Friday, October 31, 2008

Did This Market Actually Put Together A Rally?

Never thought I'd say this so soon, but the markets actually looked strong today. Right before the close we had a huge sell-off (as I expected) but the markets didn't go negative and the bullz fought back against the bearz. Regardless, I think we are going to go lower in the short term. Taking a look at the S&P we can see that it has bumped up against Fib resistance levels and technically speaking should move lower to the mid-point of the tall white engulfing candle (or around the 880 level). My index puts took a lick today but I've got faith that this market won't keep going up like this in the near term.

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.

Happy Halloween!

Pre-Market Futures Point Down

Good Morning! Futures are pointing to a lower open this morning as consumer spending fell 0.3% during the quarter. While personal income rose, I'd be interested to see how the markets react knowing that there are going to be thousands of jobs lost from all the ailing companies. I bought a good deal of index puts yesterday (SPY, DIA, QQQQ) in case there is another big fall today. After all it is friday, and there hasn't been a back to back up day this month. Keep a level head here everyone and tighted your stops. Happy Trading!

Thursday, October 30, 2008

Futures Rise, GDP Better Than Expected, Unemployment Unchanged

Good Morning! Pre-market futures are up almost 2.5% this morning after GDP numbers came in better than expected. Although the economy shrank the most in the third quarter, somehow just beating estimates is creating a good mood on Wall St. I personally don't buy it, if the economy shrinks, the markets will still have a tough time ahead of them. Also, gold and oil continue their advance as the dollar gets slammed. Happy Trading!

Wednesday, October 29, 2008

Fed Cuts Rates to 1%, Dollar Falls, Gold & Oil Rise

The following all happened after the Fed's announcement at 2:15pm. The market dropped sharply then rebounded to 200+ before selling off til 3ish. Then, the market went up nearly 400 points just to drop like a rock 5 mins before the close....if you weren't watching closely, you probably said to yourself "What the heck was just up over 400 points?" I personally believe that the sell off was strictly the result of GE's news and people panicked before the close. I think that tomorrow things will settle down a bit (although I have bought put protection just in case). Check out the 2 day graph of the DOW to see the volatility.

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!

I've Been Preaching It For Days...

The dollar finally broke hard today. I've been saying it for days now that the USD/CAD has been a great looking trade. Today its down big...I've gotten out of my position (as memebers know) but will look to re-enter at higher prices for the long drop down. Also, Oil and Gold are up big, no suprise there as they move counter the dollar.

Futures Down Slightly

Good Morning! Pre-market futures are down slightly on recession concerns (and rightfully so after a day like yesterday). Today is Uncle Ben day again, as the markets will likely trade within a small range before the 2:15pm announcement on interest rates. I think we are going to definately get 50 bps while some people are hoping for more. Either way, it should prove to swing the markets violently. As a note, the dollar, oil, and gold plays are all moving in the right direction. Happy Trading!

Tuesday, October 28, 2008

Markets Close Up 10% On Big Rally...Dollar Falls

Talk about a day. The markets opened up strong then sold off during the middle of the day, just to make a huge (again I say huge!) move before the close. With the S&P closing up nearly 11% on the day, the charts show so much information. First, we opened at recent low levels and held tight. Second, the candle pattern shows a very large bullish engulfing pattern. And third, our big strategy for gold, oil, and the dollar are really starting to move in the right direction.

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!

You Could Have Made 275 Pips in Two Hours!

The dollar is finally weakening against other currencies. If you went long after my post about the GBP/USD when I advised around 1:15pm, you could have made 275 pips in litterally two hours. I am still holding onto my positions against the dollar's increase (mainly USD/CAD shorts) which are doing great. Memebers know my current positions...sign up and get the inside scoop!


Is it me or does every single dollar related currency look wacky? The large inflow to the dollar recently has been helped by lower commodity prices and money coming out of emerging markets. But, there still needs to be a correction. Below is the a 10-year daily graph of the pound/dollar. Notice how we hit the last Fib retracement level recently around lows from 03-04. Additionally, as you can see, the last time a big fall happened recently, it was followed by a quick and sharp upswing (around 1.80 prices). Therefore, no big surprise, but I'm expecting the dollar to show some sort of weakness up to the 1.68 level or higher. This would be a great time to start buying the pound at rock bottom prices!

Futures Point Higher

Good Morning! Pre-market futures are pointing to a higher open this morning. News that the Boeing strike may be ending, money market rates falling, and a nearly 100% chance of a rate cut tomorrow (based on the futures) are all adding to the good mood. Oil and Gold are also up, while some key currencies are showing signs of a big turn (the Pound, EURO, and CAD) while the dollar weakens...Let's have a great trading day!

Monday, October 27, 2008

What Happened at the Close?

Starting the day it looked like things were going to be really bad after the open. However, the market opened down and slowly made the climb into positive territory (nearly 200+ points for the DOW). Then...JUST before the close...huge sell off back down to the opening lows. As you can see in the 1 min chart for the day there was no stopping the sell off at the end. Thus, we should be fairly cautious on where things can go from here. Particularly, we should be watching the lows of October as a last level of support.

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.

Going Long ETF's

As I ran through my list of ETF's, I think a bunch of them are way over-sold (or over-bought for the ultra-shorts). Either way, its a great time to accumulate big positions in these over the next couple of days. Technically most of them have pulled way off their 200 day moving average and are showing some very bullish candle patterns...find out exactly what I'm buying by subscribing...

Still Holding Strong

Well the markets were looking like another killing today early on when the futures were down nearly 3% at some points. Yet, we are still sitting fairly even as I am typing this. I hope today is quiet and none eventful because we all need a break from the ups and downs of this market. Happy Trading!

Friday, October 24, 2008

Still Looking Stable...

Its just before 2pm and the markets are still looking stable. I haven't really made any moves today, just weaking of positions with stops etc. I'll be looking to sell some puts into strong selling during the close (if that happens). Don't expect everyone to hold onto their positions over-night. Be calm though...our oil, gold, and dollar plan is starting to work itself out...

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!

Will The Markets Crash Today?

Morning...Pre-market futures were halted this morning after more than a 6% decline. This is big news and should not be ignored today. Can anyone take a guess at what will happen after the halt is lifted...things are going to get sold again. I am a little disappointed at how much oil has dropped and the dollar has risen. We are printing money left and right in this country right now and still the dollar rises against other currencies (except the Yen right now). I still have a lot of time on my oil and dollar positions so baring any catastrophic decline, I will hold on to them through this downturn. Some traders are also taking about an emergency rate cute...which at this point I don't think will help much. Be on the lookout for existing home sales at 10am which will push the needle for sure...

Thursday, October 23, 2008

Woah...That Was A Close One

Well, for a minute there it looked as if the triangle pattern had been broken, and it still might be, but not for another day at least. About a half hour or so before the close, we saw huge buying for stocks (and thankfully in energy and oil). While today's buying again formed long lower shadows on the charts which reinforce support areas, we still need this market to move above the triangle's upper resistance level before we get really bullish. Plus, I don't really count on earnings all of a sudden being great in the near future.

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.

Breakpoint...Make Up Your Mind Markets

Well, we have been successful at filling in this symmetrical triangle I've been talking about. Now, we are just waiting for this thing to either fall of the bed or go through the roof. Either ways, its important that we are positioned for both. See everyone after the close...

Tame Futures

Good Morning! Futures seem to be fairly tame this morning (less than 1% move). Home foreclosures rose 71% in the third quarter, Goldman is cutting jobs, and more moves by GM to cut costs are topping headlines. Oil showed some strength earlier this morning but is back off a little. Likewise the dollar is starting to slow its sky high upward path. Initial jobless claims also increased more than expected and once again reignited the "D" word in the media. Let's see if we can find a short term bottom soon!

Wednesday, October 22, 2008

Strategy: Short Dollar, Long Oil and Gold

Another big sell off before the close...big surprise right? Seems like every other day is armageddon for the markets. But, for traders like us, these are the best times to jump into things that are getting too-oversold or over-bought. Members know that I was fairly active today getting in and out of positions.

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 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).

Futures Point to Lower Open

Morning! Pre-market futures are pointing to a lower open for the markets. Wachovia had a rather large loss on real estate writedowns (go figure) and McDonald's beat estimates. The EUR/USD is down another 1.5% and Oil fell below $70 a barrel. Again, with a slew of earnings the markets should be jumping around today as usual. I'll be back later for an update...

Tuesday, October 21, 2008

More Volatility...

Another crazy day on wall street. The market was all over the place, just to close down nearly 2.5%. We still haven't broken out either up or down from our symmetrical triangle I spoke about yesterday, in fact the markets did good just continuing to fill the pattern which will give it more meaning when the breakout does eventually come. AAPL announced earnings that beat estimates after the close, which has sent the stock up nearly 11% in after-hours to around 113 range. Readers will remember that I went long AAPL (see Long AAPL post in archives) when it formed the first hammer candle. Ironically enough, I wanted it to test the recent lows (which it did with another hammer) before making the trip back to its 200-day moving average. Can't wait to see where this goes tomorrow!

The EUR/USD quickly fell to its Fib retracement level as I hoped it would in my post last night. From here it should start making a move back up to near the 1.39 level (or next higher Fib at 1.42) before resuming the downtrend.

I bought puts on AZO today which I think has shown enough strength for this leg of it's recent move. Notice that the candle pattern's high hit near the middle of the huge red candle on Oct 6th. I'm looking for this to come down to 100 (Fib fan level) before getting out. My stop is just above today's highs.

CAL was another one I bought puts on today. Not only did it reach it's 200-day moving average, but it's hitting resistance around 19. The target for CAL is around 12.50 or below.

Earnings are going to be the big economic driver during the next couple weeks, so be prepared for some volatility (what's new right?). See you tomorrow morning before the markets open!

Disapointing Earnings

Good Morning! Looks like we are headed for another down day in the markets after poor earnings from a multitude of companies including some of the regional banks. Both the EURO and Oil look like they are going to see some selling pressure today. I'm glad I bought some put protection yesterday. I'll be back later with an update...

Monday, October 20, 2008

Strong Day...Will It Last?

Today was a pretty strong day for the markets. There was some early volatility in the morning, but after lunch stocks just started a steady climb that carried out through the close. It's nice to not see a big day like this with a huge sell-off just before the close (which has been the case lately). Both the S&P and DOW were up more than 4.5% while the tech heavy Nasdaq was only up 3.4%. Also, Oil finally has shown some strength (as I expected). I still have my OIH calls which I expect to see some considerable upside in over the next month or so. Taking a look at the markets though, they seem to be forming a symmetrical triangle at the moment. While, the pattern still needs to fill a little more to be influential, it is worth noting that this thing could go either way. A breakout to the down side would mean disaster for the bulls and likely by-pass the previous lows. A breakout to the upside (which is what should happen given the distance from the 200-day moving average) would help reinforce a near-term bottom for the markets. Having said that, I bought some index put protection today in case things get worse near term.

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

Buffett Buys...We Listen

Warren Buffett is apparently gobbling up US equities left and right as they reach extreme lows. Don't you think this guy knows something about the markets that we don't? Don't you think you should follow in the footsteps of one of the greatest value investors? I sure will. Like I have said, the markets are getting too over-sold and it's time we make the track (possible long and hard) back to "normal ranges" (i.e. at least near the 200 day moving average). Be careful in the volatility today!

"Be fearful when others are greedy, and greedy when others are fearful."
~Uncle W. Buffett~

Housing Still Poor

Morning. Futures are pointing to a lower opening after housing starts fell 6.3% and building permits (an indicator of future construction) dropped 8.3%. All in all, we should come very close to testing the previous lows and a break below them would indicate a major fall for the markets. If you have any longs you are worried about, I would suggest tightening them up or buy some puts for protection. Others with index calls (like myself) should look for opportunities to build on your position. I had said earlier not to buy up everything yet because things could get worse. Well, here we are with poor economic data and another great opportunity to buy in at extremely low prices.

Oh yeah, options expire today which should make things VERY interesting.

Thursday, October 16, 2008

Market Re-Cap

Well, as usual, we had another day of large point swings on the DOW. It seems like these kind of days are becoming more and more frequent. Still, we managed to end the day up which was great for my index call positions I mentioned earlier in the day (note I made them at virtually the lows of the day). From the chart, the S&P seemed to successfully re-test its previous low. I would expect the markets to slowly start moving higher given the relatively "okay" CPI data and GOOG's strong earnings after the close. But, we could see some resistance from Fib retracement levels.

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!

Leaving Money on the Table

I just happened to check some of the stocks I shorted the last couple of weeks to see where they are at today. Here is one in particular that makes me frustrated. I bought puts on AM when it was around 18 and sold them when it fell to 13.50. Granted I made a 250% return but looking at the same puts I owned, I left a couple grand laying on the table. Morale of the story, things can always go down more than you expect.

Things are getting too over-sold...

The DOW is off nearly 4% this morning and I think its time to slowly start accumulating some index calls (SPY, DIA, QQQQ) as they start to get depressed. Now, don't go crazy buying here because if things get worse you should have some cash to buy more at even lower prices. I think the worst is still ahead of us once earnings season starts, but for now there seems to be blood in the street for stocks (which may be a good time to slowly start buying). I'd like to see a bit of a relief rally (more sustained this time) over the next month or so. The SPY's look particularly interesting and should move close to the highlighted area in the next month or so.

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

DOW Off Nearly 800

No disputing it, the bears were in absolute and total control today. Thankfully, I had a very large position in some index puts (DIA, QQQQ, and SPY) since yesterday's peak in the early morning. From here, it doesn't look pretty for the bulls. There was massive selling occurring late in the day indicating that most of the large institutional players didn't want to hold any positions overnight. And really, who would blame them when the market is up 900 points one day and down 700 the next. Still, I think we should see a little more selling going into the end of the week while Options expiration on the 17th should prove to show some increased volatility. If you're long you should think about tightening some of your stops unless some great news comes out tomorrow morning (which is unlikely given that EBAY cut it's forecast after the close).

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!


I'm going long AAPL. Its really taken a beating since September and after sucessfully re-testing the lows of its up-gap, it look like a pretty nice set-up for the next month or so. I have my stops set below the lows three days ago. My target is somewhere around the 150 range as it starts to pull back to its 200-day moving average.

Poor Economic Data

So much for the "rally" we got on Monday. Looks like we are already setting up for a big down day. Dow already down nearly 3% on the min chart.

Tuesday, October 14, 2008


Looks like the DOW had some indecision today. We started off with a big pop, up almost another 4% and then slowly throughout the day selling pressure came in and we were down nearly 4%. Yet, magically (as there is usually no ryhmn or reason these days for massive swings) we end the day with a modest decline. As you can see in the chart, today's candle was a high wave - no sound direction in place, just neutral fighting between the bulls and bears. Any good/bad news tomorrow with earnings and/or economic reports could push us higher or slam us back down. Look out for my morning post tomorrow!