole lot about how rested I feel, though. We need to take it as it comes…..
