Fade this rally. I did.
Friday, August 31, 2007
Wednesday, August 29, 2007
One thing that I'm learning about bear markets is to never worry about missing an entry point because there will always be a bounce. I've been watching EZCorp because it looks to be entering its mark down phase. EZPW used to be #1 on the IBD 100 and is now showing signs that it is finishing off a rounded top pattern. It is also consistently below the 10 week moving average. Fundamentals might say that a pawn shop company might be coming into its sweet spot with all of this sub prime crap, but the chart certainly says something different. I think EZPW might be a victim of being over owned by the fund managers. I think 90% of the float is owned by institutions.
When the market looked like it was bouncing this morning, I put in a order to short EZPW at 12.16. My target for now is 10.50 and depending how the volume looks, I might hold longer. Notice the weak volume on the bounce and how it stalls inside the swing point of 7/25/07. There are also some nice TDST lines to guide the resistance and support areas.
I'm up a little early today and I made the mistake of listening to CNBC's Squawk Box. They are hammering two points that I find unbelievable! First, they keep saying that insider stock buying are at record levels, emphasizing the financial sector in particular. What they fail to tell us is that there is no buying going on at the big broker/dealers like Goldman Sachs and Bear Stearns.
Second, and certainly more irritating to me is that they keep saying that volume was very light during yesterday's sell off so the loss shouldn't be taken seriously. Where was this concern about volume when the S&P was climbing on progressively lighter volume last week? The reality is that volume was higher yesterday than what we saw on the counter trend bounce. I don't care about their bullish bias, but don't mislead people.
Posted by Paul Stiles at 8/29/2007 06:04:00 AM
Tuesday, August 28, 2007
Sunday, August 26, 2007
I wonder if Boris is related to Miss South Carolina?
Posted by Paul Stiles at 8/26/2007 10:42:00 PM
I'll take O'Neil's advice over the "Fast Money Five" any day.
Posted by Paul Stiles at 8/26/2007 07:17:00 PM
Saturday, August 25, 2007
I have watched Fast Money for the last time. On Friday they declared that the bottom is in and that a retest of the lows is not needed. They also stated that rising on lower volume is a bullish sign.
Wow, how crazy is that? Volume confirming price is a general rule for technical analysis.
I looked back at some recent corrections and the mild bear market of 2004. While it is true that volume can be light while coming out of a correction, if that correction comes in the midst of a bull market, a retest of the high volume lows almost always takes place. Anytime you see a V-shaped base that is usually a bad sign for the medium to long term. William O'Neil has studied many bases of many stocks and he always says to avoid the V-shaped base. They work sometimes, but have a high failure rate.
I'm showing the correction of 2005, 2006 and the bear market of 2004. Notice the 3 V-shaped bases during the bear market. You will also find many V-shaped bases during the 2000-2003 bear market. Notice also how well the TD-Sequential worked for the two corrections I show below.
Posted by Paul Stiles at 8/25/2007 08:19:00 PM
Thursday, August 23, 2007
If you haven't had a chance, go check out this post on "The Big Picture". It is a collection of letters written by quant funds "explaining" why they have lost so much money recently.
Thank you Barry Ritholtz for providing such valuable and fascinating information to the rest of us.
Posted by Paul Stiles at 8/23/2007 12:20:00 PM
Wednesday, August 22, 2007
Tuesday, August 21, 2007
Monday, August 20, 2007
It seems that no matter where I look people are talking about how volatile the markets are. Whether it is on TV or on someones blog, they usually say the same thing. It usually goes something like this, "I don't know about you guys, but these daily price swings are the largest that I've ever seen in my career". Such statements always struck me as strange so I decided to check the charts.
What I have plotted below are the daily percentage differences between the high and low of each major index. Low and behold, I found that the recent daily price swings are not even close to the days of the late 90's and most recent bear market. I have a yellow line pointing out the recent swings.
So are these people as new to the market as I am or do they have extremely short memories?
Posted by Paul Stiles at 8/20/2007 07:13:00 PM
I avoid politics on my blog, but I just can't resist this post. I was watching Bloomberg and saw this headline pass by.
"Karl Rove says he built coalitions and Democrats divided country"
Thank for the good hard laugh Karl and good riddance to you sir!
Posted by Paul Stiles at 8/20/2007 11:22:00 AM
Sunday, August 19, 2007
Ok, it took some work but I had to rewrite the TD Sequential indicator for Blocks after my old hard drive crashed. If you don't know what the indicator is you can click here for a brief description.
It will purge the rottenness out of the system. High costs of living
and high living will come down. People will work harder, live a moral
life. Values will be adjusted, and enterprising people will pickup the
wrecks from less competent people.
Secretary of the Treasury Andrew Mellon, commenting on the panic of
Wow, that worked out well. I've been hearing a lot of the same sentiment recently, but mostly from the other side of the isle (Mellon was a Republican). The argument goes, why should the government bail out all of these hedge funds for taking on too much risk? While such arguments appeal to my sense of justice, they seem to forget the fact that many more people will be hurt if the Federal Reserve doesn't step up and provide some help.
Quoting Kindleberger in "Manias, Panics and Crashes":
...while it is desirable to purge the system of bubbles and manic
investments there is the risk that a deflationary panic would spread and wipe out sound investments by the non-speculators who would not be able to obtain the credit they need to survive.
All I can say is that I wouldn't want to be in Ben Bernanke's shoes right now.
On a related note, there is one critical advantage that a Fed policy of benign neglect might bring that I think most people have forgotten. It goes nicely with the arguments of Mr. Mellon. With a little pain and suffering comes excellent rock and roll! Just think of it. What was the last band that mattered? We have to go back to the last housing market downturn in the early 90's when grunge took over the world. While there have been some good bands since then, no band has struck a chord with the country's state of mind as did Nirvana. A recession would probably purge the country's obsession with celebrities as well.
Posted by Paul Stiles at 8/19/2007 11:00:00 AM
Friday, August 17, 2007
I was watching Fastmoney and I was thoroughly disgusted and amused by the "Bulls and Bears" argument. It wasn't really an argument given that Doug Kaas (the bear case) totally outclassed his competition on all levels. To sum up Najarian's arguments (the bull case), "the market went up today, so this is a bull market". After such violent selling, you would think that a professional would not say such reckless things. Hasn't he ever seen a dead-cat-bounce?
I'm amused by Fastmoney at times but it is quickly going downhill. I don't like the Najarian brothers and wish that the "risk doctor" would return to the show.
For the bulls out there, check out the above chart. It shows the earnings of the lower 10% of the S&P 500. Look what happened when earnings turned down in 2000. Looks to me like the same thing is happening right now.
Posted by Paul Stiles at 8/17/2007 07:51:00 PM
Thursday, August 16, 2007
The charts below show where I think the markets are headed. I'm going to short the hell out of them when they get there. Notice the huge volume today, which means that we will be back down there to test the lows. I think we will go lower.
Posted by Paul Stiles at 8/16/2007 07:33:00 PM
Wednesday, August 15, 2007
I'm looking for a bounce in the next few days. If you are long, I would suggest that you get the hell out when the markets get back up to their 20 day moving averages. These markets are sick.
Here are some charts and their TDST support lines.
Posted by Paul Stiles at 8/15/2007 10:03:00 PM
Today was the first day people started to really sound worried. Looks like it is time to run in all those panicky shorts in the next few days.
Incredibly, MIND has held up pretty well. I plan on riding this out with GBN and UXG, both of which got hammered today.
I'll be looking for a long play on one of the indexes if we open down tomorrow. If we get that bounce, I'll dump MIND and load up short again.
I'll publish some index charts soon.
Posted by Paul Stiles at 8/15/2007 09:04:00 PM
Tuesday, August 14, 2007
Sunday, August 12, 2007
Friday, August 10, 2007
Here is a quote from Helicopter Ben Bernanke.
..."people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation."
It was always clear to me that the government, with all its debt, would always prefer inflation over zero inflation. What has been confirmed today is that the Fed is absolutely petrified of even the slightest threat of deflation.
Rates will be cut! The dollar will be trashed! I'm betting that gold will be benefit. It won't be because of inflation, it will be from a fear of financial collapse.
Posted by Paul Stiles at 8/10/2007 08:03:00 PM
Thursday, August 09, 2007
Posted by Paul Stiles at 8/09/2007 09:36:00 PM
Metalink always describes itself as the "best-of-breed" in the wireless networking chip sector and if you would like some evidence for that claim just read the article below. This is pretty cool stuff. Here is the link.
Metalink Ltd. (NASDAQ: MTLK), a provider of high-performance wireless and wireline broadband communication silicon solutions, announced that its WLANPlus(TM) chipset has achieved impressive performance results in independent tests conducted by The Tolly Group. These rigorous tests benchmarked Metalink's WLANPlus against three products using different 802.11n chipsets. The tests confirmed that the use of Metalink's solution doubled performance as compared to the closest competitor tested, and in many of the tests by as much as ten-fold. These tests further position WLANPlus as the best-of-breed 802.11n draft 2.0 compliant product and the only one powerful enough to enable high-performance wireless applications.
Kevin Tolly, the CEO of The Tolly Group, noted: "To 'push the limits' of these chipsets, we introduced a new set of challenging criteria, including zero-loss tests as a necessary de-facto standard for the home entertainment space. We were impressed with Metalink's WLANPlus, which clearly outperformed the others in both the 2.4-GHz and 5-GHz bands, as well as being the only chipset tested to achieve zero-loss in UDP tests." Tolly added that the tests indicated that Metalink's product also achieved the best results in TCP tests.
The Tolly Group's tests took place in a large U.S.-based home (a 6,000-square foot, three-floor structure with a basement), enabling a wide variety of performance tests. The tests included measurement of throughput, full home coverage and transmission quality. These tests demonstrated that WLANPlus offers superior performance in the 2.4-GHz band (the band commonly used for data services), and that it is the only chipset tested which provides robust performance in the 5-GHz band (used for high-quality applications such as video and gaming). As such, WLANPlus has emerged as the clear best-of-breed foundation for 802.11n home networks with a proven ability to support the delivery of multiple simultaneous HD video streams throughout the home.
"The fact that the Tolly Group's independent tests have singled out Metalink's technology confirms WLANPlus's status as the market's highest-performing solution for wireless home networks," said Barry Volinskey, Metalink's Vice President of Marketing. "Our product achieved the best results in both TCP and UDP tests, as well as in the 2.4-GHz and 5-GHz bands, making it the only wireless technology capable of supporting the new demanding requirements of wireless home networks. This further establishes Metalink's positioning as a major player in the fast-growing home networking space."
Wednesday, August 08, 2007
Sure was wild out there today. I was stopped out of my TWM trade but I did pick up some LMC and added some MIND shares today. I got lucky with the MIND buy, as it exploded about an hour after I got in. LMC looks strong but it has some work to do to make it up to 14.40, which is my price target.
US Gold Corp was huge today! That was nice to see.
This market still looks like a dead cat bounce to me, but that move today was powerful!!!
Tuesday, August 07, 2007
Monday, August 06, 2007
Wednesday, August 01, 2007
Posted by Paul Stiles at 8/01/2007 11:40:00 PM