Some China leaders

All weekly charts, all approaching the highs.

SPY

Today's bar looks like the bar on Jan 7th, which was also a gap down and has not been filled yet.

NASDAQ gap

Even though it is still above the moving average, the gap down this morning may well singal the end of rally.

I don't understand it

This morning's economic report showed an increase of personal spending and a decrease of personal income. And all the talking heads are saying it is a good thing as people started spending again. I don't get it. We got into this mess because of generations of over spending, now the government encourages us to spend more to save the economy? It does not make senses at all. I think this time we have a shortage of supply side of the equation instead of demand side.

But what do I know? I am not even an economist!

China market is stalling

China stock market is stalling too at the previous high. Notice the negative divergence.

Explaination

I know I sound contradictory to my yesterday's comment, but I don't like the bulls have tried 1550 area 3 times and fail. The odds are high we could have some near term weakness, maybe shallow, maybe deep, which I really don't know. They all say upside is limited. Even if I am wrong and the market charges higher tomorrow, my stop is close and I won't lose much.

In and out

It looks like the rally is stalling. I am scaling out of my longs and short some more. I am not sure how deep we will decline from here, anyhow the upside might be limited.

Break out!

The NASDAQ clearly broke out yesterday. The near term direction is up!

Report from LA

All I want to say is "not a good picture". Never saw so many vacant business spaces in my life in the States. Comparing to this, the Dot Com Burst was nothing, which did not affect the real businesses at all. Starbucks closed two stores which had been in that area for ages and I went a lot. Restaurant business was down as much as 70%, according to the waitress at my favorite Japanese shabu shabu place. But the South Coast Plaza is still packed in the weekends.

Biotech stalled at resistance too

SOX failing?

It controls the fate of the NASDAQ.

Banks

The resistance ahead, the bottom fishers should not be greedy.

SOX

I thought the semiconductor index could lead the NASDAQ lower, but instead it is breaking up today. A bullish sign.

At resistance

Some of recent China plays are stalled at resistance on the weekly chart.

Bullish reversal

The reversal is strong, bottom seems in.

What drove this rally?

1. stretched bearishness, I am one of them.

2. Big banks' CEOs announced they did well in the first two months. Since the earning season starts today, let's see how good they did and whether the number can justify the recent rally. Don't just talk, show me the money!

GOOG

Shorting GOOG.

The rally is stalled for now

The double resistance is working. Hope you saw my Sunday's post and took some profit off the table. The rally was nice, but it is still too early to call a bottom.

Common sense

Even though we just experienced a fierce bear market rally, I still remain bearish on the economy and the stock market in the longer term. I don't have a fancy theory to claim I must be correct, my reason is just a common sense.

We just experienced a fatal destruction of our economy in less than six months, our banking system is almost gone, our banks almost went under, all of above make me hard to believe the worst would be over so soon and a new bull market is coming as lots of investors hope.

Imagine if a top athlete just recovers from a cancer, will he immediately be able to go back to gym and fight ground right away? The recovery will take much longer.

There is a possibility that we have seen the worst part in the stock market, but don't count on it and celebrate it too early. We still have a lower low on S&P and Dow Jones.

Take some profit off the table and wait to see where it wants to go next.

Some positive factors

S&P made a lower low this month, but the sectors above have not, which forms a positive devergence. And semiconductor appears to be the leader.

Rally stalled

Stalled at the resistance. Normal after such rally. If today's high marks the high of this rally, then we will have a lower high, which is bearish.

Still early

The recent strength gave bulls more confidence which I fully understand. Doug Kass's call seems working finally. But wait, even after such rally, we are still below his first bottom call on Feb 19th.

Now the market comes to a critical point, 1450 the double resistance, both pink downward moving average and break down point. If we close above it, this is probably D bottom and my hat off to Doug Kass who nailed it, maybe just days early; if we can't overcome it, this is another shorting opportunity.

A double bottom?

A double bottom? Too early to tell. The price action is good, but lack of volume.

Price talks, you listen?

The market is getting more oversold everyday, but it still can't mount a decent rally, even not an oversold rally. Every time it tried to climb up, it got sold off near the end of day. Forget about all the indicators and the sentiment, the price clearly says that it wants to go lower. We did not get the big kahuna today, but I still think it will come true in the near future.

Dr doom says

Roubini predicts an U shape recession for up to 36 months.

Is it going to lead the decline of NASDAQ?

Further breaking down from here will open the door for more weakness of NASDAQ. The financial area was the leader of last decline, this time the techonology will take the charge.

Buy and hold method

The buy and hold method has been under fire lately. Why is Warren Buffett still insisting his buy and hold for life on CNBC today, even though quite a few of his long term holdings have dropped to single digit? Because the method works for him and has been worked for him for a long time.

Does it mean it will work for everybody? NO. Buy and hold sounds so easy, it seems everybody could copy his method and have the same financial success. If that is the case, then how many Warren Buffett in this world? Shouldn't it be many? I never heard of an average investor achieved the massive wealth by his method. He is the only one can do it this well.

Bolt set the 100 meter record with 9.72 seconds. Running is so easy that everybody can do. But can you do it with 9.72 seconds? Even if you eat what he eats, practise the same hours as he does, do exactly same, you are not going to run as fast as him.

The method is nothing wrong. The problem is that investors blindly follow his simple method, which can be described under 10 words "buy a good business and hold it for life". If you really think his method is this simple, making a fortune is really this simple, then who else is going to lose money?

Warren Buffett in front of nation again!

Warren Buffett did a good job this morning to prevent the market from a free fall. The European markets were down over 1% across the board at premarket, now they are green. Even though Mr. Buffett made some serious mistakes over the last year, average Americans still treat him as a investing legend. No matter how the guy like Doug Kass attacked him or questioned his method, he is still the No.2 richest man and still got his touch.

Not D bottom!

GM, GE.

It does not look like a bottom to me!

Remember what I said this to C? Ditto to BAC.

My wild guess last Friday

Look at what I said on Friday at Twitter, the premarket activities make me think my wild guess might come true!

Observation over the weekend

Over the weekend, I saw enthusiasm among the traders, who calls for a bounce, at least short term one. But without some very positive and meaningful fundamental news, the bounce will be short lived and minimal. If with more negative news, the selloff will continue and the big kahuna I have been expecting may finally come true.

Jim Cramer's worst case for Dow

5320 area is also a support on the monthly chart. So his guess is a reasonable on the chart too.

Will it follow next week?

The semiconductor sector is tough to crack. I expect it will do sooner or later.

4 bears

We are on the way to catch up the Great Depression, in length and depth.
via Investment Bloggers' Digest

SQM

SQM was featured in my newsletter.

Hero of the day: Doug Kass?!

I have been closely following Doug Kass, a Street.com commentator who is red hot today for his gutty rally call. Jim Cramer is kissing his ass all day, and other small potatoes at Realmoney follow. But the truth is, Doug Kass called a rally on Feb 17Th, 10 days ago and 10% above the current price. He used the phrase "longest I have been in almost three years". Since then, he has been saying "having been net short for several years - I am now all in long" at Twitter. On Feb 27Th, he said "s and p futures hitting sell stop levels now ", a follower asked if he referred the general market or his own position, he did not answer. He disappeared for several more days until his prediction finally becomes correct today.

After 10 down days, 1 up day is normal; after 180 pts dive, a 33 pts bounce is expected. Why suddenly he is the hero? He would be a hero if the market gains back where it stood on Feb 17Th, he would be even a bigger hero if the market keeps rally afterwards. But certainly not right now, 1st correctness after 10 consecutive wrongness. It shows how pathetic and ignorance the financial professionals are at Thestreet.com. Bash them, I say!

Old prediction

Check it out here. The low of this recent decline is 1312. Now I expect we are going to test 1000.

MS

17% in the pocket.

Too orderly

This selloff is too orderly, more downside ahead!

Update: APC

Still in the newsletter too, now more than 13% in the pocket.

Still shorting BTU

Still in my newsletter, now 17% in the pocket.

FXI

FXI looks even more bearish.

China stock market

The move may be near the end for China.

Fear

Over the weekend, Warren Buffett was no question under the spotlight. The negativity of all the headlines is intensifying the fear in the air. Also on Monday morning, HSBC announced to sell $17billion of shares, even worse is that HSBC plans to announce a two-for-five rights issue, priced at about 300 pence a share, almost 40 percent below the stock’s closing price of 491.25 pence in London on Feb. 27! Currently HSBC is halted in HK trading session. Maybe the fear and the coming volatility is all we need to put a solid floor.

Summary of Feb, 09

What went wrong? I made some long bets highlighted with red color from Feb 4-11 and got stopped out. It looked attempting, made me think the bottom was in. And I paid the price for it.

I feel like a fish who could not help biting the bait. Even though I escaped, I got hurt badly. Conclusion: there are lots of fake bottoming process in a bear market, I would rather being late than wrong. Looking at those trades, all losses. If I ignored the long signals, only focused on short ones, my performance would have been much better this month.

Overall, the newsletter's picks are up almost 5% or $15.85 so far this year.