What a relief we've had the past few sessions. Markets took off with a vengeance as oversold conditions setup the perfect scenario to initiate short squeezes to give buyers waiting the incentive to buy.
I am looking for the markets to continue now on a temporary upswing. The financial sector might have gone up too much too fast, but the thing is when there's doubt in the air it probably means it has more room to go up.
I bought a new position in Nucor (NUE). I've been waiting on the sidelines for a very long time and now it looks like a nice chance to get in since it is right on the 200DMA now. It even broke down a little bit but looks like all the weak hands are being flushed out. I have been wrong a lot before about picking bottoms but that's why I don't even try to. I'm just going to buy a position now and continue building on it. This is at least a $70 dollar stock imo. If there are some quick rips up due to short covering then I'll consider just trading it.
If oil continues to fall out of flavor we could see a nice sustained move up. It broke below $129 so let's see if we can get a meaningful downmove.
- DL
Long ATI, RIO, NUE, JCG, SOLF, GOOG
Saturday, July 19, 2008
Wednesday, July 16, 2008
Could Today be our Long Awaited Turnaround?
What a fantastic up move today in the markets. News that Wells Fargo beating earnings expectation sent shorts scrambling to cover. I want to point to something very interesting in the SKF, which is a 2x short financial ETF.
Talk about getting destroyed today it is down $45 dollars, or 22% on MASSIVE VOLUME. If financial companies that report this week can continue to post in line earnings showing analyst have been overly pessimistic, mark my words we will see this flush out of shorts to lock in profits and we will see this ETF driven to the floor. Because as I have posted yesterday, longs have been severely overkilled. And sentiment in the markets have gotten so negative that all it takes is something positive to happen and bam, we get a massive short squeeze.
Some of the financial stocks during today's rally were just unbelievable. We are talking 20%-30% moves in ONE DAY. Granted, they have been destroyed this past year. But buying stocks are all about entry points. If caught correctly it can be very profitable. Keep an eye on financial as they seem to have the capability to go higher if theres continual following through on short squeezes.
Ebay posting up some good numbers but the stock is selling off. I think it is just partly because the stock ran up into earnings. Tomorrow I'm looking for a pause day. Meaning either small move up or down or stay flat. What we DON'T want to see is a selloff back down to the lows of the day. Because that'll completely negate the move today. We need to see confirmation.
Oil coming down hard the past few days. We have seen this happen before, but we need confirmation too. But everything that needed to work today worked. Financials caught a mega bid, Oil came down hard, the dollar firmed. Let's see if the momentum will continue.
Hang tough longs, perhaps this time around, the calvary is coming.
- DL
Talk about getting destroyed today it is down $45 dollars, or 22% on MASSIVE VOLUME. If financial companies that report this week can continue to post in line earnings showing analyst have been overly pessimistic, mark my words we will see this flush out of shorts to lock in profits and we will see this ETF driven to the floor. Because as I have posted yesterday, longs have been severely overkilled. And sentiment in the markets have gotten so negative that all it takes is something positive to happen and bam, we get a massive short squeeze.
Some of the financial stocks during today's rally were just unbelievable. We are talking 20%-30% moves in ONE DAY. Granted, they have been destroyed this past year. But buying stocks are all about entry points. If caught correctly it can be very profitable. Keep an eye on financial as they seem to have the capability to go higher if theres continual following through on short squeezes.
Ebay posting up some good numbers but the stock is selling off. I think it is just partly because the stock ran up into earnings. Tomorrow I'm looking for a pause day. Meaning either small move up or down or stay flat. What we DON'T want to see is a selloff back down to the lows of the day. Because that'll completely negate the move today. We need to see confirmation.
Oil coming down hard the past few days. We have seen this happen before, but we need confirmation too. But everything that needed to work today worked. Financials caught a mega bid, Oil came down hard, the dollar firmed. Let's see if the momentum will continue.
Hang tough longs, perhaps this time around, the calvary is coming.
- DL
Where the F*** you been Xman?!?
Greetings my fellow online readers,
I have been away for quite some time. And my apologies for not even saying anything and just took off. The reason being was simply I needed some time away from the stock market. The market's inconsistency coupled with fire-selling on stocks that have already been beat up severely defies logic and frankly frustrated me to a point where I needed to step back and regroup. And that was exactly what I did. For a few weeks I just held my positions, checked them once daily and that was it.
But running is not the solution. So I am back now. I don't know how many of you still check the blogs but I will try to pick up the pieces where I've left off. We've had a few sizable moves up but all were greeted by hard sells. We even hit below 11k today...sad times for the stock market.
The Vix meter is nearing the 30+ mark again, put/call ratio is extremely skewed towards the put side, the sentiment is severely negative.
The government has been doing absolutely nothing productive to induce investor confidence. Add all of this to the unbelieveable drop the financial sector have experienced and we have on our hands a tumultuous period in time that will most likely go down in history books as one of the worst in the 21st century.
As for my positions...ya I have been taking beatings pretty hard. Still have JCG, V, RIO, GOOG, Sold my PWRD. And I've also initiated a position on Alleghany technologies (ATI) with a cost average of $55.
As for an outlook, lets see what the technicals of the chart tells us:
The massive downdraft we have experienced the past 2 months is simply UNBELIEVABLE. I don't dare to try to call a bottom but if I were to look care carefully it is obvious that yesterday 7/15 the selling was at its HIGHEST dating all the way back to the beginning of the year.
-Indicators are just severely oversold
- Sentiment is extremely negative
- Short levels HIGHEST since Bear Stearns
We have broken the lows and gone down significantly. So there's no denying now, this market is an official bear. However, it doesn't mean the markets can't bounce hard 5-10% in the near future just simply because of how ugly the tape has gotten. We have to acknowledge the fact that this market is going to take a long time to repair. And to fight a trend is to just ask for pain. But my inclination for now is we're so far below oversold that the market just needs a slight excuse or something positive to come out to give shorts the incentives to say "it's time to take profits".
OIL needs to come down. And I continue to believe that a significant correction will be coming. The key right now is in Oil, Financials, and our dollar. If Oil comes down, Financials get a bid, and the dollar firms up, we will see this market rally hard. If not, we will continue to see this dripping death.
Well that's all I have for now folks. It's been a long while, I have read all you guys comments and I appreciate you guys conversations and ideas. It makes me realize why I ought to keep up with this blog. Because together we can help one another to navigate through these historic and unusual periods.
God Bless, and God speed to all of us.
- David Lok (DL) aka the Xman
Disclosure:
Long V, GOOG, JCG, RIO, ATI
I have been away for quite some time. And my apologies for not even saying anything and just took off. The reason being was simply I needed some time away from the stock market. The market's inconsistency coupled with fire-selling on stocks that have already been beat up severely defies logic and frankly frustrated me to a point where I needed to step back and regroup. And that was exactly what I did. For a few weeks I just held my positions, checked them once daily and that was it.
But running is not the solution. So I am back now. I don't know how many of you still check the blogs but I will try to pick up the pieces where I've left off. We've had a few sizable moves up but all were greeted by hard sells. We even hit below 11k today...sad times for the stock market.
The Vix meter is nearing the 30+ mark again, put/call ratio is extremely skewed towards the put side, the sentiment is severely negative.
The government has been doing absolutely nothing productive to induce investor confidence. Add all of this to the unbelieveable drop the financial sector have experienced and we have on our hands a tumultuous period in time that will most likely go down in history books as one of the worst in the 21st century.
As for my positions...ya I have been taking beatings pretty hard. Still have JCG, V, RIO, GOOG, Sold my PWRD. And I've also initiated a position on Alleghany technologies (ATI) with a cost average of $55.
As for an outlook, lets see what the technicals of the chart tells us:
The massive downdraft we have experienced the past 2 months is simply UNBELIEVABLE. I don't dare to try to call a bottom but if I were to look care carefully it is obvious that yesterday 7/15 the selling was at its HIGHEST dating all the way back to the beginning of the year.
-Indicators are just severely oversold
- Sentiment is extremely negative
- Short levels HIGHEST since Bear Stearns
We have broken the lows and gone down significantly. So there's no denying now, this market is an official bear. However, it doesn't mean the markets can't bounce hard 5-10% in the near future just simply because of how ugly the tape has gotten. We have to acknowledge the fact that this market is going to take a long time to repair. And to fight a trend is to just ask for pain. But my inclination for now is we're so far below oversold that the market just needs a slight excuse or something positive to come out to give shorts the incentives to say "it's time to take profits".
OIL needs to come down. And I continue to believe that a significant correction will be coming. The key right now is in Oil, Financials, and our dollar. If Oil comes down, Financials get a bid, and the dollar firms up, we will see this market rally hard. If not, we will continue to see this dripping death.
Well that's all I have for now folks. It's been a long while, I have read all you guys comments and I appreciate you guys conversations and ideas. It makes me realize why I ought to keep up with this blog. Because together we can help one another to navigate through these historic and unusual periods.
God Bless, and God speed to all of us.
- David Lok (DL) aka the Xman
Disclosure:
Long V, GOOG, JCG, RIO, ATI
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