Quote Tracker

As promised here is a review of Quote Tracker. If what you do all day is sit around watching a screen you can do far worse than Quote Tracker but not much better - especially when you like to "roll your own" as I do.

As I mentioned yesterday the interface takes a bit of getting used to and the help panels could be a little less detailed and a little bit more helpful (I think a deeper level of indexing would help) but the service department is quick to respond and although I managed to solve most of the problems on my own they did provide some help. (I don't think they are used to dealing with old folks so you kids shouldn't have too much trouble).

But once you are through the basics (which takes far less time than I'm making it out to be) it is a wonderful piece of software and for 60 bucks a year it's a bargain. And if you decide not to keep it they promise a refund of the unused value. There really isn't any reason not to try it.

So if you have a data stream that you already pay for either separately or through a brokerage account you won't have any problems getting up and running with their software. If you don't have a data stream it is easy enough to get one and the instructions are on their site.

Now I wouldn't recommend this for people who don't sit and watch charts because it really isn't necessary for the casual trader - but if you have nothing to do all day but trade - this might be a good application for you.



What I'm showing here is a chart that I use - this one is for QLGC. On this chart you can see that two of the candles have a little widget drawn underneath them - that is what I use to indicate a "dummy spot" and the 11:30 candle is colored purple - that's a completed BOB.

Quote Tracker also permits alarms to be set up but I haven't done that yet so that will be the subject of another post in the future - I'm just pretty pleased with my progress to date.

Nobody Knows Nothing III

Including - or maybe - especially - me.

I give you CRI - A company that took a huge beat down last week - a company that I was invested in and took the beat down with - a company that I said would never recover to where it was -



And don't I feel stupid this morning? Oh well - live and learn - next time I'll hold the piece of crap all the way to 0 (not).

Wheelies and Hole-ies

And of course we are speaking of HLYS and CROX. Over the past couple of weeks I have seen dozens of kids in stores all over the place rolling around on their Heelies and I've actually seen two people wearing Crox shoes. CROX reported very strong earnings last night and targets on them are being raised even as we speak. (Notable Calls). But this isn't the chart of a company where the investors expected a good story -



Of course it will get better today.

HLYS also had a bad looking chart - up till a week ago.



I'm not sure why HLYS is suddenly catching fire but I'm not going to invest in either one of them. I think that once a fad reaches the East Coast from California - it is over.

What Are The Cyclicals Telling Us?

I read an article via Seeking Alpha by Eddy Elfenbein that Cyclical Stocks are Soaring and Eddy suggests that this means that the economy is doing great. The fact that I just read this same idea by Cramer suggests to me that Cramer is writing under a different name - or we have finally found out what Cramer's name in the States was. (Back in the ancient times - when Marlyn was but a child there were only a handful of States and when people went out into the territories to search for gold and other treasure they often changed their names - and not to protect the innocent - if you get my drift).

Anyway. Eddy says: I like to track the CYC/S&P ratio, which often gives us a better reading on the economy’s health than any government report. The ratio increases when cyclicals outperform, and decreases when cyclicals underperform. Eddy has a couple of other things to say about this and it is probably worth the read.

So I pulled up a picture of the ratio done from the basis of Marlyn's Curve and guess what I see - we are reaching a turning place. Eddy sees that too - Cramer doesn't - so maybe they aren't the same guy or maybe this is just standard Cramer calling an up in one venue and a down in another. I don't know, I don't care - but if you look at the chart you will see volatility decreasing and that the turn point is very near.



This chart is on a weekly basis and shows the last 8 years or so of the ratio. That puts it back into boom time, through the last recession of 2001 - 2003 (boxed in on the chart) and into the current times.

Now here is Marlyn's curve - this chart shows how these two indices play together - but the one thing you can't help but notice is that the SPX turns first - both down and up. Very seldom do the "cyclicals" lead. The second thing I noticed was the same thing I noticed on the other chart and indicated with the arrows and lines - volatility is disappearing even in the cyclicals. This chart is the same basis as the last.



The last thing I want you to make note of - the SPX is rolling over. Now that doesn't mean that it has to go down very far and in fact it doesn't anymore but it is going to take a rest in the near future so be prepared for it when it comes.

Yous Tube

According to Notable Calls GOOG is having trouble with the content for YouTube - apparently all of the TV companies see this as a great new revenue stream but aren't willing to play nice with poor little GOOG.

The solution to this, of course, is to put part of YouTube on a subscription basis and see if people will be willing to pay to see that crap that they already pay to see when they buy cable. The networks could permit a certain amount of programming - especially some of the really ancient stuff like "Green Acres" (a TV icon still seen in many markets as expressing the true nature of "rural living") to be shown for free and the modern stuff - such as "24" to be put on the paid part of the site.

Of course the pirates will be right there to buy the first subscriptions - this would be like shooting fish in a barrel.

I just post these blurbs to get you to read Notable Calls - I have no stake in the site but I think it is one of the best "stock picker sites" that isn't a "stock picker site" out there.

Tuesday Wraps

As posted earlier, I bought TLB and if it sets up again tomorrow I'll double up. I'm holding it up to earnings on March 7th or until I get tired of it - whichever comes first.

I also had CORS and CRI as day trades and I almost kept CRI but then I read that I wasn't wrong about the earnings - they post tomorrow. What they did last week was give a little preview so that the market wouldn't be shocked tomorrow when they officially announce. What do I think is going to happen? Why should I care - I got my quarter out of them today. CORS too was looking good for awhile but I had bought that deliberately as a day trade off my "Day Trading with BOB" filter and I got 21 cents out of it after expenses. That filter is still proving to be a real winner when it comes to picking stocks for short term gains. It might also be good for long term gains but I don't hold them long enough to know.

I also took a position in SOFO towards the end of the day - this will be another swing trade. After watching it all day I decided I should probably just commit. I'm only going for a half a buck or three days on this one though so whichever occurs first - it's gone.

Both CAR and RDEN finished the day up and either one would have been a good counter play for a day trade once the market turned around.

I didn't expect that - in fact I was figuring on a dull, down day but for some reason or other the market turned at 10:15 or so. I'm pretty sure it wasn't Wal-mart's blowing the top off the estimate (imagine that) that caused the turn around since that was already known at market open.

Of course I really don't care why the media thinks it went up - I'm just certain that it is still overbought, the range is narrower still, and eventually we are going to have to have a little blow-off to get the pressure out of the prices. Not a crash - I never predict a crash - just a 100 point or so drop in the Dow, a couple of dozen in the NASDAQ and 10 or 12 in the SPX. That would be more than enough.

GOOG went up a couple of points, MSFT went up a couple of cents and AAPL is up a buck and a little. AAPL is still trading in that narrow range but keep a close eye on it - today could have been a breakout signal. If it opens higher and goes up tomorrow there is a possibility that it will put a couple of bucks in the pot before it is through. That'll make the AAPL fans happy.

BARE, the cosmetic company I wrote about on the weekend, the one with the massive secondary coming out - dropped to 32.88 and then recovered most of that - finishing only 85 cents down from the close Friday. Just can't keep a good company down - it will probably go to the moon tomorrow. And just because it has dropped 9 of its last 10 days doesn't mean anything other than it is just an excellent company taking a little nap. Of note - its turn-around this morning was a classic blow-off bottom so that isn't all bad. Just in case you have forgotten what that looks like - here it is again.



All together now, one more time - Weee are being FOOOOLED by RANNNNDOMMMMNESSSSS! Alright - that should satisfy the fundamental purists in the audience (although I doubt I have any of those hanging around).

I spent a lot of time today working with QuoteTracker - I'm not ready yet to report my findings. Maybe tomorrow. For now let's just say I'm of mixed feelings. The interface could be a little less cumbersome and the help panels a little more helpful - but I'm new at it and I always give a piece of software a good, rigorous test before I write the report.

For tomorrow I'd say I-dunno except I'm in a contest with that stupid magic coin - so I'm saying a down day is coming. The up/down ratio is neutral, about 52%, the VIX is neutral, and all four major indices as represented by their respective ETFs printed black/red candles in the last hour of trading, as did GS. Normally that would mean that an up day is coming but the INDU ATR is still below 80 and this indicator remains in the sell zone (.005 and above).



Sooner or later we have to have a down day - it is impossible for the market to keep going up without a breather. The fact that the Q's round tripped and closed red today suggests that there is a need for a nap. Now you do understand that the only thing that happens for me on a down day is that I get to do things with my Bride such as take day trips to museums and the like which is a good thing for a retired person to do. She puts up with my sitting here at this box day in and day out without complaint and she needs a break every now and then too.

The magic coin, having called today almost completely correct - says for tomorrow ... heads - bull is coming again.

The score now sits at Marlyn 13 - 10 and 4 and the coin is 10 - 13 and 4.

I hope you all are having as much fun as I am. And I hope you all are making money too.

TLB

Bullish Jim asked me last week if you could have a blow-off bottom across days and normally I would say no if you are looking for a day trade and are using the 15 or 30-minute charts. However, if you are looking for a swing trade and you go up to the 60-minute or greater charts you almost have to look across day boundaries which is what I did this morning on TLB -



If, however, you don't want to take the trade on a BOB this trade could have just as easily been taken on the Breakout as shown. Which, coincidentally, is where I took it. It is also a cross over pattern.

I plan to hold this to just before earnings or it crashes - whichever comes first.

Bought TLB

Also bought a couple of others for day trades including CRI and CORS both doing well. Considering SOFO. And watching RDEN. I might wait for RDEN to break out of this range it seems to be in (22.40 - 22.80) - maybe around 23.00.

AMGN Alert

Notable Calls this morning reports on AMGN and says that the recent sell-off related to a bad investigation was not necessary. Apparently a couple of firms are out in defense of AMGN and from my point of view which is strictly TA it appears to be forming a BOB on the weekly charts.



I don't like biocrappa in general but AMGN has been around forever and it appears to me that there might be some recovery coming. Of course you will need a confirmation (the third candle) so this is just a heads-up.

If you like the biopharma then I'd keep an eye on it and if a turn around comes you might want to get on board. It may be the last time you get this stock at this level.

Fooled By Randomness

Every so often someone publishes a book proving without a doubt that there are no patterns in the stock market and that people who adhere to the tenants of TA are being "fooled by randomness." The book becomes a best-seller and everyone who is too lazy to investigate the premise on their own goes - see, I told you so.

What I find most incredible about this is that it is often said by people who believe that monthly housing start data actually means something important.

What could be more random than "monthly housing start data"? Or "weekly unemployment figures"? Or "monthly CPI figures"? (Coming by the way on Wednesday). Or "consumer confidence percentage changes"? Or any number of other government reports that economists live and die with?

These reports are absolute crap. Why do I say that? Because each report has a life cycle of exactly one day if that - what shocks the market today is forgotten tomorrow and we are on to something new.

Trust me when I say this - the market goes up and down based on supply and demand - if something is being offered in great quantities with little demand the price will go down and vice versa. The basic principle of economics is that the greater the price of something the more of it will be produced and the more of it that is produced the lower the price will become. And once the price hits some magic place where no one will offer any more - the price goes back up.

That's why when housing starts come out on a Friday and they don't ring some magic chime you get this effect -



Now let me just ask you what do you see in the first three candles of this chart - those of you who answered "an opportunity to make a buck" can sit up here in the front of the class.

You see, what happened was an overreaction to a bullsnot report that everyone knows is bullsnot. Then all of a sudden someone else noticed - wow - a chance to make some money and they started taking the offers. The third candle suggests a "short squeeze" and the opportunity to make some easy cash presented itself.

I wasn't watching housing on Friday - still licking my wounds from last week's beat down - but next time some bad report comes out - start watching the industry or industries that might be affected - maybe you can make a few quid by being "fooled by randomness".

BOB and BOT

I found a good example of a Blow-off Bottom followed weeks later by a Blow-off Top. I'm using a weekly chart to show how the BOB (and BOT) can be found from minutes to months. Once more the rules are simple -

Blow-off Bottom - two red candles where the low of the second candle is lower than the low of the first. The volume of the second candle is greater than the volume of the first. These are followed by a third candle (green/white) where the third candle's low is higher than that of the second. At least one candle of the first two should close below the EMA 8 as a minimum (less than EMA 4 is best). See the circle in the chart below. (For purposes of full disclosure - the third candle in this sequence is also a cross over).



Blow-off Top - two white/green candles where the high of the second candle is higher than the high of the first one. The volume of the second candle in the sequence is less than the volume of the first candle. The third candle is red and the high of that candle is lower than the high of the second candle. At least on candle of the first two should close above the EMA 8 as a minimum (greater than EMA 4 is best). See the rectangle in the chart above.

Now - when you see a blow-off top you should probably do one or both of two things - first - end any long trades you have in place, second - sell the stock short.

This is not an invitation to speculate - don't be fooled by randomness - we all know that there is no such thing as a pattern that repeats itself so consistently as to earn a silly name such as Blow-Off Bottom or BOB - don't we? And something even sillier like a "cross over pattern" couldn't possibly exist - could it?

If You Are Thinking About FOREX

And who doesn't these days - you might want to take a look at this -

PowerShares Launches Dollar ETFs

This is brand new today and will give us "little people" a chance to play the dollar game. Or not. Your choice.

Finally - Someone Who Knows

What "inflation" is -

Cause and Effect

So when Bernanke talks about temporary ``factors'' boosting inflation, he is really talking about temporary ``effects'' of higher oil prices on the CPI. Oil prices don't cause inflation. Nor do wages, even though you'd never know it from discussions on the subject. The Fed causes inflation all by itself, creating too much money relative to the supply of goods and services.

Fed's Inflation Analysis Ranks With Zimbabwe's: Caroline Baum

It's a good read on Bloomberg.

Growth or Value?

That is like asking - Lady or the Tiger? In actuality it is very much the same because either way you're ...

You fill in the blank - But when it comes to the stock market it makes a small difference in the up market and a large difference in the down market. Ideally you would be out of stocks in the down market or short the index or something such as that.

But since last September the place to be was in the stock market and the place to be buying stocks was in the small cap index and the place to be in there was in growth stocks (IWO). The difference between the two cohorts is growth +13.7% and value +12.2% - and that should be sufficient enough difference to make a difference.

But what do we have going on now? Here is the weekly chart in Marlyn's Curve which is always the best way to watch for secular changes in the market.



It appears to me that we have both growth and value cohorts rolling over. That means that the returns are becoming tighter which always indicates that a reversal is upon us. I think given this roll over that it is time to switch to watching daily charts again and at the first sign of trouble - bailing.

To which we then answer - neither thank you.

A Cheap Stock For Tuesday

I don't particularly care for cheap stocks because, as you know, cheap stocks are cheap for a reason. But sometimes a cheapie hits my radar and I think I should share it with you.

I give you SOFO. I heard about this one from the Motley Fool CAPS program (whatever that is - but I thought I'd give them the props they deserve). SOFO does something with some folks somewhere but more importantly Yahoo finance thinks one of their main competitors is MSFT. You can't make this stuff up - SOFO with its 72 employees is a competitor of MSFT with its 71 thousand employees. No matter - the fact is SOFO is well regarded in some circles - everyone connected with the company is buying stock, it has already reported its earnings which were as good as a small company can expect and it has a very nice chart -



This is the weekly chart which is the way I like to look at my short term trades. It completed a BOB three weeks ago and it is possible that it will continue to rise. There is a very small institutional investment in the stock but for the most part institutions are not allowed to buy these kinds of companies because they are too small.

I don't know if I'm going to buy this or not - I think I might wait for it to break out over 4.50 and then take the shot at that point.

This is not an invitation to speculate in the stock market - speculation is bad for your financial health, buying stocks is gambling, gambling is bad. Don't gamble.

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.

Retail - I Hate Retail

But sometimes I find a gem in the muck and when I do I want to share it.

The back story is simple - I was going through my filters looking for breakouts and I ran across CHS. There is no way that I would invest in CHS but it was a legitimate breakout so I decided to do some investigation anyway. While I was going through the competitor comparison using my not so complicated method of dividing their trailing 12 month revenues by their employee numbers I surfaced the fact that Talbots (TLB) is not only superior to CHS but significantly superior. And Talbots also broke out just the other day. And on the weekly charts TLB shows a very crisp breakout formation.



TLB also beats ANN, DDS, and FD in the competition - consequently I think TLB is a pretty good store.

Some other facts - while CHS insiders are selling everything they own - TLB insiders are mostly buying. Institutional ownership is only 45% but there they are mostly buying also. It would be very bad to buy a stock that everyone else is selling - that's how you become a bag holder.

TLB reports earnings on March 7th and given the current breakout it is possible that they will be rising into earnings and that is a good thing. Of course if you do buy them and then choose to play earnings roulette that is your choice - trust me when I say I won't be on the felt with you.

As far as I know they are not planning a secondary offering - but these things come from nowhere so that's just one of the risks. And until the Congress makes it illegal to do so we're stuck with it - and what are the odds of that? Right.

I have pretty much talked myself into taking a small piece of this action tomorrow morning. If I do it will be because of the breakout pattern, the rising into earnings, and the fact that they are number one among their competitors (using Marlyn's crazy methods - if you don't trust yourself who can you trust?).

This is not an invitation to speculate in the stock market - the stock market is a cold, scary place - and you will always do better just buying an index fund and holding it forever.

See The USA

In your Chevrolet - actually - Avis's Chevy.

Want to play earnings roulette? Avis budget rental car (CAR) reports earnings on the 21st. The current historical volatility is 13% and the current implied volatility is 31% which suggests a move is coming but, of course, we don't know up or down. I also don't know how to convert implied volatility into a dollar value but it could be a buck or so.

I also don't know how to value car rental companies - I know Avis "tries harder" but I'm not sure what they try harder to do. I do know one thing - they are number one with a bullet on my quick estimate of efficiency so they are doing something right. About 77% of their float is held by institutions and there have been some sales but the insider activity is almost non-existent with the only transaction in the last 12 months being a 3000 share purchase.

Here is the chart -



And it is a good looker too.

But this is one for folks who want to game earnings - I believe that a stock rising into earnings is usually a good stock to buy and if you get a spike on earnings day - that's probably a good time to sell.

I won't be playing CAR - I just drive 'em.

On The Other Hand

Here is a cosmetic company that should garner your attention - especially if you are looking for a long term relationship or at least beyond next Monday. Elizabeth Arden (RDEN) has been around for a long time and is the number one cosmetics maker (by my revenue per employee estimation method) in the country. Extremely efficient. Good numbers last out. And here is the chart -



Here are some other numbers that impress me - 66% institutional ownership but no sales in the past quarter or so - in fact it looks like there have been buys only. The insiders are buying at a rate of 2 for every one they are selling. My friends, when the insiders buy you are looking at a good company.

And even though it is approaching its 52-week high there are still a couple of bucks to go.

I'm considering a small flyer on this stock on Tuesday. I'll let you know if I succumb to this pretty face.

It's A Beauty

I'm not usually one to be looking at cosmetics companies for trading ideas but I came across a story on Bare Escentuals (BARE) today that is causing me to put it on my watch list - this stock announced a secondary offering of 12 million shares. Currently it has about 89 million shares and they are going to increase that to 101 million shares. If I've done my math correctly that means that the current 35 dollar price should drop to about 31 dollars on Tuesday just because of the dilution to value being caused by this offering. I'm probably not going to buy this stock ever but I have to ask - given a chart like this -



What possessed them at this point in time to add to the share base? And exactly how is this in the best interests of share holders? Especially since the company itself is only offering a half a million shares and "selected" stockholders are going to release the other 11.5 million.

I'll keep an eye on it and if it starts to turn around like LQDT I might try to scalp a few cents from it - but the big difference here is that LQDT was a healthy company to start with - this one looks like it needs some of the product it sells - of course there is the old saying - you can put lipstick on a pig but it still is a ...

Marlyn Does FOREX

Tyro trader has a story about a really bright guy who lost a bundle trading FOREX. Wow another newbie got scalped in the FOREX world - now that's an original story.

I think those stupid "Trade FOREX" TV infomercials should be made illegal. They won't be, of course, because "investing" is "moral" and gambling is not - yet I believe that with far less effort you would have better odds at a black jack table and certainly a better chance at a poker table. Yet those are "games" and are "gambling" and are thus "immoral". I’m a fairly good poker and black jack player – not professional class – but talented enough to win most of the time when I sit down to play.

Several years ago the “Trade FOREX” bug bit me. I approached it differently from the newbie in Tyro trader’s article however. I actually did it the way you are supposed to – make a small account and trade. Why? Because paper trading isn’t worth the paper it’s printed on. In the very first day I knew that different instruments traded at different spreads and the other thing I knew was that all instruments traded exactly alike.

What? Well it’s this way – pick three instruments on the spot market, they can be any three instruments but I like to use Euro, USD, and Cable (UK Pound) for the example. If you put the three together on a spread sheet what you will see is when one makes a move against another that move is reflected in the remaining instrument in the exact same proportion to the move between the original two. The relationship remains the same between the USD and EURO as it does between the USD and the Cable as it does between the EURO and the Cable. It has to - all money is based on the same "trust me" principle - it's the reason no one uses gold any longer - no arguments over valuation. All money then follows the risk free interest rate of the country of issue and the amount of money in circulation at any one time determines its value on the open market. Computers - you gotta love 'em.

In other words the Internet has brought perfect balance to the spot market in FOREX and the old days when arbitration was the way to make money there are long gone. Consequently in order to play FOREX you simply find one instrument of one of the major pairs that you like and play that one instrument exclusively both long and short. I specialized in the Australian Dollar – USD pair.

My broker only took a 1.5 pip spread on that pair most of the time. “Most of the time” means except when a major announcement was expected from either side regarding interest rates or other economic factors that affect interest rates such as GDP. Your bet had to be in place several minutes to tens of minutes ahead of these announcements – and my choice of words here is perfect – bet. That’s because what was normally a 1.5 pip (pip = hundredth of a cent) spread could expand to a 10, 20 or more pips spread depending on the numbers of bets on the books long and short just before the announcement.

When the announcement time came the market went crazy with this currency going up, that one going down and sometimes the moves were intense – up to several cents - especially when the announcements dealt with interest rate changes. I became adept at scalping. I’d wait for about 5 minutes for the excitement to subside and then take the counter trade of the move that just occurred. If the AUD went down I bought it, if it went up, I sold it. It took a lot of practice and observation to be able to tell when the major move was over and the counter move was about to begin. Thus I could game the market a couple of times a week, secure my account, and go on with my daily business. And when I say “secure” I mean go to all cash.

Long story short – in the first couple of months I doubled my account. Yes kiddies I doubled my small (couple of thousand) trading account in a few months. Doubled it by scalping. Then hubris took over.

I had noticed that the Japanese Yen was moving overnight about 20 – 30 pips or so in a downward direction (it was becoming more expensive relative to the dollar on a daily basis). I reasoned that I was wasting an opportunity to make a couple of extra quid by not parking my money in the Yen-USD pair overnight – short yen. So I started doing that. Of course I kept a tight stop on the transaction – and what was the worse that could happen? Lose a couple of pips on a stop.

Japan, or course, trades while Marlyn is asleep so I did this for a number of nights and my account continued to go up, up, up. Then one morning I got up, looked at my trading window and saw a huge green line stretching forever into the top of the chart. Overnight the Japanese bankers growing tired of this continued strengthening of their currency to the detriment of their international trade balance just dumped a huge amount of Yen on the market (bought dollars). In a supply and demand world when the supply increases the price decreases and that is what happened on the spot market. Except that the Yen trades long to the dollar when it is getting weaker and I was short. The stop was ignored until the carnage ended and given the huge amount of leverage involved when the wind stopped blowing Marlyn had about 63 dollars and a few cents left in his account.

I reloaded once more but my heart had been ripped out. All I did was worry about the next Central Bank beating I was going to take and sure as hell several months later the UK did the same thing and I took another heavy hit. I ended my FOREX career at that time. It was too expensive, and much too nasty. I’ll take the specialists of the NYSE any day over those Central Bankers. The specialists can only dream of the kind of power those guys wield.

Do I think people can make money in FOREX – sure – lucky people and people like Warren Buffet who can put billions into a single transaction and hold it for years and years. Oh, and the other class who make money in FOREX – the folks who sell the “Get Rich Quick in FOREX” products on the TV infomercials.

Friday Wraps - TGIF

Start of a three-day weekend and I'm glad. It was a rough week but I actually didn't do as badly as I make it all sound. I took two shots at LQDT today and both were profitable - 50 cents on one and a quarter on the other. Basically both were simple breakouts on the 15-minute charts. I also played SGP to a 6 cent loss and TTI to a break even + happy meal. The latter two I took off my "Day Trading with BOB" filter and they were the only ones that had any promise at all - a very weak output this morning and then a weak day going forward. I'm flat going into the weekend - still not ready to carry risk overnight - I'll let you know when that changes.

Of the three Amigos - GOOG had a reasonable day, Steve Balmer managed to talk MSFT into a 75 cent loss, and AAPL just twisted in the cold, cold wind - down 40 cents or so. I watch these three because these, among several others, are bell weather stocks. They let you know which way the wind is blowing and today it was just swirling around going nowhere.

That described the market as a whole,of course, but the INDU finished the day in positive territory. However, when you look at it and you don't have to look too closely, both major indices - the SPX and the COMPQ finished down - so I'm considering today to be a down day.

Small cap finished up and I think that is going to be the real story going forward for the rest of the year. I'll be publishing an update to the Marlyn's Curve over the weekend with the four indices overlaid. I've made a major change and I want to see how it works out. First major change to Marlyn's Curve in almost a decade.

I've started working with this new charting service that I read about over on Esto's site - named Quotetracker - what appeals to me is that you can program your own alerts based on your own custom criteria. That has to be worth something. And I can use my existing prophet.net data subscription to drive the beast. I'll try it out and let you know. I'd really like to program good old BOB into the engine on a 15-minute basis and see what comes out of that. I know that there are other applications out there that permit you to do these things on the minute-based charts - but this only cost me 60 bucks for a year's access and I'm already paying for the data feed through prophet. I also can get a real-time data feed from one of my brokerage accounts (free) - so I'm covered backward and forward.

I'm looking for a solid down day on Tuesday - this is afterall the week after expiration and all of the 401K money has been placed. The up/down ratio still sits in neutral but the VIX slid more than 5 points below the 10-day moving average. The INDU ATR is at 75.87 and this indicator is two days overdue:



And way way overbought. Once again we're in that position where we need to take a little pressure off the market. It has to go down to go up.

I'm calling Tuesday - down.

The magic coin is calling Tuesday ... heads - up. OK - we're starting to diverge.

Having called today a down day I get a point that makes it Marlyn 13 - 9 and 4 and the coin is 9 - 13 and 4.

Another BOB Example

I never get tired of this set-up - I see it many times every day across any number of time periods. Here it is on the daily charts with REGN. I've annotated a couple of spots - first the basic set-up is minimum of two days down with increasing volume on the second day. This example has the added feature of having some significant volume which just adds to the probability of a happy ending. Then the third candle is up with the low of the day being higher than the low of the previous day.



That's all there is to it. If you use the BOB method you can make the buy anywhere at "a" or above (recommended - not mandatory) and set your stop at "b" or below (suggested - not mandatory).

Any number of software filtering packages that allow you to "roll your own" will enable you to find good old BOB - I use stockfetcher.com.

Of course if you are still using the prepackaged filters at MSN money dot coma you won't find BOB but to each his own.

Buy or Sell?

I give you BHP - Cramer says "I have rarely, if ever, seen a company that is more in love with its shareholders than BHP. ... I think BHP goes to 50 bucks. where it should be right now ..."



A couple of observations - this is a mining company - it is an excellent company - it is better than Alcoa (AA). How do I know? BHP made $35 billion in the last 12 months with 35000 employees - Alcoa made $30 billion with 125000 employees. That is how I know. Far more efficient, far better ROI and the absolutely worst chart I have ever seen.

This thing is all gaps and craps. And right now it is at the end of 3 gaps up with a DOJI. Where do you think it is going next?

We'll revisit this one in a week or so and see how it is doing.

Wraps Thursday

A good day. No 12% haircuts for me today. As I said yesterday - I don't hide - but I did make a change or two today and I recommend this to anyone who gets hit hard a couple days in a row. Drop back on the weight - only take half or quarter loads. Get the feel back. It was probably just bad luck - but ego and arrogance play a large part in what we do and if you go out swinging for the fences after a bad beat or two you are liable to get beat some more. Remember the market can dish it out a lot longer than you can take it.

So that's what I did today - I throttled back and here's how I did. PLXS +4 cents for a breakeven plus a happy meal - my bride is pleased - we eat tonight (just kidding). LQDT +1.10 - probably could have had more but was in late and out early (another part of the recovery process - a good profit - is a good profit - is a good profit). PDLI +30 cents. And KNOT +31 cents. I bought KNOT and then doubled up after it bounced off the EMA 21 on the 30-minute charts. I was expecting it to do that and put some nice coin in the register because I anticipated a recovery. All told $1.65 and I feel a lot better. And, of course, I'm flat in my account - just cash going into Friday. I was done by noon and spent some quality time with my bride. And that's how it has to be for now.

I had 9 candidates with the "day trading with BOB" filter today. 4 went down and 5 went up. One gapped up too far to be of any use and of the other four I took PDLI and PLXS. PDLI proved to be the best of the lot. Of the 15 I had yesterday 12 are now up and only 3 are down. I think this is going to be a good filter - not automatic - but a little common sense can go a long way in this business. And once we get out of earnings season it should be a good filter for picking swing trades. It is interesting how the smallest things can sometimes mean so much.

I ignored CRI even though I saw right away that it was going to gain back some of yesterday's lost blood. Sometimes I just don't want to be bothered with the garbage. It's probably foolish of me because all of the bad that could happen has happened but once burned twice shy. Maybe tomorrow.

I read this morning that Cramer was all over NTRI for low balling their announcement on January 31st then coming out with a boomer last night. He said that he's through with this bunch. That made a big impact on his legion of fan (sports stars have legions of fans - Cramer just has legion) and I see that NTRI is up 14%.

The three Amigos - MSFT, GOOG, and AAPL didn't get the message, two went down a bit and Mr. Softy made about 6 cents for his loyal supportors. Let's see 100 shares x 6 cents = happy meal? Nope. I'm not really sure what that sums up to except something negative going forward. Probably has something to do with options expiration tomorrow. BIDU took the 12% haircut today.

I notice that bubblevision is blaming Bernake today for the market not continuing the boom. He was the hero yesterday and the goat today and pretty much said the same thing. The media types always have to have something to blame it on. They just can't say its a matter of supply and demand. If they did they'd soon realize that they were an oversupply to very little demand.

I looked at the charts every once in awhile this afternoon and about the only thing I could say that could even come close to a characterization is "driftage" - the market is in "driftage". No point, no purpose, no real destination, just a large floating cloud of crap.

Of course I missed on my forecast but as I said the NewMoMo method is relatively new and I do know from my testing that it doesn't have a 1.0 correlation - just close. The ATR indicator is also "just close" and most of the time several days go by between its dipping below 80 and the INDU taking a fall. I showed that on the figure last week. So probably tomorrow.

Speaking of the NewMoMO indicator here it is for today's edition of As the Wrap Turns -


The up/down ratio is printing 48% so it's neutral again. The VIX is neutral and the ATR indicator is 77.78. So two in neutral, two showing down - I'm going with down - I don't think the market can stand another up day this week.

The magic coin says ... heads - a bull market again - well at least we differ.

Once again we both missed so the score is Marlyn 12 - 9 and 4 and the coin is 9 - 12 and 4. Still just a little better than luck.

Insanity

Ahead of the bell and all hell is breaking loose - BIDU on great revenue and weak guidance is down 5% and NTRI - another company that sells dreams or maybe it sells fantasy - is up over 20%.

Who wants to play earnings roulette? Step right up and put your money on the table - win, lose, or draw it's a great time to be had by the casino owners no matter what.

Always bank the game - you will never lose.

Return To 4, Return To 8 - Daily Charts

Here are some more examples of entry methods - this time on a longer time frame for those of my readers who would prefer a swing trade or maybe a little longer time horizon.

First we have GES - showing a classic Return to 4. It also has a BOB and a crossover. The BOB came first and this time happened to involve a cross over formation (a positive body across both EMA 4 and EMA 21). Both of these things suggest something good is going to happen. But if you bought the next day you would have had the stock start going down. Now if you watch the stock for awhile and don't set your stop too close you will see it hit the EMA 4 and then rebound.



Next we have PCU and it is showing a Return to 8 (although I have been known to call this "retreat to 8 so as not to confuse it with return to 4), a modest cross over and a dummy spot. Normally I would have bought this off the confirmation of the dummy spot on the next day, but buying it off the cross over would have been just fine and, if after all that you wanted more of an indicator - the return to 8 was looming with a very nice bounce and buy. That was 6 points higher than the dummy spot but a world higher in probability of success i.e. lower risk.



And that is what it is all about - risk, risk, and more risk. Each of the entry methods on these two charts possess their own risk factors (fair, better, best) and you have to make your decisions appropriately.

The way you can find these is to set up a monthly view of the daily charts against a watchlist in any one of the many free charting services that are available and then just walk through the charts one by one. You can do this late Sunday evening. As you go through them print out the ones that look promising (or copy them into a separate file) and keep going. Once you have a collection or 8 or 10 candidates then do your due dilligence, check whatever fundamentals need to be checked - review when earnings are going to be announced and then put your favorites on another watch list and watch it. Make your buys when it's appropriate.

And needless to say but I will anyway this is not an invitation to speculate in the stock market and past performance is not to be construed as an indicator of the future.

Return To 4

This is my second favorite set-up. It is a lot easier than the BOB - The stock goes up, then comes back down to touch the EMA 4 (or MA 5 - some people still use SMA). It bounces there and when it does you buy it. You put your stop under the EMA 21 - 5 cents and just wait it out.

It doesn't have to come back to the 4 - it can also go sideways into the 4. Occassionally it will go through the 4 and bounce off the EMA 8 - that is just as good. The example I'm showing here has an added feature which is the crossover - the crossover here is just icing on this cake and is not necessary for the set-up to work.

Here are three views on three different time frames of the same stock on Wednesday.

First the 30-minute chart annotated -



Next the 15-minute chart annotated -



And then the 10-minute chart annotated -



The point I was trying to make with the three views is that the 15 and 30 minute charts are easier to work with and - most importantly - the trade doesn't care what time frame you use - it breaks out when it breaks out. Sometimes you can catch a trade a few minutes earlier than other times and you might make or lose a few cents one way or another but most often it is better to just take the set-up when it is presented on the 15 or 30 minute charts and let the trade develop as it will.

Wednesday's Wrap

Wrap me up - after I found out that NTRI was reporting after hours it took every bit of my strength to not buy it to the extent of my trading account at the close - I mean who wouldn't want a 12% loss on their book three days in a row? Of course NTRI will go up at least 10% tomorrow morning. That you can bank on. (Update - up 16% after hours).

Flat - in cash - no stocks in my trading account - no holdings - nada - I'm clear. As I mentioned I sold everything including CRI before noon. I reasoned for CRI that it wasn't going to recover the losses ever and it might even go down some more since that was its general direction before I took it anyway. Right now I'd rather have the cash for trading rather than being carried as a bump in the book.

Turns out I should have held NEW a bit longer but the way I was feeling at that moment I needed a winner and that was it and I'm happy with what I got out of it. I took KNOT on a blow-off bottom but set my stop way too close and was stopped out - I didn't have my heart or mind in the trade - maybe tomorrow. I think KNOT is going to get back to where it was - it, afterall, is selling dreams and not real stuff like baby wear. Dreams are a lot easier to value. (If you detect the slightest hint of sarcasm here it's probably because there is a little in the air at the moment).

But when you get bucked off the bull you pick yourself up, make sure nothing is broken, and then you either get back on the bull or you go home and hide under the bed - I don't hide. But I did make some changes and you won't see me holding any stocks in my trading account any longer than 5 hours - if that.

Nuff about my woes - I published a new method to find day trade candidates this morning using a filter that would, if completed, find full scale blow-off bottoms. The filter found 15 matches and of the 15 - four went down today and 11 went up. Needless to say today was a good day for "going up" so I won't say that will be the norm - but I will keep track of this in the wrap and we'll see how well it does.

My three favorites were ETFC, SAY, and TTM - but because this was the first time I've tried this I just watched today. I'm going to continue using this method for awhile and see what develops.

Another interesting detail of the day is that small caps went up and then retreated back to the open - or as I say - they round-tripped. I'm not sure what that portends. Is this the age of the large caps? I doubt it - it might be as simple as the small caps are all overbought. And if you look at the IWM, IWN, and IWO charts together with the stochasticRSI(2) you see the incredible variance of the IWM (the index) and IWO (growth component) both being at 1.000 and the IWN being at 0.000! Apparently value was sold off today hard and that was enough to bring the overall index down. So that leaves the only question as why is value being sold off this year? I have no clue.

GOOG, MSFT and AAPL all went up today as did the semi's. Don't start cheering because I think that is just a one day story.

Another stock that took an amazing haircut today was GIFI. Just last week Trading Goddess was talking about that stock as if it had a real chance post earnings. I didn't think much of the stock - it appeared to me to be ready to come down anyway - but apparently the company has postponed its earnings announcement and that was enough for an 11% haircut. See what I mean about the market being so fearful? I don't think the economy is in that good shape - at least not as good as some of our leaders would have us believe. Gold keeps going up and stocks keep exploding. Although it is possible that gold is starting to peak. I think Bernake scared gold traders today when he started talking about inflation being under control - the worst thing that can happen to the gold bugs is an interest rate cut. If stocks keep blowing up I think that is coming - I'm surprised it hasn't happened already. Jimmy Crack Corn Pone also thinks one is due too.

CRVL continued its droppage today. See what happens when the day traders and scalpers abandon you - absolute chaos.

I think GM is done for awhile - third gap up yesterday and a DOJI today.

Now for the most amazing piece of the puzzle - the up/down ratio actually went down today to 55% from 59% and there were about 300 fewer stocks going up today than went up yesterday. That suggests that today's exuberance was indeed irrational. Now despite that the NEWMOMO method is suggesting we are already due for a correction.



As I've pointed out - this is a relatively new method that I'm using and I really don't know what to expect from it but the icing on the cake is the fact that the ATR(10) for the INDU is at 78.99 which is less than 80. So I'm forecasting a down day tomorrow.

The coin says --- tails - also a down day - I have to start letting the coin go first - I think it is playing me.

We both got it right again so the score is Marlyn 12 - 8 and 4 and the coin is 9 - 11 and 4.

Happy trails to you.

Day Trading with BOB

A new day a new idea – actually an old idea with a modification. What I did was modify my Blow-Off Bottom (BOB) filter to output the first two candles only. In other words – it will be up to me to determine if the third candle is being formed or not in real-time and to act on it if it is.



It then occurred to me that the output could be used for a day trade – and then I would be day trading with BOB.



Filters from Stockfetcher.com - here is the filter

/*This filter finds the first two days of the triad - you have to determine the third piece in real time*/
show stocks where close is between 15 and 25
and average volume(90) > 500000
and close 1 days ago < ema(8) 1 day ago /*this line helps ensure that I'm looking at distressed stocks*/
and close 1 days ago < open 1 day ago
and close < open
and high < high 1 day ago
and volume is more than 20% > volume 1 day ago
and low < low 1 day ago
and draw ema(8)
and draw ema(21)
and add column average true range(10)
and sort on column 5 descending

Charts from Prophet.net.

CRI Me A River

I just bought CRI yesterday and I really thought that it had already reported earnings - but unfortunately I was mistaken - But - losing 12%+ on good earnings and so-so guidance is ridiculous and is why I say the economy is rapidly failing.

The fact is these are estimates and the funds and everyone else is so concerned about a few cents of guesses that the stock prices are being battered for absolutely no reason except pure fear.

Look at KNOT yesterday - analysts "expected" better returns off a couple of acquisitions, didn't get it, and bang - dump city. And these aren't the only examples blowing up lately.

Well I just turned CRI into an investment - I'll hold it for awhile and see if I can get a few cents back and then dump it for a loss - I doubt it will ever be back to 25 bucks again in my lifetime - there just isn't enough pizazz there to cause that kind of growth.

That's two days in a row with huge surprise losses - I'm going back to being flat every night - it is the only way to play this game during earnings season.

Bought NEW and BMRN as day trades this morning. Those and RX will be gone by COB if not sooner. No more overnight. No more overnight.

Update: 10:52 - out of NEW and BMRN +59, -6 respectively. Also sold RX for an 8 cent gain. Another one hour day - by 10:30 it looked like everything was collapsing.

Cramer Speaks

From Seeking Alpha -

Re: SCI - 'I think that this company - which was in the early 2000s just a mess - has gotten its act back together. It's become, once again, a great growth company.'

I ridicule. Here is a picture of SCI -



Tell me - which part of a 51 cent range makes a 10 dollar stock a "must buy"?

Probably the massive dividends.

Ending Hedge Funds

Now here is a guy I could like - he hears a different drummer and is attempting, single-handedly to bring down the might hedge fund industry. A couple of thoughts from the article - most hedge funds don't produce alpha so it is easy to beat them. Only 20% of all hedge funds do produce alpha but you never know which those will be - they are all the same.

Read about it here: Flying Dutchman Portends Doom

AAPL - Other's Concerned

Apparently I'm not the only one who is concerned about AAPL - According to Notable Calls, Piper Jafrey also has some concerns.

Read it here.

Wrapping Tuesday

Another one-hour day. That's pretty much it any more - the market spikes and then drifts back down, touches the EMA 8 or 21, spikes again, then more drifting. Tough way to make a living.

I got back about 80% of my profit on LQDT this afternoon when it printed a blow-off bottom on the 15's. I got in at 19.20 - rode to 19.90 and when it pulled back to 19.80 I was out. I don't think it is going to recover soon - it might have an up day tomorrow, and might even have a gap up on the open, but the sell off today was relentless and very, very angry. Usually in the secondary offerings you get one gap down and you sit and wonder what happened - this was a gap down followed by relentless selling starting about 10:30. And the only thing that happened was the volume kept increasing. Four times normal volume and that doesn't speak well for their plan. This could have been simple short selling but I don't think there were enough up-ticks to make that possible. Tomorrow will complete the picture and we'll see then if all is forgiven.

There's been a lot of angry selling lately - AOB has been on the bad end six of the last seven days - although today looks like it is finally bottoming. I'll be watching this one for tomorrow and see what happens. This was another stock where I took a "secondary offering" beating a couple of years ago - it still owes me money. At least with LQDT I'm a bit ahead of the game.

CRVL we've discussed several times - and it is toast right now - at least the volume is drying up some. And there was some nice action in the last 45-minutes. They finished today with a nice DOJI too and that might mean that the sell-off is over for the time being. But as I've said before unless they come up with another buy back plan they are probably going to keep going down.

But they're not the only ones - AMD keeps getting hammered day after day - as does NTRI. But NTRI also formed a nice DOJI this afternoon. I don't know if these DOJI are significant - there are a lot of them and they don't necessarily have to mean a bottom. They might - that's all I can say.

HANS looks like it has blown its top (not a blow-off top but a blown top) and it shaved 9% today. I mean this is a day when the markets were going up and all of this carnage was taking place among the darlings.

Gold has been going up quite a bit lately - the problem with gold is that the miners go with the metal and with the market - if the metal is down - the miners are down, if the market is down - the miners are down. The only time the miners go up is when the market and the metal go up together - like today - but most of the major miners (sorry Mom) formed gap-up DOJI and that might spell trouble.

GOOG gained 70 cents today. I don't know whether to laugh or cry about that. That was 0.16% which I'm sure made some fund's quarter - I'm also pretty sure that it wasn't the "short squeeze" that Jimmy Crack Corn Pone predicted.

AAPL continued its losing ways but you know how I feel about AAPL. It is probably done for all time.

The semis are done - here is a "maximum top" from last week.



You see on 2/01, 2/02, 2/05 three gaps and a DOJI - classic maximum top. It tried to get over it but it couldn't. If the semi's are done - tech is done - it's pretty clear. Have you looked at a SYMC chart lately? It's been trading between 17.60 and 18.00 for a month now - that's a 40 cent range. Oh well, just as long as they keep paying that dividend. Oh - that's right SYMC is another one of those tech stocks that has been around forever (1990), backdates options, and doesn't pay a dividend. Tell me - exactly what part of a 40-cent wide daily range makes this piece of crap a "must buy"?

MSFT is fighting back but swinging like the little old lady it is. It will fight all week to pin at 30 and once it has caused maximum damage to the options trader's accounts it will resume shuffling down the hill. Mr. Softy is another one - the sizzle has already been sold and nobody is buying the Bull.

And I'm saying all of this on a day when the INDU is up 100 points - I must be absolutely nuts. But that ATR-less-than-80 indicator that I wrote about last week worked like a charm - the INDU ATR(10) went below 80 last Thursday and took the INDU down through the EMA 21. Once the INDU closes on or below the EMA 21 it goes back up again. Maybe the market is just fine and some of these mature stocks are just that - mature stocks. Time to start looking for fresh meat.

Took two swing trades today - RX and CRI. Both of them breaking out and they look like they might be able to make a couple of points in the next month. I have a feeling I'm going to have to hold them for awhile.

I'm dropping the new 20-period high/low ratio because it doesn't seem to be a good predictor - certainly not as good as the ATR indicator I found last week. The up/down ratio is a relatively good indicator as is the Newmomo indicator below. So I'm going to be using these three plus the VIX for forecasting from now on and I'm dropping the last hour indicator also - unless it is five reds or white/greens. Those two configurations actually have meaning for the 'morrow.

So saying for tomorrow the up/down ratio is printing 59% which is neutral and the VIX is back in neutral territory, the INDU ATR(10) is above 80 and the Newmomo indicator still reads bullish.

Thus while it doesn't necessarily have to be an up day tomorrow - I think it will be.



The coin is saying --- heads - also forecasting an up day.

We now have the score as Marlyn 11 - 8 and 4 and the coin is 8 - 11 and 4.

What A Difference A Day Makes - II

Yesterday LQDT was flying high - nothing between it and 500 points but fresh air and sunshine - today, to this moment (1:30 P.M.) it has already shed 389 cents and that is, roughly speaking, about the same 90 million bucks in capitalization it made last week on its just OK earnings. What goes around comes around.

There really wasn't any need for the secondary offering except the greed of the participants and consequently a lot of 401K's (LQDT's labor force) got raped and it is all perfectly legal.

How about that - you put your money into your companies stock because your company is a strong, solid place and you know they are doing good things, and you are very proud to be part of that gang - you go to bed on Monday night with a solid retirement fund and by the time you get to work on Tuesday morning your company has killed 17% of it - not theirs - just yours - they're selling 5 million more shares for their retirement fund.

Gotta love it.

Secondary Offerings

Secondary offerings have cost me more money than any other useless management scam ever perpetrated on the unsuspecting trader. I'd rather they backdated options - at least that doesn't have the effect of "company is going to sell 100K shares and "selected shareholders" are going to be allowed to sell 5 million". Wonder who they are? As I said a backdated options scam is less painful than this crap.

OK - I lost 75 cents on the bet today - that gives me a two day net of 0 including commissions - I should consider myself lucky I suppose - I actually had a profit in my account for 24 hours and then I got greedy. The rule is simple - don't try to drink from the well twice in one day - you will always gag on the second drink - always.

It's only good to be management folks - no one else stands a chance.

AAPL Core – Furthermore

Many years ago I dabbled in advertising for a little while and it is where I learned that you sell the “sizzle” not the “steak”. That premise remains true today.

About a month ago I showed an AAPL daily chart and I suggested that the DOJI printed on Jan 11th signaled a “maximum top”.



It obviously wasn’t “maximum” but it did turn out to be “close enough” and had you followed Baron Rothschild’s advice about “selling too early” you would have been out in time to miss the crash. Sometimes Marlyn knows what he is talking about. Certainly not as often as Jimmy Crack Corn Pone - but I don’t care.

The musical question today is - should I re-enter AAPL at this time. And I think the answer is no.

Here’s AAPL on the weekly chart and it looks good. It took all of the stress and pressure off that was built up through the week of January 8th and bounced off the EMA 21 last week very nicely. It even is forming a blow-off bottom (last two weeks lower highs, higher volume last week than week before, and a higher low yesterday) and if that continues through the end of this week I may change my tune.



But, and there is always a “but” - while there is certainly the potential for more downside – there’s neither a fundamental nor technical case for much upside. They already have the stores, they have the products, and they’ve already announced their new, expensive phone.

So the question really is - has all the “sizzle” been sold? It is possible that AAPL now becomes as much of a commodity as some old drug manufacturer, finds a narrow trading range, and stays there forever. Which is great as long as they continue paying that massive dividend.

Buying GOOG

Not me - I wouldn't buy GOOG with your money - there are reasons for this and all of them have to do with the fact that GOOG is not really much better than YHOO when it comes to returns (we've discussed and proved this) and is far inferior to GM or HANS on a day by day basis. Especially lately.

But an article in Notable Calls today Calls of Note Part 7 suggests that GOOG is getting near Must Buy territory -

I say it again - if you don't read Notable Calls every day (except Saturday) you are just pretending.

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.

Best Friends Forever (or Until Dawn)

Bought LQDT last Friday at 3:40 for 22.63 - sold this morning at 9:45 for 23.40 +77 cents for a trade I held about 35 business minutes.

A couple of years ago I found that the only way I could make any money consistently was to buy at 3:45 and sell at 9:45. Given the looks of the market lately we might be entering that sort of time period again.

Everything just looks way overbought or way oversold - there is no happy medium. When you have a stock such as LQDT that is just lollygagging along you can make what I call a "spike" trade and get some quick profits out of it.

Another stock that went up abruptly this morning was CIEN. I had considered taking this one as well on Friday afternoon but didn't - oh well - there's always tomorrow.

I might buy LQDT back again this mornng for a day trade if it keeps doing what it is doing - tagging the EMA 4 and going up. But for now I've made a good profit on the day and I'm happy and I may just take the rest of the day off. Less stress - happy Marlyn.

Looks like the market is going to take the rest of the day off too. SPY is down, Q is down and DIA is folding. Goldie (GS) is down, oil is down and VIX is up. A good day to just watch - I think.

Using History as a Guide

It is said that those who ignore history are often doomed to repeat it and today I’d like to give you a history lesson – or rather a way that you can learn a stock’s history without the stock even knowing it. And while the past is not necessarily prologue – what has happened in the past frequently happens again in the future – especially in the stock market. To put it bluntly what goes up must come down. The problem to be solved is in determining when it is time to come down.

I’ve mentioned before that one of the best ways to keep track of your longer term or even swing trades is by using the weekly charts. And I know I’ve discussed the EMA 90 and its relationship to the weekly charts to a degree that even frightens me with its obsession. Now I’m going to show you two charts labeled A and B and I’m going to remove all other identifying characteristics because the stock themselves really don’t matter – only the lesson counts. And at then end of the discussion you tell me which one you would rather invest in this week.

First we have A and I show it in a weekly format with its 90-period EMA. The second figure is of the distance A normally travels from its 90-period EMA on the weekly frequency. You can see that A has had a great run lately and seems to be slowing down.





Next we have B illustrated in the same manner. The second figure clearly shows that B has strayed far from the 90-period EMA but the rate of difference is slowing down.





The bar charts provide a historical reference for these stocks going out to 2 years ago – you can see clearly how they don’t get too far away from the 90-period EMA and when that distance becomes extended they normally hurry back to the touchstone.

So give a picture of the history with no other information which stock do you think has a higher probability of going up and which might be heading down - A or B?