Friday, October 31, 2008
Airlines have been recently strong on Oils decline but have yet to break upper resistance. UAUA is one that I have puts on and sported a nice shooting start pattern today. I'm looking for this one to get back to the $9 level as Oil rises next week.
MMM is another good short. It has risen nice over the past month but is hitting major Fib levels and is due for a trip back to the $57.50 level at the least. I currently have my stops above the upper Fib retracement level.
BAX is a favorite of mine right now. I have fairly long term puts on this as the 10-year (which is not shown) illustrates a major reversal for this stock. The most recent rebound which brought it to current levels is close to breaking. Notice the shooting start top three days again that held tight, in addition to Fib resistance levels. If the market turns sour, BAX should be south of $50 fast.
Okay, let's re-cap the week. We had practically horrible news almost everyday and yet we put together a nice rally this week. I personally think that its justified only in stock values (i.e. some major companies were ridiculously cheap) and the fact that we were technically way over-sold. Still, with companies laying-off employees left and right, and consumer spending dropping, we have much more room to go lower. Just because analysts lower their estimates so much that every company is "beating estimates" doesn't mean anything; these companies are still losing money! I would like to see the market make a successful re-test of the October lows before getting crazy and buying stocks for long-term holds.
Thursday, October 30, 2008
Wednesday, October 29, 2008
The dollar showed some great weakness today which helped all my FOREX positions. Remember I've been advising to short the dollar for about a week now (and I still have a very large short position). The AUD/USD has been great the last two days. I got out earlier this afternoon and am waiting to re-enter at better prices when things re-adjust for a day or two. However, the dollar is still way over-bought and has a lot of room to go from here.
Member's know that I got into a couple of stock put positions just before the big fall at the close. MMM is one stock that hit its Fib fan levels and is nearly retracement levels, thus is due for some continued short term weakness. Hopefully everyone got it at the highs when I sent out the email today about it because you would be 30% in the money right now.
Tomorrow should be interesting with GDP numbers coming out and the positioning of mutual funds during the remainder of the week. See everyone in the morning!
Tuesday, October 28, 2008
As you can see, OIH (of which I hold a long position) made a very nice hammer type candle today. Moreover, we successfully tested both the Fib retracement and Fib fan levels. From here, I am looking for this to definitely make the move to the 110 level or higher.
Tomorrow is the widely anticipated Feb meeting on interest rates. According the the futures, there is pretty much a consensus that there will be at least a 50 bps cut in the fed funds rate. It should make for some more volatile trading so stay strong and update your stops. See you tomorrow morning!
Monday, October 27, 2008
As part of my strategy in OIL, GOLD, and the DOLLAR, I am shorting some airline stocks. Members know that I bought puts on this one during the middle of the day when it was at intra-day highs and am now in the green nicely. I'm looking for UAUA to go to around $4 before I get out of these positions.
With the election coming up next week (and please get out and vote no matter who you go with), the markets usually see a nice rally which new presidential hopes and dreams. This are still way over-sold and I will be adding to my positions slowing if it gets worse. Make no mistake though, I still am holding onto some of my puts from a while back (COH, APA to name a couple) for daily profits when we close down.
Friday, October 24, 2008
I'll do a recap post late tonight as I have a function to go to this evening after the close. Let's go bearz!
Thursday, October 23, 2008
Like I and others have preached, Oil is again just hammering out a base. Today it was up at the open, then way down in the middle of the day, and finally closed up on a rally late in the day. Notice that the volume for DIG was pretty good today (and the past couple of days for that matter) which should help it start moving higher. It also didn't hurt that OPEC decided to cut production today in an effort to protect what profits are left as the global economy declines.
The dollar again reached new and amazing highs today, but this run is very very close to being over. I shorted the USD/CAD which is particularly over-bought and forming a very clean shooting star pattern. I'm probably going to hold these for a while until it move closer to its 200-day moving average.
Wednesday, October 22, 2008
So, I just wanted to highlight my general opinion of things to come. First, crude has been falling like a rock. Today we heard some analysts talking about it going to $50 a barrel before the end of the year (will it happen...it could). Yet, this sounds so reminiscent of what happened just three months ago when analysts were predicting $200 a barrel and then oil made the "big turn." So, I think we are going to see oil start to climb for a variety of reason. As you can see in the chart, its fallen through every Fib fan and retracement level out there, not to mention its now below and very important channel. I think we have reached a fairly stable level (let's hope) with a pull back to near the 200-day moving average very likely.
Second, the dollar has been shooting through the roof. I wont even get into why I think this a ridiculous play for the bullz. Still, its gotten way over-bought. I bought some UUP dollar ETF puts today because I think the dollar will show some weakness soon. Any relative weakness in the dollar with also help push oil prices up for us!
Finally, back to my long oil plays. I had some DUG calls that did well, but have since traded them out for DIG calls. Notice the long lower shadows I highlighted. These indicate strong buying interest at these levels (which have been consecutively higher and higher). My big plays for the next couple of weeks are going to be this: short the dollar, long oil and gold. Sweet and simple! If things keep getting over-sold and over-bought, I'll keep adding to my positions (like I did today with OIH).
Tuesday, October 21, 2008
Monday, October 20, 2008
The EURO is interesting right now. It's shown considerable weakness since late July, yet it's finally reached some support levels (both Fib fan and retracement) and has begun consolidating. I am expecting the dollar to strengthen a bit more (pushing the EURO down) until it hits the Fib retracement level below it. After that, we should see some weakening in the dollar, which should also help lift Oil prices.
Be on the lookout for earnings tonight and tomorrow morning. Nearly 17 big name companies report before the open tomorrow, so we should get a cleaner picture of things to come with their expectations and forecasts. As of this post, American Express beat estimates and Sun Mirco lowered guidance...I'll re-cap earnings tomorrow before the bell!
Friday, October 17, 2008
"Be fearful when others are greedy, and greedy when others are fearful."
~Uncle W. Buffett~
Oh yeah, options expire today which should make things VERY interesting.
Thursday, October 16, 2008
I have been very bearish on oil for a while now, yet I didn't hang on to my puts as long as I should have. Oil pushed below $70 a barrel today which I pretty significant. It feels like just yesterday it was at the $140 level and everyone was going crazy about buying oil stocks; that faded quickly though didn't it? However, at these levels its logical for crude to climb back to at least $90 a barrel before resuming the fall. OIH is my ride up for now. See you tomorrow morning!
Oil also has taken a beating lately. Make no mistake, strong oil prices are needed to sustain a strong economy. When oil is rising there is demand from consumers and companies which means the economy is strong. It used to be that when oil fell the markets rallied but take a look at how oil has fallen basically in lock step with the markets recently. OIH is particularly oversold and should come back up to the 130 level.
Wednesday, October 15, 2008
On a side note, I encourage everyone to watch the Presidential Debate tonight. I will never get into politics here (since this is strictly a trading blog), but I want everyone to form an education opinion of the candidates.
See you tomorrow morning!