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.
Thursday, May 7, 2009
Wednesday, May 6, 2009
May 6
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.
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.
Tuesday, May 5, 2009
Keep an eye on
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
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.
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.
Monday, May 4, 2009
Possible cycle turn
Please see for the periodicity of this market.
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
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.
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.
Friday, May 1, 2009
May 1
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.
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.
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