Saturday Rock Blog: Touch or Low risk shorts abound! (e.g., DD and JNJ)

Disclosure:  I am short JNJ own DD puts.

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".

Dollars looking for a home

I voted "No" in the recent StockGeometry poll on "the top of the market". As I wrote in this article, the markets are being force-fed money that has to be invested somewhere.

New proof of this can be seen in a Tuesday article published by Reuters. To quote the article;

"Experts are reassuring investors that U.S. money market mutual funds, which have gathered about $165 billion in new assets over an eight-week period..."

and,

"Money market mutual fund assets stood at a record $2.7 trillion on August 15..."

And given that billions more dollars have been injected to to the worldwide banking system, you just have to think that some sectors of the stock market will respond positively.

Hey, Budweiser still makes a lot of money brewing beer, and they don't seem to be having any difficulty raising funds by way of a bond offering. In fact, the size of that deal was raised from 350 million to 500 million, and I don't see where any other terms were changed. And all the usual suspects were lead brokers on the deal.

Rio Tinto recently posted quarterly earnings in the billion dollar range, and I'm sure they'll keep doing so. The company is always looking for acquisitions and in April they completed a deal on an Australian coal miner. The usual suspects are no doubt "standing on the sidelines" waiting for their next deal (now if the company would do something about their website).

And just to round things out, Johnson and Johnson still makes just about every product you really need in your bathroom and they make a profit doing it.

No, these are not sexy stocks. And it could be argued that many Blue Chips have been dead money for the last couple of years, but if you're looking to own quality, with no exposure to the sub-prime problem, I would argue that you could find many, many examples just like Johnson and Johnson.