Energy/Commodities have been flogged the past few weeks. CHK was a star performer and a darling of many portfolios, the past few years. The last few weeks have seen the violent unwinding of the CHK positions. CHK is near its long term trendline. We will look to add CHK near the 42-43 area. Our first target is around 51 on CHK. We are seeing positive bullish divergences on multiple momentum indicators. We expect energy and oil to rebound in the short term for about 2-3 weeks, starting end of this week/early next week. We saw early signs of that in the gold miners today.
On a side note, we made one roundtrip ETF short today, when the SPX touched 1291 today for a scalp profit. We don't want to be take L/S positions when the indices are at a crucial juncture, and the week is opex.
While the intermediate term picture is up in the air, as of now we are leaning towards a scenario like in Jan. We believe the energy rebound, may cause the markets to break the (too closely watched & too obvious) ascending trendline or even the July 15 lows ( probably take it out by a few, bringing on a lot of shorts on board). After that we may see a healthy bounce upto SPX 1350 levels by election time. Ofcourse , predicting markets is solving a puzzle - the more pieces fill in, the easier it is to arrive at the solution. As of now, this is our view. Lets see how things pan out.
Good luck to all.
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