I'm not sure if you have read this yet, but it is simply amazing. According to Bloomberg, S&P and Moody's are refusing to downgrade any mortgage bonds even though defaults on the loans backing the bonds are growing. Why are they doing this? If certain bonds fall beneath a certain recommendation level, pension, endowment and mutual funds will be forced to sell them, causing the bottom to fall out of the bond market.
Isn't it better to just suck it up and deal it with now rather than sticking your head in the sand? Won't the problem just get worse and worse? Joshua Rosner, a managing director at investment research firm Graham Fisher & Co. certainly thinks so. Go read the Bloomberg article.
If you don't understand how this impacts the broader market, go read an excerpt from "My life as a quant". It wasn't until I read this book that I finally appreciated the breadth and magnitude of the housing problem.
Saturday, June 30, 2007
Friday, June 29, 2007
ANO has had a great run and it looks to me like it is ready to come back. I originally bought it at 1.28 and sold at 2.56.
Volume has dried up and it looks like a head-and-shoulders is developing. I also have a sell signal on my TD Combo based indicator. This will be an absolutely awesome buy if it gets back to the breakout day 4/4/07 on lighter volume. What is cool is that the TDST line at 1.57 lines up with the high volume breakout day.
Thursday, June 28, 2007
Tuesday, June 26, 2007
Yes, Apple had a little sell the news action today and I'm kicking myself for not writing about it earlier. I was expecting such a reaction and wonder if there will be any follow through. Apple's break today reminded me about some of the other market leaders that have stayed very strong through this volatile market action.
Steel, steel, and steel have led this market since the lows of this last summer. I have been anxiously waiting to see if they would ever come down. Today looks to be the day. Arcelor broke its uptrend line and is now headed for the $42 level. MT has been signaling a sell for months now but has refused to break. This will be a good short on any bounce up.
Dover Corp. has a great chart for a long entry. It broke out and is now testing the breakout point. This is a classic "resistance becomes support" chart. If the market wasn't getting so ugly I would be all over this.
Monday, June 25, 2007
GM gapped up today after it was upgraded. It then gave up the price and ended only 0.81 cents higher. Looks like a lot of weak hands just entered GM at this swing high.
I plan on shorting GM tomorrow.
Sunday, June 24, 2007
First, create a "Bar to Line" block and insert this code. It is the numerator in the TD REI. I named it REI_Home in the block diagram.
Posted by Paul Stiles at 6/24/2007 01:22:00 PM
Posted by Paul Stiles at 6/24/2007 11:44:00 AM
Saturday, June 23, 2007
I have used Telechart 2007 and the Blocks Player for a few months now. As part of my membership I get a daily chart analysis of some random stock or index that one of the Worden brothers think is important. I usually don't pay attention because I have no interest in their technical analysis methods.
Yesterday, however, they presented the chart of AllianceBernstein (AB) and claimed that it was a short play. Sure, the current congress is looking to change the tax brackets of some companies, like AB, but this is not a sure thing. I thought that I would look at the chart again and see if shorting a company that pays over a 5% dividend would be a smart thing to do.
It looks like there has been some erratic trading lately, but nothing that raises any red flags. Just keep an eye on the price as it reaches the key support levels shown in the chart above. Can AB get back down to 78 to 80? Sure, but I expect the entire market to head down so shorting a company that pays over a 5% dividend doesn't seem too bright to me.
Throw a dart and pick another stock to short.
Thursday, June 21, 2007
I was stopped out of my QID trade last week. I dipped into another short today, this time with 3M.
Looks like 3M is up against resistance. Interestingly, the previous times MMM has reached this point it has fallen hard, with each time going lower and lower. (Click on weekly chart). My initial target is $79.50.
I was asked by a friend to look at NYX. He said that some "technical analysis" guy on RealMoney.com was saying that NYX is ready to buy. I don't think so. It looks to me like NYX will experience continued weakness. I expect a short bounce, but then it is back down on its way to $72, at least.
Wednesday, June 20, 2007
Posted by Paul Stiles at 6/20/2007 07:34:00 PM
Tuesday, June 19, 2007
Tuesday, June 12, 2007
Here is the chart of the homebuilders. Once again...DUH!!!
Posted by Paul Stiles at 6/12/2007 06:41:00 PM
Monday, June 11, 2007
Here is what it should look like.
Posted by Paul Stiles at 6/11/2007 07:39:00 PM
I didn't write anything over the weekend because my Internet was down at home. I just wanted to update my overall market strategy. I shorted the Nasdaq 100 near the close on Friday. It was a huge rally, but on very weak volume. I'm expected a deep correction and I planned on getting in on the first bounce.
I'll write about the technical pattern that has been formed on the QQQQ later tonight.
Posted by Paul Stiles at 6/11/2007 09:44:00 AM
Thursday, June 07, 2007
The downtrend looks like it has started. It is now time for a game plan.
If there one thing that I've learned it is the market never does the same thing twice, unless of course everyone has had enough time to forget about what has happened. During the last down spike, everyone was looking for a larger correction, just like what happened during the summer of 2006. Of course what ended up happening was that the market shot down, sucked in a bunch of shorts and then shot right back up. I would expect a lot of people are looking for the same type of reaction. The only problem is that there are already a ton of shorts.
So what is my plan? I expect everyone to jump back onto the long side too early. I'm going to short the first big up spike (around 200 Dow points) and then ride it down. I'm also going to start building my buy list and will get very aggressive if we get a solid follow through day.
On a final note, I find it funny that so many people are finally talking about interest rates. Anyone who has been listening to TFNN has been expecting this break in bonds for months. Inflation is going up. Rates are going up. It is simple. Tom O'Brien is expecting a bear market due to stagflation. Will he be right again?
Posted by Paul Stiles at 6/07/2007 08:26:00 PM
Wednesday, June 06, 2007
It started with the Red Sox winning the World Series and now Bob Barker has taped his last "Price is Right" show.
How will we endure? I'm not sure we can.
Posted by Paul Stiles at 6/06/2007 10:02:00 PM