Stock Market Rally Quik Piks

If you believe that this is more than just a short, counter-trend rally, or the start of a larger trend to the upside, these high beta stocks should outpace the pack...

symbol, name, current price

PIR, Pier 1 Imports, 11.01
SCSS, Select Comfort, 15.67
SAH, Sonic Auto, 13.51
REDF, Rediff.com India, 8.65

Each of these has already made some big gains over the last two days, but if the market want to go the way of the bull, there's more to gain.

DISCLOSURE: I do not own any of these nor do I plan on owning any of these. I posted this list so that the market will reverse course as it usually does after I post these high beta picks. I have much more to gain if the market falls like a hurricane-battered chimney brick.

You see, I, too, have ulterior motives, but at least I'm honest about it...which I guess doesn't make it ulterior anymore.

Jackson Hole Wordle Word Analysis

We had a Tasmanian Devil come through the jungle once. He was a little difficult to understand so I made a point to repeat my words multiple times so that I could get my point across to him. Wordle does the same. The larger the word, the more times it was repeated in the text.

Since the "market" seems to hang on every word whenever Chairman Ben speaks, I thought it might be interesting to "wordle" and compare the 2010 Jackson Hole speech and today's gripping, market-moving essay.

2010...



2011...




Looks like the word 'inflation' was a little more deflated in the 2011 speech. 'Growth', 'economy', and 'recovery' took the top three spots as the most used nouns this year. Congratulations to you all.

That was fun.

In the Jaws of Mr. Market

He can't go down with three barrels...not with three barrels on he can't!

~Quote from the movie Jaws or from Ben Bernanke's 2011 Jackson Hole speech. Not sure.
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That's right Chief, we're going to need a bigger boat. I'm not sure why though. Maybe for more room to load all the profits, or maybe to prevent us from capsizing from one too many double-digit moves to the wrong side. Huge waves of volatility have that affect.

Quick note: If you happen to see the CMI year-to-date gain/loss results disappearing sporadically over the next few days, it's due to some minor technical difficulties and an audit of my fuzzy math. It will be corrected as soon as possible. Today's disastrous, Fed-anticipated, earthquake shook, tropical windbag filled, chum-induced buying frenzy turned a 16.5% gain into something around 7%.

As Ben Bernanke said after the 2011 Jackson Hole speech...

When we get them silly bastards down in that rock pile, it'll be some fun, they'll wish their fathers had never met their mothers. When they start takin' their bottoms out and slamming into them rocks, boy!



Related post: Possibly the World's Greatest "ETF"

Why, 2K, of Course!

I haven't made a prediction in a while and since gold is my favorite color, this should be easy.

One ounce of gold will shoot right past $1900 an ounce and bounce off of $2000 before returning to $1800 within the next four months. Then it will fluctuate in the $1800-1900 channel before heading higher, past the $2000 mark in 2012.

Now you know what the "B" stands for in the name Sigmund B. Cheetum...

Umm, actually, I was thinking "Brevity".

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Here's a close up of one of my favorite pieces from my dime collection. I used that little American Eagle for scale.



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A chart showing paper currency losing value...

Everyone Wins...

...in a perfect Fibonacci world.

I can't pray to the Great Fibonacci just yet. He was far too generous after I smoke-signalled the last prayer. But looking at the recent charts of the Dow, QQQ, NASDAQ, and the S&P500, I can't help but put those favorite Fib numbers to the test.



Now that we are very close to a 38% retracement, or inverse retracement, from the recent bottom, it makes me wonder what if A to B really does equal C to D. I'll allow the projected C to D leg a little breathing room and give it until November to blossom. But, with a severe market thrashing similar to the last, "everyone wins" as the post title states.

How can everyone win with such a dismal market performance, especially if the market tanks in several days rather than several months? Obviously, the bears win with this sort of price destruction, but the bulls also win. The coming pain is inevitable so jumping in the freezing swamp is the preferable alternative to taking the slow, methodical toe-first approach. Let's bypass the slow torture, false hope, and annoying whipsawing that will occur if the market chooses the indirect route.

You see, everyone can win...in a perfect Fibonacci world.

No need to dispute my perfect world. You're preachin' to the choir. It's the market's modus operandi to suck in more buyers during a "mudslide" producing dead-banker bounces, and counter-trends. And, unless the Dow gaps up to 14,400 really soon, you can see that the market is not a 'game of perfect', nor does Fibonacci rule the market. But don't tell him that.

CMI - Next Generation?

I hope I don't get to the point where I release a CMI Vista Edition. We're only up to CMI 3.0 right now, but could CMI 4.0 be right around the corner? The year-to-date performance of CMI 3.0 is represented by the thick black line that weaves above and below the zero line over the course of the last seven and a half months, not unlike some of the fuzzy pictures of Nessie, the creature of Loch Ness.

For comparison purposes, I have added year-to-date results of Apple and the SPY. Nothing about the CMI's performance instills any sort of confidence. Deep drawdowns tend to scare primates away.

Each version of the Cheetum Market Indicator since 2009 has required an almost complete 're-build' although each has been influenced by the successes and failures of the previous version. The good news is that the previous two years have resulted in double-digit gains if every signal was followed (by only the bravest of jungle dwellers). The bad news is that it took a Herculean leap of faith to follow each signal due to extreme draw-downs, especially this year.

CMI 3.0 uses multiple indicators to generate a buy or sell signal. Looking at the daily action generated by these signals clearly shows the lack of responsiveness during a year that has not produced any real long-term trend. CMI 3.0 was geared to follow the long trend based on data from 2008 and 2009. What is lacking is flexibility.

Recent results, and an eight month back test of the CMI using only four of the ten indicators, have yielded excellent results depicted by the gray line that sits atop all the other lines on the chart. These results are tracked in the sidebar under the 'AlphaMonkey'.

I have turned the CMI 3.0 screws as far a they can go so that I can squeeze as much flexibility out of this version by mimicking this newer, streamlined version. If the gray line continues on it's journey to the upper right hand corner of the chart, 4.0 will be born.

The best news from all of this is that only minor changes to the current version may be needed to produce stellar results. The complications and inaction resulting from ten conflicting indicators may have paved the path to a profitable, synergistic, four signal method.

Who's statement will best describe the future of the CMI?

As Hannibal Smith once said, "I love it when a plan comes together."

Or did B.A. Baracus get it right when he said, "I pity the fool!"

Aaa to Zanax

The five day chart of the NASDAQ looks more like a chart of a low volume pink sheet stock. What next for tomorrow? A 350 point gain to the upside? A steady downward progression would be just fine with me. Otherwise I'll need that six-pack of Dramamine soon. While you're at it, spike the market's IV drip with some Zanax.

Of course, I jest. I just follow the signals that the CMI provides. "No worries" as the koala bear says. The day trading is another matter entirely.

Another 500 points down for the Dow today? I think that's the third time in a week. That can only mean one thing...the Ramones get to haunt the jungle again...



I know, right? I miss the 80's too.


Related post: Slow Thursday Linkages

One Less "A" for the US of A

Uh-oh, someone teed-off Moses again.

I didn't know those credit rating agency guys could downgrading anything behind the walls of a federal prison.

Those Standard and Poor's monkeys ARE in prison, right?

You remember.. mortgage-backed securities...CDO's...
AAA ratings...
market collapse...
666...

OK, I'll check my facts. I just assumed the obvious.



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Downgrade Roulette

Have the markets already priced in all of this downgrade business or do we have to prove Jesse Livermore correct once again when he said "that stocks are never too high for you to begin buying or too low to begin selling." It's the selling part of the phrase I'm keying on here. A close on Monday that is either up, down, or sideways are your only choices. Let spin the wheel and make a bet.

I'll go with a gap down at the open and a steady slide lower. Seems like the obvious choice since the CMI is on the QID side now.

An unbiased, rational monkey might go with my second choice; a high Friday-like, volatile day, with big swings back and forth ending where it started.

My last choice is a cheap dollar, gap up and away with bargain hunters buying up all those "oversold" beaten down stocks. This would be the start of the anticipated, short-term bear market rally...that will end bad.

Slow Thursday Linkages

Market Beat

If you were on the wrong side of the market today, all's you can do is look to the Ramones for solace. Those guys are gonna make it big someday. Personally speaking, today was good for the stocks and bad for the 'way out of the money' put credit spread that ain't so way out of money anymore.
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Bread, Milk, and Uranium

On an 'unrelated to the stock market' note, this dude was trying to split atoms in his kitchen. You must need a sharp Ginsu for that job. I wish there was a jungle in Sweden. Seems like industrious folks out there. The 2000 comments under the story are hilarious but your eyes may fall out of your head reading them all.

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Not So Fast, Moving Average Unbeliever...

That post I was writing on the misconception of lightening up the portfolio when prices cross below the 200 day moving average will have to wait. A 512 point drop for the Dow could make a believer out of the biggest skeptic. We both know the Scalosians are to blame for the big red candle today.

Olbermann: "Goodnight and Good Luck!"

Yeah, what he said...





More at Phil's Stock World.