Heart Attack Grill

My kind of place.


H/T: rmultiples

The Best Blog Posts of 2008

Earlier this month, Dinosaur Trader asked some of his favorite stock bloggers to send him a link to our favorite blog post for 2008. Out of pity, we dutifully complied with his groveling request. 

The result is this post.

Hope you enjoy reading the entries as much as we enjoyed writing them.

Sock It To The Holidays

H/T: Tickerville

Hoosier Dome Imploded

The Hoosier Dome, aka RCA Dome, was imploded Saturday to make room for an expanded convention center. I attended several Colts games in the dome over the last several years and there wasn't a bad seat in the house.

Be sure to view this is in full screen mode for best effect.

Reason.tv on the Nanny State

Two Degrees of Freedom

Two degrees of freedom for 2008:

Three Degrees of Freedom

Putzing around at StockFetcher this morning trying to create a short-only mechanical trading system using as few degrees of freedom as possible.

Using only three degrees of freedom, here are the system results for 2008 and then 2002:

Merry Christmas from Senator Thompson

The Inner Dogwood

I'm always intrigued by online personality tests, so when Dr. Steenbarger sent out a Tweet linking to Signal Patterns, I couldn't resist. I registered with the site, then took their personality survey and their music preference survey.

Below are the results. Hope you enjoy this glimpse into the inner Dogwood. For what it's worth, the results seem on target, except for the "sad" music preference. I thought that one was a bit odd, oh well, it was fun to do.

Charting the Nasdaq 100

Thursday afternoon's sell off took the Nasdaq 100 to the uptrend line drawn from November's low, and just below the support line at 1,200, before shorts began covering and buyers stepped in to lift the price above support where it closed at 1,204.

The sell off is not alarming, especially coming on lighter volume than the last two days, so I don't think longs need to abandon their positions yet. However, the market is contracting into a very narrow trading range and this can't go on for long. 

Consensus opinion in the blogosphere is calling for a breakout to the upside followed by heavy selling in January as retail sales numbers come in. This is probably a correct assessment, but we also could get a replay of the August decline, but I doubt enough traders are around the office this time of year to retest November lows, or set new ones, before Christmas.

My game plan is to buy morning weakness, then hold on as the shorts start covering their positions before the weekend. No one wants to be short the market if the Feds announce a Big 3 bailout deal Sunday night.

Economic Poetry

Detroit isn't bankrupt because of a few automobile plants in the South. They are insolvent because their business model is as putrid as Gacy's date in a crawlspace. The combination of managerial greed, union greed, and insufferable government mandates combined to slay an industry that has been essentially producing unwanted junk for 35 years anyway.

You can read the whole thing here.

Where Are They Now?

Too funny to resist.

Apparently, 1980s hair band rocker Share Pederson Ross of Vixen is now an options trader.

First, here she is playing bass guitar in the music video Edge of a Broken Heart.

And here she is in a new video released tonight by OptionMonster.

Charting the Nasdaq 100

Friday's price gapped down to the uptrend line drawn from November's low and then closed above the 1,200 support level. That's the good news, which has been giving off bullish vibes all weekend.

The bad news is that price is sitting just below the MA 50 point of resistance and still within what appears to be a bear flag.

If the flag breaks to the upside, then I believe a move to 1,400 would be fairly quick and easy. A break to the downside takes us to, well, who knows for sure. It would be ugly though.

I'm not expecting much from today's market given the FOMC meeting. The real action will come after 2:15 p.m. Tuesday when the FOMC announces its interest rate decision.

Mortgage Mess Not Quite Over?

Interesting story on 60 Minutes tonight regarding the approaching mortgage crisis. Yes, I said approaching.

Cloture Vote Fails 52 to 35

The U.S. Senate failed to get the 60 votes necessary to close debate and bring the Big 3 bailout bill to a vote tonight. As of this posting, Dow futures are down 361, S&P 500 futures are down 44, and Nasdaq 100 futures are down 55.

Charting the Nasdaq 100

Today was a nice pullback on below average volume that filled the Friday-Monday gap at 1,180, of course, price had to break support at 1,200 to make that happen.

At this point, I expect price to find support at 1,140, where the downtrend and uptrend lines intersect. If price closes below that area, then we'll probably see new lows this month.

As of this posting, the NQ futures contract had dropped to 1,147.50 before bouncing to 1,155. So, it looks like the 1,140 area will be tested overnight.

UPDATE: 10 minutes after posting the above, NQ broke to 1,135 then bounced to 1,140.

Killer Chic

I've always found Hollywood stars entertaining, but not for the reasons they would hope.

Now Reason.tv explores one issue that has always humored me, the adoption by stars and starlets of Che Guevara, a man who did not hesitate to kill such people when and where he found them.

This edition of Reason.tv also discusses the embrace of Mao, a man who killed tens of millions of his own people.

Charting the Nasdaq 100

Monday's price action broke above the downtrend line and today's activity took us just shy of the MA 50 before sellers stepped in and drove the Naz 100 to the 1,200 support level.

A further pullback to the downtrend line would not be unexpected, or harmful to the breakout, although buyers successfully defended the 1,200 level in such a way that I'm not convinced the bears have the necessary strength to drive the market lower.

Buy Our Cars, or Else

Saw this over at The Big Picture and thought my readers would enjoy it.

Nasdaq 100 Daily Chart at Midday

Techland finds itself in an interesting spot midday, sitting above the downtrend line and support at 1,200, but below the MA 50 @ 1,266. 

At this point, I'm expecting a pullback to at least the downtrend line before a move higher, perhaps to the MA 50, sometime this week.

Or, this could be a false breakout and the market collapses from here.

Stay nimble.

Charting the Nasdaq 100

Here is a quick look at the Nasdaq 100 after Friday's rally. Price is parked just a smidge above the downtrend line with RSI(2) not yet in overbought territory.

Tonight, the NQ futures contract is up about 20 points to just under 1,200, an area that in October provided some support to the market before giving way in November. Just above the current price is the daily R1 pivot point at 1,204.

News of a potential Big 3 bailout agreement is helping to drive futures higher, with the ES (S&P 500) contract up 16 to 888.50, and the YM (Dow 30) contract up 134 to 8,746.

Hard to say if the pop in futures will last. There is a lot of resistance overhead, especially in the rapidly-approaching MA 50. A finalized bailout may ignite a rally, or it could be the ultimate sell the news event.

Yeah, I know, not very decisive, but staying open to a trade in either direction is the best I can do in this environment.

MA 50 Cross Over & Cross Under Update

What's Wrong with the Poll?

The captains of the three sinking ships commonly referred to as the Big 3 automakers are making much ado about polling data that shows more than 50 percent of Americans are unwilling to buy a car from a bankrupt manufacturer.

In the latest installment of this story, CNBC has announced results of its own poll showing that 52 percent of Americans would not buy from such a company.

What I found interesting is that the percentage of people who won't buy from a bankrupt manufacturer (52 percent) is almost identical to the market share held by manufacturers of imported cars.

According to ProCon.org, in October 2008, imports had a 53.5 percent market share, while the Big 3 had a 46.5 percent market share.

This begs the question: Are the people answering no on these surveys import car buyers, or are they actual prospective customers of the Big 3? 

Let's face it, there are a lot of people in the U.S. who will never, ever consider buying a car made by the Big 3, bankrupt or solvent. Therefore, it makes no sense to use their opinions to assess whether bankruptcy reorganization would actually have a significant negative impact on prospective sales.

A more accurate poll would weed out the import-only buyers, and then ask the remaining potential car customers if a chapter 11 filing would prevent them from buying a car from a bankrupt manufacturer.

To use a political analogy, when trying to determine who is going to win a campaign, one of the first questions asked is whether or not the person is going to vote. 

If the person indicates he is not going to vote, then the pollster ends the interview and makes another call. However, if the person says he is likely, very likely or will definitely be voting, then the pollster completes the interview.

It would not make any sense to include the opinions of nonvoters in political polling results, and it makes no sense to include the opinions of import-only buyers in polling results that attempt to gauge the impact of a bankruptcy filing on the Big 3.

Since the majority of car buyers have already voted with their wallets against Detroit, it is not much of a stretch for them to vote no on a survey, too.

Triple MA Cross Over Update

Long has been so very wrong in this market for months, and these long-only swing trading systems are all the proof you need. 

Prior to this year, the worst performance for the 4-day holding period was 2002 with an ROI of .16 percent. During the same year, the 5-day holding period had an ROI of -18.12 percent. Both outperformed the S&P 500 though, which had an ROI of -23.74 percent.

Let's see if the 4- or 5-day version can at least beat the market this year.

Sun + Water = Fuel?

Technology Review has an interesting article on efforts at MIT to use solar energy to split water to create hydrogen, which can then be burned to generate electricity.

The potential breakthrough could address solar's major drawback, inconsistent power generation during the day and none at night. The article also explains why solar's potential will be severely limited until the energy storage issue is adequately addressed.

It is well worth a read for anyone interested in the science and engineering challenges of alternative energy.

November Retail Sales Numbers: Really Bad

The following headlines are courtesy of MarketWatch:

Nordstrom same-store sales sink 15.9% in November

Ross Stores Nov. same-store sales down 2%

Kohl's Corp. November same-store sales down 17.5%

Chico's Nov. same-store sales down 15.4%

J.C. Penney November same-store sales fall 11.9%

Saks Nov. same-store sales down 5.2%

Target Nov. same-store sales down 10.4%

TJX same-store sales down 12% in November

Abercrombie same-store sales down 28%

Macy's Nov. same-store sales down 13.3%

American Eagle Outfitters same-store sales down 11%

Dillard's Nov. same-store sales down 9%

BJ's Wholesale Club Nov. same-store sales up 4.1%

Wal-Mart's total U.S. same-store sales rise 3.4% in November

Gap same-store sales down 10% in November

Limited Brands Nov. same-store sales down 8%

Stage Stores November same-store sales down 8%

Resistance is Futile...Maybe

It is the day before initial jobless claims and two days before the employment report, both of which are expected to suck in a major way, so in the perverse Wall Street fashion, the Nasdaq 100 index is perched at the top of the downtrend channel.

Better than expected numbers will likely lead to a breakout, while worse than expected numbers will give the market the head start and momentum necessary to break below the channel and set new lows.

Either way, fun times are coming very soon to a brokerage account near and dear to your heart.

Buckle up and trade safely (use stops).

UAW Makes Concessions to Save Big 3

Courtesy of AutoBlog.

Consolidation Day

After Monday's monster move, Mother Market gave us a rather volatile consolidation day that gained some lost ground but not enough to get me into the stock buying mood.

As I mentioned to Carlos in a comment below, I won't be getting bullish unless or until the markets break above the top of the channels they are trading in. And if the indices break below the low set Monday and successfully defended today, then look for a quick retest of the lows, or new ones.

Here is an updated chart of the Nasdaq 100, which is what I day trade via NQ, the Nasdaq 100 futures contract.

Nice Pullback, Now What?

Sellers took care of that overbought condition for us today by parking the major indices near the middle of their downward sloping channels.

The day's selling was brutal and resulted in one of the largest daily point drops in Dow 30 history, but the relevant question is: now what?

Frankly, I have no idea where we go from here. Given the extent of the selling, the markets should retrace some of today's lost ground tonight and tomorrow morning, but then they could go either way.

The trend is down, so I'll pick down, but with Congress working to rescue the Big 3, a "happy news" rally later in the week isn't out of the question.