Click chart to enlargeWe're sticking with SMN given the weakness that still remains in the commodity charts. There is no bottom in sight for OIL, nor for some of the fertilizer charts like POT (at new lows today).
The descending triangle drawn on the chart of AGU above shows why we think all commodities have yet to see their lows. The odds of this chart breaking down are very high.
....
As a side note, we mentioned strength in biotech in the previous post. Perhaps we weren't clear in saying that we do not think the biotech and pharmaceutical ETF's are a buy yet. They are all stage 4 downtrending charts. We were just happy to find a small pocket of strength anywhere in this market, and felt it deserved to be recognized. The only way to play it is to buy one of those great-looking individual stocks on a pullback to the moving average or other substantial weakness. Even then, it's a risky bet, as they are small cap names with light volume. A single earnings report can cut them in half, uptrend or not. As a general rule, we never buy biotech or airlines. Both are extremely thankless businesses which spend the majority of their time on the brink of bankruptcy.
21 comments:
sbb, regarding your comment on the previous post, we don't feel that a poll is all that telling. Best it can do is gauge the market sentiment of people with small amounts of money... like all of us "under $100M" accounts here.
Bottom line, at the hour Goldman Sachs decides we've hit bottom, we've hit bottom.
Big and small holders are getting wiped out. Billionaires in India have lost 250 billion combined this year on paper. 70% of Russian billionaires on Forbes list are no longer billionaires. Crooked Wall St institutions around for over a century have vanished. This is now a problem that no one can control. GS is as helpless as a homeless man on the street in this environment. There is no such thing as the "BIG BOYS" now. They are getting slaughtered worse than the little man. We're headed for a DEPRESSION.
How is the DUG trading at 38 with OIL at $43 a barrel. These ETF's are no longer following the way they should be. Based on OIL the DUG should blow away the 52 week high of 86. Same with the SMN based on the AG stocks.
The DUG 38 thing proved my theory that in this market everything including 2x ultrashort are sold-off along with the market. If Dow goes to zero, DUG, FXP, EEV, SMN, SKF will be zero, too. Why people hold these ultra short when the world is ended. They will be sold-off, too. You think FXP should be up 120% because FXI is down 60%. No, FXP is down 40% YTD.
Anybody manage to pick up some SRS at the 200sma? That is yet more evidence that we're nearing a top. It's all coming together. I noticed there is a lot of momentum behind certain sectors, as if they are expecting a big rally.
Anon, if all of these billionaire investors are losing so much, then how do you explain Gary's 4% profit while the S&P is down 12%?
If a chimp can do it, why would you doubt that Government Sachs can?
All the typical hedges against the market are just going down with it. Gold and Oil both falling. Great, widespread deflation, just what we need.
You can't blame people for not buying oil despite its price drop. We believe there is some spite at work there, and it won't end anytime soon.
Snot, GS stock is down 75% for the year. They have proven they cannot do it. When your leverage is 30 to 1 all it takes is one mistake to wipe you out. Without the FED intervening with all these bailouts GS would have followed the path of Lehman Bros along with 99% of the companies on Wall St. Lucky for them their ex CEO is running the secretary of treasury. World greatest investor thought they were a buy at 120. 1 month later they are trading at 45. GS would be trading at a penny if Paulson wasn't running the treasury.
Good article written in October.
http://seekingalpha.com/article/99838-how-long-will-the-bear-market-last
How long will this bear market last? Well, the 1930s Great Depression caused a bear market lasting over 2 decades, from 1929 to 1952. It was only until 1958 that the market came back to the old 1929 peak, 3 decades later. And the 1970s was not much better, lasting 14-16 years from 1966 or 1968 to 1982. Even though the bear market ended more quickly in the 1970s, it was until 1992 or 24 years later to reach the 1968 peak.
If you buy dug, that means you want to short xom (23.61%), cvx(9.83%) and other oil stocks. because xom and cvx are bullish, other oil stocks are bearish, so both dug and dig are neutral recently.
mediumboy:
I just calculate the mean of the poll at the top left of the blog. I don't even pretend to know where the bottom will eventually be. Snot is right, it acts more as a sentiment indicator, but since most of us (whether we like to admit it or not) trade in part because of sentiment, it is germane.
Soumynona:
I would have to include real job growth as the number one catalyst to turning around this economy. That, and getting the government out of the way of business. Now, I realize that I just held aloft a lightning rod, so go easy. This is just one person's opinion. Also, I'm more than happy to admit when I'm wrong. No problem there. If the market goes way up I'll send you a box of chocolates and call it even.
Snot:
Awhile back you posted the pics of some of the biggest investors out there. They have all lost their shirts and then some. They don't seem to know anything that you or I don't.
Big day coming tomorrow. I've compiled a chart that shows 3 big tests all hitting at once:
http://i468.photobucket.com/albums/rr44/iconoclast421/test-12-5.jpg
There's the test of China, financials, and the whole S&P 500.
The first thing to note is that all 3 failed to meet their rsi resistance lines on wednesday. That in itself is a bearish sign. That's why I went short today.
But the big test is whether these 3 can bounce up, forming new rsi support lines. IF they fail to do that, then this chart becomes relevant:
http://i468.photobucket.com/albums/rr44/iconoclast421/fail-12-5.jpg
I added one line indicating where each one will most likely go if we get the technical breakdown. If we do get a rally tomnorrow, it has a chance of breaking the rsi resistance line for XLF, meaning the rally will come first from the financial sector. If SPX follows it up with an upwards break of its own, it will signal a very significant rally.
The safest thing to do is to simply wait for a break in one direction or another. If we only close about a percentage point higher tomorrow then we'll have to wait till monday to see what happens. Hopefully, we get decisive movement tomorrow, to put this to rest. I'll be short, but only conservatively so. If we get a technical breakdown, there will be plenty of opportunity to go short, especially on china.
Bookmark the above chart. See if it passes or fails the test, then look back in a week to see what it predicted. It will be significant, one direction or another.
Tomorrow, we will see how bad the unemployment data is. Remember, most of the layoffs happen in December. I am just about to be laid off myself. Things are not looking good. The market will either tank or there is a chance it will rally because the data is not as bad as it was predicted. We shall see.
j
About the only thing longs have that can help them short-term would be:
1. A surprise rate cut. Europe just cut, so what about Uncle Ben?
2. A resolution on the Big-3 bailout.
3. Some event to jack up the price of oil, and all commodities or commodity related equities with it. A huge OPEC cut. An incident in Iran or elsewhere>
4. A multiple of the above three which might cause some short covering and money coming off the sidelines at the same time.
Otherwise we are range-bound or worse.
Ben
Is the forced selling by hedge funds due to deleveraging (how the heck to you spell it?) over? If not, how can one tell when?
Unemployment number -533,000 at 6.7% and the worse is yet to come!
Everyone knew the number was going to be greater than 500K, this was no surprise.
I love that oil sells off due to a bad jobs number. Frickin' hilarious.
I just sold dug and bought dig
DIG is going break down decending triangle. This is dead wish for you Small Boy!
bigboy8882008 said:
"I just sold dug and bought dig"
Time: December 5, 2008 9:34 AM
Anon said:
"DIG is going break down decending triangle. This is dead wish for you Small Boy!"
time: December 5, 2008 10:31 AM
When snot says its time to short AGU, it is time to buy. Whoa how good that has worked.
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