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Friday, June 22, 2007
Poetry in Motion
I've got a riddle for you.
What well-known Jewish personality made a bundle of money on Wall Street today and needs to have their back hair waxed? If your answer is Abby Joseph Cohen, you are technically correct, but the answer I was seeking was Stephen A. Schwarzman of Blackstone.
OK, here's the second part of the riddle (isn't this fun, kids?)
What percentage of public investors have profits on newly-minted Blackstone Group (BX) today, now that the trading day is through? The answer: basically zero. Oh, I'm not talking about the midget founder of the place. He's doing just fine with his billions, thanks for asking.
I'm talking about the poor schlubs who thought they could get inside the club by buying into this stock. Virtually every single share bought is in a losing position. Nice going, folks.

Yesterday, if you'll recall, I wrote:
But tomorrow is - at last - the big day. That's right - it's Blackstone day. Apparently the demand for shares in BX is about seven-fold oversubscribed. Nothing would be more poetic than the market taking a fall tomorrow.
Well. Down 189 more points. Nice.
I actually had a great day, making money both on the short side and - for the brief bounce of the day - on the long as well. I remain cautious and humble in the face of a massively moronic and gullible public that could be coaxed into buying again. Thus I tighten my stops every day.

The Russell has been stronger (relatively) than I'd like to see. But it remains attractive to me largely due to its reasonable bid/ask spread on the options. I remain dumbfounded at the complete rip-off represented by the S&P 500 options market. It's just criminal.

Oh, speaking of the S&P - - - in spite of the recent fall in equities, we remain absolutely sky-high. Dare I even say grotesquely overvalued. Oh, well. It'll take years to sort out. Long story short, don't be fooled with the tiny inching down we've been doing. It's nothing compared to the radical overvaluation still present. Trillions of dollars of equity need to be destroyed before we are at interesting values again. Whether the top has passed it totally unknown. And it doesn't matter to me, as long as I manage and maintain these stops responsibly.

Symbol ALB bounced up to a perfect retracement, thus permitting me to re-enter the position which I closed profitably just a couple of days ago.

Symbol CAH isn't doing badly for me either. I own puts on this.

Although Cigna (CI) is too big to simply collapse, it's got a cute little H and S pattern whose neckline was broken today.

A new short I think I'll enter next week is - again - Malaysia (EWM).

I've got to hand it to Google (on which I have not had a position in a while) - - they seem to be doing everything right. This is a gorgeous bullish pattern - just beautiful - particularly in light of today's market action. Poor old Yahoo is just a mess. Why anyone ever used Yahoo in the first place - - I thought they sucked in 1996 when I first tried them - - is beyond me.

Goldman Sachs (GS) suffered some today, so my puts prospered. This isn't a big fall by any stretch. I guess maybe the lame-o BX reaction hurt them? I don't know.

I continue to hold my JC Penney (JCP) puts, which push a little higher into the green each day. This is a dynamite pattern. Never has polyester clothing been so good to me!

I haven't shown Meritage (MTH) in a long time, but I just want to use this to illustrate the kind of slow grinding death equities can go through. I think this is a good proxy for just about the entire stock market, although housing got a head start on the rest of us.

It's been a good week. Particularly since the detractors are too sheepish to show their faces around here during down days. So let's celebrate:
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at6/22/200759 insightful comments  Links to this post
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Thursday, June 21, 2007
Yeah, We Do.........
I've been mixed up with computers a long time - - since 1979, actually. And I've been involved in electronic communities since 1981. Yes, you read right. I've been doing this a while. And I've learned a few things along the way.
One thing I've learned is that there tends to be an inverse correlation between how a person presents themselves (when they can hide behind a facade) and how they really are. This applies particularly to personal appearance. A shining example of this appeared in last Sunday's New York Times, which profiled a number of serious electronic gamers with their avatars. Here's a particularly painful, poignant example:

So the enormous mass of protoplasm on the left is the human. And the svelte, strong, serious warrior on the right is his representation of himself in the virtual world of Everquest.
Now, if you read this blog at all regularly, you really have no reason not to do thefree sign-up for BlogLog, since it's a kick to see who your fellow readers are (savvy, witty folks, by and large; with at least enough good sense to swing by here once a day). But I am highly confident that no one reading my bloglooks like this.

My caution yesterday was very well founded. In fact, it was spot-on. The market opened. It farted around a bit, then it fell hard. And I closed out my DIA and RUT puts at huge profits.
Then I bought calls. But........because I'm an idiot......I sold them shortly thereafter for breakeven. Then they spent the day going up 20%, so that was about $8,000 down the toilet. Like I said: an idiot.

But tomorrow is - at last - the big day. That's right - it's Blackstone day. Apparently the demand for shares in BX is aboutseven-fold oversubscribed. Nothing would be more poetic than the market taking a fall tomorrow. As for BX, I guess it's almost certainly going to close well above its offering price. I guess. But there's something about this offering that I think is rather pivotal in the world of investor psychology.
Anyhoo, my intuition is that tomorrow is that we're going to resume the fall. Perhaps even taking out Wednesday's lows.

One of my favorite real estate shorts now is Kilroy (KRC). If this stock can break its neckline, this is a honey of a pattern. Quite large.

If the market is on the weak side after the opening bell tomorrow, I think some 3M (MMM) puts are probably one of the best places to take advantage of any downside action.

I've mentioned Micron (MU) as a long a number of times. This is a great little pattern, with a volume swell to boot.

It's been quite a week. Let's see how Blackstone day treats us. See you after the close. Oh, and this is me. For real.
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Wednesday, June 20, 2007
Do We HAVE to Have a Bounce?
I started the day off, before the opening bell, feeling very discouraged. The market seemed inclined to stay at - to borrow from Irving Fisher - a "permanently high plateau". Today provided a welcome respite, with interest rates gutting the Dow for 146 points.
But surely you've seen a change in my temperment. Whereas typically I would be tooting the celebratory horns at such a thing, all I can think now is, "Great, we'll just go into another bounce now." And, perhaps, in my own twisted way, that's actually a really bearish sign. Because when I was feeling balls-out, it's the end of the world, the market invariably pushed higher. I regard these recent jolts downward not with glee, but with dire suspicion, bordering on a sense of dread.
Not to say that, from a chartist's viewpoint, the indexes (and carefully chosen stocks) don't look terrific for the bears. The S&P 500 looks gorgeous.

And yet, as I look at the minute bars of the same index over the past 60 days, unless the lows of last Thursday, June 7th, are taken out we're going to continue to stay stuck in this f*cking grind upward. If there is, in fact, a loving God, and we blow out the lows of June 7th, then it's time to rock. But I'm a doubter until it happens.

Another reason for my skepticism is that whenever the VIX goes rip-roaring higher, it is prone to ease back down (lately, at least). You can see the general range I've highlighted below. We're a bit above it.

Apple (AAPL), on which I own a small put position, edged down both yesterday and today. Next Friday is when the JesusPhone gets introduced. Obviously it will be fascinating on the 29th to see what happens to the stock. To say this product is widely anticipated is a gross understatement.

Let me pause for a second to make a socionomic observation. I saw a full page ad in the WSJ this morning for a series on CNBC (of course) calledAmerican Greed. Just another sign of the apocalypse, folks. The world's vomit-inducing obsession with cash, stoked terribly over the past few years, is reaching the saturation point. Barf.
Real estate stocks are a strange one to me now. They have very toppy formations. But they have also fallen far enough to be resting on some pretty significant trendlines. It is a difficult call. Apartment Investments (AIV) is a good example. I don't have a position in this one, although I do in some others, such as ESS.

Bolt Tech (BTJ) finally started to fall a bit today, although it would be hard for any stock not to do so on a day like this. I have great hopes for this one.

CVH doesn't have any particular bearish pattern per se, but it does look like what would normally be a really bullish breakout is going limp-dicked. And that's bearish. Oh, random thought: if you ever see anyone spell it per say, shoot them. Because they are an abomination to the gene pool. Aw, hell, let them live. Most people are idiots anyway. No harm in letting a few more loose.

I'm sorry to say I got stopped out of John Deere this morning, but it went on to form a lovely shooting star. Sigh. Could have to re-enter this sucker.

InfoSys (INFY) isn't my favorite pattern in the world, but as lower lows and lower highs go, it's not terrible.

Lehman Brothers (LEH) is mushed up against its Fib Fan. Nice.

My bullish notes on ONT have panned out OK, but, I dunno, I'd edge away from this one unless it busts through yesterday's high. Volume is slipping fast. And if you look at the entire history of this stock, it definitely is not beneath wrecking a perfectly good bullish pattern by going limp.

The SPY (whose options have a surprisingly sucky bid/ask spread) sports a nice bearish engulfing pattern. Heavenly Father, would you please make the market fall hard for more than one day in a row? Please?

Remember: it's a beautiful world.
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