SPY

Here are the fibs again.


We should be able to make it to the 1050 relatively easily. Futures are very strong right now, we are far behind Asia and emerging markets in this bounce!

Short

I can't help but still want to be short this market. It is just absurd how it acts. Selloff after the fed announcement, followed by a huge rally, followed by an even huger selloff. LVS moving up 80% on rumors of funding, WFC selling $25 billion of preferred stock to the government, stupid GE rumors.

I like MON short and SKF long, but I will not fight this market if it wants to go up.

A Look at Today's Move

Take a look at the daily chart of CLF. Today's candle was pretty small, almost an insignificant move up compared to the moves it has had before.



But look at the 1 minute chart

This stock was up 29% today! Don't underestimate the % moves we can have at these low low levels! Don't be afraid to jump on long during this panic buying, and be very scared to short in front of these trains.

S&P 500 Since the Bailout News

We are just back to where we were a few days ago!



Stay tuned (to the market, not me) to see if we can rally to at least the 50% retracement. I will play this market very neutral. Buy the dips, short the rips until one side proves itself stronger for the day.

Volume

The volume has been getting weaker recently.



Does that mean the sellers are almost done? I am not trying to be bullish here, since I think we can easily drift lower on low volume, but I am watching the markets to see if buyers will ever show up in force. This decrease in volume gives the bulls a chance to do exactly that. Until that happens, the easy trades are still to the downside!

Market Summary

I recently found the market summary page on stockcharts. Useful to find weak and strong sectors.

Crazy Buying at the End

FSLR action was an extreme example. I am curious to see how the late buying will affect tomorrow.

Dear Jim Cramer

Thank you for calling the bottom so many times.

http://www.cnbc.com/id/25932873
http://www.cnbc.com/id/26406036
http://www.youtube.com/watch?v=kgPzZJCTSLE
http://www.youtube.com/watch?v=dt8pd9xd2h4&feature=user

He needs to man up and admit his STUPID calls on air.

No Buyers? No Soup for You

We are forming a triangle. Odds favor a break in the direction of the current trend.

Rally or Fade

Ultra Short Basic Materials

SMN looks good if the market heads lower.

Flip a Coin

To figure out if we end tomorrow up or down. Does AAPL YHOO earnings bring on a rally? Or does this fade like all other rallies?

If the buyers truly step up, we can have a decent rally the next few days. But the sellers have consistently stepped in at every chance.

It seems that almost every stock I follow trends with the market. Some weaker, some stronger. What I have been trying to do is being long the stronger names when the SPY is headed higher and being short the weak ones when SPY is headed lower.

MON to 50

I am still very bearish on MON, but I wont fight it if it wants to go up with the market. Especially since this stock has been strong than most other ags.


You can see from this chart the my conservative target is 50, a more optimistic target would be 30. It has a PE of 24 and a FPE of 17. With other growth stocks trading at 3-8 PE, this one seems veeerrrryyy overvalued.

It will be hard not to take a short here though.

Right above the declining trendline and at the 50 DMA.

Bottoming Process?

Smooth bottoming process or secondary trend move up before the next leg down. Either way, it looks like the market wants to head up.

Be careful playing the long side! Here are a few ultra long ETFs for your consideration.

DIG - for the oversold energy stocks


QLD - for the 'resistant' technology stocks


URE - because real estate is bottoming (not really)


UWM - small caps are still crazy outperforming the big caps


UYG - because financials are now backed by the government, this one was very weak today


UYM - china is still growing and these stocks are crazy oversold

More Shorts

Forgot about these.

FSYS


CF

TED Spread and Libor

http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

http://www.bankrate.com/brm/ratewatch/other-indices.asp

Still Bearish Ags

It seems as if the whole market trades the same. Every stock I saw on Friday was moving up as the SPY was moving up, and moving down as the SPY was moving down. So make sure you trade with the trend!

I like MON the best, but POT, AGU, MOS are all good.





Looks like the consolidation is going through, the next leg down should be here soon.

S&P 500 Since the Bailout News

Fibs

The huge 10% rally hit the 50% retracement from the lows. We are currently at the 23.6% mark. What do we do from here?


The vix looks very bullish here. An inverted hammer with the high in the 80s!!!! But note, just because the vix comes lower does not mean we have a huge rally.

Commercial Paper

Why doesn't the government sell bills, for 1% yield, take that money and make commercial loans at 4-6%?

They should make it very explicit that they are selling these bills to buy commercial paper. This will make the capital markets look like the sissies that they are. It will also make people realize that they could be getting the same higher yields.

Funny

It is funny how just a few days ago people were panicking to buy stocks at these levels. Where did the enthusiasm go? What does it take for stocks to be attractive? PEs with 10 multiple?

This chart is from April 10, 2008


So if we use the 1974 bear market as comparison to our market, we nee our trailing PE ratio to be around 8 before the bottom is found.

The same thing can be found here.


Currently I estimate that with S&P 500 at 900, the trailing PE is 17.4 (SPY PE shows 14ish, but I think these are a little old). That means we need a 50% price hair cut to return to 1974 lows. Going forward we expect earnings to drop more, requiring an an even bigger drop in price to bring us to a low PE.

So next time you hear that the PE ratios are attractive here, remember this.

My list of stocks

Ags	Airlines	Casinos	Chinese	Coal	Energy Drillers	Energy Exploration
ADM	AMR	BYD	CBAK	ACI	ATW	APA
AG	CEA	ISLE	CDS	ANR	DO	ARD
AGU	DAL	LGN	CHA	BTU	DRQ	BEXP
ANDE	JBLU	LVS	CHDX	BUCY	ESV	CLR
BG	LCC	MCRI	CHL	CLF	NBR	DNR
CF	LUV	MGM	CHNR	CNX	NE	DVN
CMP	NWA	PENN	CN	FCL	NOV	GMXR
COIN	PNCL	TRMP	CPSL	FDG	PDE	GTE
DBA	RJET	WOLF	CYD	ICO	PDS	HES
DE	SKYW	WYNN	EDU	JOYG	PKD	NOG
FEED	UAUA		EFUT	JRCC	RIG	OXY
GRO	ZNH		EJ	KOL		PBR
IPI			FEED	MEE		PDO
LNN			FXI	PCX		REXX
MON			GU	SSL		SD
MOO			NINE	WLT		WLL
MOS			SEED	YZC		WTI
POT			SINA
SEED			SOHU
SQM
SYT
TNH
TRA
Energy Integrated	Energy Nat Gas	Energy Service	Financials	Home Builders	Ultras	Rails
BP	APC	BAS	ABK	CTX	QID	BNI
COP	BEXP	BHI	BAC	DHI	QLD	CNI
CVX	CHK	CLB	BCS	GFA	SSO	CP
IMO	CRK	CPX	C	HOV	SDS	CSX
PTR	DVN	FTI	COF	KBH	DDM	GWR
SII	GDP	FTK	CS	LEN	DXD	KSU
TOT	HK	GLF	DB	MTH	SKF	NSC
XOM	MXC	HAL	FAF	PHM	UYG	TRN
	NGS	OII	FNM	TOL	UWM	UNP
	PXD	OMNI	FRE	XHB	TWM	WAB
	UNG	SII	GS
	XTO	SLB	HBC
		SPN	JPM
		TTES	KEY
			MBI
			MER
			MS
			MTB
			PRU
			UBS
			UYG
			WB
			WFC
			XL
			XLF
Refiners	Retailers	Shipping	Solar	Steel	Tech
ALJ	AEO	ANW	AKNS	AKS	AAPL
BP	BBBY	DRYS	ASTI	CPSL	ADBE
COP	BBY	DSX	CSIQ	GGB	AMZN
DK	COST	EGLE	CSUN	GSI	BIDU
FTO	CROX	ESEA	DSTI	MEA	EMC
HOC	HD	EXM	ENER	MT	GOOG
MRO	JCP	FREE	ESLR	MTL	GRMN
MUR	LOW	GNK	FSLR	NUE	MSFT
PTR	LULU	NM	HOKU	PKX	NVDA
SNP	MW	OCNF	JASO	RIO	QLD
SUN	RTH	OKN	KWT	RS	QQQQ
TSO	SHLD	PRGN	LDK	RTP	RIMM
VLO	SKS	SB	RSOL	SCHN	SNDK
WNR	UA	SBLK	SOL	SID	VMW
	WMT	SINO	SOLF	SLX	YHOO
	ZUMZ	TBSI	SPIR	STLD
		TRMD	SPWR	TX
			STP	X
			TAN	ZEUS
			TSL
			WFR
			YGE

If anyone has any stock additions or for a whole new section, please share!

Selloff continues

Bearish anything that has not hit its lows.

Did you guys notice how badly the rails have been the last 2 days? HUGE moves for such steady stocks.

Bearish: MON, CF, FSYS, NYX, CME, COST, FSLR

If the market decides to hold or rally, you could get long almost any oversold name that is showing strength.

Even though I want the market to rally, the buyers are just NOT showing up. Even if they do show up, they have to show up in force for me to believe anything. Till then I will be cautiously short.

A Look at the Crack Spread

It took a HUGE beating and is now back to recent lows. The last two days have shown improvements. If this keeps up, we could see the refiners rally once more, but I would not put much weight in the stocks, they are in such bad condition. The crack needs to sustain a high to medium level for a LENGTHY time in order for these stocks to come back into favor.

How I trade

Someone asked me on wallstreak how I trade, so I thought I would try to outline it here. To share and mostly to reflect and reinforce some habits.

I scan for stocks using daily 1-2 year charts, usually at night. I do this to find stocks that are setting up for nice moves. In a normal market I would use 1 min/5 min chart to time my entry into the stock and hold on for 1-5 days. But in this market I simply use the daily charts to develop a bullish or bearish lean towards a stock. I will then proceed to day trade it based on how the market is acting that day. This market is so day to day that it is impossible to have a strategy that works for anything more than 36 hours.

If volatility ever comes back down (next year?), I will have to adapt my strategy to take advantage of extended moves in stocks. But for now, I can easily get a 3-10% move in 2-3 hours, which is good enough.

Charts, Keeping Your Eye on the Ball, Frustration

I will update later today describing my person strategy that I have been following in this market.

Here are some charts with the exact lines I drew yesterday. Today was all about the shorts.

POT

Frustration: I could not short this stock through TOS.

MON

Frustration: Was a bit too slow to notice this stock dropping right from the gap up. I felt like I would chase it if shorted, so instead I tried to short POT (arg).

MOS

Frustration: Could not borrow.

NYX

Frustration: Not paying attention!

So the lesson learned? I need to concentrate more on the stocks that I research and highlight. I should have easily got 4+ points shorting MON or 3+ shorting NYX. I need to update my chart setup in the mornings so that I can easily watch these stocks of interest without missing the big moves.

On the plus side, I still had a good day trading SKF to the long and POT to the long. Just quick intraday trades.

Charts

Bullish

ICE

My favorite stock exchange. Has not run up too much like CME, is not weak like NYX.

BTU

Just an oversold play.

MEE

I like this as a better oversold play.

UA

Short squeeze candidate. Only if retails pick up, they were lousy today.

CHK

Oversold.

Bearish

I like the ags as shorts, but a lot of these charts need some more time.

CF

A bit more time. Bear flag forming.

FSYS

Very nicely retracing back to the downward trendline.

MON

I really like this one. It has already overwelcomed its rally, the downward moving averages will catch up with it very soon.

MOS

Another ag ready to meet its doom. No one like this stock now!

POT

Yet another ag.

NYX

Meeting resistance, the weakest stock exchange stock.

Day Trading

Honestly, there is no way to tell where this market will go unless you judge the action intraday. Have we ran too much? Is this just the beginning? All this will be determined by the day to day action. I will try to screen for some charts later today, but I am not sure how much this will help. All charts look basically the same, huge sell off with a slight 1-2 day bounce.

Even if we do continue higher there are many questions to answer. Would it be best to go for stocks that are the most oversold? The ones with the best fundamentals? The ones that were the strongest today?!??

For now I will try to limit most of my trades to the long side.

Only in this market

Only in this market can a stock go from a 52-week high, wait, an ALL time high to a 2-year low, all within 1 month. What stock is this? Hint, it is a large cap (150+ billion market cap).

Tick Tock.

I will post the answer/chart end of day today or tomorrow.

Crashes

Read about them here. I will be updating this post with a few charts of some bear markets/crashes. MSN has some decent historic charts!

2000

-45% in 2 years.

We have done -43% in 1 year. Take that dot com bubble!

1987

No bear market though, I wish our market acted like this. Buyers stepped up right away. This time around people are way more hesitant.

1974

50% decline, took about 2 years.

This last one seems to be the closest match to what we have going on. Read about the bear market here and here.

The worst drop during that market was an 18% drop in a little over 1 month and a 33% drop in 3 months. We have dropped 28% in about 1 month. There were about 6-10% rallies in between, but that is almost pathetic! This makes you think that it really is not worth it to buy stocks for an oversold rally unless it really is the bottom.

Even given all these past events, there has not been one (post WWII) market that has dropped this far this fast. That is what makes this market so special. At this rate we could probably bottom at about -60%, which is SPY at 63. But I think valuations would be way too ridiculous at that point. I expected either a bottom to be formed within the next 2 weeks around the 80-90 range, or a more severe bear market that bottoms in the 65-75 range. Either way, this will be historic.

Finding the Bottom - A Look at the Financials

I wont be recommending any longs or shorts for a few days/weeks. This market is just too crazy. Instead I will analyze daily charts and see what it takes for a bottom. Lets look at XLF

TICKER	WEIGHT PCT
JPM	9.218056651
BAC	6.510135477
WFC	6.179692435
C	5.123050887
USB	3.634949945
GS	2.955375767
CME	1.973219748
BK	1.920944935
AXP	1.78970732
V	1.620253917
PNC	1.506434474
AFL	1.371868465
TRV	1.315713295
STT	1.288288608
SCHW	1.250596422
MER	1.242658985
BBT	1.133600549
SPG	1.095058279
ALL	1.083789115
PRU	1.029060551

Now the chart.

Alright! Fresh all time low. No support! Yay! -64% from the highs. Since the XLF is the sector that is causing all the problems, lets compare it with QQQQ during the dot com bust. It went from 120 to a low of 20, an 83% drop. So by those standards, the bottom should be... 6.5 (ouch). Is that reasonable? It seems like a stretch since the height of the dot come bubble brought about huge valuations for companies, but then again this disaster should also take away huge valuations from banks. I would at least expect continued downside from here, hopefully not straight down like it has been doing lately. Right now the XLF is at the bottom of the trendline, this doesn't mean much since all other indexes have broken their trendlines, but just a thought.

SPY

-43% from the highs. 12.5% away from the from the 2002 low.

Looking at this chart, I think the most probable case is that we bottom BELOW the 2002 levels. Although this recent drop has been VERY VERY quick, it is about the same as the last and final drop before the 2002 bottom. Maybe some hope.

PE

Check out this image from Bespoke Investment Group.

This is exactly something I keep pointing out about a lot of coal stocks out there.

Either earnings estimates are still way too high, or many of these stocks are trading at values of a lifetime. Just looking at the top three stocks on the list (GNW, X, CF), even if their '09 earnings come in at half of current estimates, at current prices their P/Es would still be less than five.

Lets see how these earnings play out in the future!

Also, spot coal prices have inched down a bit. Will they follow the trend of the coal stocks?

VZ

A caller on Mad Money asked about VZ. I decided to look at a chart.



Now lets see... VZ first reached this price back in 1989. Thats right, VZ has reached the price it was over TEN years ago and where it bottomed after the dot com bust! Also, did I mention the yield is 6% now (went ex-dividend today)? This is too weird.

Posts

Sorry for the lack of posts, but what I don't know what to be posting about. This market is just awful. Only day trading works, and even then you get killed if you are on the wrong side. The only advice I have for people is to manage their risk. Don't invest money that you are not comfortable losing.

Anyone want to chat and trade?

Market

This market is pathetic. Can't make any sort of rally. Id rather be in cash or short here. Some day the rally will come, hopefully we will be ready. But it sure as hell isn't now.

Financial Crisis

I thought I knew most about what is going on, but I this broadcast does such a GREAT job of explaining everything.

I URGE you to listen, especially about the credit default swaps.

Short Squeeze Candidates

CME

Very very strong today. This stock can run tomorrow, but a pullback would also be very nice. Days To Cover (Short Interest Ratio) 2.3

HANS

Buyout rumors, good consolidation. Days To Cover (Short Interest Ratio) 9.9

LULU

Chart is a little sloppy but it is right and support if it fails here, it will be headed to the lows. Today's action was very promising. Days To Cover (Short Interest Ratio) 8.0

MW

Not the most bullish looking chart, but it has been consolidating for a very long time and has a big short interest. Today's action looks good. Days To Cover (Short Interest Ratio) 10.0

SHLD

Possible bull flag, but I have my doubts. It is at a critical point here, at the 100 DMA and previous support and the bottom of the trendline. So if you take it, the stop is easy. Days To Cover (Short Interest Ratio) 11.4

UA

Not the greatest fundamentals FPE 20. The price action is somewhat confusing, it ran up high but it pullback way too much. Today's action is a plus. Days To Cover (Short Interest Ratio) 16.6

I will also look to buy some very oversold coals stocks IF the market acts strong: MEE, ACI, BTU.