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April 30 2004 Ah Spring, glorious spring and the sound of hope springing eternal. Forget it. The die is cast.
Talk about the sound of hope springing. The news is oozing with it, and the analysts whose jobs depend on "good" markets can't disguise the hope in their voices. But the China hope bubble seems to have burst and so now they are going to put their hope on the Google bubble. Meanwhile back at the markets the low was taken out last week and now the markets have a new low to pursue. Note the Qs which lead here and very possible lead the markets down. Uh, did somebody say Listen Mule? We thought we might have heard something like that, but like everybody else we are breathlessly looking forward to the Google IPO. So we took our eye off the pea and the next thing we knew was a two by four hitting us between the eyes.
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Ah, Spring and the sound of the robins and jays and humvees blowing up in Iraq and Sheik Alan explaining in dulcet tones how he plans to choke the markets to death and the sound of unabated lying coming from Washington, and the cherry blossoms drifting down to form little haikus on the reflecting pools. The sound of Kellogg crying in his beer because Congress shut down his insurance company scam. If you haven't read Perfectly Legal you are the slowest one on your block. Read it quickly and get in on the tax scams before they close them down. With any luck you will be grandfathered like Spear Leeds Kellogg. Remind us how much they just paid in fines for messing with the markets. We can't keep up with the scandals. |
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And here is the Google IPO!! Just kidding. It's actually Palm, back in the days when flipping, laddering and lying cheating and stealing were in style in the gay (as in jolly) '90s. Will we buy Google? If we can get it at Sequoia's price. And we might. But not in the IPO. On the other hand if Google's IPO looks like Palm's we'll be sitting there with sharpened knives to short a boat load. |
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April 23 2004
Major Turning Points Letter (CLICK CLICK)
As the yearly subscription includes MTP letters use this link to read our daring take on the markets and recommendation. Now for the hedge. Although we think that this MTP letter marks the beginning of the end we will turn on an 1/8th if market developments warrant. Take your eye off the ball and wind up with horsehide in the teeth. (Got lots of chipped teeth, your faithful correspondents.)
As every westerner knows the way you get the attention of a mule is with a two by four. Applied judiciously between the eyes. The long black bar here at "Listen, Mule!" is just such a notice. The merest hint from Olympian Zeus Alan that interest rates might rise someday sent the rats scurrying from the ship. They are the smart ones. When the other boot drops the rats left on board are going down with the ship
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Should there be any doubt in your mind, yes, Virginia, there is a Santa Claus and his name is George Bush if you have over $1MM income a year, and yes, Intel is in a downtrend. Is that a bellwether or what? |
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Note: No letter is planned for next week. Readers might check back Tuesday or Wednesday to see if we have been able to bear to shut up for a week.
April 8 2004 So awright awready. When you're offered free money, take it.
Three years of the Dow (DIA). We will not be going long any indices this decade. And we are now beginning to scale into our bear market positions, shorting the major indices, the bonds, and anything else that wiggles, except Brazilian samba dancers. Speaking of which, our colleague at GGU, Prof Hank Pruden (the world authority on Wyckoff) has advised us to establish an alternate Brazilian identity because when they come to the Bush Bear Market hearings we will want to be out of the country as they will be looking for people to hang and blame.
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From these three long term charts we can see how far back this bull market (actually bear market rally) has brought the markets. Investors will now be out of the general market except for well chosen intimately know issues (and out of those when the chart so dictates). Aggressive investor/speculators will now, for example, divide their DIA, (and SPY, ETC) capital into 5 to 7 tranches or units. One of these may be put on now. A second can be put on at the breaking of the nearby low, or if a new high is made. We'll talk about the others later. |
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We expect these positions to last for years. Sharp rallies will occur against the position. We will be attempting to hedge against these rallies. Macho speculators can ignore the rallies. Well, maybe not. If you are attached to your capital and see 20-30% movements against it, macho may not be enough. On the bright side these rallies will offer the opportunity to sell some more.
What's the risk here? Well, maximum 114 in the DIA. SPY 120. QQQ 45. Could we be "wrong" (or, better put, semantically, "rash" or "gambling" or "unskillful"). Absolutely. Would we be sorry our clients and friends (and don't forget US) LOST MONEY. We look at dollars the way generals look at soldiers. You send them out and if they win they bring back captives. If they lose you write letters to their families. (A word here about Iraq: Stupid. Rash. Foolhardy. Criminal. --Actually four words.)
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Moderate and cautious investors and speculators will be waiting until the March lows are taken out. We will shortly be addressing issues and positioning in a Major Turning Points Letter. |
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April 2 2004 April Fool!
Two gaps in the DIA and a moving average line now being crossed with regularity. Signs of a developing trading range. The gaps are undoubtedly area or pattern gaps -- i.e. of no technical significance -- except to warn the alert technician that a congestion pattern is developing -- hard on the heels of the one which just ended. As we have said this is no market for investors, but traders buying weakness and selling strength can at least get some action. Investors should be looking for a place to hide.
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Option sellers should enjoy the coming period also. Note the interesting candlestick on Friday in the major indices. The hanging man which according to Nisson is supposed to imply a temporary top. We think the likelihood of a higher high in the indices is unlikely, unless it were to be a part of a broadening pattern. At this moment all our comments are speculative. What is fact is that a major trend line is broken and the 40 day moving average line has been broken decisively for the first time in a year. |
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All these comments are true of the Qs also, and the size of the gap is impressive, but then the Qs were the most "oversold". We are big discounters of news. Who does believe government statistics? The naive and those who need to create volatility. All governments lie, as I.F. Stone said, especially about jobs. And we don't stand on the tracks when the news train is bearing down on us. So we hedged our shorts in the Qs and DIA and retreated to our bear cave. Note hedged. A break in the now 9 day trend here will put us short again. |
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On our way back to the cave we gorged on the profits from the short bond trade. Quick traders would have taken profits Friday, as there should be some bounce up next week. As soon as we calibrate that bounce we will put on some more shorts. Quite frequently trades are so obvious that only quintessential lassitude or operational considerations keeps the technician from making it. This bond trade was one of those. Price dead up against the long term resistance. Obvious defense points. Lead pipe certainty of higher rates. The previous Friday's breakdown was another such point -- a clear signal. This Thursday's activity was another sign -- suspicious volume. Someone knew something. |
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