Joined Jul 30, 2008
2,107 Blog Posts

VIX under 22 Tread Careful Here

Interesting game going on in the market.  I feel like we make a clear run to 11k, but at the same time, I check myself by going back to the VIX, and it tells me to hold out my hand, then slap my face…

One stock that kind of tells a story of what is going on is JCP, which I only realized TODAY that J.C. Penney is not spelled “Penny.”  I can’t believe it, all my life I thought it was Penny as in 1 cent.  My whole day is ruined. 

The quad has been ugly on the 3-month.  Movement on it has been real fast up and down.   I would love to see this move above 50 and just take off from there.  Right now, it’s not putting up a good fight.  Volume not justifying price. 

Meanwhile, when the market is undecided and looking over a cliff whether to dive, you’ll notice a lot of beat up stocks will start to rally.  Let’s get back to CREE which is brewing up a possible +10% relief rally.  If not, remember, it goes down hard.  My kind of stock play.

So yeah, it was a good weekend for the football fans.  Not so much for the Lions fans after they ruled Roy’s game winning touchdown incomplete.  That caused me to lose in one of my leagues by 1 stinking point.  Even the Chicago fans knew that was a TD.  Anyway, I’m glad football season is back, because that just means I get to mass-media-trash-talk my friends.  Remember now, I live in Hawaii, so we have no professional teams, so everyone here has their favorites, no loyaly to a home team… so you can imagine it gets ugly here.  I’m kicking myself though, because I’ll be heading to Seattle next month and to my dismay the Seahawks are on bi-week the weekend I’m there.    Of all days.   :/

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CREE Attack

A once great stock is down again.  CREE gets another significant high volume selloff.  Remember, we look at price+volume to predict future performance.  CREE was on my leaders index for a while now, but as of today, it gets the boot.  Whenever I start jettisoning too many elite stocks, it’s not really a comforting sign for me.  Anyway, check out the breakdowns, and decide for yourself what happens to CREE.   My first insticts are

1.  Rally back 12% after dipping into high 40s.

2.  Selloff

VIX – is down about 2% today, with market moving about 50 on the DOW.  That’s a pretty good ratio.  Calm after the storm effect.  Bulls need to quietly build this market back up if they want to make a counter rally.  As someone who shorts the market, I hate it when that happens.

I spent the whole day yesterday getting new credit cards, new phone, new IDs, new wallet, new bag.  I guess it’s good getting robbed?  Haha.  Nah, thanks for the thievery stories in the last post.  Kind of reminds me that crap happens.  Hawaii got problems too, so hide your kids hide your wife.  Haha.

Btw, I’m going to New York in a few weeks.  Anyone know of a good hotel to stay in Manhattan?   I’ve been using Booking.com (subsidiary of PriceLine) but am totally new to that site, so I’m not sure if the prices are good and I notice a lot of Europeans use it (what’s up with that).  If you got any tips let me know please!

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Panic? Buy on Vix Greater Than +8%

Nice movement on the VIX today.  We had a spike of 11%, however the market only fell about 100 points on the Dow.  This tells me the market will fall again since the bulls are trying to buy up premature dips.  Relative to its current position, the VIX can move violently between 22-25.  In practice, I would be more confident buying with VIX closer to 22, and selling/shorting at VIX closer to 25.  VIX currently trades at 23.80 so the market still has a way to go down.  Buy on the panic, therefore, wait for next spike up on VIX.  I’ll give it a 7-8% range to make an aggressive buy.  For now, the only moves I made were to add to current shorts.  There’s a lot of signs being shown in idividual stocks that shows the market is weakening.  Take a look at PEET’s pattern… strong a failed attempt to gain back its August highs is the same tale of the overall market.  Meanwhile, it’s good to keep in mind that the market is full of relief rallies, so on the next panic, make sure you buy.  An 11% jump on the VIX is quite significant.

(what an ugly chart)

Anyway, hope your weekend was better than mine.  I got jacked at the beach.  Man, I feel so violated right now.  Lost my phone, wallet, keys, watch… I feel naked.  Actually, they weren’t my keys, I borrowed my friend’s car, but it was a total pain in the butt getting the spare key since she was in Los Angeles.  I hope whoever stole my stuff finds God real fast, because strangely, I pity a person who lives life that way.  What I lost was material, what he lost a long time ago was his dignity.  Well anyway, lesson learned.  At least I can get a new driver’s license now that my hideous looking one is gone.  Time to go cheer myself up.  Anyone of you out there got your stuff jacked?

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Coffee Wars

A little update for you from my favorite sector.  I know very little about a little, and coffee is one of them!

Position 1:  Remain short on PEET.  Nice entry right here.  Holding period is short, so if it goes against you right away, then get out.

GMCR was only recommended on Motley Fool’s Newsletter this month!  We gave this stock to you over a year ago.  🙂   Anyway, those fools can enjoy the after party.  You can get long or short on this flag pattern…

Quote from Motley Fool Newsletter:

The Foolish Bottom Line

You don’t have to be a java junkie to get a buzz from Green Mountain. A proprietary razor-blade model, a growing installed base, and legions of addicted fans have made the company’s stock nearly a four-bagger on our scorecard. But Green Mountain’s coffee sales last year represented only about 2% of the $18 billion U.S. coffee market — and that’s not even considering international opportunities like the Lavazza partnership. Better pour a fresh cup; we’re going to be here a while.  – 9/1/10

Thanks for the “Lavazza Partnership” tip!  I’ll be keeping an eye on how that plays.  Meanwhile, by coincidence, I am drinking StarBucks coffee as I type this.  I feel dirty.

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Rally Mode Until VIX 21

Been spending a lot of time figuring out the market path of the past few days.  I had a feeling a market spike was coming after studying the latest VIX charts.  This rally did not come from no where.  It has emotion written all over it, so the good news is the VIX is back!

So in conclusion, it looks like this rally has some track legs.  Sorry for the huge white space, I saved the image and it left this big white block.  You can draw in there if you like.  Anyway, I got at least 3 longs I’m looking to ride on a follow-through rally.  Then, as the VIX chart shows, I will load up on more shorts near Vix 22, rebuy longs Vix 24, short hard VIX<21.  It feels much more natural to have the market move this way.  Enjoy!

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