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.

Full>half

Roubini says fully nationalizantion is better.

A colorful tomorrow

In his annual report, Warren Buffett said America has faced bigger economic challenges in the past, including two World Wars and the Great Depression.

"Though the path has not been smooth, our economic system has worked extraordinarily well over time," Buffett wrote. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

I totally agree with him as human being, but disagree as an investor. If following his "buy and hold" stratergy and having bought his heroic call last Nov, you will not live through this dark time. You are out of ammo by now.

"Buy when others fear" is a good investing stratergy and works most of times. However, even most sounding method could lose its magic, which does not mean it is not good, nothing is perfect. Unfortunately it does not work quite well this time. You have to prepare yourself for the worst outcome, which Warren Buffett did not outline you, no other so called professionals ever did. And that is why I am pissed.

Warren Buffett

His annual report just out!

True color of Obama

Is president Obama leading us the wrong way? Larry Kudlow says yes.

C

What did I say yesterday about C? If you acted on my call, at least I save you 50%:)

Major phases of a bear market

Historically, major bear markets have also followed distinct patterns.

1. First phase
There is a sharp initial fall that removes much of the 'froth' from the market.

2. Middle phase
There is a strong rally in prices for several months, which may lull some investors into thinking that the bear market is over. The rallies can be dramatic, but have lower trading volume than the initial sell-offs. And the advances tend to be concentrated on a few selected stocks, not the whole market.

3. Third phase
There is a long slow downward grind in prices, accompanied by low volume and periodic false dawns until the bear phase ends quietly as share valuations reach rock bottom. At this point, few investors from the earlier buoyant phase in the market are interested in anything other than the most conservative investments.

Which phase are we in?

Via Investment Bloggers' Digest

No sector rotation!

All the sectors on my screen are under the declining 30 day moving average, the biotech is the latest joining the bear party. Even with recent strength from the banks, the others still want to go down. No more sector rotation, bulls have no where to hide this time.

It does not look like a bottom to me!

C has been bouncing, but the bounce is weak. It does not look like a bottom to me, which is scary.

Waiting for something big to happen?

We are either building a bottom or waiting for another nasty surprise. I would say the latter has a better chance.

I am just so pissed

I have to spit it out. I have taken this for too long. What do I talk about? I am talking about the irresponsibility of our so called financial professionals. Jim Cramer, Warren Buffet, Doug Kass, the list goes on. They act like knowledgeable people, calling buy this buy that on TV, on radio, on Internet. But they never tell you what and how to do if their predictions are wrong. Nobody can be 100% correct in the market. If they are responsible, they should have told you what the stop is, or what the next step is to save the position. They never did. They give you a start, but not ending. A 10 year old child can do that is OK, not professionals with thousands of followers.

Stop too tight

Too bad!

BRCM

Also BRCM.

BTU

BTU is a currently short too.

APC

APC is a featured short in my newsletter.

Against the new proposed tax!!!!

A proposed tax is making the rounds in Congress. A financial-transactions tax on the sale or transfer of financial assets - 0.25 percent of proceeds and purchases - is a disaster to traders, even if you sell it at a loss. A 0.25 percent financial-transaction tax on $10 million of proceeds OR PURCHASES equals a tax of $50,000 per year. This is even if you lose money on those trades!! This tax applies to stocks, options, and futures.

Please sign this online petition:
http://www.rallycongress.com/no2tradertax/1536/
Please contact your local senators and voice your disapproval:
http://www.senate.gov/general/contact_information/senators_cfm.cfm
Please contact your local Representatives and speak your mind:
http://www.house.gov/house/MemberWWW.shtml

Remain bearish

It is on the way to 1300.

Some snow pictures

My apartment buildings under snow.

Banks still getting sold

With banks keep getting hammered, I doubt we will get a real lift.

React, not predict!

If you ever leaned anything from the disgusting decline of 08, it should be "don't ever listen to professionals' predictions". ONLY REACT. If you listened to Warren Buffet's heroic speech and bought his predictions last year, you are in deep water right now and do not feel any patriotism any more.

Why it does not work? Simple, because you are not Warren Buffet. You are a small investor with limited capital and limited financial tools while he has billions of dollars at his hands that he can average down or deploy other methods to cut the costs down. So even if his prediction is wrong, he could still make it work. But you, you are dead when you have a fatal mistake.

So as a small investor, only way to survive a brutal market is to look at the charts and to react.

Steel sector

I wished the steel sector could follow China, it followed for a day or two, but did not get a chance to break out before China pulls back. As soon as China market softens, we break down and take the dive. Totally a loser behavior.

New direction

This breakdown signals the end of recent consolidation and the start of a new down leg. We are far from oversold.

Jim Rogers is shorting the US market

He bets that U.S. stocks will drop as the government’s economic revival plan is a “disaster.” He has correctly predicted China would first come out the financial crisis. So far this year China has rallied 23% while US declined more than 8%. I won't bet against him, will you?

Stimulus package explained (I think it is funny)

If you spend that money at Wal-Mart, all the money will go to China.
If you spend it on gasoline it will go to Hugo Chavez, the Arabs and Al Queda.
If you purchase a computer it will go to Taiwan.
If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic).
If you buy a car it will go to Japan and Korea.
If you purchase prescription drugs it will go to India
If you purchase heroin it will go to the Taliban in Afghanistan
If you give it to a charitable cause, it will go to Nigeria

Via Investment Bloggers' Digest.

Frustration

I don't know about you, I am just frustrated this month, in which we can't even get a trend for two days. I am forced to be a daytrader, in this market.

AGU

AGU is one of few long positions have not been stopped out lately.

My feel

I am adding long positions gradually. As I said yesterday, the market does not respond the negative news any more, which seems priced in already. Please remember, we are still in trading range that means anything could still happen.

Strong close

The bullish reversal signals the worst is over? Be patient, we are still in a trading range which will resolve soon.

Weak open

Dow Jones is breaking down the two months' old trading range and investors are fleeing to technologies. GOOG, RIMM, AAPL all in green.

GOLD

GOLD was only big winner for the newsletter today.

Shorting this sucker

The market is fading quickly, it seems it does not want to go up. I am reloading some shorts.

BTW, a reader thinks I sound more lucky than anything else. If I can make a living by the luck that is what he called it, then I am a hell of lucky guy. Sometimes luck IS more important than anything else.

Wrong!

I am wrong! This selloff is nasty. Now we are on the edge of further breaking down, unless we gain back most of loss tomorrow.

Observation

I think we might not see a bigger selloff than right now. The reason? The financials are not getting sold as hard as before. Remember we had some serious rallies last week.

Update: VRTX

Stop out.

Getting rich from blogging?

Thinking about quiting your day job and making money by blogging? Think twice. Blogging is an interest, that is what I think and that is why I am not burned out.

Thanks Maoxian for the link.

NASDAQ

Set up nicely, Geithner don't blow it!

More thought

What is this? A joke? This shows how the new government still can't get a hold of the mass. Sometimes, you can't delay a thing like what you did in your daily life. You can't delay an earning report, you can't delay an important sport event, you can't delay a government annoucement. They should know much much more than I, but they still make such stupid mistake. Again I am disappointed by our inefficient and stupid government.

Wait, we need one more day!

The bank rescue plan just got postponed. Sometimes it is not good to have a democracy. They just can't get one simple thing done.

Happy Lantern festival!

It is sunny and warm in Bejing now, spring is coming.