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It's interesting that one of the "horsemen", GOOG, is down over 12 points, and yet the NASDAQ is pushing to new yearly highs. In any case, the only index I trust to short right now is the Russell 2000, which is both at the 38.2% retracement level and mashed up against the top part of its Bollinger band.
I have therefore gone long TWM, the double-inverse ETF.
I like clean charts, but the market gods have decided this isn't the time to produce crystal clear trends and patterns. It's a murky, mucky, mess.
For example, last week, I felt the financial ultrashorts were looking pretty good. Look at SKF and FAZ, below. FAZ in particular (the one with the tinted breakout) was beautiful. But this week, it fell to pieces, and the most I would hope for (as a chartist) at this point would be a retracement back to the broken trendline.
I suppose the reason they're showing any strength at all today, in spite of the Dow being flat, is thanks to GE, which has actually been stumbling lower fairly steadily since May.
I love sharing good ideas here – I really do – but nothing is leaping out at me, and I don't want to offer up flimsy charts.
I guess there are times when things are just really unclear, and this is one of those times. I never want to go through a week like this again.
I make a habit of using the Preserve feature in MarketMatrix in order to check what my closed positions did after I closed them. This is a handy retrospective, since I can see which big losses I avoid (and which big profits I managed to duck).
The stand-out among these is Avis (symbol CAR), which I got stopped out of on March 3 at 33 cents. It is at $6.56 now, a 1720% gain in the span of four months. A $4,290 position is now worth $85,280. Ugh.
Here's what the percentage chart looks like from that stop-out point:
Here's the longer-term price chart. You can see how we are just beneath a Fibonacci level here.
What do I take away from this? First, don't sell stocks that are about to go up 1800% (ahem). In all seriousness, it shows the power of percent. The battered stocks from March are the only bright spot in my trading over the past four months. This is why, over the very long haul, the bulls always come out on top, because growth is, by and large, the nature of the human experience, and you cannot beat the power of percentage gains like this.
If you're ever tempted to start a blog, don't do it. At least don't do it if you feel the tug of guilt.
I so don't feel like blogging right now, for a wide variety of reasons. But I will try to think of something cogent to say once I pull myself up a notch from this funk.
I'll be back in a bit.
Early this week, when Ms. Whitney was getting this torture-fest started, one Sloper mused, "Who are they going to bring out next? Roubini?" Well, life continues to be stranger than fiction. I was stunned to see Roubini's optimism being held up as the latest evidence of the new bull market. Amazing. Just amazing.
The weakness we saw from June 11 through July 12 has been swept away. If you look at the NASDAQ Composite, the entirety of last autumn's bear market has been retracted. We are just underneath the unfilled gap, and we are at a new high for 2009. Lovely.
There are opposing currents and eddies all over the place. Take a look at the S&P 100 below. The magenta portion is the pattern that shall not be named (and which failed gloriously). And the green pattern, much larger obviously, is its bullish doppelganger. It is conceivable that the S&P 500 (a different index than the one below, but highly correlated) could return to the quadruple digits as soon as next month. I, for one, remain very uncomfortable going long in this market.
I remain cautiously bearish on energy. I'm long DUG and short OIH.
Unless some miracle happens tomorrow, this will go down as the work week in my life as a trader. On the whole, I did a very good job following my rules, so I don't have a lot of beating-myself-up to do. The simple fact is that I was very badly positioned for this rally (to say the least), and this run-up, for me, was quite unexpected. I will climb out of this hole, but it's going to take a heck of a lot longer than four days.
