Lost a lot of things to trailing stops.
MEE, out at 22.10.
BHI, the last half of that's gone now at 38.25.
SU, the last half of that's gone at 31.40.
HL was setting up some negative divergences and got turned away at its 200DMA, so that tiny speculative position is now gone.
Where I sit right now is long some PMs (DGP, BVN, GBG), short real estate (SRS) and treasuries (TBT), short indices (SDS). 57% short, 43% long, but around 60% cash after everything I sold last week. I'm in the hole on the index short, but up 6.1% for the year right now.
Major indices are getting into slightly oversold territory. S&P should find some good support 850-ish. Nasdaq getting pretty oversold, but still overextended. The rule has been that the upside and downside have both gone on further than I've expected, every time. Still, some weakness on Monday would be a good place to start unwinding shorts.
I don't know if you'll see it, though. LOW earnings Monday are probably going to be interpreted as more green shoots to smoke.
In a quick chart review, the the defensives played well this week, but the only real long-side setup I see is MO's nice ascending triangle with a base around 17.45.
On the short side, one that I missed last week... utes getting killed here. I don't know if it's the same bond rollover issues that got them last year, or some political nonsense about cap & trade. SDP did a nice double-bottom at 40.
Lots of retail looking tasty on the short side. Of the trendline breaks, I guess I like JWN best on the short side. AN and CHS are also like this.
Saturday, May 16, 2009
Thursday, May 14, 2009
Trendline breaks
Looking at the markets simplistically, every index has broken a multimonth trendline. Naz, you could really have gone short it on Monday. It fiddled with the trendline resistance for a couple of days; now it's decisively broken.
A caution, though... In thinking about this last night, I re-read Magee's chapter on channel lines and discovered an interesting observation. The amount (of points) by which the chart fails to reach the top of the channel by (in Nasdaq's case it's about 40 points) is usually the amount by which it falls from the lower trendline before having its first snap-back rally.
In the present case, we broke the channel at 1700 and closed last night at 1664 so at 1660 we'd be pretty close to that 40 point target.
Expiry week, so be careful of the snapback. I'd still be a seller of the snapback rally.
I lost all my remaining (small) energy positions to trailing stops the last two days.
Still have on the gold... played in the microcaps GBG, NXG. Lost NXG to a stop yesterday. GBG still hanging in there. The ETF DGP is still hanging in there.
I got a half-position of 400 BVN on at 24.96 the other day. Still have him with a stop at 24. Some foreign golds (South Africa) are the best charts I see on the long side - not saying much.
What I'm watching - a couple of bad days from now, could get a primo entry short TLT around that 100 resistance.
This jibes with my intermediate-term theory about municipal debt guarantees. Short story, Cali (and a number of other states) are about to have a funding crisis. I suspect the FDIC will wind up guaranteeing its debt, as it did for banks and financials. If one state's debt is guaranteed, then all states must be, else there will be capital flight. So you might as well go long the junkiest muni debt from Inland Empire GO bonds or Detroit Sewer bonds over short the long end of treasuries and reap the coupon. This could be a double-digit trade for years.
A caution, though... In thinking about this last night, I re-read Magee's chapter on channel lines and discovered an interesting observation. The amount (of points) by which the chart fails to reach the top of the channel by (in Nasdaq's case it's about 40 points) is usually the amount by which it falls from the lower trendline before having its first snap-back rally.
In the present case, we broke the channel at 1700 and closed last night at 1664 so at 1660 we'd be pretty close to that 40 point target.
Expiry week, so be careful of the snapback. I'd still be a seller of the snapback rally.
I lost all my remaining (small) energy positions to trailing stops the last two days.
Still have on the gold... played in the microcaps GBG, NXG. Lost NXG to a stop yesterday. GBG still hanging in there. The ETF DGP is still hanging in there.
I got a half-position of 400 BVN on at 24.96 the other day. Still have him with a stop at 24. Some foreign golds (South Africa) are the best charts I see on the long side - not saying much.
What I'm watching - a couple of bad days from now, could get a primo entry short TLT around that 100 resistance.
This jibes with my intermediate-term theory about municipal debt guarantees. Short story, Cali (and a number of other states) are about to have a funding crisis. I suspect the FDIC will wind up guaranteeing its debt, as it did for banks and financials. If one state's debt is guaranteed, then all states must be, else there will be capital flight. So you might as well go long the junkiest muni debt from Inland Empire GO bonds or Detroit Sewer bonds over short the long end of treasuries and reap the coupon. This could be a double-digit trade for years.
Sunday, May 3, 2009
Weak CRE stocks
Noting the weakness in a number of the REITs after their big (possibly artificial) runup over the last 6 weeks.
One that jumps out is the trendline violation on big volume in CLI. Other REITs - SPG, AKR, HOT, BXP - confirm the same pattern.
I put on a position in SRS starting from the 22.50 range last week. This thing trades like nuclear waste, so stops are in at 24.
On the long side, the coal group generally looks strong. Still like MEE best in this group, have some on, put some more on Friday to bring me up to 2K shares with a basis around 11.45.
Also on the long side, I want to put a bid in on gold around 850, playing for something in the mid-900s.
One that jumps out is the trendline violation on big volume in CLI. Other REITs - SPG, AKR, HOT, BXP - confirm the same pattern.
I put on a position in SRS starting from the 22.50 range last week. This thing trades like nuclear waste, so stops are in at 24.
On the long side, the coal group generally looks strong. Still like MEE best in this group, have some on, put some more on Friday to bring me up to 2K shares with a basis around 11.45.
Also on the long side, I want to put a bid in on gold around 850, playing for something in the mid-900s.
Wednesday, April 22, 2009
Yay for stops!
Got nearly all the juice out of that SKF trade before it tanked.
The Geithner speech really juiced things.
Today, looking like the financials will give something back on the horrible COF numbers. YHOO inline, Bartz doing a good spin-job.
Oscillators *way, way* overbought here. S&P oscillator at +9, I would be a seller at +5. No new longs here, peel 'em off if you have 'em.
Looking at SRS just below the all-time low, around 25.50. Again, these instruments are to be held no longer than green bananas.
But the market has a distinct squeeze-y feel. Keep those stops tighter than a fist and positions small.
The Geithner speech really juiced things.
Today, looking like the financials will give something back on the horrible COF numbers. YHOO inline, Bartz doing a good spin-job.
Oscillators *way, way* overbought here. S&P oscillator at +9, I would be a seller at +5. No new longs here, peel 'em off if you have 'em.
Looking at SRS just below the all-time low, around 25.50. Again, these instruments are to be held no longer than green bananas.
But the market has a distinct squeeze-y feel. Keep those stops tighter than a fist and positions small.
Tuesday, April 21, 2009
Wedgie in the indices
I took off half the SKF yesterday and moved stops. Because (repeat after me) We Never, Ever Let a 25% Weekend Move Get Away. Plus, the double-short products are just a pure shit ripoff. They're intraday-only.
All three indices look to me to be at the bottom trendline of a wedge. A break of that downtrend line could mean a lot of downside for the markets. A bounce could be a big move up.
I went back to the bible, Edwards & Magee's "Technical Analysis of Stock Trends," and looked up the pattern of a wedge.
Tell me how well their comments have held up:
Rising wedges are common in bear market rallies. Magee says that it is so typical that frequent appearances of wedges after an extensive decline bring about questions as to whether a new bull trend is in place. Does that sound familiar?
Another item of note is that it normally takes more than three weeks to complete. We've got that. And once prices break out of the wedge to the downside they usually waste little time before declining in earnest.
We're still somewhat overbought, not as bad as it was a week ago.
I would lean to the short side here, with the caveat that it's hard to make money during earnings season either way.
Geithner speaks, or rather obfuscates, late morning. Last time, it was worth a 100 point Dow bounce. The plan is to stay neutral until he speaks. If you want to be long, some oil might be good on a reversal.
All three indices look to me to be at the bottom trendline of a wedge. A break of that downtrend line could mean a lot of downside for the markets. A bounce could be a big move up.
I went back to the bible, Edwards & Magee's "Technical Analysis of Stock Trends," and looked up the pattern of a wedge.
Tell me how well their comments have held up:
Rising wedges are common in bear market rallies. Magee says that it is so typical that frequent appearances of wedges after an extensive decline bring about questions as to whether a new bull trend is in place. Does that sound familiar?
Another item of note is that it normally takes more than three weeks to complete. We've got that. And once prices break out of the wedge to the downside they usually waste little time before declining in earnest.
We're still somewhat overbought, not as bad as it was a week ago.
I would lean to the short side here, with the caveat that it's hard to make money during earnings season either way.
Geithner speaks, or rather obfuscates, late morning. Last time, it was worth a 100 point Dow bounce. The plan is to stay neutral until he speaks. If you want to be long, some oil might be good on a reversal.
Monday, April 20, 2009
Fading the rally
Rally looks artificial and long in the tooth by every measure I look at.
Got hit at 56.75 on 400 SKF for a green banana trade. Want to stress, there's no technical reason within the framework of my methods to do this here.
Turned loose half the SU at 25.75, basis was around 18 off that double-bottom. That was a pretty clearly an intraday triple top at 25.90. You really want to be shedding longs here.
Also, half the BHI, again, bought off that double-bottom weeks ago. This has been a very disappointing position.
It's basically been the overlevered junk leading this rally off the bottom.
Actually, I am thinking this will be a buyable pullback. You see this kind of move frequently on the Monday after expiry.
Builders look good on a pullback... XHB at that 12 support, I think, is where you want to enter. I like the composite ETF chart better than any of the individual charts.
As a rough guide, I'm thinking in terms of a 50% retracement of the whole move since early March. This would be, very roughly, S&P 750/Dow 7250. Some reasonable support there as well.
I think very precise technical levels are nonsense to try to trade by. Stocks in the real world come up a little short, or go over just enough to rape you. I think in terms of scaling in, in 2, 3, 4 trades, then put a stop on the whole basis.
Got hit at 56.75 on 400 SKF for a green banana trade. Want to stress, there's no technical reason within the framework of my methods to do this here.
Turned loose half the SU at 25.75, basis was around 18 off that double-bottom. That was a pretty clearly an intraday triple top at 25.90. You really want to be shedding longs here.
Also, half the BHI, again, bought off that double-bottom weeks ago. This has been a very disappointing position.
It's basically been the overlevered junk leading this rally off the bottom.
Actually, I am thinking this will be a buyable pullback. You see this kind of move frequently on the Monday after expiry.
Builders look good on a pullback... XHB at that 12 support, I think, is where you want to enter. I like the composite ETF chart better than any of the individual charts.
As a rough guide, I'm thinking in terms of a 50% retracement of the whole move since early March. This would be, very roughly, S&P 750/Dow 7250. Some reasonable support there as well.
I think very precise technical levels are nonsense to try to trade by. Stocks in the real world come up a little short, or go over just enough to rape you. I think in terms of scaling in, in 2, 3, 4 trades, then put a stop on the whole basis.
Tuesday, April 14, 2009
Couple of moves in the last few weeks
OK, a quick update... the strategy here is short the S&P, long oil, short treasuries on the long end.
Got some oil... full position each in SU and BHI. The former has done fine, the latter is sitting still.
I'd sold gold on that spike above 1000. Bought it back last week as it came down to the bottom of the channel. You could argue it's making a bull flag here. I'd be a buyer close to 850, playing for 10% or so.
Pull out the chart on XLU to any duration you like. Last year, I caught that H&S on the short side, covered it late last year. Now, it's back at resistance, having barely participated in this rally. Bigger resistance at 30.
Nobody's going to bail out ute debt.
Got some oil... full position each in SU and BHI. The former has done fine, the latter is sitting still.
I'd sold gold on that spike above 1000. Bought it back last week as it came down to the bottom of the channel. You could argue it's making a bull flag here. I'd be a buyer close to 850, playing for 10% or so.
Pull out the chart on XLU to any duration you like. Last year, I caught that H&S on the short side, covered it late last year. Now, it's back at resistance, having barely participated in this rally. Bigger resistance at 30.
Nobody's going to bail out ute debt.
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