First, Moran e-mailed me his new rap vid on Madoff. I’m sick and tired of hearing about Madoff, but check it out:
[youtube:http://www.youtube.com/watch?v=rLarQAmsf_g&fmt=18]Second, the breakdown has just begun. As long as we don’t get a +250 pt day on the Dow, the shorts are fine. For now, the selling appears like it will accelerate. For example, look at the Dow and SPX’s red candles and volume pattern. The open-close ranges are becoming larger and the volume is expanding on the down days. Subsequent larger candles make good waterfalls or cliffs.
If you recall from my post yesterday, this is enough to satisfy #1’s “price/volume divergence”. #3’s band expansion has only just begun. Look at the July-August rally, because there’s nothing funny about it. The similarities are astounding. You are crazy if you’re net long.
Also, I’ve mentioned the significance of the financial sector this entire week. They are responsible for dragging this market down and I explicited stated many times that the market could not rally if the financials did not participate. If you were long, that’s your fault. Citi is still screwed and BofA now needs more capital so they don’t look stupid for spending only 2 days hammering out a $50 billion deal. Come on, it took you longer than 2 days to think about buying your sub-$100,000 house.
So the problem now is, “How will taxpayers, with their own money infused into these banks, be protected in the coming decline?”. They won’t. I suspect there will be a significant level of outrage once the public realizes they got duped. What’s the Treasury going to do now, buy more stock? Please stop.
Today’s action was boring/sideways because, by 2PM, I realized that we were forming a bear continuation flag for tomorrow’s set up with a range between 820-860. I was right. We need a 5+ pt gap down on the SPX tomorrow morning for the flag’s fulfillment. I am not covering my financial shorts until there is capitulation on massive volume. I am also considering shorting REITs as many of them show signs of topping out and ready to roll over.
I also mentioned breadth for several days now, more specifically the $NYHL & $NAHL and less so the $NYAD & $NAAD. Not only did the New-Highs/New-Lows indices turn red, we can now visibly see them turning down. Not only that, keep in mind that the only time we turned green was right before the crash. We formed 96 new lows and 4 new highs today and I suspect it will not get any better for the short-term. As for Advance-Declines, we had 1-to-10. It’s been over a month since we’ve had these kind of internals.
As for the NASDAQ, they’re going to have some problems tomorrow pending reaction from the AAPL news. In other news, Jim Goldman is an idiot. Sometimes the truth hurts, but you don’t withhold it from the public. He’s my “Asshat of the Month” nomination – you don’t have to wait until the end of the month for this one.
Pwnd.
You can’t ignore the fact that fear is coming back into the markets. I sense panic selling once again. The best sector to short is obvious the financials. Watch for a possible bounce at 820 SPX. Resistance is at 860 SPX. Watch C, BAC, JPM, and the rest of the financials very closely as well as a potential bounce off of the VIX at 54-55.
On a side note, beware the next several days. There is something evil in the air. This is beyond “WTF”. I’m not bullshitting on this one. There will be a pretext.
By the way, Jeremy, we still have porno in the “Posting Videos” section. Not that I was looking.
—————————————————–
PPT Overall Market Summary (& historical scores):
No. Date Technicals Fundamentals Hybrid Score Hybrid Change
1 2009-01-14 1.32 3.67 2.31 (Sell) -4.63%
2 2009-01-13 1.53 3.66 2.43 (Sell) 5.73%
3 2009-01-12 1.33 3.66 2.31 (Sell) -3.11%
4 2009-01-11 1.48 3.65 2.39 (Sell) -3.90%
5 2009-01-09 1.48 3.65 2.39 (Sell) -3.90%
6 2009-01-08 1.67 3.64 2.50 (Sell) 3.00%
7 2009-01-07 1.58 3.64 2.44 (Sell) -12.63%
8 2009-01-06 2.22 3.64 2.81 (Sell) 0.24%
9 2009-01-05 2.23 3.64 2.82 (Sell) -3.22%
10 2009-01-02 2.41 3.64 2.93 (Sell) 4.10%
11 2008-12-31 2.28 3.61 2.84 (Sell) 12.63%
12 2008-12-30 1.84 3.53 2.55 (Sell) 9.78%
13 2008-12-29 1.49 3.53 2.35 (Sell) 6.87%
14 2008-12-26 1.23 3.53 2.20 (Sell) -3.39%
15 2008-12-24 1.66 3.53 2.45 (Sell) -2.63%
16 2008-12-23 1.78 3.53 2.52 (Sell) -4.57%
17 2008-12-19 2.03 3.53 2.66 (Sell) 1.59%
18 2008-12-18 2.00 3.52 2.64 (Sell) -2.04%
19 2008-12-17 2.13 3.52 2.72 (Sell) 4.73%
20 2008-12-16 1.96 3.53 2.62 (Sell) 7.10%
The evil in the air is DEVILDOG and I’m a very, very hungry BEAR. My NEW LOWS are coming soon. As I’ve stated for the last 2 days you will get your S&P 5 point gap DOWN open tomorrow based on 700K new unemployment claims reported an hour before the open. I believe they call it reality news.
BTW, CA nice work. I get earlier indications on the weekly chart patterns and indicators of the trend pivots hence my BIG SHORT position initiated on 9/19 and more on 1/6.
Your blog is great. Thanks for putting some of your hard work up here
Semper fi
Nice work CA.
On a side note, beware the next several days. There is something evil in the air. This is beyond “WTF”. I’m not bullshitting on this one. There will be a pretext.
“Beware” in what aspect of our lives? Trying to beware of all things at all times is very Lady G like.
Adding to your voice here, CA. Jeremy should either trash that Posting Videos topic or delete all the comment spam. It is very 3rd-tier to let that crap linger.
A tid bit for you….the average bear market rally is 29 days…we reached that about 5 trading days ago….
Bernanke said the gov has never lost on investing…they will buy more stock, SIVs and other garbage so they can re-rig the game and change the rules…FASB….when they change the game those worthless assets will have renewed value and then they win.
Otherwise this is the Titanic. Those who rig the game will avoid that at all costs…no ?
great post as usual, thank you John.
~ your charts always have a calming effect.
cheers!
DD – we have some shit coming. Soon. You have balls staying short during the rally. I shorted on Sept 5 and beyond for my fund, but covered everything on Nov 24 (my bday) for a massive gain. I even wrote an article on SA on Sept 5 titled, “The Rally is Over, and Here’s Why”. The first comment was from this idiot:
“It’s amazing that by just looking at charts one can predict the future and make bold statements such as “This Rally Is Over”. I wonder if there are other forces in life which could affect iron clad chart trends, and perhaps make “This Rally Is Over” sound a bit more uncertain. Nah. Wishful thinking on my end.”
–Sadly, this fucker got raped. I win.
I just started building up financial short positions quietly for both my fund and personal accounts.
Ottnott – I have a feeling that there will be a major negative catalyst, such as terrorism, large economic/financial collapse, political attack, etc. very soon. It is one of my 2009 predictions actually.
As for the porn, the Akismet spam filter must have not caught it. My own filter has caught 1,376 since I started in Dec!
GW – yes. I actually wrote an article on bear markets/reaction rallies: http://weeklyta.blogspot.com/2008/08/investorstraders-guide-to-bear-markets.html
Never say never. The gov’t is on a path to destruction and we are close to hitting the iceberg. This is the biggest scam in history. The only way they’ll be able to avoid loss is by using a pretext, to a planned disaster. It’s the easiest way to do it.
BOTD – Must be the sunset backgrounds on the charts. Don’t mind the incoming bloodbath.
During latter 2007 I used told the secretary in our office most days as I walked out, “don’t be surprised if the stock market crashes tomorrow” .. she always gave that yeah-right look.
but since it never really was a 1-day thing i deserve zero, maybe negative, credit for those calls.
regardless — i’m with you/fly/theworld that this thing plugs lower for a while.
will note this though.. i used to work in a bank’s wealth mgmt area.. the company’s 401k plan was managed in the dept also. i was personally very short during the 2000-02 bear market. for anecdotal info to cover (i did not use charts then) i kept waiting for some employee to run upstairs to our office screaming to get them out of stocks.
it never happened. through the whole cycle. i lost a bunch of my short profits during the 10/02 bounce and will not forget that. in fact that’s what led to my current profession.
Point: “the people” don’t have to scream for a bottom to come in.. in fact it was silent that time.
Yep: Again, good advice. There’s no good technical reason why it didn’t fail yesterday by 11:30. There are NO buyers, and as Gio says distribution is at unheard of levels. You can bet some major fuckery will happen real soon. Get the Gatoraide bottle out, lotsa salsa and chips, tighten the stops, and don’t leave the console until after-hours.
JPM news may throw a monkey wrench into the accounts of those that shorted yesterday.
The biggest concern for everyone is that the big shock will result in the currency implosion. USD or otherwise.
get in the funnel! 🙂
CA,
Could you do some analysis on LPHI and perhaps grind it through the PPT? It’s had one kick ass year and a great track record, and is about to split 2 for 1.
Thanks CA
reversal today.