When I was younger I watched Blue's Clues. Things had personality. Things had names. It is only right. Of course, as the adult world grips the soul, things can tend toward nihilism. But, what the fuck does this have anything to do with anything? To which I reply, my point exactly.
In any case, the NYSE Bullish Percent Index is pushing its head above 30%. This occurrence, as mentioned many times before (if not here, in the world of technical analysis), means that the chance for a reversal in trend improves. In other words, it would not be surprising if the market began trending upward, although it would be nice to see the BPNYA break above 30 with an X.
Also, the VIX needs to continue dropping as it has been. This, of course, signals a reduction in market volatility (fear). Currently, maintaining the current downward trend does not look unlikely.
Here is the BPNYA on a more historic scale (thanks to Trader's Narrative for the chart). As you can see, mid-October we hit, what looks like, a historic low. Passing the 30% mark will hopefully confirm the current bullish sentiment.
PS: I'm tutoring Calculus and other math after I get out of class. Also, I have been writing so many essays I don't want to see another word. Really. But, soon, I will have far fewer excuses for not updating. Until then, enjoy the shitty music above and the lower stock prices below.
Thanks to The Deipnosophist for this clip. Again, I don't think either candidate has all the answers (that's what their advisors are for, yeah?), but I do believe the collective IQ of the United States is slowly falling below 100.
I lost the gains that I made yesterday: 6.44%. Should have cashed out the stocks at the close (should have made it a point to be near a computer at the close!). Whenever you see prices rise substantially in a short amount of time with low volume, cash out. You can normally buy back in later. It can also be a wonderful place to short, especially if the volume plummets after the rise. Short that shit.
I'm still up everything I made last week (this is all in my fantasy account; my real account has been stagnant as I don't want to take a loss at the moment). In the morning I made a few purchases based on some gaps down that I thought would close. They eventually closed; but, I did not get to a computer until later in the afternoon, when everything started going to shit. Oh well. There's still terrible volume, but I like the NYSE Bullish Percent Index, the NYA50r and NYA150r, and the fact that it did pull back on light volume. Futures are up. It'd be nice to see some volume tomorrow. I want to say a triangle is forming on SPY's point and figure. It looks like there's some strong support at 90, but I'd look for a break above or rebound off of 93 with volume to give a clue as to where this market is heading. Until then, futures are a nice indicator, at least for the opening, especially if you can get a sell off before the prices start to change. Also, play those support and resistance levels until a direction takes hold.
This week has been stressful for many reasons unrelated to the stock market. Not sure when the stress will ease, but I hope to start posting again very soon. I even have a short guide that I have written up in my time between school and work.
I took a little time to play the fantasy markets on Friday (some of the shares were purchased on Wednesday or Thursday, but only a fraction). Notice the registration date. Yes, that 10.8+% gain took place over the course of a few days (and I didn't even purchase anything in this portfolio account on the first day because I registered after market hours).
In any case, the BPI is rebounding; we've had our first positive week in a long time; and, many hardcore investors are contemplating long positions--while, I say go with whatever works.
Your stock went up $1.00 on Monday and continued down $.63 on Tuesday. It went back up $1.40 on Wednesday while falling down $.30 on Thursday. When you take a look at the intraday charts you see something frustrating and erratic. No price at which to sell is clear. If only there were a method to eliminate some of the noise perhaps the stock trend would be somewhat clearer. For this, many turn to point and figure charting, because it aids in reducing noise and elucidating market tendencies.
If you have seen charts with rows of X's and O's, then you have seen point and figure charts. Their beauty lies in their simplicity. The O's represent supply and the X's represent demand. Whichever resides in the row furthest to the right has control of the marketplace at the moment. When supply outpaces demand, price falls. When demand outpaces supply prices rise.
In order to make the concept of supply and demand somewhat clearer, let's think of it in terms of something less abstract than stocks and currency. Try thinking of supply and demand in terms of diamonds. Despite what businessmen in the diamond industry profess, diamond scarcity arises mostly from controls placed on the size of supply. Through the use of advertisements and various other psychological tricks, demand maintains its strength. With supply low and demand high, diamonds can carry a high asking price. If marketplace supply increased substantially, then price would have to be lowered in order to liquidate the product and to prevent customers from purchasing from less expensive competitors. If supply is high, and demand is low, then price must be lowered to entice consumers to purchase. If demand is high while supply is low, then the owner can raise prices.
Similar phenomena occur in the stock market. When demand for a stock is low, demand can be increased by lowering the stocks price. That is what must be done if people want to liquidate stock while others have little desire to purchase that stock. If shareholders do not want to sell stock while others would like to purchase, then the potential buyer must raise his or her bidding price in order to tempt those who are holding onto their coveted shares.
Point and figure charting displays the interplay between these two fundemental forces of the marketplace, while at the same time not tracking relatively insignificant changes.
Barry over at The Big Picture posted a comic from Sinfest. I began looking through the comic's archives and found that the last few months have been full of politically and economically charged strips. They were all good. These were my favorites.
(With all the beatings given to McCain and Palin, mocking Obama a little feels refreshing.)
"But tell me: how did gold get to be the highest value? Because it is uncommon and useless and gleaming and gentle in its brilliance; it always gives itself. Only as an image of the highest virtue did gold get to be the highest value. The giver’s glance gleams like gold. A golden brilliance concludes peace between the moon and the sun. Uncommon is the highest virtue and useless, it is gleaming and gentle in its brilliance: a gift- giving virtue is the highest virtue."
Now, I know grammar jokes are only funny to a few, and that the joke must be especially clever to elicit laughter. But, for me, I enjoy even the poorly done. Yesterday, during some free time I began reading through various blogs on the internet and came across a stock blog called The Float. Among his intelligent posts and numerous article links, he posts comics on a regular basis. And while I find some of them somewhat formulaic, I did come across this New Yorker comic (left) that reminded me of my love for grammar (even if I do not always succeed in using it properly).
This reminded me of a brilliant birthday card I got my brother a year or two ago. Here are the pictures, outside and inside.
And given that this is a blog about stocks and not a blog on the nuances of the English language, I figured I would post a comic that while not directly relating to the market, reminded me of its most recent plunge and current rebound into the green:
I have to go to school.
PS: 100th post! Hope someone out there has somewhat enjoyed the posts. If not, I have. And it probably won't stop soon.
I found this nifty link while searching through StockCharts.com the other day. It provides you with a list of NYSE stocks that currently show buy signals on their point and figure chart. Basically, it is the list that is used for the NYSE Bullish Percent Index (they divide the number of stocks with buy signals by the number of stocks on the exchange); but, it is also useful as a stock screener.
Because my grandpa is suffering from a fairly severe medicinal side effect, I won't be posting much else today. But a little humor never hurts:
In an article titled "Dow's Worst Week Comes to an End," Peter A. McKay states that Trading activity was feverish [on October 10th]. New York Stock Exchange composite volume hit 11.6 billion shares, a new record. Nasdaq trading also hit a record, as 4.18 billion shares changed hands. (link: Wall Street Journal)
While not all charts show strong increases in volume, there are quite a few that do: INTC, DIA, SPY, A, XOM, GE, MSFT, WMT, PG, JNJ, T, HPQ, KO, CSCO, PFE, PM, VZ, SLB, QCOM. Trading Goddess has some stocks listed with volume and price increases, as well. Looks like some opportunities are starting to emerge from the gloom and doom.
And while there's no guarantee that the free fall has found an intermediate bottom, the percentage of NYSE stocks above their 50 and 150 day moving averages is starting to rebound, albeit very slowly:
I'm sure there were some other things I was going to post, but that will have to wait until another time. Right now, some Smashing Pumpkins:
The above is for personal enlightenment only. I do not recommend "playing" the stock market to anyone, because I would like to keep (out of court, and) all the wealth to myself! MUHAHAHA....
Politics. I hate the shit. So much of it is aimed at capturing the vote of the lowest common denominator, and thus lacks nuance, reason, and intelligent repartee. No offense (and I doubt you should take offense if you are reading this site), but I would rather not have the country become an ochlocracy (i.e. mobocracy). I do not want to be ruled by idiots (as derived from the Greek [def]) who have never passed more than a single economics or civics course--if that. And I do not want to be ruled by the 70+% of Americans who do not have a Bachelor's degree [1]. It makes me nervous and scared.
Earlier this evening I saw something on television that pushed this fear out of my relative subconscious and into the open. After news on a report revealing Sarah Palin's misuse of power [2], a commentator, who used to be the liberal "sidekick" of Tucker Carlson [3], parsed some of the hate emerging from the McCain crowds [4]. The misunderstandings, the fear, and the hatred exhibited reminded me of Orson Welles' 1984. I started rereading 1984 a few days ago. Abuse of language, abuse of reality, and incitement of negative emotions seethes from the ruling party in the book. And my belief that many of these misuses are a part of our own society has strengthened--I am not limiting them to one side of the aisle either. They are useful tactics when anyone wants to control a mob of people. And that is exactly what our form of government tends to encourage, albeit, not with the absolutism displayed in 1984. But it is there.
Here are a few videos of Palin's recent speech and McCain's recent rally that make me somewhat fearful for the state of the union. If you want to watch the program I watched on television earlier, click the fourth reference link above. After the videos I will strive to make some sense of the title of this post.
Obama, the associate of terrorists?
Slight misunderstanding (or associate of the misinformed)?
McCain receives boos when he asks the crowd to respect the other presidential candidate?
I digress... Ugh. Meritocracy? Fuck that shit seems to be the clarion call sounding from all four corners of the country. And, it appears, that people strive to instill this argument with credibility by saying we're all created equal (i.e. "do not hold me up to the same standards as those more talented than me; we are all equal in God's eyes, and deserve the same."). Let me assure you, all of this leads to a failed state: some form of socialism, communism, or fascism, demoralizing to those who contribute the most to the advancement of society.
As for privilege, which I now do not believe I will spend much time on, it is coming to an end for the vast majority of Americans. Jobs are being shipped overseas that used to provide a decent salary for the unskilled; high paying construction jobs have slowed; because of declining incomes, fewer Americans will participate with vigor in the consumer economy; and worse, Americans, for the most part, do not want to see what they are becoming.
Privilege. We, as Americans, have been privileged to live the life we live. Nearly everyone has a television here. Free education through high school and government aid, for many poor, thereafter. Cheap clothes, cheap food. Libraries in many cities. Use of 25% of the world's energy. We are privileged.
But it will not last if we continue to disregard the necessity for higher standards.
And, personally, good riddance to those uninitiated in the realities of the world. I'm sick of hearing all the doublespeak.
Yesterday was not a terrible day. The markets stopped vomiting on my carpet. And it apologized for urinating all over the bathroom. Perhaps it will even help to clean up its mess before it heads off on another drunken fall.
In terms of stocks, I still like SOL, EGLE and INTC (up on IBM earnings). SOL is coming back to life. up 12% in the premarket. EGLE supposedly has a contract with shareholders to provide a consistent dividend. Right now that dividend is 20%+. While I do not own any EGLE, I'd purchase some if I had the money. I do own SOL--and if I had the money I would purchase more, especially while the Capitalist God himself has lost faith in the markets.
Oh, and futures point up. Though, I would be wary as the short selling ban on financials has been lifted.
God Am by Alice in Chains. Layne Staley's last show. Favorite line: "World dies, I still pay taxes."
I don't mean to blabber on and on and say that certain crap should happen, or shouldn't. Dinosaur Trader was right in saying that the volume was not nearly high enough for there to have been a capitulation on Monday. I mentioned that that may be an issue, but did not give it enough credit. Remember, I am not a seasoned investor. I am currently holding to two long positions in hopes that I do not have to sell for such a miserable loss. While the experienced traders have their downs, I'd still listen to them over myself. And, how I wished I had $25k to allow for day trading. With Zecco there's unlimited free trading for the month of October. At sogotrade you can get $1.50 trades and when you sign up you get 100 free (at least I did). The whole idea that day trading is more dangerous for someone with less than 25k than it is for someone with more than 25k is bogus. I'm sure there are all sorts of reasons that the SEC implemented the rule, but I know that there is lots of money to be made day trading this volatile market.
In any case, the Bullish Percent Index is further down. The percentage of stocks above their 10 and 30 week moving averages is down even more--to levels not seen since circa 2002. None of this means a guaranteed bounce is under way.
Like I have said before, use the above information at your own expense. Take care.
I posted a comment over at Dinosaur Trader earlier today when I had some free time at work. Sometimes it's hard for me to get a post up on Mondays and Wednesdays because I have work and school and tend to get home late. Anyway, check out that post and the charts above. I found one BP chart that goes back to 1987 and stops in early 2008. Today the NYSE Bullish Percent Index is even lower than it was at the beginning of '08, as shown in the first chart. Although the volume was not as strong as I would like it to have been, today could definitely be a reversal day if interest rates are cut and poor earnings are already priced in. Many gap downs occurred today, setting up many stocks for what appear to be a bullish hammer, or, in some cases, a morning star. The VIX also made record highs signifying a possible bounce (yes, I love the site VIX and more). In any case, today was a monumental day in that we broke through the 10,000 level on the DOW. As the Big Picture said about the best investment ever, "It is those 'Dow 10,000' hats CNBC got for all the on air anchors way back in 1999. They sure got a whole lot of use out of them."
The Big Picture posted this humorous take on how the markets really work (I'm beginning to believe that this is not too far off from the real thing):
Contrahour posted two very interesting videos that I am going to embed below. One has the opinion of billionaire Jim Rogers on the current economic crisis, what he sees, and what he would recommend or not recommend. The other contains a longer interview with Warren Buffet covering similar material, albeit with a different perception.
I also have three pertinent graphs:
The first is the NYSE Bullish Percent Index. As mentioned before, it has gone below the 30% level, a level that once it breaks back through normally triggers a decent rally (the red circle is one instance where coming down from 70 the BPNYA did not drop much). The percentage of stocks above their 50 day and 150 day MAs is also pretty low, nearing 2001/02 values. Now, I may be mentioning these graphs because I purchased some SPY on Friday and am hoping for a rebound (probably only likely if there is a rate cut); but, even if that does not happen, it is a good idea to keep the BPNYA in mind. It is a fairly reliable indicator.
Looking at the SPY chart confirms a new low and a triple bottom breakout. In the long run we will hit 97 and maybe go as low as 72. I'll sell this if the futures turn red. And, as for SOL, if it is not trading up in the pre-market, I am thinking about getting out. I like the stock because of its low P/E, but considering the PF chart, breaking below 9.50 is not ideal (unless you are buying). And it is getting closer.
My advice may lead you to bankruptcy. Therefore, use the info above at your own risk. Take care.
PS: Not to belabor a political point on an economic website, but I dislike both presidential candidates. I would vote for Ron Paul, but I think he is a little crazy too. In fact, I am thinking of doing a write in for my mother. But that does not mean I do not enjoy reading and learning about politics and the various politicians that have power in our country. For instance, I read an article (by Rolling Stone, so it is liberal leaning, but well done) about how the life story McCain presents on the national stage differs from what actually has happened in his life. Some of the differences include: McCain is no outsider (as though you could not figure that out; he's a 72 year old senator who was not elected yesterday). His father and grandfather were both four star admirals who helped push him through schools and ranks (and past crashed aircraft that would normally stall advancements). McCain even flew on an airfield named after his family: McCain field. The article is a bit long, but it is an interesting read. It is called Make Believe Maverick.
Bought back SOL @ 10.05 and shorting RIMM is officially the best trade of the day. Covered @ 62.93 (wish I had checked RIMM's yesterday low, because I probably would have covered there).
Take care.
Update: Bought some SPY @ 111.49; I won't be doing anymore buying or selling today.
I had some stops in, so I made a profit this morning. But who would have thought the DOW, S&P, and NASDAQ would give up so much of their gains? Maybe I'm just naive. In any event, I shorted RIMM @ 65.16. Looking to pick up some long positions at the end of the day, depending on how things take shape.
Good luck to all of you.
PS: I think my stock made the most gains in Trading Goddess' Stock Picking Contest. I'd have to go back and look through all the submissions to be certain, but things look good from the research I did on Wednesday.
The VIX is rising; but, as FDR said, "There's nothing to fear but fear itself." Learn to love Fear (yes, capitalize the SOB) and he will treat you with some respect. Of course, tomorrow could usher in another shit storm. Albeit, that's a risk I am willing to take. I bought some SPY @ 112.76, some BA @ 55.20 (yes, it hurts a little), and bought back some SOL @ 10.53 after selling it for 11.13 this morning. Now I'm off to school, but while I'm away, enjoy this:
McCain takes some jabs at Letterman, after Letterman makes a few jokes of his own. (6 month+ old show).
While the Fly laments the loss of the good old days [1], I am up 10% in SOL[2], happy, and finding the market more interesting than ever. With another vote on a slightly modified bailout package taking place in the House midday Friday [3], the Senate's okay [4], Americans' 401ks hit hard [5], 91% of all mutual funds having lost money [6], and bailout analysts stating what’s saved on the expenditure side could well be lost on the revenue side [7]; it appears that the House will edge towards something. Whether they vote for the bill and hand it to the President remains possible--especially given the original 228-205 vote [8] that may find itself swayed after Monday's turmoil [9]. Futures data are down for today [10], meaning I may sell in the morning; but, overall, my view on the bailout remains optimistic. And, it appears that Warren Buffet holds a similar view [11].
Also, the VIX needs to continue dropping as it has been. This, of course, signals a reduction in market volatility (fear). Currently, maintaining the current downward trend does not look unlikely.
