Thu, 18 Aug 2011 21:21 GMT
Rev Shark's content is now being featured on the new Real Money site.
Wed, 17 Aug 2011 12:51 GMT
Rev Shark is out today.
Tue, 16 Aug 2011 20:23 GMT
After a low-volume, three-day bounce, the market trapped a few bulls with a poor open this morning. It was able to stabilize for a while, but the Europeans failed to offer any real solutions to its sovereign debt issues and it pulled back again. For some reason, or maybe it was just the machines, there was some dip-buying interest, which moved the market back up again but it didn't close with any great energy.
Overall, we session ended with a fairly mild point loss, which gave the bulls something to be positive about. But the low volume and lack of energy made it quite challenging to trade. There is very little strong upside momentum out there and almost no positive chart setups.
Another issue is that very few themes are working. We saw some strength today in Wal-Mart and Home Depot , which helped the retail sector, but big-cap technology acted quite poorly. There really hasn't been any sector that is doing anything notable other than precious metals. Everything is pretty much moving in lockstep which isn't very interesting if you like to pick stocks rather than trade headlines. ...Click to view a price quote on WMT. Click to research the Retail industry.
Tue, 16 Aug 2011 17:53 GMT
The emergency conference in Europe to address the sovereign debt issue is disappointing the market. The only real concrete idea that came out of it was an agreement on a financial transaction tax. Combine that with the recent short selling ban and it's hard not to be surprised by the sheer ineptitude.
On the other hand, the market had at least a dozen 'Greece is saved' rallies even though there never really was any real solution. So, I guess we can bounce back each time another emergency meeting is on the agenda.
This chaotic action would be much more interesting if it wasn't so slow out there. At least the market showed some vigor last week when it bounced around. Today, there is more disinterest and dislike rather than strong emotions, which are easier to trade....Click to view a price quote on PCLN. Click to research the Leisure industry.
Tue, 16 Aug 2011 16:10 GMT
The market is holding up fairly well as optimism grows for something positive from the Sarkozy-Merkel press conference, which is due to start shortly. If it weren't for that news, this market would really be dead. The action is very slow, and breadth is still 2 to 1 positive, but the bears aren't having any luck gaining traction.
Like yesterday, we have a technical setup that suggests that the path of least resistance is to the downside, but it has been the nature of this market for a very long time to punish anyone who tries to fade bounces. Our oversold bounces always seem to have underlying support, even when volume is weak and the news flow poor. ...
Tue, 16 Aug 2011 14:26 GMT
The market beast did an exceptionally nice job yesterday with the strong close which sucked in bulls who feared they were going to miss out on a fast and easy recovery. Given how often we have continued to work higher on declining volume, it is understandable that some folks would want to add long exposure, but the big market picture is not attractive at all, and it takes a real leap in faith to believe that all the recent turmoil is going to be overcome so easily.
Breadth is the inverse of yesterday and is quite weak at around 670 gainers to 4,500 losers. Gold is strong again but retail is the most surprising. Wal-Mart is really helping to boost that group today. ...Click to view a price quote on WWWW. Click to research the Internet industry.
Tue, 16 Aug 2011 12:42 GMT
"Confidence is the feeling you have before you understand the situation." --Unknown
Yesterday, the market pulled off one of those very low volume, straight up bounces that always confounds bears and underinvested bulls. After a very nasty breakdown, the market acts like it doesn't have a care in the world and suddenly all the media talking heads are confident that it's clear sailing to the upside, even though we are rallying on less than half the volume that drove us down.
More often than not, that bullish thinking has worked well. Waiting for a retest of the lows or another pullback has simply been wrong, although it is the logical thing to expect. Quickly regaining confidence in the resiliency of the market has probably been the best trading approach since the bottom in March 2009. ...
Mon, 15 Aug 2011 20:29 GMT
The light volume bounce that we saw on Friday was followed by an even bigger bounce on even lighter volume today. The fact that most European markets were closed helped to slow the action down, but from a technical standpoint, it was just another one of those moves that gains steam in large part because too many folks didn't expect the market to go back up this quickly or easily.
This sort of action creates a million potential short setups but the key word here is "potential." So far they aren't working at all. We have seen this sort of action way too many times in the last couple years to think that it can't continue. In fact, low-volume, straight-up bounces have become the rule rather than the exception. This sort of action has consistently killed the bears who keep looking for some sort of hesitation after an initial oversold bounce.
Logically it makes sense to do some selling into this sort of action but it has been a recipe for being under-invested as we continue to run. We tend to create a dynamic where there aren't any easy entry points, so short and underinvested bulls end up having to chase the market higher. That feeds on itself and creates these V-shaped moves that catch so many people out of step. ...
Mon, 15 Aug 2011 19:13 GMT
As I go through the charts this afternoon, I keep asking myself, "Who buys that?" I look at stocks such as Steven Madden , Fossil , Expedia and just about half the stocks in the market and think they are classic short setups, but here we are hitting the highs of the day on superb breadth.
I often wonder if the computers are programmed with an algorithm that has them buying the charts that are the most obvious short setups. Many short-sellers have very limited tolerance for pain, and it isn't too hard to induce the underinvested bulls to chase things that are moving straight up.
One thing I've learned often is to not fight the action that seems totally illogical. If you want to play, you need to react rather than anticipate. A week ago, it was the overly anticipatory bulls who were pounded and now it is the overly anticipated bears who are taking a beating. ...Click to view a price quote on SHO. Click to research the Real Estate industry.
Mon, 15 Aug 2011 16:23 GMT
A basic tenet of technical trading is that the lows that are hit after a breakdown tend to be retested. The first big breakdown almost always produces some sort of quick bounce, and then after that, technicians look for another bout of selling as trapped bulls look for exits and aggressive bears reload shorts. The folks who missed buying the first bounce will then provide support at the initial low, and if that holds it will eventually give us a good bottom.
That is the theory, and it certainly makes common sense, but since the bottom in early 2009, it just hasn't worked out that way very often. In fact, after the major low in 2009, we never even came to close to any sort of retest. Once we reversed, we had almost straight-up action, and the bulls who were patiently waiting for the retest so they could buy more aggressively never given an opportunity.
Since then, the market has consistently failed to retest the lows that are hit after a breakdown. Just this year in March and April, we went straight back up after fairly sharp pullbacks. ...
Mon, 15 Aug 2011 14:15 GMT
The market did a very nice job of shrugging off the poor Empire manufacturing number. We have very lopsided breadth to the upside, with about 3,400 gainers to just 700 decliners, which makes me think that the machines are active and pushing things around -- volume is light due to much of Europe being closed today. Oil is leading and gold is lagging, which is a function of the stronger euro and weaker dollar.
I have very limited trust in the upside here and have cut back my long inventory into the strength. I bought some Google on the gap down and have already flipped out of most of it. I see so few good long setups that there's little choice but to focus on some short possibilities. ...Click to view a price quote on GOOG. Click to research the Internet industry.
Mon, 15 Aug 2011 12:44 GMT
The secret to a rich life is to have more beginnings than endings. -- Dave Weinbaum
After the historic level of volatility last week, indications are for a slow start to the new week. Many European markets are closed for the Assumption of Mary holiday, there aren't any major news headlines and we are at the peak time for summer vacations. Of course, the wild swings last week helped to scare some folks completely away from the market as well, which is reflected in extremely high levels of withdrawals from stock equity funds.
Although things are calm at the moment, many market players are feeling unsettled as confidence levels have been drained by the wild swings. No one has been able to predict what is going to happen in this market lately and that is going to continue to be the case. There is no reason to think that we have suddenly put aside all the issues that caused the chaos in the first place and the potential for some wild swings remains extremely high. ...
Fri, 12 Aug 2011 20:38 GMT
We've heard so much about what a volatile week this has been that I'm not going to belabor it too much. It really was historic -- but nearly impossible to trade.
One remarkable statistic I saw is that yesterday and today marked the first time since July 6 and 7 that the Dow closed higher two days in a row. Volume was huge and the point moves gigantic this week, but what was particularly unusual was how the action went from one extreme to the other. We had one big day followed by a weak day, and then back up again. Stocks moved in tandem like never before (which is probably a function of the dominance of computerized trading and exchange-traded funds), rendering individual stock picking a lost art. It really didn't matter what you bought or sold -- as long as you were trading in the right direction.
Rather than look in the rear-view mirror, we need to focus on where to go from here. The number one question is whether this volatility is going to slow down. I believe it is very likely to continue, simply because we still have so many major problems without any clear solutions. The sovereign debt problem in Europe is likely to continue for a while. ...
Fri, 12 Aug 2011 15:42 GMT
Everyone seems to be sitting around waiting for the market to pick a direction. The thinking is that the machines are going to kick in once we break one way or the other and produce a big move. But so far we are just drifting around.
The bulls are focused on better relative strength in big-caps while the bears are watching the weakness in financials. But the key now is the intraday range. If we break to a new high the bulls will pile, and vice versa if we don't hold the lows. I'm watching the iShares Russell 2000 Index ETF IWM closely to see if it holds $69. If it doesn't I'll be taking some index shorts. ...Click to view a price quote on IWM. Click to research the Financial Services industry.
Fri, 12 Aug 2011 14:33 GMT
Market players are moving slowly this morning, as they wait to see if another strong intraday trend develops. With the huge moves after the market open lately, the smart trade has been to jump in fast and ride the intraday momentum as long as possible.
The bears gave the downside a brief try on the weaker-than-expected sentiment numbers that came out this morning, but the bulls are working hard to shrug it off. Breadth went flat but it is now in positive territory and we are seeing some strength from oil, steel, coal and commodities other than precious metals.
The action has been so volatile lately that probably the most surprising thing the market could do is to have some relatively flat action. That would probably confuse everyone since expectations are very high for continued volatility. ...
Fri, 12 Aug 2011 12:59 GMT
"The short-sale ban really smacks of desperation. That's their plan for solving the euro debt crisis? I mean, this isn't going to buy them much time." --Kenneth S. Rogoff, professor of economics at Harvard University
For the first time since the 1987 crash, the market has swung more than 4% on four successive days. You have to go back to the 1930s for another bout of such volatility. This sort of action has only occurred a handful of times in history, so I don't need to belabor the point that we are dealing with truly unusual market conditions, which means we had better adapt if we want to survive and prosper.
The big jump Thursday is being helped this morning by a short-selling ban in France, Italy, Spain and Belgium. The obvious goal here is to try to stabilize markets and restore confidence while the European Central Bank deals with the euro-debt crisis. It may sound good in theory, but you have to wonder how effective that course of action will be. ...
Thu, 11 Aug 2011 20:39 GMT
The wild volatility continued today. This time it was the bulls who benefited. The action is so wild that there isn't much else to do but play the intraday momentum. Luckily, it's moving so fast that you can make some money in very quick trend trades.
The big risk is holding overnight. The mood is constantly shifting and everyone is worried about the next big news event out of Europe. There are still many unknowns and they aren't going to be clarified quickly. The big pullback in the last 10 minutes of a trading was probably folks not wanting to carry much risk overnight.
While it was nice to see some bounces, what bothers me is that the vast majority of charts I look at are short-sale setups. We had much lighter volume today, which results in a bunch of broken charts with low-volume bounces into resistance levels. They are classic short setups but almost too obvious to work very well. ...
Thu, 11 Aug 2011 17:41 GMT
The market is better today -- but when it bounces back after a big waterfall drop, momentum traders always complain about a lack of "good" charts. But there aren't any chart setups for momentum players to get excited about because all we've had is one good day.
Adding to their consternation is the fact that they have forgotten that they've avoided losses while others have celebrated gains. The trader who's been 90% long on the way down is thrilled that he has some big bounces, but the fact that he is still substantially underwater is forgotten. Ironically, the trader who has done better recently feels worse than the one still sitting on big losses.
Keep your perspective and don't feel frustrated when your style of trading doesn't work. If it kept you out of trouble recently, it really is irrelevant that you are underperforming today. Don't start making trades you normally wouldn't just because others are excited for a change. Stick with your style if it is working and don't try to reinvent yourself suddenly. ...
Thu, 11 Aug 2011 16:00 GMT
Talk of a short selling ban in Europe helped to add some steam to our bounce, but there isn't much information so far. There are denials and also talk that it only applies to naked CDSs. Even if a short ban is put in place, we can't forget how that strategy failed to work in 2008 when the SEC implemented a ban on short sales of banks. They found little support and downtrended steadily for a while which is exactly what you'd expect when the government starts to meddle in the market. Italy is now contradicting this news, but this market is so oversold it is looking hard for some reason to bounce anyway. When a market is this emotional it is the market that drives the news rather than vice versa. In the current situation news is much more likely to be spun as positive rather than negative because the buyers are so desperate to find reasons to buy. I have been writing quite a bit about not trying to anticipate lows, but I'm seeing a number of small stocks with very good numbers finding some support and I'm doing some buying. I added several names to the Sharkfolio and am looking to do a little more nibbling as things develop. One name I added today is Coleman Cable , which I mentioned a week or so ago, is the sort of stock I track as its downtrending. It just had better than expected earnings and current earnings estimates are $1.42 for 2011, which is 115% growth over 2010, and $1.66 for 2012. With a trailing PE of just 9 it looks very cheap. Technically it is holding right at the 200-day simple moving average at $9.26 which is giving the green light to nibble a bit.Click to view a price quote on CCIX. Click to research the Industrial industry.
Thu, 11 Aug 2011 14:30 GMT
Emotions continue to run very high, but there are signs of underlying support as the bargain hunters can't resist buying their favorites at a discount. The dip buyers did a nice job of jumping in just as we made a new low for the day.
Breadth is strong and precious metals are the laggards for a change. Technology has some bounce on Cisco , but banks and retailers are leading. It is very choppy action but the tone is better.
Folks are still nervous about something negative coming out of Europe, but given how oversold we are, the desire to snap up "bargains" is strong. ...Click to view a price quote on CSCO. Click to research the Computer Hardware industry.
Thu, 11 Aug 2011 12:47 GMT
"Chaos results when the world changes faster than people." --Unknown
In the last five days of trading, the market has moved more than 4% four times, with three of those moves to the downside. We've had giant intraday reversals into the close the last couple of days and then crazy volatility overnight. Anyone who has been confident that they can predict what this market is going to do has ended up feeling foolish. It isn't possible to predict the short-term movements lately.
In addition to the volatility, what is particularly notable about the market action is how unprecedented much of it is. According to SentimenTrader.com, we have never had these sorts of price swings before. The closest we've come was in the 1930s. ...Click to view a price quote on CSCO. Click to research the Computer Hardware industry.
Wed, 10 Aug 2011 20:41 GMT
On Tuesday, the bulls breathed a sigh of relief when the market reversed and spiked up sharply in the last 90 minutes of trading. Today, we had the exact opposite action, plunging lower in the last hour after a failed recovery attempt.
Banks were the primary villains today, but there was relentless selling in many stocks. The folks who keep trying to catch stocks that are acting like falling safes are being crushed. When a big gain like Tuesday's reverses so quickly, it not only creates panic but also causes some market players to give up out of disgust. The mood is gloomy.
I'm hearing comments about how breadth wasn't nearly as bad as Monday and how there aren't as many new lows, but that sort of positive non-confirmation doesn't provide much comfort when so many stocks are acting so poorly. It may mean we are closer to a low, but I don't think anyone would doubt the fact that we are in a vicious downtrend and that trying to call a low is downright foolhardy. ...
Wed, 10 Aug 2011 18:47 GMT
The market finally has a little bounce kicking in, but I suspect there are lots of folks looking for the quick flip and many who are worried about holding overnight. Therefore, I would be surprised to see another late rip higher like the one we saw yesterday. It is good to see some interest, but I definitely would not get too comfortable.
The action is still extremely unstable, but I'm seeing a higher level of interest from the bottom-fishers who are nibbling at some "bargains." I'm doing that a little myself but I'm still holding extremely high levels of cash.
In a market like this, I tend to focus more on stocks that have strong earnings growth and a bit less on the chart setups. You aren't going to find any great momentum charts anyway but some of the really poor charts of stocks with good earnings can lift quickly when we have some temporary relief. ...Click to view a price quote on WWWW. Click to research the Internet industry.
Wed, 10 Aug 2011 16:26 GMT
When the market is acting poorly I sometimes feel like a broken record as I constantly remind readers that you don't need to try to call the bottom or average into weakness in order to be successful.
Those are the strategies followed by traditional Wall Street and mutual funds and are promoted endless in the media by those with ties to institutional Wall Street. It is what they have been trained to do and they do it automatically when the market is trending down.
It can work if you are lucky with your timing and average in correctly, but it has always been my contention that most individual investors would be better off if they simply get out of the way of a poor acting market and don't bother looking for buys until the action improves. ...
Wed, 10 Aug 2011 14:34 GMT
Tuesday's spike finish has turned into a nasty bull trap as the market focuses on problems with European banks. In particular, Socit Gnrale in France is under severe pressure, as are various Italian banks.
Banks are leading the way to the downside on our side of the Atlantic, but there is no shortage of selling. All the big-cap names that bounced so strongly into the close are in the red, and small-caps are bidless again.
Breadth isn't quite as bad as Monday, but it is around 4:1 negative with precious metals as the only safe haven again. ...Click to view a price quote on GOOG. Click to research the Internet industry.
Wed, 10 Aug 2011 12:42 GMT
"We now see a greater-than-even chance that the FOMC will resume quantitative easing later this year or in early 2012." --Jan Hatzius, Goldman Sachs' chief U.S. economist.
Following yesterday's Federal Open Market Committee interest-rate decision, the market initially sold-off, then regrouped and blasted straight up for the last 90 minutes of trading. Some attributed the strong finish to the "good" news that interest rates will stay low for another two years while others believed it was the Goldman Sachs statement above about the likelihood of more quantitative easing that brought in the buyers.
While the FOMC news provided a convenient headline for the business media, the big move probably was more a function of the recent volatility, oversold conditions, over-aggressive bears, high-frequency trading and dysfunctional market. This market has been trading in such chaotic fashion that it really isn't surprising it would find an excuse to rip higher suddenly, just when it looked like it was going to break down again. ...Click to view a price quote on GS. Click to research the Financial Services industry.
Tue, 09 Aug 2011 20:29 GMT
The market has been so volatile lately we probably shouldn't be surprised that the Fed announcement resulted in a vicious whipsaw. Initially, the bears took control when the Fed didn't offer anything concrete in their policy statement other than nailing down how long they anticipate rates to stay low.
After we sold off and went negative on that news, the mood began to change and suddenly there was a surge in optimism. The disappointment about a lack of aggressive action turned into anticipation that something was cooking and would be forthcoming soon. Goldman Sachs helped to fan the flames of excitement with some speculation that QE3 was on the horizon. Bonds exploded, the dollar collapsed, precious metals sunk and equities bounced big.
After the selling of the last few weeks, a big oversold bounce shouldn't come as too big of a surprise. But the manner in which it occurred today didn't make it easy to trade. We were in the red with less than 90 minutes to go and then just ripped straight up into the close. A combination of computerized trading, underinvested bulls and short covering blasted us higher into the close without a pause. ...Click to view a price quote on GS. Click to research the Financial Services industry.
Tue, 09 Aug 2011 18:42 GMT
The Federal Open Market Committee disappointed, offering bulls nothing more than language about how interest rates will stay "exceptionally low" through mid-2013. That isn't surprising, and the acknowledgement that the economy is considerable slower than expected doesn't help, either.
Market players knew that the Fed didn't have much ammunition left in its bag of tricks, but it could have done a better job of conveying a sense of optimism. This was a very gloomy policy statement, and it sounds like the Fed's hands are tied. ...
Tue, 09 Aug 2011 15:48 GMT
Our bounce is starting to slow as market players shift their focus to the FOMC interest rate decision, which is due out at 2:15 p.m. EDT. After the recent meltdown, there is hope that the Fed will toss the market a bone of some sort, but the worry is that they really isn't much the Fed can offer at this point. Nonetheless, a little happy talk and some comments about "acting as necessary" may comfort this very confused market.
The dilemma that technical traders always face in the market at this point is that there really aren't many attractive charts. A bunch of waterfall patterns have resulted in oversold conditions; this may be good for some bounces, but it's too early for longer-term position trades.
After the breakdowns we have suffered recently, you simply can't trust stocks to go straight back up. Typically, we need some back-and-forth action to shake out the remaining weak holders and to help create a base of support. The first bounce after a breakdown has a very high risk of being sold, while subsequent bounces are more likely to gain further momentum. ...
Tue, 09 Aug 2011 14:27 GMT
Some nervous market players took the opportunity to exit the market on the gap up open, which produced a quick dip. But there are buyers underneath and they have us back up at the highs of the day and gaining a little traction now.
Given the carnage we've suffered, there are plenty of dip buyers out there. But they are lacking confidence to do their thing. What will draw them in is a market that can hold steady for a while. If we start to test the lows again they will exit very quickly to avoid being caught in another woooosh down.
The big issue right now is that we are definitely oversold and due for a bounce, but there are a multitude of trapped bulls who are very anxious to escape the pain of this market. If they can cut some of their recent losses they will be happy to do so. ...Click to view a price quote on GOOG. Click to research the Internet industry.