Two days in a row with the Dow down triple digits. I like it.
I like even more the fact that we are getting away from the idea that a reduction in crude oil prices is all the economy needs to thrive again. A drop in oil and equities on the same day is just what the doctor ordered. Although the bullish uptrend in crude oil is not broken, it has been a while since we've seen this firm of a downdraft. Six out of the last eight trading sessions have crude closing below its opening price.
The only news on the scene today (besides GM soft sales) was Lehman Brothers (LEH), falling nearly 10% today alone. Perhaps people think this is "Bear Stearns II" on the horizon. Looking at those fan lines, unless LEH is heading for the graveyard, I think most of the selling has been wrung out so far.
The equity markets pushed beneath May's lows today in many cases, and we seem to be on the "right side" of the Fibonacci retracement line.
The Transports, too – – worrisome of late – – could be in the process of turning the tide. That lifetime high we saw in May could be the high water mark for quite some time. A fall beneath 5,150 would cement that.
The the NASDAQ, a favorite of mine to watch these days would make its bearish case clear again if it fell beneath 2,450 Friday's unemployment report may be the catalyst to really take the market down, since there's no real economic news on the scene until then.
Looking closer at the $NDX, we got tantalizingly close to breaking the channel, but instead it touched it perfectly. Maybe next time, eh?
If oil really tumbles, how far could OIH go? Judging from this graph, I'd say the low 180s.
Russell 2000 – formerly my favorite – remains stubbornly above its retracement line. We have another 20 points to fall before we're in the clear.
I do, however, have puts on the S&P 500, which is weaker.
In my IRA account, I can only buy positions, so I am forced to go long either equities or inverse funds. I've got a mix of both. A few favorites right now include CPI Corp….
……Firstfed (much riskier)…….
…….the QQQ double inverse fund……..
…….and Toll Brothers (although I'll be a lot more enthusiastic if it breaks above $26).
On the short side, CEPH's pattern is terrific, provided it doesn't cross above the line you see here.
First Solar closed at its trendline both yesterday and today. I am optimistic this is going to take out the $250 level, which is critical to its plunge.
I have good hopes for ISRG as well. Its formerly bullish pattern is ancient history now.
If the Transports roll over, there are some stocks which enjoyed the sensational rise in 2008 which will fall just as fast. Ryder, a major component, is one of them.
I also shorted GD today based on its failure to fulfill its bullish breakout.
Genzyme, profitable but a source of frustration, is finally inching down beneath its neckline.
I have puts in both GOOG and BIDU. Today was better for the former.
And another of the four horseman, RIMM, has failed its bullish breakout – – often a good sign for us bears.
Dick Cheney-land, Halliburton, is a new short for me today.
I used to be excited about LNN, but this chart just isn't acting right at all. I may bag this one.
Lastly, SLB is behaving itself beneath resistance, and I could see this easily getting down to $80.
Thanks for all the nice comments and emails about the prior post; they are much appreciated! Good night.
