Some stocks are just falling up lately, but hitting resistance today

Saturday Rock Blog: I Fall to Pieces, nostalgic post

Note that these are all old charts I posted here and are not current.

Declining 50 Day Moving Averages

Its easy to make a case for the bears right now since the underwhelming Santa rally has run out of steam at the 50 dma. In the small caps above you can see sell signals showing up as well. The fact of the matter is, in a long term downtrend the declining 50 dma is a low risk place to enter shorts (low risk because you just cover if prices overtake the 50 dma). It certainly is still possible that some upside momentum might be salvaged for an early 2009 rally but every day we spend below the 50 dma the odds get lower. Its time to look into opportunities on the short side and here are a few that popped onto my screen this morning:

I know its hard to short a stock at 10$ that was over a $100 a year ago. But DRYS was also $3 a few weeks ago. I think it could go back there.


This CSX pattern is a nice clean break, the trangle targets roughly $15. Note that the break occured today and the market is not closed yet.

SHLD is more of an example than something I would actually short, notice how the stock is so weak that it can't even reach the 50 dma.

Good luck!

Places to dig in your claws

In the midst of this market meltdown almost every stock looks like a great short. Tonight I just want to throw out some specific 6 month charts that I think demonstrate the scale of the collapse and offer big opportunities on the downside. I will start with charts that look the worst and then show you better looking situations. The result will be that the more conservative (lower risk, lower reward) plays are first then I'll get to the really aggressive (higher risk, huge reward potential) ideas. Be sure to click on each chart to see the details of my thoughts on the charts including support, resistance and targets. These are the days that bears wait years for, enjoy!

Sears Holdings/ Kmart (SHLD):

Home Depot (HD):

Fannie Mae (FNM):

Bank of America (BAC):

Intel (INTC):
Google (GOOG):

And my favorite of all shorts in the entire market right now is FSLR. Not only do I think that wallstreet has this stock fundamentally wrong, its also gone up a ton with few pullbacks to create support. I'm looking for a $100 drop in this stock in a short period of time.

First Solar (FSLR):

Just one cautionary note. When things look worst that is usually the best time to take profits on shorts and things look pretty bad right now. I am of the mind that we began a new scale of decline last Friday and things are about to look much, much worse. I have been wrong before though and I am constantly worried of some emergency move by Bush, Paulson and Bernanke to try and wipe out shorts. They have done things like emergency rate cutes before and I expect the bulls to go down kicking and screaming. So just be on your guard and take profits casually on the way down while aggressively shorting the rallies. Its time to start acting like bears!

Disclosure: I own BAC, FNM and FSLR puts and I wish I had puts on all of these.

Tastey Charts for Carnivores and Honey Lovers

I realized today that bulls are herbivores. You know, their favorite snack is grass and so they generally don't have good taste in food. Bears on the other hand love their meat and aren't afraid of fighting off a few bees for a pound of honey.





Interesting Option Activity.
VIX/SDS Ratio Indicator.

Disclosure: I own CAT puts.