NewMoMo - All Indices

The only thing I'm missing is the mid-cap. Mid-cap is the best performing class of stocks this year to date - why is that? I don't know - no one knows - it's just a fact.


What this shows is that three of the four have rolled over the top and are now heading back down which is why I'm calling for a down day on Monday. But I think because this is end of the quarter and the last week at the end of the quarter is usually pretty good (about 60 - 40 up) barring catastrophe this could be an up week overall. Friday is, after all, hedge fund manager bonus day and vacation season is upon us and 90 percent of the hedge funds out there are simple stock funds with a couple of options thrown in and so the market must go up. But first - it must go down.

The Past is Prologue

One thing I hate to hear is “this time it’s different” because no - it isn’t. It might not be exactly the same at the detail level but in the larger sense it will be the same.

Here is the DIA, the replica of the Dow Industrials -



Start at the bottom. Notice how the ATR increases and then decreases and how this somehow relates to what is going on with the prices. Expect that to happen – the ATR will increase some more and then eventually roll over and begin to decrease. Now move to the RSI – it will be extremely volatile – expect it to suggest a bottom several times in the next several weeks. But until the ATR rolls over and starts to decrease they are just head fakes. Notice that the volume will return to normal very quickly – the amount of volume we had last week is unsustainable – eventually no one is willing to sell their shares in the quantities required for such a volume spike. Note how any up weeks (a) will have longer tails than normal and when the all-clear is sounded you should have something that looks like (b) – I.E. going up right out of the box. And notice how the price should come all the way to the 90-EMA before turning back up. This last mini-correction took 11 weeks to sort out. In that 10 weeks there were three clear-cut up weeks and two DOJI weeks before it was cleared. The SPY/SPX looked pretty much the same.

Here is the IWM -



You see how it is very much like the DIA. It also hit the EMA-90 before it cleared. The elements marked “a” and “b” were exactly the same.

And finally the Q’s -



The tech took an extra week to clear and actually went down through the EMA-90 but it started from a much closer point. At any rate the same basic principles apply – low RSI several times and then an ATR roll-over. I’ve also annotated on this chart that period from November to the present where the tech market was flat - I posted about that back in December and mentioned that I was looking for a break out. What we got was a breakdown.

I’d expect another down day on Monday and then a little bit of relief for the rest of the week. The retail trade is shell shocked and not fearless so don’t expect a lot of action. But the 401K money comes in beginning Monday and it has to be put somewhere. That’s the law. Then we could have a couple of down weeks and then who knows.

Take your trading a day at a time and try not to keep one eye on the screen all the time. And if we do get an up week don’t start breathing easy until you see that ATR roll-over and start back down.

Wednesday Wraps

As dumb as it gets. Bernake, in an effort to appear a lot smarter than he is, said, "there is no one cause for yesterday's meltdown" and the market responded nicely and went up a hundred points to finish up 52 or so. Marlyn, in an effort to keep from blowing the coffee that he just drank out of his nose, gargled out a strangled, "Bull Snot"! Which caused his Bride to ask if he were OK. Marlyn then attempted to explain what an idiot Bernake is and his Bride just patted him on the head and said, there, there dear - go make us some money. Leave it to the Bride to keep things in perspective - that's why I love her so.

Girls and boys I hope you were all elbows deep today - I know I was - this was truly amazing especially the last hour or so. Everything just turned glorious and life doesn't get any better than this.

I grabbed up a couple of stocks I've been waiting for a pullback to buy - RIO and AKS first thing out of the box this morning. I got into RIO a little early but AKS came along just fine. Both in the green in my account now but it was touch and go for awhile there with RIO. I didn't mind since I'm pretty sure it is going to continue to climb for the next whatever. I'm planning on holding these two for awhile - if they continue to go up.

Also picked up GGB and that was just because it was on my list of 12 candidates. At the end of the day I added TIE to my trading portfolio.

The model portfolio that I spoke about in this morning's post gained 3.18% and SPY (the benchmark) gained 1.48%.

I didn't do any day trading today although it would have been a perfect day for it. I wanted to concentrate on getting some things in place going forward - this kind of opportunity doesn't happen only so often (according to Dr. Brett 5 times going back to '98) and you have to take advantage of the good fortune when you stumble on to it or it stumbles on to you.

I did watch the market though and I tried to learn everything I could about the day after chaos that was possible to learn. That's how you stay prepared learn something new every day. Another thing I did was to build a Proshares inverse ETF list for use in Quote Tracker. Next time the market starts to fall I'll bring that out and watch those charts for day trades.

The three pals (GOOG, MSFT, AAPL) all went up, of course, but GOOG only made 68 cents. If that doesn't throw some warning signs up I don't know what will. AAPL was only a cent behind at 67 cents and MSFT did the best of all with 30 cents (based on percentage gained). I'm not sure if I were holding GOOG that I'd wait much longer for it to hit 520. It probably will but you wasted a lot of trading capital today on a stock that may or may not go anywhere. Now that's not a recommendation to sell GOOG just something to consider when you are making your decision.

I saw a bunch of this today -



That little DOJI suggests caution. And after the smack down yesterday one would expect traders to be a bit cautious. Of course I also saw a lot of this -



- which reader's of this BLOG will quickly identify as a BOB!. The part I like about this BOB is the volume. That suggests some conviction in the move. So we have caution and conviction - I wonder which way it's going to go tomorrow.

The four indices that we follow - DIA, IWM, SPY, and Q's all printed a black/red candle in the last hour. GS printed a DOJI. That is good - shows traders taking a breath. Of course the VIX began its trek back to low-number-land but remains more than 10% greater than its 10-period moving average. And this indicator continues to go down.



That's expected of course because all indicators based on price take a little while to work - if the market goes up again tomorrow - and I don't know why it wouldn't - we will see it turn at that time. And that will be the major indicator to begin buying stocks.

Of course the up/down ratio recovered too and output a 54% or neutral reading.

Given all of the positives I'm calling tomorrow for the bulls - an up day.

The coin meanwhile, fresh off an amazing win today calls tomorrow ... tails - bear coming. Dumb coin, bad coin, stupid coin.

Having nailed today, and who couldn't, the score now stands at Marlyn 16 - 12 and 5 and the coin is 13 - 15 and 5.

I think this is the last post for February - I just noticed that it will be number 113. There are entire BLOGs out there that don't have 113 posts in their entire existence. At any rate that is a record for me and it is unintentional I just have a lot to say. But as long as I continue to enjoy doing this I will continue to attempt to amuse, confuse, but never abuse, you my dear readers. See ya's tomorrow.

Small Caps Rising

My new rendition of Marlyn's Curve shows exactly what the old one shows - small caps as represented by the IWM ETF are once more taking the lead. The tired old Dow Industrials on the other hand, despite making new all-time record highs day after day after day, are kind of flat - in other words, for as strong as they appear to be in the newspaper or on TV they are actually pretty not doing well at all.



As you can see the small caps took a hard turn back about January 24th or so. Again Marlyn's amazing Curve doesn't concern itself with the mundane of price but rather the excitement of return so we can see that you would have been better off putting your money in IWM rather than DIA.

The Q's have turned down again which reflects the problems that tech is having finding a champion now that GOOG and MSFT and AAPL have all abandoned ship. SPY is looping up a bit and the dodgy old Dow just stays flat to down. Was there ever a time to play long caps in the past year of so - maybe back last Spring when the small caps turned over and the Dow took a bit of a jog up. But since that brief time - no - unless you want to call being in big caps during the run down into August was a good thing (you were losing less on a percentage basis at that time). And then there was another brief period - but you get the point.

Small caps rule.

Monday's Wraps

Well I sat and watched for awhile then went out with my bride - didn't miss much. About 3:30 I reloaded with LQDT and maybe I'll get another bump up tomorrow. It would be nice. Other than that I'm flat, dumb, and happy to coin a phrase. As of the close LQDT was already profitable. We'll see.

Last week I read that the market went down because oil went down (!) and there was too much talk of raising interest rates. Interest rates of course are always a one-day story so today it had to be something new - and that was investor disappointment with a number of collapsed deals. I was always taught that there is always going to be inflation in an economic system based on smoke and mirrors and the way to combat inflation would be to --- wait for it --- invest in stocks. Apparently we can't invest in stocks when there is inflation because inflation gathers interest rate hikes and interest rate hikes cause the market to - you guessed it - go down. And you wonder why I gave up all that mumbo jumbo and do silly things like buy at 3:30 and sell at 9:45. Self preservation is the real reason behind rule 1.

Just read an interesting article on Seeking Alpha by John Hussman regarding "selling too early." It is an interesting commentary on today using a historical figure. Worth your time to read, IMO.

I spoke about the historical basis for stock movement this morning and its relationship to the EMA 90. I hope everyone got a chance to look that over. Same theme as always - buy low and sell high. It truly is an easy game in a market that refuses to come down. Although the last couple of days have been a good start.

Unfortunately while we could use a bit more downside I'm thinking that we are in a perfect dip buyers crease and that tomorrow will be an up day as a result.

The following figure is something I've been working on for a few weeks and it looks as if it might have promise.



I call it the "Newmomo" because it, unlike every other indicator known to civilized man is built on EMA's. It is the variance of the EMA 4 vs the EMA 21 of the 20-period normalized DIA. Or the difference between the green line and the red line as shown on this chart.



If you are looking for the routine you've come to the wrong place. Anyway this indicator (for which I have hundreds of samples not just the few shown here) suggests that whenever it went below -.005 that a market turn around should occur in the next day or so. If we couple that with my usual rap I think that turn around could start tomorrow.

The up/down ratio printed 34% which was actually up 6 points from Friday but the new 20-day high/low ratio printed 40% which is 10+ points down. The VIX is sitting at 9% over the 10-period moving average and that probably is enough - maybe a spike up in the morning to take it over the 10% mark and then a slow decline through the day into the close. Goldie (GS) and the Q's printed DOJI while SPY, DIA, and IWM all put out white candles in the last hour. The mix is good - shows that the market isn't sure what it wants to do.

My forecast for tomorrow - rain, sleet, snow and an upward moving market (weather report gratis).

The magic coin agrees - bull market tomorrow.

Neither the coin nor I got today correct so the race is now Marlyn 10 - 8 and 4 and the coin is 7 - 11 and 4.

Wrapping Tuesday

Bernake speaks - he says - don't worry - education and training will help narrow income inequality. That is - education for those who can afford it - which means parents who can afford it because you don't get through school jerking sodas anymore - not at 5.25 an hour or even 7.25 an hour. Which means - we're screwed. But you all knew that already.

But that's not what I'm here to talk about today - I'm here to talk about this amazing new stock market of the new intertube century - it slices - it dices - it cures every ailment known to man and a couple not even discovered yet - it goes up and down like a psychotic yo-yo - watch the shells boy and try to pick the walnut with pea under it - I'll give you two chances for one money ... would you like to try again?

Wow! Will this ever end? There were so many set-ups coming about mid-day I didn't know what to do. Here's several that you can look up for yourselves (all 15-minute charts) - at 11:45 JNPR printed a dummy spot followed by clear confirmation that also formed a tweezer bottom at 12:00. It took off from there. At 12:45 to 1:15 MSFT formed a classic blow-off bottom (sorry Jim) and took off from there. At 11:30 SYX formed a classic blow-off bottom with a confirmation 15 minutes later. It took off from there. SPY printed a tweezer bottom at the 11:45 - 12:15 on the 15-minute bars. In the 11:45 to 12 time period on the 1-minute bars you can see a huge 2.5-3 million share sell in SPY that was probably one transaction. After that the market reversed.

I took a bit on SYX - a stock I'd never played before. And got out at the dummy spot at 1:30.

Still holding CRVL even though it gave up a buck and a half today - probably get it back and then some tomorrow. Also holding DHI and it is only 20 cents away from where I bought it despite the best efforts of thestreet.com's loyal 10 subscribers. Still holding JNPR - it is in a nice chart formation and I think it is going to continue to go up - I'm looking at 18.90 as a target. I did sell the Q's this morning just as they jumped up at the open because I thought that they were going to go down from there hard. They did, then recovered most of it. Holding KKD too - although the next time it goes profitable I'm out because I think it is done for now. I'll wait for another set-up in the future.

I knew ahead of time that this was going to be a strange day because around noon I took a look at the up/down ratio and there were more stocks up than yesterday and the market was crashing all morning. How can stocks go up with the indices down - damifino but they do and they did.

CSCO beat - that probably means a 20 point day on the NAS tomorrow. GOOG went up today - it too had a classical blow-off bottom 11:30-12:15. Remember the BOB is characterized by a minimum of two down bars (Red) with elevated volume on the second down bar. This is followed by a Green/White bar with a higher low than the last Red bar or an absolutely equal low (tweezer bottom) with the last red bar. That is all it takes and if you see this formation you buy it and put your stop someplace below the low of the Green/White bar. You choose the spot but some multiple of the 15-minute ATR would probably be appropriate. For GOOG at that moment it was about 2 bucks which seems about right. Who in their right mind is going to day trade GOOG? Here is an example of BOB on the hour charts (yes you see it on all time scales). Of course the longer the time scale the longer the run (generally) so if MSFT goes up tomorrow too - don't say I didn't try to warn you.



Nuff of that. The up/down ratio went up today to 43% which is neutral. The new 20-day high/low ratio is 77% which still means an overbought market ahead of us. Four of the five majors finished with white candles in the final hour, only the Q's were down and the VIX remains neutral - if I were the VIX I'd probably want to stay out of it too.

I'm forecasting tomorrow as an up day. I want a downer so bad that I'm calling for an up day (although I'd take one like today but that just doesn't happen that often). It probably will be mixed again, but we'll see.

Meanwhile old magic coin says --- tails - bear market again. The coin just never learns.

Having missed today by the barest of margins, the score is now Marlyn 8 - 6 and 4 and the coin is 6 - 8 and 4. Marlyn is just barely better than lucky (which puts him head and shoulders ahead of Jimmy Crack You Know Who).

Forgot to mention - I absolutely love this stuff - every boring minute of every boring day and I hope that my absolute passion for it plays through in my writing. Have a good evening.

Wrapping Monday

I'm not feeling too well - I guess I picked up a bug last week when I was on the road. Probably not too difficult when you observe how many people cough without covering their mouths with their hands at least. Anyway I have a miserable head cold so I'm mostly watching today and thinking.

I saw an opportunity to grab some DHI on a minor pullback so I took it. I bought it on a blow-off bottom around the noon hour that was also a tweezer bottom on the 15-minute charts. Then at 4 minutes to the close I bought a load of JNPR based on a report I read in Notable Calls and the fact that it too was forming a bottom in the final hour of trading. I will probably sell this one tomorrow.

That makes the load CRVL, KKD, still holding the Q's even though they are profitable and I swore I'd sell them, and now DHI and JNPR.

I was going to buy FNF but it just didn't look good to me. It will probably report good earnings and go to the moon tomorrow morning. But maybe not. I don't have a feel for it and I still don't like holding stocks through earnings unless I do have a feel for them. Of course at about 2:30 it started catching a bid and it went up 60 cents in the last hour and a half. I don't trust after hours so we'll see tomorrow but the earnings were down.

I did notice that GOOG had another "long squeeze" today. A "long squeeze" is when the retail traders sell all their many millions of ... wait, retail traders don't sell millions of shares ... well who's selling then? I don't know but there are a lot of 200 - 1000 lots coming across plus quite a few larger than that. I can guess that most of these are not retail traders because the time and sales window is color coded and most of the trades are in cyan - that means the trade is not at either the bid or the ask. Contrast that to a GM for instance where most of the trades are in red or green (for bid or ask). I don't know why GOOG is losing ground - I think it is possible that people are taking profits to pay for Christmas now that the bills are coming in. Yeah - sure.

Speaking of GM - back in early December Carl Icahn sold off his holdings because as he said, and I'll paraphrase - dumbass company won't listen to me so its stock is going to go down. He managed to beat it down to 28 and change in a couple of days and since then it has gained back about 5 bucks - 3 higher than where Carl sold. So much for Carl as stock picker - see just because you have barrels of money doesn't mean you're smart.

But I'd like to do another object lesson on this same theme. Let's say that on Jan 14th or so Jimmy Crack Corn Pone said that GOOG was going to 513 and from there a short squeeze would take it to 520. Let's say that you believed him and with 10K of your hard earned money you bought GOOG on 1/16 at 507 (approx the open) and you got 19 shares. Today your 19 shares are worth 8971. If you had gotten the 19 shares to 520 you would have a 247 dollar gain. If on the same day you had used the same 10K to buy 324 shares of GM it would be worth 10692 today or 692 dollars in profit or nearly 3 times the profit you might have gained with GOOG but didn't.

The point of this exercise is not to ridicule Jimmy Crack Corn Pone (although I can't help myself I really can't) but to show you that you have choices where to put your money - or as your mother used to say - if everyone was jumping off the bridge would you jump too? Sometimes it just makes good sense to buy an old sticks and bricks company like GM. From a traders perspective GM is a great day trade up or down - just watch the Dow and go with the flow.

Broker A over at Fly on Wall Street has a rant up regarding the fact that GOOG should split - and it probably should about 5 to 1 if not more. If it were anywhere near BIDU you'd be able to make direct and realistic comparisons.

Unless you have Marlyn's Curve. I'll do a post later today or tomorrow showing GOOG, BIDU, and YHOO as you've never seen them before - it's pretty neat.

MSFT and AAPL were both down today but MSFT looked to me like it might go back up again tomorrow. AAPL just looks tired and I have a feeling it will be taking a long rest. SMH looked like it put in a maximum top today - three gaps up and a DOJI star. I wouldn't be surprised to see it drop a bit tomorrow. Of course volume is drying up in just about everything. I'm not sure what everyone is waiting for but I don't like this quiet - it's too quiet.

The up/down ratio has pulled way back to 38% and the new 20-day high/low ratio also pulled back to 74% which isn't great and still reflects an overbought market but some relief is in sight. The last hour was mixed with a couple up and a couple down. And that story is getting to be real old too. The VIX has pulled back into neutral territory which is OK but I'm calling tomorrow a down day. And that is based on the tweezer top that formed on the SPY and IWM today and Friday. They weren't perfect but they were within 2 cents of one another and that's close enough for me. Between that and the absolute minimal volume across the board and I think we need a few days of downward movement just to get the pressure off.

Meanwhile in magic land the coin calls tomorrow --- tails - also down.

Let's call today what it deserves to be called and that is another mixed day or what I'm calling a tie. I lost money on my several investments today but they are all green from where I bought them.

The score is now Marlyn 8 - 5 and 4 and the coin is 6 - 7 and 4.

Wrap It Up Friday

Late for Friday's wrap - had some important things to do. Anyway as you may have noticed it was a kind of up and down day but the one thing that stood out was the low volume.

After peaking on Wednesday at 2 million over the average the DIA was 2 million down for Friday. The SPY, Q's and IWM showed the same pattern with IWM coming in at only about half of the average volume.

I think this shows a reluctance on the part of the funds to sell their winners and that probably supports the belief that the bull has some run left. Of course earnings in general have been not too bad and there haven't been any outright misses - yet. But we are getting close to the end of the earnings season and it appears as if everyone is breathing a sigh of relief that things aren't as bad as the anecdotes would have it.

I didn't do much today because I was busy with other things but I did reacquire KKD. I took it at the daily pivot point (12.29) after it had gone below and touched the mid-point low. I was going to sell it at R2 but it never made it that far so I decided to hang on for another day.

An update on CRVL - the other day I said I'd either double or sell and I opted to double. Problem was I was only able to get half my order filled before the price ran away (I won't "market" buy this one) so I only went up another quarter. I'm going to hold a while longer as it made my week this past week and I see no reason to sell at this time.

Monday is looking like a down day even though the cycle should have us going up. This will be the first (full) week of the month and it normally is an up week because of the influx of the retirement fund money. There are mixed signals however because the up/down ratio withdrew to 53% but the new 20-day high/low ratio stayed in the high 80's (88%). The VIX went back into the yellow zone low (-5-10 below 10 day moving average) and 3 of the 4 indices finished the week with stong white final hour candles. Only IWM finished in the red. I think that there is just not enough out there to buy and that the stress on the system caused by the huge number of new 20-day highs is going to be enough to knock the market down a little on Monday.

Meanwhile the coin says - - - tails - bear market. We agree again.

Nothing to be said about Friday except another mixed day. The score is now Marlyn 8 - 5 and 3 and the coin is 6 - 7 and 3. I wonder what all of these mixed days are going to mean? Six months last year we had 1 so far we've had 3. Stay tuned.

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.

Whither the Small Cap?

I drew this picture on my high-tech Etch A Sketch* otherwise known as "Excel"** with a little help from Power Point.



This is the IWM, the ETF version of the small cap index - the RUT 2000 or more familiarly the Rusty 2K. Anyway rather than give you the loaded with distractions charts as I usually do when talking prices I thought I'd produce a stripped down version to show you where we were (and where we've been for awhile) in the small cap world.

Sometime in the next forever there is going to be a breakout - but which way? Ah but there's the rub - how can we tell from the price action when we are range bound? Unfortunately there is only one way - if we go above the upper dotted line we are probably going up - if we drop below the lower - well you know the rest of that story. For now - repeat after me - there is no trend in small cap. Which might explain your mutual fund performance lately.

*Etch A Sketch is a toy invented in 1959 by Frenchman Arthur Granjean and introduced commercially by the Ohio Art Company (ticker: OART) in 1960 - it enjoys popularity even today. I just looked at OART and I don't know why, maybe they discovered a cure for cancer in left over etch a sketch aluminum powder and plastic beads, but it went from 5 bucks a share in Nov 2006 to close at 9.50 yesterday. I kid you not. (Damn! I love Wikipedia! If I had had Wikipedia back when I was in school --- wow!)

**You all know where Excel comes from, Power Point too.

Wrapping Wednesday

Continued day trading as I said I would and was very successful. Hard not to be on a day like this.

Took KKD early at the midpoint high (see Pivot Points) and held it through R3. In numbers that is 12.54 - 13.47. Did a similar with TRID except was out at R1 - a slower developing trade with a slower moving line. Still a 28 cent profit is OK. I'm feeling a lot better now that I'm not losing money on stocks such as Glass (up 2 and change today) and CTXS up a buck 77 on the day. Of course they might give it back and then some tomorrow. I just didn't want to hold either one of these into earnings. I'm still not sure how GLW managed to "beat by a penny."

Still holding CRVL and it went serious-profitable for me today but I decided I didn't have a good reason to sell it. I'm pretty sure that it's going to continue to go up - at least past 46 bucks. Maybe I'll sell then. Sprint also went up some more and I still can't find a good reason to sell that one. Not as sweet as CRVL but I have a lot more exposure too. And Q's are really turning profitable. The weekly indicator is green. I hope it can hold through Friday - I don't think I'll keep the Q's over the weekend. Meanwhile I intend to continue day trading using the Pivot Points as my entry and exits. It's kind of neat not having to make any real decisions except hit the line and buy - hit the other line and sell.

Was today the long awaited GOOG short squeeze? Nah - just normal activity for an abnormal stock. How can you tell? The volume forms a bowl - high for the first hour and a half - tapers into noon - begins to climb again through 4 P.M. Still a nice 4% bump and I'm sure everyone who bought at 513 in front of Jimmy's short squeeze breathed a sigh of relief.

But you have to figure that any day that SUNW shows a profit is a day when everyone should show a profit. They have the best warranty in the business - you pay for it but don't dare go without it 'cause you're going to need it. (You don't read that in their brochures).

For tomorrow first I'll give the data points and they all point to a down day. The up/down ratio went up a paltry 2 percent to 60 but the new 20-day high/low ratio hit 84% and that is hugre. The last time it was this high we had a sustained three day loss. The VIX is back in the overbought zone between 5 and 10 and all 4 major indices plus GS printed strong white candles in the final hour. That in itself should bring the market down a bit tomorrow. But - in the after hours EBAY reported massive earnings and even as we speak there is a feeding frenzy going on in all of the internet stocks. If that carries through to tomorrow and it should we're going to have another up day. I'm forecasting an up day tomorrow.

The magic coin meanwhile sits and sulks having miscalled yet another one today. But for tomorrow the coin says ... tails - bear market - can't convince the coin that sentiment beats luck.

Marlyn is now 7 - 4 and 1 and the coin is 4 - 7 and 1 maybe skill beats luck after all. We'll see.

I'm giving Jimmy Crack Corn Pone a break today. But we'll be watching tomorrow - day 7 of the GOOG short squeeze vigil - get your candles at the door.

Wrapping Turdsday

Wow! Was I ever wrong! And am I ever happy! What? Oh yeah, man! (Emeril doesn't have that phrase copywrit - at least not yet). (By the way his Garlic Lovers Spaghetti sauce is out of this world wowee!). 'nuff about that - back to the market.

As noted in an earlier post today AAPL led the market lower because of their silly 4 penny miss. Now I was thinking - what if we all got together - all the AAPL shareholders (I am not) and gave them 4 cents out of our own pockets - do you think that would help? It's a thought.

In a later post I asked the musical question - whither the Q's next week and if you all answered up, up, and away - you might be right. In the past 6 months there has only been one down week followed by a down week - the rest have been up weeks and today was a super blow-off if I've ever seen one. A lot of crap stocks were sold today along with AAPL.

Day three of the GOOG short squeeze vigil passed without incident and I'm beginning to receive dispatches from the front - most of them saying things like - what the hell and are you kidding and who is the Jimmy Crack Corn Pone anyway? To which I can only reply - Jimmy said it - I reported it - some people believed it - and I don't care. Or in the words of my dear old Ma - Do Dah Do Dah Day.

I dumped Chiquita Banana today based on the fact that it didn't seem to want to go anywhere but held RX because I'm stupid. Also held GLW and SYMC and CRVL and added to the pain with S (Sprint). Why Sprint? Simple I read my Notable Calls this morning and Sprint is troughing (much like MOT I might add) and they are probably going to go up once all of this shake-out is over.

I might take a position in MOT tomorrow. And I heard about this little guy the other day, GTXI, that has something or other coming out of trials and the news is looking good. I might add a small bite of that to the plate as well.

Tomorrow is options expiry day and contrary to popular belief it is usually a pretty calm day. I expect a moderate to mild rally tomorrow.

And that is based on the up/down ratio printing 30% and the new 20 day high/low ratio printing 38% (they both went the same way for a change) and the fact that the VIX has climbed back up within the 5% range and the fact that every major index printed red in the final hour and GS, the proxy for the stock market of the 22nd century, printed a doji. I would like to see it go down again but trust me - everybody is in a hole and there is only one way out - up.

The magic coin says ... tails - bear market - we'll see coin, we'll see.

Marlyn is now 3 - 4 and 1 and the coin is 3 - 4 and 1. At least we disagree about tomorrow.

IWM Crossing

IWM just posted a crossing pattern on the 15-minute charts (11:15). Suggests that small caps are finally going to start hitting the offer. Meanwhile there is no love for GLW today - told ya - the market hates that stock and uses any old excuse to beat up on it - makes me wonder why I'm in it. SYMC is rebounding although slowly (I bought at the bottom this morning and will run it up today and sell at COB - with the exception of Glass I don't think I ever want to hold another tech stock overnight in my life - and as soon as GLW returns to profit/break even it's gone). (Piece of Crap!)

ACI (coal company) also had a crossover in the first 15 minutes and it looks like it is going to make a bit of a run.

Update - IWM crashed into the afternoon and ACI continued going down. So much for that and even though GLW got past break even this afternoon - I kept it. I'm going to hate myself for that.

Correction Coming?

Regular readers of this Blog know that I don’t dwell on the gloomier side of the market such as corrections and such and that I’m usually pretty upbeat about the whole situation. I did write a post back in December that suggested that a correction was due and I’m going to follow that up today with yet another post along the same idea.

I’m a great believer in regression to the mean (duh) and I believe that the best view of any stock, index or otherwise is the 90-period EMA applied to the weekly charts. Here I show a picture of the SPY, which I use as a proxy for the S&P 500 index since it kind of is the S&P 500 index. The diagram shows clearly that the SPY weekly bars stay well in touch with the 90-period EMA. And whenever it pulls too far away it hurries back again. Now “too far” is a relative term and I normally just eyeball it and watch the highs and lows and it looks to me on this chart at least that the SPY and therefore the S&P 500 is flattening at the top. It could be that we will have another decline like last two years and then explosive growth through the remainder of the year – but I’d be careful right now if I were planning any really long-term relationships with stocks. I’m not saying don’t get involved (remember rule 1) but be watchful and don’t let your portfolio on autopilot.



Here is the IWM, which is the proxy for the Russell 2000. It isn’t as graceful as the SPY and that probably reflects the fact that the small caps are more volatile than the S&P 500 large caps. But the effect is the same and if you were to overlay the two figures you would see that the corrections occur about the same time. In other words small cap, large cap is meaningless in the context of the larger market. This one looks like it is already rolling over at the top (highs and lows lower than previous highs and lows). If we take the past as prologue (and what else can we do) then we could probably expect a 7 to 10 point drop before the correction is over. And that would be about 10%. Do I expect more? Expect - no – is it possible – yes.



Last but not least here is a picture of MSFT on the same baseline (weekly with 90-period EMA). Note Mr. Softy’s love affair with the EMA and note how very, very far away Mr. Softy has run from its anchor. I leave the rest to your fertile imaginations.

Friday's Wrap

As noted earlier - after a month of holding for a better day I sold SYMC for an 18 cent loss - could have sold it yesterday for a half buck profit but nooooo had to hold it. Who would have suspected that good news such as an open portal to sell your goods to a couple of billion Chinese would be seen as such a bad thing on Wall Street. There is absolutely no rationality in this market.

I completed the first round buy on Glass (GLW) and also added to my DHI holdings. Not quite back to where I was but I will probably get there next week if they keep edging up.

Going to keep this simple today - the up/down ratio dropped back a bit to 56% but the new 20 day high/low ratio went ahead to 79%. That plus the fact that the VIX is 12% less than its 10 day moving average suggests a down day coming on Tuesday. Add to all of that the fact that the Q's, DIA, SPY, IWM and GS all put in strong white candles in the final hour and we have to say Tuesday is definitely a down day.

The magic coin says tails - also a down day.

Today makes Marlyn 3 and 2 and coin 2 and 3. We are not doing very well this year so far.

Later this weekend I'll show you the difference between a scalper special and solid investment and how to tell when to hold 'em and when to fold 'em. That's if Blogger ever allows charts to be uploaded.

Wrapping Thursday

Fortunately I wasn't around much of today having had a little personal business to get out of the way. It seemed that for all the action in the indices the only thing that moved was - I really don't have to tell you this do I? - Homebuilders! DHI made back 54 cents and I made back most of my losses. Meanwhile SYMC managed to round trip a 40 cent profit and turned in a 13 cent loss - on a day when the COMPQ was up 25 points. One more day and I'll be done with that piece of crap. Not that I don't have a profit - I do - but I think the money will be better used somewhere else.

For example - I bought some Glass (GLW) on the open based on the dummy spot on the weekly charts from two weeks ago followed by a doji last week. All of that looks like a bottom. It went up today and given its recent past this generally this means a smack down tomorrow but GLW will be my new swing trade. Today it is printing a crossing formation on the daily charts. If GLW confirms tomorrow I'll finish the buy for this round. I never got past round one on SYMC because it never went anywhere. Should rename that stock the old yo-yo. To put things in perspective I made more today in a half position of Glass than I've made in a month in SYMC.

Since I was out I didn't do any mo-mo day trading today. Just as well none of the usual suspects did much of anything. CRVL limped around for a bit and round tripped 60 cents which is nothing for that stock - it usually round trips a a buck and a half every hour or so.

GS looks like it was shot out of a cannon and then just sat in space all day. Most of the activity in the market seemed to be over by 11 A.M. My darling from yesterday CTXS gained a half a rock today. Had I been around I probably would have played it again off a "gap up - pull back" play.

Going to be out early tomorrow so I don't think I'll make any plays at all unless I fill GLW.

Which is all well and good because I think the market will take a rest tomorrow - the up/down ratio is 60% which is not too terribly bad but the new 20 day high/low ratio is 70%. That, coupled with the VIX being more than 5% below its 10 day moving average, suggests a down day coming. We have a split ending in our four majors with two red candles and two white candles in the final hour and GS, that old tie-breaker, landed on its edge - a doji (still tired).

My prediction - down tomorrow and the magic coin says ... tails - it agrees. So once again we will both be right or both be wrong.

So far - Marlyn 3 and 1 and the coin is 2 and 2.

Wednesday's Wrap

I had a busy day - I was out most of it but I was able to take two trades this morning before I left – CTXS on a 15-minute crossover with a confirmation and CRVL on a buck 43 gap down. Let’s address CTXS first – I’ve talked about the crossover several times this week and I think you all know what it looks like by now. But in case you forgot here is a picture – worth a thousand words – for me it was worth a thousand bucks – well, 763 actually but that isn’t too bad all things considered equal.



You can see how the second 15-minute bar transects the three averages and the third bar confirms. I've been watching CTXS on various time periods and it looks like it is setting up for a long term run. Here is how it looks today on the weekly charts.



Now remember we need to finish out this week with a green/white body and have a confirmation either next week or the following week before we can safely take this one. I know - it takes the patience of a Saint but that's the best way to play the intermediate or swing game - with patience and careful selections.

Now we’ll talk about CRVL – this stock is a day trader’s wet dream – lots of action, much up and down but mostly up. I’ve been watching this stock for a couple of months – actually ever since I first read about it over on the Goddess’ site. Subsequently I figured it out – it often opens on a gap down and then claws its way back to the surface – a buck and a quarter to a buck and a half is about the daily range. So when I saw it at minus a buck and change this morning I said gimme some no need for a set-up. In at 42.31 out at 43.60 and thank you Ms. Goddess for the tip (She plays it for a lonnnng tiiiime – I day trade it – who’s right? who’s wrong? who cares? – Truth – she’s right because she caught it on a dip and has ridden it long and well since. – Truth - I am because I’ve made taksan okani* off the little beast and its’ hordes of day trading demons and I plan to keep on keepin’ on). Remember these thinly traded stocks only work when there is day trading action and I told you yesterday how to put your limit between the bid and the ask because any semblance between those two and reality is purely coincidental.

Fact is I make more money on these weak start days than on any others. I don’t know why that is but had I been home all day I would’ve played HANS and GM and any number of other boomers. Even Glass (GLW) took the blue pill this afternoon. Looks like it might have taken the whole bottle.

Of course at the end of the day SYMC (my swing trade) is down 11 cents with the Naz up 15 skins. But I said I’d play it through Friday and if it doesn’t show me some real love by then – goodbye SYMC. (I long ago stopped using it on my box having found far better products for far better prices (mostly free)). My few shares of DHI managed to lose 6 cents today. I think that's a good sign because it appears to have been sold out and now everyone is waiting for a reason to buy it. Me too. I have my target in mind and if it breaks the target I'll buy back my shares. Meanwhile the money is being put to good use in scalping CRVL and day trading stocks like CTXS.

Meanwhile the up/down ratio actually lost ground today to 42% which is good and the new 20 day high/low ratio only obtained 40% and that's OK too. The VIX remains neutral but all 4 majors and GS finished the last hour bright and white and that could mean some trouble for tomorrow. I'm putting it all together and saying another up day tomorrow.

The magic coin says ... heads - bull market tomorrow - well we're either both going to be right or both be wrong.

Marlyn is now 2 and 1 and coin is 1 and 2. But it's early in the season folks - don't go away.

* "taksan okani" is Japanese for a great amount of money and is probably the only Japanese I remember from a youth spent exploring the temples and ... oh Bull - runnin' the allies staying one step ahead of the MP's. A very checkered life has led this Marlyn person - indeed.

Wrapping Monday

I wanted to do some of this as a midday report but Blogger wouldn't allow me to upload a figure that I am using later and so I'll do it as the normal wrap.

Maybe tomorrow we'll be able to do a "midday report". Maybe tomorrow Blogger will sprout wings and fly. Shouldn't complain - you gets what you pays for.

Picked up RAD as a day-trade - gapped up and came back to the EMA 4 and that's when I grabbed it up. Same with BSX. Sold off RAD mid-afternoon as it seemed to be done. Decided to hold BSX (convert to a swing) as it looks pretty strong. There were a number of these types of set-ups today - these were just the two I took.

Speaking of the "gap up fall back" set-up, one of Broker-A's favorites, MVIS, did that this morning. MVIS looks like it is finally catching on. They are developing a heads-up display for automobiles - just what we need - another driver distraction. Actually the tech market is so barren of new ideas that any idea sounds great. I mean let's face it how many different ways can you say "telephone and takes pictures" and make it sound new and exciting - twice? So MVIS is being rewarded for innovation if nothing else.

SYMC is up a bit. This one is driving me nuts. I'd be better off day-trading it than holding it as a swing. I'll hang in there one more cycle (4 days) and if it doesn't break out of this range (> 21.80) then I'm out of it. We'll see on Friday. If I do sell it will be your signal to load up. I dumped nearly all of my DHI this morning - maybe housing isn't ready to go up. I'll keep an eye on it and if it turns I'll get my losses back - they weren't too severe but I hate losses.

Picked up some CRVL on a reversal day-trade this afternoon. I sold at COB for a buck and change. I keep this one on my screens all the time - it is a thinly traded stock with a massive spread but I usually buy it as a limit trade by putting my bid square in the center of the bid-ask. Somebody hits it almost immediately. There are a lot of scalpers in this stock. Selling is the same process - put it out between the bid and the ask and some fish will rise to the bait. Trading is like fishing - a lot of patience and knowing where to drop your line goes a long way.

One of my fellow Bloggers - Bullish Jim - bailed on CTXS last week and look at it today - up a buck and change and look out above. Only wish I had jumped on it at open this morning (just kidding Jim). Actually I'm not, Jim. CTXS put out a "buy me" crossing signal this morning and I saw it but got distracted and by the time I got back half the move was made. That "buy me" crossing signal looks like this.



You will see this on just about every time period including daily, weekly and monthly. I use three EMA - 4, 8 and 21 and a "crossing" signal is when the open of the first 15-minute candle is below the EMA 21 and the close is above the EMA 4. When you get a confirmation (as shown in the figure) the next move is up - usually. Sometimes they fool us and go down but that is what risk management is all about. I normally set a stop just below the EMA 21 and that is generally sufficient. Readers of this Blog know that I also normally use "mental" stops. (Charts courtesy of Prophet.net - a good company).

This signal, by the way, works for shorts too (red candle crossing down) and works in many different markets. I have seen it work after the open (today NVEC for example) but keep in mind the rules are fairly strict - you must have the crossing and the confirmation before taking the trade.

I keep an eye out for this signal on my various watch lists that I have set up 24 to a page and start going through 15 minutes after the open. If I see the indicator I copy the stock to another watch list for the next 15 minute scan.

As for tomorrow - the up/down ratio is back to 52% (erroneously reported earlier as 60%) and the new 20 day high/low ratio is at 35% which is mixed. The VIX is still more than 5% greater than its 10 day moving average which, while not a hard and fast indicator, does suggest a certain amount of oversoldishness. The four indices that we track (via their ETFs) all finished the last hour in the red and GS finished with a doji. That last is understandable given the 4+ point gain it had today - poor guy had to be plumb tuckered out. Or as we New Yorkers say - "Dat guy is f'in tired." Put all of this together and it spells - another up day tomorrow. And that's my prediction.

The magic coin says - tails - bear again.

OK the score so far is Marlyn - 1 and 0 --- Coin 0 and 1 - the race has begun.

Wrapping the First Week

I was listening to Bloomberg radio in the car yesterday and the guy said - with all seriousness - that the Dow was down about a half a percent for the year. And you wonder why I don't pay any attention to those bozo's.

Both AES and BLG crapped out and hit the stop loss. Oh well - they were speculative buys and I was trying a new approach. Obviously I need to refine my process a bit. I'm still holding SYMC and DHI and as one goes up the other goes down which is OK for now - but I expect DHI to turn around sooner rather than later.

The good news is that the up/down ratio is at 25% which is about as low as it gets. The new 20 day high/low ratio is at 14% and looking back that seems to be about as low as it ever got. This means that there is something to buy on Monday.

The three majors, DIA, SPY, and the Q's finished mixed in their last hour as did IWM and GS. But if you have a minute this weekend take a look at the 60-minute charts for DIA, SPY, QQQQ, and IWM for Thursday. Look at the last hour and you will see what a blow-off top on the indices looks like.

The VIX is in the yellow zone (greater than 5% over its 10-day less than 10%) so there is some weakness indicated (or maybe "suggested" is a better word). I think that Monday brings a bit of an up day across the board.

The Magic Coin disagrees and says it will be a bear market. Remember - I'm going to keep track of my predictions vs the coin's and we'll see who is better in a couple of months.

And even though you didn't ask - mom's in great shape for 87 years old - still lives in her own house and drives her own car. Sees the doctor every now and again for the heart problems but if I'm in half as good a shape when I get to 87 I'll be very pleased (and it will be an improvement). My brother is close at hand and takes her on longer trips but otherwise she gets around pretty good.

Wrapping Friday

As expected a down day - the problem being there isn't anybody around who really cares enough to buy anything. Given the extra day off next week (Tuesday) nearly everyone who is anyone took off at noon today to prepare for the 4-day mourning session honoring our only unelected President. I know I'm going to pull out my old WIN button and wear it proudly for the next 4 days. (WIN = Whip Inflation Now - Gerald Ford's answer to some of the most miserable run-away stagflation ever to hit the country).

I end the year holding SYMC even though it backed up today, DHI, and I added a very small position in GM this morning. I will be holding them through next week in anticipation of the coming boom in the stock market. Actually I'm taking all of next week off. Nothing special just a short trip I've had planned for awhile.

For a recap - the up/down ratio is now at 38% and the new 20 day high/low ratio is 42% and the VIX is 7% over its 10 day moving average. These things mean that next week will be a good one - at least on Wednesday. I'd really like for the market to fall back for the next two weeks and then, when there is lots and lots of things to buy, take off from there.

With the exception of the SPY everybody else (DIA, QQQQ, IWM, GS) finished with a red candle in the last hour - which is good. That means that there was even more capitulation following through from yesterday.

I'll be back later this weekend with a fearless prediction for the next year - it doesn't matter whether I'm right or wrong - it's just something you can look at and compare with all the other fearless no nothings out there.

The magic coin having nailed today finishes the year 42 - 31 and if you don't know how much better the coin is than Cramer you just aren't paying attention. For the First Trading Day of the New Year the coin says --- Heads - bull market -

And that's a wrap.