Careful with this week’s tape

 

“That Was a Bad Idea”

Although I am medium term bullish, long term bearish, a move like this week makes me short term bearish.  A lot of false bullish signals showing up.  Be careful not to mistake bullish moves in bad places as, well, bullish moves.   I did enter a few shorts, as I noticed the Vix barely dropped on this move, as well as seeing some inverse ETFs showing relative strength (SRS, SKF… not FXP, EEV, I am bearish on FXP which should be de-listed for being so idiotic).  My strategy here is to short on the rips and buy on the dips on any index that moves +4% over a multi-day period.  It’s too early in the year for me to pick a side.  I still think retail traders are moving this low volume tape, and the institutional investors are waiting to sell at higher prices.

Nevertheless, some things I noted today:

–  Ugly stocks moving up

–  Volume down on major indexes

–  AAPL testing 91 resistance

– Nice move in solars today, but solars is not a leading sector.  FSLR, JASO, SOL, SPWRA

3 of the 4 commodity horsemen were strong on price, but weak on volume.

– Nice jump in oil.  Again, stocks up in the energy sector are up, but about 1/2 the trading volume.   CLR looks good for a swing long.  APWR is a trader stock.

–  Gold was weakest.  I am short EGO.

–  Steel and other worthless scraps of metal were also up.  X, MEA (up almost 30%!  Mama MEA!)

– Ag/Fertz stocks up.  MOS, POT, TNH, MON

… keep positions tight!  It’s still a little to early to short aggressively, but I do think it’s a little late to enter new longs.  But, whatever is working for you, stick to it with a few exit strategies.  

Go check out Pearlman’s new blog.  He’s a trader focused on trader psychology, so his field and skill intersect a little with my sentiment trading background.  For those interested in a technical approach to the indexes, I think C-Addict’s latest post about the Indicators is a must read.

K, back to work!!!

-gio-

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What will happen in 2009?  Hmm, let’s see…  TSCM will be delisted, then will be re-listed on the Nasdaq as LMAO.  Removal of Bush will spark a rally.  The best time to short will be further down than you think, maybe July, after the Obama hype is over.  Detroit will upset Celtics in the second round, Lakers will win it all.  Yankees won’t make the playoffs.   AAPL to the 70s as news of Jobs retirement hits investors in a negative way.  Hawaii stocks will get hit hard. 

 …….. Yeah, I have a lot of crazy ideas.  Anyway, here is my map of 2009.  I wish I put it into a timeline, but ironically, I ran out of time.  Remember, these crazy ideas are either “crazy” or just “ideas.”  But all are likely scenarios, at least in my mind.  Nevertheless, predicting 2009 will be harder than we all think.  Anyway, here’s a snapshot of clairvoyance for you…

Download My Predictions in a PDF Here (interactive PDF)

If you download it, click on the “+” signs to expand the map

 

 

Bernanke will raise rates

Target: Quarter 3

Market will tank on the news

Part of the Auto Industry will be owned by the Government, then reorganized. Chrysler will be no more.

There will be a few bull markets in weird places

Invest in Water… I will buy this h2o stock

Home Health Care Bubble will be a top industry

The Bush Rally

Market to rally 12%

Everyone will be happy!

America will cheer as soldiers in Iraq come home in mass

Dow to 10,777!

Ignited by the Bush rally, a few weeks later the market will trek its way back above 10k on the Obama rally

Vix will be in the mid 30s

Now will be the time to short!!

The Dow will drop -22% in a 3-day period

After the Bush + Obama Rally Sisypean Rally

The $ will crash

A global economic faction will be formed

A global unit of currency will be the focus of this summit… hehe, not really, but that would be cool.

Vix spikes to 80s = capitulation baby!

The Exchange Stocks will be nuked after a false rally, will lose 1/2 market caps

CME to double digits

NDAQ drops 60%

ICE drops 60%

Epic Scandals

Madoff will hang himself

FFH will drop -80% on scandal (I don’t know why)

TNH will drop -70% after cutting interest yields in half

Goldman Sachs to 0 …just kidding.  But it will get slammed.

The Dollar smashes foreign markets in the first half of 2009

Perma bears shorting the $ will lose big

EEV will double

After the $ kills foreign markets, get long China as they will unexpectedly rebound

FXP will be de-listed

The return of the 4-commodity-horsemen will come galloping back making a winepress out of Bears’ blood. I see 30% squeezes before setting up for another commodity Armageddon.

Gold

Will rally on INFLATION scares

Setting up a great short, as Gold dives back to 700

Oil

Oil will rally 30% back to the 60s

Agriculture

Steel/Copper

TIE will be bought by RIO

Retails will be horse nuked… after the Bush rally

Consumer spending to historic lows

Demand for luxury goods historic lows

.com Part 2

Consolidation into the industry will cause many smaller .com retail sites to lose considerable value

Good bye to… BFLY, SFLY, OSTK, and other queer me-too .coms

Solar Flare

Target: 4th quarter

Things to look for: Obama policy

One solar stock will move 600% on an epic short squeeze

 

Enjoy 2009!  Or not.

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I gave the VIX the kiss of death early in December , taking note that the market environment had drastically changed:  People were not selling stock after bad news!  That led to a 500 point rally.

Since then the VIX has melted down over 25% in the past 10 trading days.  What does this mean?  For me, it just means this is not a good place to enter new longs, or if you already enjoyed the rally, you have to start thinking about taking profits in some of those longs.

Conversely, you may ask, is this a good time to short?  I can say it’s a much better time to short than when we were in the 50s, and since then, this light volume trading has shook out most of the weak bears.  The time to short is certainly getting closer, and the Vix has almost reached my range to start shorting which was 35-39.  If I get a spike down there I will definitely start shorting.  If we throw in the double top in the VIX on November 20 = 81, then the VIX has been cut in half in about 1 month.  Since then, the market rallied over 1,000 points.

I do think we can go higher within the next 2-3 months, but as a swing trader, it’s better to get out when complacency hits extreme levels, then re-enter on a dip.

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I was out all day on Tuesday.  Had to take a business trip to Maui early in the morning (so early that my socks weren’t matching.  They all looked black to me!) then fly up to the Big Island.  Every year I get to visit some of the major construction projects on Hawaii across the islands, and check on their progress, make sure they’re on time… well, it’s basically just to show face, and have free lunch with some important people.

Anyway, after breakfast in Maui, a few handshakes, laughing nodding and “keep up the good works”, we boarded back on Hawaiian Airlines jet to Kona which is on the Big Island.. you know, the one with the active volcano, and proceeded for more laughs, handshakes, hardhats, and “good job dude.”  It’s kind of funny because I have NO carpentry/construction skills and I have to act like I know what’s happening … so sad.  I wear an extra crispy bleached white collar.

While it’s a pretty fun job, it’s sort of my on the street access to how Hawaii’s construction, hotel, and tourism industry is doing. This year was definitely different from all the others.  Normally, all the project managers for these new hotels are upbeat and optimistic, now, many of them are afraid of what 2009 will bring, or if their next project will go through.  Don’t get me started on occupancy!  Many of these multi-million dollar condo-hotel-timeshares are empty.  I’m not sure how significant the lack of buyers are, but I’m speculating that it’s not as great as they hoped.  For these reasons I will probably short Hawaii stocks heavily in the second half of 2009.  I just wanted to illustrate how I am more of a fundamental trader, that uses technicals to time my entry points.  There’s always a reason behind a bearish chart!  I hope to hedge against a slowing Hawaii economy in the same way I was long oil while we were paying $5 per gallon in Lanai, Hawaii!

Who knows, maybe in a few years these ridiculous condo prices will drop and you can get your own dream condo or vacation timeshare?  For now, forget about it.  Here’s some pictures I took.  Weather was crap, but still probably nicer than yours if you live on the East coast.

Breakfast at Kaanapali Resort, in Lahaina Maui…

Touring one of Lahaina’s newest condos.  All rooms are over a million.  Sad, no?  One of these days!….

Lunch on the Big Island!  Here’s King’s Golf Course, which is in Waikaloa Resort.  I highly recommend staying there if you visit Kona…

See, plants growing in lava rocks.  That is our state flower, the hibiscus.  It’s a real word so you can use it in Scrabble.  I’ve also seen it used on a national spelling bee.  H-i-b-i-s-c-u-s

And it’s great to back home on Oahu!  Wow, 4 airplanes in one day!  I’m ready to zzzzzzzz…

My 2009 predictions are coming up on my next post!  It’s a timed-post.   I already wrote it, and set the timer to post it about 1 hour after the market closes.  Check it out if you like!

-gio

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There should be some incredible sales out there, so I’m going shopping… no, not shopping for more useless stuff, but “shopping” to see which stores out there are looking bad. You can tell which ones are really desperate by

1) the after Christmas discounts, for example I read in my local paper that some stores were offering 70% off certain items.

2) the amount of floor inventory… I’ll be checking out BestBuy and Circuit City to see if people are still buying stuff.

3) by asking people… I like to casually ask the employees there how the sales environment is compared to a year ago.

Now write those stores in a list somewhere for a possible short position in a few weeks from today.

This is all part of trading stocks. Sometimes you have to look beyond a candlestick chart, bollinger bands, Fib retracement points, MACDs, etc.. and see what’s really happening out there. Do some homework, and have fun with it! This reminds me of the days I used to go to 7-11 and see how much shelf space HANS’ Monster Energy drinks were taking up .

By the way, I hate shopping malls.

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Enjoy the rivalry reborn!

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