Saturday, January 31, 2009

Triangles, triangles everywhere

And not a thing to buy.

Just to be contrarian, I have to ask where there are *any* good long-side trades out there? Emphasis on "trade." Everything is a batch of green bananas in this market.

Here's my best idea: UGA, the gasoline ETF. Breakout above that neckline at 23-ish measures to 30. Want to see him a little lower, but that looks like a 1-down/6-up situation.

Physical gold chart looks OK. Give it a chance to pull back to that neckline. I don't care much for any individual miner chart, though. GDX looks kinda toppy, not confirming gold's move. It could pull back 10% easily before any support.

I always start with the indices/ETFs and work down.

Almost all the broad indices and larger industry sectors look like triangles to me. S&P is a good example, lower highs and lower lows. If it breaks down, it targets to around 250, and we're not even remotely oversold here.

On the long side, Dow Transports look like a promising double-bottom around the 2920 level. RSI and Money Flow divergence but nothing else confirms. None of its individual component charts confirm the pattern either.

A couple of its components are truckers. If we look among those, we find maybe 2 out of 10 that look like this. Watching CNW, maybe HTLD around 13. Not very excited about these, though.

Dow Utes, until Wednesday, were the only group up for the year. I see a triangle with higher lows since October. Breakdown would give you a target of about 230. Breakout above that multitop, 390-ish, would be very bullish. Call this level 30.50 on the XLU. UPW about 37.50. SDP the other way.

XLP around 21.40 could be a good entry point. I don't like any of his components except, maybe PEP at 50. Setting up a trend indicator, oscillator and RSI divergence at that level.

Friday, January 30, 2009

Not seeing much on the long side

Seeing Dow, S&P, Naz just above midline overbought. No compelling reason I can see to be long the indices this particular day. On a very short-term chart, S&P failed resistance at 875. You could make the case for being a bit short based on that, but I'm not playing indices today.

The thing that caught my eye this morning is gold. I see him quoted 921 as I write this. About 916 would be the right neckline of that squint-y H&S pattern. This would target to 1200.

The amazing thing is, this is happening in the context of a rising dollar. I think the dollar strength is an artifact of euro/GBP weakness and gold is acting as a reserve currency . CEO of Barrick talked about the possibility that China would divest its dollar holdings and convert to physical gold. Rumors of a bank holiday in Britain. Rumblings about problems with physical delivery from Comex - the usual stuff that outsiders like me can never really pin down.

Scanning the groups, not seeing anything to excite me on the long side.

Where I sit right now: Over half cash, biggest position is still TBT, DGP, SRS, a little FXP left. DDM on the long side as a balance. Hard to characterize in terms of long/short exposure... perhaps a better way to put it is "long nominal rates and panic."

The last week or so has sure had a melt-downy feel to it, like something big could blow up any second and the world would change forever. This has been disconcerting to watch for a couple of years now.

Tuesday, January 27, 2009

Did a little selling

Sold the DIG into the strong open yesterday. In 24.99, out 29.20.

Took down another 100 of the TBT at 45.51.

Updated after the close:

Near the open, another 100 of the TBT got taken out by a stop. In at 36, out 44.75. That leaves me with 500 on. Talk that Bernanke would buy the long end to effect QE. I guess the good thing about it is it means he still has a shred of credibility left.

NXG hit a trailing stop, 1.17, looks like a reversal. 5000, in at 0.65, out at 1.17. I'd pyramided some at 1.06 like I talked about last week, took it out at 1.23 on that big up day. Not a lot of money, but a good trade.

Gold's worth watching here. Above 916, you can squint and make it a reverse H&S out of it that targets to 1200. But a lot of the charts I'm looking at seem to have reversals after their big week last week. I could see it going to the low 800s from here.

Saturday, January 24, 2009

Gold pops his trendline

Of all the stock groups, that seems to be big story of the day. It obliterated the downtrend line that'd been giving it trouble for weeks.

I sell the rips. I'd let my gold positions get up to almost 15% of the account. Nothing, never ever, for any reason, goes above 20% of the account. I sold down 150 of the 1000 DGP.

In my ideal little chartist's world, we'd see a low-volume pullback to that trendline, where I'd put on some more. But, a 20% move has to be taken in this market.

Got hit on 400 DIG, bid 24.99 for it just to be difficult. Pisses me off that I could've paid 24.50 a couple of days before for all I wanted. That wouldn't have gotten hit. He ran all day, got stronger and stronger. If there's a strong open for oil on Monday, I may have to take that position down... can't turn away 10%, especially with these worthless double long/double short instruments.

Took off another hundred of the TBT. 36 handle to 45 handle. Suze Orman's recommendation has me freaked. Plus, you know, WE'RE IN A FUCKING DEPRESSION where, you know, LONG BONDS ARE HISTORICALLY THE SINGLE BEST ASSET CLASS. I'd just feel a lot better taking a little something off the table.

I was really regretting not hitting the SRS bid above 70 last week, so when we had a weak open, I let 200 of my 400 go near the open at 67 and change. Of course, it fell the rest of the day. You have to take every little win you can get.

The only thing I'm really down on here is the DDM I've been using as a partial hedge. Have to decide what to do with that... hate to take a 20% loss, hate even worse to let him turn into a 40% loss.

Now, in reading over this post, it sounds like I'm playing like a cornered animal. Which, when I think about it, is really the case. The job is getting very iffy at this point. If it goes away, this is how I'll have to make my living.

Friday, January 23, 2009

Wrong, but in the right way

Totally wrong call on my part off the oversold reading. Everything's lower since then.

This week, I felt like the bad news out of Britain (nationalization rumblings) drove the news flow.

Positions are playing OK here.

TBT, put some more on with a 39 handle, took it back off yesterday for 5 sticks, primarily because Suze Frickin' Orman recommended it on her show.

Gold is hanging in there. This morning, futures look like it's going to pop above trendline.

Added some SRS, so I'm up to 400 now with a basis of 59. Wishing I'd hit that bid above 70 so hard it rattled teeth.

Couple of the microcap golds are playing well. NXG popped a multi-top and held it. Time to pyramid a little bit there.

Literally tons of oil charts - NE, DO, BP -look like they're basing. I tried for some DIG at 24.50, but just missed it. Look like they'll be coming back today as well, so being patient with them.

Saturday, January 17, 2009

What I did last week

This is a market where I think you have to be happy with 5% in a position and you have to be willing to take profits instantly.

I got two big things right - the overbought condition and gold's trendline resistance.

On the first thesis, I took an additional 300 DXD with a 54 handle. I took it down into the gap Wednesday at 61 and change.

I had on 300 FXP on with a basis of 32.47. I sold 200 into the gap on Wednesday at 45.25.

So that left me imbalanced a little on the long side. I took 200 SRS at 59.50. Whenever I put out a lowball limit order that gets hit, it always makes me doubt that I really want the position. We'll see... expecting a bunch of retail BKs to lean on CRE. CRE isn't really TARP-able... bankruptcy there isn't systemic, it just transfers ownership to the bondholders.

AGT is playing really well. Just playing for pocket change, took another 20K at .18, flipped him at .24. It doesn't matter how big the trade is, the important thing is to trade it properly and have a winner. He's making a nice little pennant here between .18 and .24.

So, right now, I have 20K of AGT on with a basis of .18. 5000 NXG with a basis of .65, he looks like he's having trouble at that important 1.00 resistance. Chart looks very wedge-y to me. Give him one more chance to crack it from this oversold market, then turn him loose.

Gold generally doesn't excite me. The bear case is, you still have the same issue with that downtrend line around 850. Bull case, well, that's a stretch... if it recovered to 900, you could squint and make that a raggedy H&S with a target of 1100.

Not thrilled by the charts in any of the stronger groups. The one I'm smacking myself over is missing the move in MO off that 15 level, especially when it's sitting right there on my screens.

One thing I am noticing, even though the charts are raggedy, water stocks seem to show outperformance every time we come off a low. But, the big ETF PHO looks like shit because it's so weighted in GE.

MeanGene did a good piece of work on the long-term picture for silver, which everyone should read:

All 3 indices back to oversold and turning up with oscillator buy signals in that reversal on Thursday... man, that happened quickly.

The S&P held and finished right at the pivot at 850. Therefore, my inclination here is to lean a little long. I'm 55% cash, 25% long, 20% short.

Friday, January 9, 2009

Did some selling

Stop on SLW got hit at 6.25. In at 2.73, out at 6.25.

Bought part of the position back, 5.68. 2000. Out again on Friday at 6.15. This position is all done.

Held the SU, feeling like a fool, but got 24.01 for him. In at 18, out at 24.01. This position is all done.

Sold all 2000 of the GBG, the weakest of the golds. Just pocket change here, in at .91, out at 1.14.
Still way overbought, but encouraging how the S&P held that 896 level.

Going back to the overbought/oversold game to see if it works. Adding some index shorts, using DXD as a proxy.

Tuesday, January 6, 2009

Overbought - careful here

General markets getting pretty overbought here. McClellan summation index, Moving average of A/D line, Williams oscillator as overbought as they’ve been in many weeks.

Very curious to see if the overbought/oversold game starts to work again.

No new buys into conditions like this, even though there are a lot of oil and gas stocks, basic materials, some tech, that looks pretty good.

Commodities generally acting oddly divergent. Oil starts the day strong, finishes weak, feels like a reversal.

In a mode where I want to take some profits, if for no other reason than to throw a virgin into the volcano. I don't have it on in this account, but probably start with some of the SU I have over in the long-term account, put on at 18 in December.

PMs started weak, finished fine. Almost lost SLW to a stop, actually felt kinda stupid hanging in there with it. Gold having trouble with its downtrend line (and its 200) since last June. Probably sell the weakest gold - GBG.

Be aware that I am frequently wrong, and often early even when I'm not. As a matter of general principle, perhaps just because it brings a sense of order and control to my universe to sell at a price of my own choosing.