Saturday Rock Blog: Christmas Tears or Shorting Best Buy (BBY) for the holidays

Disclosure: I am short BBY and I have BBY puts.

In case you missed the memo:

Sunday Rock Blog: Frankenstein (financial sector ETF: XLF)

Disclosure: I have no position in XLF, but it looks like an amazing short on this retrace. The upsloping neckline is ~$19.75, but things should really get interesting on a break of $19.27. The target on a break is $17.69.

Saturday Rock Blog: Put Your Head on My Shoulder (CVX Top)

Disclosure: I sold my October CVX puts Friday and bought calls for a short term pop. Next week I'll look for good entries on CVX November puts targeting the $104-$108 range. So full disclosure, I own CVX calls.

Wednesday Rock Blog: Breakouts fail (bull trap sprung!), but Life Goes On (Tupac)

"From failed moves come fast moves" -smart trader

Friday Rock Blog: Phil Collins Shorts EWJ (Japanese stock ETF)

Disclosure: I have a bunch of EWJ puts.

Big Wave Riding or How the S&P 500 looks like its about to tank or Monday Night FOMC-Week Rock Blog

With the recent rapid rise in interest rates, a surging yen, plunging global equities, new bear market in gold, and spiking VIX, many investors seems to be scratching their heads at the modest ~5% correction in US stocks ($169 to $160).  If the world is going through a significant deflationary correction (like every index except for US stocks suggests), then why haven't stocks dropped more?  Its anybody's guess and there are many things to point to such as the accommodating FOMC (no tapering!), improving US economy, or possibility of fiscal stimulus.  

Its anybody's guess and there are many things to point to such as the accommodating FOMC (no tapering!), improving US economy, or possibility of fiscal stimulus.  Frankly, I think it could be just a question of leading indicators vs lagging indicators, and the US stock indexes seem to be the latter case these days (a lagging indicator).  US stock investor shave grown complacent due to the Bernanke put, and have absolutely no fear of a meaningful correction.  That could all be changing right under the bull's noses, if you put all of the puzzle pieces together.  Lets keep it simple, based on the above SPY chart I would be looking for shorts anywhere $162 to $165.  If SPY can break ~$166 then the bulls could squeeze us up to new highs.  However, I think a break of $162-ish spells doom for the bulls with ~$153-$156 (5%-7% lower) targeted by the  rising 200 dma and measure rule ($169 - $160 = A, $160- $165 = B).  

Probably what will happen is a huge move one day this week related to the FOMC.  Either the market will go into some sort of panic and tank, or the bears will capitulate and send stocks into an upwards crash/capitulation, such as I've spoken of recently.  I also wouldn't be surprised to see some sort of huge fake out, for example, a spike to new highs followed by a drop below $162 in the same day.  If you start to see the volume spike then you'll know the big wave is upon is.

Disclosure:  I have no SPY position but I have many other shorts, including S&P500-correlated indexes like the Russel 2000 and the Dow Jones Industrials.  I am long the yen and short gold.  So I am short, and I intend to stay short unless we break recent highs.  If we slide through recent lows it'll be time to hang ten.

Nothing But Tears (Coming for JNJ)

There are many extremely interesting charts right now. We've are in the midst of one of the longest winning streaks (base don various metrics) in decades for US stocks and this has lead to some really nice formations.  Over the next few days I'm going to post some breathtaking charts. I think we are really close to a major turning point (based on bonds, yen, topping patterns, etc) but will we crash up in a capitulative top or has it happened already? Regardless, I am convinced the price action will be fascinating. I am going to update the blog later this week (long overdue), but first, enjoy some sweet charts. JNJ is one that has many people puzzled, the stock had been soaring until the recent correction which looks very healthy by most standards. If it weren't for the fact that we aren't having a baby boom right now, if the steep uptrend hadn't broken, if that beautiful inverted hammer candle hadnt formed at a new all time high, and if the CCI and stochastics weren't flashing bearish signals, I might be bullish on this 50 dma bounce. Instead, I'd look to get puts when the stock reaches the 87.50-88 area. I have no position currently. To quote the words of our former dear leader, "this sucker might go down".

Saturday Rock Blog: Any Way You Want It

Disclosure: I am long DGLD (short GLD x3)

LOL: DGLD +26% today as gold tanks

Disclosure: I own PHYS as of today

Saturday Rock Blog: Last Christmas

Saturday Rock Blog: Its Over (Yen Bull Market)

Disclosure: I own Dec FXY $123 puts

Five Charts Suggesting a Top is Near

1. Key divergences on the S&P 500. As the index has made new highs recently, key price indicators such as RSI, CCI and MACD have made lower highs:

2. Apple has capitulated. The three year rally in AAPL shares from $100/share that has made the company the largest in the world appears to have ended with a blow off top:

3. The VIX broke out. Despite the recent rally in stocks, the volatitlity index has broken out and remains off the recent lows set a few weeks ago:

4. Bonds remain in a long term uptrend. Bulls want to see yields rise as investors favor stocks over bonds. Instead, bonds have held support recently and remain well above their 200 dma:

5. The dow transports are rolling over. Dow theorists will note that the transports are significantly underperforming this year, hinting at underlying weakness in the market:
It feels like most market participants are expecting a massive rally after Greece gets bailed out again and are afraid to sell. I don't claim to know how the market will react to the inevitable bailout news, but stocks are well positioned for a fall from here. I'm thinking that any push higher (perhaps on bailout news) from here provides a low risk shorting opportunity, at least in the intermediate term. So far I just have a few small shorts on but hope to add more this week.

Disclosure: I have no positions in the above stocks but am short IWM with puts.

Saturday Rock Blog: Get, get, DOWN.

Yes, I've turned bearish! More details to follow... tomorrow.
Disclosure: I am short SPWR, IWM and SWKS with more to come.

Saturday Rock Blog: The Thrill is Gone

QQQQ Head & Shoulders Top Forming

In watching the intraday action it feels as though there has been a major shift in sentiment following the 10% market crash we had a few weeks ago. In many of the daily charts you can see a pretty severe breakdown on that day followed by a series of bounces within continiued selling. The technical damage was severe on that day; for example, the Q's broke their 2010 low from back in February before reversing and many former leaders have since broken even lower. It feels as though the 2008-2010 bull market is ending and a new bear is about to reassert itself. In my view a new bear market has not been confirmed technically. On the Q's above I see a head and shoulders top forming with a neckline at $42 that targets around $33.35. The right shoulder is a bit messy and starts on "glitch day" the way I have it drawn but perhaps we still haven't finished the head yet. I am looking for a close below $42 on a weekly basis for a confirmation of a new bear market in tech stocks and completion of this H&S pattern. As far as the recent bounce/rally of the past few days, I think QQQQ could see at most $47 but it appears to be running out of steam right here ~$46. From here that $42 will be a magnet and a good test to see how badly the bulls want to own stocks.

Disclosure: I don't have a position in QQQQ at this time.

My "out there" prediction: Q's hit $40.5 by Xmas

Yeah I know, the dow jones hit a new high for the year today and bearish predictions are not so popular when the dow is making news highs. But what about the market leading small caps? Despite all the falling dollar market euphoria, the Russell 2000 (small caps) again failed to retake it's 50 dma. Even the S&P was unable to reach a new high and still lies well below the recent gravestone doji. Looking at the Nasdaq 100 (above), I see a series of lower highs in place now leading up to today's new gravestone doji. Take a look at what happened to AAPL today(below). After being up most of the session it got slammed in the final hours of the day to close down $3 out of the blue. I think everyone knows this market has gotten far, far ahead of itself and has turned into a momentum game of musical chairs. Jittery investors are hitting the sell button at any hint of weakness, like with AAPL today.
While these charts are not overwhelmingly bearish, by any means, this market just feels like it wants to sell off to me. I haven't taken a significantly bearish position in a while, but I'm going to stick my neck out here and bet on a big drop in December. I'm looking for the Nasdaq 100 to break its 50 dma and hit $40.50 this month.

Disclosure: I am short BIDU and own SPY puts, for now.