Trader Joe

Mar 15th

2010-03-15T12:58:00.001-07:00

Another warning shot today:

( Flashback: Bear market ends when walmart breaks down)

Going by the same token, walmart is breaking out, we are cautious.

4:20 p.m. We got our first signal today to go short the market. We put on a short position in SPY.

New high

2010-03-10T07:11:00.001-08:00

Too easy for the SPX to fail here. Also too easy for the SPX to fail immediately after making a new high. Two pieces caught our attention today

o C (citigroup) trading >200M shares in the pre-market. This is greed taking over. Chasing is going on all right.
o The greek minister saying everything is over and greece is an isolated case. When it is officially denied problems are officially confirmed.

This is just a matter of time now. Price objectives will be met with new highs. We are sure will see a Put call ratio of less than 0.55. We will initiate our first short position then.

March 5

2010-03-05T11:40:00.000-08:00

We missed the rally since March 1. Our thinking of a decline from Feb 24 was wrong. But as the last post says, none of our indicators have flashed a sell signal yet. Stockwise, scrips like GOOG, GS are rallying all right but we don't understand the technical strength behind these moves. We don't recognize those patterns and so have not played them. There are still a few junk names like CBS, PERY, WGO which fit our setups. But we have missed them.

What next?

There is something very key going on here which we view as a trapping process. Stocks like GS which did not rally until feb 25 have caught up. Ones like AMZN which rallied earlier are not participating. There are very few technical setups in our scan of charts. Bears who went short around Feb 15 are being forced to "hedge" putting on risky long position. In other words, the tape is making people chase, but these are not technical setups. The chasing could take a while to complete. What is bearish would be volume cum breadth expansion accompanied with price contraction. This would mean larger (broad breadth) volume bars but smaller percentage up moves. This is what occurs when chasing happens. People just want to own a stock.

Bottomline:

We are setting up for a fall alright. We missed this rally but are not short either. It is only time before this chasing game turns sour. Our best guess at this point is for a down cycle to get hold by the 2nd week of march. If that occurs, we can have a bumpy april, may, june.

seasonal cycle

2010-02-22T20:11:00.001-08:00

The bullish seasonal cycle begins in march. So, we are inclined to call it a low. We have another major cycle low around March 15th. So net-net we are looking for an intermediate term low in the first week of march.

For the above outlook to hold, we need to decline pronto. Any rally exceeding Feb 24 means we are actually heading higher. As of this writing, there are no signals to go short. Plus if a significant bear market has to unfold in the later half of 2010, we need to see distribution and that typically takes 6-8 weeks of choppy trapping action. As of now, we want to see how the seasonal rally out of the march low will unfold. If it is strong, we expect a top near 1270, otherwise we could just make a failed double top (~1170) or some such.

We will wait to see how the market handles itself into march 1 before any trades.

For now, we don't see any tradeable charts. If gold declines into the march 1 timeframe, we would buy it based on the HL chart in the previous post.

bigger picture

2010-02-04T07:00:00.000-08:00

The weakness comes in on very light volume which should frustrate so many technical analysts out there. We said in our last post, yesterday was anything but bullish, internals were bad. That is not how a consolidation should look. We are looking for a sustained down move in this market into the march 1 timeframe.

Two conditions were met on Jan 15. In our weekly scan of over 500 charts, we found about 15 bull setups. Furthermore, none of these 15 broke out. This told us to look for weakness. Some of them like YUM, LRN have held up into selling forming their long winded consolidation patterns, but one has to ask given the strength in the last two sessions (cycle turndates on 29th), why these haven't broken out. We think we will get another quick blast to the downside this month. A few battered ones will start to turn around by Feb 15, while others will continue to lag till Mar 1. Our first target for the SPY is 1050 and the 200d moving average after that. We don't know if the march rally will lead to new highs. But we know it will last for months.

We present one such stock we are looking at, not that it is representative of the market, but this miner has very nice cycle properties.

bearish

2010-02-03T20:10:00.000-08:00

Lets give the market another day to prove itself over 1104 area. But technically there was nothing bullish about today. Maybe we will get continued weakness into feb 15 time frame. Looking for spx 1050 over the next 2-3 weeks.

Feb 1

2010-01-31T16:54:00.001-08:00

We did some buying on friday. Maybe we are a tad early. Maybe the SPX tags 1062 and 1050 extended targets. If it does, we expect to see a fast retrace and possibly even new highs into may this year, depending on the sentiment readings.

The next weeks should be interesting. In any case, If the market declines into Mar1, buy.

Jan 29 turn

2010-01-29T07:27:00.001-08:00

Bang on our turndate, we get a lift. If this is really the turn date, the next turn is on Feb 12/Feb15. Since that is options expiration week, we will even give it leeway until turnaround tuesday Feb 16. We expect to see further weakness into March 1. If this weakness occurs, march 1 would be a nice buy point.

Time for the seasonal rally

2010-01-27T20:55:00.000-08:00

We look like we have 5 waves down in quite a few of the stocks we see (T, GS, FCX etc.). Also quite a few stocks have come into their weekly or daily averages. A technical bounce combined with the famous rally of Jan 26th-Feb1 (> 80% seasonal ratio) along with our turndate on 28th(+/-) would mean a rally should start anytime now.

However, the larger cycle remains down. If we go sideways or down in the march 1, expect to be buying on March 1 for a sizeable rally from the march 1st low.

Friday Jan 22

2010-01-22T07:46:00.000-08:00

10:30 a.m. Bullish divergences beginning to appear. We think we can get a bounce here upto 1120 or so atleast.

We like LRN a lot here. Looking for a 5-10% move in the next week. JPM if it gets down to 39.5 region for an option scalp.

And finally it comes

2010-01-21T15:53:00.000-08:00

Our stance to bail out on the long side around 1140 seems smart in hindsight.
The question is now what?

We don't have any turn up in the advance decline lines or divergences in any of the indicators yet, meaning this decline is not done yet. We have a turn date around Jan 28th (+/-).

On an intermediate term, like many elliott wavers claim, if this is a "major top", then one thing to note compared to other major declines is that the price never got stretched far beyond the 20 and 50 day moving averages. In our work, we found that such declines are "laboured".

We are not willing to commit to a major top just yet. If we read this right, we believe there will be another attack back up towards 1170 sometime in the next 2-3 months.

In the shorter frame, most stocks are on some sort of a moving average, we expect a weak bounce followed by another decline into 1080-1060 area culminating on our turn date.

Jan 8

2010-01-07T19:07:00.000-08:00

Regional banks (BK, IAT and others) have taken on the baton as we noted in an earlier post for another round of russian roulette sector rotation. The target of 1140 has also been met.

We still believe there will be a shakeout after tomorrow's jobs numbers or sometime next week. We expect the SPX to fall to 1100. As of this writing, we expect 1100 to hold.

Our trade will be to short on break of 1127 with a stop at 1129, if it occurs tomorrow.

Jan 6

2010-01-06T19:14:00.001-08:00

More of the same action, slow grinding. Need to a bit cautious here around 1140. The question to ask is if 1120 - 1125was the barrier (50%) retrace why is the market not zooming upwards.

The trading shows grinding action, allowing lots of "them to get in". Typically, once a resistance breaks not many are allowed to get in. For example, look at our pick ACH, each of the moves in the past 3 days, each 5% or more. This is what a hot market should look like.

For this reason we are expecting a shakeout of the longs soon (30-50 SP points). Oil is at the doorstep of 85$ (our long held target) and so is the SP near 1140.

Our trades - closed out ACH, WNR, AB, SCHW positions for decent 10-15% profits.

2010

2010-01-04T07:55:00.000-08:00

Welcome 2010, the grind continues. We are more cautious now. We took profits on 20% of AB position for a 7% move. We are not ready to go short yet. We still think 1040 is doable, as we have been harping for over 2-3 months now.

If there is another leg up ?

2009-12-27T23:58:00.000-08:00

While the future is unclear, what if there is another leg up?

Lets look at two charts:- one of $NIKK(Tokyo index) and the other of BK (Bank of mellon NY, representing the regional bank space in the US). The patterns on the long side don't look complete. Especially, bank of mellon seems to be in a long contracting triangle on the cusp of a break out. Both present viable long ideas in the intermediate term (weeks to months) should a break out occur.

Year end look

2009-12-22T23:37:00.000-08:00

The nasdaq seems to have broken out of a coil upwards. However, the put call ratio is in extreme bullish land. While this doesn't mean immediate decline, they all point to caution.

Our intermediate term read on the markets is as follows:-

come january - we may have a false breakout out of this tight call pattern to flush out the stops (as we have repeatedly harped since the 1050s a new recovery high into 1140s) and then a downwards to sideways correction from Jan 1st week into March, to be followed by the

seasonal summer rally into June-July 2010 followed by some sort of important peak in July 2010.

This is all based on highly speculative cycle work. As for our positions, we are pretty light in our PF, playing only a few names like DIN, SCHW, AB, ACH for quick long trades/scalps.

SWI, SWSI, CENX, YGE, GNK, MOS have served us well the past two months. We hope you enjoyed our calls too.

Dec 12

2009-12-11T22:33:00.000-08:00

CENX and ACH acting as expected. We will be taking off for a few weeks into the end of the year. Happy holidays.

Dec 8

2009-12-07T17:03:00.000-08:00

Oil is where we like it for a long. We are looking for 85$.

Solar stocks have been on a roar as we have noted numerous times earlier.

No doubt this has been a difficult market to trade. But our picks MOS, YGE, WNR and such have

kept us in the game and very well so. We are looking for one more push up into the 1140$ area by mid Jan or earlier.

Dec 2

2009-12-02T06:39:00.000-08:00

9:40 a.m. Took some more profits in MOS.

Dubai and a correction

2009-11-28T17:27:00.000-08:00

As noted in earlier posts, we have cycle date around the Dec 5. The Dubai event seems to be the perfect excuse. We are looking for another push up in crude and consequently in stocks.

We continue to like MOS, YGE and some oil related names for another push up.

We will be wrong if the DOW break 10100 and trades around there for an extended period of time (1-2 days).

Nov 23

2009-11-23T07:17:00.000-08:00

10 a.m. Another attack back up at new recovery highs, for us it is still more of the same. Take 10% profits in MOS(on half position). Let the rest run. If USO can break above the flag we can have hit 1140-1150 on the SPX

Nov 19

2009-11-19T07:33:00.000-08:00

10:30 a.m Closed GNK @ 27. Still holding YGE. As of now appears to us like a correction. Next cycle turn is in the first week of December. Expecting to see some sort of a struggling correction into that timeframe. Our call for higher prices comes from the action in crude. Crude looks to be forming a bull flag, We would be a buyer of USO around 37.5 looking for 42-45 into Jan 2010. So we patiently wait. As we maintained before we believe the solars will soar during this last run in crude. We will watch patiently for now.

We are buyers if the SPX gets to 1080 for a quick long trade.

Trades Nov 16th

2009-11-16T07:50:00.000-08:00

10:50 a.m. Lock 40% profit in GNK. Move the money to YGE for now. Need to research the solar stocks, they have not had any comparable rallies, we could be on the brink of one.

11:40 a.m. By 40% (on GNK) we meant on 40% of the principal, profit is about 15% give or take. 1120 here we come, we believe the market usually goes a tad higher than the 50% retrace (at 1120). 1125-1140 will be fair game. Let just use Dow jones 10500.

3:00 P.M What next for the market? -- Our forecast for the next few weeks is as follows:-

We break this run either today/tomorrow (Nov 17th would be ideal). The difficult part is from what level. Lets say +/- 2% from 1120. We fall into the 1075 range by Dec 5-10th. We have another cycle turn date during that period, probably leading to another rally from that period into Jan 2010 good for 100 SPX points or so (1150-1170). We think the solar stocks could really soar during this late phase of the rally.

Longer Term

2009-11-13T08:49:00.001-08:00

This is a follow up to the post below.

http://maybeitsclarke.blogspot.com/2009/03/likely-targetscenario.html

The above is a longer chart of the industrial average. It is a fairly obvious formation and overtly bearish one if it comes to fruition.

So what is missing? - Time component. We need to have a whipsaws for a few months creating confusion for say 5-6 months. Let say if we attain 10800-11500 by Jun 2010 if will look perfect with a sort of rounded top formation that we have been calling for. More importantly, it will also tire out the PIII gang of elliott wavers and subside the bearish sentiment somewhat. We are waiting for the "ideal" cover declaring things are dandy, the latest TIME cover is far from it.

Price wise, we are entering into turbulence zone now. We expect numerous attempts to get into the 11000 area and lot of failures, frustrating both bulls and bears.

Lots of cycles would line up with a top in March-July 2010 and we could have then have a significant bear market in the last half of 2010-2011 time frame.

Ofcourse, like all things this is a long term view and something to keep at the back of your mind.

A Thought

2009-11-12T12:13:00.000-08:00

Finally we found some time today to browse the trading blogosphere.

The first thing which jumped out as us was how blogs have elliott wave labels now. We distinctly remember how few wavers there were May/March 08.

Even tiny, individual stocks are being labelled by elliott waves. If you believe (like we do) that the market is in the end a giant arbitrage game the more the number of elliott wavers the lesser its effectiveness. No wonder (we and) many elliott wavers have been calling tops for some time, changing labels on every turn and getting burnt.

As for Prechter(whom we very highly respect), his EWI subscriber strength could be the only asset in hyperinflation now. Maybe EWI should use the graph of their subscriber strength as a market turning point.

With so many elliott wavers expecting PIII will it show up?

Nov 11 update

2009-11-11T11:13:00.000-08:00

We will be liquidating SPY long positions accumulated as of our last posting on Nov 2.

Not many would have thought a new high was possible then, but we believed and we got one. We could still run up more. But since we can count an intraday 5 up in the UUP today, we are a bit cautious to see if this is the real deal.

Market has run up nicely bang into our turndate (+/-) here too, we can atleast expect some turbulence into the 50% fib retrace at 1120, if it even gets there. For now, we will liquidate positions and wait. The question to ask is are enough trapped that they have to sell? Lets watch at this juncture.

For long positions, we like the shipping sector. Looks like GNK is about to bust out of its 6 month triangle. GNK seems to have the highest short ratio so a more violent move should ensue. Today seems to be the kickoff. Lets put a tentative target of 30 on GNK for now. Other shippers should follow.

Similarly, MOS also seems to be coiling around in a triangle.

Cycle inversions

2009-11-02T11:40:00.000-08:00

Just a quick note:-

We have had a 80 pt drop. We also mentioned the key turn date around Nov 10th (watch out for inversions into this date). We are oversold, but ideally we would like to see some more days of this selling continue. We believe another rally will brew from these levels (1018 - 1025?) and a secondary test of that low could be on Nov 10th.

The advance decline lines are showing a bullish higher lows setup.

If the market trades for a period of time below 1008, we will abandon the forecast above.

As of this point, we don't like the P3 elliott wave stance just yet. We think 1120 on the SPX is doable, probably even 1150. It would be very good for the bearish P3 case if this move was a slow arduous grind up into the mid 1100s by say Feb 2010, forming a sort of rounded top.

Looking Further

2009-10-29T14:11:00.000-07:00

We have quite busy with our job (thankfully) and our trading has been on the backburner since late september. Our PF like the market has done nothing since then.

We don't know if we will be able to update our blogs so often, but we will update the list of stocks to watch and their direction on the right hand side of the blog. Our lottery longs and the picks posted previously have been absolute rockers (well! which stock hasn't been) but in any case, we will post an occassional blog here and there besides our picks.

We have said this before - when the biggest defensive names (XOM, WMT, CLX etc.) fall, the bear market is over. Similarly, when the biggest defensive names rally the bull market is over. XOM, CLX have obliged, WMT doesn't seem to have yet.

As of now, our cycle turn comes in on novemeber 10th. The market has essentially gone nowhere since Sep 9th. We think there maybe another push into that nov 10th timeframe, probably to 50% fib (1120 SPX ) retrace and most likely slightly over (1140-50?).

Aug 28

2009-08-28T06:36:00.000-07:00

Aug 28 Our cycle date windows begins today. INTC made a new high as expected. The setup for the hook is in place.

9:45 a.m. We will be travelling on some work related issues for a couple of weeks. The Put call ratio is 0.64. We can do with some decline. We added some SPY short positions.

12.30 P.M

We will be off in the afternoon and be out for a couple of weeks or so.

A recap our stance:-

Nice decline (at least nicer than the past few declines). More so, it comes bang in on our cycle highs. We showed you a big 34 week cycle coming in UTX (and also the DOW) around first week of sept1. In our cycle model, today was the top of the may 13th (low) cycle. Usually when multiple cycles, elliott wave labels match up we expect see a sharp decline. We will give this decline upto 15th Sep. We must break back below the 1000 and very preferably at least visit last swing low 980 by then.

Accordingly, our PF has various kinds of put and short positions on SPY, FXI, QQQQ, UTX. We also have long positions which are essentially house money in dividend paying stocks like INTC. We usually take profits in stocks.

Now, if we don't see a decline by then - it gives an important signal that the market is rallying even on bearish cycles. We must respect that. Since then, the market can rally into november and even Mar-May 2010 possibly.

Our preferred scenario is however by our cycle work a decline into oct-november. Followed by another advance into July 2010. Fundamentally, we think a second stimulus will be passed by the government or atleast some of the spending of the first one will be brought forward in time.

See you folks in a couple of weeks.

We will off in the afternoon and be out for a couple of weeks.

Aug 27th

2009-08-27T07:18:00.001-07:00

10:10 a.m Much better Put call ratio today (for the bears - 0.84). We don't think 1016 will give way here.

10:30 a.m We are going to act so - If the market dips below 1016 (briefly) and then back up, it will be a shakeout of weak longs and would propel the markets to the 1040 region. If we spend time below the 1016 region, say two hourly candles then we are going to correct more deeply.

If you have noticed the intra day action lately in the transition from correction to rally there is a very familiar pattern i.e. bounce into a support level, retrace back for a double bottom and a rally, followed by a triangle consolidation to a new high.

We think a rally is somewhere around the corner, as the put call ratio (PCR) creeps up above 1.

11.00 a.m Nat gas hit our $2.7 region.

Is there capitulation? - maybe.

Is it time to buy? - Not until we clear the 20W moving average. Given how compressed nat gas prices are, there should be plenty of room to run if we close above the 20W.

12.00 P.M And the pattern strikes again. Unfortunately we missed the pop in our lottery long BPOP.

12.15 Lottery CIT exploded and with us this time :-)

1.00 P.M Out of CIT for 4%, not bad for 1 hour. On another note, watch GS intraday chart.

Does the pattern remind you of some other chart?

- Doesn't it resemble the SPY chart since the march bottom? If it holds true, we should

a failed HnS and a thrust up. Sweet fractal if it comes to fruition.

5.00 P.M Big move coming soon - four tight range days. No prize for guessing it should be to the upside. Another of our lottery long PRKR exploded. We believe there is lots more upside to this one. It has a 17% short interest as of last record. If that still holds, we could easily see a 50% move in 1 week. That being said, the "quality" of lottery longs has been going down for a week now. We can find very few unexploded ones with the RIGHT setup. Ofcourse, we will post here if we find any. We are curious to know if you did manage to catch any of these.

Cycle wise, tomorrow onwards, we are also into a big cluster of cycle dates from 28(+/-) until Sep-mid. Lets see if our cycle model holds up. Meanwhile the advance-decline line continues to make lower highs in the face of the advance.

Aug 26

2009-08-26T07:40:00.000-07:00

10:30 a.m We are not going to fall if the Put call ratio is this bearish

10:50 a.m Volume is looking good today. Most trend reversals are presaged by a volume expansion. Ideal for the bearish case would be a big volume day and a small price movement.

12:30 a.m. The put call ratio is at ~1.15. Quite a few expecting a correction. Look at INTC, looks like it has recharged its energy.

2:30 P.M The strength in INTC is telling. We believe a breakout to a new recovery high is in the cards for this name over the next week or so.

2:50 P.M INTC looks destined to break its long term resistance line from the Oct 2007 highs - the bear market trendline. Meanwhile the put call ratio is still hovering around 1.1. This is not forebode well for the bears.

4.06 P.M Another day, another green candle. The put-call ratio is at 1.04. $CPCI closed at 1.9.

Today smells, feels, looks like consolidation. There is a big move coming one way or another in the next couple of days. As of now, we are guessing to the upside, following INTC's lead. Look at SMH, these are the leaders of the NASDAQ. SMH's formation doesn't look like a top.

The upside hook is missing.
The indicative high volume day is missing.
No long tails above either -- look at the the previous Aug 7th top.

The weekly chart of GS looks like a bull flag for another blast up into the 175 area.

Can a bubble form in stocks again?

2009-08-26T05:31:00.000-07:00

While we maybe thinking far in advance, if the markets don't turn by september 7th or so, we have an intermediate high turn date on november - meaning markets could rally all the way into that turn date, it could be a rise similar to the one in the shanghai index. So we give the market some time to turn down by mid september, we would have an inversion in my cycle model and then higher prices into our november turn.

Fundamentally, considering the FED's liquidity pumping scheme a bubble is not far fetched.

Additions to the Lottery List

2009-08-25T17:39:00.000-07:00

Some more additions to the lottery list

1. CPF (target - 6)

2. BPOP(target - 3)

3. MTXX (target -??)

4. HNBC(target - 8)

5. HW(target - 4.2)

6. KNDL(target 16.5)

Another one to watch is HMY (symm triangle) -- which way is it going to break??

We would like to add, most of these are fundamentally trashy stocks. So one needs to time their entry and exits precisely. For this we use a simple trend following technique of a 5MA x 20MA crossover on a timescale of one's preference. The exit strategy is a close below the 5MA. Since these are so explosive a 15m timescale usually suffices to capture a decent 5-10% move.

Aug 25

2009-08-25T09:04:00.000-07:00

12:00 Noon "Enter the risen Osiris-risen again", OSIR on its way to our target with us :-)

2.00 P.M Out of OSIR for a meagre 1%

6:30 P.M We are getting close to the high, but we don't think we are there yet. We have a short term low on Aug 26th (+/-) and since we have not made significant downside, we could expect another leg up into 1050-1070. We could have a down day here and there. probably tomorrow looking at the candlesticks to 1016 or so, but for the long awaited plunge we would ideally like to see the market rally into the September 6th time frame - that is where our alternator cycle and the 34 week cycle hit.

8.00 P.M For those who follow demark cycles (see http://www.etfdigest.com/TDSequential.pdf) we finished the 13 count today. This means we should see a correction pronto. We have a short term cycle low around 26th(+/-). So this could mean we have a couple of red days. This would fit in nicely with the scenario painted above (september first week high).

Additions to lottery longs

2009-08-24T14:00:00.000-07:00

Since our lotteries have recently exploded, we looked for some more and listed below are additions to that list.

1. DPTR(target $3)

2. HTE (target $6.5, bull flag)

3. PURE ( target $2.25)

4. OSIR (target $15.5)

Aug 24

2009-08-24T07:24:00.001-07:00

10:10 a.m Dumped all KEY at 6.93. Picked up some PACR @4.05.

10:30 a.m Whoa! PACR. Sold 30% at 4.4

10:50 a.m PACR seems to be forming another triangle. Will add more on breakout. Our target is 5.21 eventually.

11.00 a.m Hmm Another lottery from the list below, DRL exploded. Unfortunately without us :-(

11.05 a.m And so did CT, hello, don't leave us behind!!! Stopped out of PACR at 4.3, Cannot complain with 7% in 1 hour. If it breaks 4.5 we will ride again.

11.10 a.m Stalking unexploded ones like IBNK. We may have to leave now for a meeting. We will be back in the afternoon. If you see explosive lottery longs do share :-)

12:50 P.M Short UTX@59.59

4:30 P.M Natural gas made it into our general target area of 2.7 (We believe the low was somewhere around 2.85). That puts our bias into neutral. Trading above 3.7 or so, should be the first signs that a multi month rally in natural gas is under way. Natural gas could even triple under such a sustained advance. This is not a call to buy but a call to watch. If the recent low breaks, 2.7 looms.

Lottery longs

2009-08-21T19:38:00.000-07:00

Considering our last lottery long GGC (http://maybeitsclarke.blogspot.com/2009/06/lottery-long-ggc.html) literally exploded.

We believe we have another week or two of rally time. So these could really rally (10-20% in a day).

Here are some more from that list, and the technical pattern)

1. PRKR (target 3.57 - weekly bull flag, Short interest = 17%)

2. ABCB (target 7.3 - symm triangle)

3. AYE (symm triangle)

4. BAS (double bottom)

5. PWE (target - 17)

6. ABMD (target - 9)

7. CIT (target - 1.62, symm triangle)

8. CT (target - 2.41)

9. DRL (target - 4.39)

10. IBNK (target - 1.74, symm triangle)

11. PACR (target-5.21, symm triangle)

12. PGNX (target - 6.78)

Thrift is in a bullmarket

2009-08-21T18:04:00.001-07:00

This is a long term chart of walmart. It shows a classical 4th wave triangle, with sideways consolidation of about 7 years. It rallied breaking out of the triangle for 1 year and has now looks like it has backtested the sloping trendline of the triangle. 12 months of rally seems way too small, both in price and time for 7 years of consolidation. We estimate walmart will reach $100 in the next 4-5 years. A bullmarket in thrift anyone?

Aug 21

2009-08-21T08:07:00.000-07:00

11.00 a.m. Alright, that makes sense, no more talk of 38.2% retracement being the top. One should always feel uneasy when everyone watches the same level. Sold some KEY from yesterday. Still own some KEY. We still expect another consolidation and another push to complete 5 waves up from 975. We could be in the third wave here.

Nevertheless, while we understand we are a tad early, we have started building a short position, currently 2% of our PF. Added a sliver of SPY short.

12:00 Gone for the rest of the day, limit order in for KEY at 6.99.

5.00 P.M Back, unfortunately looks like KEY did not hit 6.99. But no avail, we still expect it to hit $7 next week. On another note, look at the put call ratio $CPCE 0.51 - we are getting there. Meanwhile JNK:LQD failed to make a higher high. Stealth selling going on behind the scenes.

Making sense of it

2009-08-20T18:41:00.000-07:00

UTX is one of the stocks we use for our DOW cycle work. It has an almost perfect 34 week top to top cycle. Also shown is the elliott wave labelling, Will 34 weeks be another top? It is also getting close to the 200 W ma and the 50% retrace has been achieved.

The 34 Week cycle comes in on the first week of september.

We re-ran some cycle models today. As of now we think -

This is one reason to believe there could be one more push to the 1030 area by the end of august which should resume a bear trend for 2-3 months. Below is the chart of CMA (most holding of BKX are similar).

It has textbook EW labels and is missing a 5th wave. We own some KEY (similar setup) from earlier today with a target of 7$. We believe the breakout could occur in the next couple of days.

What next?

We are looking for an IT bottom around SPX 840 by november, followed a new recovery high to SPX 1150 or so by may 2010. Ofcourse, this is all conjecture until the 34 week cycle is respected in the coming 2-3 weeks.

Look at the chart of JNK:LQD. The move away from risk is going on in stealth. It will come to the fore soon in stocks.

Aug 20

2009-08-20T07:46:00.001-07:00

9:45 a.m. Dumped puts from Aug 6 at the opening for a small loss.

6.00 P.M We are somewhat lost. The internals, advance declines, volume etc., are degrading on this rally, our longer term cycles have turned down. But the market still keeps chugging along. We doubt we can break 1018 on such weak internals, atleast not during the day - maybe overnight. If this is indeed a pump job due to the FED liquidity injections, it is one fantastic job. Yesterday it was energy, today financials. Probably tomorrow it will be biotech and tech and so on. One thing to note is there are some marquee names which have given up rallying altogether e.g. FSLR, RIMM, INTC, LOW, SHLD. It is almost as if a few stocks are carrying the indices further and one by one the stocks are falling to the bear.

If there is no selling pronto, we will just have to sit this out until 975 or 1018 is broken.

Aug 19 -- warning signs

2009-08-18T14:04:00.000-07:00

5.00 P.M We did not like the action today as a bear. This brings our previously painted scenario of 1033 right back on the table. If the market was actually topping out, we would not have liked to see today's gap down filled. The put call ratio this morning was 1.32. It has been consistently ~1 for two days. The interpretation is the market is bear heavy, lots of eager bears. China, India - the two markets which bottomed the first have fallen a fair way. We could have a scenario of a synchronized week or two of bounce, whereby the US makes a new high while china retraces this past move. $SSEC is also sitting at its 38.2%. So the stage is being set nicely.

Look at the chart of GS weekly -- it looks like a bull flag.

Look at the chart of D weekly -- it is hugging the underside of the 50W, with weakening volume. This is bullish action.

Look at KEY - it looks like a triangle, waiting for a rally to the 200d at 7.

We still own some puts loaded on from Aug 6th. We will let them go if the market fills the gap near 1005. We will seriously entertain 1033 SPX by August end - September first week.

As of now, we still believe there is going to be downside fireworks from mid september to november.

Mon Aug17

2009-08-17T09:32:00.000-07:00

12:30 Closed lots of short positions HGG, FXI, INTC, FCX shorts, a few SPY puts, a few QQQQ puts. We are still keeping some. Wavewise, today's gap down was some sort of a wave 3. That means we have more downside to come. All this fits perfectly with our short term cycle turn date for the Aug 22nd (+/-). If our wave count and timing is on the dot, we expect waves 3,4,5 of this first downleg (from Aug 6 +/-) to finish by the end of this week/early next week.

On a side note, if you do like our work please say so :-)

If you don't, still let us know.

Aug 13th

2009-08-13T15:25:00.001-07:00

We have a cycle low somewhere near Aug22nd. We put on short positions on HGG, SPY as said in the post previously. We have not made any progress on the spy short but HGG has given way nicely.

This has been a very interesting rally, to say the least. The most shorted names have been squeezed hardest and rallied most. We have been amazed by its resilience too, inspite of our bullish stance and forecasting it right in the first week of july.

The price component (38.2% retracement) on the SPX has already been satisfied beginning of august. Maybe, we are just waiting for all the markets around the world to complete their 38.2% retracement. In particular, we are waiting on australia (AORD) which has been a laggard thus far . We ideally want to see some expansion in volume. Light volume rallying is bullish and can continue indefinitely. We want to see huge volume, whichever side it may be.

If our timing model is right, we need to see selling right from the get go starting latest by next week - otherwise we will be forced to sit back and quit our positions. We are giving the rally one more day tomorrow to make a new high. This rally has not been about price, but about time.

Addendum:

0. Keep an eye on JNK. We are beginning to see weakness, implying the rally is on borrowed time. Bears need to look for the ratio JNK:LQD to fall. Thus far it is promising.

1.We recalculated some possible scenarios and weighted them according to fib retracements and our cycle times. We believe a move upto SPX 1033 could occur. According to this scenario, we should then see a large retracement to 950 or so, which is the first target, the bulls will ofcourse buy this retracement. But we believe this will be short lived. We should see the entire gains from 850 or so erased by november.

The setup exists

2009-08-07T17:35:00.000-07:00

We believe we may have seen the top or should see one very soon. In accordance,

we began initiating short positions today. Our model calls for an intermediate term bear market (about 3-4 months) into november 15th. We believe the brunt of the sell-off will be in the nasdaq and the semi-conductors and the commodities and probably less severe on retailers or autos - basically stocks which bottomed in oct, Nov will be hit hard.

In terms of price and time - we expect a brief, sharp correction beginning next week and into Aug 24th cycle low. We expect bulls to buy the dip but it will be a correction and should burn the bulls in september/october time frame.

On top is one chart we are looking to short - HGG. Our labelling is shown. This chart has beautiful elliott wave labels and a classic 4th wave triangle. Wave 1 has equality with wave 5 in time and price.

Travels and a Rant (Feel free to ignore)

2009-08-03T19:58:00.001-07:00

We have been travelling around Asia for a month now visiting a few countries like China, Japan, Singapore etc.

Talking to people we can sense people getting more confident that a recovery is underway. There is a pervasive belief that decoupling is occurring and that these emerging countries will lead the world out of the recession.

The US has been losing its advantage steadily for the past 50 years due to the increasing govt intervention in the economy and the size of govt. as a percentage of GDP. While the emerging markets have the exact opposite dynamic - decreasing govt size as a ratio of GDP.

The belief of decoupling is well and kicking. Sure, there may be decoupling in the next 10-15 years but we think it is too soon. For the past 10 years there has been just one trade in the world essentially - the Long/Short dollar or the liquidity trade. Dollar rallying => liquidity tightens => market down. Infact it almost seems like, there is so much liquidity sloshing around the world that fundamental supply demand picture is still noise compared to the excessive liquidity ebbing and rallying markets. This credit crunch is the cure for this excessive liquidity.

We respect the likes of Peter Schiff. Obviously he is way beyond us in economic understanding. But his pumping of china, while understandable seems a hyperbole. We have often found that Schiff (rightly) questions US govt statistics while taking chinese govt statistics at face value. In our travels we saw lots of empty high rises in the cities of these emerging nations. We don't think the deflation cycle is over. It is going to probably take another 3-4 years.

On that note, when we get back we will do a risque post, our guesstimate on a 4 year chart of the US market based on cycles (dow jones and dollar) and elliott wave and our deflation cycle analysis. Just to keep a record and as a learning process.

A chart

2009-08-01T23:00:00.001-07:00

We found some time to log on and do a chart of one of the asian indices. Asian markets are liquidity sinks and this rally is liquidity driven. Since these markets are relatively small, liquidity moves the emerging markets a lot more, creating greater volatility => greater price swings => greater trader emotion => clearer elliott waves. Just like the Nasdaq is the leader in the US, we follow the Korean index KOSPI. We consider the KOSPI to be the leader in Asia.

Our elliott labels are shown on the chart which explains our bearish stand. We have not shown our cycle work in there (since we don't have the software on our laptop). But our cycle and the apex of the kospi triangle all line up uncannily.

For future reference too, we suggest using kospi to look for liquidity cycles, it has some of the clearest patterns available.

Just checking in

2009-07-31T05:38:00.001-07:00

midway in our vacation....

Few would have believed (probably even ourselves) on July 5th that we would get such a powerful rally phase. But now that it has come, we must take the next steps as in we outlined in our dow model previously. Basically use it till its fails and not try to time every penny out of it. We will start loading up on SPX puts and nasdaq (especially) puts around 1000 (SPX). We believe there may be another week or so of sideways to upwards motion. But by Nov end or so, we expect to see at least 25% correction in nasdaq etc.

cycle dates

2009-06-27T07:11:00.000-07:00

We are going on a vacation for a couple of months. So we won't be able to post, not regularly atleast. In any event we just wanted to paint an intermediate scenario.

Our tentative next cycle dates are on July 9, July 22 and aug 11. The polarity is still not clear to us. But as of now it looks like 9th will be a high, 22nd a low and 11th a high to bring the bear out in real strength again. The July 22-aug11 is very important. We expect to see a 2-3 month bear from that time frame. We don't have price targets, but anything in the 750 area is game. It is possible that gold may provide temporary respite during august when we expect a mini crash.

The cycles are just waiting for the dollar to put in a double bottom or some sort of base. There may be one more drop in the dollar and then a blistering rally. Sentiment has been negative for quite a while.

On a fundamental note, we are seeing signs of distribution in the bond etfs - notable the junk bond and munis. While it is a tad too early, the loss of momentum bears watching. Have a good summer.

The widowmaker revisited - natural gas

2009-06-25T19:37:00.001-07:00

Above are the monthly and daily charts of natural gas.

Our preferred ew counts are labelled on the daily. It makes the argument for another leg down into July 23rd or Sept1 or oct 11, which are seasonal turn dates for natural gas. The long term chart shows a nice 1:1 symmetry at 2.7$. We expect a nice bounce off there should prices dip down into that area.

We did buy UNG when natgas was at 3.25 and had a huge move up. We rode the 'a' leg up a month or so ago, mistaking it for a new bull run. We got out at the 50d moving average. Natgas pierced the 50d but was stalled by the 20W moving average. Since then it has gone nowhere.

Ofcourse, all this will be wrong if natgas exceeds the peaks of A,C. Lets just say, if natgas can break above the 20W moving average, then we will jump on board again natgas again.

In essence, whichever way this triangle gives, there will be a whole lot of supply/demand above/underneath. Looking at the volume on UNG a lot of players are interested. Seems to us, they are tad too early.

Jun 25

2009-06-25T08:46:00.000-07:00

11:45 a.m Sweet rally from the cycle low of Jun 22. Cycles work! (well atleast 70% of the time and it sure is good enough with good discipline).

12:00 Noon We will update the nat gas chart post later today. We left it unfinished yesterday night. The gist is that there maybe one last downleg remaining (our preferred count) to at least the 2.5 level.

5:45 P.M Ok, we got our rally. That was the easy part. The next few days until our cycle turn on July 9th is the tricky part. 927 will be a stiff target and the market is overbought on the shorter timeframe. Our inclination is still on the bullish side, but we don't know about price limits. The problem is we are unable to identify a leading sector. Very few chart patterns have a basing formation. If we follow the cycles, we will wallow our time until July 9th and then short the market.

Jun 24

2009-06-23T21:32:00.000-07:00

00:10 a.m Too busy yesterday, so a short summary. We still own DIA and are still underwater. 888-890 is still holding and we are still oversold. But this is not bullish action. We need to break 900 before the 26th, because that is a key date in terms of pivot days and weeks since the rally started. This action looks almost like the stock market is waiting for the dollar to put in the last few pieces of a bottom pattern before a waterfall drop. We need to hold rally tomorrow.

10:30 a.m. Jun 22 cycle lows seem to be holding for now. We have a nice rally, albeit with a light volume. Our DIA bet is in the money now. 927 is the real test. If we get over that we can attempt the recover highs of 956.

11.10 a.m A personal rant - We would like to see Roubini and Cramer face off again. At 666, Roubini called cramer a fool. Cramer may be one but he is definitely a rich one and anyone who followed cramer would be sitting on tons of profit. Maybe Roubini has good fundamental reasoning (arguable in our view), but whenever he speaks of doom the market rises.

1.45 P.M Out of longs for a negligible profit. FED meeting coming up and we cannot handle whipsaws.

5:20 P.M Standing out of FED decisions is always a good thing. We continue to look for a rally into 26th atleast. We think the market can make it to the 920s before that day. Our next cycle low is in the first week of July 7th. It is quite likely the market rallies into 930-950 by the July4th weekend on relatively light volume.

Jun 22

2009-06-22T07:50:00.001-07:00

10:50 a.m. Just got back from a week long trip. Looks like the market has followed gold and silver into selling off. But we are within our cycle low turndate period. We expect some bottoming action here around 8375-8400 dow. We would be a scalp buyer here with a stop around 8200 dow. Our target is back to the old highs near 9000.

3.00 P.M Opened long at 83.65 DIA.

5.00 P.M Absolutely no respite in the selling. And that means we are nicely under water in our long position. We have to start rallying tomorrow and SPX 890 must hold, otherwise the cycle has inverted again and (it is high time) we have to go back to the drawing table on our cycles model. On the bullish side, we have some positive divergence on some small stochastics and they are oversold, very oversold. That is no reason for a rally if the trend is bearish. For the bulls, 903 is a key level if taken out, 927 is the next target.

Gold and silver must be shorted on any rise. It is a pity we got out a week earlier before our trip. SSRI has sold off more than 30% since we first shorted at ~25 and only captured about 10% of the move. The precious metals have indeed been leading the commodity complex. Natural gas is still stuck in no man's land according to us. We continue to wait for july seasonal low or a break of the 20W MA.

Bonds and the dollar continue to rally. We are looking for a 4 handle on the 30 yr
yield.

Jun 17

2009-06-17T09:03:00.000-07:00

12.00 Noon We are traveling this week, so will have intermittent internet connectivity. We got the top on Jun 11th as expected, next turn is a short term low 22 (+/-) - so late this week to monday. This bounce could be a 3 wave or a 5 wave bounce. If it is a 5 wave bounce, we can rally to new highs in august, otherwise we need to look for a break of 903 and then 875. For now, we are slightly leaning to the bull camp. But lets react not act.

Jun 15

2009-06-15T14:52:00.001-07:00

5:45 P.M Brief update as we don't have too much time this week. The level highs from our Jun 8th turn date has produced a reversal.

Our trades - We covered a lot of left over SPY slivers from 950/960. We will look to short gold and silver stocks on any palpable bounce. We covered them PM shorts a bit too early on friday. Shorting PM looks the best trade in town. But no worries.
The message is clear - don't try any "bottom fishing" until next week (Jun 22-25 cycle turn) to see how the pullback ensues. Intermediate term, we are looking higher into august.

Is gold in a bear market?

2009-06-14T16:14:00.001-07:00

The chart above is that of Gold in Euro. I think this chart is quite telling. The message is clear, we are in a cycle bear atleast for the next 8 months in gold.

Try out silver in euro, even clearer

http://stockcharts.com/h-sc/ui?s=$SILVER:$XEU&p=W&yr=3&mn=0&dy=0&id=p28604460239

The EW labels are crystal clear thus far and the message is BEAR.

Some longer term thoughts

2009-06-14T12:48:00.001-07:00

This is a sequel to this post. We are trying to "paint" the future directions of the market. There are quite a few people skeptical that 1000 will be exceeded soon (us included). However, we need to look at this objectively. The rally from the lows has unfolded as we called out in that post.

To put things into perspective timewise, we had a decline for over 420 days, we have now been rallying for less than a 100. The long term chart just doesn't look complete timewise i.e we have need to spend some more months here or higher (Lets say DOW 11000 before June 2010).

Ofcourse, this is purely speculative on our part. Our cycle model and studies only point to a high in the first week of aug and a low on oct 20th or so. We have pointed out that in the chart above

In terms of price advance it will be a suboptimal advance. But timewise, it should drive sentiment high enough that people forget about the crash of 2008 and the govt. label its efforts a success. In general, people are still quite negative. Quite a few message boards and stock sites are humming with talks of P3 (elliott wave 3). We just don't think it will be that simple, either for the bulls or the bears. We could have a slow arduous grind up - imagine the days of old - 150 dow points for over 10 months. Well the previous week is a glimpse. As we have maintained, bear markets are designed to break down speculation. There were a lot of people in the 90-2000s who were enamored with stocks(us included). This is essentially unproductive. Such periods of going nowhere are necessary to kill the love. Fundamentally, the trillions of liquidity will surely buy us some time. Last week we had one such period. We had a similar period from Nov 08 - Jan09. We may just have a bigger one beginning the end of the year to mid 2010.

Jun 12th

2009-06-12T06:36:00.001-07:00

9:36 Covered SPY sliver short from 96.
5:30 P.M Covered all SSRI, ZSL etc. Not that the bear trend is over! but we are travelling next week and don't want to lose any profits. The market tape sures seems whippy. Maybe we just keep whipsawing until Jun 22nd. Now that would be fun??

6:00 We have been quite busy the past few weeks with work (and ofcourse we are happy for that :-)).
Would just like to point out our dollar/ PM call which we have the most conviction in and hence our positions. We believe Silver/Gold has started a leg down.
For context, please review this post
Sometimes cycles work beautifully as in this case. There is so much fibonacci symmetry that it is astounding. We believe the time to buy PMs will come in 2010 or in late october when the seasonal rally kicked off by the Indians buying gold ensues.

Gold/silver topped out in Mar 08, oil and other commodities with a lag of 2-3 months. We believe it will true this time too. Oil may go upto 80 or so, but the rise in oil, copper look countertrend at least as of now. Lets say with the lag of 2 months, we may see the bottom fall out of these commodities like oil once again-- August. Oil could very well dip below 30 this time.

Jun 11

2009-06-11T10:35:00.000-07:00

1:30 P.M Breakout. Volume looks OK by last month's standards. Our first target is the 50W moving average. This is a breakout from a triangle, meaning we are going to retrace the whole move sometime in the next few months. Trailing stop on R.

3.45 P.M Stopped out of R at 31.2. Added SPY sliver short at 96.

A contrary view

2009-06-10T16:07:00.000-07:00

Yes, the chart above is not representative of the overall market. It is of SWN, an energy play.

As we show in the chart, the highs were made in the first week of June and since then we have been consolidation in a tight triangle. The labelling suggests another push down towards 38.

Now, lets go to why we think the overall market is following this pattern. As we noted before, we were expecting a high in the first week of june, we promptly made a high and have traded sideways since. Our next cycle date is June 22. So, it is possible that we have a similar pattern in the SPY. We scanned a few energy charts and a few others AH. Most of them (e.g. COP, PWE) have either a bearish hanging man/black doji (e.g COP) or a possible ending diagonal (XOM) or the formation above(PWE).

Sentiment wise, we scanned a few blogs & message boards, everyone has noticed the triangle on the SPY and is getting prepared for a break of 950. While certainly our scan is not pervasive enough (and sentiment is to be treated with care :-)), we believe a small correction could be in order here. We will weight the bear scenario 55-45.

This post is just for building the bear case. On the SPY, if 95 breaks, this bearish case is dead. If 925 breaks the bull case is dead.

Jun 10

2009-06-10T08:48:00.000-07:00

1:15 p.m Covered SPY sliver short from 95 at 93.7.

5:40 p.m Been a bit busy to check in intra day. Anyways, the Jun 6th week cycle highs is still intact, but we have been bouncing inside a tight trading range, meaning what we are undergoing is a time correction and not a price one. When this time correction is over, we may have another shot up challenging the 50W moving average. ~96 on the SPY. TBT is in its last legs of the rally. As for currencies, we want to see another rally in FXE. We will reload our DRR there again and hopefully hold it till the end of the year or so. We believe the dollar index can hit 90-100 by the end of the year.

Jun 8

2009-06-08T05:29:00.000-07:00

8:30 a.m Initial weakness on our turndate week. More interestingly, the markets which had been leading us and soaring - $hsi (hang seng), $bse(sensex) got obliterated. Profit taking/shorting is beginning to kick in.

10:10 a.m. Covered some portion of the SPY sliver from 95 at 93.45, though we expect a lot more weakness into June 22 cycle low. Also covered some SSRI and some ZSL (L)

10:35 a.m. covered some of our DRR position (Euro short = dollar long)

3:20 p.m The late afternoon rally. Buying money on the sidelines has still not abated. Buy there are sellers who are willing (as witnessed in the morning). Our decision to cover some of the SPY shorts in the morning looks good now. We'll reload SPY sliver shorts at 95, should it get there. On a side note, what material use is it to blame the PPT?

4.00 P.M Added SPY sliver short @95.

6:10 P.M Ugly candle on the dollar for the bulls. Ugly candle on SLV and some of the PM stocks for the bears. It means there may be another push lower in the dollar and another push higher in stocks/PM. We will give the rally until the end of this week.

June 5

2009-06-05T06:33:00.001-07:00

9:30 a.m Covered some SSRI for a 3% profit. Will reload some portion higher.
9:40 a.m Shorted SPY sliver at 95.

6.50 p.m Was loaded with work for the entire day and could not watch the action. End of the chart sweep suggests a big fight occurring at the top of a move. Couple this with strength in the dollar, weakness in PMs and our cycle date in the week of the 11th, we believe a (at least short term) top is in progress. Our SPY sliver short strategy has worked well and consistently thus far.
Our pf without the house money longs is
5% short silver
10% short SPY ( +2% PUT)
5% DRR
5% UNG
5% R

Rest is cash.

Next week we will look to short TBT/go long the bonds. We should see a nice rally in bond prices.

We would like to leave with a post of ours from a few days back. Look at how AAPL has rallied relentlessly to fulfill the prophecy. Today we got the first sign of weakness on this stock. Since the candle is so small, it is ideal risk/reward to short AAPL right here right now.
Have a good weekend.

June 4th

2009-06-04T12:29:00.000-07:00

3:20 P.M Reloaded a small short position in SSRI @23.8. Some stocks have been on a manic rally. e.g GS & AAPL. We blogged about potential targets in this post. The stocks are almost at their targets, maybe another 1-2%. That is *not* a reason to go short. What it means is, the time is ripe to look for a topping process.

10:20 P.M The picture has not changed much. We are still expecting another push higher into the weekend. FWIW, there is a short term low in the week of Jun 25th. We bought some long term SPY puts and added some shares of R. The stop loss is if the triangle breaks. We also shorted some more SSRI. We will still believe there may be another move up in silver, gold, oil, markets etc and one more move down in the dollar.

Lottery Long - ggc

2009-06-03T21:36:00.000-07:00

As the name suggest, see charts above.

jun 03

2009-06-03T05:11:00.000-07:00

8 a.m minor weakness, but looks like correction though. We should see a rally from the 930 region at least.

10 a.m. Covered 95 SPY sliver short @93.6

11:30 a.m Work has again swamped us. Our strategy is to reshort somewhere higher. We have a SPY sliver short order in at 95, we think it may get filled today/tomorrow.

12.00 Noon BTW, today is a bradley turn date. Google for it. There is another turn on June 6th. We don't vouch for astro indicators, but it is always good to know. On market action, our short positions and the PUT in SPY, dollar (L) and slv (short) doing extremely well. If the dollar has not already found a bottom, this nice bounce should set up massive positive divergence for the dollar. Our first target on the dollar index is 84. We believe before the end of the year or by march next year, the dollar index will take out 90.

1.10 P.M Covered some more SSRI for a 10% profit.

1.50 P.M The sector heat map says it all. Looks like a 90% down day. Intense desire to sell. But.... the volume is still light. Who is the king?? -- the "$".

3.00 P.M Very oversold on the hourly timeframe. Look for a bounce, volume remains light. AAPL, GOOG and some tech is in the green. We thinks, this could be a fakeout move down due to funds selling at 200d. We may rally upto 960-980 by the end of the week/early next week and set up a big negative divergence for a move down starting June 8 (+/-). But no bets on the long side.

3:40 P.M Natural gas sold off hard today. Natural gas is trying to turn at the 3.2$ level. One of the two needs to happen before one can jump in either 3.2$ gives way or the 20Week MA gives way. Until then this is a dangerous market. It is best to stay away. The +ve seasonal for natgas begins in July. Is there one more downleg left in UNG?

5:25 P.M Nice profitable day for us today. But tehcnical wise volume was light, breadth was so-so to the downside. It leads us to believe there will be another push to the upside into our turn date. Precious metals got slammed. Silver & gold must not break back above their 5MA daily, if this happens then the bearish bet will take time to play out. But as a PM bear, we could not ask for a better day than this. Silver got slammed, so did SSRI, so did PAAS.

June 2

2009-06-02T18:38:00.000-07:00

9:30 P.M Quite busy today, so no trading. Nothing has changed since yesterday. At 975 hits, we will add another SPY sliver short. SLV continues to act extremely well in comparison to gold.

BUT look at SSRI & PAAS, they seem to have a small triangle in the 4th wave position signalling another shot up is in the works on the precious metals probably worth another 4-5%. We will look to reshort SSRI. BTW, the candlestick formation on SSRI looks interesting. Three days of gap ups but could not hold the gains on any of them.

Lets look at some fundamentals with a disclaimer ofcourse that we have absolutely no proven skills in macroeconomics :-). What we don't see any analyst out there talking is the dimishing trade gap.

The imports into america are falling because we are broke. The exports have been increasing as other countries as we either sell off assets to foreign countries or export to the newly found "wealthy" nations. The trade gap has been diminishing. One should not be surprised if the trade deficit turns into a surplus a few quarters down the road. This will lead to (at least a short term) dollar liquidity shortfall. Will the media cite this as a reason if the dollar rallies in the next few months?

10 P.M We noticed that our long term PUT order on the SPY SZCOR got filled today at 2.54. This is about 1% of our account.

June 1 wrapup

2009-06-01T18:25:00.000-07:00

Nothing much to add since the day session. The trend is still up short term. We will look for a topping process later this week/ next week. Our short term cycle tops later this week/next week. But the intermediate cycle doesn't top later on, atleast till July end-Aug beginning (tentatively). We don't know how to read this yet. It is possible we have some choppy move down . Remember, there are a lot of shorts caught (well) short. So it may not be a straight line down.

Dollar still in bottoming process, the intra day wave counts don't look complete, but we are very close sentiment wise atleast.

As for targets, we made some calculations today. 98.1 on the SPY is possible.

For long stocks keep an eye on Ryder R where the symmetrical triangle is still in play. It could gap up this week and reach the 200d moving average.

Relentless surge

2009-06-01T04:11:00.000-07:00

7.00 a.m Futures up big. Everything is as per plan. We are in the 8th-9th inning of this rally now. We may have another 5-10% left on the indices. So it is wise to start hedging after every big rally on the short side. Think may 2008. Commodity bulls running rampant citing dollar crash. This is exactly what a prelude to a period of deflation and the next leg down needs. Just for kicks (always with care;-) on sentiment) - try out a search for dollar on yahoo message boards.

8:40 a.m The good news is flowing in all fronts.

This usually occurs just before (or in ) a fifth wave.

http://business.maktoob.com/20090000004225/OPEC_Sec_Gen_says_oil_price_rally_may_persist/Article.htm

10:10 a.m Opened position in R(L) and D(L). Opened first short starter position in short silver.
10:20 a.m. Remember the 50W moving average. That is our first target. We don't expect the Jan high of 943 to hold. That is the battleground right now. It may prove to be a fight. But we expect the 50W to be tagged.XLU still has some room to run. In gold, we are slightly reluctant to name a top, but we are leaning towards the 1033 being taken out. That would the mother of all fakeouts. Say 1055? before the plunge downwards.

10:50 a.m. Battle for the jan peak continues. For the bulls, it smells, looks, walks, talks, quacks like a bull flag, thus far at least.

11.00 a.m. Silver continues to fall, so does the euro, so does gold. R is looking good for us. We are hoping for a break of the symmetrical triangle today. It could be one helluva move up in one day. TBT rallying again, setting up for a massive divergence (-ve) and a double top. This is a really nice short at the double top region.

We can feel our heart rate faster on a day like this. Guess for the same reason the vix is also up. Everyone is feeling jumpier. Remind us not to our emotions carried away. Staying away from news stories etc for a while, we don't more transference now.

11:40 a.m. Took 40% of R(~4%) and (~2%) of D - profits.

1:50 p.m Bull snooze button on. Transports have another 2-3% before the hit of the 200d, Will add a sliver of SPY shorts on the hit. We believe it is slightly late for new longs now(unless R breaks out of its triangle > 30) and blazes away, we will not add to longs. We hold. For dollar longs, Euro needs to break the ascending channel of the past week, it is around 141.6 now.

2.00 p.m Another sentiment watch (with care ofcourse, since everyone is a contrarian by birth ;-)), there are quite a few traders in chat rooms and boards, who have been massively short since the 850, beginning to add (hedge) longs, at the break of the january peak. We should get another spurt of buying today/tomorrow. These are extremely risky trades. In a contrarian sort of way, the market aims to whip them out a) either exit the long too early or b) make the longs also negative.

By the way, oil is beginning to show typical commodity behavior massive spikes into a peak or bottom. Don't know why it happens. Any clues?

2:30 P.M Euro fighting the uptrend line. The violence in the currency markets is stunning.

3.00 P.M Trail stopped out R and D. SPY sliver short added at 950. There seems to be some violence in the market and intra market divergences setting in (e.g FXE, XLF selling off). We have our dollar position, silver short and our SPY slivers. We are almost entirely short save for residual house money longs.

Currencies

2009-05-31T22:24:00.000-07:00

We wrote in a previous, we are intermediate term bullish on the dollar. We have a small dollar long position on since the 79.8 level on the index. We are looking for the dollar to bottom soon.

[chart soon]

Sector Sweep

2009-05-31T08:38:00.000-07:00

We did a sector sweep yesterday (http://finviz.com/groups.ashx is quite helpful to find out sector rotation) and we think we found a good one to find longs.

The chart is shown with the ew labels. We are looking for a retracement of the triangle apex.

Potential longs are D, SO, EXC, DUK, AEP, etc...

The good news is this sector is filled with stocks offering super dividends. So any profits we stumble upon ;-), we will take in the form of stock.

Stocks to watch

2009-05-30T16:02:00.000-07:00

Listed are a few stocks with possible bullish formations.

The chart is pretty much clear, in our opinion. Use both the daily and weekly charts.

1) R (Ryder)

2) BSY

3) IX

4) NVS

5) KSU

6) GBX

7) TSO

A brain dump of charts

2009-05-29T20:10:00.000-07:00

This post is basically a brain dump of ew labels for some of the bellwether stocks.

1) AAPL

The ew labelling is on the left on a 3 year weekly chart. The longer term monthly chart is on the right. Look at the volume in the last 3 months and the 20 month moving average right above.

2) GS

Nothing much to add, the chart speaks quite loud in our opinion.

3. DIS

We have superimposed black lines on the action to illustrate what we think is a triangle formation. We cannot count 5 waves down in the recent 2 years in disney, which leads us to choose this labelling. The alternate count is disney is currently in its fourth wave (but it seems a stretch to us) so we will keep it as above. Here the target in the next year or so is in the 30 region.

4...

We'll add some charts to this post as time goes on. If you want any long term charts let us know.

Common theme and a rant (feel free to ignore):

Now lets step back and look at the fundamentals behind the economy. Quite a few chartists believe,everything is in the charts. According to us partly true, but we simply cannot digest that our history completely governs our future. Sure it has a part to play but our actions hence too play an important role. For more about our model see (http://maybeitsclarke.blogspot.com/2009/05/time-again-to-short-gold-stocks.html).

What we are trying to say is this - In most of the charts above we have labelled 3 waves down, upto the march low. Technically, by elliott's theory it is a "completed" correction wave structure. The question is it the end of the bear?- the answer is in theory there is a tiny possibility that it is the end of the bear market (in nominal terms), but surely not in terms of real money. For e.g. say the govt tomorrow starts actively employing the zimbabwean school of economics and prints and doles out sums of money to everyone. Can the inflation lift stocks? In nominal terms by all means.

So keeping this in mind, lets look at what is more likely to happen? The govt continues to throw money at the problem, though nowhere near the pace of zimbabwe. So what we may get is a 4th wave triangle. That would mean we trade in this range another 5-10 years. We are now in a 'd' wave. This gigantic triangle takes about 15-20 (2001-...) years to finish. This is just a caveat type of thought at what the chart could morph into - like the chart of taiwan or the nikkei (in terms of dollars) - a 20 yr triangle/pennant. So as everything take it FWIW. Lets keep an open mind is what we are advocating.

Exhilirating Day

2009-05-29T18:36:00.000-07:00

An exhilirating day to say the least, lived up to its billing of a key day. We will post some charts this weekend and review our turndates etc. stay tuned.

May 29

2009-05-29T08:09:00.000-07:00

11:10 P.M Very whippy, no way out yet. On the other hand, we just cannot stop ourselves from shorting the precious metals. We may be shooting the trend here (which is clearly short term up), but the 200W is right at 25 for SSRI, the risk reward is too good. So, we added a sliver of SSRI short at 24.5

2:30 P.M Whippy action continues. But one market has been a straight line today. The yields have gone straight down. A big shout out to Jenszen who pointed out the seasonal play in TLT beginning end of may. We wrote about this seasonality in our blog post yesterday. J is in TBT puts @56 from 2 days prior.

2:45 P.M SSRI seems to be cratering. Lowering buy stops to 23.9. Atleast we have about 2% profit on a day like today.

3.00 P.M Covered 50% of SSRI at 23.7 for a 3% profit.

3:30 P.M One step up, one step down. We are not dancing.

4.00 P.M Breakout. Wohoo!! the bulls win again. We blogged yesterday about this hunch. We have maintained for a while now, our long term cycles top only in June. We will look for distribution patterns then. We reiterate again, today is a key day. We think the 200d will be assailed and the target for the SPY is the 50W moving average.
Lets rationalize with some sentiment(always with care :-)), the 200d is like the definition of the bear market to many people. A 5-10% incursion above it, is enough to drag quite a few folks onto the bull side, claiming the bear is officially dead. Bear markets have vicious rallies in direct proportion to the viciousness of the bear. This one seems like it will be real vicious bear when it wakes up later.

Another try at shorting precious metals

2009-05-28T19:29:00.001-07:00

Gold & silver are in a clear short term uptrend. Let us add a caveat beforehand, our record at timing gold, silver is about 2/3 (right). So take it FWIW as everything.

Now, lets look at long term monthly charts on gold miners.

We choose the miners to plot because these are so much more volatile and a chart with greater volatility shows clearer herding behavior of greed and fear.

Above is a chart of a gold miner ABX and a silver producer SSRI. The ew labelling is shown above. The takeaway is we had a huge run up until Mar 2008 (it became a crowded trade). We can chart 3 waves down, signalling we had a correction until Oct-Nov 2008. So, we had a bull market of ~ 88 months (since 2000). We had a bear of 8 months, and then a rebound. This doesn't seem sufficient timewise. We would atleast like a 25%-50% time correction. Gold has not had one down year in the last 8 years.

As for ABX and SSRI, key monthly averages and the triangle apex are acting as magnets. The charts can penetrate those averages slightly but expect strong resistance. And we would look for any signs of divergences to pile on the short side. (Disclosure: we have a small 50% SSRI short position on from friday).

The alternate labelling is that we are done with the correction and we are onto the next leg of the bull market. We will label this secondary for another reason we elucidate after the silver chart.

The ew labels are similar to the chart above. What we point out is silver & gold have a ~8 month intermediate cycle. We had a 3 move downleg from March 08 to Oct-Nov 08. Then a 3 move upleg from Nov 08. The 8 month cycle ends around Jun11th (+/- 1 week). Silver has strong resistance around 16. Also it dropped a fibonacci $12 in the 8 months, it seems to have come up a fibonacci $8 in 8 months => the rate of descent has been greater than the ascent. Ofcourse, this doesn't preclude a bull market. But thus far the evidence is not convincing. We believe silver will top out in the 16 region. Small weekly divergences are occurring. Another nice property to note is that silver moves violently just prior to a termination. We are seeing a violent move now. So all evidence points to silver peaking.

Another key piece of evidence is the commercials COT report. Commercials have a huge short position. Such a COT report usually doesn't preclude a bull run. It happens at the very end of a bull run.

Tale of two triangles

2009-05-28T16:39:00.001-07:00

This is a long-ish post so bear with us.

This is what we meets our eye and it seems pretty obvious. Please bear with us for the quality of the screencaps. We had a top at 930 on 5/8, which was a key 45 day turndate (see http://maybeitsclarke.blogspot.com/2009/05/may-8.html). Looking back now, our post could not have been more right. We also believe our plan to stay away on either side has also been vindicated. We have labelled the above as a 'A' leg down followed by a 5 leg down 'B' wave sideways. The 'D' leg bottomed for a shot up on our May 25th turndate. The question is now whether our cycle turn was an inversion? (which can happen sometimes).

Now lets look at the periodicity of the market. The 15 period cycle which this market has religiously followed will culminate a 60 day period on June 1 monday. So the next few days are very key to watch. Yes, quite a few days are key, but the importance of the next 3-4 days cannot be stressed enough.

The bearish scenario is drawn above, if we break the triangle on the downside (885 on the SPX), then we will see lower prices into our june 11th cycle turn.

Now for the more optimistic scenario.

This labelling seems alright too. Now lets look for positives. The weekly chart, looks to us like a bull flag. Volume decreasing for the last 3 weeks in a sideways to lower move. In the last two days, the volume has surged. Today, the green volume is greater. Also the market looks like it is consolidating just beneath the 200d moving average. Such action usually leads to a break of the average. Most markets around the world have penetrated their 200d, it only seems natural for the SPX to accomplish it too. In this scenario the key is the 915 region. If that is taken out, 970 should be on.

Seasonality and The dollar:

Seasonally, May25th-May30th is a small bullish period. The treasury's bottom during this period and then start a strong seasonal rally through June. This is also a bullish period for the dollar. So, the seasonality from now on go to the bears. Which side has more horsepower?

In essence, watch and react, don't act and pray.

sell signals emerging

2009-05-28T05:39:00.000-07:00

http://www.cnbc.com/id/30976096

1:30 p.m. Looks like the HnS intraday had the bears salivating. But until 875 breaks, all HnS are bear traps. Spectacular short squeeze. Quite a few message boards are now filled with sour traders post-reasoning, why the treasury auction is bullish etc. and how it is the work of the PPT. Tune out or use them only as a contrarian indicator (ofcourse with care). Volume is much higher than yesterday. Something the bears miss. The bears have one point on the bulls though - the russells is lagging. Not what I as a bull want to see.

5.00 P.M Things have cleared up sufficiently for us to finally do a chart post tonight. Enough of mindless rambling :-). From our scan of charts, we will present two possible scenarios, ofcourse one bullish and the other bearish. We are slightly leaning towards the bullish one. Check it out later.

may 27th

2009-05-27T18:30:00.001-07:00

9:30 p.m No time for trading today but what transpired today was not good for the bulls. We will have to revise the wave count if 875 gives way. Until that we have nothing to do. As for our trades, we initiated a position in the dollar just before the close. The risk/reward of a double bottom is too good to give up.

May 26

2009-05-26T07:13:00.000-07:00

10:10 a.m. Cycle turned ?? We need to break above 905 to confirm positively.
We could see a very steep climb upto the 50W MA if so. This market is teaching the bears a lesson - not to be trigger happy.

12:40 p.m. The bulls break 905. Now we need to hold it for the close. Cycle turn indeed seems to be working, so also our TNA position (long from 25.3), which we will ride with a trailing stop of 1%. Thus far, it has been a straight line so no worries.

2:30 p.m Out of tna at 26.75 for a 4% gain. We have to leave for the day, but the theme remains "Don't be a heroic bear". Wait for other bears to get slaughtered.

5:10 p.m Our cycles and seasonality work told us to keep an eye out for a blistering rally. That is exactly what we got. More importantly, the 905 area is now support again. We visited quite a few trading blogs, sites and message boards over the weekend. There was almost a unanimous HnS claim on bellwether stocks like AMZN.
The winner in this bout of technicals was clearly sentiment, seasonality and cycles.

Yes, the market was overbought, yes there were bearish divergences on the horizon, but until we get a weekly close on any of the indices under the 5Weekly moving average, the weekly trend is up and we should continue looking for higher prices. Our next cycle high date is on june 10th(+/-). For astro traders, there is also a bradley turn window in the first week of june. Some stocks like RMBS, TIE, AXYS etc. are shooting out of what looks like a bull flag. Does the weekly SPY itself look like a bull flag?? A case can be definitely be made. Will GS make it to 160? We think it is possible before our next turn date.

Cycle turns

2009-05-25T14:49:00.000-07:00

We were out for most of last week. As for our positions, we got stopped out of tso for a 3% loss. But we also managed to book some profits on the SPY short. Now lets gets back to the future :-)

We have been mentioning there are some short term cycles turning up on May 25. So here we are, we made the nominal high on may 18th and it has been downhill since then. The 60 day cycle ends on may 30. We have another important date on jun 11th.

If we get another boost up, depends all on this time frame. We need to hold the key 8000 area on the dow by june 11th, worst case. Tomorrow is an important day to watch too. 25th may is seasonally one of the most bullish days in an year. So things are bound to be volatile.

Clues from the bond market - TLT looks to be bottoming or will do so soon, so also the dollar. The negative sentiment is clearly peaking. But we will wait for confirmations before putting on these trades. We got blown out of our gold short. Until we understand things better in the PM sector, we will stay away.

May 20

2009-05-20T04:11:00.001-07:00

7.00 a.m. We will be out of town for a couple of days, so no updates until the weekend.

Tradewise, we maintain our stance of bullish against 875. Mar 25th is an important short term cycle low date, both seasonality wise and cycle wise. So we expect a strong push from may 25th onwards from wherever that may be. Ideally we would like for 875 to hold until then.

Sentiment wise,

1) The Investor intelligence survey is still looks cautious to us.

2) consumer sentiment still looks compressed to us.

3) In our scans of chat forums and message boards, there are still bears who just won't give up. Maybe they are right. While it is impossible and foolhardy to pick tops, in our opinion the sentiment is still somewhat negative out there. Bordering on cynicism, we should add - which is just the condition required for the rally to sustain.

May 18

2009-05-18T07:50:00.000-07:00

10:50 a.m Bounce off 20d again. There are still too many doubting Thomases. Also, quite a few TA'ers thinking the small incursion below 20d on friday, would automatically mean the market going to the 50d. The market promptly reverses. As for us, we are riding TSO and our leftover positions in various stocks like PM, PBT etc. Also we added the customary sliver SPY short at 90.

Rant (feel free to ignore): Of late we feel Cramer has been wrongly castigated. He asked people to exit at 10,000 and then to get back at 6700. If anyone followed his advice, they would be smiling now. Sure, he makes bad calls. Everyone does. But if anyone followed. We are not a fan of cramer or have an association with him within 6 degrees of separation - but at face value, following his advice would have clearly brought one about 50-100% profit for this year alone.

5:45 p.m. Strong breadth/low volume. We did anticipate a rally based on friday's action but today's move (atleast for us) is not the kind we like to trade.

What next? - we think a tag and incursion of the 200d is possible. But we will not be playing it, as we cannot see any setups/patterns here. EWT sure is a great tool, but at minute levels there are umpteen labels that every hour requires a change of labels. As we have saying for umpteen posts now, we will wait for June, when our intermediate term cycles top out. Often the best trade is be flat.

Our portfolio as of now, is littered with long positions made up with house money from PM, PBT, PWE, URRE etc ...
and a new long TSO (about 10%) and SPY shorts (~ 12% av @90.5), GILD short (3%).

Yes we tested the underside of the rising trendline, but until we break 875, we are not shorting aggressively.

Here is one of the blogs we often read (and enjoy):-
The following post is quite nice. We are sure quite a few bears are following the gameplan described in there.
http://garyscommonsense.blogspot.com/2009/05/heres-why-i-prefer-not-to-fight-with.html
We follow quite a few message boards and stock chart forums filled with TA'ers. We can vouch the above has been their gameplan to a T. Quite a few Faz'ers, SRS'ers, TZA'ers have gotten obliterated. We are guilty of trying to short too but only using the methodical SPY short and covering. This has worked wonderfully well, keeps emotions out and we see no reason to discontinue it as yet.

Fri May 15

2009-05-15T09:07:00.001-07:00

12.00 P.M Added a small portion of TSO long. Covered a portion of SPY sliver (from 90) at 88.8

2:20 P.M Since this market volume/breadth/$CPC etc are not confirming the plunge. There is a risk of a sharp rise in the next few days/weeks now. We would not want to short anything until 875 is taken out. On a technical note, the obvious target on the upside is 200d SPY. It is entirely possible that the big program trading and hedgie shorts are waiting for a tag. And since 200d is an "easy target" to start shorting. It may very well happen that the market rally a nice 5-7% above the 200d to put off rookies.

Sentimentwise (at the risk of everyone being a successful contrarian :-)), has we seen major jubiliation no! Remember this downturn started with bad news (of retail spend down). Rallies don't end on bad news. They end on good ones. We are weary because we expected a much more vicious downside thrust. Alas it seems to be missing.

We need to scan the charts to see if there any trade setups on the long side. We will report back later in the day.

6.00 P.M We could find very few convincing charts for long setups. TSO was a half baked one, so we put on a small long position. A break above 18.5 on TSO would give a massive thrust to 25, the stop is a close below the moving averages.
That being said, the market volume was low, the breadth sucked and we bounced again off the 20d ma. We don't feel like going aggressively short here. Ofcourse our sliver SPY short positions keeps us in the game. We covered some today at 88.8. We will add if the market rallies to 900. We will unload some SPY shorts at the 50d if the 20d breaks. In terms of weekly charts, most indices and SPDRs had an inside week, something to keep in mind.

We prefer to stay safe here.

May 14

2009-05-14T09:42:00.000-07:00

12:40 P.M Small bounce today. Should have been expected of SPX bouncing of 20d. But nothing spectacular about it. It will probably down soon, like the other indices - NDX, RUT etc.

2:50 p.m. The market is as drowsy as us. Added an SPY short sliver at 90.

May13

2009-05-13T05:46:00.000-07:00

8:45 a.m Heavy weakness P.M. Will probably cover 1 spy sliver at 88 if it gets there.

9:20 a.m. We absolutely hate it. We stalk out and buy NVS and then it does nothing for a few days and we get out with a meagre profit. And now it gaps up 4% :-) This happened with PM too. bah! we need more patience.

1:10 p.m. Covered spy sliver short from 92.5. We have two more slivers @87.5, @90.
1:20 p.m Gold miners and PM getting smashes. And we got shaken out of SSRI short. Damn! Maybe there are phases in trading. We are probably in a lean one right now, after a fabulous run over the last month or so.

5:55 p.m Nice solid red candle with nice increasing downside breadth from monday, looks like a 3 wave of some kind. We seem to have made a top bang on our May 11th cycle turn. Next short term cycle turn is May 25th(+/-).

Now the more important question - Is the bull rally over? We are leaning towards - *not yet*. Technically, the larger term cycles don't turn until June end. More importantly, we need to see how the market handles the 20 and 50 moving averages and also April's Wave 'B' triangle consolidation(for e.g. in XLE). We are likely to see buyers turn up in that zone. The larger question in our mind is what will the bulls buy? We don't see anything attractive other than a few energy stocks, specifically natural gas stocks which is pulling back after the gusher move. Tomorrow should be the test of the 20d moving average on the SPY. The russell, tran, NDX have already failed at their 20d, which is a pointer rds further weakness. The interesting area is therefore SPX - 830 (50d). We fully believe the market will make it there in a few weeks time.

Our strategy is to short stocks that have flown up high above their 20d, e.g. AFAM. Basically, the more the separation the greater the fall. We will also start covering some SPY slivers along the way, every 25 points or so.

May 12

2009-05-12T07:31:00.000-07:00

10:30 a.m. Covered SSRI for a loss of 3%. Not still broken out, but taking no risks as we may not be at our screen. NVS looking to break out. Lets see if it can do it.

1.10 a.m. NVS seemed to be failing at the 20week resistance. Bailed out at 39 for a 2.7% profit. We covered AMZN for a 2.5% profit. Quite a few sectors are red, but the volume, TICK, VIX truly suck. So other than our SPY short slivers which we regularly pick every 25+ points, we are not in the game. It is looking very likely now that we made a short term top on our May 11th cycle date. Our next cycle turn date is May 25th, which could be short term low. We still think there is another month or two left before an solid term top is made. What sectors will lead the next bout of buying? We don't know, there are extremely few setups we can see for buying now. We may have a "dead" market for sometime, probably designed to kill option traders.

May 11

2009-05-11T09:07:00.000-07:00

12.00 a.m. We injured our shoulder this morning, so we will be out of action for the next few days sleeping and being numb most of the time :-).

2.00 p.m Quite drowsy on painkillers but nonetheless, we shorted SSRI, GDX this morning, the double top is the stop. Watching CNBC during the day is entertaining to say the least. I has been sometime now watching talking heads give their views.

6:20 P.M mild sell-off. In our brief scan AH, we don't see any clear bull setups in charts. IPSU the one we were watching (and the one which scottrade did not allow us to buy, for some strange reason) finally blasted out today. What this means is tomorrow's breadth is the key. With no apparent leaders anew, what will the bulls buy next? That being said, trash is now beginning to fall down back to earth. e.g. DRYS, CPSL etc. which had enjoyed > 100% gains are giving way.
Looking at CAT chart, could that be a small triangle in the 4th wave position? - it is definitely possible, meaning we may have another small thrust up, but it will also mean that would be the last and will fully retrace the move.

Nonetheless, this week promises to be interesting.

8:00 P.M Some possible triangle plays for a last thrust up - FMCN, AXYS, CAT, BQI (trash still going up)

Time again to short gold stocks

2009-05-10T08:50:00.001-07:00

Above is a wave count on XAU. In our eyes, the 5 waves down are clear with a triangle at the fourth, followed by a 3 wave rise, including a triangle in the b wve position. We will reshort gold/silver stocks at the double top, with a stop above the double stop. If our labelling is right we could have one hell of a ride down in the coming few weeks.

Rant (feel free to ignore):- We have been questioned quite a few times about the validity of TA and if it is really so powerful why doesn't everyone use it and therefore rendered useless. Our view of a stock price is that of a machine (or function/ stochastic process) with inputs at every time instant since its inception. The news now creates a new input for this machine and based on all the inputs thus far, the machine gives us a new output for the next instant, the stock price. A chart is a simplistic way of capturing this relationship in time. Sometimes, whatever be the input at the next time instant, given all the inputs thus far, the function can output only a few selected values. Think of it like a degree of freedom. For e.g if there has been only good news on a stock and it has soared relentlessly, the "surer" output is it is going down e.g AAPL circa 2008. What TA does is place odds on this "sure" bet. In our opinion quite a few technicians (including ourselves) try and time every small wiggle as if external factors don't matter. Of course they do, but the question is always to what extent. e.g in sep 08, when the bank bailout was not passed, the market crashed. The congress turned around immediately and passed it. It promptly crashed again. So one can think of it like the degree of freedom in this case was by how many points it was to crash. The unsure bet was by how many points. Since picking such moments of surety is quite subjective (in our opinion atleast), it is difficult to time every move. Often the best thing to do is not trade the stock and look for stocks with the right setup.

May 8

2009-05-08T07:45:00.000-07:00

10:45 a.m. Today is a potential important 45 day possible cycle top from the Mar 9th lows. Keep a look out for more clues about possible tops. On the stocks front, the last bastions "energy" are eking out gains while the higher beta nasdaq is losing it, which is expected and hence our short position in AMZN yesterday. We believe the 50d will be hit on this trip. That is when we close our short.NVS is acting sickly, we will watch for a close below the moving averages and then stop out. We don't think the market will crash back to the old low, at least not in one swoop. What is more likely in our opinion, is a lengthy 3 or more months of going nowhere and a trading range, to draw a right shoulder (look at a 20 yr chart of the transports (Our earlier post)). For now we scalp and play the ranges.

1:50 A.m (9th) We were away from our desk all day, so we did not trade today. Today finishes 45 days of a rally. The percentage of stocks above their 200d is upto 50% today. Percentage of stocks above their 50d is now 94%. The daily sentiment index (jake bernstein) is 85%. Talking heads are increasingly seeing green shoots everywhere. We have quite a few bearish signs, momentum wise. Probably the most bearish is the nasdaq not confirming the dow's breakout. The nasdaq has been the leader thus far, but as we noted it is energy which is leading this last thrust up. XLE has also tagged the 200d. We have a potential short term cycle topping 8-11th. We are not going aggressively short, we will wait for the hourly average to give way before entering a sizeable short. If indeed the market falls, the next cycle turn date is the 25th of this month.

May 7

2009-05-07T05:41:00.000-07:00

8:30 a.m News flow is getting better and better. Time to sell is getting closer. A top may form 8th-11th.

10:30 a.m. Sold 90% of PBT (6% profit). Sold off (90%) PWE@12.7 from long term portfolio. Added another sliver of SPY short. PM looks like a bull flag, so holding onto that. In tune with yesterday, nasdaq should be the leader on the downside. Will look to add small portions of qqqq short on bear flags.

11:14 a.m PM rallying amidst a sickish market. Triangle breakouts are indeed fun (and profitable :-)) to trade. But it is also worthwhile noting, triangles are usually the last consolidation phase in the thrust higher. They also retrace upto the apex of the triangle, like XLE, nasdaq etc. have just accomplished. If you find any potential triangles do let us know :-)

11.50 a.m. Terrible natgas report, and natgas rallies. We got what we wanted. Sold the rest of the 10% of UNG. We have run up 25% in a week. While this is bullish, we can count a full 5 wave from the bottom. PM looks like another long bull flag.

12.10 a.m. Sold 80% PM for a 4% profit. Rest is house money, with 5% dividend.

1:45 p.m. back from lunch, have the flood gates opened? We don't know, but the strategy SPY slivers is simple. If SPY reaches 90, we will cover a portion of our SPY short from the morning. We have a top pencilled in 8th-11th. If indeed it is the top, the cycle turns up on the 25th later this month.

2.30 p.m Shorted AMZN at 78.8. We believe this could go all the way upto the 50d MA (~75). GILD is bouncing as expected yesterday, in wave 2. We will wait and watch how far the bounce carries it before re-shorting.

5.00 P.M This past week has been the story of one commodity - the last commodity to rebound and what a way to do it -- natgas. We nailed the bottom absolutely spot on (The widowmaker), and captured a decent portion of it. The volume surge and the percentage gain surge have been superb. Today UNG closed above its 50d for the first time in almost 10 months.

We want to maintain long positions in natural gas, for the next 4-6 months. The COT reports indicate the commercials have a historic all time high net long position. We are in for the mother of all giant squeezes, through this summer.
We believe UNG has decent upside 25-30 should be doable in 5-6 months. While it can pullback somewhat since it is thoroughly overbought, any pullback we buy slivers. Look out for a scintillating July seasonal rally in natural gas.

May 6

2009-05-06T07:38:00.001-07:00

10:30 a.m PM did break out after all. Got in again @39

12:10 P.M Got into PBT into what looks like a bull flag at @9.20

1.45 p.m The mother of all tests for natgas is at hand now, 50d moving average. Accordingly, peeled off 20% of position. We only have 10% of our initial position left. We do believe there will a nice fight. Even more interesting will be the reaction tomorrow. Volume wise etc. things are very indicative of the bottom. But what is a bottom when there is no doubt about a bottom. As they say, rallies ride on skepticism and top when there is none left. We need to see how natgas handles the pullback, if at all there is one.

2.00 P.M By the way, the nasdaq has been lagging for the last week or so. This is classic sector rotation. As we said, in a post earlier, the upside in most of the NDX stocks like amzn etc. is now limited. Money is flowing into what we believe is the literally the LAST few sector where > 10% upside remains, - energy, specifically gas and gas stocks, and a few consumer stocks like PM etc. Once these are done too(and we think soon they will be), we could have a nice down leg. It is better to start hedging positions with a stable short.

4:30 P.M We were busy in the afternoon, so could not look at the tape. When even the defensive stocks are beaten down, a bear market is over (for a while atleast). This is what happened in Feb-March. Last bastions of the bull like XOM, WMT, JNJ finally succumbed and the bear market was over. This time around, exactly the opposite is true, once the last bastions of the bear market are over, the bull is dead.
In other words, we scanned a few charts last night and the number, quality of breakout patterns or charts with sufficient upside has reduced considerably. The percentage of stocks above 200d is now 40%. A massive downward correction cannot be far off. Therefore, we are also uneasy about new longs now. We will keep one eye on the door for our positions in PM, NVS, PBT which we have loaded up in the previous few days.

Keep an eye on

2009-05-05T19:47:00.000-07:00

We don't have much time this week. So a brief post about stocks to watch. This is basically a list of stocks that have not yet rallied "all that much" are look promising. We would keep them on the watch list for an explosive move. The corrections thus far in these look like long bull flag formations.

1) BPT

2) PBT

3) IPSU

4) FCEL

Will add more as we spot them

May 5

2009-05-05T08:33:00.000-07:00

11.30 a.m. Slightly busy at work today. Took 70% off the table from UNG for a 4% profit. We will wait and see if the 20d is reconquered. Stance is still bullish on the overall market. It may pullback into the high 890s or even worst case 881 (61.8% retrace of the move), but it will be a buying opp.

1.10 P.M Sold the rest of my TBT (10%). Traditionally interest rates peak in may.
1.15 P.M Covered 20% of my GILD position. Will reload higher around 46-47.

4:30 P.M Looks, smells like consolidation for another move higher. GILD could have finished wave 1 of 5 of 3. May get a small bounce, but it would be another shorting opportunity . Out of precious metal shorts from last month. Looks like a bounce is ensuing.

Possible cycle turn

2009-05-04T19:03:00.000-07:00

Please see for the periodicity of this market.

http://maybeitsclarke.blogspot.com/2009/04/week-of-truth.html

The next 45 day interval is May 8th. We could see a possible top during that time frame. We re-ran some seasonal models. Traditionally, the first 4 trading days of May have a positive bias.

May 4

2009-05-04T07:20:00.000-07:00

10:10 a.m. The theme of the spring/summer as we said earlier was upside surprises. This may be the last leg of the upswing, as we are breaking out of the last sector (in our opinion) energy. XLE is on fire and so is our LT pf of COP, BP, and other such energy names. We will start taking profits slowly now. Also adding another sliver of SPY short at 900.

12.45 P.M Sold PM from friday for a miserly 1.5% profit. The volume is too weak for a triangle breakout. Maybe we got too hasty. But we were not convinced one way or another. So we closed our position. The action in UNG is very encouraging.

2:40 P.M natural gas closed the pit session above the 20d. 50d has been the real challenge for this. But the volume is expanding and so is the size of the thrusts, looks quite promising thus far. The real test will come on the 7th - inventory day. We are hoping to have a disappointing inventory number. If natgas actually can hold onto its gains in the face of such numbers or even rally, that will be the best tell.

4.20 P.M No surprise an up day again. Just tells you the amount of shorts that had been caught on the wrong/early side and how much the doomsday psyche got ingrained into the society. The volume is indicative a waning short squeeze. We think it would be good to keep adding short slivers in SPY or other such stable index (with minimal slippage) for the counter thrust down. My astro friend traders tell me May6-7th is an important pivot day. We don't give much too much weight to astro aspects etc, but undeniably the rally is getting long in the tooth. Lets do some projections on XLE, the triangle breakout did occur, as expected. The width of the triangle is about 5$. There is about 1-2$ left on the upside left as per the projections. So there is not much left in it for a gamble. Tack on another 5% to the SPX. We get atmost 940-950, we believe that will be the maximum for this rally leg.

The risk/reward is now shifting favorably to the short side. We'll keep an eye/ear out for the sentiment. We are definitely hearing green shoots repeated increasingly. While the bears are still in denial and cries of PPT manipulation are still around, it seems like the squeeze is beginning to running out of steam. Meanwhile asian indices which have well and truly been the leaders are also beginning to tire. We could see a nice downdraft over the next couple of weeks. We'll refine our cycle model for the turn low later on after we see sure sign of a top.

May 1

2009-05-01T08:09:00.000-07:00

11.00 a.m. Covered some GILD from 47.5 @45. Will add some more higher. This bounce is working off the hourly oversold condition.

11:40 a.m. Add some short GILD at 45.35. Started a small position in UNG. We don't know if the bottom is here. We will bail if the LOD is broken. To us, it looks like accumulation is going on. For conservative traders (in natural gas it is wise to be conservative), wait for consecutive closes above 50d.

4:10 p.m We are now very overbought, so the market may have a pullback into the week of May 11th, our cycle turn (potential low). We are bullish into june. Technically, volume is waning, both on the upside and down. So the old norm of SPY 200M is a highly liquid day volume wise. It is very rough to play against the trend, the trend is up and we don't want to micromanage every turn. We find quite a few (including ourselves) traders expecting a pullback since the market is overbought and trying to time the pullback with a short position. It is much easier to buy the stock and forget until we see signs of exhaustion or excessively positive sentiment. On the commodity side, silver, gold are looking vulnerable. Natural gas had what we call a super double thrust. Two days back to back with increasing percent gains on increasing volume. It looks like accumulation is going on in natural gas. The area where this has occurred is 3.2 region. That should not be a surprise to us, given the 20 yr trendline. That being said, the test for natgas lies ahead at the 20d and more importantly the 50d.

Sentiment wise, (at the risk of being contrarian, which comes easily to one and all :-) ) we are beginning to hear analysts coming out of the closet and call for SPX 1000 or so. But there are still some doubts lingering in minds of newsletters like CNBC, WSJ and calling for the next shoe to fall etc. Stock message boards are still teeming with lots of people waiting for the big kahuna event. There are some who are caught with explosive short positions in FAZ, SKF, TZA who are brimming with cynicism. This what the rally needs to keep going. Before we reach a substantial top into which one should turn aggressively short, we will probably see the fabulous four of Summers, Geithner, Bernanke and Obama ordained for pulling us out of this recession. Think of it as follows, the more optimistic news we get, the closer this rally is to its end. As of now, people don't seem to have forgotten the crash in sept-oct 08 and are still ginger about it. Maybe it really takes a coppockian 11 months for another crash, a wave 3-of-3-of-C(3?). If and when that happens, that will be a bigger crash than the crash of sep 08.

apr 30

2009-04-30T05:41:00.000-07:00

8:40 a.m bsy cracked the triangle upwards. PM(phillip morris) chart looks good too.

10:10 a.m. DIS flying as noted yesterday. No position on it though. Have small positions in PM & NVS.

10:50 a.m URRE hit 1.60. 100% within 3 days. Too bad, we sold 90% way too early at 1.07. Holding the rest since that is kind of free stock, since our capital (and some) is back in our pocket.

11.00 a.m. GILD has all the marking of a wave 3 of wave 3 down. So does SLV and GLD.

1:50 a.m. GILD can't catch a BID. That is how a 3rd wave should look. In the next few days/weeks we expect GILD to sport a nice gap down below 44, completing a head n shoulder. We are in the green on GILD now. The MA stars are also looking like aligning very soon. We lowered our buy loss accordingly (47, from 48 close). Sometimes the markets seem very wicked to us - despite the overarching hype of flu and blowout earnings, GILD is going down.

6:37 P.M We opened small trades in NVS and PM today. We will bail on a closing break of the moving averages. The market is overbought and can correct a bit. Our cycle turn points to a low during the week of May 11th. So maybe that is what is occurring. DIS made a nice run today towards its 200d. We believe the SPX can run towards 950-1000 in the coming weeks. The intermediate cycles don't turn until late june. We will then look aggressively for the short side. As of now, we are happy scalping here n there. GILD has finished a complete 5 wave down on the hourly scale. So it may get a temporary respite for a day or two (probably upto 47 or so). It should not cross the highs of two days prior. For bears, this will be a yummy shorting opportunity as the 3 of 3 (hourly) is coming up very soon on GILD. We should see the 44 shelf break down on that move.

Drugs are good

2009-04-29T19:25:00.000-07:00

Above is a monthly and a daily chart of novartis (NVS). We believe novartis is in the early stages of a nice rally for the next few months, upto 45-50 or so.

Lets look at our arguments for it.

Daily chart :

1) NVS just broke a down trend line from 5 months on decent volume surge.

2) Daily moving averages stars (pps>5>20>50) are aligned alright, making a case for the rally upto the 200d.

3) Our preferred EW labelling has us in the wave 3 stage of the C corrective wave.

Monthly chart:

1) NVS made its all time high in 2006, and as per our preferred our ew labelling has finished a huge corrective wave of A

2) The bottom in march (~33) was in the area of the previous 4th wave triangle as well as a bounce of the 200 month moving average.

3) The monthly stochs are turning up, the weekly macd has crossed over.

All in one, things looks good here for NVS. We would buy it with a daily close stop below the daily average neckties (say a break of 36). The target is around 45-50 in a month or two. Risk/Reward wise the trade is set up very nicely indeed.

BTW, the company seems to have a stable dividend of > 4%.

Apr 29

2009-04-29T07:49:00.000-07:00

10:45 a.m Looks like XLE is breaking out of the triangle and SPY is rallying. Keep an eye on UNG for a cross above 20d & 50d. We may have /are in a bottoming process in natural gas. What more, we have bounced exactly of the 20 year trendline at 3.19 (see our post a few days ago on this). Sometimes, it feels incredible that the market knows and respects a 20 yr trendline. As for the markets, could we see 900? Sure. We use a hedged play, we added some XLE again on the breakout of the triangle. We will keep adding SPY shorts every 25+ points or so.

11:24 a.m. sold 90% of our URRE(@ 1.07) bought at 0.63, which we bought a while back now (2 months? - sometime in Dec-Jan)

11:55 a.m. Out of ERX & XLE from the morning for small 3% & 0.75% profits respectively. Double top region, yes we can blow through, but it also attracts sellers. So, yes we can (scalp). Also, we don't have the balls to hold through the FOMC announcement.

12.20 a.m. Looks like another long bull flag.

Feel free to ignore:
WSJ & CNBC had an article saying h0w the rally was fake and things are going to worse etc. Again, at the risk of playing contrarian (which comes easily to us all :-)), in 2008 May, they were saying it is a correction in a bull market, now they are at the other end of the spectrum and the newsletters don't believe this rally. This rally has defied all the bear logic thus far - ascending wedges, various trendlines at various angles, moving averages, low volume, turndates, cycle dates. Such skepticism is probably healthy for the rally to continue. Lots of technical charters (ourself included) have drawn in an ascending wedge and were looking a nice fall to get in. Too many shorts got caught on the silent run from 666 (remember we strongly hinted towards a no-capitulation style rally). Being a bear is still in vogue. DSI (bernstein's) daily sentiment index is buzzing at 60%. So, there is still some room on the upside sentiment wise (according to us ofcourse).

2:26 p.m Sold 90% TBT from the purchase 2 weeks back (we did a post about this) for a 10% profit.

6.00 P.M XLE has proved to be very indicative of the market action. We suspected a rally breakout and that is what we got. The action today in XLE broke above the triangle. We may have a pullback no doubt, but that will be a buying opportunity as long as 842 holds on the SPX. We'll continue to scalp watching the hourly moving averages. We are quite overbought short term so a pullback can ensue anytime. As long as 842 (the low) on monday holds, this market will rally.

Lets look at DIS (disney) as a random stock pick. This broke out of a sideways month long consolidation. The bears would have possibly played this as a possible Head n shoulders. We fully believe DIS can make it to the 24 region (the 200d) MA in the coming weeks. This is classic sector rotation in progress. Some of the tech stocks which have already run a long way will probably go down little or chop around (e.g. AAPL, AMZN), while relative laggards thus far (for e.g. DIS) can run.