Well I was right about a rally but I was dead wrong about the price from where it would start. The dow broke well out of that declining broadening wedge I posted last night. Today had pretty much all the qualities of a classic capitulation bottom. The price action felt like panic, volume surged, the VIX exploded, nice round numbers were crushed (Dow 10,000, Nasdaq 2000), Cramer capitulated and we were left with a very large candlestick tail (possible reversal. I'd note that the massive head and shoulders top on the dow had a target of about 9,500 which was hit today. Here's the weekly time from notice how this week's entire candlestick is below the lower Bollinger band and note that we still have four days left to work on that closing price:
I still stand by what I said last night and think the argument is good for a multi month rally up to 12k but things are changing. Breaking out of that descending broadening wedge indicates to me that the downtrend is accelerating (and why shouldn't it be?). This means one of two things to me, either the bear market is ending, in which case the lows for this cycle will be the ultimate lows. Or, this bear market is going to be a lot deeper and more severe than most expect. I don't claim to have a clue which of the two it will be, we'll just have to wait and see how the economy develops over the next year. What I am pretty certain of is a rally up to 12k, and it looks as though that move began today when the dow hit 9,500. To put things into perspective check out this video from 1999:
Disclosure: I went very long today, own calls on QQQQ, SPY, IWM, AAPL, MOS among others.
15 comments:
"Very long today" very Buffet-like!
Always good to chart, sense, feel, see and smell optimism.
Other than "loving" the JWN short,
throw the crystal ball out the window. In the imortal words of our beloved "president", "this sucker is goin' down"...
Kaleb, I tend to loath blind optimism but right now the pessimism is too abundant and obvious. I mean, we've seen this coming for what two years now? I've been bearish for a long time and at least for the short term it feels very crowded.
Anonymous, I'm glad you like the JWN short. Other great ones that I posted here have been FSLR, COF, BAC, AHM, CCRT, MDC, DDS to name a few. Sorry if you were not able to participate in those. I think I'll keep my crystal ball, it has been on point for years and far more reliable than anything else I have seen out there. Certainly lately it has been going a little haywire as the market has unraveled, but technical analysis is and always will be a work in progress.
There is every indication to think that we are near a major low in terms of time and price, and I stand by that.
Look at it this way. If you were short the market from there highs, and you see it come down to long term support levels, are you covering and taking profits. Wouldn't you as a short want to buy the bottom and sell "the bounce". Perfect example today. Yesterday markets squeezed higher IMO on short covering and today shorts got a second chance to sell at higher prices.
Yes, I see your point. But if stocks are bouncing off long term support levels after such a big draw down then I would expect a much bigger rally in terms of price and duration. At least that's what we can expect historically.
I will say that there does *seem* to be somewhat of a compression in time going on though. Larger daily moves indicates faster moving prices which is another way of saying increased volatility, more or less. A move that might have taken a month before will happen over a few hours, or so it seems. But the charts need time just as much as they need price, so I don't put to much weight in the appearance of time compression.
So yeah, I had been covering my shorts over the past week (for pornographic profits, albeit way too early) and started going long Friday and added big yesterday. But I'm not looking to trade a short lived bounce. I have been expecting the next rally to last 3-4 months.
TA and charts are "in uncharted
territory" when dealing with the credit/liquidity/insolvency unwind
we are experiencing. Any bounce will be extremely short lived, immediately apprehended to "steal the cream" from this soured milk.
As with most pundits who come here angrily arguing with me, (like the guy who was calling me an idiot for shorting FSLR when it was at $300, now $130) I suspect you will disappear after I'm proven right. But until that time I welcome your thoughts.
No emotion here, I would have more sentiment or "heart warmed snuggly
feeling all over" to see major upward movement in the major stock indexes, my living somewhat resides close to the issue of personalities believing they are "protected" in there false securities and that they can spend into eternity. I am only listening, with my head next to the railroad tracks. The train which is heading further down is on it's way.
"my living somewhat resides close to the issue of personalities believing they are "protected" in there false securities"
Interesting, care to elaborate on that?
I recall the previous poster who was interested in owning FSLR had an online pseudonym "Steve Pluvia." He certainly felt protected by his online alias but it didn't help his stock any.
Dude,let go of your previous poster, man, 'cause, like, that person is past.
As far as elaboration, I am not at
liberty to do so.
Moving forward, are you going to double down long on the SP 940 test?
Yes, 940-965 looks solid, after that 800. I have a hard time believing this panic will go much further, but I guess I've made that point by now though.
Another key area I'm looking for is IWM = 43.
Well,
Looks like Ms. Market blew out the candle.
Hold on fast and get out of the way, next stop SP 800...
Remember, I tried to give you a head's up.
No, you're right. Nice call. The dow seems destined to see 8,000 but if any rally catches hold you are going to see a 1,000 point intraday move up. These current prices will fly past on the upside.
But congrats on your profits today, are you staying short until SP = 800?
Fortunately MOS, AAPL, QQQQ, and DBA held up ok today. But my SPY and IWM calls are worthless.
I will be looking for an "excuse" to sell my QID tomorrow, or perhaps on Monday, then look for some temporary long positions,
VERY temporary.
Lehman's CDO turnover may or may not prove to be the "event horizon". We will see.
Asia looks like a meltdown, WOW.
If it speads the wild fire fever,
look for a HUGE pattern, several times the size of today, either way it goes.
Eh, LEH CDS's, not CDO's....
Anyhow, keep your head down, and powder drive....
And give a shout out to "Uncle Vince" for me.
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