Wimpy Wednesday

Dow Jones 9,899.25 -40.73 -0.41%
NASDAQ 2,158.85 -11.72 -0.54%
S&P 500 1,055.65 -6.35 -0.60%

Sure enough, the market turned shortly after mid-day and tanked. It was thin volume through the day in most stocks and ETFs, and the thin ice melted under pressure. People just selling into rallies, no surprise, though the bulls held the market up as long as they could.

I entered VXX late at 31.11, sold for a small loss at 30.80 and watched it climb up over 31 again. Re-entered before the bell at 31.33 and will probably hold overnight. The bulls had their chance and gave the ball back to the bears. Bernanke's positive comments about the state of the economy had a life span of about 2 hours before they dissipated into thin air. So we topped short term as I suspected.

Watching AAPL sink to 245, 244, 243 ... it's a quiet stretch now that iPhone G4 is out. The critics are having their say about the closed system. Par for the course. Euro, euro, euro. As long as there's a major issue in the global economy, AAPL gets hit indirectly sooner or later. Much as I love my Apple computers, so glad to be not married to the stock.

I mentioned earlier that one sign of a top is when broke-ass penny stocks like BBI (Blockbuster Video) are among the percentage leaders. BBI has $1 billion of debt. That's right, BBI is the crackhead of all retail, barely worth more than a quarter per share and carrying that kind of debt. Yet, BBI closed at 0.29, up 4.61%. Instead of limping through the finish line, shares finished fairly strong.

Another penny, HAUP, finished at 2.16, up 1.89% and off its high of 2.27.

Earlier, nat gas plays were en fuego with 38 of 39 on my list in the green. By the close, only 12 of the 39 were positive. KOG led with a 2.92% gain (3.17) and MMR finished up 2.06% at 10.42. UNG was close to the bottom with a 2.44% loss (7.98).

NFLX closed up 4.51% at 115.31, more than 2 bucks off its intraday high. This is one of the more sporadic stocks and I just can't get into it as long as the competition gets stronger and stronger. I supposed the same could be said of Apple, but Apple isn't a one-horse wagon.

Financials did OK until late in the day. C closed up 4.03% at 3.87, but GS dropped 0.71% to 136.80 and FAS finished -2.04% to 20.64. FAZ closed up 2.17% at 16.91. Haven't traded FAZ or any finnies in ages.

STD gave up most of its gains and closed at 8.99 (+0.45%).

GLD (-0.37%), TLT (-0.11%), UUP (-0.39%) were flat. Euro finished up (FXE +0.34%) just slightly. Unusual combination, but overall these issues were flat.

BP closed near its low at 29.20 (-15.8%) after a horrendous loss today. BIDU (-4.38%), IMAX (-4.02%) and AAPL (-2.59%) also lost chunks of market cap today. F (11.05, -1.52%) and GOOG (474.34 -2.15%) also casualties despite their recent good news.

Getting toppy already?

Another awesome night of rest. 6:58 am Hawaii time and the markets are flush with green gold. DJ up 93, Nas +27 and S&P +11 with 3 hours left in today's session. Nas is up 1.26% after lagging yesterday. Yesterday's strong finish was a tell for Nas, but I didn't really care. I slept nice, still 100% cash.

The Nat Gas sector is on fire. My list of 39 has 38 issues in the green. That's quite positive for the time being. BEXP (+6.80%), PQ (+6.62%), KOG (+6.56%) and MMR (+6.19) lead after a couple of down days for the sector. Natural profit-taking before another run, probably.

UNG is the lone red bleeder (-1.59%) at 8.05. It's reverted back to its form in pre-Obama Clean Energy speech times. Huge selling today.

Nat gas is up, but so is oil. USO is up 3.04% despite BP dropping a whopping 8.87%. Much of that, as well as the market's surge up, came on Bernanke's bullish speech. BP trading at 31.75 now.

US Steel rallying again, up 3.5% to 42.79. FCX up 2.05%, though its off its highs. FXI up 1.83% (39.52).

Positive on those fronts, plus financials are up. C (+3.43% to 3.87), GS up fractionally to 138.19 (a steal?) and Spanish conquistador STD is up 2.79% to 9.20. C has been a smart buy below 3.60 for the past year. STD dipped momentarily below 9 today. Both tempt me.

Dollar down (UUP -0.65%, 34.16) and Euro up (FXE +0.65%, 119.91). We may be topping a bit here if the tiny caps are any indication. BBI is up 2.27% to 0.29 and HAUP is +3.30% to 2.19. BBI (Blockbuster Video) is likely going to file for bankruptcy and trades primarily as a lottery ticket. How quickly the market turns stupid again.

Photo: Denise Milani (no website)

What's Hauppenin'?

So, as expected, HAUP has traded like many infamous penny stocks of yesteryear. After leaping from 0.92 (Thursday afternoon) to 4.85 (intraday Friday), HAUP has lost all momentum from a cleverly timed press release (Apple tie-in). Friday's mediocre earnings report after the bell set shares on an accelerated decline.

HAUP gapped down this morning to 3.22 and closed at 2.82. Whatever the surrounding conditions, the shares have done two things:

1. Retraced 38% of the Thursday-Friday gain (3.38)

2. Retraced 50% of the same gain (2.92)

If and when HAUP slides to 2.45, that would make a 61.8% retrace — possibly the max of this tumultuous slide. At 2.45, or even 2.00, HAUP would still have doubled (and then some) from its Thursday intraday low.

I've been neither long nor short this stock, but I've been on the winning and losing end of long trades in penny stocks years ago, and it was ecstatic or gruesome. No in-between. I finally learned the danger of fooling with pennies that had no real basis for a 300 or 400 or 500% gain in a matter of hours.

Like any other stock, risk management is paramount. Risking anything more than 2% of an entire account value on one trade is not sensible.

Momo Monday

Dow Jones 10,625.83 +5.67 +0.05%

Nasdaq 2,354.23 +7.30 +0.31%

S&P 500 1,136.94 +1.26 +0.11%

Trading range, indeed. After a drop to 170 or so points on the Dow, the market finished positive. I'm underwhelmed, but comfortable enough to stay in cash for now. Those who went short the past few days were geniuses. One of them is ChessNwine over at iBankCoin.

He got out of his inverse ETFs and longs today and is now 100% cash. I'm not smart like him, didn't hang in there with my inverse stuff like FAZ, but I didn't lose any money today either because I was flat. So I'm either a semi-genius or a semi-dunderhead. Fine.

Slept well through most of the market. A long weekend of work and meetings didn't help me catch up on that sleep debt, but I'm feeling almost right now. It's partly cloudy in Honolulu this morning. Traffic isn't bad. My loved ones are OK. Things could be worse, I know.

• AAPL (254.22 +0.40 +0.16%) sold down to 24.71 before rallying. The final 38 or so minutes were a rocket liftoff for many stocks. AAPL went from 250.51 (another higher intraday low) to 254-plus, then sold back below 254 and I thought about starting a position again. But the indicators were too high and I decided to wait for a little bit more of a pullback, maybe tomorrow.

• BIDU (73.18 -0.80 -1.08%) had a low of 71.64 today, still way off its high last week above 80. Intraday high was 75.10 shortly after the opening bell.

• C (3.88 -0.12 -3.02%) really stood out earlier at 3.76. I'd gotten up at that minute, saw that price and started thinking this might be the start of a serious hammering for finnies. As usual, that kind of guessing is opposite of reality. With Europe likely to have unprecedented financial issues, traders may not buy into euro printing press solution the way it happened in the US with dollars after March 2009.

• FXE / EUO. The euro rallied from a low of 122.47 to a close of 123.48 to finish just above neutral (+0.01 +0.01%). Euro is still at a critical point technically. EUO fell from its high and finished near its low (24.49 -0.03 -0.12%). The swings in these two are not as severe as other ETFs and stocks, but I watch anyway.

• F (11.95 -0.16 -1.32%) hit a low of 11.49 before buyers stormed in. Ford hasn't done anything different, hasn't done anything wrong since shares ballooned to 14-plus a couple of months ago.

• FAS / FAZ (13.77 -0.02 -0.15%). This was a big bump for FAZ to 14.71; it was in the low 12s a few days ago. Then the reversal sapped profits for FAZ traders and it finished up only 2¢ to 13.82. FAS broke even at 28.00 after dipping to 26.08. Crazy train!

• GLD (119.36 -1.01 -0.84%) still correcting slightly. Low of the day was 119.29, not a huge move at all. Hard to argue against gold's value as a hedge against currencies. This might be just a consolidation period unless debt-ridden nations start unloading their gold stocks.

• GS (142.64 -0.59 -0.41%) fell to 138.53 before rallying.

• HAUP (2.82 -1.11 -28.24%) cratered, as expected, after the weak earnings report. Shares got down to 2.77 and hovered above 2.90 for some time, but selling pressure was still strong through the late rally. The retracement is a little more than 50% since the run-up on Thursday afternoon. Staying listed on the NASDAQ is more likely now.

• IMAX (19.60 +0.30 +1.55%) was one of the stronger players today, well off the low of 19.19. Shares have stabilized since the massive insider selling a couple of weeks ago.

• IRE (7.41 -0.34 -4.39%), NBG (2.65 -0.06 -2.21%) and STD (10.36 -0.08 -0.77%) all rallied off their lows. Trillion euros or not, they'll keep getting hit until the next infusion of freshly printed money.

• NFLX (106.35 +5.79 +5.76%) was the biggest mover on my list despite a low of 101.31. I liked NFLX in the 80s, missed the run to 100-plus on the earnings report and positive guidance, but haven't been a staunch believer since. There's competition (Coinstar, Apple, Amazon) in the digital world, and the run last week to 120 was based on takeover rumors. Shares could run again on the rumors, but I'll stay out.

• TMF (36.32 -0.55 -1.49%) finally pulled back after a nice run. For awhile, though, 30-year bonds were quite sexy.

• VXX (27.48 +0.62 +2.31%) finished with a nice gain despite pulling back from 29.00. After making and losing money on this steroid-laden robot, I'm still not sure how to define the volatility that is measured by VXX (and VIX). There's always price action, though, and this was very active. Kooky.

• X (51.15 -1.66 -3.14%) sold off again. Last week's run was short-lived.

Oil and the market have traded together. Oil is at $70 a barrel now, at a possible breaking point or reversal point.

HAUP fizzles on earnings report

Rough week overall for the market, even as it finished net positive. For me, there were missed opportunities, like HAUP, which had bored day traders in a tizzy starting late Thursday afternoon.

Hauppauge Digital (HAUP 3.93 +0.90 +29.70% — 3.72 after hours) is what it is. All the rancor and fuss about the service it provides for the iPad is entertaining, to say the least. Bottom line, though, is that Hauppauge was certainly worth more than 92¢ per share yesterday. Is HAUP worth 4.85? That was the high today in crazy momentum movement.

The run is done, barring something unforseen from a company that knows its niche and played its sparkly iPad announcement (Thursday) and underwhelming earnings report (today) expertly — great for momo traders early, bad for momo traders late.

Maybe this is a jump-the-shark moment, proving the bears' point that the bull run is done. When tiny stocks gain 300-400% on one press release without earning that shiny new market cap first, well, they've got a point. But HAUP is no 92¢ pennie and won't be again, not in the near future.

Being in the middle of the Pacific and working a regular job has me at a disadvantage occasionally, so I missed the premarket and early-morning run. That's the nature of my situation and I accept it. Don't like it, but it's reality. I wanted to see HAUP return to Fibonacci levels starting at 3.38 for a possible entry. With Haupaugge's earnings report after the bell today — not very positive — Monday could be a tough session for momo traders who entered the stock above 3.50.

I learned long ago that you don't want to hold a tiny-cap momo play long. In fact, the lifespan of a position in that kind of vehicle is better measured in minutes, even seconds, than hours and days. Fortunately for new longs, HAUP is going to make money and in three months, the next earnings report will be much better than the one released today. By then, however, the majority of momo traders will be gone, and HAUP will likely drift in a range much lower.

By then, I might get some shares. I missed the first boat out yesterday, and then missed the second one today. With HAUP down to 3.72 after hours and clearly no new press releases coming until the next earnings report, it would still be a triple-bagger at 3.00 or so.

You know, with just 8 million shares in its float, maybe I'm wrong and HAUP will roar up and down for days to come. Shares, apparently, are tough to find for shorters. This might be better than watching poker on TV.

Aloha Friday

Dow Jones 10,620 -162.79 -1.51%

NASDAQ 2,346 -47.51 -1.09%

S&P 500 1,135 -21.76 -1.88%

Can a 162-point drop on the Dow ever be a positive sign? After dropping about 230 or 240 points intraday, the Dow rallied into the close. So did the Nasdaq and S&P 500.

I didn't get up until about 5 am Hawaii time, 90 minutes into the session. I missed HAUP's gap up and run to 4.85. Like yesterday, when it ran crazy in the final two hours on a press release involving Apple, I wanted a retracement to Fibonacci levels. It didn't happen. That's what happens when a 92-cent stock increases in one day by five-fold.

A down market is one thing, but this one had a range underwater and I wanted some AAPL, which bottomed at 249.50, but ran to 252 or so in the second half of the day. But FAZ and VXX intrigued me; aside from HAUP, there was nothing else on my screen that was green aside from inverse ETFs/ETNs. It was a great day to be short the market coming in, not after the fact.

Still, I tried. FAZ settled into a range between 13.80 and 14.00, and I got shares at 13.96. Teetered, tottered and I held up and down, revising my exit point along the way several times. However, when I added more shares at 14.06, that was basically the all-points-bulletin for shorts to pile in. It ran to 14.13 for a second, then sold off and I got out at 13.86. Could've been worse, but I should've gotten out at break-even or somewhere above 14. It was a good trade in the sense that I limited the loss in a turbulent market. But timing is still an issue. I sold these shares of FAZ yesterday before the bell at 12.51 for a 10-cent loss. I didn't want to hold anything overnight, which cost me $1.50 on today's gain.

By the close, AAPL had run from 250 to 254. The banks ran, too, to no surprise. C was at 3.92 for most of the afternoon* before closing at 3.98.

The inverse ETFs/ETNs closed weaker but were still green. Nice green, too.

• EUO 24.60 (+0.57, +2.37%)

• EPV 25.94 (+1.52, +6.22%)

• FAZ 13.75 (+1.08, +8.52%)

• FXP 44.11 (+1.62, +3.84%)

• SDS 32.05 (+1.12, +3.65)

• SKF 19.76 (+1.06, +5.67%)

• TMF 36.87 (+1.95, ++5.58)

• TZA 6.10 (+0.33, +5.71%)

• UUP 25.21 (+0.23, +0.92%)

• VXX 26.86 (+2.13, +8.63)

EUO is a steady short on the euro, not a high flyer like VXX, but very consistent. FXP (short China) is interesting, but I'm not comfortable touching that yet. Getting more familiar, though. No good news out of China for awhile. In other words, the slightest good news will wreck the FXP and fuel the FXI (down 21% the past year).

TMF (30-year treasury index) is killing it. Go Grandma! UUP, the U.S. dollar, is also solid.

GLD and SLV are down fractionally. Overbought, yes, but people will stay in for the most part. Or go to treasury bonds, maybe TMF.

US Steel (X) sold off 5.66% today. Other big sells were in NFLX (100.56, -9.45, -8.59%) and ETFs like FAS (-8.74%), STD (-7.28%), and financials like IRE (-4.44%). GS is down 1%. C rallied into the close from 3.91 to 3.99 (-0.11, -2.69%).

HAUP held up fairly well, despite the tape, and closed at 3.93 (+0.90, +29.70%). Missed my opportunity there, but it could be interesting on a retracement to 3.38 and lower.

IMAX down just 0.57% to 19.30. A nice rally since dipping to 17 last week.

Next week is a mystery to me. My gut says better hedge than go long, but anything can happen over the weekend, especially with the Euro league of nations.

An AAPL/VXX pairing sounds interesting, but I don't want to deal with any slippage by VXX again. Staying 100% cash for now.

The week was a series of losses, mostly small, with a few wins. Study time. I think one key note is that I'm sticking better to discipline now, an improvement from earlier in the week. No matter how much I like AAPL, it's subject to the whims of the market like everyone else. Dry powder rules.

If you're haupy and you know it ...

Clap your hands, HAUP fans. You, unlike me (gutless wonder) are in fat (or phat) city this morning. Shares are still in asskicker mode as shorts ran off the cliff with nothing but their lives.

Really. Who can stop a partner of Apple? This whole buy-whoever-is-part-of-the-iPad movement is brilliant. I'm a bit slow to recognize...

HAUP hit a high of 4.85 this morning and is now at 4.43 with 17.7 million shares traded. The float is less than 8 million shares. HOWWWLEEE SHEEITT!!!

What's interesting is that with the markets down big (Nasdaq is -2.5%, Dow -188 points, -1.75%), HAUP keeps catching its second wind, third wind, etc. This won't last forever, you know. In a drunk market, it could hit 5.00, but probably not today. But who's going to argue? HAUP was at 92 cents yesterday.

Everything else that's green on my screen is pretty much an inverse ETF or ETN. I'd love to see what the projected revenue will be for Hauppauge Digital products as a result of this app in Apple's products. For now, some Fibonacci numbers.

38% retrace (from Thursday's low to today's high): 3.38

50% retrace: 2.92

62% retrace: 2.45

Will HAUP retrace? Hard to say since this might be one of the nastiest short squeezes in recent years. I wouldn't bet against HAUP. Even Timothy Sykes probably cut his short plan hours ago.

Bloody Red Friday morning

Long night of work Thursday left me short on sleep, but waking up to a market in red is bittersweet. Yeah, emotion has no place in trading, but even though I'm 100% in cash, I'd rather study the moment than move too quickly 90 minutes into the session.

Dow -179 (-2.16%)

Nas -52 (-1.56%)

S&P -23 (-2.04%)

• HAUP and it's tiny 8-million share float have become a lottery ticket of sorts. Shares opened at 8 am Eastern higher at 3.50, and opened at 4.32. HAUP hit a high of 4.85, then sold off to the 4.00 level twice since the opening bell. Currently at 4.25 (+1.20, +39.60%). How long can HAUP stay up in a negative market?

Never returned to the Fibonacci levels I posted yesterday. Hard to believe people still shorted HAUP after the press release about Apple. Then again, I didn't buy any shares like I intuitively wanted to. Trying to be disciplined here...

• FAZ, which I sold at a tiny loss at 12.51 before the close yesterday, is at 13.77 (+1.10, +8.68%) now, near its high of the day. In fact, all the short ETFs are in happy town this morning. VXX (27.42, +2.67, +10.56%) is tearing it up big, which is interesting. It was quiet yesterday, actually in negative territory, while most of the market was slightly down. More true to its normal behavior today. I was starting to believe VXX moved more when there was violence on financial TV, i.e. Greek riots.

• GLD and SLV are in the red, proving that even hot precious metals have their topping points, and boy, were they topped out. Barf city, finally, but a great run for cautious traders. GLD (119.71, -0.85, -0.71%) isn't doing badly compared to the rest of the market.

• TMT, the 30-year treasuries ETF, is up 6.10% to 37.05. How nice is that? And how weird. Treasuries? I'm following this first the first time. This is Grandma speeding down the road in a Camaro. Vroom Vroom!

•As expected, there's action in the FXI and FXP. I didn't want to touch either even as China's market is at a -21% correction. FXP is up 5.3% this morning to 44.68. JJC, the copper ETF and second cousin of FXI, is predictably down 2.35% to 42.36. Not sure how much lower China can go, but it's pretty scary from the long side.

The gutsy traders are picking up shares there pretty cheap.

• FXE is down 1.18% to 123.46. If the euro were to make a comeback, this would've been the day after a week of dips. Euro bulls are hating this, but printing out a trillion dollars of new bills doesn't add value, so FXE is stagnant for some time, most likely. Meanwhile, EUO (short euro) is up 2.33% to 24.59.

I'm still 100% cash. I missed the early morning run on the hedge side, but I'm not drowning in a sea of red on the long side either. ChessnWine at iBankCoin is a genius, of course. He called the downturn two days ago while the market was revving up on the long side. He and The Fly, with their time machine, a.k.a. The PPT, are kicking royal ass.

The Dow is now down -211. It's early Friday... can it get worse before the close? Or do we get a pre-weekend rally?

HAUP piggy-backs Apple after hours

*** Update (1:35 pm Hawaii time): HAUP never retraced to Fib levels in afterhours trading. (I was looking for a modest retrace to 2.52.) Shares approached today's high of 3.48, but stopped short and sit at 3.20 (+2.01, +197.06%) right now. Two factors to note: 1. No debt with annual revs of $59 million and 2. Float is 7.98 million shares.

In addition, since '06, there has been far more insider buying than selling. It's not even close.

Lacking details about Hauppauge Digital's deal with Apple, the float alone is going to be scary for any shorts still remaining. HAUP has traded 3.8 million shares today, and the action didn't begin until the last 27 minutes. I may enter a small position; scale in some shares today and more tomorrow.

HAUP traded below 1 for most of the day before the press release came out, then it was gangbusters after that. HAUP was below 3 after hours. A retrace would be nice, but seems unlikely for today.

Final note: On the weekly chart, HAUP has not been at this level since May of 2008, when shares plunged below 3.00. Shares have not traded with this much volume since the first week of January, '06. The 3-dollar mark was a key support level for years, and if HAUP retraces tomorrow and stays below 3 next week, it might be very difficult to get back over 3. Long-suffering longs may want to unload their shares after two long, miserable years in the doldrums.

I'd hesitate to say Hauppauge has hit the mother lode. Apple's operating margin is legendary. They'd rather take a cheaper deal with a lesser partner than pay up for the best. Still, this may be the best thing ever to happen in HAUP's history, and with that tiny float, it would not be surprising to see shares stay above 3 tomorrow. The next resistance levels are at 3.20 and 4.10.

Let the party at Hauppauge begin... unless you're bearish on HAUP. Here's the viewpoint of short artist Timothy Sykes, who wonders aloud how one app on the iPad can be worth $25 million in market cap to Hauppauge Digital.

Most likely, the incredible reaction was due to the specific 3:33pm EST late day timing from HAUP’s smart public relations people which forced traders to buy first, ask questions later…and given the magnitude of the runup, many did…

Now comes the hard part, are these new iPag and iPhone apps worth $25 million?

Sykes has a good point, and his track record is impressive. There's one difference, however, between those faux-profit Internet stocks of 1999, and HAUP is working with Apple. I agree that an app alone isn't worth $25 million overnight, but that real estate in Apple's universe is extremely valuable and will likely convert into sales for Hauppauge Digital at some point.

HAUP may not be worth 3.25 per share right now, but the days below 1 buck are gone.

Hauppin' on?

Hauppage (HAUP) is the latest in a line of small companies that are getting the boost of their lives thanks to Apple's iPad, iPhone and Mac products.

HAUP jumped from a mid-day low of 0.92 to 3.48 with a press release announcing a relationship with Apple to provide tuners (TV). HAUP slipped to 3.03 by the close and is at 2.82 in afterhours trading, still a huge gain. Shares were below 1 buck until late April and have been volatile since.

Fibonacci retracement for HAUP based on today's low and high:

38% retrace: 2.51

50% retrace: 2.20

62% retrace: 1.89

Does HAUP return to these levels? Probably. There are too many remaining shareholders who have been waiting for a chance to break even or make a small profit. Overhead supply. A return to 2.51 would pique a little interest. But if this relationship with Apple is truly productive for Hauppauge, anything below 2 bucks is nice, and anything below 1.50 is probably a steal.

Unrelated (probably) to the Apple deal, here's a sample of what a Hauppauge tuner looks like. This looks cool, too. Plug it into the laptop, go camping and watch TV in the woods or at the beach.