Click chart to enlarge Seems too much too soon to us, but the Ag stocks are in rally mode, so we aren't complaining. We "only" got 60% of our capital in this time around, and we rarely if ever chase stocks as they rally, so 60% it is. If these stocks continue to rally strongly over a very short period of time, we may take a little off the table. Perhaps back to a 50% exposure. While the support of the broader market is not required for Ag to run up, we are troubled by OIL's drop to the bottom of its channel. The slightest news story and OIL could tack on a quick 10%, which could take the Dow down below 11000.
The chart above is a chart of CF. It stopped falling at the bottom of its trend channel and its 100dma yesterday. We added more CF yesterday at 136. We should have backed up the truck, but only hindsight has 20/20. The Ag stocks report earnings in two weeks. Where they go after reporting has 90% to do with where they are trading prior to reporting, and 10% to do with the contents of the reports themselves. If they rally to the tops of their channels (unlikely), they will surely get slammed after reporting, regardless of how well they do. If they drop back down ahead of earnings, we expect a substantial rally after they report, as long as earnings are not terrible. We will determine the best exposure before the reports based on their locations in their respective channels. Holding a stock through an earnings report is generally not a good idea, but each scenario is unique.
In other news, although we do not short individual stocks, our short picks (BCSI, CROX and C) are all doing as expected. They are heading for $0 until an equal and opposite force turns them around.
44 comments:
FRE is really breaking down. I'm putting in a buy order at $6.50. LOL
Snot, not all of ag is in rally mode. Chiefly fertilizer is, but DE is down hard. Wilmar and SYT are down a little. What does that say -- other than it is best to hold the strongest stocks in a sector?
4% is hardly "down hard". And Snot has said repeatedly MOS, AGU, POT & CF are what he's referring to when he's talking Ag plays.
And why would you even mention a little OTC pink slip turd like Wilmar? It traded a whopping 1,667 shares today.
My, my, got a burr under your saddle? Thanks for pointing out the bleeding obvious in a condescending manner.
As to "down hard", if the market is down 2% or so and fertilizer and chemicals are up 2% or so and another ag stock is down 4%, what do you call that? When you take a 4% hit on a holding, is it nothing to you? Is your self-esteem a little low today so that you felt a need to jump on somebody and attempt to ridicule them -- emphasis on "attempt" -- in a very sarcastic manner?
As for Wilmar, do a little better research. Volume on it today was over 6 million.
Wilmar
Wilmar makes up over 5% of the holdings of MOO. You looked up the wrong one.
Geez!
Home page for Wilmer
Wilmar is Asia'a leading agribusiness and while they especially trade on the Singapore exchange, they also trade on other exchanges around the world.
Will you two please take your childish one upsmanship to the Yahoo LDK board where these kind of exchanges belong? Thank you.
You are welcome.
At least I didn't start it and I tried to provide some information, but it'll be the last time,--for which you won't be sorry, I guess.
1. Interesting that DE is down 4% on the day that Motley Fool promotes it.
Link on DE
2. When GS speaks, the market listens. That could explain why fertilzer was up nicely today.
GS upgrade link
Agreed...
Now, anyone still see a short term market rally in the cards??
I'm tempted to dive into OIL & DXD tomorrow... yuck.
Oil chart is very bearish looking. We may see some consolidation near the 200ma intra day or so for some more days. Ultimately, that line is going to give way if we tap it so many times.
This market is looking to breakdown here. The only thing that can save the rally is tomorrow's close above yesterday's low. We are hoping that we don't take out the lows.
Either ways, we got stopped out of almost all our longs today. We are only 15% invested now , two small portions in AGU and SSO. Eitherways, both short and long positions are looking risky (to me atleast).
I will let the big boys fight here and lead the way. We are hoping it is the bulls who win here.
--clarke
All this negative sentiment is fantastic. I hope that the market does breakdown from here, and we finally have the "capitulation day" that everyone has been waiting and hoping for. "Buy when in fear and sell when it's dear" is something we should all keep in mind over the next few days. I'd bet that even Warren Buffet is looking at equities right about now in the cycle.
Dennis Gartman also said today on Fast Money that "people were puking all over their shoes and selling everything in sight" so if we can just get the VIX to hit 30 in the next few trading sessions we might get a strong bottom in place that could provide quite a fantastic bear market bounce. Let's all hope for -500pts down on the DOW tomorrow!
Just wondering why OIL's chart is 'very bearish'. Because it's been hanging near the bottom of its channel for a couple days? Thanks for your input.
I too agree that OIL looks more bullish than bearish and it may cause the capitulation. Also has anyone checked out CHK? Looks like another one on the launching pad.
-G
Today was awesome.
Today's market action accomplished two very important things:
1.) It showed that when money pours back into the market, it's going into fertilizer. i.e., Ag is not dead, just hibernating.
2.) The market is giving us another opportunity to get in cheap.
The fertilizer rally was stopped dead in its tracks by a -230 down day for the Dow. It's the perfect setup... strong stocks taken down by the broader market.
We hope the market does capitulate tomorrow. Fridays are usually boring, so we're not holding out hope that Friday will be D-day. Perhaps Monday or Black Tuesday will end this correction.
One of you said it best, it's a "bear market rally" we're looking for, not a new bull.
If the market capitulates (down 400+ points in one day), and pulls POT, MOS, CF and AGU down with it, we're going to put at least another 20% of our capital into these names. Another 400 points early next week will attract the final 20% of our capital. Then we just sit back and wait for the day POT tacks on 35 points.
I agree that Clarke is sometimes the "Chicken Little" of this board as she seems to get all too easily scared. I'm not sure exactly what chart she is referring to when she mentions that "oil" is looking very bearish here, but if she's talking about the chart of OIL or USO, that call is way too early.
In the VERY short term OIL or USO may go down another few dollars to the bottom of their channels to their 50dma, and maybe she mistyped and put in "200dma" where she should've put in "50dma".
But if she really does think that either of those charts are headed for their 200dma, then that makes me suspect of her and her college classmates' chart reading abilities.
And if I've misunderstood what chart she was talking about then I apologize, as I like to read everyone's point of view on here.
And of course by all means if anyone disagrees, then please feel free to jump into DUG right here. If some previously undiscovered ocean of oil is found in our backyard I will be proven wrong, as that is most likely the only scenario that would cause such a calamitous breakdown of either OIL or USO.
We don't see the chart of OIL as being bearish either, until it breaks the channel and/or 50dma. Actually, it has responded better to its 40dma over the past 5 months of its steep climb. If anything, we think OIL is poised for another sharp rally. Although, Clarke did call the breakdown of MTL when it was still in its channel based on divergences, so maybe he has other technical reasons for being bearish. We're with you, though... what could cause such a drop? Any drop is likely to quickly recover. There are many more news stories that could cause a rally than a selloff.
Both the Dow and the S&P are at new lows, in virgin territory. We're not outright calling for a plunge, but this is the very position from which the sharpest selloffs happen. It wouldn't take much to send the market into a tailspin right now. Perhaps a single bankruptcy in the financials this weekend (FRE,LEH?), and Dow 11000 will only be visible in the rear view mirror. Look at FRE today. Last time it got this far below its moving average (mid March), it rallied strongly. Still, this is not a chart you want to be long of. BSC looked similar in the days before its collapse. Buying FRE here is playing a dangerous game of roulette. Next stop is either $14 or $0. Fed intervention, right? Is that what comes next?
Feeling lucky to have got out of my UYG relatively unscathed. Only holding AGU now. 1241 is the decisive level to break on the SPX. There is a small technical (& hopeful/risque) part of me that still believes today will be a bounce day. Though, I don't have the balls to long/short any SSO/UYG etc.
--clarke
I am using the USO chart. Also, DUG is a bad way to short oil. I would use DTO.
I should have used my adjectives properly. It was 'very bearish' on the intraday chart. I did not also mean to say 200dma, I said 200 MA on the intraday (meaning on the 10-minute chart).
In the long run, these are my reasons for being "chicken little". I am not saying it will drop today, sure it can go higher, but I don't see the "desire" to make one more iteration in the channel.
1. When oil was strong it used to have downwards consolidation patterns, like a staircase effect. In the last iteration, it had an almost sideways consolidation. The pop off of that pattern was quite weak and it came back to that sideways pattern for need of further consolidation. This is not what a strong stock does.
2. There is a negative divergence on the MACD. Sure, these do not always come to fruition, nevertheless it indicates the stock is beginning to extend itself.
3. Finally, the "channel" oil is in now and you are referring to got steeper at the beginning of 2008. Such channels are not sustainable. The stock usually returns to its less steeper channel.
A small request, kindly sign off on posts, it is difficult to allude to them otherwise.
Thanks for clarifying your take on oil Clarke. Not sure why you got such a hard time, and I for one don't consider you the 'chicken little' of the board (I really value your input, to be honest). Also, you're male, right? Weird...
Anyway, OIL's run (and when I asked earlier I was in fact looking at OIL's chart) also strikes me as unsustainable, but I'm having trouble convincing myself that it will go down much anytime soon. Especially with what's new and building in the Middle East, and the fact that any bad news seems to send OIL shooting up. Calls for $150-160/barrel oil by summer's end just don't seem that far-fetched to me at this point, which maybe shows how desensitized I've become to any reasoning behind the run up.
This led me to load up on more DXD today...
Cheers
there she blows!
Thank you, I still consider myself a newbie at TA, given my first lessons were Snot's post on LDK.
I have no position in USO. I would definitely welcome any bullish points too. Just because a stock is at the lower end of the channel is not enough for a bullish posture, especially given the market conditions.
As for the male part, most definitely I am.
--clarke
My 2 cents again, the time for shorting the market was when the DOW was at 13000. This is not the time to be shorting it. I am not long either.
Agreed, 2-cents (about shorting at 13000, that would have been perfect). At this point though, I don't see a substantial (>200 pt) rally before a day or few of meltdown, so I'm not convinced DXD is all that risky yet (also see Snot's post above-- I feel the same way).
Cheers
Looks like we're now going to have to wait until "Black Tuesday" for the capitulation day. With the financials poised to report, Iran launching more missles and oil on the move again, it should be a perfect storm to pummel the market and give us that sub 11K level on the DOW.
Why is everyone talking about capitulation? Today was a very key & crazy day in the markets. Huge, huge volume and still the sellers couldn't take the market down.
The fear in financials was unbelievable today. It seemed almost orchestrated fear induction that oil suddenly spiked up. And still the market did not sell off, given the tons of volume. We did not even break yesterday's low.
It helps to think of the markets in terms of analogies. Today was close range fist fight. The bears threw everything they had and still the bulls rallied it. Mind you, the up volume was still strong.
This is an extremely difficult market to call. But
I am posturing slightly bullish after today's move. Ofcourse, I want confirmation tomorrow. I want the low to hold from today.
I would love other viewpoints.
--clarke
Very interesting discussions. We're so happy to finally have a forum in which to have intelligent dialouge without the attacks and immaturity prevalent on the Yahoo boards.
We should all try to give approximate time frames for our stock picks, because on this board we vary from daytraders to intermediate term traders.
Although we think OIL will spike to 89 (top of channel), we agree that the steepness of the current channel is unsustainable. We have no projection for OIL after it hits the top of the channel other than that it won't crash. It will just consolidate sideways through the bottom of the channel at some point. It's only the next move to the top of the channel that we're concerned with, because we think it could be one of the catalysts to cause the market to sell off and put in a real bottom.
OIL is finally on the move, and if you think the Dow can just disregard it, give it time. Another 2-3 up days for OIL like we had today, and the Dow will not be able to shrug it off.
Today could have been a disaster. With OIL spiking, FRE and LEH dropping like knives, we have all of the ingredients for a crash. We think that it was the prescence of the Fed today that soothed the markets. People know that when they show up, an emergency bailout of some kind is not far away.
Fridays are uneventful, so we'll have to wait until next week to see if the invisible hand of the Fed can keep the market above 11000. Our guess is that Fedspeak alone will not stop the market from dropping if OIL surges, or if LEH or FRE goes under. It will take real action, not just a speech. Our guess is that right now, they are worried about Fannie and Freddie.
On a more cheerful note, our portfolio is at an all time high, as Ag seems to be determined to continue its uptrend. We really don't care which way the market goes right now, because we'll either make money or get a chance to buy more cheaply. Either one would be welcome. We'd prefer Dow 10700, but our approach to the market is not dependant on the direction of the indexes.
Does anyone have an opinion how the market will react when GE comes out with earnings tomorrow? If the history repeats itself the market will fall.
Snot, can you take a look at AZK? It seems to have formed an upward trend and it's putting in higher lows. But its not putting in higher highs. The 200dma is moving steadily upwards.
Okay C.L.arke we get it- you get frightened all too easily. From your "moment of panic" Tuesday to the "unbelievable fear" you perceived yesterday...what will be your new adjective for today's action? Better not use the strongest word in your arsenal, you'll need that for next week when the financials really get decimated and drag the broader market down with them. THEN we might get a "key day", but unfortunately yesterday was nowhere near to being that day.
Fannie & Freddie getting POUNDED in the pre market this morning. I think Snot hit it dead on, the government will step in and take them over very shortly and that will be another "Bear Stearns" bottom from which we may get a very powerful bear market bounce. If UYG gets to a 15 handle I'm going to start to bottom feed on that carp. Also we may see SSO pushed down to a 55 handle, which would seem to be another safe starting point to start to scale into.
If I had the money to burn, I would buy a stake in FRE at 5.33.
Then I'd double it up if FRE dropped to 5.
Then I'd quadruple it if FRE dropped under 4.75.
Then I'd sell out if it fell under 4.40
Obviously you're a retail home gamer with a S&M streak, as that is one of the most reckless things I've ever seen posted. Did you also buy BSC on it's collapse on that Friday at 30 thinking "this can't get any worse" and then end up panicking on Monday and selling at 5?
The sky is falling the sky is falling!!!!!!!
Actually I regret not buying BSC at $4. Admittedly the risk is higher with FRE because a bailout of FRE might not add any value to the shareprice if the bailout comes in the form of some kind of government takeover.
OIL is spiking to the top of the channel, Fannie and Freddie are on the brink of bankruptcy, and the Dow is hitting new lows. We are getting VERY close to a bottom (timewise, not pointwise, anyway).
We're within days of the bottom, but it could be another few hundred points lower.
We thought this kind of action would take Ag down with it, but instead it's rallying. Can't complain, just wish we were more than 60% invested. It's only a matter of time now before the Fed intervenes and gives the market a decisive bottom. Do you know anyone who works at Fannie or Freddie? Now may be a good time to buy them a box for their stuff.
Paulson said that they won't be bailing out FNM and FRE. They've finally signed onto the idea of letting the market adjust itself. Where was this wisdom in January when they "saved" Bear Stearns?
I can't remember the last time that Paulson told the truth about anything. I doubt he can either. The Gov is working on a bailout as we speak. 2 days ago didn't he say that the GSE's were fine? In January he said the credit crisis was over...
Anybody know what is the worst friday on record?
snot, what do you think of mon? it looks like its one of the only ag stocks still near the bottom of its channel, do you see this as a sign of weekness, or do you think the rest of the ag stocks will pull it up? im thinking about increasing my ag exposure with today's weekness.
check out CEDC. Night tight upward trend channel.
INDYMAC - another failure, but they waited til after the close to let the news out......
http://biz.yahoo.com/ap/080711/indymac.html
Monday will be even more interesting....
Agr8gem57
D, you were right, they've orchestrated a bailout for FRE and FNM just days after publicly announcing that they would not be there to bail them out. Don't you just love when government officials lie squarely to your face? It's great for young people to have such shining examples of morality. Now when you try to teach them not to lie, your teenagers will just respond, "Paulson does it all the time!"
The futures indicate a huge rise tomorrow. It seems all too well orchestrated. I am sure, the big boys knew what was going to happen as far back as last week.
At the start of the week after the stock market had taken a considerable pounding, GS comes out and degrades financials and the market is pummelled even more. Then they rake up the freddie & fannie issue, when everyone knows these entities are in trouble. The stock markets keeps going down even in the face of oil.
I saw one of clarke's post saying, there was accumulation in XLF despite the price action etc. Its probably the big guys secretly lapping up these. The coming week is options expiration. The big money wants to shake the small guy out of the puts. No wonder, the bastards - GS makes a ton of money.
yep, wow. Nice call D.
My guess for early this week is that we'll see a head-fake market mini rally until oil spikes on some news from the Middle East, just to end up right back here by Wed.
Anyone think the news over the weekend could put in a solid bottom here?
I'm very short term heavy in DXD, which has treated me nicely. About time to get out though, I think.
EWZ is also getting tempting (see Clarke's blog, nice chart), although I probably won't act there for a week or so (and may miss the boat, yes). What do you think of EWZ here, Snot?
Cheers
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