News Flash: The Market is Gay

New York (iBC)— Stocks had their heads egregiously chopped off on Tuesday. This came after Monday’s “paaahhhtaaay on” like it’s 1999 rally. How stupid and gay is THAT?

The Costanza Watchlist has now grown to 18 stocks. I’m sure there are more than this, but I don’t have the time nor the inclination to give out so many money making ideas to the average Joe trading with a “one comma, four figure” account.

Just be cognizant that Jeremy, the glorious IT / hacker guy, has your IP address. So expect a bill for a “hedge fund-like” 20% of the profits you make from these ideas, in some official looking email.

Arch Coal, Inc. [[ACI]] , American Superconductor Corporation [[AMSC]] , Alpha Natural Resources, Inc. [[ANR]] , AU Optronics Corp. (ADR) [[AUO]] , CF Industries Holdings, Inc. [[CF]] , CONSOL Energy Inc. [[CNX]] , DryShips Inc. [[DRYS]] , Eni S.p.A. (ADR) [[E]] , Energy Conversion Devices, Inc. [[ENER]] , Flowserve Corporation [[FLS]] , GMX Resources Inc. [[GMXR]] , Joy Global Inc. [[JOYG]] , KBR, Inc. [[KBR]] , [[KOL]] , Massey Energy Company [[MEE]] , National-Oilwell Varco, Inc. [[NOV]] , Patriot Coal Corporation [[PCX]] , and [[TRF]] .

Pull up the charts and look at the beating they’re taken. These stocks are so ugly, they’ve been locked in the trunk of an abandoned Ford Taurus down by the river. Nobody wants them—-which is why they make the “Costanza Watchlist”. Do the opposite. Want them. Desire them. Make sense?

Keep these on your radar, and play them for a bounce. (Hint: Go to www.stockcharts.com, pull up the P&F charts, type in the symbol for each, and observe. Then look to buy them when you see a 3-box reversal off the bottom, i.e., 3 X’s in the furthest column to the right). Sheesh, I even tell you how to make money on these.

Should you decide to ignore these names (to avoid having to pay me 20% of the profits), that’s fine. You’ll just be gut-punching yourself with regret, that’s all.

Keep you eyes on that little VIXen. Last Friday’s action and today’s VIX readings were positive for the market.

The VIX closed today right smack down on the lap of the 50 day MA. It will confirm if this is, in fact, a start of a new breakout after the bailout news.

It should be an interesting day tomorrow. 

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My purchase of Research In Motion Limited (USA) [[RIMM]] @ $102.01 basically went nowhere today. I’m still keeping the stop loss at 98.

Bought shares of Research In Motion Limited (USA) [[RIMM]] , @ $102.01 (14:16 ET).

Initial stop loss is set at $97.

I’m going to buy Research In Motion Limited (USA) [[RIMM]] on a break above 102, just so you know ahead of time.

Still waiting on Apple Inc. [[AAPL]] to get ripe.

Disclaimer: Capitalism is on the verge of being outlawed by our government bankers and bureaucrats, so this trade may not work out. However, if it doesn’t, you might be able to apply for a bailout at your local mortgage lender. 

The “Costanza Trade” wins again.

This morning, I sold shares of Potash Corp./Saskatchewan (USA) [[POT]] , @ $164.00 (9:39 ET), and The Mosaic Company [[MOS]] , @ $95.00 (9:45 ET).

Both hit their stops after a 3-box reversal off the highs this morning.

Basis on POT was $152.98 and MOS was $89.02. Both were bought on Friday, 9/5.

I’ll keep you posted on the next Costanza trading opportunity.

For over 40 years, Investors Intelligence has reported market sentiment surveys. They survey and measure the percentage of bullish investment advisors, bearish investment advisors and percentage of advisors expecting a correction.

As recently as July 25th, they reported that 50% of advisors were bearish. This is one of the highest readings in the past 40 years. The only other time bearish sentiment reached these levels among investment advisors was in late 1994 to early 1995.

Now, I realize that many of you weren’t even trading back then, probably due to the fact that you were too busy drinking beer and chasing tail around campus. Just realize that the market ended up rallying over 37% in the following 12 month period, when it broke out in February of 1995.

To get a perspective on where we stand now, the 1998 “Asian contagion” showed bearish sentiment readings of 46% – 47%, and the tech wreck bottom of 2002 didn’t even show bearish sentiment that high among advisors.

With short interest at these levels, this advisor sentiment reading is also something to put in that “Costanza file” for later use.

These sentiment indicators are contrarian measurements, and should not be relied upon for timing trades. But still, something to remind you of the environment we are in as we approach the end of Q3.