The dollar is a very key reading to understanding the market action. Above is what the dollar has done in the last month. It has had a 10% rally in the last month. For a currency this is truly garguantan, especially when the reason the dollar is rallying is not due to inherent strength but the weakness of other currencies. While we believe in the intermediate term (3-6) months, the dollar will continue to rally upto 80 or so, at this point in time, it look overextended. Points in favor of dollar bears,1. The dollar is on a long term resistance trendline (not shown here), which is around 78 on this charts.
2. The recent consolidation in the dollar after this huge move is unhealthy. It has been consolidating sideways to upwards.
3. Bearish divergences on the all the momentum indicators.
Q. Would I short the dollar here and any targets?
We would wait for the stochastics to break below 80. Once that happens, we expect the next stop to be around 75 on the $USD.
Well, dollar weakening would spark a bounce in the commodities. Our guess is oil will see 130-135$ or so, before the dollar starts to regain momentum. We believe silver will atleast fill the gap upto 14$ and gold will rise to atleast 850$.
As for the markets - some of the correlation of markets and oil has started to unravel recently. We still slightly favor the upside for stocks, until the trend is broken. But airlines for sure will get clobbered should oil rise.
42 comments:
I found this website...go to Commentary Tab, and listen to the 8/29/08 audio...
www.cyclesman.com
mimi, maybe I should be careful here.
I never said Gustav will increase oil prices. I would never trade a stock based on news.
The dollar is due for consolidation. Oil *MAY* rally because of this. My dollar view is unconfirmed by the COT report
http://www.nowandfutures.com/cot.html#usdx
I agree with the thoughts in the commentary on cyclesman. My guess is oil will rally to 130 or so, as a part of the right shoulder of the HnS pattern, before the fall to 100.
I know that..I found the website and I wanted to share it with you.
FYI..30 minutes ago oil was trading at 117.63. I am hoping it will go up so I can buy more airline stocks. Would you happen to know which one is "healthier"? I am thinking AMR?
Maybe buying DTO for a long term hold is good?
I will go on the record and say that the dollar continue to move up..but of course there will be some slight pullbacks.
"I will go on the record and say that the dollar continue to move up.."
in what timeframe?
Go up the next few months...:)
After elections I think the feds will raise interest rates.
I may get back into SKF if it falls to 95-100. XLF will probably get close to 24 and then come tumbling down....or I may stick to airlines.
phew! mimi, finally we agree about something. For the next few months, the dollar sure does look good.
But in the next few weeks, the dollar might just need to consolidate. It is good for the buck.
yes we finally agree...
Mimi you seem to have hit a gold mine. Nice!
not to bad...
USO did get down to 88, and SRS to 82.
I do think we will get a rally in oil, but to 120 and not 130. I am going to sell 25% of UAUA today/tomorrow.
http://caldaroew.spaces.live.com/
Great blog...
freaking crazy day! totally crazy!
why?
sorry I am dead busy and have had very little chance to update. Will write whenever I find time. Hope you all are doing fine.
Only at lunch, I find some time. I hate meetings
Now the dollar will fall with the bailout.
The market is going to rock on Monday. If you can't be there with your finger on the trigger (I can't; lecturing again), then put your orders in ahead of time. I'll check premarket and put in sell orders and hopefully recoup last week's losses in the opening minutes. If I do, I'll pop a top on a Dr. Pepper and toast the Sec. of the Treasury. Hoping RXL and LTL will pop nicely since they are ultras, even though financials and real estate will likely be leading the way. And maybe MOO will pop too since ferts might pop -- the rest of MOO's components should with the rest of the market -- since oil may be up a little (that weird action where fert trades like a commodity, as we all remember). Ferts won't be going to zero anyway. :) UNG may be up big for you Clarke. See the futures. Hope you guys and gals have lots of longs for Monday. I feel sorry for anyone who holds SKF. I wouldn't be surprised if it opens down 6% and falls another 2% or more.
http://www.bloomberg.com/markets/commodities/cfutures.html
http://www.bloomberg.com/markets/stocks/futures.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPUJBuIy5IiA&refer=home
I bought some bank shares on friday before the close. I sold them at the opening today for a hefty gain. I am all in cash except for UNG once again. Seeing which way the market is headed in the short term, my guess is up towards 1300 over the next week or so.
Hedgies action. Beware:
Link
Commodities:
Link
Hil, you are right on the money here. What we are seeing in commodities is hedge fund games. One trying to short the heck out of the other. Atleast thats what has happened in silver and energy, I believe. I read somewhere, (I cannot find the link now) - if you make a comparison of small caps in energy vs large caps, the large caps are getting brutalized. If this was an escape from energy, small caps should have been battered more. Instead select sector favourites are getting smashed. UNG was one prime example. POT is another.
This is an even more dangerous game now, if you are playing short term
Cramer on commodities. Makes sense. Hedgies having to sell to come up with cash for redemptions (customers want their money).
Link
Cramer knows his stuff. He didn't make 20 million or so running a hedge fund by luck. He may act like a clown on TV, but he isn't a clown.
After solar plunged along with oil and commodities, I bought some more TAN for a few cents above $19. One of my few good choices of late, I think.
Nice solar trade. I am still waiting for a trigger to buy into commodities/solar for a bounce. Especially looking at silver.
what coincidence! I was thinking of Cramer backing natural gas too. I think the cramer indicator has a sort of wave structure just like the markets. This is probably a result of me reading about elliot waves and such.
when cramer started off, only a few believed cramer was wrong and hence he was wrong. In this phase of the cramer indicator everyone disses him. It has become so popular now that everyone thinks cramer is wrong. Well we all know what happens when we all think in one direction.
I bought 2 shares of LEH today, using an account on zecco - so I don't have to pay broker fee.
Wish me luck!!
2 shares. Really sticking your neck out there :) That sounds like what you call a "fun trade."
Ferts have been rolling for a couple of days and that has really helped MOO start to recover. POT is buying back more shares. AGU CEO is doing insider buying. Fert business is iffy and prices may be coming down some, but the business should still be strong for some time. Better than LEH anyway and Fannie and Freddie at least. They won't be going to zero or single digits.
How's your UNG trade, Clark? Are you back in the green now? Once you are in the green on it, are you going to put a trailing stop under it or what? Cramer is pumping natural gas. T. Boone is pumping it. You may have bought in a little too early, but you may have made a good pick there.
Clarke..I thought you forgot about us...no new postings?
I did buy some gold/energy etc. Lets hope I make some money. I bought CORS, financials last week and then sold. Made some 10-15% in a day and then bit on some silver. I shorted the dollar UUP yesterday.
Oh boy! I am learning how tough corporate america is. It has made me use stop and limit orders and give up blogging other than for lunch time/tea time glancing at stocks. I hope I will get to write an update this week.
I am nowhere close to coming in the Green in UNG. I am hoping energy will get some bounce next week. This week's COT report on nat gas disappointed me this week. I was hoping for some relief from speculative shorts, seems like there is no luck.
I was in DXD again, and closed it with a tiny profit. I got in DUG last week and did really well and then bought back in (not doing so good today), and I got some DTO..more of a long term play..and of course I love airlines..LCC. doing well with it.
I think the market may go up this week (12,000 DOW).I will sell LCC
this week...and then I think we see it comimg down. I might pick up SDP this week and maybe SKF.
Lots more positive signs that ferts aren't going to zero and aren't even going to single digits :) Apparently that's isn't what all stocks just do. :)
Recent report claiming Agrium is attractively priced at present.
Link 1
Crop forecasts are down which is helping seed producers and ferts according to a recent report:
Link 2
Motley Fool is calling POT's increased share buyback program the "mother of all buybacks". They write, "Potash Corp's management is showing terrific capital discipline here. Rather than throwing billions of dollars at a new mine, the company is improving its assets through expansion, while simultaneously reinvesting in itself through repurchases. At a high-single-digit multiple of estimated 2009 earnings, it's hard to see this strategy going wrong."
Link 3
Oil and energy futures are down except for Clarke's natural gas, but ag futures are up. Will ferts start to disconnect from oil? Will the lower production from OPEC start to have an effect any time soon?
Link 4
Meanwhile, will a failure to salvage LEH and a weekend hurricane mean Monday is a black Monday?
Link 5
I'm glad I sold what I did on Friday for nice profits, but I didn't sell anywhere near everything. Gulp. Come on you big boys and girls in the smoke-filled back rooms. Work something out before the opening bell Monday morning.
I haven't sold either. Infact I bought silver on friday. I shorted UUP on thursday. and some energy and 2 shares of LEH too. I am gulping too, hoping the energy shares stay alive on monday.
Aaaaarrrrrggghhhh. That's what lots of people are saying today. Anyone who had stop losses in place took the risk of them getting taken out and getting them taken out deep. I watched some of the ultras like RXL drop 7.5% only to come back up to a more decent 3% or so drop within 10 minutes trading which was more in line with the underlying components like JNJ which is down about 1%. Somebody got whacked in the volatile opening. Instead of stop losses I had sell orders in place to try to sell some things at cost. As some poor guy was getting his stop on RXL taken out at 7.5% below Friday's close on RXL, I was trying to sell 200 shares of RXL at a mere 4 cents below Friday's close. My order was partially filled. A mere four shares were sold. I would rather that none at all sold and I bet whoever bought them wishes their buy order hadn't filled too. Only the broker won on that one. Aaaarrrggghhhh. Should have made it a sell all or none type order. Live and learn. $8.00 lesson. At least it was GTC so I can leave it open if I want.
Now we need some Wall Street deals to sort out the financials and also maybe Uncle Ben will lower the rates and give us a rally. But thus far, what an ugly day unless you are short.
You guys buying anything today? I bought a little DDM (since SSO and QLD are off my buy list for another week -- wash rule). AIG and BAC are components of the DOW so it is down more than the Naz and S&P.
How are you guys faring today thus far.
not too good! not too bad!
My dollar short is ok. I sold my LEH. I had a small short on MS from friday, which I covered on the open. UNG for some reason took off but has since cooled down.
My energy and silver (SSRI) are in RED. Not too good.
I am looking to buy some GDX today around 29?
Anything on the buy list?
Also, I used to have scottrade. I got tired of paying them 7 bucks each time and opened an account with zecco. Though the interface is minimal, I enjoy not having to pay any fees. I use scottrade for the charts and execute orders on zecco.
Clarke, sounds like you are getting such a light haircut no one will even know you have been to the barbershop.
I got stopped out of my DDM for a few bucks profit when the market went down. Don't know if I'll buy something before the close or not. This market could rally big tomorrow with the FED and some overnight deals or it could head for the cellar. Lots of fear out there, so that is the time you are supposed to buy, right? But what do you do when you are afraid along with everybody else? :) I liked the CNBC interview with the Vanguard representative. That's where 90% of our mutuals and retirement money is and all of that money is over 70% bonds, so I'll leave it alone and ride this out. Well, what will the close tell us. Will shorts cover sparking a tiny rally? Will more longs bail out in fear? Will either one actually point reliably toward what we can expect tomorrow? Do either shorts or longs know anything? Probably not, because who could have predicted this crazy weekend. The big shots in the BAC Merrill deal talked on CNBC about how they were doing other things on Saturday and all of a sudden on Sunday they did this deal. All I know is my chief watch list is a sea of red. The two bond funds are green and DUG is green. Otherwise all red. Yikes. That is seriously ugly. My health shares have held up fairly good. Consumer staples have held up nicely, but I don't have them, sniff, sniff. -400 isn't far away. Help.
well you said it, we hit -400.
light haircut. 1% down of my entire pf is down. That is by no means a light haircut. It is sure not as bad as -3% as the SPX or dow.
-1% is nothing on a day like today. Relative to the market as a whole you have done superb.
Looks like a capitulation type day. Lot of people are losing their jobs today. Lot of people are getting more than a haircut today. Some serious fortunes being made today and many more being lost. Wow.
I bought some more at the close (LTL). Now we need a big Uncle Ben rally for a couple of days so that I can sell off and go to cash.
A day to remember.
Hey guys...I sold half of my LCC today for small profit and my DUG is in the green and plan on holding for a few more days, and I bought DTO on Friday..in the green.
mimi is the star really!
mimi for the hundredth time,start a blog.I don't care if you are lucky or brilliant, I will follow your trades.
Hil, futures down again. I think we can easily touch 1170. load up on shorts.
HAHA!!!
I think the key is to play with 3 or 4 stocks over and over again and reading my favorite 4 blogs...
evilspeculator.com
stocktock.com
caldaroew.spaces.live.com
slopeofhope.com
wow!! what a wild day. Thanks for your advice mimi. Had a windfall day today. My best day of trading ever, I guess. My PF is up over 6% in one day.
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