Yesterday, after the intraday S&P subprime commentary that sparked the huge reversal I was thinking that this market is as treacherous as I've ever seen. I'm glad it's not just me who's thinking that. Here's what Art Cashin said this morning:
This has got to be the most skittish and suicidal bunch of shorts that I've seen in 45 years.
He said that because of the rallies they've been forced to spark caused by Fed actions, AMBAC rumors and S&P yesterday. He also credited the fact that short interest is at all time highs thanks to tons of hedge funds and that most of their traders are 'just out of diapers' and have never traded a bear market before. :-)
Anyway, we had a big reversal in the futures this morning thanks to the tamer than expected CPI. This is a great opportunity for the bulls to make some higher-highs on the daily charts.
On Today's Calendar:
- 10:00 -- Mich Sentiment-Prel.
More Calendars: U.S. Earnings | Conf. Calls | Surprises | IPO | Economic
Potential swing trades:
See one of the recent 'Chart Reading' posts for some potential swing candidates. Also be sure to check my typical swing trade entry & exit rules.
Potential day trades:
(From Briefing.com)
Gapping Down
In reaction to weak earnings/guidance: IFON -44.0%, POWR -12.7%, PANL -8.9%, QADI -7.8%, HALO -7.0%, ANN -5.6%, DIOD -4.8%, CX -4.3%, WAVX -3.3%, CHDN -2.6%, PSUN -2.0%, DNA -1.8%, SRSL -1.4%, ARO -1.2%... Select Asian stocks trading lower with weakness in Chinese & Japanese markets: PKX -6.2%, SNP -5.3% (denies report of projected Q1, Q2 losses - Xinhuanet.com), ACH -4.9%, HNP -4.3%, CHA -4.0%, CEO -3.2%, SNE -2.8%, LFC -2.4%, CHL -1.0%... Other news: NCT -9.2% (decreases common stock dividend to increase retained earnings and declares its preferred stock dividends ), LUX -4.0% (weakness after reporting earnings yesterday before the close), NCC -3.3% (credit rating downgraded to A3 from A2 at Moody's due to the bank's second-lien home equity and real estate exposure), NITE -2.9% (releases Feb 2008 volume statistics; average daily dollar value traded in Feb 2008 was $15.39 bln), NMX -2.1% (reports Feb 2008 volume averaged record 1.846 mln contracts per day, electronic volume increases 30% and trading volume increases 99%)... Analyst downgrades: ITU -3.9% (downgraded to Sell at tier 1 firm), GDP -3.0% (downgraded to Neutral at SunTrust), AEA -2.2% (downgraded to Equal Weight at Stephens), TICC -2.0% (downgraded to Market Perform at Friedman Billings), BBD -1.9% (downgraded to Neutral at tier 1 firm).
Gapping UpIn reaction to strong earnings/guidance: SCA +104.5%, ZUMZ +13.5%, ARCI +9.6%, COGO +8.7%, LSCC +6.0%, RSO +5.8%, INTX +3.9%, WSCI +3.0%, ZIPR +1.9%, ADS +1.0% (discloses it will dispose of certain operations)... Other news: VM +15.4% (rebounding after this week's ~35%+ decline), TTHI +14.8% (Eli Lilly and Transition therapeutics announce licensing and collaboration agreement), TMA +10.6 (still checking), SHPGY +5.0% (Shire Shares Jump on Speculation Pfizer Will Make Bid - Bloomberg.com), EXEL +3.8% (to develop Exelixis compound exercised by Genentech), BHP +1.6% (stock showed strength in Europe), DOW +1.4% (Cramer makes positive comments on MadMoney), YHOO +1.1% (Microsoft pitches merger vision to Yahoo at meeting - WSJ)... Analyst upgrades: EK +2.5% (upgraded to Hold at Citigroup), BA +1.9% (upgraded to Overweight at Morgan Stanley), HL +1.6% (upgraded to Outperform at RBC),WX +1.4% (upgraded to Buy at Jefferies), MYL +1.4% (upgraded to Buy at Citigroup).
Disclaimer & How I use this list
Reports of this skittish shorts demise have been exaggerated :-)
I started live trading in January & I'm now breaking even. I was a little worried about this but given your comments I'm actually reassured! Maybe when things ease up I'll actually turn a profit.
Mike:
I have a different take on that SP commentary, shorts may have been suicidal, but by the end of the day, they may not be stupid :), please check out my week in review if you get chance.
best,
fw
hey mike,
two things...
1. how is TOS working for you?
2. Do you know where people are chatting up the BSC situation?
thanks brother!
Groove
Cashin is the man. Interesting to hear him guess that shorts are the ones causing the wild action. It is no surprise that they are because, traditionally, you are not supposed to fight the Fed. Eventually, this massive liquidity the Fed is pumping into the system will lead to some kind of sustained rally - even if this sustained rally ends up being the biggest of the fake-out, bear rallies yet. Greenspan pumped in the liquidity in drips, and it took almost three years for us to truly bottom out. Follow to the logical conclusion and this next bottoming process should be shorter - so shorts have to stay on edge even more than usual.
I've been saying for a while now that these Bears are a bunch of wussies. They should be killing this market. Can't close it out to save their lives.
Meh.
this time the shorts were right.
don't try to catch a falling knife.