Market Recap: Finally Call Proved Correct
July 31, 2008 9:24 PM
I mentioned pre-open that we were going to open down and if we were going to see serious pressure, it should come late as the futures suggested it should try and hold and or bounce early in the day. Right on target. The gap was bought and more than filled, and then sold off towards the close. I like the markets when they do as i think they “should”….I am unhappy with the markets when they do not do as they “should”…ha.
Tomorrow should be important as we have Non-farm Payrolls pre-open and ISM at 10:00 EST. It looks like 11,086 is important on the Dow for a low. There are no important lows on the SP.
I just hope the lows clear so the Monday Morning QB’s like Cramer can eat some crow. Him “calling” the bottom after the fact is pure comedy. You cannot possibly call a top or bottom. it isn’t possible and anyone that says so is a complete liar or idiot. All you can do is look at what is going on and say hmmm…. this “may be the bottom” or the top and go from there.
If you want to use his “I called the bottom bs” then i called the top of the market on the EXACT day, and that is a fact. I emailed at least 20 people i knew THE night the SP made the high and said TROUBLE. I also called the exact high on AAPL last year. Here is the problem. Did I know for sure that we had seen the exact high on the SP? No. Did i know for certain that we had seen the exact high on AAPL? No. I knew that both were a short below the highs, but that is all I or anyone knew. It just happened to work out that both calls were the all time highs. I cannot take credit of that nature for that. I did warn very strongly of the SP high however, I will admit, as I emailed my friends and said “this appears ominous for both short and long term”.
But for him or anyone to make the claim that they called the high or bottom is complete fiction. For example, i saw the high of the SP and thought big trouble was possible and emailed everyone I knew. Did I know for sure? No. Using this same nonsensical logic, then i apparently called the low on FNMA and can take credit for a 100% move in a week. I saw that the gap low was bought and knew traders would be long above that low of $6.83, I believe. Could that low have cleared? Yes. Did it? No. So, using his logic, I called the low within - exactly. It is complete nonsense.
Did Cramer “know” we had seen a bottom? No chance. He is playing Monday Morning Quarterback. In fact, I am still not convinced, on any level, we have seen the ultimate low. It depends on where the economy goes, long term.
Morning Call: GDP Not Good, Initial Claims Spike
July 31, 2008 9:33 AM
The economic data was not good this morning with GDP was 1.8% and Initial Claims were 448,000, both far worse than estimates. We are going to open down. If we are going to get serious pressure today, it is likely to come late. The futures charts suggest it may try and bounce a bit off the lows, or hold early on. if we cannot move higher, then bigger pressure may come late. Will just have to watch the gap reaction and see whats going on.
UPS: Avoid And or Short
July 31, 2008 1:34 AM
The UPS house of cards run may be over. It is a short and or avoid long here, IMO, with a hard stop above $64.85. This stock is a bit more difficult to predict than many as it has been rising on falling oil, obviously. It has zero points to be long, as I see things, and a clear short point, so that is the only trade here. I am not only not happy with the low on UPS on any level, I am not happy with ANY point to be long. It is a short here, IMO.
07/31 Close Update: Once again UPS held steady on drop in oil. It needs to get under $62.20 to probably apply some pressure here.
08/04 Update: Small gain on the call but SMA’s and drops in oil are holding the stock it appears. I would not be long this stock, on any level however, it is a house of cards, as I see things.
AEM: My Cramer Call Whipping Boy Revisited
July 31, 2008 1:23 AM
I have long been critical of Cramer’s call to be long AEM near the high. In addition, the stock was clearly a house of cards, to say the least. It hit a recent high of $80.29 on 07/15 and just 11 trading days later it is $55.60. This is EXACTLY why I repeatedly warn on stocks that have to clear points that are important. Why on earth would anyone be long AEM at $80 when it has to clear $83.45 to be long? Why?
Not to mention that this stock appears to be a massive bubble by any measure, but that is a different issue. Point being, If it had to clear $83.45 to be long, and you are long at $80, you are a complete knucklehead. and begging to donate your money. The stock has plunged over 35% in two weeks and there was simply no reason to even consider being long the stock in that range. This is what puzzles me about the markets. On 07/15 there was over 4 million shares traded between $75 and $80. There are buyers of 4 million shares near $80? It is mind boggling to me. If I had more time to look at 30-50 charts a day, I could warn about these. The problem is, as I have mentioned, I simply do not have time.
At any rate, AEM has to hold $52.95 here and the “trade” is long above it, IMO. I would never say invest in this silliness, but that is the trade, as I see it, if you just have to trade this bubble.
Good Site For Short Interest: ShortSqueeze.com
July 31, 2008 12:28 AM
I was looking into the short interest in financials tonight to see if the levels have come down. Anyhow, I found a site that seems to give some decent information regarding short interest, if anyone likes to look at that data. It is ShortSqueeze.com. The site costs $29 a month, but you can type in a symbol and get some information for free without signing up. It appears that the monthly fee is for their picks on possible short squeezes, possibly. But i found the site to have decent information for free, without their picks.
Market Direction: I Missed Many Longs Because of My Focus on the SP
July 31, 2008 12:00 AM
I have long mentioned that I would rather “swim downstream”. Meaning I would rather make calls to be long a stock - if the overall market is likely to move in the same direction. This is for a variety of reasons, including risk and gains. I watch the SP a lot because I like to look at the futures on it. Therefore, I may have become too preoccupied with the SP direction, and have missed easy calls to be long. it just is surprising that the DOW can lead the SP higher when, in general, it seems to follow the SP. But clearly that has not been the case the last 2 weeks.
On a side note, because of my post yesterday, that “there must be a LOT of people far smarter than I am” and that I would put a picture of a man in a dunce hat for the post, if I had one, my wise arse coworkers had a picture of a man in a dunce hat tapped to my pc screen at work this morning - ha, ha. Was somewhat funny, I admit. Anyhow…. at least they read it. I will admit that I am still a bit aggravated that I didnt see the move coming, but such is life.
For instance, on 07/15, the call should have been long GS, long JPM, long the Dow. The reason I did not make those calls is because the SP never rejected a low of any kind and XLF clearly never rejected a low as a whole. Therefore, I wanted a new low.
The problem appears that the financials have fallen so far, that any move higher in them lifts the market in a huge way, percentage wise, and this makes the moves to “appear” to make no sense. When WM is $3.50 a 20% move higher is not much, 70 cents.
Anyhow, I have no opinion on the market at these levels as these moves still seem like short covering on financials. But maybe I am wrong. I am not certain - so I have no opinion.
WLT: No Clarity Here
July 30, 2008 11:41 PM
WLT had made a huge move after earnings. Earnings were strong, I will concede the point. However, as I have been “pounding the table” lately, you cannot be long this range, IMO. It made a high today of $106.78. it has to clear $111.99 to even consider being long here and even then it could reverse again. Like I have long mentioned, why be the Lone Ranger? Let someone else do it. My views will never change - ever. ONLY be long or short where there is complete clarity. We do not have that here, obviously. I am not saying it will fall. I am not saying it won’t. I am saying I do not know.
The problem with this stock is there is one and only one clear point to be long, IMO, and that is probably $90.04. The gap higher after earnings was not that large, so I am not even sure of the significance of that low, long term. My views on this stock were not to short after earnings, but to avoid chasing much above $100 as the risk appears high. Not to mention that I am possibly the only person alive that is not a fan of being long coal long term. I still believe coal is exposed to many pressures from wind and nuclear energy. I simply see no reason, on any level, that coal can march higher long term considering wind power can (and will) generate power far cheaper than coal at these levels.
Point being, where is the upside in coal? I do not see it.
Market Recap: There Must Be A Whole Lot Of People Smarter Than I Am
July 29, 2008 9:58 PM
Well, there has to be a LOT of people far smarter than I am. I cannot possibly explain why we would rally 266 points today on news that was marginal - at best. I shook my head all day at work as it went higher and higher. Therefore, either I am completely clueless, or this was short covering on financials that got completely out of control. I really do not want to make excuses, so let’s just say I flat out do not get it and apparently people are smarter than I am. If I had a picture of a guy in a dunce hat, I would use that for the post. Perhaps I need to get one.
If we had gapped lower then reversed - I get that move as I thought that was likely and mentioned last night as much. If we had opened flat, sold off and then reversed - I get that move. Today’s action I am completely clueless. We opened marginaly higher and continued the rally to points that defied logic or reason, as I see things anyhow. No reversal low. Ignored all trend lines. No logic, no reason.
Looking deeper into the move, it appears the vast majority of the gains were limited to the banks. XLF was up over 8%. WB up 15%, WFC 9%, WM12%, etc. etc. Looking at the broader market IBM, which probably has the best chart I can find, up 1%, PFE up 1%, AAPL 1.7%, etc. etc. Basically, not much. Any major move you would expect the high beta stock gains to be far more than the market, but that clearly did not happen.
Let’s examine the “news” that supposedly caused this. Consumer confidence improved (but still a very negative number) for the first time in 6 months. Oil dropped again. But the catalyst was Merrill LOST another $5.9 Billion and is seeking more money through asset sales and a stock sale. Hmm, great news, apparently. In addition, an analyst said that he expects C to writedown another $8 Billion. More good news, obviously. Whats another 8-10 billion after the 8-10 billion that was supposed to the bottom, after another 8-10 billion that was supposed to be the bottom. It wasn’t that many years ago that $10 Billion was a lot of money. Apparently now if you only lose $8-10 Billion - you rock. If we can ever get these companies to actually make a nickel, just think what would happen. I would guess a nickel in profit would be a 100% gain in stock, considering only losing $6 billion equates to 15% gains. What total and complete nonsense.
Therefore, apparently there are a LOT of people FAR brighter than I as this makes no sense to me, on any level. American Express just warned not long ago that credit conditions are getting far worse. Rally. JPM previously said that prime loans were getting far worse. Rally.
Anyhow, these nonsensical moves I cannot possibly explain. If someone sees something that I do not, please enlighten me. I was so frustrated with this nonsense rally today that I was going to just not comment anymore on this site until this bear market is over, the shorts cover and get it over with and stop this nonsense, and we can all get down the road. The problem is I have no idea how long that will be. If we have seen the lows, then this could possibly be the shallowest and quickest bear market that I know of. My caution would be this. Anytime anyone ever says in the markets “it is different this time” history strongly suggests to run for the hills. It never has been. Then again, maybe it is - different this time. And maybe history is wrong this time. And maybe the market is far, far smarter than I am. Or maybe history is correct and these rally’s are total nonsense. Take your pick.
I was just reading Tradestalker’s comments from last night heading into the open today, and his views appear similar to mine. That we “need a strong consumer confidence number or the years lows will likely be seen. Look to be long any weakness - but only on a reversal”, etc. etc. This is what I had “envisioned” for today. I strongly respect his views, although we do have a different take on the market, to some degree.
Today makes me think of a line from Top Gun where Goose says “hey Mav, do you still have that number, Truck Masters I think it was. I may need that”. If these unsupported nonsensical huge moves keep happening, then any “insight” I may have will be completely useless and I may as well make a site on how to raise goldfish or something like that. Not trying to be frustrated with this tonight as nobody can predict the market every single day, but I made this site for the sole purpose of trying to give some insight to the ”average joe” on how I think the market works. Not to provide any advice of any kind, but just to give people something else to look at it to understand “possibly” why things are happening and to question the Talking Heads supposed insight.
If the market continues to make these moves, which I consider completely unwarranted, then the “average Joe” will consider what I have to say as complete hogwash and move on to Cramer or Fast Money or some other nonsense - and that frustrates me as I strongly consider that a big mistake. Therefore, I put pressure on myself to see what is going on, and convey it, if possible. Therefore, even though I do this site for almost nothing, it bothers me if things happen that I do not expect.
Market Open: No New Low, Consumer Confidence Better
July 29, 2008 10:08 AM
We “may” be ok today, but they sure are not going to make this easy as we did not make a new tradable low. It would have been far easier if we made a new low, then reversed and give everyone a point to trade from. No such luck. Longer term i do not like yesterdays lows in the futures, so once again, if we get back in that range again, nothing to stop the fall.
The problem with these huge drops, is just like the falls, there is nothing to stop this move to the upside, other than SMA’s.
My issue with the market here is not the Dow or the Nasdaq as they both made tradeable lows on 07/15. The problem is the SP. It never has rejected a low, IMO, of any kind, and remains the cause of my skepticism. Today’s action is once again building a “house of cards” with nothing to stop the fall if we get more bad news in the days ahead.
Once again, the market is moving on an oil drop and a seemingly daily “this is the bottom because more bad news” mentality on financials with the Merrill news and C analyst call of more writedowns coming. This view has been proven wrong over and over, but who knows.
Market Open: If We Are Going To Reverse This
July 29, 2008 1:15 AM
If we are going to reverse the selling here, I believe we have to sell down tomorrow and reverse course. If we open sharply lower, watch out for a reversal early on. If we get that, then you will have to understand what is going on to know if we are in trouble, or creating a near term low. If we open higher, to say that I would be skeptical would be a massive understatement. If we cannot reverse it tomorrow, then Wednesday has to be it.
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