The 50 Day Moving Average Proves To Be Strong Resistance; For A Real Bottom To Happen The Public Has To Give Up–We Are No Where Near That Yet
August 7, 2008
I am extremely busy right now and will expand on this later but like I have said many times before: the most successful rallies come when the Follow-Through Day comes with a move well over 3% and takes the prices over the 50 DMA. When you don’t get that on a FTD day you normally only have a bear market rally.
A lot of people are wondering why it is so hard to make money out there. Well folks just taking a look at your charts tells you why. Since January 29, 2008 till today 8/7/2008 (I think I was on a two-day chart when I posted these figures in the longs/shorts analysis–subscribers will see the small variation) the market has moved a WHOLE NEGATIVE .10 PERCENT. I hate to tell people who love to make money this but without a real trend it is OBVIOUSLY impossible to make money in the market.
For six-and-a-half months the market has moved nowhere and without a market moving more than 10% up or down it becomes impossible for trend followers to make big money. That is why since the big gap lower on 1/22 I have made absolutely ZERO for income. A job that has always provided me with income (minus the Jan 02-September 02 period) is right now making me its little you know what. For this to change one simple thing has to happen and it is very simple. A trend has to start.
I don’t care if this trend is up or down but the fact is that it must move at least more than 5%. Or else none of your stocks will have enough time to make anything since 3 out of 4 stocks follow the trend of the market the fact is that most stocks are going nowhere with the market. If they are going up or down they are giving horrible and poor price entries. So those of you that think that I should be killing the market right now are completely inexperienced and HAVE NO CLUE how the real market works. You need a trend to make money. Those that are making money now are going to make a LOT LESS in either a bull or bear market. This is a churning market. Just look at the market since 1/22. IT SIMPLE HAS GONE NOWHERE ALLOWING NO ONE TO MAKE MONEY.
I have my records of 1999-2008 available. Even this year we nailed three nice stocks in XCO, DGLY, and PDO. Even if BKE, BRKR, ACM, AEHR, and a few other failed. This continued the trend of late 2007 when only one perfect chart worked: APPY. Earlier in the year in 2007 we had AFSI and TESO as clear winners. These charts simply don’t exist anymore. If you want to look at the ONLY two pretty charts just now starting to setup you can look at EMIS and APII. Too bad they are too thin. If you have your TCNET setting the same as mine you can see how pretty APII and EMIS are. APII is the clear King in this joint but it is too thin and too young to be considered a long. There needs to be at least 5 more weeks before it can even be considered for a base. Things simply do not look good out there.
There is nothing else to add here that I have not already said. I am going from 25% invested to 10% invested OVER NIGHT! I really have no faith in this market and what it did to two of my prettiest stocks today (OFI and VRUS) proves to me the market is psychotic and that no rational person needs to have money on the line. There are so many times when the market is easier like 2003-2006 and 1999. There is no reason to work your butt off for nothing. Which is what everyone is doing right now. I think some of you need to relax, realize another bull will come, but first we need to see some real blood and “give-up” on the street before we can have REAL stocks (those that trade over $10 and over 100,000 shares a day) setup in the same pattern APII is in. When I see 10-100 APII’s setting up, then I know going 1000% on margin is here. Until that day, STAY OFF MARGIN and keep all your plays small, long and short.
Hopefully, we can top here and selloff 20%. That would give us at least a good amount of time to make money on shorts before catching another bounce which is probably all it will be for a long time. I think we have a while before my pretty green charts or CANSLIM stocks work again. Those of you who continue to try to go long in this market have still not had something bad happen to them.
Look at MR for God’s sake. This stock was THE ONLY stock coming up on all my fundamental and technical scans. I passed on it due to its rough chart which shows heavy volume selloff in March below the 200 DMA with red BOP and false breakouts in June. Before that it false broke out in October and December of 2007. So trusting the breakout yesterday was the furthest thing away from my mind.
The reaction today on the volume that was HUGE and trumped yesterday’s proves NOT EVEN MEDICAL stocks are safe here. One place is safe: CASH. CASH IS KING!!!! I have been saying that a LONG TIME and have been right the entire time.
I nailed the market top, rode the uptrend the WHOLE WAY FROM 2002, and have told you to be in cash for the past four to five months. Yet, people still will not FULLY listen to me when I tell them to wait. Impatience will kill you in this kind of a stock market. Exercise discipline, be patient, and wait to pick up the cash in the corner of a room when it is just laying there. These kind of markets lead to 2003 type of bull markets. It just takes time. Be patient, keep your head high, and your cash dry. ALOHA!!!!
PMI Group Inc. Q2 2008 Earnings Call Transcript
August 7, 2008
PMI Group Inc. (PMI)
Q2 2008 Earnings Call
PMI Group Inc. Q2 2008 Earnings Call Transcript
Dow 30 Trading Ranges
August 7, 2008
Below we highlight the 30 Dow members with respect to their various trading ranges.
After the recent volatility in the markets (S&P 500 +2.9% on Tuesday, -1.8% yesterday) some of these stocks are on the move. BAC had traded at its theoretical high of $34 and has declined over the last five days (through Wednesday) into it "normal" range. XOM continues to show weakness as it is 4.7% below the lower end of its range while JNJ is approaching its theoretical high.
US Major Index and Sector Bull/Bear Filter
August 7, 2008
Between 7/15 and 7/23 the S&P 500 financial sector rallied 30% over 8 days and marked the beginning of a new bull market after its 54% decline from 2/20/07 to 7/15/08. Birinyi Associates defines bull and bear markets based on the traditional definition of a 20% gain or loss from peak to trough.
The following table highlights the current cycle for the DJIA, S&P 500 and its ten sectors as well as the historical average (since 1962) for each. The sectors are traditionally more volatile than the markets; financials for example have had 20 bull and bear market cycles since 1962 compared to the S&P’s eight rallies and nine declines.
US Major Index and Sector Bull/Bear Filter
Do Bear Markets Have Bigger Days?
August 7, 2008
Mebane Faber submits:
I don’t really get Kedrosky’s post on 300 point rallies in bear markets (as a follow up to Ritholtz). The point value is not useful in comparing current conditions to past conditions. As an example, a 300 point move on the Dow now equates to about a -2.5% loss. Back in 2002 or 2003, that is closer to a -4% loss (and early 1990s that is a -10% loss, and in the 1920’s it is a -100% loss), but you get the picture.
A better question is:
Do Bear Markets Have Bigger Days?
Big Days and Future Market Performance
August 7, 2008
Hickey and Walters (Bespoke) submit:
An earlier post we did on 300 point days garnered a lot of commentary. Incorporating the feedback from the comments section, we analyzed the performance of the S&P 500 following big percentage gains. Since not everyone agrees with the standard definition of a bull and bear market (gains or losses of 20% or more), instead of analyzing when these big days are more likely to occur, we calculated what the average performance of the market was following all big up days. After all, all we really care about is where the market is going.
In the table below we show the average performance of the S&P 500 following one-day gains of more than 2%, 3%, 4%, and 5% since 1945. The 2% category includes all gains of 3%, 4%, and 5% etc. In the bottom row, we also calculated the average performance of the S&P 500 following all days since 1945.
Big Days and Future Market Performance
07 Aug 2008 16:00:00 - Top 5 Stocks up on Unusual Volume
August 7, 2008
| Intraday Unusual Volume - Top 5 Up |
| Symbol | Volume % Change |
Price % Change |
News | |
| TRLG | 452% |  28.61% |
news | |
| HAYN | 395% | 53.44% |
news | |
| GIVN | 320% | 15.18% |
news | |
| PACR | 308% | 19.29% |
news | |
| PRXL | 308% | 32.64% |
news | |
|
||||
07 Aug 2008 16:00:00 - Top 5 Stocks up on Unusual Volume
Pending Home Sales Index Was Bad - Not Good (as Reported)
August 7, 2008
Barry Ritholtz submits:
There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
Pending Home Sales Index Was Bad - Not Good (as Reported)
Thursday Options Outlook: XLE, WB, MRVL, NUE, HSY, COF, F
August 7, 2008
Rebecca Engmann Darst co-authored this article.
Energy
Select Sector SPDR (XLE) - Uneventful action in the share price of the Energy
Select Sector SPDR today gave option traders the darkness of cover to seek
sizable put-spread positions protecting against a new pullback in oil prices.
The action here is extremely noteworthy simply by dint of the size. First we
observed a trader sell a 20,000 lot put spread in the August contract between
strikes 70 and 75 – possibly the rollout of an existing position down
into the September contract, where a long spread was deployed between strikes
65 and 71. Current premiums suggest that a long position would cost a total of
$1.59 – requiring a break below $69.41 (5%) below current levels to break
even – although the sale of the August spread might have mitigated the
cost of the long September position somewhat. We were also informed of a
sizable cash spread in the XLE involving some $2.875 million, a 5-leg trade in
which the trader sold 5,000 August 70 puts, 10,000 September 70 puts, then
bought 5,000 September 65 puts and a 20,000-lot December 60/69 put spread.
Thursday Options Outlook: XLE, WB, MRVL, NUE, HSY, COF, F
A Better Way To Measure Performance Persistence
August 7, 2008
Christopher Holt submits:
“Performance persistence” is never far from the minds of both hedge fund investors and researchers. Many studies have attempted to determine if good managers can actually remain good or if their performance is destined to “revert to the mean”. In general, they conclude that persistence does exist … bad managers remain bad. Unfortunately, the opposite is not generally believed to be very true.
One author of a recent study on return persistence, Daniel Capocci, found that previous returns showed modest predictive ability and wrote on these pages last March:
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