Weight of the Evidence

Happy holidays and all that Jazz. I’m feeling a bit cantankerous today. So I haven’t posted a video in a couple of weeks, maybe this weekend. I wasn’t even going to post tonight, but all the stuff I’m seeing deserves an hour or so of my time and a few minutes of yours.

Today Existing Home Sales, Chicago PMI and Consumer Confidence all came in stronger than expected. The market didn’t rally on it though (it’s not the news, it’s the market’s reaction to the news that is important). Here’s a few ideas s to why-1) the information was leaked and that’s why we saw a couple of good days earlier in the week or perhaps it’s the market’s perception that the news lessens the likelihood of an interest rate cut any time soon or perhaps it’s just the markets own Cantankerous streak coming out (mixed with a little pessimism.) Treasuries gave ground as expected.

A look at the Major averages-I see Harami Reversals in the Nasdaq Transports (which by the way have been negatively divergent vs. the composite), the Nasdaq Composite, DJ-30, SP-500, Russell 2k and the MDY which has fallen out of it’s linear regression channel. The Nasdaq Advance/Decline line has been negatively divergent (vs. the Composite). Looking at the Q’s, they have broken down, as I mentioned last week, from a triangle (intraday). MACD has been divergent since Sept, TSV 18, 38 and 55 have all crossed under their moving averages in December. MoneyStream, OBV and BOP have all crossed under their MA’s or into negative territory as well. Look at the volume for the QID and then the QLD and tell me what you see? Yeah, the volume tells the story-QID is looking pretty good right now.

Moving on, Oil (Light Sweet Crude) put in a doji (perhaps halting the downside slide) today at $60.53. I’ve been recently bullish on oil as a result of the market’s behavior and the slide in the dollar, but if oil breaks below $60, I’ll have to reconsider. US inventories came in down for the 4th or 5th straight week. However, the mild winter has contributed to the recent weakness-technical analysis doesn’t see all.

The US Dollar index continues to struggle around $84.03-maybe the bounce is done? It is pretty much at the level I’ve been expecting. Partly as a result of this, gold has been acting better the last couple of days. Gold has bounced off the support zone and I expect to see a re-test of the Nov/Dec highs. I wish I could say the same for Silver-which looks like a pretty decent short right here as it has filled the “continuation?” gap.

So far our Santa Claus Rally has put in S&P .5%, Dow .75%, Nasdaq Composite .5% and the Russell .8%. For tomorrow, there’s no market moving events on the calendar except for the always influential Help Wanted Index. Anyone looking for a full-time blogger/trader/hedge fund manager? Anybody? You know where to reach me-I told you I was feeling cantankerous. Keep in mind-tomorrow is the last day of trading for 2006 and that may produce some volatility. So, that’s the weight of the evidence. To me, it looks like the market is in some trouble here, but what seems obvious, is often wrong when it comes to the Stock market, so maybe we are just setting up for a super-duper rally?

Here are a few recently mentioned stocks (most covered in recent videos) that have done pretty well today. SNCR motioned 12/15 as a Worden pick + 7.74%-lesson learned here? Volume precedes price, now go back and look at the QLD/QID again. CFW (Nov 30, Dec 14/18) +5.86%, one of my few winning trades recently. ININ (Dec18) +6.95%. ANGN, made the short list (Dec 6/14) gain of nearly 18% as of the 19th because the night of the 18th I suggested taking profits. ANGN is setting up for another short entry around $13-$13.50. And the last one that made some serious duckets today was another trade I’m in-ANDS (11/30, 12/4-6 and I think the 14th and 18th?) up 8.46% today with a very impressive close.

Here are a few possible trades to take a look at: INFY looking like a good short as it attempts to kisses the channel goodbye. LCRX is a possible short. BRLI looks like a short if it can make it to 23.50-although it looks done here and now. This was originally an idea from DavidDT (trading-to-win.blogspot). TRMM an idea of KJ from the TagBoard looks like a decent long. NWRE also looks like a possible long, as does TMY. ORH-looking like short and maybe ENT. I’m still short MER and RIMM and long ANDS, KRY, FORD and CFW. I like all those trades here as well except I’m a bit “ify” on FORD which is a January Effect play.

On a closing note-I’ve been playing around with TeleChart/Worden’s new BackScanner which is totally awesome. One thing that I’ve found-it is hard to make more than 30% annualized on almost any system I’ve back tested. So if you make better than that consistently, you are either a very good trader or very lucky. I do have a few very interesting leads I’m working on and if you have any ideas for systems you’d like me to test-let me know. Or better yet, sign up for TeleChart, get the Snapsheets platform for free and try out the BackScanner platform for yourself-while it is still available. Don’t forget to tell them you heard about it from Trade Guild-or better yet, use one of our links to Worden’s Telechart, it is very much appreciated.

Afternoon Update...

Well, there's not much happening so I haven't posted in a fat minute, but here's a quick update and a few ideas.

CFW from Dec 14 and 18th video looking good on the pullback-I bought some of this. JRCC and CMVT from the 14th-both dead trades. CELG from Dec 18 vid-short looks good here. MNKD long looks great right here. ANGN was a nice short for us-20+% in a few weeks. Institutional Holdings went from 24% in Nov to about 10 late Nov.-will be a nice short again on a bounce. USG is getting some wind into it’s sails –not too late, but the pullback was a great entry as pointed out on Dec 19 video. FDG long is dead unless we can get a close above $22 today. INFY short looks decent-I’d like to see it get into overbought territory first, say above $55.50. Looks like a RACK bounce is in the making-It held up at both levels identified on the 18th/19th video ($29 intraday and $30 on the close). At this point I view RACK as a trade only. A nice short setup is developing in the Q’s, say around $43.45-take a look at QID for more volatility. The November 22nd video featured ARTX-at almost the exact bottom. Anyone playing that one at the time should have between a 75-80% gain. I’d take a lot of that off the table-I’d maybe leave the profits there to work until the volatility subsides. And finally, Thiago mentioned GRA-long, I think it’s worth a look here.

Don't forget about the January Effect, my choice for a few different reasons was FORD-it was mentioned by DavidDT from Trading to Win. Happy New Year.

MerRy CHriStMaS

NORAD TRACKS SANTA

Reindeer C0urtesy of DavidDt of Tradingto Win

......Dave-I was going to use the Blink tag, but in the spirit of Christmas, brotherly love and world peace- I abstained, but man was it tempting

What's the Deal?

Up, down, sideways and all around? Yes, this market is getting volatile as is common at tops-whether they be short, intermediate or primary, who knows? However, this market's technicals have been coming undone for quite a while now. The first video covers the market in general and the 2nd and 3rd cover specific trading ideas both long and short. Cash is not entirely a bad place to be right now-not that I am. You my also want to consider widening your stops and/or reducing your risk through position sizing. Lots of luck and happy holidays.

Afternoon Update....

Well, it had been a quiet pre-Xmas day on the major averages until 2:45. The Q's broke intraday support around 44.22 on increasing volume. The SPY which was set to tag it's intraday uptrend line, broke that around 142 on increasing volume and the DIA is in lockstep to the downside. This looks like a program trde has kicked in and we'll most likely witness the final component of an evening start reversal in all 3 averages.

Last I looked, these ideas looked pretty good, but I haven't looked since the market headed south, so do your DD. On the long side I like:USG, KRY and DIVX. On the short side I continue to favor MER and RIMM. CMVT also made the list. On open positions-ANGN short may be a good time to take some off the table. Also CFW long looks set for a pullback-I'd think about taken your profits there too.

Well, we'll see what today has in store for us. Check out Sunday's post and check back in tonight for an update.

Not Just Another Sales Pitch-

If you folks are anything like me, then you are probably really excited about trading and new concepts and new trades. You probably would love to talk about it with others, your spouse, friends, etc. If your experiences are like mine, then you probably have very few people you can talk with about it. Some people will make a real effort to listen to you, but most are just nodding along until they can find a convenient segway out of the conversation. I think that's the reason you can always find someone on the Tagboard, even at 3am, believe me-I know! So keep all this in mind as you read on.


My blog doesn't exist for the sake of making money, some out there do. If I had to account for the time I put in versus the money that comes in through adds and affiliations, I'd probably be making about $2 an hour before expenses (That may even be generous). So what I'm about to share with you isn't a sales pitch, it's not motivated by a desire to get filthy rich off my readers-I'm a trader and that is how I'll make my money. What I share with you now is because I believe in it, I live in it, and I know that it will help all of you irregardless of whether you are a trader, an investor, a technician or a fundamentalist. I bring you commentary and suggest Briefing.com and I've never made one penny off that-I even pay for all my subscriptions to Telechart and Briefing.com-the same rate, as you would pay.

So here's what I'm getting at. I spent my Saturday morning and afternoon, as most of you know, with a Trade Guild associate the Worden's free Snapsheets training class that I've been talking about the last week. I have to tell you-I'm Excited (note the big E)! I've been using Telechart for years, I upgraded to Platinum a year or so back. Recently the Wordens released their new platform called SnapSheets which comes free with your Telechart subscription-(these are 2 different software platforms that integrate seamlessly). The SnapSheets software has applications beyond market analysis-it has limitless possibilities. It just so happens that the tools that they have "snapped" onto the sheet are for stock market analysis. I want to tell you everything about these two packages, but I simply can't do it justice. As great as today's seminar was, the 4 or 5 hours we spent looking at it and asking questions just scratched the surface. So I'm going to include some video links in which you can get a "feel" for the capabilities. Capabilities are great, but just as horsepower doesn't necessarily translate into speed, capabilities can sometimes be gratuitous. So as a long term user of TeleChart and a new user of SnapSheets, I want to tell you that these are not nifty, neat and gratuitous functions.

For those of you who have been around for a while, many of you made money with me on the SLXA trade. I started talking about it back in June. That trade eventually made me 50% for my time. If you look at that chart, it wasn't a beautiful thing. It was kinda ugly, however Worden's proprietary indicators, MoneyStream and BOP, showed me an additional bit of information that few others had seen-accumulation in a big way. So while the market largely ignored this Ugly Betty, we had an edge. When SnapSheets was released (while we were accumulating), I looked at SLXA with it. Because SnapSheets has the ability to chart fundamental data, I found that institutional holdings went from 14% in February to 50% in September as the stock chopped sideways in a big, but not obvious, triangle. SnapSheets confirmed what I was seeing with price, volume, MoneyStream and BOP. Confirmation is a powerful concept and we'll talk more about that in another post soon. As the trade progressed, got a big, nasty shakeout in SLXA in September. The confirmation of all the evidence suggested that this was a shakeout and not a breakdown. The confirmation of TeleChart and Snapsheets together gave me confidence to hold this position and buy more in the shakeout. In November SLXA jumped nearly 30% in one day on news of a buyout and that put my trade at a cool 50% gain in a few months-and many of you made close to the same. It appears that "Smart Money" is more than just a curious moniker. So needless to say, that trade more than paid for all of my subscriptions for the year and quite a bit more.

Here's some of what you get with a TeleChart gold subscription: Software for 2 computers, Free US based technical support via phone and email, Don and Peter Worden's notes -minutes after they are written with attached charts (I get a lot of ideas from these), Don's daily end of day Worden Report in which he shares his decades of experience in analyzing the action in the market and sharing user submitted ideas and concepts such as submissions to the Knight program, Scanning functions based on numerous pre-defined or user defined functions (you want to find all the stocks with a P/E of 20, a price between $5 and $25 with a positive cash flow that are crossing their 50 day moving average, but still below their 200?), proprietary indicators such as MoneyStream, Time Segmented Volume, Balance of Power- that uncover hidden patterns of accumulation and distribution, Custom indicators (such as my trend channel stop system-email me for the template), synchronized watchlist -charts-notes, and 4.5 hours of cd-roms that have you up and running in a day, plus their seemingly endless forums and knowledge database.

Step up to Platinum and you get all of that plus: real time streaming data, bid and ask displayed on your chart, intraday charting functions from tick to 1 hour, live chat, share and borrow other user's notes-watchlists-scan results-indicators- and charts, clubs, price-news and note alert in TCnet, Live news from 40 sources including Briefing.com market analysis, live audio chart shows, live QQQQ trading chat, multi monitor support and real time sort functions. I know I didn't cover all of the features-I still don't even know all of the features, but I have already proven to you all of these capabilities are more than academic. If you traded SLXA with me-you have the money in your pocket to prove it and that is a trade I would not have had the confidence to stay in if it weren't for these features.

You've seen a lot of these on my videos and you've heard me talk about a lot of them. Now for the newest addition and the one that has me really excited. The Worden's have just unleashed a monster platform that runs in SnapSheets and it is called BackScanner. I just saw it for the first time and haven't had the opportunity to try it out for myself yet. This is the type of tool that is used by system traders (such as Richard Dennis -The Turtle traders or Ed Seykota) to develop winning trading systems and to give you the confidence to trade them. It back scans the criteria for a system that you are considering trading. You can put a test together in about a minute and see results that I think would take you months to do without this tool. The results are there for you to see in just a minute or so. I'm not sure if a tool on this level has ever been available to the individual trader (at this kind of price) and quite frankly I'm surprised that they chose to make it available considering the kind of money they could charge to institutional investors/traders. You can back-scan technical and fundamental data in any configuration that you can imagine and see the results on the fly. I'm going to get this platform one way or another even if I have to beg, borrow and steal! Next year we are going to do some amazing trades based on the results of our back-scanning systems. I can tell you now that I will make the trades available to you as I always have, but in this case, I will not reveal the underlying criteria used to trigger them (at least not publicly on the blog). We've seen the locals recently, time and time again shakeout and decimate obvious chart patterns (just consider SLXA as the triangle came to Apex-they shook it hard before it popped.) Technical analysis is everywhere and the market makers see the same thing you and I do. While they can't manipulate supply and demand in a reasonable sized stock for long, they can do it long enough to take your money. Why do you think they can allocate billions to salaries and bonuses? So next year, we'll be developing an edge, that is what I'm excited about. That is why this isn't a sales pitch or an infomercial. I believe in these platforms and I think they will truly enhance your results.

I've placed a lot of links in this post so you can see some of these things for yourself. If you watch only one video link, make it the BackScanner and then let me know if you get as excited as I am. If anyone has any questions, you can reach me at the email provided at the top of the blog. And let me say before I go, Worden's customer support is hands down, by far the best support I've ever seen in any company. Check it out for yourself. They offer you a chance to test drive these platforms for 30 days. If you are not impressed, you'll get your duckets back and all they'll say is "Thanks for trying Telechart". Here's an email I recently received "Brandt...Signed up for gold right now to get the 30day trial... then thinking going to the platinum after I get the feel and make sure I like it. So far I love it... I have been in the dark for years" Take a look for yourself.

tIME fOR mORE vIDEOS

I said I was done posting videos until something changed-here's your viodes! If anyone in South Florida wants to go to the free Snapsheets training seminar tommorrow in Ft Lauderdale from 10 am to 4pm, either email me or leave a comment on the Tagboard.

Here's the issues covered in the video:SPY, DIA, QQQQ, NDX, VIX, Crude Oil, XAU, DJUSST, BTK-x, GSO-x, SMSI, SNCR, ONT, USG, RBY, ZZ, XTO, FDG, JRCC, MER, ANGN, CFW, TMY,CMVT, MSPD, DJUSCL and IFNY











** A couple of things I wanted to clarify: A low reading in the VIX has no bearing on what the market will do. It is a cautionary indictor. Also bearish divergences are just that, divergences and in technical analysis they re taken as a caution sign. Markets can have divergences of varying types that go on for a long time before the sentiment that the indicator is picking up, takes hold in the market.

S&M-Surprises-Messages

Today was a day of S&M. One the "surprise" front, Retail Sales came in with the biggest gain since July. Certain components showed the strongest reading since January. You may ask-"Then why is retail performing so poorly?" 6% for October and only 1% for November. All the major averages gapped higher on the open as the data eased concerns over the reduced consumption tied to the housing decline. Interestingly, the Fed had included "substantial" in describing the housing cool down in their policy directive only a day earlier.

Messages-Last night I ended my post "The key to interpreting tomorrow's releases will not be the release themselves, but rather how the market reacts to each item, it's far more important then the news itself." For some, the reaction to the news may fall in the "surprises" category, but for us guilders-they aren't getting anything past us :) So, the message was-"Oh great, an opportunity to dump more positions". The only sector buyers seemed willing to step up to the plate was Energy. How long have we been pushing energy now? According to Briefing.com, "Had it not been for the sector's leadership as a major contributor to profit growth on the S&P 500, stocks would have finished lower." Here's a message I posted on the Tagboard this morning with regard to my MER short:

"I know they've been reporting great numbers (brokers), but the market isn't picking 'em up and running with them so far. Look at GS yesterday-annual profits nearly doubled and posted the biggest profit in WALL STREET HISTORY! Even bigger then Exxon. Their earnings were almost that of '04-'05 combined and they sold it off yesterday. The problem is not the investment banks, it's the perfect storm is not likely to continue. We've had a fantastic rally, the economy has been pretty solid, inflation had been contained, rates were low, the M and A environment was favorable, the world economy had solid growth. If any of these falter, these investment banks may have peaked and I think the profit taking yesterday just re-enforced the perception that the economic outlook isn't as bright, the global market doesn't look as strong and the equities markets are getting 2007 (thus far) off to a bad start. GS's Global Alpha hedge fund isn't doing too well in Nov and is now down 10% on the year. So the question is, where does the market go from here? On a related note-they dedicated 16.5 billion dollars to employee salaries, bonus, etc. That translates into an average employee salary of $655k a year. This just puts a fine point on my statement in the videos the other night "the market is set up to take YOUR money". What do they produce? What tangible product can I buy from them? Nothing. Their money comes directly from the market -meaning this market is absolutely setup to take your money."

So I think the reason brokers aren't running on stellar earnings is the same reason the market couldn't hold onto and/or build off the initial gains related to the Retail release. Listen to the message of the market. Observe the market's reaction to news and draw your opinions from that. I've chronicled over the last month, video after video showing the Dow slipping out of it's channel, negative MACD, TSV, MS, RSI, divergences throughout all of the major averages (in some combination). The indicators are showing at best a loss of upside momentum. The market sentiment has been at best feebly cautious, if not down right pessimistic.

The VIX (CBOE Market Volatility Index) on November 21st closed at lows that have not been seen since 1994 and within the last week, the VIX has declined nearly 20%. Excluding the November low, the VIX is at levels not seen since 1994. Key sectors are either not participating, or are breaking down. One of my newer gauges of market strength is bullish chart patterns ability to act as they should. In a bearish environment, these patterns fail to consummate. We've seen quite a few lately-SCON, GNBT, TMTA, SIRI (fundamentally driven), MEMY and possibly ANDS (keep your fingers crossed for me.) Many of these bullish continuation patterns diminish in volume as they approach the breakout point. Many of these looked great, when it was time to breakout, there were no buyers there. I think the message is coming across loud and clear, there is no interest in anyone sticking their neck out and it appears many are using any strength to jump ship.

Another Surprise-Crude Inventories came in weaker than expected. And what was the message? How did the market react? They rallied around Energy. The Crude inventories were off primarily because "we" imported less. According to Briefing.com "US crude imports average 9.6 mln barrels per day, down 701,000 bpd from the prior week. Refineries were running at a utilization rate of 89.1% due to ongoing maintenance." Draw your own conclusions...

Earlier today the dollar was up on news of the falling trade deficit. Presumably, also on the retail sales as the stronger numbers reduced the chances of an interest rate cut early next year. As I posted last night, it seems the market has been way ahead of itself on the expectations of interest rate cuts in 2007. I suggested that the market may have to re-evaluate the discount that has been priced in as there seems to be no substantial evidence in which to place these hopes. In fact, the Fed Futures are now pricing in about a 20% chance that the Fed will cut to 5% by April. This is down from a 30% chance yesterday. Furthermore the 10 year note got hit as the expectations for a cut in March were diminished after the strong Retail Sales Report today.

So concluding this portion of the post-we keep getting great numbers from the brokers, we got a great number from retail sales today and the market is using the opportunity to sell them off. Remember, the market's stellar performance since summer was in some part driven by lower cost of crude and a decline in interest rates/borrowing costs. There appears to be the makings of a reversal on both fronts.


Interesting chart /industry events-Energy, Silver and Gold are all holding up well, most at their 22 day moving average after an orderly (for the most part) pullback-these industries are acting well. Steel for the most part held up pretty well considering and there were a few names that really looked great. RS didn't look all that bad today. USO recently broke out of it's downtrend from Oct to November. It has pulled back the last few weeks, but that pullback has held at former downtrend resistance trendline. Ugly day in Semis although not technically significant. Retail continues to perform poorly-only up .30 after the great report. GSO software index
is starting to look like a decent short. NDX has formed a little triangle-it's lower support line has been tested 3 times in the last 4 days. Also the Nasdaq Comp's Bollinger Bands are pinching now-"if" the trend is still up, we should see a breakout to the upside shortly. The narrowing volatility of the bands is echoed in the recent plunge in the VIX. However there is a divergence there and that is-the triangle that has formed is generally a continuation pattern (occasionally they function as tops as well-see ADM June-Aug) and the BB's suggest a breakout from that pattern. Considering the trend is still intact, you'd think an upside breakout would be the obvious move. However, the VIX making lows, suggests the complacency that is often seen near market tops. Also as I stated earlier, many indicators are now negatively divergent in some form or another, in all the averages. This would suggest weakness. We'll have to wait and see, the correct course of action is to trade with the trend (up), but my instinct and observations suggest weakness. We'll see soon enough.

Here are some stocks that have been covered in the videos since Nov 30th that I still like. On the long side-XTO, BTU, FDG, TMY, KRY, RBY, AUY, MEE, IFNY (speculative), JRCC and DIVX. On the short side: RIMM, MER, CRL, and PMTR. Maybe you find one that you like. See you on the Tagboard.

Where to Start-

Let me just say that the new Internet Explorer sucks. I don't mean a little-I mean a lot. I had about 1500 words of a post done when it just decided to crash for no reason. It happens nearly everyday. Firefox is too damn slow to load-ideas anyone?

Now, onto today's events. Lets start with the Fed meeting. As expected, the Fed left rates as is, no surprise there. As usual, Richmond Fed President Jeffrey Lacker dissented for a fourth straight time, however this will be his last chance to do so as he won't vote again until 2009. The only inclusion in their policy directive that caused a minor stir was the word "substantial" in describing the housing cool down. That lit a small fire under the bottoms of bond traders who proceeded to drive the 10 year treasury down to 4.49%. The action in treasuries provided an opportunity for rate sensitive banks to halt some of the bleeding in the Financial sector. Other than that, there wasn't too much to get excited about and that in and of itself, was the crux of the dilemma.

The market has been eagerly anticipating a cut next March. In fact, the last time I saw it, the Fed futures were pricing in an astonishing 90+% chance of a rate cut in March. In fact, earlier in the week, the implied policy rates priced cuts in March, June and September leaving the rate at 4.5% in Sept 2007. The market may be way ahead of itself on this one as the Fed has given no ground in it's stance and no hint of any other course beyond that of watching inflation data with great concern. Usually the initial response to Fed meetings is chewed over for a few days before the market decides how it feels about it. I can't help but think there must be a fundamental revaluation considering the complete lack of corroborating evidence.

Further adding to the uncertainty is the situation in the $USD. As you know, the dollar has been on a steep negative trajectory. This week the mainstream press started carrying accounts of Russia and OPEC nations selling-off their dollar denominated assets in favor of the EURO. Of course they will try to do this as quietly as possible as to not reduce the worth of their remaining position. Lets break this down to the basic laws of supply and demand. A sell-off in the dollar creates supply and prices fall. Another effect of that is an inability for the US to sell their debt at auction as the market is already flooded with supply. One of the ways to increase demand is to make the yield more attractive-thus a rise in interest rates. It is far too early to speculate on this scenario, but then again maybe not. We'll see what the market decides in a few days.

While on the subject of the dollar-it was down again today as follow through off yesterdays apparent reversal of the overesold bounce. It has been my opinion that this bounce provided a good opportunity to get exposure to dollar related positions such as metals and energy. I do believe the trend in the dollar will be one of continued weakness making stocks in the gold, silver, copper, etc. sectors an attractive alternative especially if the apparent market weakness we are seeing develops into something uglier than it is now, as I suspect it will.

Lets touch on the major averages for a moment. If you haven't already, you may want to take a look at some of my recent videos as I display a series of negative divergences and other related weakness. All of the major averages were down today and apparently somewhere around 11:30 am a trade program kicked in a sent the averages plummeting. Take a look for yourself and compare all the averages together. The Spyders, Diamonds and to a lesser extent, the Q's have had unusually large volume throughout December and the last half of November with no meaningful price appreciation. This action is reminiscent of churning or distribution. The Q's (NASDAQ turned in today's worst performance)in particular are looking like they are ready to make a move as the Bollinger Bands start to pinch. The Russell 2k saw 1/3 of it's component's trading down on increasing volume. My scan of industry groups revealed only 18 of 239 trading up more than 1/2% today and none over 1.66% and that was Grocery stores! Conversely, 90 traded down more than 1/2%-it seems odd as the major averages weren't down that much. All of this taken into account with other evidence such as the multiple divergences have forced me to re-allocate my positions in favor of Energy, metals and short positions. Cash is probably the best idea at this point, but simply and honestly, I like to trade.

Tech was under pressure today as Apple reported disappointing sales for I-tunes, actually it was worded as "Sales are collapsing". This is just another piece of the puzzle pointing to rather dismal performance of retail oriented issues. Best Buy also turned in a poor performance as it missed expectations due to a "competitive environment". Our BEBE idea is up about 20% in a few weeks and the short in SWHC is taking on a life of it's own -13+%.

Probably the second biggest story of the day and one in which there seems to be great interest right here in our little piece of opinionated rants in cyber-space (mostly my own), was NUE (was that a run-on sentence or what?). So NUE sees Q4 coming in at $1.05-$1.15 versus previous estimates of $1.44. The bad news sent Steel stocks hurling up their recent gains and the negative sentiment even spilled over into other metals such as titanium (ATI, RTI and TIE) and to a lesser extent-aluminum. Nucor is the US's largest steel producer and is itself a bellwether for where Steel prices are going. You might even say "as goes Nue, so does steel." Typically when NUE warns, other Steel producers tend to warn as well. Steel has been one of the market's best performing sectors over the last few months and today's announcement was reason enough for traders to take profits off the table at the very least. The drastic nature of the decline and the fact that the other Steel producers haven't been able to recover, suggests that this news came as a surprise. So I expect there to be further volatility and most likely weakness as the market tries to discount the new information. We'll have to wait and see how deeply into the Metals and Mining industry this re-valuation will dig. XAU held up rather well as GS said they expect Gold and Copper prices to remain elevated throughout 2007. Also they expect more action in mergers and acquisitions in the sector. All this taken into consideration with the weakness in the dollar, should bode well for Gold and hopefully the sector at large.

Lets not forget Energy-I told you I wasn't sure where to start! Tomorrow could be an interesting day. OPEC has signaled it's willingness to keep oil above $60 a barrel, interestingly that level is the same as the 50 day moving average. Thursday OPEC will meet in Nigeria and the floor talk is centered on whether or not they will announce cuts. It is feared there will be a sharp sell-off if they don't. We'll also get a look at the Energy Dept. weekly oil inventories-that will be closely watched. Take a look at BTU and XTO, they've both held up pretty well and have been doing as I expected.

Also on the calendar tomorrow: 8:30 am release of Retail Sales Report will give us another look at consumer spending in this holiday season. After the opening bell, October Business Inventories will be released. Before the bell, COST, BSC, LEH, CIEN and PIR will report quarterly results. After the bell-ADBE and TEK will report.

The key to interpreting tomorrow's releases will not be the release themselves, but rather how the market reacts to each item, it's far more important then the news itself. Although the weakness I perceive is not yet showing in price and the moving averages, it is everywhere with regard to indicators, breadth and sentiment. We might just get a lump of coal in the stocking rather than the Santa Claus rally. PLAY IT SAFE!

Second Verse Same as the First!

I feel like I'm doing the same video over and over again, so this will be my last post on this subject until something substantial has changed. My opinion has been for awhile, the market is nearing a top of some short (short-term, long-term, etc.). The dollar is going down the toilet and Gold and Energy are 2 areas that I feel exposure is essential. It's my opinion, take it or leave it. I cover SPY, Q'S, VIX, US dollar, DBC, DJUSST, XAU,light sweet crude, and USO in the first video plus my take on the dichotomy of technical analysis mantras. In video #2 I cover: XTO, RS, BTU, PAL, PMU, FDG, and BRNC.

On other news, the debate on the Tagboard recently has been the better quality videos of Revver vs. YouTube's better reliability. I'm looking into this to see what can be done as I understand some of you are having problems viewing the Revver videos. For the moment my only suggestion is to make sure you have the most current version of FlashPlayer or go to this link on Revver. You can also subscribe to the RSS feed here.
Finally, for anyone living in South Florida-Worden.com/Telechart will be hosting a free seminar for their new Snapsheets charting platform. This is free software that comes with your Telechart subscription. The free seminars will be held Friday December 15 and Saturday December 16. Both classes will be held from 10am-4pm. I plan on attending the Saturday class, so if anyone would like to meet up down there,drop me an email. You can pre-register on the site or you can just show up, but it is first come, first serve. It should be great as this platform is so far advanced over anything I've ever heard of for charting and you can get it free. I hope I see some of your faces.

Enjoy the vids-

RIMM is a Short?

I think so...I got an email this weekend from a new reader (what are we going to call Guild readers?)-Blue Horseshoe. She (?) submitted an idea for a short on RIMM and had some good analysis with regard to the options chain. So, I promised a video this weekend on shorting and this seems to be a pretty good candidate. I ran out of time on the video, but my opinion is RIMM is nearing oversold levels, thus maybe we see a little bounce to setup a nice short? Lets take a look.

On another topic-I made a lot of changes to the blog this weekend. It seems to display a little better in Firefox and I've had a lot of problems with IE7 crashing, I've heard others have as well. In anycase, some of the new changes include-an Amazon Store front, an enlarged bloglog recent readers list, a flashing tipjar (just in case you didn't see it), Revver video archives widget-below WallStrip, Youtube video archives link, an updated resources and concepts area with a scrolling list-give it a second to see all the posts, and I removed the "gift ideas for traders" section and placed them all in the Amazon Store Front which contains some of my favorite books, magazines, electronics and tools! So, I hope it all displays well for you, if there are any problems or you have feedback, please feel free to email me.

Here/s the video:



*it may take an hour to upload.

We Might Just Have Ourselves a Polar Bear....

I thought that bears were supposed to hibernate during the winter-literally and figuratively. According to the Stock Trader's Almanac, December is the best performing month for the S&P, the second best for the Dow and the second best for the NASDAQ. However, this has been a strange year. The two worst performing months for the market are August-September and this year we saw the market hatch an amazing rally around then. One other note with regard to December is the Santa Clause Rally. This occurs the last five days of December and the first two if January. Typically it is a nice 1.6% rally, however, should that fail to materialize, it is a strong indication that a bear market is just around the corner. If you haven't already, get yourself a Stock Trader's Almanac-there's a link to the book on Amazon on the right side of the blog about half way down (lots of other great trading books too) and just below on this post

Now for tonight's videos-I cover the Dow, the S&P, Q's, VIX, the Dollar, OIH, Light Sweet Crude, INFY, TEC, XTO, BRNC, MER, AUY, RBY, BTU, JRCC, FDG, MEE, PAL, KRY, PMU. I've been talking about the market's apparent weakness the last month or so, however the trend remains up and we trade the trend. However, the indications are now simply too strong for me not to take action. Take a look at the videos and then we'll start fine-tuning some of these ideas. I will say, there are some charts that look ready right now, I'll be looking at entering a few Friday.

Many of you who have been here for a while already know what I'm about to admit-I LOVE selling short, for a variety of reasons. This is where my heart is and I can't wait to get back on the dark side. Check back in over the weekend, I'll be putting up a video on shorting strategies and setups. On the right side of the blog down a bit, there is a section called resources and concepts. May I suggest you read "Selling Short", "Concepts in Selling Short", "Making More Than 100% in a Short" and maybe some of the posts on money management and position sizing which are both essential for shorting in general and especially the volatile stocks that we trade here. Also newly added tonight, i installed a Revver widget that allows you to scroll through previos videos.

That's it for tonight-before I go I just want to say welcome to the 60+ people from Telechart who wrote me after my last Worden Report submission. You guys will really appreciate some of my stock ideas because you are more familiar with the Worden proprietary indicators. Don't forget to check out our Tagboard on the right side of the blog-sorta like TC-chat...lol The quality of ideas are outstanding-enjoy.

Another 4 Videos-

In the first video I briefly cover the broader market action and take a look at today's top three and bottom three industry groups. I also take a quick look at the events that are partially driving those groupings. There is certainly an air of caution in the market now and well deserved. However, their are some interesting causes behind some of the moves in the market and I touch on those. The next three videos are all ideas long and short. I also cover market makers and specialists running the stops and how the occurrence of those events seem to be increasing-I have a theory as to why. So here they are-


note***All stops are on a closing basis

SIRI us Trouble?

All of your shares are belong to us HAHAHAHA!!!! Okay, now that I've lightened up a pretty dismal subject, lets get to it. I've posted and featured via video, SIRI for a couple of weeks or thereabouts. This was a pretty nice chart before today, but all hope is not lost, not just yet anyway. In my mind-here's the size of it: How much of this is an emotional over-reaction? How much of this is truly institutional dumping? It seems to me that the information regarding SIRI retail sales or lack thereof, would be a fairly easy thing for any half way decent research department to assess. What was the whisper number? How much was already priced in? Bottom line is this-there's no way of knowing the answer to these questions until it is a matter of history. The only thing we have is the chart and right now it looks like a huge emotional over-reaction. And in the midst of that, it looks like or I should say, there is a possibility based on what I see on the chart, that cooler heads may prevail, but like I said-we won't know until it's past. So-in my view, today was not a good day to sell. I want to sell into some kind of strength, not with the crowd bum-rushing the bid. On the other hand, there has to be an uncle point and that will be different for each of us as we have different strategies, risk tolerance, goals, time-frames, etc. So, here's my view-






If you are new to this blog-please take some time to look around. We have numerous links, resources, posts and videos that are linked with regard to all aspects of technical analysis and trading. Also, don't miss our Tagboard (chat) on the right side of the blog. Take some time to get to know the people there and hear some of their ideas-maybe share a few of your own. This is more than a blog-this is a community.

Okay, here's last night's videos (Dec 4). Sorry it took so long, but I didn't get the uploads completed until 1am or so and it takes Revver several hours to encode and approve the videos. The quality seems to be much higher as they don't compress them so it's a give and take.

X-mas is near, check out some of the gift ideas for traders under the Tagboard. Also, consider giving yourself a subscription to TeleChart. Here's a recent comment from someone who emailed me about getting into TeleChart "Signed up for gold right now to get the 30day trial... then thinking going to the platinum after I get the feel and make sure I like it. So far I love it... I have been in the dark for years.-I have been putting in some hours figuring this program out and can't believe how much info there is available." And here is a comment regarding the SnapSheets platform that comes with your subscription for free"Snapsheets, which you also get, is an extremely useful program as well, in fact as good as Telechart's in it's own way, and better in some ways." Check it out for yourself from one of our links to Worden.com or call, but please don't forget to tell them you heard about them from Trade-Guild. Thanks-I know you'll love it. Before I depart this subject, let me mention this: if you live in South Florida and want to go to a free seminar/workshop for the new SnapSheets platform, let me know. It is the weekend of the 16th of Dec, two weekends away. The workshop will cover Snapsheets extensively including how to write all of your own custom indicators, back tests, and much more. It's free and I'll be attending. Email me to make arrangements.


So, lets get to the videos. I cover the market briefly. I also cover several of the ideas mentioned in yesterday's afternoon update. And finally, I answered all the questions from the Tagboard last night, so enjoy.

My Top 13...Let's Make That 14 Ideas

Here are the stocks that I believe are in the best trading position today. Of course these are only ideas, due your own homework. Here they are: DIVX, SIRI*, TMTA*, GNBT*, SCON, ANDS, ENT, CORS, RS, TEC, and LCC. These are the longs. *These are positions I'm in. Here are the shorts: CRL and ORCH.

So, you say "That's only 13"? OK, here's MEMY also-I'm a bit "ify" about it. Good luck!

I love my Telechart and those of you who just signed up will find that you love it too. If you decide to try it, we are an affiliate and would very much appreciate you using a link from our site or to mention my affiliate number-A335, there is no extra cost to you.. One of the things I really appreciate, every night after the close-Don Worden (a pioneer in the development of technical indicators back when they used main-frames to calculate moving averages)publishes the Worden Report, available to TeleChart subscribers. A few times a week he'll include a submission from a user, that he finds insightful. If he really likes it, he gives you a title and you take your seat at "The Roundtable of Knights Who Think for Themselves." With that, there are privileges, such as membership in the "knight's" discussion group and a nice bottle of Veuve Clicquot Ponsardin. My first submission was published 5/23/06 and that dealt with my stop-trend channel formula. The second was Oct 6 2006 and basically dealt with the laggard strategy that I employ. Recently I sent in this submission that was published tonight. For all of you who do not have TC, I thought you might enjoy reading it. I am responding to another Knight's submission in which he more or less talks about how he views short selling as a powerful tool, but one that is rarely appropriate to use outside of certain market conditions. I have posts in the "Resources and Concepts" section, below the TagBoard that cover some of these principles I talk about, such as: making more than 100% on a short, risk management and short selling basics. Here's the submission: The Worden Report (Friday, December 1,2006)--Sir Risk Adjuster on Shorting--

Sir Risk Adjuster does an excellent job of summing up the advantages versus the disadvantages of short selling. It is interesting that, in good markets or bad, he is almost always short something. He was seated at the Roundtable of Knights Who Think for Themselves on May 23, 2006 and contributed again on October 6, 2006. This will be his third bottle of Veuve Clicquot Ponsardin in a six month period. -DW

Don,
I enjoyed reading Sir Grail's submission in the Worden Report of November 17. It was both wise and romantic. I agree with much of what he said, especially the part about the "waiting." I however respectfully disagree with his assessment of the number of opportunities to go short. It may be a matter of perspective to some degree.
Years ago I studied martial arts, I was lucky enough to study with the Master of the form I practiced. He said to the class once "You will teach as you have first learned." Over the years since, I have been in management (my money and otherwise) and I find that my management style eerily resembles that of my first manager. I have seen this trait in others as well.
It is not truly known who first spoke the quote attributed as an ancient Chinese curse "May you live in interesting times," but we'll go with Robert Kennedy-Cape Town, South Africa 1966. I suppose I was cursed with becoming ensnared by the allure of the market back in 1999 when the news broadcasts would declare a 400-point day in the Dow. It didn't take long (only a year or so) to lose about 60% of my portfolio. It was smaller back then, which was fortunate because I learned how to trade with real money. Paper trading cannot replace the emotions of fear and greed that, unchecked, play a major role in all decisions. At the same time, the relatively small account gave me the ability to try new things without too much anxiety being that the money was money I could afford to lose. It didn't take long to reap the profits of short selling, and I became quite fond of the strategy. And I still am.
To this day, I almost always carry a short position in my account. If we are in a market trending up and I am trading four positions, I'll carry one short. In a down trending market, I'll carry three short and one long. In a sideways market, I may be long the two best looking stocks I can find and short the two worst. Sometimes the positions are correlated reminiscently of pairs trading, sometimes they are not. It depends on "what's on the menu." To decide if my portfolio will be net short, net long or neutral, I simply look at my long Watchlist and my short Watchlist. It is usually very obvious to me if the market is close to a turning point based on the number of good ideas that are culled from the two Watchlists; usually the number is quite lopsided. If there aren't too many in either direction-cash is King!
As most of us are aware of (perhaps too much so), short selling carries a high degree of risk (sometimes overstated). And short-selling has some disadvantages. I won't go into all of them, but here are a few.
The uptick rule (you can work around this by entering the trade above the bid, since the market has switched from fractional quotes to decimalization, it is usually just a few pennies away and easy to get filled-also ETFs don't have an uptick rule).
- Short squeezes (nothing a well-placed stop can't deal with and the fundamental data feed on SnapSheets allows us technicians to chart short interest and keep a heads-up perspective).
- You have a responsibility to pay dividends (again, awareness is usually enough-just add a new data field for dividends at the top of your TeleChart data bar).
- You are betting against the proven historical uptrend of the market. However, fear is a stronger emotion than greed and stocks tend to fall much faster than they rise. Also, bad news travels a lot quicker than good news.
- The Big Scary is that your potential downside is unlimited, while your potential upside is limited to 100%, assuming the company goes bust. This is where I want to spend a minute.
- While the former is true in theory, in reality you will almost certainly receive a margin call long before that happens (my personal rule is to never meet a margin call with cash). If that fails, the broker will almost certainly sell out the position as they have a vested interest too being that you are on margin, their money. As for the latter (your upside is limited to 100%), this isn't exactly the whole truth. As a short position works in your favor, the equity is added to your account. As long as you can maintain the amount needed to cover the position at the lower (current) price, the additional equity added to your account (profits on the position) can be used to pyramid the position by adding shares. As long as the price continues to drop, you can continue adding shares and end up with much more than 100%; in fact you could end up making 200% or more and even without using margin! This is an advantage over long positions. While on the subject, consider that uptrends don't last forever, but a stock can go to zero.
Of course this is not intended as a comprehensive treatment of the subject. There are other risks, other advantages and other uses for short selling such as locking in profits on a long trade without selling the position for tax or other purposes. I also don't want to understate the potential risks. Short selling requires rock solid money management and stop-loss discipline. However, in my view, there is a short for all seasons-even now.
Incidentally, I have some more material on shorting that I'd be glad to send to anybody who requests it (to me in care of Worden Support). Thanks for the awesome products. SnapSheets is unreal!


Brandt (aka Sir Risk-Adjuster)**end

So there it is, I hope you enjoyed it and found it thought provoking. Hopefully, you'll take something away from it, incorporate it into your strategies and then come back and share it with us-so we can assimilate it and create something new again. This is what this site is all about.

Now, for some videos-I can't believe how many videos I've posted this week. I haven't had a of feedback on them though. I realize they come up very late at night, hopefully you'll have some time this weekend to check out the videos from Sunday (a look at Gold and Energy and the driving force behind their recent advances.) Monday's videos dealt with the dollar, retail, gold, energy, and a bunch of long and short ideas. Thursday night I posted 6 videos, the first 2 dealt with the market in general, emerging trends, etc. The final 4 covered over 40 different stock trading ideas, long and short. Tonight (Fri) I have another 3 videos that cover briefly the market, emerging trends, the inflation picture, hot sectors, and those in trouble. I also reviewed some of this weeks winners and what they have made since put out on the blog. One stock on the video was up nearly 200% in a month or two. So take a look. Let me know what your thoughts are and we'll go from there. Have a great weekend and check back.

An Early Christmas Gift-

I slave all night over a hot laptop to bring you great stock ideas-Does that bring you back to your childhood? No really, I spent about 3 hours looking at chart (in the neighborhood of 500) and another 2 1/2 hours recording, editing, uploading and posting them. So please watch them!

The market is looking very tentative recently, jittery even. In the first video I update my market review from earlier this week (Mon-Tues). I cover: XGLD SPY DBC MDY XOIL FINANCIAL-SERVICES DOLLAR-INDEX DIA IEF VIX QQQQ HKHS IWM XAU . In the other five videos I present you with long and short ideas, a couple of pair trades, a quick look at a stop system I use and a few concepts. Here are the tickers covered in these 5 videos: CTTY ANDS ENT KRY TMY LNG CBMX TEC RBY BRNC RS OIIM CORS IFNY BTU LCC HP NPSP ZZ DIVX AOG SHFL HS RACK NVS SMSI CFW BEN OVTI CPNO CBC TMTA HEC GNBT FIS ANTP OMG CRL CMVT MPET SCON PMTR BEBE. You'll find roughly 40 ideas there. I only trade 4-5 at a time and I'm loaded up, so consider this an early Christmas present. I hope they bring you a green Christmas. Some of the ideas covered are from my friends on our Tagboard, so thanks for the input guys and gals.

As usual, I want to remind you about the Paypal donate link (in case you should make a small fortune on an idea from these videos). Also you can help out by using our links to Amazon.com should you care to do some X-mas shopping. And TeleChart would be a great gift to yourself-truly, it is the gift that keeps on giving. Once you try it, you won't go back. It's like using DSL and then going back to dial-up. One other way you can show some love is to post our link (links to videos work good too)on message boards or wherever you can. We are currently #41 on Blogtopsites.com. I'd like to see us in the Top20 with The Knight Trader. By the way-thanks very much to all who have contributed to the blog in $, time, links, ideas, affiliates, and concepts. We have a bunch of very generous people here and it is very much appreciated and much of it goes right back into (or will go back into) the blog. My next goal is to get some software to allow us to do a weekly web-meeting/chart conference. If anyone has suggestions-drop me an email or a Tag.

Well it is approaching 3 am and I have to get up in a few hours to go to work. I hope these videos make it to you in time to be useful. Have a great weekend and don't forget to check back in as I'll be posting some strategy videos and your requests. Enjoy the vids.