Click charts to enlarge Of course there are many ways to play the short side of the market. Short financials may be the best bet (SKF), but not to be discounted are the recent descending triangles playing out on the charts of the fertilizer stocks. These triangles are not perfect, but the charts are bearish nevertheless. The chart of POT (top chart) looks like it's heading for a break of recent lows. The chart of MOS below it is only slightly stronger. Most of the other fertilizer stocks paint a similar picture. TNH is the least bearish of the group, but we're confident that if POT makes new lows, it will take the entire sector down with it.
Despite a rally in SMN (Ultrashort materials) today, we bought some near the close. It accounts for about 4.5% of our portfolio, but we'll add more if these stocks get to a point that they're just hovering precariously over their old lows. The chart of the sector's leader, POT, is simply too bearish for us not to act on it.
60 comments:
POT broke down after hour trade on MOS cut estimate. This is surely going tank big tomorrow! Thanks for the chart SNOT.
Wow, what timing! Just ironic. POT is at new lows, MOS down approx 15% AH
I bought SKF, SMN, and QID today and sold half of my position. ME-NO is suffer big time today...
Thanks for the info Snot, I just bought SMN after market close.
I am now FAZ until 110-120 and then will be FAS.
Good luck
What an amazingly frustrating day. Checked the market around 7:45 this AM, then spent the next 5 1/2 hours on the road. So although I said I was going to buy QID, SKF and DXD, I wasn't able to. (As a rule, I don't buy pre-market because I'm not confident enough.) One of the last posts on the previous thread said that tomorrow will probably dictate the market's next move. I agree. I'll probably hold off buying SKF now until after Thurs. and see what the big boys are going to do.
hk22, are you still 100% cash?
Some food for thought. If you draw a line on the price chart connecting the peaks of the 3 peaks on sept 19th, nov 1st, and nov 28th, you get a channel that is parallel to the 50sma. Snot, I'm surprised you didnt mention this. 900 was the top of that channel. That channel analysis would have coincided with my rsi analysis and both methods would have yielded the same top of ~900, further justifying a short position. Right now we're back in the middle of the channel.
Also, if you look at the downward slope of the trend on the price chart of SPX between the May peak and the July trough, that seems to be the exact trend we're on right now. It is a very sharp steady downward trend, dropping about 10-12% per month.
When looking at that trend, it is easy to see the August rally as a fluke. SPX should have been at 1100 in august, and 1000 in sept.
Finally, the 50 day moving average is going to fall rapidly in 5 days. Then it is going to drop off a cliff in 10 days, as all the pre-crash data is eliminated. In about 3 weeks, there will be an excellent opportunity for the indexes to hit and finally break their 50 sma's at that time. But I guess that depends on how much worse things get...
Sbbuilder,
I was 100% cash till I bought some FAS at the end of the day.
Reason: Looking for a small rebound tomorrow.Today's sell-off was overdone. The released economic data was no news. What triggered the downturn was also the channel trendlines which nowdays everybody is following. If we go up a little that would be a easy 10% for FAZ. But to be realistic that move was way too risky and I regret doing it.
Once we head down, we really head down. The "small rebound" might not come till the day after.
I have "two" options pretty much:
1-Market goes up (90-150 pts for DJI)- I sell FAS and buy FAZ. (make money)
2-Market goes down - I sell FAS and buy FAZ (lose money- maybe break even with the FAZ-Short term-Long term FAZ will make me money)
But than again the environment is very volatile so makes it very hard to predict.
One should notice the Shanghai Composite trading channel:
http://s426.photobucket.com/albums/pp345/hk22_2008/SHANGHAI/SSEC.jpg
It is good indicator of the world markets are about to go. It doesn't look that good.
Also take a look at the Volatility Index:
http://s426.photobucket.com/albums/pp345/hk22_2008/spx/VIX.jpg
So pretty much if we go up tomorrow I would use that to start short positions.
Iconoclast,
Are you saying that the correct SPX channel should be the one in the green colors shown below?
http://s426.photobucket.com/albums/pp345/hk22_2008/spx/spx3.jpg
I think this is the channel.
http://img49.imageshack.us/my.php?image=spxrn0.jpg
sold FAS in the open with a loss- went long on FAZ.
Looks like we are heading way down in the upcomng days
Anyone SHORT POT here?
HK22,
I guess you jumped the gun too soon. I too was in the same boat last couple of times and now I am 100% cash waiting for FAZ/TZA/BGZ to come to more 'reasonable' levels.
AK.
AK,
I know, I am very good at that. :-)
Option [1] could have made me a lot of money if done right. Should have been more patient, and it was just a matter of 25 minutes.
but than volatility is crazy nowdays.
The idea was there tho :-)
Well if you wanna go short looks like today is the day
I bought uso again.
Bigboy, why the uso big drop today?
went short on fxp today
one at 51.9 and 55
thebat
hk22, yeah that's about right. Maybe even a little steeper than that. What I'm looking at for long term guidance is the rsi of the weekly chart of SPX. It forms a very clear, well defined 12-month channel that isnt violated even by the may and august rallies.
http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=1&mn=7&dy=0&id=p39341185282
We're near the middle of that channel right now. A new uptrending rsi support line is beginning to form.
anon:
it's only down 6% in two days, it's not big drop. most of stocks were down 10-30% yesterday.
Shorts have to cover it before market close.
before opec meeting I will play oil stocks.
The chart of FXI is starting to look quite impressive. It looks a lot better than any of the US indices. Looks like FXI might break its 50 sma. But not by much. Sort of like how it did in july. I will buy FXP again when FXI hits 28.
GM sales plunged 41% in Nov....
why are we still bailing them out?
looks like dow is heading south..
thebat
When AIG gets a pile of money, that is a bail out. When huge banks get piles of money, that is a bail out. When the Auto's get money they have to pay back, then that is a LOAN. Get is straight, folks. Also, of the 700B money from the Fed, the amount the Auto's will have to share among themselves amounts to 3.5% of that. Not much in comparison, is it?
It looks like now is the time to short. This time, though, I'm going to hold on for a longer period of time.
don't understand what's going on... is this short covering?
Anon:
I read one article recently, it said:"The cartel's de facto leader and the world's largest exporter, Saudi Arabia, finds itself in a bind. Most OPEC members will face real economic problems if crude prices see a sustained drop below $50 a barrel."
I think Opec will protect themself on next meeting.
I don't know who are you. if you think you are right, post your opinion and use your name or url.
this is last time I reply you.
OPEC said over the weekend that they were delaying the decision to cut production until their December 17th meeting, leaving no doubt that they will do just that when they reconvene.
The Saudis also said that $75.00 a barrel is their target price, and that they will do "everything in their power" to get it back to that price. I certainly wouldn't bet against a statement like that. They have have a wee bit of experience in manipulating world oil prices as everyone knows.
Why do you bother with USO bigboy? Buy DXO instead, it's 1/12th the price and moves 2X as fast! It's awesome!!
Chuck: I bought DTO, so am I a fool? :) I don't care about OPEC, just the tape.
Anon,
DTO looks like it's up in the stratosphere, but who knows? That never stopped SKF from going higher and certainly in the short term oil could drop to $40 or below before before OPEC finally decides to get serious. Ignore them now, but you won't be able to forever. After all there is no better organizer than greed and fear and they are beginning to experience both.
I bought DXO thinking if I can sell it for a profit by next summer I'll be happy. For some reason I doubt oil will stay below $50 for the next 8 months straight. All it will take is one bad news story out of the Middle East and the price will spike $10-$15 over a few sessions and that will account for a tidy profit.
That or the cumulative effect of continued production cuts will slowly but surely bring the price back up. I mean what more do you need? OPEC has given everyone a road map, it's up to you if you want to follow it or not.
Sbbuilder,
Today was a perfect day to go short,
And yes I agree with you, these positions are worth holding for a longer time.
Didn't it feel like the day before the sorm?
All the charts point down from now.
815 looked like a strong support for SPX, todays lows touched it twice.
Hope to recover today's loss soon.
But then again, I was asking for trouble trying to time the market.
All I hear is layoff's and how credit limits are beeing reduced.
Not a good sign. If it wasn't for the double bubble that we had from 03-08 we would have been out of the bear market by now.
22 year bull follwed by a 1/3= 7 year bear.
Time for some research tonight
Chuck: I bought DTO to hold it for a couple of days not for months. :) It's just a swing.
I will get out if the position goes against me. I never hold a losing position.
I bought some DTO when the crude oil felt below 60, then I sold it when it went below 50 (~49), then I repurchased when it reach the ~55 USD area, and here we are. It's just a trend-swing-trade. :)
Hope This Charts help:
Pay close attention to SPX and SSEC. (let me know what you think, and thats why I think today is a good day to go short)
--S&P500 (SPX)
http://s426.photobucket.com/albums/pp345/hk22_2008/spx/spx4.jpg
--SHANGHAI COMPOSITE INDEX (SSEC)
http://s426.photobucket.com/albums/pp345/hk22_2008/SHANGHAI/SSEC2.jpg
--VOLATILITY INDEX (VIX)
http://s426.photobucket.com/albums/pp345/hk22_2008/spx/VIX2.jpg
--ULTRA FINANCIALS (UYG)
http://s426.photobucket.com/albums/pp345/hk22_2008/spx/UYG2.jpg
Chuck: Thank you for your msg.
Before we buy uso or dxo, we have to think about lots of matter.
1. There are two groups all over the world: A group: US, China, India, japan, and Europe. they hope the oil price is low level, the lower, the better. B group: Opec, Russia, and Norway. they hope the oil price is high level, the higher, the better.
2. After last opec meeting, they lost the chance which can pump the oil price.( in fact they don't want to cut the product so much, they want to use the meeting to lift the oil price ) however, A group know what they mean this time. they ( especialy US-->hates Russia, Iran, and Venezuela ) issued lots of negative news through the media. so we only knew the negative news about the oil price in US recently.
3. In fact, there are lots of good news about the oil price.
A. China's GDP will be 8-9% in 2009B. More and more people will buy cars in Asia, especialy in China and India. they have never owned the cars in their life, so they are so eager to own their cars.
C. China will cut the gasoline price in recently ( Now their gasoline price is more expensive(50%) than in US.
D. Oil price was cut $100 in four months and it's under $50 now, Opec 100% disgrees
E. US dollar will be down in near term.
F. US will print more and more money in future.
G. Winter is coming, maybe it's very cold.
H. Now many countries are afraid of deflation including USA.
etc.
Btw, why I bought uso ?
1. If it's down, not so much, as you know I sold 1/2 uso shares and made 8% last Friday, I only lose around 1% on paper now.
2. I can sell cover calls, if I make a mistake or if uso is flat in future, I will make around 10% each month.
3. only USO or DXO IS BOTTOM NOW, oil stocks were up recently, even worst stocks, such as, C, GM, and F were up 100% recently. (I have never touched the ill stocks.)
4. I just reminded: we can't short USO because when uso was $145-$147, I wanted to short it, but I couldn't, So I bought some Jan 2009puts at that time and made lots of money, after that I have never touched USO until last Friday.
5. Maybe the oil price will be $45 before Opec meeting, if it is true I will buy more.
Another Interesting study regarding SPX.
Chances are it will take us another 10-15 days till we get another big rally. Maybe it will be called "the Christmas Rally" this time.
It's amazing how human mind tends to be so organized and repetitive.
http://s426.photobucket.com/albums/pp345/hk22_2008/spx/spx5.jpg
two more good news for oil price.
1. China bought lots of energy capital recently and will buy more in future.
2. China found: after 20 years it will have no any oil resource.
The commodity-related charts still look so bearish, especially OIL. New 52 week lows are never a good sign. We're going to be patient with SMN given the weakness in POT and OIL. Hopefully SMN doesn't go against investors the way FXP did. If we're right about another leg down for commodities, SMN should go up, not down!
There's absolutely nothing redeeming about the chart of OIL or USO. Not choosing sides, just giving our opinion. Both look headed lower.
hk22, hope your analysis is right...
I loaded fxp today even though i loss a few $ today, hopefully FXP will make it up for the next 10 days as per your analysis.
the market has to find a reason to bring down the market. Not sure what they have this time around.
thebat
TheBat,
SSEC (Shanghai} is not the index that FXP follows. It is mostly HSI (where the 25 Xinhua companies are traded}
I would be careful with FXP.
I suggest you unload half at 70-75 and the rest at 85. (or all at 72 to be safe}. But than again FXP has gone wild lately so who knows what it will follow. The Chinese might have a lot of faith in their stimulus.
Here is two charts, one of HSI (Hong Kong Hang Seng) and the other FXP.
http://s426.photobucket.com/albums/pp345/hk22_2008/SHANGHAI/fxp.jpg
http://s426.photobucket.com/albums/pp345/hk22_2008/SHANGHAI/hsi.fxp
Snot.
Do you think SMN, FXP, FXI, OIH and some ETFs not only are ETF(70%) but also are future(30%)? in other words, they tell us the direction sometimes, (that's why someone complained FXP's price did not match FXI on this blog.) you can check SMN, OIH and USO's price between July 1 and July 15 of this year. At that time I found OIH was down a lot, but USO was new high, so I bought some USO'S puts. today OIH was green, SMN was down so much, but USO broke the support( Maybe MM's play the game like Dow last time) and it was the new low. Maybe USO is the bottom or near the bottom.
btw I am only holding 8% position about USO.
hk22,
agree, FXP is a bit weird, but it does follow the direction of the US market. I will be happy if it can reach 70+ shortly.
After reading a couple headline, I feel that GS earnings will take the market down big time. anyone know when their earnings date is?
just for other interest on HSI that hk22 posted, the correct link is:
http://s426.photobucket.com/albums/pp345/hk22_2008/SHANGHAI/hsi.jpg
thebat
Sorry, I think FXP will be $45 within 2 weeks.
----Bernanke: There's No Housing Bubble to Go Bust
Thursday, October 27, 2005
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html
----Bernanke Expects Housing Recovery by Year End
Reuters | 12 Feb 2008 | 03:59 PM ET
http://www.cnbc.com/id/23131888
----Bernanke says crisis 'no comparison' to Great Depression
1 day ago
http://www.google.com/hostednews/afp/article/ALeqM5gzwiRk81qjTxmJYcbbCuXLWX0urA
As you can see he is very "Good" at predicting the economy
Trump to go belly up? Is that an option. Nice read.
"He is being sued by Deutsche Bank, which provided loans for the project and says he missed a deadline this month to pay off the remaining $334m. Mr Trump got his own suit in earlier, claiming Deutsche should have allowed an extension because the credit crisis counts as an act of God."
http://www.independent.ie/world-news/the-king-of-capitalism-watches-his-empire-crumble-1559934.html
FXI supposed to follow the Hang Seng China Enterprises index.
EWH - simple Hang Seng index.
FXP - double inverse FXI. But no more. It's a nonsense ETF now. It's screwed up.
Look the Hang Seng index and look the FXP.
Hang Seng is close to it's 1 year lows, while FXP in 1 year timeframe is at all time lows.
Snot,
Your blog has been taken over by day-traders. Have you become a day-trader too?
Signed,
Anonymous
If I had a pair I'd be looking at FAZ. GS pre announces a loss and the market will still act ::::shocked:::: when they report.
I bought another 4% position about uso today.
$37.5 is the bottom before Opec meeting.
imho.
The last few day's action definitely proves that all the various theories on here are just that- theories. From RSI to Monday's action dictates the action for the week to 15 days this timeframe to 5 days that timeframe...alllllllllll just guesses in the current environment.
I started a short position in FAZ at 57. I would normally take profits because of the 7% jump in a few minutes. But I am holding in anticipation of a big event next week. I will be very heavily short by next tuesday. In the meantime, I would not be surprised if FAZ went to 40 before next tuesday.
For SPX I'm seeing strong support at just above the current 52 week low of 741. 760 looks like a good target for me. I will be adding to my shorts at every opportunity, taking minimal profits during the next 5 trading sessions.
Obama is without a doubt the most organized and well prepared incoming President I've ever seen. I bet this guy holds his first Cabinet meeting 5AM January 21st. His incoming Administration is going to send the market sailing.
Iconoclast421,
If you are heavily short and expect the SPX to go to 760, why are short FAZ ? Are we missing something here ?
AK.
So you're basically calling for a retest of the lows Iconoclast421. With a rally before the retest. Seems probable enough.
What event do you think is coming by next Tuesday Icono? The decision on the automakers? It looks like the loan may end up being even larger than 25B so won't that be a relief for the market? That for at least a few more months the automakers won't go under?
Yeah I meant I'm long FAZ (or shorting the market via FAZ). If we do go down big today, then I will take profits because that money will be available again by tuesday. I aim to be 100% short by tuesday, assuming we dont crash before then.
Goldman Sachs is expected to report the week of Dec 15. Their fiscal year end is Nov 30
Hope you were nimble and got out of FAZ at 67 Icon. Any time I get 10 pts in a day I bail even if it is retirement account.
Icon better move fast or he's going to give the whole 10 points back. How can you be anything but a daytrader with this kind of action?
Right. That's exactly what I did. But I need to acquire some shares of FAZ to hold for a week, so I'm looking to buy back in. Hopefully under 50.
This is excellent end of day action here. Keep in mind that the resistance line we bounced off of last friday at 896 has moved downward to about 880-887. If we can manage to close there, it will be a major opportunity for anyone going short.
The market never works if it is too obvious. I bet SP will surprise by moving above the resistance line and the 50dma this time.
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