Friday, March 16, 2007

Friday Wraps

Another boring day. I dumped out of AKS because I looked at its chart and I saw that it was probably as extended as it was going to get and I already had a steel company in GGB that has room to run. Then I added back on GGB this afternoon lower than where I sold it this morning. I kept the same level in NFI and I added to SOHU and STD.

For awhile there it looked as if SOHU would actually finish the day up (in my portfolio) but it couldn't hold the gains. I think that next week we will see a rebound. I am ready.

I base that thought on this chart - a weekly of the INDU -

That long tail on this weeks finish suggests that the buyers were coming out to play and it is possible that after today the dip buyers will be back in force next week - but that's not all - a blind man couldn't help but notice the white-red-white pattern on this chart. And given that the weeks of 2/18 and 2/26 were both red (sequentially) we are owed an up week. Of course the market never "owes" it just "does" so this is just a suggestion and not a certainty. There's a reason why I don't write this stuff during market hours - I'd hate to think someone thought that I actually knew something and acted on my say so. On the daily INDU the ATR continues to decline. Today it went down to 135.96. A long way to go but at least it is moving in the right direction.

This is one powerful indicator - it's refusal to break -0.005 yesterday kind of foretold today and it is still refusing to go down below -0.005. All it would have taken is another 47 cents down. But it didn't get it.

The VIX remains neutral (between 5 and -5%) so there is no indication one way or the other there.

The model portfolio is at 2.85 and the benchmark is -1.32. The model portfolio is doing very nicely and that proves if you buy low you will make money - but we already knew that.

GOOG dropped again mostly because of that lawsuit from Viacom - of course that's just a CNBC excuse - a billion dollar lawsuit does not shave $5 per share off GOOG so that was either an overrun or not the reason. I still think that GOOG is dead money. But that's easy for me to say - I don't own any and never plan on owning any. For every share there are just too many missed opportunities. AAPL and MSFT basically broke even on the day. But this is one scary chart -

There are a couple of things going on here - first today's candle is a real good indicator of a change in direction - similar to the one on 2/28. Maybe not instantly but eventually. Second - it is once again running away from its 21-EMA. Third - it keeps bumping up against 90 and not being able to go past it. It's taken four shots at it in the past 20 trading days. Right now we have a good base if you draw a line across the top of the last two white candles and that will be the breakout spot. Can it go up from there? I don't know but right now it's poised to fall.

MSFT's chart isn't much better but it stays in the range and will probably stay there until the next time the market goes down hard at which time it will find a new, and lower range.

Bullish Jim remarked this morning that SBUX jumped but I think it has to beat the high of the last Cathedral of Dead Money before it is clear - that was 6 days ago and a buck higher from where it closed today.

I was in and out of AUY so fast this morning it made my accountant spin and this too is one ugly formation -

The problem with gold miners is that they move with gold and with the market. So you can't be sure if you are going to get fair value or not. If either the market or gold goes down the miners go down - but they only go up when the market goes up. The Japanese call this candle the "evening star" which signifies sayonara Yamana-san. Actually it needs a confirmation on Monday to become an evening star - a red candle is required - but it's two-thirds of the way. I call that candle formation on 2/26 the "cross on the hill" - it is a standalone bear sign. One other neat formation on this chart is called "three gaps down." The first gap was 2/26-2/27, followed by 3/01-3/02 and then 3/02-3/03. The "three gaps down" are usually (not always, but usually) followed by an upward movement. And last, but not least is the BOB formed from 3/02 to 3/06. If the market had been in healthier shape AUY would have been in the 16's by now.

The up/down ratio is at 35% which is a good sign and about the only hope we have for Monday. I think that we are still in the woods but we need a couple of good up days so I'm calling Monday up.

The magic coin, fresh off its most recent win calls Monday ... heads - also up.

The score now stands at Marlyn 20 - 15 and 6 and the coin is 19 - 18 and 6.

One of the the things I've been watching lately is that we seem to be in a secular down trend in the markets and that is very visible on the weekly Marlyn's Curves - I'll publish this weekend with a picture of those along with a commentary as to what I think about all of that.


Bullish Jim said...

I tightened my stop on SBUX but
I probably should have just sold it on that bounce. The bounce appeared to occur due to an analyst upgrade to "conviction buy". Does that imply an upgrade to plain old "buy" by that broker is done without any conviction? :) said...



Great posts