Mainely Stocks

[ari5000]

new BP slogan:


(found on Twitter)

"The oil you need is just one high tide away."

[ari5000]

getting stronger:


I've been buying stuff all day... today feels different. Feels like the days when bears got their teeth kicked in every day.


Bought STX, SNDA, ESV (red now on moratorium news), but I think you gotta get long here.

[ari5000]

taking a dip:


Today I just felt like buying. This is the third time market has rallied after a terrible day. Today's gap up after closing below Dow 10,000 is surely a big surprise to many. So the key is to be flexible. If the market does not want to stay below 10k, it's going up.

So I bought a few things back today: CSIQ, XIDE, BOLT, ENDP, CVVT -- very very small. But sometimes, you have to go with your gut.

Look at RIG -- from when I mentioned it just a few days ago. Now up almost 10%.

By the way, bearish sentiment polls are at the most bearish levels in over a year. Everyone is fearful now... so it's possible we've found a bottom.

[ari5000]

view from a Dirty Dozen member:

http://joefahmy.com/2010/05/26/take-a-ritalin-and-relax/


I probably keep close tabs on the opinions of about a dozen or so bloggers/traders online. This is one of them. Many others are linked in the i-box on this page.

At the moment, pretty much every single one of them is saying the same thing: Market looks weak, I'm in 100% cash.

There are many people making money but they are trading daily. One guy in the chat room this week made $100,000 in one day shorting the Australian dollar or something.

I'm still a fairly horrible day trader. I really only ever make money in strong bull markets... so why fight it? It's not a bull market. So I won't.

I'm still working on learning how to day trade properly. But for now, cash is fine.

[ari5000]

and near the close:


everyone buying in on today's pop higher just got punched in the face once again by Mr. Market end of day.

Dow 10000 broken near the close and looks like it will close underneath.


The bright side: SGG (sugar) stays green. This is good to go.

FXI index just barely green. China has been one of the worst markets this year... showing better strength. If we ever rally again one day in the future... you might actually make some money in China names.

The favorite ticker of the group I follow, CCME is up 2.55%

[ari5000]

some see a bottom, others opportunity.


Me? I see death traps still.

[ari5000]

Support Found:

http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=9&dy=0&id=p51532920683&a=191081970

Today's massive reversal day is saying something. First of all, everyone I follow was quite bearish and ready to get short... so for the day to simply blast through all that negative sentiment and the SPY to go green at the end (and have it happen for the second time in 3 days) is a signal. There is support down here. It may not stick. But it's a very very good sign.

The day ended with 323 bullish engulfing stock candles as well.

There were over 127 new lows on the Nasdaq but that's not such a bearish sign.


So what I'll be hoping for is some basing patterns. The fact is, I don't daytrade too much and I usually end up losing money on those trades. Like most of you, I prefer to make money on longer term holds and investments... but you can't stay long in a bear market. If the markets can start flattening out here... then there may be a chance to put some money to work again.

I do like that SGG but I'd like to see some other names.

For now, I remain over 90% cash. But if the next few days hold up, it's possible we may have seen the worst of 2010. The question now is: What stocks will be the next leaders to go up?

I remain cautious but for the first time in several weeks, I'm a lot less worried about some insane plummet to Dow 6000.


I should point out though: The market is in several oversold conditions. Quite often the market can rally in a bear trend... moving up to the top of the descending trendline, then fail spectacularly again. This remains the most likely scenario. So it's dangerous to jump back in, and then when the 'clearing rally' relieves oversold conditions, early bulls are trapped and punished.

The leading sector for today's bounce by the way, was energy, with RIG and ESV moving sharply to green in the last hour. These are two very cheap names and have been severely sold in the last few weeks. So I'm not surprised.

[ari5000]

sugar is officially a bull market:

http://stockcharts.com/h-sc/ui?s=SGG&p=D&yr=0&mn=9&dy=0&id=p94296675480&a=196238840

My chart says you can buy sugar now.

Why is sugar going up?

I have no idea. All I know is, everything else is being hammered, sugar is going up. The market likes sugar. If the trendline breaks, I will sell. But clearly, the story has changed.

[ari5000]

quote from NY Times article:


“There is a widespread lack of confidence,” said Francis Lun, general manager of Fulbright Securities in Hong Kong. “Investors don’t seem to have faith in anything.”




Pretty much sums it all up. In the end, it's merely a con game after all. Without confidence, nothing else matters. This is the history of the stock market. All bull markets rise from confidence and faith.

And die from lack thereof.

[ari5000]

What's coming next?




Pain.

[ari5000]

death traps everywhere:


again: 90% cash or more is the only way out. Holding on through a persistent bear market is a painful experience. Nothing worth holding except gold.

[ari5000]

RIG:


main issue: the price is volatile mainly due to the possible litigation they may face. RIG filed to limit their damages to $27 million. haha.

Well, it's not clear how much they may have to pay or who exactly is at fault. Again, I think the stock price is fully pricing in a massive hit. If a big penalty results, don't be surprised to see RIG jump up 10%. This market seems to be pricing in a multi-billion dollar penalty and potential bankruptcy.

[ari5000]

long term buy: RIG


I bought RIG today for a long term investment. It is down 1.80 today to 57.43.

Nobody wants to touch RIG.

Despite projections of earning over $8/share this year.

Assuming some extremely weak earnings... the lowest fair value I can come up with is $97/share.


RIG looks dangerously weak but of course, the lower the price goes, the less riskier it actually is.

Let's think five years from now: Will the BP disaster shut down offshore drilling? Will RIG still be in business? Will oil prices be higher or lower?


Rig is now near 57 and may go to 55 or 50. It's still worth in the 90s. My feeling here is -- if you can buy a small enough position so that you can just forget about it, and check back in five years, you'll make a profit. It may wind up returning

If RIG hits $91/share in 2015 -- that will be equivalent to making a 10% return annually on your purchase. So it's not a get rich quick scheme. If it gets back to the 90s before then, obviously your return on investment would be higher. As I write RIG is now UNDER 57. So the margin of safety is only getting better as the BP news dominates short term buying.

I think this is a nice idea since the long term trend in oil will be up most likely.



Here's the chart:

http://stockcharts.com/h-sc/ui?s=RIG&p=D&yr=0&mn=9&dy=0&id=p14205419497

All good value purchases are usually made when the chart looks like death. Good luck if you buy in.

[ari5000]

short term thoughts:


small caps and the transportation index did not crack under the 200 day MA. Also, we are way off the descending trendline. Thus -- there is some upside potential in the short term. The major trend is still down.

I see futures are gapping down this Monday morning but I am not terribly worried about a big downside move. In fact, today's drop this morning is calling for bargain hunters to step in -- as long as you can step out after making a profit. Obviously, this is not a good environment for long term investors. Cash is good.


Buy out of healthcare name ODSY and several upgrades of key stocks like INTC and C will provide plenty of support as long as conditions are oversold.

China index looks strong, too.


The main problem I see is the huge gap down in the euro -- so that's probably what's causing the drop -- but the euro can't kill the markets forever... at least not in a straight line.

My guess is a lot more volatility, choppiness, but perhaps not such a big move in either direction this week as the bearish/bullish indicators are getting closer to balance.

[ari5000]

broke that trendline:

http://stockcharts.com/h-sc/ui?s=SPY&p=30&yr=0&mn=1&dy=0&id=p00460291907&a=196737556

Great finish -- update -- broke the last recent downtrend line. Might have some rally action next week. Internals were great today.

Still no reason to get back into this market heavy though.

[ari5000]

SPY -- 30 day chart:

http://stockcharts.com/h-sc/ui?s=SPY&p=30&yr=0&mn=1&dy=0&id=p00460291907&a=196737556

Today's rally is strong, strong internals. Strong support finally after another drop in the morning. However, there's always room to rally and maintain a clear downtrend. (see chart)

These kinds of rallies during bear markets are very good at getting some people to step back in. Then, when the trendline continues down, people lose heart and the selloff continues.

Once a bear market forms -- I like to think of it this way: The trend is down. So the bulls have the burden of proof to destroy the downtrend. One day rallies to the top of resistance doesn't change my opinion.

We are way oversold. Many smart traders I follow noted this. They expected a rally. And many may be long -- but they won't hold on for long.

But as I said -- there are some great names like ESV (up 5% today) -- but they had to go down to insanely cheap levels to rally.

I'd expect perhaps some more strength... maybe a few days. For now... I plan to do a lot of observing, little trading.

[ari5000]

reality vs opinions:


People have all kinds of opinions. Here are some facts:

http://www.barchart.com/stocks/marketpulse

Declining issues SWAMPED advancing stocks today (see link)

Volume was strong.

The major indexes pretty much closed at the low of the day on heavy volume.

The market gapped down and finished lower despite already being down 5 days in a row. This has happened 10 times before, except the last 10 times, the index filled the gap opening.

Just like a market in a raging bull market is hard to turn, a bear market does not turn on a dime either, and it always goes to extremes.

My long positions are being destroyed (fortunately I only own 2 now). My managed account was down a solid 1.4%. Obviously better than the indexes.


The best thing about being a small investor is that you can cash out. Big funds get destroyed trying to unload multi-million dollar positions during a downfall. To profit in the long run, we must utilize our most important tool -- the liquidity of the market. We can exit. Big funds can't - not so easily.

90% of all stocks recently are going down. The odds are against us.

On Twitter - I see a lot of anger mostly. Confusion. I know what's next... frustration. Depression. The acceptance of major losses. (Then the markets start to go up again.)

We need to sidestep most of that part of the cycle. Participate in the excitement, greed, euphoria. This part of the game is nothing but pain.

Follow the signals and it'll be clear when the market is less hostile. For now, if you're not at least 50% cash... I can only wish you the best of luck as this bear market unfolds.

[ari5000]

oh, and as usual:

Ameritrade is down -- most people panicking can't even sell their portfolios. I'm sure that instills confidence.

[ari5000]

SPY below 200 day MA:



For people with the majority of their money in the indexes -- this has got to be devastating. Internals are incredibly weak today -- funds are all desperate to get out.


Advance decline ratio is around 1:13 today and deteriorating -- I've never seen such a full scale exodus from stocks.

I expect the fat finger lows to be way above us soon.

[TandoorGG]

As always good posts Ari!

[ari5000]

Thursday morning:


Market starting with a gap down -- SPY will open near or below 200 day MA.

Fat finger days are here again.


You can pretty much throw away all normal indicators now. Anything can happen.


Since 90% of traders I know like to stay in cash... who's left to buy the dips? Not many. Hence, the dips become enormous as everyone is watching from the sidelines wondering when it will stop going down.

[ari5000]

Post from a very smart investor:


Here's a value investor I know. He wrote today:

In the last 5 sessions, I've lost back over half the profits I made all year. Overall I've now lost back 80% of my gains this year in the last 2-3 weeks. My avg PE stock going forward is around 6 fully taxed, and almost all stocks I own had a blowout qtr and strong guidence. Go figure !


See how it goes? You can be a great stock picker -- but if you really want to improve your portfolio, you're better off being a strong market picker. In a bear market - you can't win. In a raging bull market, almost everything goes up. So which skill is more important? And certainly you can have work on both at the same time. But it means occasionally, you have to go to 80% cash (or more) during bear markets so that you have the cash to pick up the bargains when it's all washed out.

[ari5000]

Oversold conditions now...

http://www.barchart.com/stocks/marketpulse


market internals weak...

but end of day finishing strong.


It's tough calling bounces in a bear market but I think one is coming.

[ari5000]

top trader site:


http://markminerviniblog.blogspot.com/2010/05/market-commentary-tuesday-may-18-2010.html


Follow this guy.

[ari5000]

some signals I'm watching:


http://stockcharts.com/def/servlet/SC.scan

1) on this link you'll see new 52 week highs/lows -- the ratio is about even... but there used to be many more new highs a few weeks ago

2) bearish engulfing candlesticks (also found on the link if you scroll down) --huge number of bearish vs. bullish candles yesterday

3) moving averages (most are now sloping down on major indexes)

4) leadership stocks -- have you seen GMCR, AAPL, GOOG, VECO, CREE lately? No more leadership.



That said, the market is approaching oversold conditions. The sharpest rallies are ALWAYS bear market rallies -- you often get those unbelieveable snappers that catch shorts off guard. They often fizzle a few days later. So it's tricky to just go short and think you can clean up on the downside.

Also -- despite the euro collapsing, we never know what kind of insane government intervention will be tried out next to keep the party going.

Oil is now $68/barrel. In five years, I bet this turns out to be a bargain. I'm definitely thinking that perhaps energy names will be the new leaders. The rig disaster is one of those big news events that can really affect short term prices, but it has minimal affect on the long run cash flows of most rigs. BP has a history of neglect and weak safety control. The chances of a company that regularly inspects its equipment instead of trying to save a buck and having a disaster like that is (I think) probably 100 times less likely. So when this gets cleaned up, and oil prices rise back to $4/gallon -- people will want more drilling, less safety. The short term attitude won't last forever.

Remember when people were afraid to fly in 2002? Now people are willing to sit in airports for hours and fly through volcanic ash.

But again -- for now -- it's best to have a heavy cash flow. ESV around 35 seems like a price I would probably recommend an initial purchase. But be patient. Fear is a powerful emotion.

[ari5000]

What are traders talking about?


http://stockcharts.com/h-sc/ui?s=FXE&p=D&yr=0&mn=9&dy=0&id=p11031269014


pretty obvious -- euro implosion is setting the world on fire.


rush to safety in dollars is dropping the price of all commodities -- oil under $70/barrel -- wooo... not a lot of people expected this.

So yes -- there is fear and people don't like to buy when they are fearful, they like to sell.


I do hold a lot more positions in my managed account -- it's getting hammered. But it's also 66% cash so I have lots of buying power.

This is a market that wants lower. No doubt about it. 200 day Moving avg. on the major indexes is probably the next level of support.

I see a lot of traders buying oil for a trade. I definitely don't like that idea. Commodities can do anything. Just like the FXE completely crashing today.

The best traders I know employ a market monitoring system. When the system says danger: they remain mostly in cash. It's just that simple. Markets only go up when confidence is strong. All we have now is fear. So let those that are deeply involved sell out. Get all the fearful players out.

Then we'll see some flattening, basing. Then maybe some names can go up again.

My favorite rig play ESV is hitting new lows as we speak. You just can't beat a bear market.



But nice to see SGG up 5.5%. There's always a bull market somewhere... even if it's hard to find.

[TandoorGG]

I think even though bargains are here, people are afraid to buy...I know I am.

[ari5000]

there are bargains out there:



I'm not too much of a value investor anymore -- but there are some great deals.


ESV under 40 is really cheap -- a great deepwater rig name (punished for obvious reasons). This is worth $60/share on a bad day.

XIDE at 4.76 -- really cheap (worth $9)


Unfortunately, the euro is hitting the fan and that's sending everyone out of the pool. Sentiment on Twitter is extremely negative.

Although the charts are down... I get a sense the panic levels today are a bit overblown. Many of these companies will be around long after Greece implodes. Plus the dollar is very extended.

Nobody I know is calling a bottom, in fact, many suggest the bottom is much lower than here as capitulation selling increases.

The most interesting ticker today is SGG - sugar! is up over 6% today. Now what's up with that? pay attention -- because the charts are always trying to tell you something. You just have to listen.

I remain mostly in cash. (over 90%)

[TandoorGG]

Good article!

[ari5000]

Sugar: SGG


http://stockcharts.com/h-sc/ui?s=SGG&p=D&yr=0&mn=9&dy=0&id=p81146207910

I keep watching this chart -- I don't know why I'm so fascinated with sugar.

But clearly... there is an abundance of sugar -- or the perception of abundance dominates. One day, I will buy this issue. I did buy a little in a managed account.

In general, yesterday was an interesting day -- erasing a 180 point drop. It created a very bullish candle in a very bearish environment.

I remain skeptical and risk averse.

[ari5000]

cash is winning:


I'm still looking for ways to get long... but I don't see it. Today's internals are quite negative. Heavy selling all around.

There's no reason to get back into this market... or stay long for long.

Just trapped longs looking to get out.


Avoid pain. Avoid bear markets. You'll sleep better.

[ari5000]

great technical analysis:

http://ibankcoin.com/chessnwine/2010/05/15/charts-to-help-you-throw-darts/

Follow this guy.

[ari5000]

today's heatmap from finviz:


http://www.finviz.com/

Bloody 'ell.

[ari5000]

mostly in cash:


My blogger community is mostly in cash and so am I. I wasn't sucked into the last few days rally. Today -- the whole move is being wiped out, and it's only 2 PM so far.... could end even worse. Computer driven hedge funds only buy on the up days. On the down days, no one is home on the bid.

Leader names like BIDU and NFLX topped out yesterday.

I will like slowly add to value names as they drop even further but I plan to take my time. This market needs to rest. Even if I could nail the bottom -- I think a lot of names will base down in the dumps for a while.

Names like XIDE, NE, HTCH, KND are all value names I own in my managed account and think are good buys today.. but may go even lower.

[ari5000]

Note on the Trader Cowboys:


Geckler -- who I follow -- mentioned he made around $560,000 on the day of the crash.

today he twitted that he ended up losing $360,000 on his oil long position. You almost never see anyone admit a loss, much less of that size.

[ari5000]

some are getting bullish again:


http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=10&dy=0&id=p41783945808&a=199907095


Me, I just drew a line.

[ari5000]

Because Greece is the only one with a debt problem...



http://www.reuters.com/article/idUSTRE64B53W20100512

I shall say no more.

[ari5000]

Don't overthink:


http://www.thinkingtrades.com/

I like this blogger -- he has a lot of conviction. But see how he goes from bull to bear to bull again. This is how most traders think... they buy only when stocks are going up and sell when stocks are going down. But when stocks go down 1000 points then rocket up 1000... well... you can see how if the majority are following the trend, extreme volatility like this will create maximum damage to the majority of trend-following traders.

This makes perfect sense -- if there's a dominant strategy that wins, it will inevitably sow the seeds of its own destruction.

The winning strategy now has been to buy extreme selloffs... the very thing trend traders would never think to do.

Or, of course, you could always get back to value investing.

Today's big winner this morning is China name PUDA (coal). In fact, I've noticed that many of the small cap China names have been somewhat strong the past few days. The Shanghai Index was recently down more than 20% from its highs -- a true bear market correction... so this whole index may be a lot more washed out than the U.S. indexes which still seem lofty in my mind.

The new new emerging 'leader stock' to follow by the way is BIDU (Chinese Google). Another indicator that interest in China may be picking up again.

[ari5000]

low volume bull market:


market back to 'normal' action -- on light volume, robot traders take the market up.. It always happens on low volume. It can be very dangerous if there's a drop on big volume... as when that happens, expect to see no bids again.

Very dangerous here. Today's signals though are extremely bullish -- with good leadership stocks acting well, and strong sectors. (Except oil... which is a bit of a red flag.)



The thing that caught my eye the most is SUGAR - up 6% today after a 40% drop in the last qtr. A few fertilizer co's are also acting well today.

Wonder if sugar may turn out to be white gold down here. Only way I know how to play it easily is through SGG -- the sugar exchange traded fund.

[ari5000]

XIDE:

http://stockcharts.com/h-sc/ui?s=XIDE&p=D&yr=0&mn=9&dy=0&id=p74898539597&a=200112886

Value play. I bought some today for a long term hold.

[ari5000]

Main reason there probably won't be a 1929 style crash:


Well for one thing: It's already happened. Didn't notice?


The main difference between then and now is that in 1929 - the dollar was tied to the gold standard.

Now that the U.S. can print debt to paper over all problems... the markets can stay up... it's your purchasing power that is affected.

So from 2000 to 2010 -- the Dow has been around 10,000 -- hasn't changed all that much in 10 years.

HOWEVER, the dollar has lost at least 35% of its purchasing power. If you go back and look at what things cost in 2000, you'll probably find most stuff actually cost 30 - 50% less -- so it could be worse.

So really, the Dow is at 6500 in relative terms. If you priced the Dow in gold (one of those silly exercises), then the market is in a tremendous bear market.


Once again, gold is front page news. I think these gold flurries come and go but no doubt, gold is on a slow and ever steady climb upward. I've never really been too fascinated with gold... and I find when everyone starts talking about gold stocks... that's usually the warning sign. But I have no doubt the whole sector could melt up here.

Here's a list of commodity stocks with some fundamentals if you're interested.

http://www.kitco.com/ind/matlack/may102010.html

[ari5000]

HUSSMAN:


again - a must-read

http://www.hussmanfunds.com/wmc/wmc100510.htm

[ari5000]

Now closer to 90% cash...


I'm just going to go with the top bloggers I follow.

Too many skeletons in the closet and out of the closet. Market is spooked.

got gold?

[ari5000]

Blogger of Note:


http://markminerviniblog.blogspot.com/


Here's another veteran trader worth reading. He posts infrequently, but with a lot of sharp insight.

[ari5000]

How strong was today's rally?


So strong, some of the best traders I follow are considering perhaps the bull may not be dead after all.

I see a lot of people in cash but it's clear, unless the selloff continues, a lot of 100% 'all cash' traders out there (a lot of them now) are going to quickly put that money back into the market.

I would say sentiment is mixed or neutral right now.

In some ways, charts of many indexes look similar to the Feb 8th bottom. Sharp pullback quickly terminated in a flurry of buying. However... a one day rally on a bailout of epic proportion cannot define a trend.

All I know is, there are some very powerful forces at work and the markets are now acting quite differently than 2 weeks ago.

I remain thoroughly confused.

[ari5000]

Twitter humor:


This is the kind of stuff you see on twitter all the time.


The fat-finger trader has been identified at last.

http://www.thereformedbroker.com/2010/05/10/fat-finger-trader-identified/

[ari5000]

example of technical analysis;


http://stockcharts.com/h-sc/ui?s=PCLN&p=D&yr=0&mn=10&dy=0&id=p79345706404&a=199936371

This is how drawing a simple line can save you money.

The market often knows things in advance. All you have to do is pay close attention.

[ari5000]

Had fun in Castine:


For anyone from Castine reading this: Welcome to the board.


You can register here on Ihub by clicking on the 'InvestorsHub' icon at the top-left of the page. Then you can post messages. You can read messages only if you don't sign up. (it's free, no credit card info required.)

I'm happy to provide opinions or thoughts on any questions about the market -- or specific stock ideas. It takes just a minute to put up a chart link here to get a sense of the technical strength of a particular stock.

Today's internals were very bullish. A great day for those who loaded up on Friday. It was probably a difficult day to daytrade -- very choppy intraday.


XLY - consumer discretionary index, was up 5.25% which tells me the market felt good about the economy. Even though the market faded a bit, when I got home at 3 PM and checked the internals, it was clear that today, at least, was not going to fade away. As for the rest of the week, it remains to be seen.

There are quite a few cross currents now and I wouldn't be surprised to see this volatility continue, with huge jumps in either direction now...

I'll be curious to see what the blogosphere is saying now.

One of my China names, CCME reported a very good report.

But CPBY got trashed and I ended up selling it for a loss.

So I'm personally about 66% in cash now. Holding only 'value names'.

Good luck in these difficult times.

The main thing lesson of today is: don't trust anyone -- not the news, not your friends, not your broker, not even me. The only thing you can really trust is the charts.

And don't trust the charts either.

[ari5000]

As I mentioned though:


Majority of traders I follow are negative on the markets.

I would expect this enormous rally at the open to fade. The last week has damaged psychology so I'd expect this rally to be viewed as an escape from underwater positions.

[ari5000]

Oh, it is so on!


European Central Banks go nuclear on debt crisis.

Hm - after watching U.S. market go up 70% straight via insane bailout packages of unprecedented size... this was not a hard call to make.

When in doubt, bail 'em out.


Consequences? Somebody else's problem. We've got an election to win this year.