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wndysrf

Stripper On The Flagpole

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Mark?s Market Commentary ? January 9, 2002

 

Yet another flagpole rally. The operators run the market fast and furious in the first 2 hours, like a stripper who climbs up the flagpole to the astonishment of the perverts sitting on the front row.

 

Then they hang the market up there on a slow drift to the highs to torture the audience. The audience gets impatient and thinks the stripper will never come down from the pole, so they start salivating and buying anything and everything.

 

The Global Economy got an extra shot of heroin today when it was discovered that the Global Growth Driver, the U.S. Consumer, was far from finished.

 

As shown on Doc?s FEED index, The Liquidity Bubble remains in a parabolic move.

 

The Refi Bubble decline abruptly changed course and is also going parabolic, thus explaining the hysteria ramp jobs in NCEN, EELN, CFC, and FRE the last couple of weeks. I guess the collapse in the bond market today will light a fire under all the remaining hopers who haven?t hit the refi lotto ticket yet.

 

There is simply no visibility of this bubble collapsing. In fact, it remains in its blowoff move. Note that a weak U.S. Dollar, the most overowned currency on the planet, cannot even make a dent in the desire for the arena participants to celebrate the next giant upswing in consumer borrowing and spending. Investors around the globe are ignoring the currency devaluation and are hoping that a 40% move in the Nasdaq the next year will offset a 15% decline in the dollar.

 

The borrowing and spending will fill the bellies of the rest of the global economies hooked up to the U.S. feeding tube. All other countries are rejoicing that the U.S. Consumer is still in the game.

 

Do not rule out the possiblitiy of a Double Shot.

 

The consumer is still buying, the FEED is still pumping, the housing market is booming. My prediction is that we are going to get a massive upside earnings surprise from one of the leading tech companies, and that a 1000 point Dow and 150 point upside move on the Nasdaq is imminent.

 

That will blow out every short position and immediately reverse to the downside in a super steep drop that Arch Crawford has been predicting which will catch everyone aghast.

 

Poor Doug Noland. His worst nightmare continues to unfold.

 

Poor Bob Prechter. He must be changing his E-Wave count on a daily basis.

 

Note the insanity of the participants continuing to chase the last bull market?s winners. Meanwhile heavy fear and skepticism remains among those holding gold and silver shares. As Tom O?Brien mentioned yesterday, the gold market has not seen a large upside breakaway gap yet. The types of gaps which were common during the initial stages of the tech bull market in the early 1990?s.

 

Note the virtual explosion in some of the specialty retailers, yet basic industrials continue to get hammered. A perfect lopsided economy.

 

I think it is getting too late in the game to be chasing intraday scalps among the Supermodels, so I did not chase any short skirts today.

 

Instead, I made some rather heavy additions to the gold and silver longs. The trend of the broad market is still up. Might as well go long on the strongest sector.

 

It has been exactly 90 days since the October lows. The same number of days from the Nasdaq low in 2001 to the Jan 2002 top. So we are probably close. The 200-day is within a stone?s throw. I doubt that Da Boyz will stop there. I suspect we will have a couple of days closing over the the line to really freak people out.

 

Another big TICK came in during the afternoon. The Nasdaq TRIN closed in the basement again.

 

Note that the U.S. Dollar is making a slow, laborious, 3 drives to a top wedge back to the breakdown area. I suspect it will get back up there and then give it up, sending gold and silver to the moon.

 

As you guys can see from my recent trades, my shorts have not been working out. So tempting to go into BEARX for awhile and take a break from the shorting for awhile, and play the long side on the metals instead. So far, that seems to be working.

 

For some reason, I am unable to find the parabolas. Check out SINA and EELN. Put your entire portfolio in these two at the lows and you can cash out here and call it a year. Mortgage the house and invest in Chinese Internet stocks. The New Mania.

 

SharpChartv05.ServletDriver?chart=sina,uu[l,a]dahlniay[dd][pc50!c200][vc60][i].gif

 

SharpChartv05.ServletDriver?chart=eeln,uu[l,a]dahlniay[dd][pc50!c200][vc60][i].gif

 

The Color Commentator continues to watch Da Boyz? change in market strategy in real time. As soon as the daytraders get the drift of the game, the game changes:

 

?New Strategy clearly evolving. PigMoney is buying high TRIN close days with selling down into base of 5/15minute chart, then the bacon is held overnight for the gap and run. PigMoney is shorting low TRIN closes on hysterical runups, holding bacon overnight and then covering into the gap down. This has been going on for sometime. This way PigMen eliminate Daytraders from equation and game against textbooks, trading seminars and the like thus flushing out from the gaps at least 25% of addicted participants. Holding overnight for many is unorthodox therefore the play.?

 

?Ridiculously low TRIN with snaking high holding price means more panic buying by addicts who feel train is leaving station without them. This should mean close near high of day. At any rate regardless, best short entries are to wait until end of day when TRIN closes hysterically low and index is overbought again. The simpleton stoch meter is now in overbought on daily. The weekly is overbought. We may get one more day of buying on Friday to max overbought levels. Then Monday we begin Capone Week. What does Capone do? If Market is up into OE Racketeering Week, it should sell down as Hoods and Bosses bail their underwater put positions into OE day in my opinion.?

 

Position Summary:

 

Closed more shorts today on the open.

 

Added half long position in SIL at $15.50

Added half long position in WHT at $1.05

Added half long position in HL at $5.10. Average now $4.55

 

We are 24% short, 30% long, 46% cash.

 

Half Short:

 

INTU at $53

TGT at $34 Covered at $31

MBI at $50

AMGN at $52 Covered at $49

ROST at $44 Covered at $47

 

Quarter Short:

 

FRE at $68

KBH at $49

LEN at $56

TOL at $27

COCO at $40

KSS at $66 Covered at $55

NCEN at $28

LOW at $42

 

Full Long:

 

GG at $11

HL at $4.55

 

Half Long:

 

BGO at $1.31

PAAS at $5

DROOY at $3.35

GLG at $9

MDG at $16

GSS at $1.72

SIL at $15.50

WHT at $1.05

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Mark: not so sure the consumer is still in the game. THe other day consumer credit actually declined 2.2 bil. Granted the retail stocks were up, they had an horrific xmas selling season.

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Nice warning by LXK afterhours couched as an upside suprise. For the recently ended quarter (always the strongest ) they are guiding up by 5% but for Q104 they are guiding down by as much as 15% from an already lowered base. Trading down 2 beans. Make that 3 beans.

 

I would expect to see more of this next week as comapnies easily hurdle low estimates but can't possibly make the earnings recovery numbers forecasted for the next quarter. Remeber way back when when tech companies could forecast a year out with confidence, now 6 weeks is impossible.

 

A lot of chatter about the lack of preannouncements. IMHO, deals were being made fast and loose up to 12/31/02 and may have provisions linking to JAN budget approval. If that is the case then companies can deny knowledge of material shortfalls during the first week of the year and hold off any warnings until earnings are released due to quite period regulations.

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Mark,

 

Just went over the part of last night's thread I missed. I see you are circling the same shrinkwraps I am, qlgc and xlnx. What are your intentions at this point towards these high strung vixens; have you decided when and where you will do the deed?

 

TIA

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From a trading standpoint, Ord sold his HL today at opening. Note his comments on Tom O'Brien today. Harry Schultz has noticed his a downside penetration of his own proprietary gold share index yesterday. Shares still not up to pace of metal. And, if your scenario of sudden upside explosion in Dow and NASDAQ is correct, why would you want to be adding to gold share positions today? I would like to see if that SPX 931 area is challenged again and on what kind of volume. I hold some QQQ March puts bought near close today, but am mostly in cash, awaiting better odds for both the miners and the key indices.

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Speaking of Capone Week, tonight's weekly reports show what Il Capo di Tutti Capi, Al Green, has been up to. Same thing he does after every New Year: mopping up some of the holiday liquidity, along with taking the icicle lights off the eaves. He cut back on the repos by $9 bil or so.

 

But not to worry. The M's are still growing at a respectable rate. And respectabiilty is imPOItant in dis neighborhood, capisce?

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The next few days seem to be key to the direction of the market - a close above 8800 would seem to violate the H&S pattern and signal further upside. So far Mark and Buddha have been right on!

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Volume was light, so we have to assume that the least path of resistance is going to be up.

 

Mark, you were right on the $$ yesterday.

Great job.

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i'm terrified to be long or short..i have no clue what to do next.

 

this up move should be over by monday...I hope

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Regarding Supermodel Shorts. When do you put them on?

 

Vesselin: Heard a rumor that you can get the Bullish Percent index on sectors. Can you find one on the SOX? When it gets near a maxout area, then that's the time to short 'em.

 

 

Regarding gold and silver stocks

 

I was desperate for a pullback, so I bought more. Remember, its a bull market, so if you make a mistake, you will eventually be right.

 

Other indicators:

 

NYSE Record New Highs Percent is now .92, one of the highest readings ever. Does anyone know if this reading came in consistently at this level during the 1999 - 2000 mania runs which lasted for weeks and weeks?

 

Might be a signal that a new bull market has commenced.....

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At the end of the day the mkt may go higher, should go lower. What I do know is that stocks are still grossly overvalued and that earnings on an absolute basis stink, regardless of what some shill wants you to believe regarding estimates. Every trick in the book will be used, as they have over the last three years, to hide the truth. But guess what? It has not worked and it will not work; the bulls and the sheep can hope all they want for reflation and higher stock prices, they will be sorely dissapointed. It is most unfortunate that we can not have the cleansing this system so desperately needs on a more timely basis. Employment stinks, look at the real numbers not the govt b.s and no one has any pricing power due to overcapacity in virtually everything. UNtil the system has been cleansed and folks remember what valuation means, this think has a long way to play.

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really wish we could have the wash out ( which we will have unless this time is truly different), and I could play the long side. But one does not always get what one wants. But what a pain in the rear having to put up with all the propaganda and bullcrap from the govt/fed

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Possible hint who has been selling recently.

 

Japanese bond auction last night had a bid to cover ratio of 18.6:1. A normal ratio is 1.5-2.5:1 and just last September the ratio was below 1. This is a hint that Japanese investors are becoming more risk averse. Given the strength in the Yen and weakness in the dollar we should see pressure on US bond auctions in the near future.

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Still below 200d ma. If we break 931 then the trendline is in danger & we'll be looking at 950+.

Y'all know what the cycles indicate.

 

Options I hold are actually doing okay except for IBM and CSCO. Hope they at least fade in the next 30 days or so.

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