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.

KKD - A Trading Lesson

I mentioned in my wrap yesterday that I lost KKD on a stop loss and I wanted to show you some things about that stock that serve as warnings in general. In other words if you see this kind of action look out.

First last week I saw the unmistakable signs of a top in KKD as shown below but I was thinking about holding this stock as a short term investment so I ignored the sign and decided to wait it out.


This sign was followed by a down day and then several Doji candles. I was away from my trading station on 1/31 when the big drop occurred or I would have sold before I hit the stop (I always put a stop in when I travel).

But I did want to show you how you can use the VIX to inform your short term swing trading. The charts below link the KKD and VIX 2-hour charts over the past several weeks. You can see how the KKD reacts to the VIX even the VIX is more attuned to the major indices (SPX).


At point "a" the VIX, having just tagged the upper Bollinger in the first two hours of trading begins to fall away. At the same time KKD, even though it is at the top of the bands (a bad place to be normally) continues to rise. You can see the top clearly annotated on these charts and even though the VIX continues to fall after tagging the lower band KKD also begins to fall. This would be a good indicator that the run is over and if you aren't looking for a longer term relationship you should exit now ("b").

But then something strange happened - the VIX ascended and KKD went sideways. Then at "c" something even stranger happened, the VIX did a rapid descent and in the next two hour period KKD also did a rapid descent. If you didn't get the message initially, it should be clear now - KKD is done for awhile.

The message is clear - if the VIX does something and your stock doesn't react to that move correctly you probably need to review the bidding and take your profits and run.

Now both the VIX and KKD are moving sideways. I'll be watching KKD as it reacts to the VIX and if it starts behaving normally again I'll probably reacquire when the time is right.

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 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.

KKD - How Sweet It Is!

Once more time with KKD - Since I pointed out the tweezer bottoms this stock is up 15% in a month. You'd buy a subscription to Jimmy's magazine for that kind of performance. I didn't even make you sit through any BS about how great the company is (I don't know anything about it) or a boring interview with the CEO (I don't even know his name - nor do I care to). All I did was point out an old timey tech analysis indicator -



As it says in the header folks - No Booyah No BS - just information. No sound effects either.

(I neither invest in KKD nor do I eat their donuts).

Krispy Kreme Revisited.

When we last visited donutland I pointed out a tweezer bottom on the 2-hour charts that could have been seen on the daily charts as well since it crossed two days in a row. I had preceded that post with an earlier one that pointed to 4-point tweezer bottom on the 2-hour charts in a single day. I said at those times that the tweezer bottom meant that the stock was probably saying that this was rock bottom and it should go up from there. Then one more tweezer bottom and off it went.



Up 10% in two weeks. It pays to watch for the "tweezer" regardless of the time frame.

I have no position in KKD nor do I eat the donuts.

Three Tweezer Bottom

Last week I showed you that KKD on the 8th had a 4-tweezer bottom on the 2-hour charts (12/07). I mentioned that the tweezer bottom is often used as a significant point - no lower than here (for a close).

Over the next three days KKD again printed a tweezer low on the daily charts - each day closing higher than the tweezer bottom on the 7th.

Then yesterday it gapped up and closed up significantly. Do we know our tweezers or what?



I mentioned that I watched for tweezer bottoms and tops and used them as significant turning points in a stock's price. They are a warning or guidance and you should watch for them also.

Tweezer Bottom

The other day I wrote about a tweezer bottom in GM that was separated by an hour. How about this one in KKD from Thursday? The bottom occurs in each increment of a two hour chart.



The tweezer bottom is telling you that this is it – there is no more down side to this stock – every time it hits here it is going up. That is a good thing to know.

Here is what happened on Friday with KKD.



You can see the four bottoms on Thursday in the 10, 1, 2 and 3 hours. On Friday it set-up nicely at 9.78 and went up from there for a bit. I'd watch this one for awhile longer - it may continue to climb now that it drew the line in the sand.

(This is not a recommendation to buy this stock - nor is it a recommendation to buy Krispy Kreme donuts)