Category Archives: Stock Market

The Scariest Stock Market Chart in the World

By Biiwii

As posted at NFTRH.com

Short-term volatility implies anything can happen; long-term the implication of this chart is very bearish unless bond market dynamics are err, addressed

The title is a paraphrase of “the scariest gold chart in the world” (target below $400) someone sent me in 2009, just before the gold price began its $900 per ounce upward journey. So that’s the contrarian caveat and indeed, I hesitate to write bearish things at a time when small speculators are way too short the market and everybody already seems to know how bearish things are.

But the chart is the chart and without further ado, meet the scariest US stock market chart in the world. I was ready to try a long on the SPY yesterday, but decided to wait because of this (being posted here because it never made it into NFTRH 381’s already bloated 42 pages) chart and some others in the face of which I just could not rationalize a bullish stance. Capital preservation is job 1 now, not bullish speculation. I’ll let the bulls prove something first.

Continue reading The Scariest Stock Market Chart in the World

Covering the Squid

By Biiwii

I am covering the short on Goldman Sachs not because I don’t think it’s going lower (I do), but because I am all about balance and I was out of balance and today just felt like a time to take profit.  I am up nicely over the last week and now it is about getting back into equilibrium (and raising cash).  I don’t want to be heavy short.  I want cash, risk ‘off’ vehicles (like T bonds*), gold mining (now with partial hedging) and a ‘rest easy’ mindset as things play out.

GS had done a turn as a successful NFTRH+ long and then was highlighted as a bear position in the NFTRH+ notes segment of weekly reports.  The measurement on the chart is around 135.

* [edit] Long-term T bond position too good to pass up profit.  Fellow NFTRH+’er TLT is sold for a good profit and a month’s worth of dividend income to boot.  Still holding TIP for reasons illustrated by Michael Ashton, the ‘inflation guy’ in a post a while back.

gs weekly chart

US Stock Market, Updated

By Biiwii

US Stock Market: 3 Amigos bouncing, broad market (including Amigos) remains intermediate bearish

The 3 major US indexes are on a ‘bounce within a bear trend’ plan and as of now that plan is intact.  Yesterday was hairy and I am glad I was out for the last couple of hours so I could not out think myself during the whipsaws.  It was a very profitable day (gold miners and energy playing a nice roll).  I took profit on one of my 4 short positions and have some light long exposure in a few non-gold stocks.

You can see the green shaded (short-term support) areas and up north, a lot of red (resistance).  NFTRH subscribers get updates as needed during the week in order that they, and I, can maintain perspective at all times during the volatility.  More and more I find it is dangerous to be reactionary to markets from the perspective of any one day (day traders, I don’t know how you do it and stay sane… assuming you are).  It’s all about understanding what the trends are, within which all this whipsawing takes place.

spx, ndx and dow daily chart, us stock market

So the bounce scenario lives, but so too does the intermediate-term bearishness on the broad US stock market…

wlsh daily chart, us stock market

The disappointed

By Tim Knight

Stock indexes should be permitted to do precisely what interest rates are doing these days: go into negative territory

I confess that I was worried this morning. I had 120 short positions, 0 longs, and the intraday ES looked absolutely bullish. I’ve tinted the pattern below, and it looked like a very painful day ahead. However, as you certainly know by now, the rally-that-was-to-be fell to pieces immediately, and my profits are again soaring.

0203-es, stock market

Given the torture I endured for years with these bullish turds, the amount of sympathy I have for such disappointments is simply too low to be measured, even with the most modern scientific instruments. As far as I’m concerned, the stock indexes should be permitted to do precisely what interest rates are doing these days: go into negative territory.

The bulls? Screw ’em all.

[biiwii comment: easy Tim, they ain’t dead yet]

Words of Wisdom From an NFTRH Subscriber

By Biiwii

One of the great side benefits I receive from writing a financial market report that attracts thoughtful people (professional and private investors alike) is that I gain the benefit of their thoughts from time to time.  This email from Michael S. came in response to NFTRH 380 and some of my comments therein.  His thoughts are reproduced (with permission) for the benefit of anyone reading, and were of benefit to me as well.  Personally, I am trying to be more nimble in trading and have kept cash and risk ‘off’ liquidity vehicles (Treasury bonds) above 90% in this bear phase and indeed usually did so in the year-long momentum loss phase in the stock market, which eventually resolved into this bear phase.

Hi Gary,

I enjoy reading your reports. You lamented not making as much on Google due to being shaken out of Amazon [biiwii edit: I took a profit on AMZN, but was shaken out of GOOGL due to AMZN results]. It happens.

One thing that resonates when reading your report is your conservatism. The fact is many try(most fail) in making money during markets that are in transition now. The key is to do LESS; be patient, preserve capital and don’t try to force trades. It is extremely difficult to show profits in a market that is heading down when liquidity to BUY is drying up. One has to choose between being SHORT…which most don’t know how to do successfully or have the capital to sustain down periods, or, alternatively, remain in cash. The best way I have learned to beat the market is to cut back on trading during down periods, keep position sizes smaller, watch more, do less and let the market tell you where it’s headed. In this market, one should be trying to preserve capital, not trying to beat the market. The small investor has a huge advantage over institutions and large capital because their buys and sells as indistinguishable…big institutions leave their footprints everywhere in volume.

Personally, I look for quick entry and exit points. I don’t hold onto positions for long, and I have learned that BUY and HOLD died back in 2000. This market is extremely dangerous and personally, you can make a lot of money simply by not LOSING money. This is a relative performance game, but it is highly effective over the long term. PRESERVE CAPITAL! That message has never been communicated to investors by anyone I have read and I believe the downfall of most investors is they fail to recognize when the market has changed character and fail to [adapt] to the change by changing their trading/investing style. The key is to limit losses, take advantages of temporary misplacing in the market, but in any case unless and until the market shows it has stabilized and a trend emerges there is no point in risking capital against professionals. You can’t beat the market and the best things is to try to align yourself with it ONLY after it tells you what to do. Most investors are gamblers at heart and simply give up profits earned over time because they believe they always have to play. This is a time to stay on the sidelines, walk away or wait for a large drop, after which most of the selling has already happened. When that happens, most investors won’t return because they have lost confidence, but someone was buying when prices dropped. The hardest thing to do is buy when everyone is panicking. But even though you got out of your SPY last week, shaken out…fundamentally, you got it right. But buying and holding…now that’s the hardest thing. I bought deep on Jan 21, sold a couple days later, and though I wanted to go back in to buy, I didn’t. It happens!

Note: I’m up about 2% YTD, was up 22% last year. I don’t buy and hold. That game is all about being brainwashed by marketers. But if you never sell, then how can you make money?

Thank you for your excellent reports.

Amazon Earnings Miss, Blown Up A/H

By Biiwii

Here is what the chart would look like if it were trading in regular hours, after the Amazon earnings miss.  How do you like my art work?  Ugly, I know.

amzn daily chart after amazon earnings

That is it for me with the ‘bounce’ scenario.  I dumped SPY after hours for a minor loss and GOOGL for a reduced profit.  The internets were the strongest group and if this goes south where are the rats going to run?

I’ll contentedly sit mostly in cash, Treasuries and a few shorts until I get a read on things.

MKSI Whipsaw

By Biiwii

In the original post I gave two legitimate reasons I was short MKSI (semi equipment sector fundamentals and an un-actualized technical topping pattern) and one illegitimate reason (I don’t like the company or the guy running it).  Owing to reason number 3, I was dismayed as the market reacted very bullishly out of the gate.  I held it short, with the thought ‘eff you, I’m gonna let it settle out’.  I am biased slightly more long than short at the moment, after all.  No pressure.

mksi 1 minute chart

[edit] Not a bad day at all.  Longs went up and at least one out my 3 shorts went down.

mksi

Odds & Ends

By Biiwii

In this post I stated that I am short MKSI and also the reasons why.  Well, earnings came out and they beat by .07 and are guiding flat.  We’ll see what the morning brings, but I had hoped for results that were worse, obviously.  They also noted a little bump in the sector at the very end of the year, which rhymes with a post at NFTRH.com this morning highlighting the little bump in Semi Equipment orders in December.  If the market likes MKSI’s results, then consider me wrong.  Not the first time.

On other matters, I am a bear with the intermediate trend and yet I have been nursing this counter trend bounce scenario, still holding a chunk of SPY and even adding to GOOGL today.  I am no sponsor of the bull case, but it looks like the internets at least are staying on message with Alphabet and Amazon up I guess on Facebook’s results.  So the ‘DJINET bounce from support’ scenario is still alive and well.

 

Nasdaq 100: Potential Bull Flag

By Biiwii

[edit] Got any other bright ideas?

Is it me or is the Nasdaq 100 building an orderly little bull flag that could theoretically launch the final stage of its bounce along with the market?  Short-term traders only, should take note.  The market remains in a bearish intermediate trend.

nasdaq 100 (NDX) daily chart