27 AUG 2009, Thursday

1. Yesterday, the sentiment of newsletter writers was highlighted.
2. The flip side is the retail investors as shown in the chart above.
3. While the so-called pros are bullish, individual investors apparently need more convincing. According to this week's survey of the American Association of the Individual Investors (AAII), only 1/3 of investors surveyed are currently bullish, while nearly half (49%) are bearish. Based on these surveys at least, not everyone is bullish.
4. Sooo, maybe some more upside will get them excited too?
5. We'll see.

26 AUG 2009, Wednesday

1. Investment newsletter writers are decidedly less bearish than they've been in some time. According to the weekly data from Investors Intelltigence, bullish sentiment among newsletter writers is at its highest levels since January 2008. Meanwhile, bears are practically in complete hibernation. At a level of 19.8%, bearish sentiment is at its lowest level since late 2007.
2. Sentiment is not necessarily a timing tool because it can go to extremes and stay there for long periods. But it is useful to determine the risk environment.
3. Afterall, once everyone is bullish who is left to power the buy side? Except Goldman Sachs High Frequency Traders (ie, extraordinarily high speed computers)...of course!
   

25 AUG 2009, Tuesday

1. Bawney Frank is the Banking Queen!

24 AUG 2009, Monday

1. Lifted the above chart from evilspeculator.com. It pretty much sums it up. (Double clicking on charts/pics makes them bigger.)
2. We get a small daily correction...down to 1010? Then we ramp up toward the 1050 area? He thinks higher toward 1100. Which would be fine with me, too. The higher the price, the better the short! Time wise? Don't know...early to mid September? Who knows? It just seems like we're in the final innings.
3. Soooo, I am getting ready to shut down long trades soon and just try to focus on the short side. I'm just trying to avoid being too early.
4. Of course, it doesn't have to immediately reverse either. It could just enter into a consolidation range while "Da Boyz" sell their inventory to the now very hungry retail investor. But that's OK...Down is what I want but I'll take side to down, too.
5. Some good examples of tops after big rallies can be found at this link that shows Japan's Nikkei Dow during the deflationary 1990's.
6. Can this keep going up. Sure, anything can happen! I just try to lean where the probabilities are greatest. If I have a plan and work my plan, that is the correct thing to do win or lose.
7. To all investors that have been in this upmove from March, it's been one heck of a move 54% in almost 6 months. That's a 100% annualized rate of return! Is that realistic? Make your plans now on what you will do to protect yourself. There is no rule saying that you always have to be exposed to stocks. Cash is a position. You can always go back in when you choose to.
8. You don't want this guy to get at your accounts again.

21 AUG 2009, Friday

1. Hmmm...economy is blowing up, banking system is blowing up and Social Security is now blowing up faster due to high unemployment and reduced payroll taxes for the government. Graph above shows that Social Security is getting ready to go in the red (outlays exceed revenue) a decade earlier than anticipated. Medicare is already in the red as of last year.
2. Why? Oh, why in the hell are the President and Congress all hyped up on creating the biggest expansion of government in history? I suppose I just don't get it. What I do get is that we have a responsibility to our posterity (kids, grandkids, etc). We're supposed to hand them a country on solid footing. Not a bag of hot steaming dog doo.
3. To our leaders...want a crisis to solve? Don't do anything new. No global warming, no nationalized health care, stop the cash for clunkers and cash for houses nonsense, too. Just fix the stuff that's broke now and return them to sustainability!!!
4. To the market...more on the weekend...FIN-A-FREAKING-LY!!! We've broken out of the chop to the upside and appear to be in the final stretch. It's possible that we just tipped into the "a few weeks or days" to go.
5. Watching!

18 AUG 2009, Tuesday

1. Vote for Obama-Care....or the dog gets it!!!
2. I'll miss you Rover!
   

17 AUG 2009, Monday

1. Does this look normal to you? Me neither. Bear trap being set? Dunno...but it is absolutely amazing how "Da Boyz" paint the tape.
2. 2.5 weeks of price action wiped out in the first 10 minutes (all happened overnight) today and then it just goes flat line for the bulk of the day?
3. Always interesting!

16 AUG 2009, Sunday

1. Areas I'm watching.

14 AUG 2009, Friday

1. Above chart shows "Lame Loans" on bank balance sheets. These are loans that are more than likely going to default. The thing that gets me is this whole rally has been built on the "temporary" suspension of normal accounting standards by FASB which occurred in mid March. To buy time for the banks, they were no longer required to value loans at current value and they could carry it at a price they like. Now, what are the chances that all the crap loans that were on their books have improved as the recession deepened? FDIC (taxpayer) is still responsible to back the banks that go bust. Typically, the longer they wait the worse the problems are getting as can be seen by the increasing number of bank failures. The thing that scares me is what happens when the FASB standards are put back in place. BOOM!!! This has been a mirage.
2. Excellent...and short...video of a gentleman attending one of the Town Hall meetings in Maine. He basically sums it up when he says "Don't trade your freedom for so called safety."
3. Current price action is coiling in a tight range similar to early June. This creates a lot of confusion. June's looked more like it would break down which it did for a short time followed by the recent explosive move upward. The current range is starting to look like it could break to the upside for the final surge. Dunno? Have to wait and see.
4. Indicators are all uncomfortably overbought (snagged from another blog) and sentiment for the small investor is showing too many bulls. Which, of course, makes me nervous...Looking for shorting opportunity. Could be coming soon...waiting...watching.
5. Watching these areas...we're stuck at 1010
   SP500 Resistance: 1010, 1050, 1100, 1130
   SP500 Support: 970, 940, 910, 870, 830

11 AUG 2009, Tuesday

1. Political thought for the day...especially with all that's been going on this past 2 years (old Chinese curse goes "May you live in interesting times....uhuh!).....
2. The ONLY difference between the Republicans and the Democrats is that the Dems tell you right up front that they intend to gang-rape you. Meanwhile, the Republicans claim to intend to protect you, but as soon as you look the other way they violate you from behind without warning. Ain't it grand!!?
3. Well, market is finally doing something today besides grinding in a multi-day tight range. Tomorrow is the FOMC meet so it's pretty tough to be confident as to which way things might go.
4. With this tight consolidation at high levels, it may be preparing for an overdue correction. What I'd like is a shallow and brief correction with a renewed push up to slightly higher highs and then the failure. Then I'd be quite interested in potential shorts again.
5. But "You can't always get what you want."
   

6 AUG 2009, Thursday

1. So, I went to my computer this morning and...Hey! Someone took one of my monitors!
2. What is that? NORAD???

4 AUG 2009, Tuesday

1. Happy Coast Guard Retired Day!
2. Markets...up 16.2% in 19 days!!? At this pace I guess we'll be at all time highs by late September some time. Tongue in cheek, of course. But moves like this are rare indeed. Statistically speaking...a definite outlier on the tail of the bell curve. Amazing stuff!
3. It can keep going without me. No problem. Seems like an outright buying panic or a rig by "Da Boyz". And, if it is "Da Boyz", they are doing a mighty fine job of painting this tape. Heck, they've even pushed it to the upside of the 60 week moving average these past two days. And I use that as a guide as to the longer term environment. So, new bull market? Not if it fails here at the 60 week moving average.
4. But the problem remains that it is very overbought right now by many measures. For example: the market is currently 8.25% above it's 30 week moving average (stretched). Heck, during the entire bull market 2003-2007 there were only 2 weeks where it got that far above it...they both occured in 2003 (one week was 8.1% and another was 8.7%). Throughout 2004-2007, 6-6.25% was it's maximum distance.
5. Another item for perspective...the low to high spread for the entire year of 2004 was 15.1%...for the entire year of 2005 it was 13.1%. In the past 19 days we've bested entire years during the last bull market. Wild!!!
6. So, I'm willing to watch from the sidelines and just do some day trades. As I've said before...I never, ever, ever chase a move...and this one has just gotten silly.

3 AUG 2009, Monday

1. OK Ms. Market...whatcha gonna do? Watching ya.
   

2 AUG 2009, Sunday

1. More on investor sentiment...
2. The prior post detailed the Investors Intelligence sentiment numbers (bullish / bearish percentages). They are the investment newsletter writers. Typically, these are folks who've been around awhile and have seen a number of different investment environments.
3. The links tonight will show a slightly different story. It details the percent bulls and bears reported by the American Association of Individual Investors. Basically, it is a survey of retail investors...or the little guys. These, unfortunately, are the folks that tend to get too bullish and trapped or too bearish and trapped. They are the folks that "Da Boyz" are watching because they become the bag holders....remember the childhood game of "Hot Potato"?
4. This recent move up has got more folks optimistic. It shows more bulls and fewer bears than it has in over a year. They're not at extremes and, over time, the levels can shift as denoted by the red and green bands. But, I do like to watch the response to price action. For example, in the 9 JUL blog entry I noticed ~55% bears among this group and said that there was a possibility of a bounce in prices. It played out...more than I thought and was a reason why I wasn't committed to my short position.
5. Another point...in MAR 2009, the retail guys were at bearish extremes not seen since the 1987 Crash. I was alert to a possible turn. But....there's always a but, isn't there...when you look at the % Bears chart you'll understand. I was looking for a bounce and restest in that indicator for investor safety...unfortunately, it didn't happen. What I mean is a wiggle (comes out of the bands and goes back into the bands) at the lower levels like you see in early 2005, late 2005, mid 2006, early 2008. Instead, we got a straight up shot which is unusual for this group. You can see similar action in the % Bulls. Take a look....
6. AAII Bearish %
7. AAII Bullish %
8. NOTE: Sentiment is not a timing tool so much as it is an alert as to the environment. The emotions can hold for quite some time, too, before they get exhausted.
9. Welcome to August! A new month...let's see what happens! Currently, short and intermediate over bought while the long term is neutral.