Friday, July 30, 2010
Thursday, July 29, 2010
Alot of oscillators are diverging against the trend which as I have written about often in the past, is typical. However, when I see it get this pronounced I look for counter trend trades so that is what I am doing here. I have had orders in to buy strength the last 3 days and none of them have been filled. I will continue to look for longs here as long as this divergence persists. If I lose I lose. We often get huge reversals from these types of situations, so that is what I am looking for here.
Monday, July 26, 2010
Friday, July 23, 2010
One of the challenges of Caddyshack trading is that you have to some how find a base to make decisions from. If you always require everything to be "perfect" you will never make a trade. You have to establish general parameters for what you are looking for. This fits the bill for that plan. Often at the first test the long term momentum will not be confirming a trend change, so I have to take a leap of faith to a degree on these trades. After all trading is nothing more than a series of stabs at things. We have to hope that more work than do not, and that we manage our money properly. Beyond that, there is no way to attain perfection that I know of.
Wasn't it curious how yesterday when bad economic news came out we had that big rally. It was also interesting that it happened when Bernanke went on record saying they would do whatever it takes! He should have just said including buying futures when we need to in order to keep the stock market up. I would release the balloons if he finally fessed up, but he basically did in that statement. He is probably laying the ground work for what is cleary going to come out at some point. There are just too many people that know about it and write about it now for it to stay quiet for much longer.
I am traveling today and over the weekend, so there will not be a Saturday post. Larry Williams is doing another seminar that I am attending. He was not going to do any more until he recently changed his mind. It is a can't miss for me especially since he limited it to a one time shot with a select group of students.
It appears to me we are still on track for a sell this rally against weekly resistance above here in the next few days but I will have to observe how we trade before determining that.
Tuesday, July 20, 2010
Monday, July 19, 2010
Saturday, July 17, 2010
Looking at his chart you can see both trend oscillators are down along with the price move, leading the way here. Things do not look good here to me. Stocks and the dollar are moving together. Since this has been the historic relationship it tells me that not much market manipulation by the PPT is currently happening. They have created alot of unusual bed partners the last couple of years with their tinkering. We have to expect them to show up again, but you have to wonder how much ammo they have left. The Larry Williams forecast shows more down here for the next few months. Since it is right on track with this market, that is what I am expecting as well. I see no current reason to be bullish here other than maybe on oversold bounce which we probably will get soon.
The last chart to look at is Copper which looks ready to take a tumble to me.
The longer term trend oscillator is down, the shorter term one is rolling over, and we have a gap in place from a few weeks back. I will be looking to sell rallies here if we get them.
Good trading to everyone.
Friday, July 16, 2010
Thursday, July 15, 2010
The chart above shows the exit from my Dollar short trade, price hit my target this morning. As I watch other currencies soaring and the Dollar getting clobberred, it is clear the "Barry is a lost cause" trade the other countries are making is carrying on nicely. We all know he is an idiot, but it is another thing to find an opportunity where something has a direct correlation to something he did, and also that we can act upon it. This was one of those "teachable moments." How ironic that this is one of his arrogant phrases, yet the best use of it is to bet against the US when he does something stupid. Get me on CNBC and I will break the trade out to the masses!
Could I have held this trade longer? Of course. Should I have held it longer? Possibly, but I followed my rules so when my target was hit I exited. We are pretty far along in this downtrend, and technically the weekly uptrend is still intact, albeit hanging by a string at this point. Moves will always go beyond where I take profits, that in and of itself does not bother me. I have been looking to get short some of the other currencies up here thinking the dollar would find support somewhere down here. As a result, I selected a shorter term target on this trade. Time to move on.
Here is another trade setup I am watching, BONDS.
We see the trend oscillators pointing down and price now bouncing. I am looking to short this bounce hopefully in the next couple of days. It is interesting to me that this market has not declined more with this huge stock rally we have had in the last 2 weeks. This may be telling us that this rally is about done. It is almost as if this market is hanging tough as a flight to safety spot just in case the stock rally rolls over here. Nonetheless, that is basically speculation on my part and has nothing to do with the trades I make. If this sets up in the next few days I will take the trade. There are alot of people calling the Bond market a bubble up here. They might be right I have no idea. However there is a difference between GOLD for example that is rising on pure speculation and not fundamentals, and BONDS which are rising on pure fundamentals. There is a known historic precedent for rates declining during times of economic stress. It cuts to the heart of the very nature of how money flows. With GOLD there is no such historic correlation. This makes these two markets completely different in terms of their bubble status to me.
However, if you believe economic prosperity is right around the corner, shorting BONDS would be a good play. I just have a short term pattern setting up, no more no less. I have no idea whether or not this market is a bubble.
Wednesday, July 14, 2010
The above sp500 chart shows a definite change in upward momentum telling us to look to buy dips. For those still bearish, you can see one item on this chart that supports that case. We have the top oscillator having exceeded the peak of the prior top, yet price is way below the same level corresponding to that peak. This generally indicates buying exhaustion, so there should be a retracement in reaction to that exhaustion. It is how things look once that retracement happens that will determine whether I get long on a dip or not. It is too early to tell right now if a dip is a definitive buy or not. My wish list would be for a small dip and another leg up into the weekly resistance, which would setup a sell for a larger move down.
Will it happen? Who knows, but I know what I will do if it does. Have a plan and be prepared to execute it accordingly. I am sorry for the shorter posts lately. Having to use this old editor with Blogger until they fix the problem makes doing this very time consuming. I just do not have endless time in the mornings to do this. Once they get it fixed, whenever that is, I will get back into more charts. Having to load them, then rearrange the HTML code just to get them close to the right location just sucks, and takes too much time.
Tuesday, July 13, 2010
I was of the opinion that there would be a bounce, and boy has there ever been. I had thought it would be a selling opportunity, but it does not appear to be now. This has been a moonshot, and gapped higher tonight as I post this. From a weekly perspective we are still in a downtrend, but from a daily perspective we no longer are. I have labeled a 5 point Megaphone pattern. This was originally written about by Edwards and Magee and has more recently been plagiarized by a few people claiming it as their own. Of course they are misrepresenting the truth, something very common in today's world.
Often you will see these at key turning points. I was aware of this when we were at the lows, but I just did not have any other buy signals, and these signals are notoriously inaccurate. They are not near good enough just to trade on their own. It is really more for observation than anything else. One so called owner of this concept, by himself of course, claims these are 70% accurate. They are nowhere near that, but they are a tool that if you personally can figure out how to know when they will work and will not, you have something valuable to trade with. I have never been able to figure out how to consistently trade them, so I don't trade them at all.
It does appear to me that if we move up another 20 points or so in this, we should meet some good resistance and a possible weekly sell spot might be something to look for.
I got stopped out in my short trade in Heating Oil today. When we get these explosive stock moves, virtually everything on the board except the dollar goes straight with it. As much as it pains me to say this, until proven otherwise you probably should filter all trades no matter what market except for the softs and meats, with what you think stocks will do. Shorting anything during stock rallies for the last year has been impossible to do profitably. I have never seen anything like this but it is what it is. I did short the DX today which of course will often trade opposite of stocks on a day like this. This also did not used to be the case. Again, it is what it is, deal with it.
As much as it may be tempting to short this moonshot if you are bearish, this has squeeze written all over it and I would not recommend it until we see it show signs of stalling. Remember, trade what is not what you think should be.
Monday, July 12, 2010
There was a question in another post about Crude Oil and my reply involved Heating Oil, so here is how that chart looks. We see the longer term trend indicator still in a down position but getting close to breaking upward. The shorter term indicator has far outraced price as indicated by the red arrows on the chart. This could be a situation where the market has punched itself out on this bounce and we resume a downward move. However, it does appear to me that if we rally through this area here, most of what I watch will have turned upward, and the trend will then be up. I have orders in to short this market below Friday's low as indicated by the red arrow on the chart. This is heating oil, but crude oil trades along side of it, and they do move together. I selected Heating Oil simply because of another filter I use that I do not discuss in here that tells me if we turn down the probability is a little better there than in Crude. After today I do not know if this sell setup will still be here, so it needs to trigger today. The energy markets appear to be back in sync with equities so unless we get a stock market decline today, this trade will not likely be filled.
A reader asked me a question about how to manage his current Crude Oil short. My answer may have come across a little mixed. The point I always try to make with anyone is that you have to have your exit strategy determined before entering any trade. I know exactly where my stop loss is for the above trade, it will be above Friday's high if my short order is elected. The minute I get filled, I will place the stop. If the trade moves in my favor, I will move it down according to an exact plan until it is either hit or my profit objective is reached. That part of trading should be very simple. If you get yourself into deciding these things after you are already in, emotion will get the best of you, and you will make poor decisions.
Since the reader entered at the market ( not what I do ) vs on weakness ( how I enter ), it is hard for me to tell him or her how to get out, because they are in a trade I would not be in. However, if you have an area where you think if price gets there you are wrong, then that is where your stop should be.
I am very short on time this morning, I will make up for my lack of content tomorrow. I went to Lake Havasu at the end of last week which is why I did not post anything for 2 days, chillin in 117 degrees!
Thursday, July 08, 2010
On the way to setting up the perfect short entry, things got messed up yesterday. That very sharp short covering rally turned the very short term indicators I like to use for timing, up too sharply for a near term short entry. As a result, I think we are going to go up for a longer period, perhaps a week or two. We may not do that since I think things are pretty bearish overall, but that is what is going to be required now for my entry patterns to give me a way in here. We could just rollover here and I would miss the trade, I don't get em all unfortunately. What I do is get most of them that have my patterns. I know the odds are good that when my patterns are there, the markets will move in the direction I am looking. If they are not I look to another market. I am not married to only trading the stock indexes, I make most of my money elsewhere in all honesty. This is just because there are alot of other markets so there just wind up being more opportunities collectively from them, when comparing them to just one stock market.
I like to have all of these lined up to do a trade or at least 2 of the three, so this is not looking good now but you never know what will unfold going forward. If we were to roll down today by the end these could come back into line.
Here is Gold which continues to crater, rallies are shorting opportunities here. Once again, I am not sure if this is "it" or just another pullback. This is certainly not the accleration that I think will be there once the exits get crowded. However, we are steadily moving down and this market appears to finally be moving on it's own fundamentals instead of speculation. I think we will have to take out a major pivot point to get $100 down day acceleration type of move that I think is in the future here at some point. Until then I guess if you are a gold bug you buy the dips. There is just not a trade for me right here at this point so I am looking elsewhere at the moment.
I am also still looking to short the British Pound as per my post yesterday, and also possibly the energies and a couple other currencies.
Good Trading to everyone today
Wednesday, July 07, 2010
Above is a chart of the British Pound trade, part of the Barry is an idiot trade the world seems to be making. They are running out of the Dollar and into the currencies of the countries that seem interested in getting a handle on government spending. For those Dollar bears, you elected the right man it appears. Just when it was on a very nice comeback run this talk show host made it clear to the world he is clueless and they should run for the hills from the dollar and into currencies of countries trying to get a handle on this situation. It is not too late though. The Dollar has now fallen right into weekly support areas, and the Pound above seems to be setup for a short entry.
The first subgraph here, which tracks longer term momentum does show it being very strong in an upward direction here. The shorter term trend indicators are telling us the opposite story. If this reversal bar we currently have going holds today, I will likely be trying to short this market tomorrow if my last filter confirms it. I cannot run that until after the close, so I do not know if it will make the cut yet.
Here is the US Dollar which is in my buy zone right here and is also accompanied by a nice uptrend in momentum. It Barry's ineptitude powerful enough to thwart this setup here as a buy? It very well could be, we need to hold right here in my opinion for this uptrend to stay intact. Billions betting against his competence could well be enough to reverse this trend. If he could just keep his mouth shut for a week we might be okay, but that hardly seems likely.
Looking at all of this together, if the Dollar were to hold here, it should trigger some sell signals in other currencies like the Pound above.
Monday, July 05, 2010
Here is a chart of the VIX which appears to be telling us that Volatility is a buy which generally means stocks are a sell. However, it does appear to me we need a day or possibly two more for this to setup correctly. The stock market is extremely oversold as well which means a bounce is required for short entries. As a result I will wait at least until the end of the day tomorrow to look for longs here in the VIX and shorts in stocks. If we go down again, then I will miss it.
The same picture is brewing for GOLD. We have broken the daily uptrend and now are in a sell the bounce mode as long as the bounce does not go too far.
You can see the downtrends in the trend oscillators here with now a small reaction against them beginning. If I am right in my view on stocks, this market is also likely to drop substantially due to the big deflation wave that is about to hit. For now it is still in the weekly uptrend, so if it were to hold here the bigger picture trend remains intact. A nice little inflection point we have here.
The last market to talk about here is Sugar. This market is setup on a short term basis for a short entry. I am not posting a chart due to what a pain it is with this editor. I have to upload them, then switch to HTML mode and cut and paste the image code to the location in the blog I want which is why the spacing gets messed up. Too much brain damage for me today. Blogger with the old editor puts all the images in front of everything else at the top forcing you to have to relocate all of them. I suggest anyone looking at Sugar to look for sell entries tomorrow.
In what I will call a weekly dumbass award, I nominate the poor mans Barack Obama, Michael Steele. Is it a requisite that you be a numbnut to be the head of a political party? Not sure who I would want on my spelling bee team between he and Barry?
Good trading to everyone this week
Friday, July 02, 2010
I have not been able to get the new editor to load and of course Blogger has nobody you can call, so I guess it is back to the old one which does not work nearly as well. I guess for free this is still an awfully nice tool to have. My apologies for the erratic spacing, this editor is very difficult to work with. Above is the SP 500 chart which has completely broken down. There is nothing good to say about this at all except that we are so oversold that a bounce could happen at any time. My guess at this point now when I take into account this breakdown and all the other things that are going on, is that the lows of 2008 are probably going to get taken out by the time this whole mess is over. I have no idea how long it will take, but the bigger picture trend has now switched to down.
With an absolute idiot at the helm, this ship I am afraid is going to sink. The deleveraging that began that was kicked down the road by the PPT I think is going to reassert itself now in a massive deflationary wave. This is not a change in posture by me, readers know that I have maintained for quite some time, that we are in deflationary period. It is one of the main big picture reasons as to why I say GOLD is in a bubble inflated by small speculators. In a deflationary environment hard assets should not be appreciating other than be driven by speculation.
The cycles do call for an October buy spot but I fear now that it likely only to be a rally in a downtrend and not a major buying point. The doctoring of todays non farm payrolls report was once again an insult to anyone who is paying attention at all. The ADP report kind of makes what was reported Friday impossible. However, Barry as per usual just says F you I won and I can do whatever I want including lie to you about virtually everything including the unemployement data. I would suggest extreme caution now if you are a long term bull for stocks, I think you will have a much better spot than where we are now, much better, so do not get roped into buying this dip as a long term play yet.
You have to watch the reaction to the news more than the news itself, and today told it all. They doctored that report to make it much better than what it really should have been, and the market after a small bounce just continued lower. The exits are about to get pretty crowded. I am amazed that the PPT was able to maneuver prices up this high, it was a PICASSO. The biggest problem that I see out there going forward is the lack of bullets the PPT now has to fire if we get a big rollover here. Can they keep buying futures and lose hundreds of millions again like they did during 07-08? I doubt it. The public is turning up the heat on all the spending and where the tax dollars are going. I just don't think the stonewall approach Barry and his henchmen take is going to work forever. At some point after nicely protesting, the protests are going to turn nasty like what is happening in other parts of the world.
If you examine history and the original Tea Party, that did not happen until all the peaceful objections to the King were ignored. This recent justice department fiasco where we now know that black people can do things to whites and not vice versa is the icing on this cake. Which ever side of the political fence you sit on this is a very dangerous precedent. People will not allow themselves to be treated unfairly forever. You can bet on this, come election day if they try to rig the elections by blocking good honest citizens from voting, violence will break out. I personally would be the first in line to throw down with these guys if they tried to block me, would not flinch.
I fear more than ever than things are about to become really dicey in this country, but boy do I hope I am wrong. I just feels to me like we have reached the tipping point. The markets are going with this if I am right. One of the most troubling developments in my mind is the strength of the Pound and Euro now versus the dollar. These were two places that supposedly had more debt problems than we do here in the states. The markets are telling us that there is becoming a loss of confidence in the United States. It is no coincidence these uptrends accelerated after that retard argued with other foreign leaders against austerity measures. It was almost as if the powers that be in the rest of the world realized at that moment that he is an idiot and it is time to bet against us. You can look back in my prior posts to see where I said I thought a rally in the EURO was coming. The commercials had historic long positions and the small speculators short ones. Now we seem to have some political forces behind the move as were as the numeric basis. This bodes poorly for our markets here in my view.
BRIEFLY READ MY COMMENTS ON GOLD FROM THE OTHER DAY. IT IS TOO SOON TO TELL IF THIS IS THE BEGINNING OF SOMETHING BIG OR NOT, BUT THIS IS WHAT IT WILL LOOK LIKE WHENEVER THIS BUBBLE DOES FINALLY BURST.