MarketGrind
Stocks for the Rest of Us
BofA Takes More of Our Money To Stay In Business
Jan 16th
It appears as though BofA is taking another 20 billion dollars of taxpayer money to stay afloat. I can’t understand why Ken Lewis is still the CEO. I could probably run a bank into the ground just as well and I’d only charge a couple million dollars. If anyone at BofA is reading, I’m available. What I find strange about the whole thing is the reason cited for the additional capital infusion. According to an official it’s to help “digest” the Merril Lynch acquisition. UUUHHMMM…Now I’m no MBA but I did take business 101 and if I remember correctly there was a section in the book where they talked about acquisitions and how you’re not supposed to acquire companies that bankrupt you. I guess Mr. Lewis must have been out that day. On top of that, what’s with this guy over paying for stuff. I mean, 40 billion for an insolvent company? cmon!! He could have waited a few weeks and picked it up for next to nothing Jamie Dimon style.
Time To Trim The Hedges
Jan 15th
If you took my advice in the last post and put on some hedges I think it might be time to take those off. We’re currently a little oversold so even the slightest spark can cause a fire. Clearly the market is starting to get excited about the news of a Bank of America bailout. Although I can’t imagine how the failure of yet another major bank can be seen as a good thing there’s no reason to fight the tape. Having said that I’m not so sure I want to be getting long here either.
AIPC: Everyone Loves Pasta
Jan 8th
This is a purely technical trade (although I do love pasta). The setup is easy. The stock opened up on the lows today and bounced. I want to stop myself out below today’s low. The big volume on the up days shows accumulation and the low volume sell offs reflect simple profit taking after a big move. Another way to play this stock would be to establish a partial position here and wait for a pullback to 17 where previous resistance was. You can stop yourself out of that small position below the gap and add to it on the bounce off of 17.
AIPC
S&P Oscillator Update: It’s Time To Lighten Up Into The Rally
Jan 8th
The S&P oscillator is back up to around 80 which historically has always proven to be a short term top. We’ve had a huge move off of the lows and I think it might be time to put on some hedges or take some profits. No one ever loses money taking profits. Originally, I thought that this particular oscillator was only relevant in bull markets. However, looking back at historical data it looks like the oscillator holds up even during a bear market and/or bear-to-bull transition.
Thank Me? Thank Hank Paulson. I Didn’t Want To Give You Any Money In The First Place
Dec 24th
You have to love Chrysler. I get what they were trying to do but this is just ridiculous. Note to Mr Nardelli, we didn’t invest in Chrysler; we gave you a loan which we expect to be repaid. Not only that but we didn’t want to give you the loan. The money was basically stolen from us without our consent. I wonder how much it cost you to run these full page color ads in all the major newspapers? I wonder how many more cars you will sell because of these ads? I wonder how this will help Chrysler make better cars?
S&P Oscillator Is Starting To Look A Little Overbought
Dec 16th
We’re actually starting to creep very slightly into overbought territory on the S&P oscillator that I follow. It’s not terribly overbought but it does warrant caution and I would consider taking some off the table if you were fortunate enough to catch the last bounce. No one ever loses money taking profits.
S&P Oscillator
The Market Is Approaching The Top Of The Range; Get Defensive
Dec 16th
I’m getting defensive as the market approaches the top of the range. The rally today on the news that the Fed is basically doing anything and everything it can do to “help” the economy seems counterintuitive to me. How is it a good thing when the government has to step in and do all kinds of crazy tinkering that no one really understands to keep our financial system from failing? I don’t think it really can be so my guess is that this rally will eventually fizzle like the rest of the bear market rallies we’ve seen. People always say “don’t fight the fed” but it would appear that betting against the rallies that have followed fed rate cuts is a winning strategy.
For now I’m going to let the rally play out a bit. We might rally to 1000 or so on the S&P but I expect some retracement soon. Whether we’ve seen the lows or not is a fool’s guessing game but as long as you move quickly and keep losses contained you’ll survive.
Remember, The Primary Trend Is Still Down
Dec 10th
Be careful getting too excited here as the market rallies. A lot of stocks are up 50% from the lows and anyone who was lucky enough to catch that will definitely be unloading into the strength. If you’re already long you can try and ride the rally as long as possible but if you’re not long then wait for a better entry point. There’s going to be a good bit of resistance here around the 50 day moving average on all the major indices.
Keep Your Finger On The Sell Button
Dec 8th
It looks like the year end rally might come to fruition. As I mentioned in a previous post the ability of the market to shurg off the bad news and go higher is bullish. However, there’s still no reason to think that we’ve seen THE bottom and the stock market is going no where but up. Until more evidence surfaces this is still just another bear market bounce that deserves to get sold. If you caught the bounce, consider doing some selling into the strength. If you’re in a long only buy and hold type portfolio then you might want to consider putting on a hedge in the form of index put options or the SDS.
S&P 500 Oscillator Shows Market Healthier Than In Past Sell Offs
Dec 6th
Here is another way the S&P 500 oscillator can be used which might be helpful. When a market rallies, people often refer to the breadth of the rally to determine how “real” that particular rally might be. A good rally with good breadth is one in which the majority of stocks are rising. A suspect rally with bad breadth might be one in which only the leaders rally, bringing up the major averages but the majority of stocks were actually flat or down.
The particular oscillator that I use looks at the percentage of stocks above there 50 day moving average. What’s most interesting to me is the divergence between the S&P 500 price action and the S&P 500 oscillator during the mid-November sell off. We’ve got stocks starting to climb up above their 50 day moving averages. This divergence says that the market was actually healthier internally during the mid-November sell off then it was during the previous October sell offs. It also says to me that the mid-November sell off was most likely caused by a panic in a relatively narrow scope of the market, not a broad panic like we had in October. While this is relatively bullish and the prospect of a year end rally is enticing, I’m still cautious going forward. Check it out.
S&P 500 Oscillator
S&P 500