tag:blogger.com,1999:blog-122981732024-03-07T20:03:03.037-08:00Wednesday UpdateGlennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.comBlogger996125tag:blogger.com,1999:blog-12298173.post-61163766290794203302010-01-06T19:56:00.000-08:002010-01-06T20:39:50.643-08:00Stock Market Top Very NearTop Line: OK, we couldn't resist posting one more time. What with it being a new year and the market just floating, there needs to be some discussion about the potential of both.<br /><br />In our Last Post, we said that the market would be lower in two years. Here we are after about six weeks and the market has tried ever so mightily to muster higher prices. With the new year, people seem to think it's a good time to buy. Well, that worked for the first trading day of the year. What has happened since? Not much, but that's why we're back for another post.<br /><br />The primary reason for the post tonight is to talk about the stock market. As our title says, we think that the market is very near a top. It is that time of month when the whole world looks to the employment report which is due out on Friday morning. There is a potential for the job number to be near zero for the first time in a <span id="SPELLING_ERROR_0" class="blsp-spelling-error">loooong</span> time. We don't think this is particularly good but it does Look better than the previous months.<br /><br />If the number is positive, we expect the media to say basically that the world can stop worrying, the problem is solved. This is a direct invitation for stock buyers to come in Again. We expect that the market to enjoy a last rally on this news.<br /><br />In fact, we expect the high near the time of the report to be the highest level in the Dow for...well, lets just say a long time. The market is overbought and investors are very complacent even though the market has barely managed to get back half of its losses over the past couple of years. <br /><br />We think that the stock market is once again thought of as a safe place for investors. We couldn't disagree more. There is always a chance that the high is still 10% higher than we are now. We have to allow for that possibility but the timing of a high coinciding with the jobs' report seems like a reasonable thing from our view of the situation. <br /><br />Take a look at the gold market and the mining shares. As we mentioned in November, these classes have suffered a setback and have somewhat recovered with the rally of the last week or so. Take a look at <span id="SPELLING_ERROR_1" class="blsp-spelling-error">GDX</span> and you will see your market leader having trouble getting back above 50 when it was around 55 about a month ago. <br /><br />The dollar has jumped back to life and is probably at the beginning of a major rally. No matter what you read, the dollar is said to be headed to Zero <span id="SPELLING_ERROR_2" class="blsp-spelling-corrected">in spite</span> of the huge rally it has experienced over the past month.<br /><br />Meanwhile, the Treasury bonds have come back into a very nice buying area. We like the <span id="SPELLING_ERROR_3" class="blsp-spelling-error">TLT</span> as you know and today it was trading under 90 and nearly under 89. <span id="SPELLING_ERROR_4" class="blsp-spelling-error">TLT</span> could find its way lower into the jobs' report but the price should be close to a low that will last for a while. We would say the buying range here should be below 90 which it is. We want you to get as good a price as you can so don't just buy this all at one time, ease into it. You may want to enter the trade as early as Thursday, late in the day, or early Friday morning. Then see what happens to see whether you can get better prices over the next few weeks. Then, just sit back and enjoy the 4% yield and possible 25% capital gains over the next year or so.<br /><br />Now, Treasury bonds are getting the same bad press as the dollar, maybe not quite that bad, but this makes them even more ripe for purchase. This is the best buy signal you can get...unanimous negative press. Yes, we are still <span id="SPELLING_ERROR_5" class="blsp-spelling-error">contrarians</span>.<br /><br />We were going to write last night but time got away from us so here we are today. If you have mutual funds or 401(k) funds that are invested in stock market securities, this would be an ideal time to be getting out of those funds. Keep your cash for a while and watch it grow against the stock market decline. <br /><br />If you are in individual stocks, you have a different set of issues. You may have missed the top in that stock or it may still top in the near future. We can't judge that without more information. What we can say is that if the stock you own has failed to participate in this latest rally, we would be inclined to say that it is probably not going to perform too well near term. If it has rallied, then you may find a better time in the next rally or two, but now is very nearly at that level anyway and should offer pretty good prices.<br /><br />If you have stocks that you think will go back to the 2007 levels, then you may need to take a good look at that over the next few days and weeks. If they don't go up, then you may not see them get back to their old highs any time soon.<br /><br />We are compelled to do this Sell call right now which is why we are writing again tonight. We just can't help it. We're not sure when we'll be back. Take care and have a great year.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com98tag:blogger.com,1999:blog-12298173.post-37733001861237189602009-11-18T19:21:00.001-08:002009-11-18T21:20:55.048-08:00The Last PostTop Line: Probably the biggest news in the market is the Update. With our last post, we hit 1000 posts and this, the 1001st is probably the last, at least for a while. We are going on an extended break.<br /><br />We want to leave our last mark here by summarizing our current position on the various markets we have been keeping an eye on. Remember what day this is because these comments are only good for about a day :-)<br /><br />Gold:<br />Here is a problem brewing. While gold has been punching higher to new all time highs, GDX has been painfully lagging. This can only mean that there should be a change in direction, from up to down. How long this decline will last is difficult to say but one would think it would be linked to the action in the dollar.<br /><br />Dollar:<br />If you actually take a look at the dollar chart for the last two years, you would notice that the dollar was Lower last year than it is now. What we find interesting about that is all of the bad press the dollar has received over the past several weeks. Gold has exploded and the dollar gets negative media but stops going down. This "strength" in the dollar flies in the face of strong gold. GDX and the dollar confirm that gold is near a peak, at least a short term top.<br /><br />Continued negative press on the dollar has probably convinced many to short the dollar. This used to be done with the Japanese yen. Rates were very low, at times negative, in Japan and the yen was going down. This caused the world to borrow yen at low rates and buy other currencies to buy stocks in those countries, which were rising. This is called a carry trade. Assuming that the dollar continues to go down and with low rates available, why not use these dollars to buy gold??? This will end badly if the dollar turns around or interest rates move up.<br /><br />Treasury Bonds:<br />Here is another difficult market. We have expected that the stock market drop would give a lift to T-bonds. The stock market has continued to rally but, strangely, the T-bonds have not fallen, at least not much. The highest prices for the stock market and gold have not had the intended effect on T-bonds. Instead T-bonds have held their own and have given us further evidence that the stock market and gold are not on a solid upward trajectory. When will this change? It may be this week or later but there is too much evidence to ignore.<br /><br />The Stock Market:<br />Here is where we are with the Update: This last 1000 posts have been about our take on the stock market. Our intention was to keep us honest with ourselves about how we were thinking about the current market conditions. When we look back to our early July posts and read them carefully, we can see that we missed something. Our titles even indicate that we thought a low was at hand but still we didn't take advantage of the lows at that time.<br /><br />Since then we have struggled to let go of the thinking process. Our main thought is that we are much better traders than bulls. We have to get back to trading and stop trying to figure out the intermediate term. We think better in the three day time frame or less. This large move stuff is interesting but difficult to trade. We need to stick with our strengths and not try to figure out how the market will sit two or six months out.<br /><br />What we do think is that the market will be much lower in two years. How does that help us trade tomorrow? We're not exactly sure. What we do know is that the way We make the best money is to trade frequently. This is not a good strategy for most people and does not make sense for a blog. <br /><br />The last item is the one that troubles us the most. We are contrarian thinkers and go against the grain of the media to make our best trades. We have enjoyed the position we have taken but recently have been less interested in arguing about the stock market, trying to influence others. We think we have a good way to trade with an eye to how the market reacts to the news. <br /><br />This is the most difficult thing we do...try to convince others to do things that make financial sense when all they think is that the media is right. We are convinced that we can always make money because the market participants are really not very concerned about what makes sense. Most people just want to know the market is going up before they buy (too late) and then sell when the know the market is going down (also too late). We can not change this and have decided to abandon the effort.<br /><br />To the several people that have been faithful readers of the Update, we want you to know that you have kept us writing longer than we would normally have done. Without anyone reading, this really wouldn't have made much sense. <br /><br />For those of you who know our email address, we would be happy to continue to stay in correspondence with you and will contact some of you on our own. We apologize for the abrupt change but we think this is the best time to discontinue our work. Life has taken us in new directions and a new chapter is now emerging which eliminates the time that would normally be spent working on this blog.<br /><br />Buy Low and Sell High...not necessarily in that order.<br />Call if you get rich, or Put it in writing...Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com32tag:blogger.com,1999:blog-12298173.post-41603415583144983092009-11-08T21:05:00.000-08:002009-11-08T21:43:56.390-08:00Unenjoyment Report, 10.2% UnemployedTop Line: Market action seems to be giving bulls more confidence. The market has always been a con artist and will continue to do so. We are very near a top/turning point.<br /><br />Last Friday's employment report was dismal in that it contained a double digit rate for unemployment and continued job losses but at least this time the number was under 200K. Great. Still, the market opened down after the news early Friday and then bolted up as if to say that the job picture really wasn't as bad as 10.2% sounds. The market is usually quick to say it's the end of bad news so we're just gonna buy em, after all they are marked down from Thursday's close so they must be cheap.<br /><br />We want to take a few minutes to explain our position in this game of the stock market. There is so little that media says that makes any sense and to assign a "reason" to trading presumes that if you could just predict tomorrow's news, you could have a good idea what the market was going to do tomorrow. Good luck with that. Even if you could predict the news tomorrow, you might not actually be able to do the same with the market's reaction.<br /><br />What we have tried to encourage here at the Update is to try to see when an asset is trading at a good price for either buying or selling. Over the past few years, these extremes have been prevalent in the market. The problem is that the media is so strongly encouraging the current emotional state of the market that it is very difficult to go against them. What do they know? Do they know what is going to happen tomorrow or next month or next year? No. Do they know what happened Yesterday? Maybe. For today, they are just guessing that the news has something to do with the market. It does but not in the way they think. We would say that the Market drives the news, not the other way around. <br /><br />We remain very cautious about this market as we have for the last couple of months. This is a state of mind because of how bullish the media has become. Gold is trading at new all time highs so there is a story for the media...gold has gone up so it must be Going up. We would ask, "Why?" And, if gold is at new all time highs, "Why doesn't GDX exhibit similar results?" GDX is supposed to Lead the gold, again, not the other way around. We read bullish analysts talk about how mining stocks will "eventually" catch up with gold's move. We are near term Bearish on GDX and gold Because GDX is not catching up it is signalling that the move in gold is not to be trusted.<br /><br />In fact GDX has led the stock market over the past couple of years and should continue to do so. If you take a look at how gold has exploded the last few days and GDX is still holding under its former highs, you have a recipe for gold going down. Of course, we can't know when it's going down but we think the price is too high to justify a continued move up. This position is specifically because GDX has not Led. It could be very possible that gold drops along with GDX over the next few weeks and Then GDX leads on the way up. We would be willing and eager to change our actions based on our best signals. <br /><br />As for the stock market, we think that the best guess is that we have a rally in the morning (Monday) and that may be the top of this move (we see the futures are up this evening which doesn't mean much but they could be directionally correct). The last post we suggested that the rally may be over but said it was a little short of its potential and of course it decided to rally. Predicting this rollover timing is difficult so we must concentrate on getting good prices.<br /><br />Have a great week, we hope to be back on Wednesday evening.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com19tag:blogger.com,1999:blog-12298173.post-44274486373520912162009-11-04T19:35:00.000-08:002009-11-04T20:59:34.500-08:00Fed News Not Enough To Hold GainsTop Line: The Fed's "news" brought its usual blip for the following half hour or so and then the market decided to go down. We expect that the rally for the past few days should be the relief rally that will lead to further declines.<br /><br />You might have noticed over the past few days that the market just can't seem to hold. This phenomenon is part of the roll over. As the stock market has been so volatile and it still "feels" like it could go either way. The real story is that the market has gotten too overbought and the buyers don't have enough money to keep it moving up. <br /><br />Trading the stock market is always a difficult task and there is always potential for losses. When the market opened today, the buyers were out due to some employment news from ADP. Then when the Fed made their announcements, the market was fairly volatile but after the volatility the market was higher than when the news hit. From there the market fell to negative, at least in some indexes, before ending about unchanged for the day, near the lows of the day. These types of things should scare the bulls and we do not believe they will hang around too long.<br /><br />The trading today looked and felt like the right ending to the correction. We say correction because the latest drop from the highs from a couple of weeks ago. The only problem with this discussion is that the rally out of the lows seems a little short relative to the drop but that can be because the market is really ready to drop without much relief.<br /><br />We are significantly bearish at the moment. The drag on the market is pretty strong. Every rally has trouble sticking and the sellers are ready. <br /><br />The big news seems to be that gold hit a new high near $1100 today with the dollar falling sharply. The dollar has not dropped below its lows of last week but still could. These two assets are at the center of the debate of whether the stock market can move down or or not. We have said that gold could hit $1100 on this move but that would represent a short term high with a move back down to triple digits before another rally, if we get one.<br /><br />Right now, we want to make sure that we remove ourselves from the downside risk that has risen quite a bit. If we see a "buying" opportunity we will present it to you. The possibility of a decline of over 10% is very high.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com12tag:blogger.com,1999:blog-12298173.post-17176611561720433292009-11-02T19:43:00.000-08:002009-11-02T20:11:09.988-08:00November Starts With a Volatile DayTop Line: The start of November gave the bulls a breather from the heavy selling from Friday. After maybe some more upside, the sell off should continue.<br /><br />As the week progresses, there are plenty of land mines for the market in the way of news. The big ones are the employment report on Friday and the Fed's news on Wednesday...ok, maybe that's not all that big, the Fed has become almost irrelevant. There are other news items including some little things like the Stanley/Black and Decker deal that was announced tonight. How will the market react to them?<br /><br />Well, we are pretty sure we don't really know exactly what will happen but we do think that there is little doubt that the market wants to resolve to the downside, at least for the time being. As we see the volatility rise again, there should be some more intense down moves as we move through the next few weeks. Then we'll see how much the market wants to go down.<br /><br />Today's market was very volatile as the Dow jumped out of the blocks this morning and sported a 150 point rally in the first 30 minutes. After hanging around that level for about two hours, the market decided to drop back below even over the next hour and traded around there for an hour or so. After that the Dow moved higher into the close with about a 75 point advance. To us, this was a small victory for the bears.<br /><br />The market probably won't get much from the Fed on Wednesday but tonight the Australians decided to raise interest rates again. No, not much but it was an increase. The Fed doesn't have the...ah...ability to raise rates for now so we expect much the same from them this week. <br /><br />Tuesday has a few elections in it. Could they move the market on Wednesday? <br /><br />Anyway, the big news for the week should be the employment report on Friday. We expect the market to be lower in a couple weeks than it is now and the employment report could be a catalyst in the stair step lower.<br /><br />We will be back on Wednesday evening after the Fed...Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com8tag:blogger.com,1999:blog-12298173.post-70258444723565709512009-11-01T21:04:00.000-08:002009-11-01T21:11:38.987-08:00Quick UpdateTop Line: The stock market dropped hard on Friday to a new low for the move in the major indexes that we follow. This is the start of a major drop in the market. Whatever rallies the market has should be sold.<br /><br />Friday's sell off seemed to be a shocker to all of those who thought Wednesday's sell off was a good "buying opportunity". To be clear, the good buying opportunities were last March when the SP500 was trading under 700, not now when the index is near 1100. After the index has rallied 50% in about six months, it's Not time to buy. <br /><br />The volatility indexes we follow traded above 30 and the VIX actually closed above 30. This should be a glimpse of the future when theses indexes jump to the levels we have seen over the past year and possibly higher. <br /><br />We have been out of town this weekend and it's late so we will post again on Monday evening.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com9tag:blogger.com,1999:blog-12298173.post-30969675640365800812009-10-28T18:34:00.000-07:002009-10-28T20:41:10.436-07:00Is the Update Back In Sync?Top Line: The stock market spent most of the day simply going down and we would say the trend has turned down. And, that we May finally be back in sync. <br /><br />The news on new home sales was included in the "reasons" the market went down today but that doesn't really answer the question why sell stocks when new home sales aren't as expected? The market can think anything it wants and today it was in the mood to sell stocks regardless of the news.<br /><br />Take a look at <span id="SPELLING_ERROR_0" class="blsp-spelling-error">GDX</span> and you will see that it has been on a mission lower the last week or so. Since Monday morning's spurt above 47 it has dropped to close at 41.87 today, a 10% move in three days. When we said we would consider buying it in 30's, we didn't think it might be this week. It's not in the 30's just yet but that's less than 2 points away.<br /><br />You may have noticed the chatter about how the mining stocks have taken a beating when gold itself has only dropped a little. We say that the stocks move in front of the metal so we would expect the metal itself to drop following mining stocks down. We will see.<br /><br />The catalyst for all of this is the strong dollar coming off its lows over the past few days. After the incredibly negative press on the dollar, the dollar refuses to go down anymore. The result is a sudden change in the playing field for commodities and the stock market. Even Treasury bonds have been strong the past few days, in spite of the huge supply coming to market this week. <br /><br />It may be that <span id="SPELLING_ERROR_1" class="blsp-spelling-error">GDX</span> is too oversold to go down anymore but we don't recommend buying it at this time. We will take a look at it if we see a three handle (in the 30's) on it. Until then it's a falling knife and it should be avoided. <br /><br />All we can say this evening is we are now glad to be short. A sudden drop is not out of the question. Take a look at our company, <span id="SPELLING_ERROR_2" class="blsp-spelling-error">ING</span>. They announced a restructure and the stock has lost 30% in three days. We wouldn't suggest that is how the overall market will trade but it is in the realm of possible. As we have noticed, there seems to be a lot of pent up selling.<br /><br />The opinions we read today were quite bullish actually which we like. The headlines were that this is a buying opportunity not a correction??? This is different from what we have been hearing and should allow the sellers to continue their quest.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com11tag:blogger.com,1999:blog-12298173.post-18868310085820953502009-10-26T18:11:00.000-07:002009-10-26T19:20:29.365-07:00Another Downside ReversalTop Line: Monday was Not up and that is something new...that we like. Monday showed yet another big reversal to the downside. These are bearish days and most likely are setting us up for a solid down move.<br /><br />The market took off like a rocket this morning especially in the NASDAQ 100. In a half hour the <span id="SPELLING_ERROR_0" class="blsp-spelling-error">NDX</span> was up 1.5% and held there for about an hour when it fell out of bed suddenly. In the next hour, <span id="SPELLING_ERROR_1" class="blsp-spelling-error">NDX</span> fell 2% wiping out the early morning launch and then some. The rest of the day was spent just treading water. But, the action in <span id="SPELLING_ERROR_2" class="blsp-spelling-error">NDX</span> actually was an outside down day.<br /><br /><br />All of these downside reversals we have seen in the market the past few days should resolve to the downside. <span id="SPELLING_ERROR_3" class="blsp-spelling-error">GDX</span> is one of the confirming indicators. Maybe we should start with the dollar's rebound today.<br /><br />The dollar was very strong today giving some deep knee bends for the commodities. What is kind of surprising was that the bonds were down today, too. We can rationalize that with the fact that the US Treasury is trying to sell a very large amount of debt this week. The dealers need to hold prices down so they can buy 'em cheap. Or, they are just going down. We are expecting the stock market to go down and some of that money should go into the dollar denominated US Treasury bond market. Just not this week.<br /><br />Going back to <span id="SPELLING_ERROR_4" class="blsp-spelling-error">GDX</span>, gold was down about $15 dollars and <span id="SPELLING_ERROR_5" class="blsp-spelling-error">GDX</span> was down about 2 bucks at 44.69. This was after <span id="SPELLING_ERROR_6" class="blsp-spelling-error">GDX</span> was up about a buck in the early morning launch. <span id="SPELLING_ERROR_7" class="blsp-spelling-error">GDX</span> seems to have topped for the time being at the 49.74 high about two weeks back. So far, we've seen a 10% drop in <span id="SPELLING_ERROR_8" class="blsp-spelling-error">GDX</span> and we expect that it will lead the market down some more. We will be looking at buying <span id="SPELLING_ERROR_9" class="blsp-spelling-error">GDX</span> back under 40. We're not completely sure we will but we are keeping an eye on it.<br /><p>Yes, Jackson likes swimming... <span id="SPELLING_ERROR_10" class="blsp-spelling-error">Humpty</span> <span id="SPELLING_ERROR_11" class="blsp-spelling-error">Dumpty</span> sat on a wall, <span id="SPELLING_ERROR_12" class="blsp-spelling-error">Humpty</span> <span id="SPELLING_ERROR_13" class="blsp-spelling-error">Dumpty</span> has a great fall. Now fall into the pool, Jackson.</p><br /><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 258px; DISPLAY: block; HEIGHT: 258px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5397098068642483026" border="0" alt="" src="http://3.bp.blogspot.com/_UBiWa7b7_AE/SuZYGS9hy1I/AAAAAAAAAn8/UUAA_ZTdclM/s400/3.jpg" /><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 259px; DISPLAY: block; HEIGHT: 264px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5397096365238050482" border="0" alt="" src="http://1.bp.blogspot.com/_UBiWa7b7_AE/SuZWjJSQ3rI/AAAAAAAAAn0/DX52xyu87kQ/s400/2.jpg" />Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com3tag:blogger.com,1999:blog-12298173.post-42439032859762235252009-10-25T23:14:00.000-07:002009-10-25T23:16:27.593-07:00Strong Monday or Not?Top Line: The market continues to exhibit topping action. Please see our comment in the last post for details on Friday morning's action.<br /><br />The past several weeks have seen strong Monday's so maybe this week the market can break that pattern. <br /><br />We have no time this evening for a post so will add more on Monday evening.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com4tag:blogger.com,1999:blog-12298173.post-76400556506529809032009-10-21T22:26:00.000-07:002009-10-21T23:02:02.950-07:00Another Important Reversal DayTop Line: The stock market had a outside down day which is a bearish sign. We look for further confirmation of downside.<br /><br />Outside down days are technically bearish due to what they imply. That being, early strength leading to late weakness, which is exactly what happened. Both ends of the day seemed to be driven by news about <span id="SPELLING_ERROR_0" class="blsp-spelling-error">WFC</span> (Wells Fargo). Early in the day, <span id="SPELLING_ERROR_1" class="blsp-spelling-error">WFC</span> announced blowout earnings and late in the day an important analyst downgraded the stock. So, news was a driver in this outside down day which doesn't sit well with us but we will definitely take the downside.<br /><br />This action should be followed by further downside and it should come immediately. The technical picture is ripe with downside potential. Look at a chart and you can see that this vertical run looks very brittle. The possibility exists that the entire rise from the March lows is over today. Yes, we have said that before but that doesn't mean that it's wrong. In fact the next down move could be very destructive to stocks so to side step that move would be <span id="SPELLING_ERROR_2" class="blsp-spelling-error">ok</span>.<br /><br />The volatility indexes were some of today's standout performers. The <span id="SPELLING_ERROR_3" class="blsp-spelling-error">VXO</span> dipped below 20 before blasting higher in the final hour. This is a meaningful reversal and gives us confirmation of the down move that happened in the stock market.<br /><br />As for our gold mining stock proxy, <span id="SPELLING_ERROR_4" class="blsp-spelling-error">GDX</span>, it traded to 49 this morning just shy of last week's highs before dropping to close a little lower at 47.39. This reversal was strong but not as strong as the outside down day we saw in the major indexes. <span id="SPELLING_ERROR_5" class="blsp-spelling-error">GDX</span> started down in the early part of the day and could not get back below those opening lows, still, a strong reversal along with the stock market. <br /><br />The dollar is the holdout in today's events. It too had a reversal but not as strong as we would have liked to have seen. There are so many dollar bears out there. Take a look at the news. It is unanimously negative. We can only ask why the dollar isn't much lower if all that is said is true.<br /><br />Today's reversal is the clearest signal we have seen recently to indicate that the market may finally be ready to head south. We will continue to watch this move and see if it does develop into a lasting <span id="SPELLING_ERROR_6" class="blsp-spelling-corrected">sell off</span>. We said in our last post there is some pent up selling that could occur in a hurry. We are short already so that wouldn't bother us too much...but as you know we are certainly not very profitable over the past couple of months.<br /><br />Listen to the market telling you to be cautious. Sell your long positions. The risk is too much to keep your positions.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com5tag:blogger.com,1999:blog-12298173.post-87498284761852435382009-10-18T19:41:00.000-07:002009-10-18T20:19:24.736-07:00Market Trying to Decide What to DoTop Line: The stock market is indeed struggling to go up. Friday saw some downside but not enough to convince us that the top is definitely in. We need to see some normal selling.<br /><br />Friday's options expiration brought in a few sellers after the two days above 10K in the Dow. Tonight the futures are a little weak but we still need some proof for the downside. Yes, we are already short but the market has been indecisive about moving up. With the upward drift, selling has only been enough to relieve overbought conditions, not enough to get oversold.<br /><br />Every day that goes by, we think the market can't continue to go up but it manages to hold on. The more resistance the market has to selling means that selling doesn't occur. We would say that there is some pent up selling that will come as soon as a little break down happens.<br /><br />The Update is keenly interested in the market's down move that seems almost around the corner but still illusive. As you see the market turn over, we will be adding more information to the Update. Sometimes we like to comment during the day if we see something happening. If that happens, we need to put those thoughts in the comment section so check those out. We don't have the ability to post at work so a comment has to do.<br /><br />The technical position of the market is measured in a couple of ways. Our favorite indicators are the dollar, bonds, and gold, not to mention the volatility indexes. Tonight we look at the dollar for a few minutes. It looks like the dollar is trying hard to put in a low. The media is trying to convince everyone the dollar is going down forever and no one cares that it's going down. The possibility is that there is so much negative press that all of the sellers are gone. <br /><br />At the same time, gold is trying to find a short term top. The media is still trying to look at gold positively. The dollar and gold are polar opposites and normally they should trade opposite. With gold at all time highs the dollar should be at new lows but it's not. Last year, the dollar was even lower than it has been the past few days. This could allow the dollar to drop a little more but we think it is signalling that it is close to a low if it hasn't already put in.<br /><br />Let's keep a close eye on the dollar to see if it is finding its way higher. If so, that would be negative for commodities in general. This may give us an opportunity if the market can move down. Stay tuned.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com5tag:blogger.com,1999:blog-12298173.post-75162489158056352252009-10-14T19:28:00.000-07:002009-10-14T19:53:36.530-07:00Dow 10,000, Let's Party???Top Line: More of the same...the earnings for INTC and JPM were greeted with a big lift to the market. The Dow crossed back into 10K land and some would like to see that be the start of something big.<br /><br />Everyone is excited about the Dow 10,000 event. March 1999 seems like a long time ago but that was the First time the Dow crossed 10K. That time, there were Dow 10K caps for all the traders on Wall Street. Were there caps today or just dunce hats? We don't know but the fanfare had to be much more subdued than 10 years ago.<br /><br />Still, the media wants you to believe the fantasy that now is a good time to believe the worst is behind us. We are wondering where these news stories were in March when the worst truly was behind us, for the time being. Now, after a 50% move, they expect that you are OK to get back into the market. <br /><br />Whatever you may think, after no gain for 10 years, there should be no celebration...but people who own stocks for the long term are eternal optimists. We call it the Lost Decade and we expect another Lost Decade to come. OK, enough.<br /><br />As far as the real action today, stocks were up on the back of JPM and INTC earnings. The earnings were somewhat better than expected and that seemed to be the catalyst for the market's move up...expectations that most earnings reports will show good news. At some point the market will stop partying and move against those complacent stock holders or fresh new buyers. In the mean time, we hope they are very careful.<br /><br />We are not going to say that we have called this market right over the past few months but we also don't think there can be much more upside based on the money that's been used to get us where we are.<br /><br />Realism does cross our minds on occasion and this should be one of those times. We do not think the market can continue going up but it is. The right thing for the Update to do is to continue to wait for a point to get back in if that is truly the right thing. We won't know that until it actually happens. <br /><br />We have considered our position that GDX would go to 55 and gold would go to $1100 but we seriously think there should be more than that. GDX has struggled to keep up with the move in gold and our position is that is not bullish for GDX or gold. We expect both should be sold right here and now. If we get a chance to buy GDX back we will certainly take a hard look at doing so. That would be around 40 and maybe even lower. However, even if that happens we would make sure that it was the right thing to do. <br /><br />For now, the stock market is not safe due to GDX not leading anymore. We will continue to watch the miners to see if they can tell us anything else. As we have said, gold could go to $1100 but that's not all that far away. One of the Fed officials said that he didn't think the Fed would change their powerful accommodating policy until employment improved so gold got a little pop from that but we are quickly coming to a reversal in both the dollar and gold, of course in the opposite direction. Be careful.<br /><br />What we are looking for in the stock market is a turn. What we have been getting for a couple of months is modest pullbacks with higher highs after them. This creates a safe environment for traders and gives stock owns comfort because they now don't have to sell. They sleep better due to all the little comeback rallies that have happened over the past three months. In order for them to take note, their stocks need to roll over pretty hard. When that happens, sellers will come back, probably in panic, as usual. <br /><br />While it's easy, or seems so, to be bullish now, it will not be as easy when stocks are going back down.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com5tag:blogger.com,1999:blog-12298173.post-13626350414803254862009-10-12T19:32:00.000-07:002009-10-12T20:26:45.151-07:00Waiting GameTop Line: The stock market traded pretty flat after an up opening. The main event was dullness. The market still seems to be putting in a top of some kind.<br /><br />The Columbus Day holiday was a dull event and there really wasn't much new information that we saw. The market opened strong and the various indexes traded back to or near last month's highs. If the market wants to go higher, it will. We still think that the market has stretched itself too far already but with no impetus to go down, we need to wait for confirmation that it actually wants to go down.<br /><br />As we sit here and wait for the market to make up its mind, time is passing with no meaningful moves. For the past month, we have traded in a pretty tight range (about 5%). The moves we have seen have not been easily traded so we have been patiently waiting. <br /><br />The <span id="SPELLING_ERROR_0" class="blsp-spelling-error">TLT</span> has had a rough few days but it should be just a minor setback. The move coincides with a similar but opposite move in stocks so now we need to figure out if either is real. The only way we can do that is to wait for the market to tell us. The odds favor that the market needs to make a move down.<br /><br /><span id="SPELLING_ERROR_1" class="blsp-spelling-error">GDX</span> and gold were continuing their dance with gold moving ahead of <span id="SPELLING_ERROR_2" class="blsp-spelling-error">GDX</span> as we mentioned a few days ago. This is not a good sign if you are looking for a confirmed higher move. It is possible that gold is heading to $1100 as we expect but even if it doesn't there should be a rapid move back down probably dropping back into the triple digits. Since <span id="SPELLING_ERROR_3" class="blsp-spelling-error">GDX</span> is not really confirming gold's move, we expect that <span id="SPELLING_ERROR_4" class="blsp-spelling-error">GDX</span> will move down below 40. We will try to buy some more down there. <br /><br />As we move through the month of October, there should be some downside. This could be a swift move but we expect there to be a reason for it. Earnings could be the cause, whether they aren't good enough or are actually bad. The only real thing that matters is how the market deals with whatever news there is. We wait some more...Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com5tag:blogger.com,1999:blog-12298173.post-61035734846642794522009-10-11T21:20:00.000-07:002009-10-11T21:22:26.454-07:00No Post This EveningThe market should tell us more on Monday so we will post Monday evening. We went to the Twins' last game at the MetroDome tonight. Yes, they got sweep by the Yanks.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com1tag:blogger.com,1999:blog-12298173.post-50348894165908072762009-10-08T20:55:00.000-07:002009-10-08T21:08:14.384-07:00Today May Have Been SignificantTop Line: Today was a key reversal day for gold and the dollar as both moved to extremes and then backed off. This has implications for the broader market.<br /><br />We feel compelled to post this evening. There were a few key indications that present information that is valuable. The combinations are interesting.<br /><br />The dollar collapsed to a fresh relative low like it seemed to have wanted to do for about a month. Meanwhile gold jumped to a new actual high. Normally this is what is supposed to happen, these two asset classes move in opposite directions. We think that the reversals are what are important today. The media will most likely tell you about the extremes in both and conclude they will continue in that direction.<br /><br />Today's reversal is a first good sign that the moves might be over. Time will tell but for now we say that the market is showing us something different. The reason we say that is the action in <span id="SPELLING_ERROR_0" class="blsp-spelling-error">GDX</span> today. Yes, <span id="SPELLING_ERROR_1" class="blsp-spelling-error">GDX</span> went to a new high for the move near 50, that's true. But, as we mentioned yesterday, <span id="SPELLING_ERROR_2" class="blsp-spelling-error">GDX</span> is Following gold, not leading. This is not a sustainable in our opinion.<br /><br />While this was going on, the stock market was merrily moving higher which it can easily do because it is Below its recent highs. We think the market can always get back to where it was but getting past that is what makes us pay attention. Today, the market failed to get back to the highs together with a new relative low in the dollar and a new high in gold.<br /><br />Taken all together, we think today was significant. We hope you found some way to sell some of your <span id="SPELLING_ERROR_3" class="blsp-spelling-error">GDX</span> in the 49's today. If not, we would probably have you re-read yesterday's post and figure out a way to get off that risk for awhile as we wait for further developments. Tomorrow should tell us a lot about whether today was important or not.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com1tag:blogger.com,1999:blog-12298173.post-87864648132425915032009-10-07T20:06:00.000-07:002009-10-07T20:42:49.710-07:00Gold at New HighsTop Line: The market does not seem to want to go down. Our key indicators are still negative on stocks. No buying should be done here.<br /><br />As we look at the last three days trading, the Dow has run up over 200 points. <span id="SPELLING_ERROR_0" class="blsp-spelling-error">GDX</span> has jumped back up to the 48 level even as gold has mounted a rally to new highs. <span id="SPELLING_ERROR_1" class="blsp-spelling-error">TLT</span> has remained pretty strong <span id="SPELLING_ERROR_2" class="blsp-spelling-corrected">in spite</span> of these developments and we watch it carefully.<br /><br />The key item for us is the dollar which is struggling under the strain of negative press, mostly. Gold has popped to a new high but the dollar and the <span id="SPELLING_ERROR_3" class="blsp-spelling-error">TLT</span> have remained steadfast. The dollar should be making new relative lows along with the spurt in gold and <span id="SPELLING_ERROR_4" class="blsp-spelling-error">TLT</span> should be dropping due to the same. <br /><br />Let's concentrate on <span id="SPELLING_ERROR_5" class="blsp-spelling-error">GDX</span> for the moment. We are in a position that <span id="SPELLING_ERROR_6" class="blsp-spelling-error">GDX</span> is getting close to a long term capital gain if you purchased it last year at this time and haven't sold it. This makes the decision to hold on much easier since we still think <span id="SPELLING_ERROR_7" class="blsp-spelling-error">GDX</span> will enjoy some remarkable gains going into 2010. <br /><br />Right now, with <span id="SPELLING_ERROR_8" class="blsp-spelling-error">GDX</span> <span id="SPELLING_ERROR_9" class="blsp-spelling-corrected">under performing</span> gold, we are getting a little concerned about <span id="SPELLING_ERROR_10" class="blsp-spelling-error">GDX</span> and frankly the gold move as well. Gold could well pop to $1100 and is moving up as we write. That price isn't too far away and we'll see how <span id="SPELLING_ERROR_11" class="blsp-spelling-error">GDX</span> reacts to any more upside in gold. With all of this bullishness in gold, we <span id="SPELLING_ERROR_12" class="blsp-spelling-error">contrarians</span> get nervous. The interesting thing is that no one actually believes that inflation may be a problem but still gold rallies. Imagine if people begin to think that inflation may come back...gold will soar. This is exactly what we think. We don't really think a lot of inflation is coming but we do think enough will appear so as to scare gold much higher which will be led by the <span id="SPELLING_ERROR_13" class="blsp-spelling-error">GDX</span>.<br /><br />We mostly think that <span id="SPELLING_ERROR_14" class="blsp-spelling-error">GDX</span> Leads gold, not the other way around. If <span id="SPELLING_ERROR_15" class="blsp-spelling-error">GDX</span> is struggling to follow gold up, which it <span id="SPELLING_ERROR_16" class="blsp-spelling-corrected">currently</span> is, we would want to lighten up on both. Again, if you have a taxable position, we would be more cautious about selling if the position is close to a long term capital gain. If it is, then we may recommend a legal tax hedge just in case the complex drops.<br /><br />Since we are trying to focus on <span id="SPELLING_ERROR_17" class="blsp-spelling-error">GDX</span>, we would want to short something else. This is not something that you should do without some serious thinking. In fact we're not sure we would recommend this to you unless you are close to a long term capital gain. If you are near a year, holding out until then would be an extremely tax friendly transaction.<br /><br />We will explain this further if you like. Send an email or make a comment here. First of all you will need to get a margin account in order to short something. Please do not attempt this without full consideration of taxes and whether you really want to deal with selling your position. <br /><br />This recommendation to buy <span id="SPELLING_ERROR_18" class="blsp-spelling-error">GDX</span> over the past year has yielded us great gains. That is not a good reason to sell necessarily but when you have a good gain you sometimes want to protect it. In this case, there are plenty of reasons not to sell. If you have been trading it all along and there is no pretense of a long term holding period, then you can feel free to do more trading.<br /><br />The question then becomes is this a good time to get out. If it is, we would recommend a strict buy back point which we will be watching and waiting for.<br /><br />With that in mind, the stock market is currently being led by <span id="SPELLING_ERROR_19" class="blsp-spelling-error">GDX</span>. If <span id="SPELLING_ERROR_20" class="blsp-spelling-error">GDX</span> leads the market and gold, at least in the current environment, then we need to watch <span id="SPELLING_ERROR_21" class="blsp-spelling-error">GDX</span> for clues. If <span id="SPELLING_ERROR_22" class="blsp-spelling-error">GDX</span> does manage to rally with gold here, we would need to consider that the market can go up as well. We do not have this position at the moment, as we are fairly bearish stocks. This, as you know, has not served us well over the past couple of months.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com1tag:blogger.com,1999:blog-12298173.post-8451945191712926922009-10-04T19:51:00.000-07:002009-10-04T20:48:11.241-07:00Jobs' Report DisappointsTop Line: The stock market seems to be tracing out a down move. The Dow dropped 200 points on Thursday and failed to make any headway on Friday after the jobs' report. The market should have a solid intermediate high in place and we will see how far it can go down.<br /><br />Since the 23rd, the Dow has dropped about 400 points and we don't think the first wave is complete. The market may try a quick pop on Monday morning or maybe a little longer than that. After that we should see another drop to a fresh low for the move. At that point we may have the first completed down wave which will tell us some more about how far we can go down.<br /><br />If we were to guess, that first wave could be around 550 points down to the 9350 level in the Dow. That should give us a good read on the next move which we will project when we have that information. For now, we would say that would mean about a move to 8500 in the Dow in the next month or so. More as we see it develop.<br /><br />TLT jumped above 100 as the jobs' report was announced Friday morning but then dropped the rest of the day. Still, TLT is showing some strength over the past month and should give us some confidence in our current position that the market is declining. Meanwhile, GDX dropped to a relative low on Friday morning. Both of these indicators support our position.<br /><br />October should give us a much anticipated drop in the market. The Update will be back on Wednesday evening and we'll see how things go.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com5tag:blogger.com,1999:blog-12298173.post-82343228441369441812009-09-30T19:33:00.000-07:002009-09-30T21:09:23.341-07:00September is OverTop Line: Since last Wednesday's reversal, stocks have stayed under the high set that day. We will look to that September 23rd high as our ceiling.<br /><br />Today's action gave us more questions than answers due to the early freefall followed by a churn higher. That up move took stocks back to where they were in the morning. <br /><br />The market is struggling with several items this week. The Big one is the jobs' report on Friday but today's end of quarter probably had something to do with the somewhat wild ride. The quarter was very strong and the big money needed to do their final adjustments to show they managed to participate in the big rally. The morning's news provided the media with enough reasons to be confused and you can read their accounts for yourself.<br /><br />Last week's highs should hold. We have seen a continued rally for the entire third quarter. No, it hasn't been studded with a lot of big days but just a steady churn higher. This gives people a sense of security and gets them to buy. The media have been calling for a high for a long time and we have been bearish for most of this rally, too. This has not been a good quarter for the Update. Maybe fourth quarter will be better.<br /><br />Let's take a look at two of our indicators, GDX and TLT. GDX seems to have topped two weeks ago while the broader market seems to have topped a week ago. This is very compatible with the leading nature of GDX. As for TLT, it continues to be strong, putting in new highs for the move around 99. This action means the TLT has rallied over 10% from its lows. Higher prices for TLT, our long bond proxy, means that the safety play is still happening. That implies that the smart money is probably moving out of the stock market and into safe positions. <br /><br />These two indicators are still lined up with our thinking process that we are in the early stages of a stock selloff. The next two days should be interesting. The first day of the quarter may give us clues to the rest of the quarter but the second day will provide some hesitation as we get the September jobs' report. What would you want to get into tomorrow. We generally say that the jobs' report marks an important point in the month. This month could continue that tradition. We expect October to have a down trend so Friday morning could give us an effort to best last week' highs and fail...or, it could give us something else. We prefer the former.<br /><br />Take care and we'll be back on Sunday evening.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com2tag:blogger.com,1999:blog-12298173.post-87457522148438007662009-09-23T21:32:00.000-07:002009-09-23T22:22:07.871-07:00What Do You Know, a ReversalTop Line: Huge Downside Reversal. Well, maybe not So huge but still it is a step in the right direction for the market, that would be down.<br /><br />[Editor's note: We will Not post on Sunday evening but will be back Next Wednesday evening. We apologize for continuing on our Summer schedule but the market has been tough to read over the past month, at least for us. We were out of sync as you know from reading our posts. Since the July lows, which we were predicting and didn't buy, we have been struggling. Today's move puts us back insynch so to speak, at least we think so. We are thinking of adding a emoticon to indicate if we Feel insync or out of sync but haven't decided for sure. Maybe we will be insync for the rest of time...Right.]<br /><br />Going into the Fed's announcement this afternoon, the market was holding onto modest gains, especially in the NASDAQ 100. After the announcement, stocks exploded to the upside for about a half hour and then it happened...finally...a Reversal which took stocks down the rest of the day. The decline was about 2% from top to bottom which isn't a lot and may not be convincing to some but it did give us some indication that the turn may have happened.<br /><br />Today's trading represents an outside down day which is a good reversal day. Outside down means that compared to the day before the trading was both higher and lower and then finishing down below the previous day's low. With the market signalling its turn today, many were expecting something a lot different right after the announcement, but the market couldn't support the earlier buyers leading to significant selling in the final hour.<br /><br />Things have been coming to this point for quite some time and the Fed announcement gave us the ideal reversal situation. First, with ever continuing zero interest rates, the dollar has been getting punished. Then today there seemed to be no relief and it plunged to new lows for the move. The sellers were then exhausted and the dollar rallied, basically leading the stock market but in the opposite direction. (See DXY on the bigcharts for a reverse image of the stock market move today.)<br /><br />The telltale leader was GDX. As gold moved higher and higher GDX moved up too until a couple of days ago when both started to find trouble rallying to relative highs. Today's high in gold was near last week's high but was just too much to hold onto. Gold and GDX fell along with the market which should make some sense to readers.<br /><br />What else should make sense is that the Treasury bonds moved with the dollar and opposite the stock market. TLT, our proxy for the long bond, has been trading in the 95.5 to 96.5 ranger for about a week and today it started to drop through 95.5 going to 95.2, again scaring the bulls a little. What is missed in the analysis is that TLT traded in the high 80's back in early June when the SP500 was 950. Today the SP500 was at 1080 before reversing.<br /><br />The last piece of the pie is the volatility indexes which really traded with the dollar and Treasury bonds...also making sense to long time readers. The VIX found a new 52 week low today at 22.19 before reversing Up to close at 23.49. We expect a 3 handle on the VIX before this selloff is over. (For those of you who read this "handle" stuff and wonder what that means, we use it to indicate the Front number on the price, in this case that would be 3 if it was in the 30's.)<br /><br />We sold the rest of our long positions except for a large quantity of UNG, we did sell some UNG today as well but only part of our position. With commodities about to drop due to dollar strength, we expect we can sit out of our long positions for at least a while. <br /><br />We want to emphasize our long standing position that we don't want to ride this next wave down and there is a greater than zero probability that today's high was The high so we want to be out of our longs. We are strictly short (except for some UNG) and now we have a little cash to take advantage of the opportunities that present themselves.<br /><br />We do have it in the back of our minds that public sentiment for stocks is still not giddy enough and we expect people to come back into the market full force before this rally completes itself. This Could happen after we see a good sized correction in the current rally. That's a while off but we want to be clear that we still think GDX will have a good run which will come when inflation worries hit the market. <br /><br />We say inflation worries because the Fed, no matter what they may have implied today, will Not pull the punch bowl of easy liquidity because they do Not believe the worst is behind us. They want to Make Sure that the economy has survived this test well before they do anything to jeopardize the recovery. Again, we think this is a major possibility but we will assess this position as we find out how much the market can actually go down now...that should be a lot. Yes, it's a technical term. We will know more when we see how the first wave presents itself. Then we can at least take a guess. For now, we would say that the September move from just under 1000 in the SP500 should be completely erased and then it's just a question of how deep we get to the July lows around 870. <br /><br />While we wait, here are some new pictures of Jackson. It was grandparents' day last week so we had frosted doughnuts with Jackson at his school. He enjoyed them as much as the grandparents did :-)<br /><br /><a href="http://2.bp.blogspot.com/_UBiWa7b7_AE/Srr3nNDxjJI/AAAAAAAAAnk/vfsR8md39HY/s1600-h/DSC_0373.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 266px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5384888557367299218" border="0" alt="" src="http://2.bp.blogspot.com/_UBiWa7b7_AE/Srr3nNDxjJI/AAAAAAAAAnk/vfsR8md39HY/s400/DSC_0373.jpg" /></a><br /><br /><div> </div><div><a href="http://4.bp.blogspot.com/_UBiWa7b7_AE/Srr3m0yE1uI/AAAAAAAAAnc/zIJVsp5SFXM/s1600-h/DSC_0377.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 267px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5384888550850615010" border="0" alt="" src="http://4.bp.blogspot.com/_UBiWa7b7_AE/Srr3m0yE1uI/AAAAAAAAAnc/zIJVsp5SFXM/s400/DSC_0377.jpg" /></a> </div><div> </div><div>Great Gramma was here for a couple of weeks and she enjoyed some time with Jackson, too.<br /><br /><div><a href="http://4.bp.blogspot.com/_UBiWa7b7_AE/Srr3mQ5aQUI/AAAAAAAAAnU/JRFzelekQy4/s1600-h/DSC_0401.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 267px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5384888541217702210" border="0" alt="" src="http://4.bp.blogspot.com/_UBiWa7b7_AE/Srr3mQ5aQUI/AAAAAAAAAnU/JRFzelekQy4/s400/DSC_0401.jpg" /></a><br />Of course, new pj's are always good, especially if they come from Gramma and have a monster on the front. At least you know where the monster is and it's not under the bed.<br /><br /><div><a href="http://2.bp.blogspot.com/_UBiWa7b7_AE/Srr3l6vu18I/AAAAAAAAAnM/P7jbgLg7r2U/s1600-h/1321.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 266px; DISPLAY: block; HEIGHT: 400px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5384888535271528386" border="0" alt="" src="http://2.bp.blogspot.com/_UBiWa7b7_AE/Srr3l6vu18I/AAAAAAAAAnM/P7jbgLg7r2U/s400/1321.jpg" /></a><br />Remember, our next post will be next Wednesday, September 30th.</div></div></div>Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com1tag:blogger.com,1999:blog-12298173.post-2373986875290245102009-09-20T20:19:00.000-07:002009-09-20T20:59:39.317-07:00Market Trying to Continue AdvanceTop Line: With options' expiration behind us, the stock market should be free to trade with some normalcy...ok, maybe with the Fed's announcement on Wednesday the market still can be a little temperamental.<br /><br />The market has had a pretty good September and it seems that we have been waiting and waiting for a break. Our position is that as the market goes up, we think it is becoming more and more dangerous. Meanwhile, there seems to be some complacency and outright bullishness.<br /><br />We see that the overnight markets are a little skittish with the stock futures down just a little and gold down about $6. There are so many reasons for the market to go down but as long as it is continuing its run we have to respect it. Pullbacks have been opportunities to buy, not the start of a down move. With this uptrend in place, it does have an end and we will be waiting to see the trend switch from up to down.<br /><br />With that in mind, we remind you that we are still looking for some more upside but we can not be Sure about that. We are pretty sure but, with stocks in a more and more precarious position, this could be the actual top. That is why we are so cautious and getting more cautious by the day. <br /><br />As for the Fed, we think they don't carry the same weight as they once did. With short term rates virtually zero, what can they say to move the market? We don't think there is anything they can say. The market has given them the benefit of the doubt as to whether their money policies are the right thing to do or not. Only time will tell but the market seems to believe that what they are doing is ok.<br /><br />We will reassess after the Fed's announcement on Wednesday.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com2tag:blogger.com,1999:blog-12298173.post-60759254175798435372009-09-17T21:25:00.000-07:002009-09-17T22:09:22.431-07:00Market Tried to Reverse TodayTop Line: Stocks are moving ahead but the pace of the advance is labored at best. There are so many reasons for the market to <span id="SPELLING_ERROR_0" class="blsp-spelling-corrected">stall and turn down, at least for a small correction.</span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">The trading over the past few days has included the effects of options' expiration coming up Friday, the 18th. As we move into next week, a more normal trading pattern should emerge. That's not to say that the market will be easier to figure out, just that the multiple personality of the market will be reduced by one. </span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">Let's take a look at the usual suspects, starting with GDX. Trading in GDX has become wild with huge volume and big moves, up, that is. We have seen this stock jump over the past couple of weeks from 38 to 48, a pretty healthy move. The move in GDX is not surprising because the broad market has gone up and GDX has been leading it for about a year now. The move in GDX gives you some idea how this stock can move if it wants to. We still expect a modest pullback in gold itself and GDX. Depending on how deep these corrections are, we will be buyers. </span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">The volatility indexes have not done much of anything for the last week and have only modestly moved even as the indexes have run up 10% over the last couple of weeks. We don't believe the options' players are reading this correctly because the VXX has been dropping with the advance in the stock market. VXX is basically a volatility futures proxy while the volatility indexes we follow, VIX and VXO, are based on the options values.</span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">Our constant companion, TLT, has stayed strong over the past several weeks, too, even though the market has gone straight up. Some have suggested that, at least on the front end of the curve, you know, the one to three month rates, with the expiration of some of the Fed programs, investors want to stay in the safety of Treasuries. </span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">We see the dollar has also dropped to a significant low amid much dollar bashing in the media. This is indicative of a near term low being put into place. </span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">The higher prices go, the more dangerous it becomes to be long stocks. We can't say that we have played this right at all over the past couple of months but the market is starting to become very overbought. The prices in some of these stocks have moved plenty far. Confidence is briming and very little fear remains. This fact alone is enough to drive a market in the other direction. </span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">Confidence and the stock market should not be present in the same sentence. Every trade is a way to lose money and fear is a very good thing to have when your hard earned cash is on the table so to speak. Of course, we like to take advantage of good prices both on the entry point and the exit point but patience has never been a strong suite for us. </span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">We are "confident" that we will be wrong in the future but we also think the market will have some struggles as we move into 2010 and beyond, with a possible low sometime in late 2011 or 2012. So, even though we think that the market will pull back here, we are much more likely to see it go down hard during the next two years. The market is doing much as we have said it would do...and didn't pay attention to our own words. Now, we think prices are just Too High to own them. </span><br /><span class="blsp-spelling-corrected"></span><br /><span class="blsp-spelling-corrected">On Thursday the market did manage to reverse lower after a little bit of a run early on, which took the market to new highs for the move. The final couple of hours did manage to cut those losses but the market closed off its highs for the day, something new for a change.</span>Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com0tag:blogger.com,1999:blog-12298173.post-88775915953659511732009-09-16T22:00:00.000-07:002009-09-16T22:09:06.663-07:00Delay This EveningTop Line: Stocks continued their upward movement with steady progress.<br /><div><br /></div><div></div><div>We have been out of internet access this evening so we will need to postpone our post until Thursday evening. </div><br /><br />Lucky for you, there are some pictures of Jackson with his Sponge Bob Square Pants pillow and his Grampa and his stuffed chocolate Lab that stays at Grampa and Gramma's house. <div><br /></div><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 267px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5382298012857630722" border="0" alt="" src="http://1.bp.blogspot.com/_UBiWa7b7_AE/SrHDhqurgAI/AAAAAAAAAnE/gLpdzP9LJ10/s400/1291.jpg" /><a href="http://2.bp.blogspot.com/_UBiWa7b7_AE/SrHDhG6ytJI/AAAAAAAAAm8/Kgjnjku8yL8/s1600-h/1287.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 267px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5382298003244758162" border="0" alt="" src="http://2.bp.blogspot.com/_UBiWa7b7_AE/SrHDhG6ytJI/AAAAAAAAAm8/Kgjnjku8yL8/s400/1287.jpg" /></a><br /><br /><div><a href="http://1.bp.blogspot.com/_UBiWa7b7_AE/SrHDgg9H9eI/AAAAAAAAAm0/3oXdQGRPDQk/s1600-h/1245_2.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 266px; DISPLAY: block; HEIGHT: 400px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5382297993053992418" border="0" alt="" src="http://1.bp.blogspot.com/_UBiWa7b7_AE/SrHDgg9H9eI/AAAAAAAAAm0/3oXdQGRPDQk/s400/1245_2.jpg" /></a></div>Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com5tag:blogger.com,1999:blog-12298173.post-87743113645666459222009-09-13T20:39:00.000-07:002009-09-13T20:59:43.416-07:00Down Monday Morning?Top Line: The stock market continues to try to hold up with ever diminishing power. Tonight's futures and the Asian markets are down with the possibility that a down start to Monday may occur. <br /><br />The main idea tonight is that the market is ready to take a breather. We have been waiting for that since, well, a long time. Our portfolio has gradually moved from extremely long to its current nearly completely short position. <br /><br />With the volatility indexes barely breaking below their earlier lows, the market is set up for a good drop. When the volatility indexes are low that indicates some investor complacency, in other words, No fear. With prices drifting higher and volatility slightly lower, we expect a reversal in both of these directions.<br /><br />Stocks, in terms of the SP500, should drop back down about 10% or down to about 900. If a selloff does occur, we sort of expect a sharp decline but we will be watching closely for a tradable bottom. <br /><br />We still think the public is not sure about the market and a selloff would scare them off even more. What this tells us is that the market is not at its top but we can not be sure. With the market, you need to be careful about making predictions about what happens after the current move...but we seem to be disregarding that recommendation. <br /><br />We think the public will find some optimism later in the year as prices take out the current highs and move a bit higher, yes, to SP500 1234 level. When this occurs, we will be watching to see if the public truly is buying heavily. If so, we will have more confidence that a high is at hand. <br /><br />Right now, there is some exaggerated insider selling and the market feels overbought so we remain heavily short getting ready for a sizable pullback.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com3tag:blogger.com,1999:blog-12298173.post-71998871522830242392009-09-09T21:03:00.000-07:002009-09-09T22:00:02.197-07:0009-09-09 Update Failure, One of ManyTop Line: The stock market seems to have some strong buying interest on dips the last few weeks. The has been little net progress in the indexes but a pop to finish the move is possible. <br /><br />We have been saying for months that the SP500 would go up to 1234 on this day, 9-9-09. Well, we missed by about 20% but we did get the direction right. We went back to our March posts to see when we were suggesting this level. It was on Sunday evening, March 22, go check the archives at the left for yourself. In fact, take a look at how bullish we were back then during the weeks surrounding the low on 3-6-09, SP500 of 666.<br /><br />But, that was then and this is now. We have become much more bearish in our thinking over the past few weeks and have moved to a net short position which has just been painful as the market continues to defy gravity. What does the market tell us now?<br /><br />The market has done very little in the way of net gain for several weeks. It has frustrated the bulls and the bears but maybe it has opened the door for some resolution now that full September trading is here. We say that but we realize that trading is not very strong in general. Citigroup continues to dominate trading (day trading probably) as it contributes greatly to the daily volume every day, at a price around 4 dollars. This is what the volume on the NYSE has come to, one stock trading around 4 bucks. This isn't something for stock technicians to be hanging their bullish hats on day after day.<br /><br />But, we digress. The stock market may have some upside left. We thought that the market would take a breather when it got to an overbought position and it did but it was more like a shallow breath. The NASDAQ indexes as well as some other broader indexes did break their August highs today even though the SP500 and the Dow did not. We think it shows the wrong message if you are bearish. For bearish thinking you want the generals to be leading not the troops. So, we are again on the wrong side of this move. We can't say how far it will go from here but there certainly doesn't seem to be any real selling in sight.<br /><br />From a contrarian's viewpoint, that is one of the most important considerations, complacency in sentiment. There seems to be no fear in the market as the volatility indexes hang around here in the low 20's. The other interesting event has been the GDX. We recommend a quick look at a ten day chart of GDX. You will see it sitting around 38-39 for the early part of that period and then a rally that culminated on Tuesday morning on a jump to nearly 47.50 and now followed by a close around 44 today. <br /><br />One of the hedged gold miners, ABX, (American) Barrick Gold, one of the largest miners, announced that it would be unwinding its downside hedge. These miners like to protect themselves from a drop in the price of gold which is why they hedge. ABX has said it thinks the price of gold is going up. It is so strong in its belief that it is willing to unwind its downside hedge. In fact ABX is selling stock to pay for the unwind. This story seems to be part of the craziness in the gold mining stocks over the past seven days or so. Fascinating story for the contrarians. So bullish because gold can't go down...sounds like gold may be nearing a top.<br /><br />We hope you enjoyed your 9-9-09 even though the SP500 did not reach our target for that day. We are still cautious and will be watching for more signals from the market.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com1tag:blogger.com,1999:blog-12298173.post-3168925055241263432009-09-02T20:04:00.000-07:002009-09-02T21:04:47.235-07:00GDX ScreamsTop Line: The market did decide to slide on Tuesday after all the "good" news on the economy earlier that day. Now what? The stock market still needs to go down to get rid of some of the bullishness.<br /><br />Yes, the switch from hugely bullish on Tuesday morning with a reversal from the down open to the positive situation an hour after the open. Then we see the Real reversal going from the 50 plus to the 200 minus. People are fickle and change their minds easily. It's a trader's mentality. The way a person decides what to do can't be something that happens with a 200 point swing in the Dow Jones Industrial average. Going from bullish to bearish in a couple of hours. Please.<br /><br />The stock market seems to have put in a top on Tuesday morning. We won't be sure until we see some more selling but the idea that the market should go down is still in effect for the Update. As we patiently wait for the market to continue what it started on Tuesday, we will probably see a few days of upside going into the holiday weekend. This, of course, is Not guaranteed.<br /><br />There is this one other Thing that we need to discuss, GDX. Did you notice that GDX was up nearly 10% today? We are not that happy about it since we don't own very much of it anymore. We were hoping to get most of it back in the area of 36 but that will now need to wait and possibly need to be raised. Gold itself jumped as it looked like it wanted to break out of its recent tight range. Gold mining stocks usually signal the move but actually followed this move today which doesn't confirm this move...still, the 10% move is convincing.<br /><br />Treasury bonds have had a good few days and now are getting to a place where we might be willing to start thinking about selling them. We have been watching the TLT and have seen about 10% rally in the last couple of months with possibly some more to go. We will be looking to sell them as the market goes down. We'll keep you posted.<br /><br />Meanwhile, the market continues to keep people guessing. That's the way it works, keep most of the people losing money.<br /><br />This weekend is Labor Day and the Update will not be posting on Sunday evening as usual. We will post on Wednesday evening next week. We are not sure when we'll get back to a normal daily schedule or if we should. We'll keep you informed and if you have any thoughts, let us know in comments. Have a great weekend.Glennhttp://www.blogger.com/profile/11688288987999375036noreply@blogger.com1