Slippery Slopes
August 11th, 2006 by BWV
The market appears to be in real trouble now. There isn’t a bid under much of anything. Even the oil service index OIH is getting smacked and looks toppish.
I seem to be hearing much chatter dismissing this action as “typical summer selling.” Seasonality probably is playing a role, but that doesn’t make the outlook any prettier. Down is down no matter what month we’re living in.
If you look back, the index charts bottommed out around the same areas in June & July.. so if those levels are revisited, it will be the 3rd time there.. which I’ve learned is often the “charm” for a level to be decisively broken. Not always, but pretty decent odds.. I’m guessing here, but 65% seems reasonable.
My personal lines in the sand for defining the begginning of a Bear market are:
Russell (IWM): $66.30
S&P (SPY): $122.25
DJIA: 10,700
Nasdaq: already in a Bear
However I’m by no means the only guy thinking this way.. last I checked, one of my mentors, Trader Oz, is actually looking for this test to hold — because so many like are are thinking this way — and for a furious rally to ensue. We shall see how all this “fading the fader’s fade” business works itself out.
Looking at individual names… I’ve loosely followed this Cheniere Energy stock for a while now.. a very speculative liquid natural gas related stock.. that trades at a mere 660 times revenues! Click here to look at its “key stats” on Yahoo Finance.. While there be sure to click on the analyst estimates to see just how much revenue growth they’re expecting (i’m being facetious).
“Earnings” were released at 6:13pm last Friday (Herb Greenberg taught me to be skeptical of any company that releases important news late on Fridays or over weekends).. Judging by the action this week, the numbers impressed few. If this thing looks to close under $32 today I’ll likely double up, making LNG the largest short position in my firm’s short history.
Amazon is probing this $26 area for the 3rd time now.. This short looks like it could last till the start of Christmas shopping season.. when some bottom fishers will probably emerge.
We still made a few new buys so far todays. Listed below..
Long IMO, IPSU, NGPS, PWR
Short AMZN, LNG
