Current Views
June 7, 2008 4:53 PM
Here is a summary of our current views on particular sectors of the economy and market. I am not sure you can “trade” it as the markets can be wrong for a very, very long time.
- Economy: Very Negative
- Market: Negative*
- Bonds: Long Term Negative
- Housing: Very Negative
*the market needs to make a fresh rejection of a new low to be long anything
Sorry, I wish reality warranted a different view, but it doesn’t. I have warned for at least a year that I believed housing was going FAR lower - and was correct. I have warned that the fundamentals in the economy are far worse than people realize and data has been rolling in to prove me correct. It would obviously be far easier for me to make the average investor money if things were better. But just as important is capital preservation. In addition, I have to call what I see or believe - good, bad, or ugly.
It reminds me of the last year of watching Kudlow on CNBC. I appreciate the flag waving, go USA mentality, but his comments that the USA will prosper, all is great, etc for the last year are just flat out wrong. Every day for the last year i would watch as a parade of “experts” called bottoms in housing, the economy, the market - you name it. I would sit there and say to myself - you are wrong, you are wrong and you are wrong.
I simply cannot ignore reality or the site would have no value.
Fast Money Boys Were Wildly Bullish Thursday Night. Result: Market Plunges
June 7, 2008 3:24 PM
Here is some commentary from Fast Money Thursday night. Guy Adami said the S&P 500 would blow through resistance and commodities and equities were on the move again higher. Jeff Macke also said that the markets were ready for a move higher. Pete Najarian couldn’t account for the huge move up.
Exactly. The huge move up was not warranted by either the charts nor economic reality. This is why I posted after the move that I was “skeptical - at best - of any move higher.” and repeatedly kept saying “I don’t like the lows, I don’t like the lows”. The result was down 400 points right after they were all screaming and raging bulls. More comedy, per usual. That is why I have repeatedly warned against watching TV shows for market advice for anything but entertainment.
Most of what they all have to say should be crumpled into a nice tight ball and swished.
Homebuilders Down 20% Since March 25th Call That “Cramer Was Wrong”
June 7, 2008 2:15 PM
On March 25th, right after Cramer (and probably Fast Money, but not sure) was saying buy, buy, buy home-builders - we stated wrong - they are going lower. XHB was $23.38 that day and now is $18.81 and I believe headed far lower. The Toll CEO recently came out and said that housing was in a “depression”. Thanks for that insight as I could never have guessed that on my own. Housing and home-building is going lower, period. There are 1.1 million homes currently in foreclosure and another 3 million currently “at least” 1 month behind. All statistics related to housing are at record worse levels, both in numbers and percentages.
The call to avoid/sell home-builders and anything housing related was from a macro view. I do not often make calls based on a macro view and generally let the market tell me who is right and wrong - but sometimes the evidence is so overwhelming that it cannot be ignored. The numbers simply told a very compelling picture of big, big problems ahead. And it isn’t even close to over.
Some New Stocks To Watch: VSH and MCHP
June 7, 2008 1:47 PM
I wanted to start looking at some new stocks so I pulled out some names that I owned/traded in the years past. ADI, VSH, and MCHP, all the semi space. Do your own research on these if the intererst you, just providing some additional names to look at in the future right now.
VSH: I owned this stock may, may times over the years, but haven’t in years. It was (and probably still is) widely regarded as a very well managed company. The are in the semiconductor space and their main product used to be “tantalum capacitors”. Anyhow, the chart appears a bit mixed as I was not a fan of the low.
MCHP: Another stock in the semi space is MCHP. Microchip Technology. A key hold on that right now is $32.57.
ADI: A Look At Analog Devices
June 7, 2008 1:34 PM
Let’s take a look at one of my favorite stocks from the bubble days, ADI. I haven’t read much about what products they have now, etc. and really do not have interest in reading about the “fundamentals”. You can do so if you like.
I called the recent long for a friend that owns some of it and has for many years “above $26.55″. Looking at the chart now, it has twice made a doji at the highs and sold down. $32.46 is a key hold on any further weakness. Look for it to try and hold there. If the market continues to get hammered, which I believe is likely, and that clears, look to be long above $29.26.
Today’s Market Plunge: Have You Read My Market Gap Lesson?
June 7, 2008 12:22 AM
Man I give away far too much information for free. I hope you are all working class people with 3 kids trying to make it, then I will feel good about it.
Anyhow, today was a classic gap down trend day. Nothing to stop the plunge lower - as I mentioned none of the lows made sense - and we did not exceed the high early. What is the trade when that happens? The trade is stay with the trend. It gaped lower and never challenged the initial high. The trade was short and stay short unless something changed the trade. Period. Best case you should have exited near 1370 to see what was going to happen. But even then, the market “should” have gone lower as there was no “proper” low.
The problem is most people do not understand if there is anything above or below of “significance”. That is why i warned - many times, if you noticed - that I did NOT like the lows put in. To make the entire day gap trade, you have to understand what is above and below and if anything is meaningful. I gave you the information in the last 3 days that there was NOTHING meaningful below because I simply do not believe in so called “double bottoms” and viewed them as temporary.
I am trying to give clues here without coming over your house and clicking the button for you.
Why Is UPS at $68?
June 6, 2008 10:53 PM
If you value your money, and I suspect most readers do, why would you buy UPS with 152 PE and oil at all time highs? Unless I am severely missing something very important, the stock is an avoid, a sell, a get out, a run for cover, an exit - take your pick. There simply is no reason on any level to be an investor in the stock. I just cannot figure out why it is not $30 or far less. If you believe in “valuation”, compared to Fedex, the stock would be less than $10.
I like the truck. I get all that. I will also like the stock at $10 - maybe.
Market Recap: Trend Day Plunge
June 6, 2008 10:06 PM
I had repeatedly warned that I did not like the lows put in. I also said I was skeptical of the move higher “to say the least”. Bingo, right on target. The problem is when we did not put in “proper” lows to be long off, the market is basically a house of cards and when the tide changes, it can plunge rather easily. Today was an example of that. It was also an example of a typical trend day lower. If there is nothing below to stop a trend day, it can get very, very ugly. Since we had no proper lows put in, there was nothing to stop it.
The only reason we likely did not go far lower ( I thought 1350 area was very likely ), was time ran out. Another hour on the clock, we would have likely fell 500 plus. The only number to watch out for the downside is the Dow 12,095. If we clear that, then bigger trouble is likely.
If we have a “relief rally” open higher Monday, use strength to exit as all of the lows put in are still complete nonsense. If we open lower, watch for a reversal attempt, especially above 12095 on the Dow. I said June 1 that I believed June was going to be flat “at best” and down was far more likely and use caution on strength. So also keep that in mind here. I believe the highs for June have already been placed.
Morning Call: Unemployment Jumps To 5.5%, Oil Skyrockets, Hello 70’s
June 6, 2008 11:00 AM
The unemployment rate has spooked the market and oil is up over $6. Not good. I have mentioned about 10,000 times that the market is wrong about the economy and it will get worse. This was the first sign. The recent rallies were not supported, IMO and have mentioned that a number of times. The problem with big moves like yesterday’s, especially ones that are not supported by any reversal points, is that once the trend turns it is a house of cards. I am not sure where the selling will stop today - no points. Could be a big problem unless it makes a new reversal point. Careful…
SP 1385 Area Maybe - But No Firm Numbers To Stop The Selling (see comments for intraday updates)
June 6, 2008 10:03 AM
Be careful short in the 1385 range. I am not a huge fan of trend lines, but if the selling is going to stop, it may be in that area because that is the daily trend line. The recent strength was nonsense, IMO and I still do not like any of the lows as i have mentioned many times. Other than that, i have no number to stop the fall. That is the problem with big moves like yesterday’s - there is nothing to stop the fall once it turns.
-
Recent Commentary
- Site Update: It Has Been Fun, But Closing It
- Morning Call: Open Sold
- Market Recap: GM News Was Not Really A Deal, Dow Low Cleared Late and Down She Goes
- Morning Call: Open Sold, Dow 7773
- Market Call Revisited: Sell Asia
- Market Recap: Not Good
- Market Update: Doesn’t Look Good, 818 and 826
- Market Recap: Buyers Above 818
- Morning Call: Open Gap Bought
- Market Recap: Buying On A Big Number, Now What?
- Morning Call: Still Uncertainty
- Market View: GM Holds The Cards
- Stock Charts VS Market Charts
- Market Recap: Somewhat Predictable, Low Came Where I Said Was Likely
- Morning Call: Unclear, Risk Is High
- Huge Rally: Now What
- Market Comment: Does News Even Matter?
- Market Recap: Close Day Craziness
Our Mascot Trading Goal: Ferrari 599
