Why the homebuilders?

Because nobody else likes them except Cramer........

XHB - The homebuilder ETF is channel down

Cramer was touting Masco several weeks ago just after he called the Bottom. I figure he has to double up here soon...

MAS

Cramer has also been heavy on Nuecor for the dividend yield play. There must be something here because he talked about it for most of last week. Best in Breed going forward?
NUE
KBR - Balance sheet but at sub $10 could be a deal...

How to play oil.....

Here are some ways to play oil. Options are available on all and the bid/ask spreads are not terrible.

XLE

USO

SLB

And the VIX closing in on 100 nearly touching the 423.6% fibonacci line. I hope you are writing options if you can because the premiums are unreal.....

Bear flag or bear trap?

Looking at a 60 min/60 day chart of the SPY one can see the trinangle trading range forming over the last couple of weeks. Normally, a pattern such as this is broken in the direction of the prevailing trend which is still bearish and thus could be termed a "bear flag". If this is the case a likely target for the S&P would be approximately 70.00.

If the triangle is broken counter-trend to the upside the important levels of resistance are the highs along the downward green trendline and then the 200 hour EMA

Here it is on a daily 3 month chart. Note the importance of the 20 day EMA...

The Dollar, Yen, & Euro

US dollar versus Yen
US dollar versus EURO

The greenback is getting stronger still.....Is this a good thing or bad? Should mean oil continues lower.

Oil, Agriculture, and the VIX

Crude is making a strong case for heading back to $65
While agriculture seems to have bottomed and begining to bounce - Here's the ETF - DBA

Here is arguably the best in breed - POT which appears to be finding support at the 23.6%fibonacci.
And finally the VIX which fell to the 20 day EMA. Tomorrow will be interesting if the bulls have a follow-through day this ema support will be broken...

In play for next weeks under-estimated earnings...

AAPL AMGN
BNI

QQQQ weekly reversal and AMZN

The QQQQ was the only major indice to post a week engulfing the previous week an thus possibly setting the tone for a bounce of the overall market. However it is a concern that the open and close are centered in the week suggesting major indecision. The bottoming process continues...
AMZN backfilled the gap up of early 2007 found support and bounced higher. Looking at a 5 yr weekly and then at a shorter term daily chart a long trade could be placed using last weeks close as a tight stop and the recent low as a loose stop.
Bottom line here is AMZN will test the falling 20 day EMA again and if it breaks to the upside........

10 day 10 minute graphs...

The VIX has formed a cup with a handle over the last 5 days retracing back to the 61.8% Fibonacci line. Failure will result in the VIX testing the recent lows.
The major indices have bounced and made a higher low but are still beneath the 200 EMA. It is interesting how this almost exactly correlates to a fib line on the $INDU.
The SPY battled back to the 200 EMA but sold off at the end of the day...
And the real battleground in the QQQQ was sold off hard on the close.
Oh to be a trader......

The VIX is telling the story....

When I said a few days ago "the VIX would fall" I did not figure on it falling from the 70's. WOW!!!! It is still amazing how Fibonacci levels come into play even on the VIX. It appears that for the time being the government has put the breaks on the freefall market. It is merely a bouncing ball losing momemtum with each successive bounce......

On vacation be back soon

I'll be back posting soon....

On vacation be back soon

Depression Comparison update

Enough said....

AMZN on the bounce...

How about some Deep In The Money Calls on AMZN for the bounce. If you're not in yet there will probably be another opportunity today or tomorrow. Take a look at the big Green rectangle as it highlights the gap up of late 2006-2007. The 200 monthly EMA and this gap are huge support areas. In other words easy stop loss points to go long and most definitely a time to get short if they are broken because AMZN will fall to $45 if broken. But for now it's the bounce....

Into the ABYSS....

The only question there is, "Where's the Bottom"?

The S&P 500 has pierced its 200 Monthly EMA....

But the $INDU or Dow 30 still has some room to fall to 8,800...

The VIX is over 50 and thus making Options extremely expensive and Bid/Ask Spreads WIDE. This would be a prime opportunity to sell some way out of the money option contracts on either side PUT/CALL. The premiums are unreal.......

Congratulations to the Bears ad condolences to the Bulls.....

Bailout passed - Bear martket resumes

I'm away for the weekend and do not have access to charting. The DOW was up 265 points and the bailout vote came. By the end of the day the Dow was down 137 points. Enough said.

The markets are WAY oversold, BUT the state of the economy is at best apathetic globally. I find it interesting that no one is picking a bottom here. Cramer called a bottom a couple of months ago and we are now below those levels.

Bottom line is there are no buyers in the market and until volume increases on a significantly UP day it is entirely too risky to be long.

Blood in the Streets....

Not quite blood in the streets, but by far the Transportation sector got hit the hardest today. Basically they took the Reagan quote of "if it moves" and applied it to selling stock.
It's hard to say what to expect tomorrow as the monthly employment numbers come out prior to the open and the "It's not a Bailout" Bailout House vote is scheduled for noon.

Were the last two days nothing but a Bull trap? I guess (and that is pretty much as good as anyone else's opinion at this point) we will have to wait and see what the reaction is after the vote.

Bailouts & Policy change rumours boost Financials

Paulson, Bernanke and the boys and girls on Capitol Hill were playing with your head again today. First of all the "No Short" list was supposed to end at the close of today, but was rumored to be extended.
Secondly another rumor from across the Atlantic alleged that France was putting together a major bailout plan of their own for Europe which was immediately condemned by Germany and was later refuted by the French Finance minister as rubbish.
And if that wasn't enough excitement the Senate puts on their snow blade and pushes the Bailout bill to their floor tonight at 9:30 EST causing the roller-coaster of a day into a broad upswing to the close led by the financials and more specifically the Regional Banks. It appears that the Regionals will be the big beneficiaries of the bailout plan.

Anyway the charts below of BBT, WFC, JOSB, and for comparison ETFC depict the effect of the governmental intervention. But a word of caution.....This sector may mightily bounce, but they may fall even harder and father as those who have been trapped get the chance to hit the exits. Take profits quickly and definitely before earnings season begins in earnest.

Also Steel got hammered again today so here's a longterm look. Can you say "Global Slowdown"?

1/2 way house or bounce?

I had a hard time getting my back test software to yield data on specific days of percentage loss and the following day bounce. I did manage to get the Total retracement levels of the worst historical falls. Granted the 2007-2008 data may be incomplete it does give some perspective.

Solid Bounce that it is....is nothing to get overly bullish about. Markets are still underneath short term moving averages. However, roughly 1/2 of yesterday's fall was recaptured as the Bernanke, Paulson , and the bailout boys work feverishly to come to terms and "Calm" the financial markets.

The SPY daily still in a Bear trend
QQQQ still well below day EMA...

Patience, patience, patience.....wait for the other half of the bounce and either get out or get neutral and set up for the barrage of BAD earnings coming in approximately 3 weeks.

The Devil (-666) & (-111) = Dow down 777...

I wonder what combination of our knowledgable leaders make up the -111 part of the selloff?
Bush, Paulson, Bernanke, Pelosi or was it the summation of the House's 1/3 + 2/3 = 1 failed bailout vote? Either way at this point it is more interesting to look at What did not get creamed:

Lockhead Martin and the long term chart is quite impressive. LMT is bouncing between longterm Fib lines and has recently bounced off the 200 day EMA.

IRBT or IRobot - This could be a niche defense play with a tight stop @ $14.49.

And a couple of bottom feeders of the economy Dollar Tree and Ross Stores both held up where other discounters could not. Another notable here would be COST or Costco.


And for comparison sake in the Short that got away category - CALM.
OUCH! I guess eggs in New England are out of favor in the Fall. Note the "Should have bought Puts here" oval. I just wanted to emphasize the importance of the making of Lower Highs. This one should have been EZ Picken's.....

Is AAPL crushed?

For the speculative at heart how about some AAPL Calls to play the bounce with a stop $99.99. If AAPL breaks $100 next stop is at least $80. In other words if the Call gets stopped out immediately replace with $80 Puts.


More later on the Events of the day and the lack of our Leadership.

Quarter's End

It is a good practice to look at different charting time-frames so I have a calender reminder set to jog my memory to look at Quarterly & Yearly charts. It is interesting to see the moving average levels as well as the recent action. Take for instance the S&P 500.

By looking at this long term yearly graph it looks as though the S&P has made a double top and somewhat retraced this year. It is fairly easy to see the moving averages acting as major support.

Now let's take it down to a Monthly time frame and focus on that double top. Is this looking more like a cup and handle now? The bottom of the cup being the 200 month EMA and the handle tracing back to the Long term Fibonacci fan line. Most importantly we can see that resistance going higher will be met at the 50 month EMA - 1311.

It's pretty obvious that the Financials or XLF will tip us off to the overall direction of the market. Here's a 10-year Quarterly. See anything interesting. I thought the close on the 23.6% Fibonacci line as well as the high of the quarter just above the 38.2% fib and yet below the 50 EMA. The bailout may move the XLF higher, but I believe getting short the XLF above $24.50 using the 50 -EMA as a stop could be decent trade.

The consumer staple stocks are sporting a cup with handle. However it could be viewed as a failed breakout with that blowoff top of this quarter. Bottom line here is the 50 EMA is crossing the 200 EMA and XLP is worth watching a little closer. An Call entry point in the low $26 range with a stop closely below the 100% fib line of $25.92 may be a decent hedge to all the short plays to be put on after the bailout is announced.

Why a RIMM call makes sense....

RIMM got killed today after reporting earnings and cutting their profit margin forecast by 10%. Oh they are only going to make 48% instead of 52%. That just does not correlate to 25% haircut of the stock price in my book. Anyway take a look at a 5 year weekly. Retraced straight back to the 38.2% Fibonacci line which is slightly above the 200 week EMA. Interesting you say......

(To enlarge charts to full screen just a mouse click away and hit your back button to return)



The daily reinforces again the wonder and amazement of Fibonacci levels. Drawing fib retracement from June highs to today's low brings out the lowest low prior to the gap down or roughly $88 per share and coincidently the 23.6% retracement line. It may take a Federal bailout or a few days, but the likelyhood of $88 is enough for me.

What is LIBOR?

So it's all about the banks......Check out the Reliabilty statement published on Wikipedia back in May as sourced from the Wall Street Journal.

Gleaned from Wikipedia.com:

The London Interbank Offered Rate (or LIBOR, pronounced /ˈlaɪbɔr/) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). LIBOR will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.

Reliability
On Thursday, May 29, 2008 the Wall Street Journal released a study suggesting that banks may have understated borrowing costs they reported for LIBOR during the 2008 credit crunch.[2] Such underreporting could have created an impression that banks could borrow from other banks more cheaply than they could in reality. It could also have made the banking system appear healthier than it was during the 2008 credit crunch.
For example, the study found that rates at which one major bank "said it could borrow dollars for three months were about 0.87 percentage point lower than the rate calculated using default-insurance data."
In response to the study released by the WSJ, the British Bankers' Association announced that LIBOR continues to be reliable even in times of financial crisis. According to the British Bankers' Association, other proxies for financial health such as the default credit insurance market, are not necessarily more sound than LIBOR at times of financial crisis.