Thursday, March 12, 2009

End of Day 3/12

Well, that quite the goring the bulls gave to the bears! Relentless buying all day long… I was flat out wrong on my guess last night, but this morning I warned that if we broke above that dragon’s head, it was bullish, and look at the resultant chart:

That’s some serious determination. I can just picture the bulls singing their revenge tonight… “Somebody better put you back into your place!”

Queen-We Will Rock You:

But let’s not get too ecstatic, bulls. Yes, you have gained 12 whopping percent in the last four days, BUT, that 80 SPX points has only gotten you a 38.2% retrace of the LATEST wave down, and still leaves us below the descent rate of the S&P during the Great Depression. It’s brought the DOW back to about the rate of the great depression as you can see by looking at the big picture for the bear market so far. Look at how much further we would have to go to get back over the last area of support that is now resistance… we do that, THEN I’ll be impressed:

Today the DOW gained a Seth 239.66 points (3.46%), the S&P added 4.1%, the NDX gained 3.4%, and the RUT zoomed 6.5%. The prior laggards gained the most, with the XLF up 10.3% (76 cents), and IYR climbed 7.9% and I do note that the CMBX index has come in ever so slightly, certainly not in proportion to the moves seen over the past 4 days. LQD, that high quality debt fund was actually down slightly today.

Internally it looked like more panic buying with advancers leading decliners 10 to 1 and 94% of the volume on the upside, the second 90%+ up day in the past 3. That’s often a bottom marker technical analysts look for as these are usually found at significant bottoms. They show follow through. That said, I would weigh these two 90% days within the context of the four negative ones we’ve had in the past month. This market is a different animal, and that’s some kind of volatility. But what’s amazing about all that volatility is that fear on the downside, as measured by the VIX has remained relatively low and it fell another 5.6% today. It’s one of those situations where the bulls point at the bears and say they are too bearish and the bears point at the bulls and laugh at how unafraid they are. I’m no perma-bear, but right now I’m laughing at anyone calling this THE bottom simply because there has been no change to the fundamentals the way I see them, and NO, I don’t believe for a second that we’re done in 18 months correcting the largest credit bubble in the history of the planet.

I remind everyone that crooked bank CEOs who got us into this mess are not to be trusted any further than you could throw one! Oh, what a great game just came to mind… never mind, I don’t want to get in trouble for calling them lying S.O.B.’s or anything like that, even if they are, I just wouldn’t do a thing like that!

People bought the Citi BS ramming the banks higher, then I was amazed that they bought the same bull again from JPM after Dimon said to himself, “Aha, that worked, think I’ll try that…” and then I was just astounded that it worked YET AGAIN when BAC liar/criminal CEO Ken Lewis piled on with the same BS again today! People are actually that gullible? Oh, yeah, they’re making money, and my name is Bond, James Bond. Asshats, all of them. Should have waited a day and made it a joint award – hey, what can I say, my timing’s a little off right now.

Oh, and mark to market and uptick rule changes mean NOTHING to the real fundamentals underlying the debt holding up this economy. They are a smokescreen, just like the “stress test.” Fun and games by criminals, the same ones who brought us here, that’s all.

And speaking of criminals, Bernie Madoff is finally behind bars. Hell, he practically put himself there. People begging the SEC to do something and he turns himself in and then pleads guilty! LOL, you couldn’t make this stuff up if you tried. Have we really begun to get to the root of the problem here? NO? Let me know when Paulson is behind bars, then I’ll be optimistic about our future.

Okay, the charts are talking to me… just like Cramer or Doug Kass calls the bottom over and over, and over, sooner or later I’ll be right if I say that tomorrow will be a down day! LOL, there are signs… and when I’m right, by golly, I’m going to remind you of that over and over in my commercial and ignore all the times I was wrong. Can I interest you in my new option selection service? NO? Why just look at this winner I selected that gained me over 400% in just three days! You, too, can turn your meager $10,000 investment into $40,000 in JUST THREE DAYS!

LOL, oh, we have to have fun at the lunacy.

One thing’s for certain, today eliminated the possibility of a small wave 4 retrace. There are now only two real possibilities from where I stand; either we are just about done with the larger wave 4, or the large wave 5 down is completely over and we just began wave 1 up.

When I look at the 10 day chart of the SPX I am amazed at how we ran up the middle of the green channel today and didn’t even bobble from the centerline. Look at the stochastic indicator… went up and stayed up, never even dipping down after the open. I don’t have my Fibonacci’s on here, but if we retrace, the 23.6 is at 732, the 38.2 is at 720, the 50% is at 710, and the 61.8% is at 699. The pivots are 768 above us, 734, then 717 and then 696 below. Note the light blue larger channel I drew in. That could be in play if this is the first wave up of a larger correction. If we’re still in wave 5 down, then it probably won’t hold later on. If you count the waves up from the bottom, there’s a pretty clear 5 waves there and it looks like wave 5 extended to 750. That does look like a potential ending diagonal (not drawn in):

The 60 day, 60 minute view of the SPX shows the old larger wave 5 green channel. Remember how I said a couple days ago that I could envision that smaller channel running up to the top of the bigger one? Well, here we are. The fact that channel crosses right at 750, just where we probably ended 5 waves up is amazing. And overbought on the stochastic too. Note how the 23.6 of the wave 3 move lays right at the 717 pivot… and guess what? A 38.2 retrace back down lands right back in the same neighborhood. Isn’t TA fun? Yes, wave 2 up above did overthrow the channel and this one could head fake a little more too, so be careful:

Here’s a 5 minute view inside the DOW. Really just showing it so you can see how perfect that climb was on the centerline today:

The DOW daily shows another powerful candle, but on still lower volume. Note how fast the fast stochastic has made the trip up from the bottom. The odds are very high that we’ll reach overbought before the next deep retrace gets started, and note that the slow (my slow is set slow) is still not out of oversold. If you are trapped short, you may not want to bet on a deep retrace until later and then all this action at the 7,000 level will become support:

Here’s the DIA… I’m showing it just so that you can see how low the volume is here. The SPY is a little heavier, but not a substantial amount:

And the XLF is the most bullish chart I’ve seen in a while, even if it is based on the lies and half-truths of criminals. That’s the last 3 months of XLF with the blue lines showing a large descending wedge that I pointed out last night. This time was indeed different than all the last black topping candles! Hugely engulfed and it just launched off that trendline. I got long on that this morning, but cut it lose too soon. It looks like it could easily make a run up to the $9 level, that would peg the 50dma, the upper Bollinger and fill the gap up to $8.75. We may get some pullback first, however, but probably not too much… I can still feel the optimism pouring out of my Teevee set even though it’s happily off!

The Put/Call still resides in the gutter at .76. I’m surprised that it’s not lower. Surprisingly, the other indices, like the transports and RUT that didn’t produce a breakout higher on the P&F charts still have not.

This is definitely one of the most difficult investing environments for stocks ever. If you just did the right thing and went to cash a long time ago, it’s not your problem, congratulations. I was only able to convince a few of my friends to do that, most did not. Trust me, if that was you, there is no reason whatsoever to rush into the market now. Oh yeah, it could be THE bottom and then again, we could wake up and your debts, and my debts, and America’s debts may all be gone too. Wouldn’t that be nice? Wait, is this rally real life, or is it just fantasy?

Queen - Bohemian Rhapsody:

Is this the real life-
Is this just fantasy-
Caught in a landslide-
No escape from reality-
Open your eyes
Look up to the skies and see-
Im just a poor boy,i need no sympathy-
Because Im easy come,easy go,
A little high,little low,
Anyway the wind blows,doesnt really matter to me,
To me