Thursday's Wrap

Well I mis-called that one. The indicators all pointed solidly down and the market followed the indicators. After my epiphany this morning regarding EBAY's profits I was not surprised. I'm working on a new indicator that looks like it might be better than the old up/down ratio - I have to watch it for awhile and if it proves to be valid I'll include it in the mix.

Bought some KKD just above midpoint low (MPL) and it didn't do anything all day except bounce around the MPL. I'm holding it overnight because the indicators are all solidly up for tomorrow and this time I'll follow the indicators. We'll get to those presently.

One that I missed was BKUNA - I had it on my daily watch list and for some reason or other didn't believe what I was seeing. But it came out of S2 this morning like a shot and went to R1 at the close - my mistake. Here is what that looked like.



You see how you can combine your process (wait for a bottom indicator) with the pivot points in order to make decisions. This one was pretty clear and I really don't know why I missed it except maybe I dozed off for a bit when it was developing.

Day 7 and the dumb traders started shorting GOOG again. Don't they know that Jimmy called for a short squeeze? But in all seriousness - at least as serious as one can be in this business there are some interesting developments in GOOGle-land. One of the sites I frequent, whispernumber.com, is suggesting that the "whisper number" is lower than the analyst estimate for GOOG - by 6 cents. Now we know what kind of havoc 4 cents can bring. If the whisper number (the non-publicised but hardly a secret number) turns out to be correct - look out below on January 31st.

OIH was off again today - some market some inventory a lot of hot air - most of it on the East Coast of the USA. Have no fear oil bulls - summer is coming and I can pretty much guarantee we are going to need a lot of air conditioning and all these old oil fired electric plants are going to be working overtime supplying the juice.

Seeing some chatter about the housing market depression being over and I really think it is. The reason why is because the other day in my morning paper (yes I still get a newspaper - how living in the 50's is that?) in the primary spot (upper right front page) big headline regarding the slump in the housing market. I contend that by the time reality reaches the mainstream media change is already underway. Barry Ritholz disagrees but he said we having a lousy Christmas season and we didn't. Remember rule 1 - nobody knows nothing - including me - and especially in this case since I agreed with Barry.

The up/down ratio is rock bottom at 24% which is more than half of yesterday. The new 20-day high/low ratio is at 39% which is also more than half of yesterday's number. The VIX actually leaped over its 10 day moving average and is now in the yellow zone of oversold territory (+5 - 10%). The DIA, Q'S and IWM all printed white candles in the last hour. GS printed a dummy spot (Doji) and SPY printed a gravestone Doji. Everything signals a bottom. So I'm forecasting an up day tomorrow.

The magic coin having listened to all of the evidence says ... heads - agrees with me.

Marlyn is now 7-5 and 1 and the coin is 5-7 and 1. See you tomorrow.

Wrapping Thursday

Dumped AFFX this morning for a one cent gain. I knew right away that it was going to be a miserable day just based on the PC ratio. I watch it during the first hour of trading on the 60 minute charts. I want to see two things - where it opens and where it closes in that hour. If it opens below yesterday and closes below yesterday (first hour only) that is generally a good sign. Today it opened below yesterday and closed above. That means churn and burn. And that's what we had.

Still every day brings something new to look at and this is a beauty. A tweezer bottom with a one hour separation. I didn't see it until an hour after or I would have played it. I take the tweezer bottom seriously. Here is GM with its tweezer bottom on the 15 minute charts.



See where that long spike touched at 9:30 (and it's valid - I checked on the one-minute charts) is then reproduced by another touch at 10:45. That's the tweezer bottom. This is also a mini blow-off bottom and the buy point is on the close of the next candle. The exit is obvious around 1:30 to 2:15 or so. The lower highs in a row inform you of that. Always take the tweezer bottom seriously - it is a set-up alert.

I bought some BKUNA this morning figuring on an up day and the financials have been doing a fine job of leading lately but that trade collapsed. I'm was down a dime all day until 3 P.M. and am now down 30 cents thanks to the late day market fold so I'm holding it overnight at least. Another investment. I hate investments.

Of the several stocks that I said I would be watching, ATHR, SYMC, PTEN, and CRM, ATHR set up about 11 A.M. for a nice little run, the other three didn't. Because of the kind of day it was I passed the ATHR trade too. We'll try again tomorrow with LEND, AVCT, IM, NFLX, and SY. Who knows - a good day and we might get some.

We had a good day, I miscalled it but still no matter - we need a relaxation of the tension in the indices and today helped. The up/down ratio is now 34% and that is in oversold territory, the new 20 day highs came back under 600 to 554 and the new 20 lows increased by 70 to 259. The VIX is printing 9%+ over its 10 day average and SPY, QQQQ, IWM, and GS printed a red candle in the final hour of trading. DIA printed white. Regardless that is a very positive sign - I would have preferred for them all to be down in the final hour but we can't have everything can we. All of this together along with a good jobs number tomorrow spells a one day rally and then we can all take two weeks off until Christmas. I won't be taking off - but I will cut back on trading - maybe only 2 or 3 a week.

The magic coin is 34 and 26 having nailed today and I doubted it - what a maroon. For tomorrow, I can hardly wait, .... heads - bull market coming. Well - we agree, we'll see.