BTW I love using the TRIN and TICK indicator for the NYSE and Nasdaq and see it as a game changer in order to gauge short term liquidity flows and underlying price actions, as in short term demand and supply. I have found it very useful and another important piece to my repertoire. As you can see by the chart, the market was raising bids for the past 2 days as it never broke .70. Use the TRIN, TICK value table below to feel the zones in which the market is in, sentiment zones as I like to think of it. As you can see the market was in a Mega-Bullish mode for the past two days and it will be interesting to see if the market stays in the lower zone on the TRIN’s through the end of the year. Keep an eye on it and try to make correlated high probability plays with TICK and TRIN as another variable within your trading formula. (Here‘s a place that you can read up more about TICK and TRIN.)
http://traderfeed.blogspot.com/2007/04/trading-techniques-collection-of.html
It is now holiday trading and historically we should trail up into the New Year. The technicals on Happy’s market index charts all show a higher low on the longer term charts and I believe that we COULD be almost done working off the correction phase the market has been in.
After all the writedowns, chicken little crying about how the sky is falling from the media and bloggers, here we are still above November lows and still attracting large numbers of buyers. Why aren’t we lower and doesn’t the market know we are in a recession? Maybe it already knew and now is pricing in a different scenario in 6 months. I mean is this really any new news? What the market loves is certainty, transparency and clarity and as corporations become more transparent and truthful about the losses suffered by the subprime fiasco the market gets more clarity on the financial situation. So I say give the market what it wants give it clarity, give it transparency, dump all your bad news now so we can focus on better things such as earnings!
The earnings season is approaching and like my 500% (5 bagger, it went from $110 to almost $150) on DECK earnings last time, I still think DECK and Uggs is the consumer play to be in. So I went shopping last night and JWN (Nordstrom’s) was sold out of the $50 kid’s Ugg’s for xmas! I had to order a pair of Uggs from another JWN location bcuz the $150 pair of Uggs I bought for my wife was sold out and the sales rep told me, she can’t believe it and whatever they get they sell. Everywhere I go I see young and old wearing them, it reminds me of the iPod craze.
Hmmm, it pays to be in trend and be cool! J It would not surprise me to see DECK at or near $200 after earnings. I believe AAPL and GRMN both had the best sales ever and should be watched as well.
Jon Najarian of Fast Money as well as King Goldman Sachs believes that the option prices and actions are expecting one of the most volatile Januarys on record. Please be prepared in fastening your seatbelts. And that financials could be moving significantly higher (gotta hawk GS and MA).
Jon also notes that China could be primed to rally big in the next couple months. When you look at the FXI or large Chinese corporations CHL, PTR, LFC they have been consolidating for a long time (2 months)since their highs in late October as the correctly prophesized correction occurred in sync with their Chinese market seasonal trends.
A lot of value fund managers are talking about investing in the US since the correction when comparing valuations on a P/E basis with other global markets. But as always most of that money is earmarked for China. Which is fine by me because as Ken Fisher has indicated, the larger global markets always pull the smaller ones and lets face it the US market now only makes up a little over 30% of the global economy.
Another point I’d like to make is the cyclicality of wealth in America between housing and the stock market. Now that the housing market has deflated, the stock market will rise substantially comparatively. This mechanism allows for substitution of wealth creation and helps support American consumption which is the primary catalyst for our economy. The stock market WILL be the new prosperous game to be played speculatively by the same money that was chasing the housing boom. The appetite for risk must be appeased because without risk there is no gain. Cramer as I, believe that the secular bull market in Agriculture will continue as well as the solar plays.
My favorite agriculture plays are POT, MOS, AGU, MON, CF, MOO, TRA, BG, DE. The recent Energy Bill passed by the US Govt is really a Food Bill. It will put more constraints on fertilizer supplies and grain supplies as the bill calls for millions of gallons of more ethanol. Right now a Russian fertilizer company is negotiating with the Chinese for delivery of fertilizers next year and as fertilizer prices jump $50-$100 extra a ton, we could see the highest prices ever for ferts with this new Russian-Chinese deal once it is finalized. It is rumored to be completed in the next couple weeks. Now until fertilizer prices drop substantially from the highs, this bull market should continue for the foreseeable future. Analysts are going to have to play catch up with 2008-2009 estimates at this rate. They are WAY behind the curve! Ferts and Ags as the new boom craze, who ever said food was boring!!!
Solars could be part of the big solution to save our planet!!! And it is the biggest threat to the oil establishment! I remember Eric Bolling on Fast Money when he said solar was hype. Of course he said that, he and his cohorts have been helping push up oil prices for the past 3 years, if solar becomes the big thing, oil demand will drop substantially and one day oil will be used only for taking that squeak out of your kid’s bicycle chain not filling your car! (Its solar powered). Oil will never go away but it will soon be the bridesmaid instead of the only bride. My favorite solar plays are FSLR, JASO, STP, SPWR, PBW, and WFR.
I believe the market will go higher from here and we will not test November lows. The focus will be on earnings soon so writeoffs could take a back seat for the time being and remember the FED is cutting. The Fed is cutting and the markets are climbing the wall of worry. Yeah only 25 basis point cut and we growl but the fed is still in cutting mode and will cut 25 every time they meet until we are out of the woods. The market is a leading indicator and looks out 6 months ahead, we have the Bernake put and Congress put in place to provide help if the market encounters problems and as Soros believes the market not only gauges the temperature and well being of the economy but can also be the cause of illness to the economy so it is in the best interests of EVERYONE involved to make sure the market doesn’t crater. Housing has deflated consumer consumption and if the market tanks and takes everyone’s IRA, 401Ks, trading accounts and mutual funds down they will spend even less.
It is a fluid situation and news will be priced in as it comes but as more bad news comes out and we still rally, I feel good about the prospects for 2008 and it could become one of the best years for the market ever.
Happy Holidays and enjoy spending time with your cherished loved ones. We trade but that’s not who we are, we are all loving sentient beings who happen to trade for a living. We are all very important to someone. Remember what‘s important, and remember that we need to be content to feel happiness.
Besides that you better rest up for what could be the biggest ride of our lives in the markets! Stay in the Yoda state (calm, concentrated focus needed to access implicit knowledge, unemotional) and the Yoda Santa might just bring late gifts in January!
Hope you enjoy!!
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