Erik's Market Blog

$USD updates

2010-01-05T03:11:00.000-05:00

This short pullback looks very close to done here........and the longer term trend looks to resume back upwards for the next 6-12 months.

Here is a link to my past 4 posts on the $USD

http://erikmarketview.blogspot.com/2009/12/usd-trend-change-when-will-it-start.html

...see the Weekly chart for 6-12 month TIME (not price) target of $USD up cycle. Yes, I think the $USD, will RISE for the next 6-12 months, or untill it changes it's current channell on the weekly chart.

Kenny beat me to posting the bull flag its forming here on the daily, so here it is:

http://kennystechnicalanalysisblog.blogspot.com/2010/01/market-conversation-for-january-5-2010.html

Looking at the IYR

2010-01-04T19:08:00.002-05:00

One day into the first 2010 week, and although so far wrong on the broad market 1/5 into the week, have been on the right side of the trade. (sector) SRS was another gimme trade on its gapdown...see comments on link for rationale.

http://erikmarketview.blogspot.com/2009/12/tightroap-walking-week.html

Notes on IYR charts, fwiw

Disclosure: Long SRS @7.31
(target IYR 44.20-take majority profits, stops moved to break even)

Issue Advance : Volume Advance

2009-12-31T15:18:00.003-05:00

woah, put your eye protection on. This one is wound up

Climbing the wall: GOOG

2009-12-31T02:21:00.000-05:00

Preparing for the Tax avoidance Trade (ie the early Jan sell off)

2009-12-29T02:53:00.003-05:00

There is no santa rally
There is no extra juice on the "end of year window dressing"

You want to know why the SPY has been up 27 of the past 29 Decembers in which the spy was up for that given year??? TAXES. B/C people prefer to avoid them for 12 months and roll them over whenever possible. (they dont sell in Dec, unless they HAVE TO....its human nature to avoid giving money away till when you have too, especially if there is no interest on it). Also pull up the chart and see how many of those 27 years we had a bullish START to Jan (its less than half, with an even stronger trend in the last few years, why??? my theory again, more people trade their own ports now than ever before. And i expect in its alot more than even last year, right Bernie)

I am ready..........for the New Year correction...I expect the first 1-2 weeks of Jan to be bearish.

finger on some SRS 7 calls......(plan to purchase at the very END of this trading week)

The fact is many more people trade their own account now, than they ever did before.
(and rightfully so Bernie...)

If Joe 6 pack is up big in 2009, (which he is) do you think he really wants to pay taxes on all of it right now?
.......OR............do you think he prefers to DELAY that nuissance by 12 months by simply waiting till AFTER the new years to sell a few shares. I strongly guess the later.

USD trend change: When will it start dragging down the market?

2009-12-16T23:07:00.002-05:00

$USD looks to be headed UP for the next many MONTHS (6-12 months is my time target for the trend), as I mentioned last week. Observe a weekly chart.

USD weekly breakout 11 Dec 09

But unless one is a currency trader, as HUGE as a key the USD is, it's not everything....
The USD is well off its 74.23 bottom, yet the market is still at it's highs. I also mentioned 2 weeks ago, that I suspect a rising USD will NOT put a damper on the stock market for the next couple weeks, due to it rolling into the Holiday anemic volume season here.

USD watch 6 Dec 09

I stick by my calls, that the dollar is headed up for the next several months, as well as the stock market will not sell off bigtime till 4 Jan 2009.

- In regards to the USD, I mean the rubber band for now has popped. What more do they expect out of FOMC to get another dollar drop? These FOMC meetings, they have been telling us what they plan to do BEFORE the meetings. The meeting results are no "surprises" really here. They say 0 rate is the plan, and its working for now, etc etc.

My point is, Tonight's futures, the USD is on rocking tonight, up .43 as a i type this. So the reaction from FOMC is dollar goes UP. Now, what else COULD they of really said, that would of made it dollar bearish today? Short of "we will never ever ever increase rates, for 500 years!"...short of something "made up" like that, it just seems fully baked in here. Again, imo the 74.23 was a USD BOTTOM, for the next likely year ahead.

Yet i don't think the market "cracks" tommorow, even if the USD picks up more momentum tonight. Its expo week, then the next 2 weeks are lower volume, due to holidays, etc.

-Much more people today are managing and trading their own accounts than just a few years ago. It is my opinion of that. (no studies performed). It's also my opinion, and speculation that after the brutal 2008, the investors that manage their own accounts, and after having a great + year in 2009 they will choose to DELAY paying any income tax by 365 days, by simply waiting till after 1 jan to sell any stocks that were profitable in 2009.

-That's my theory of why historically DEC is the most bullish month there is. No one wants to sell and pay tax, if they delay it by 12 months (up years, retail pulls the train). Then in the down years, when some people might want to sell in dec, to get capital loss and get tax benefit like 2008, the fed steps in, and since its holiday volume it's easier for them. (down years, the ppt pulls the train). Take alook at the dollar chart in Dec 2008. It's surprising the market was not up 15% for the month with that!!!!! So that's just why I think Dec are so historically bullish, fwiw.

The market does feel very heavy, likes its about to puke it up, it does, anyone can see/feel that. I agree 100% with the "Bernake: time magazine" indicator. Good quick read here, how TIME magazine has been the best contrarian market signal for a little while now.

Man of the year: Time magazine = Kiss of Death

I stick to my thesis, that holidays=anemic volume
anemic volume=more bullish friendly.

If they keep this act up, (which i hope they do)...will be looking to get short heavy right at the close on 1 Jan 09
(friday's are also bullish freindly, and last year, i recall 1 Jan was a big up day, i just recall Dennis Kneale saying he would "dance a jig, if we broke 9000 or something", and every was talking about the great year ahead. Remember last time, that the financials and reits were the 2 sectors that had HUGE spikes before the p3 crash.

disclosure: long exm, into years end, with finger on abort/sell button

Looking at the REITS

2009-12-13T14:16:00.025-05:00

via SPY, IYR, and the 4 highest % reit stocks of the IYR etf

Thoughts:   SPG looks way ahead of itself in relation it's sector
                     (not saying it has already topped here).
                        - does that mean it is a leading indicator
                           and the rest will follow?
                        OR
                        - it is just far ahead of itself, and more likely
                          to come down harder than others at the next
                          downmove?

(I think the later, as it also dropped the most in 08-early09,
    meaning its the higher beta. Trying put more emphasis on IYR
   to watch, than 1 individual stock)

IYR looks like it may want to tag 48.57 (61.8% fib)

Dollar Weekly (update: breakout confirmed)

2009-12-12T21:40:00.004-05:00

http://erikmarketview.blogspot.com/2009/12/watch-that-dollar-weekly.html

Well, There she goes. Looks like time to buy the dips now
(dollar dips that is)

It broke out clean, on the WEEKLY as of Friday (intermediate term direction now appears UP)

Personally, I am looking for a pullback on the daily chart (short term), to enter some inverse dollar swing trades.
- even the weekly chart now can pull back some and still land above prior resistance as new found support.

Not thinking to attempting to pinpoint estimate/guess the height or length of this move, however looking at the USD weekly chart and its past trends and durations for the past 20 years. (39mo, 36 mo, 18mo, 14mo)

Even the monthly chart is bouncing where the support level is.
From a technical perspective, the USD looks as 74.23 was a solid intermediate bottom, and the trend is now up till the chart says it's not. (for the next 6-12 months)

disclosure: long exm into years end

GOOG (patience)...............

2009-12-10T18:31:00.004-05:00

http://erikmarketview.blogspot.com/2009/08/goog-i-will-be-waiting-for-you-when.html

not yet....................................................
but its getting very close, so I mention the set up again, which is......

Waiting for the weekly rsi / macd trend breakdown for short signal.

Update from my original post (above)

disclosure: long exm

Watch that Dollar (weekly)

2009-12-06T17:02:00.005-05:00

Remember a weekly chart ALWAYS trumps a daily.

Friday's usd move was a monster
- the daily chart looks like a breakout
- however the weekly is right at major resistance now

I would like to see it pull back and consolidate, to then look to go short names like FCX
(which trade almost totally inverse to the dollar)

I still believe that in Dec the market will "float" higher due to the anemic volume.
stocks like goog, amzn, aapl with less correlation to the dollar to lead the way. Even though the dollar was strong Friday, the market however was up. With the NASDAQ leading the way. (makes sense, again as it is the lowest USD correlation, yet commodity stocks, such as FCX were hammered)

Bottom line: I am watching the USD weekly chart to break out of its rsi channel before a trend change to be confirmed.

- also, with the low holiday volume, I would not be surprised to see stocks stay afloat and strong even WITH a confirmed USD reversal.

- If so, will wait to after the USD weekly breakout AND after Jan 1st to short this casino.

Disclosure: 100% cash

Follow the Leader, wait who is the leader?

2009-12-02T20:02:00.006-05:00

............your guess is as good as mine which that is......

sometimes I do have a pretty good track on who is running in front.

http://erikmarketview.blogspot.com/2009/10/index-comparing-watch-dow-ndxtran-have.html

So the dow continues to have the lead torch, till it doesn't. However, the amount of time between tops and the expanding differance in the tops has grown fairly larger (ie look at the RUT!). So if i was to lean bullish, i would lean more on the RUT if i did. The divergance is pretty large now, and its chart pattern is actually set up much better than lets say the TRAN (which is in pure wait and see mode for breakout or triple top)

...but that's IF i was trading it long, which im not.

but here now, it looks dark as mud
market just looks undecisive here.....short term.

I still favor the bulls until the 2009 clock is ticking, per my below posts rationale...

.....not trading w/ em though....

random: Windows 7 is a step up and them some from the that vista

Cant stop the dollar drop

2009-11-30T20:28:00.006-05:00

see below chart, for a technical STRONG signal of something to look for when a bottom and reversal are CONFIRMED. Until that line gets broke, there are sharks in the water.

maybe it reverses tomorrow? (i have not a clue, however i doubt it)
- which is why I will just sit and wait for it reverse and confirm prior.

Take a look at the USD performance last DEC, they tanked it hard. Worst month for the USD for the year in 2008. (no wonder dec 08 was mildly bullish huh?)

Too scary and high in the clouds to go long here.
No reason to short the market going into the holidays, the chances are NOT favorable.
- besides all the window, eoy theories...a known fact is that Holidays=anemic volume
- another known fact is anemic volume = bullish (in case you haven't noticed the past 10 months)

Ideally, to me the best swing trade plan/scenario is float and grind higher all the way up into years end, then buy vix calls on the last day of the year. The anemic volume can bring the vix lower than it intends to be. Perhaps im bias, because last year the vix calls when 400% in a week to start the new year.

I don't see the market falling too much until 2010 get's here, imo. Mainly due to the closer we get to 2010, and the holidays the lower the volume......

EDIT (add): here is a little historical data on December
Is is sell in May and go away.....or Buy in October and get yourself sober?

http://www.bespokeinvest.com/bespoke/2009/11/whats-in-store-for-december.html

The continuing watch for the USD intermediate to major bottom/reversal signal.

2009-11-22T13:47:00.007-05:00

The blue line annotated to be broken/taken out, is the only ticket I see.

Index Comparing: Watch the DOW (ndx/tran have passed the torch)

2009-10-30T21:03:00.009-04:00

the direction short term is DOWN.
(edit: intermediate term)

I was not expecting a Friday to be like that. I had said I think the GDP will be a sell the news event weeks ago, and elaborated 2 posts ago, in that the euphoric climax celebration will in term cause a great tradable market top.

Of course GS uses its will to make the same trade occur just the way they want it, extracting even more juice...

If you look back since March, you can see for yourself that the few and far between larger down days we have had, they are never on a Friday. (well until now!). I have begin a strong feeling that this is intentional for the "feel-good weekend" comfort to suck more money in the market.

Again, this is my opinion. However, with the exception of today, look back and see what most Friday's looked like for the past 8 months.

Without going too deep, we sold off more "after the event" than we rallied "off the event".
That alone is a pretty strong sign of what the direction is. (and remember, the event was mostly a gs induced short squeeze itself!!)

But does one CHASE this short right here? I had fully expected the market to WANT to go down today, yet i "thought" the ppt would do all they can to keep the "GDP fever" fresh in the mom n pops all weekend long to sip on and celebrate, as their was quite distribution today.

Again, if gs had not set that estimated "fear" number of 2.7, then we probably would of ended the week on about the same level, but the route getting there (ie wed/thurs/friday) would not have appeared as dramatic.

Bottom line is that the "2nd half recovery" that everyone has been talking about for over a YEAR now has occurred, and is now past tense. Earnings are also now getting into 2nd tier stocks.

the dollar, and economic data should rule here. So next week will be very telling w/ FOMC and unemployment.

my hunch is that 9.9 would not cause a sell off
but the psychological 10.0 level would however

FOMC, no clue, but the first reaction (ie 5 min bar) immediate after is usually the direction for the rest of that entire day...almost like an earnings reaction w/o the anemic ah volume to sort through.

technically, we (short term) look like we are due a bounce.

Daneric's last short term chart very feasable to to me. (bouce to 1060ish area, then call the life alert)

http://danericselliottwaves.blogspot.com/2009/10/bears-eager-to-jump-on-hold-on-sec.html

I actually bought a few DIA 98 calls at the close, yep diamonds..... (only looking to hold the first few days of next week). And I might be trying to get too cute w/ that. It was only a few. IF we get a bounce early next week, I will then cash out of them and then trade heavily w/ spy puts. But i want to see a bounce first. Just cant chase it short after today.

I really wanted to buy some CLNE calls at the close, I just hate those nickle/dime spreads.
...why CLNE?? Nothing extremely specific about it, however they do not report till 9 Nov, and "MOST" stocks do not crack before earnings. Basically any stock that reports in the next 10 trading days or so. (ideally more like 5) would be a safer long for a short term trade into next week. That way if you do NOT have the market direction correct, you still have the pre-earnings sentiment protection which is rarely more bearish than the broad market itself.

In regards to T/A, I have 1 observation (see chart)
Since the March lows, the NDX, along w/ TRAN have been the strongest indexes.
I mention this several times, that the NDX was also the ONLY index that made a higher low in March 09 (as compared to Nov 08). It is the leader, period. And when the NDX decides to pass off the leader torch, then the rally is likely over.

Do you remember that "Head and Shoulders" a couple months ago, you know the one that people in the barber shop were even talking about. The same one the spy, and especially the weak INDU had signaled. Yet that turned out to be one of the best intermediate term BUY signals in a long long time. ? Just food for thought here, but you can see the NDX actually never signaled, it landed smack dab on support.

The point being, if you LOOK for bullish or bearish signals, you can not use the weakest index only to look for bear signals OR the strongest index only to look for bull signals.

The NDX has been the best performing index since March
The INDU has been the worst performing index since March
....yet just a few days ago, they painted the dow's close, remember?

the INDU lagged the entire move up. Once could of been long the QQQQ and short the DIA as a pair trade and been lovin it since march, with very very little risk.
Now looking back in backazmith, what index is the LEAST off its highs? - the INDU

at any rate, the line in the sand to me is the INDU trend line that it closed immediately above. This looks identical to the NDX scenario head and shoulders trap. (at that time the NDX was the leader). Now, the leader is the INDU!! (well not actually a leader, just the least weak, or most propped. Hey, "dow 10,000 is catchy", ya want the retail to have that vision out there to sucker em in)

Looking for an early week bounce (led by the dow to tease the 10,000 level again)
....then another entry to short the spy (from around 1060). Just how im playing it.

3rd QTR Recovery "CONFIRMED"

2009-10-29T23:03:00.003-04:00

Well its official now, USA is back to growth.
Yippie!

Haven't been posting much, and this will be short as well. Busy in transition.

GS controlled that one as well.
Lowering the bar the day prior, then CNBC announces how "ironic" they have been on point of late and they "better not be" this time.
GS didn't think GDP would be 2.7, GS did that b/c they traded that both ways. (short wed, then switched to long 1 min before the close)...GS made that call b/c they were trading the same news they produced. (imo)

I was actually short spy Mon-Wed, Once I saw they were NOT ramping up the market into the gdp, starting Monday, which i suspected they would I got short. Once i saw gs revise the est down the day PRIOR, after 4 consecitive red days..... it smelled way too fishy, so I went back into cash yesterday, and was wary of the pop today. (didn't play it long)

I had assumed it would be a buy the hype, sell the news. However since the market was in pullback mode, gs just simply extended it into a short the news, cover the event scenario, as they rocked the house both ways on this one. It was beutifull too how they operate. Within 3 minutes after their "revised" numbers, CNBC made sure to broadcast how very accurate they have been with these calls. The market would of probably been GREEN on wed, if gs had said nothing. Just as the market would of been probably flat today, as well. But hey, there is alot more money to be made by whipsawing it and frontrunning the same calls your making.

Will be going back in short Friday (tommorow) at the close, more than likely.
If you look back at the performace of Friday's since March, you can see it has the highest percentage of up days. And of all the larger down days we have had over the past few months, (-2oo) type. I don't believe any have happened on a Friday. (i dont have all this written down...so do your own dd). However, I have noticed that Friday's lean bullish on the most consistant basis.

Next week we have FOMC and unemployment. FOMC's historically are common pivot days, and recall the last FOMC, it was no different. Everyone one and their mother expects rates to stay at zero and it to be assured they will for a long time. Hence anything LESS than this, imo will cause a dollar rally. Again, remember the last FOMC, that's when the dollar started to show life, and the SPX moved from 1080 to 1019.

yea, the DOW is back within an earmark of the 10k level again. (great mom/pop headline catcher)...but look at the RUT and the NDX, they are no where near their tops. The NDX is the major leading index too.

I think Friday will be a small UP day....1080 tops (small: after a large move it then tends to be consolidation and UP b/c of Friday's history), then starting Monday we to resume the larger short term trend back down and revisit 1042 or 1019.

Earnings vrs GDP "hype" magnet. + a look back at the 2007 "top"

2009-10-06T22:35:00.007-04:00

seems as if someone has rattled the market's cage here (october)
...as in the moves we are getting here are swing friendly, ie BIG (finally....!)

It was mentioned to me, that in regards to my postings, that I utilize information (perhaps too much) from others free insight.
- well i sure hope that i do! as that is what it is for...if i was better than everyone else at predicting the market, i would not read anyone else. (which is why i do, b/c im not. That's the whole purpose of blogging/message boards, isn't it?)

example, waxie was very emphatic that this post window dressing was a high probability sell off, and I shared that view. Market dropped 240pts the first day of oct. (thank ya $$)

then ya read some retail message boards and some are surprised the market went up even on Monday??? why? we had a huge sell off thurs/fri, that WAS the "post-window dressing" that was it, came and went. it's over. was very nice tho, (even tho it was short lived)...if using front month options. Short bounces / Buy dips (not chase)

that is what blogs are for, (at least to me they are)...after reading enough of them you can notice WHAT certain peoples strengths and weakness are. In regards to if there will or will not be a window dressing pre or post, or a santa rally....waxie is the best for that, hands down. imo

in regards to short term cycles and turning points, to me...inthemoneystocks has been by far the most on point (they are calling for a short term reversal of trend to the down side starting tommorow fyi)

in regards to interpreting news and how it will affect a stock...johnwelschphd is my fav source

in regards to awareness of extrinsic factors that I at times forget about (beyond charts)..i read kliguy38's blog

Tommorow, based on daily CPCE there is a 68% chance the market is RED (ie...read Cobra's blog to the right)

etc, etc...list goes on and on....

all input it compiled and used as adjunts to mine to form a gameplan.

just as important to notice what certain traders SUCK at, hence to not use that information. (again...everyone has strength's and weakness)

at any rate, as far as the market....post window dressing was great thus/fri, got in short wed at close, rang the register mid day friday......

went back short today at the open, (ouch) yet my P/L is actually flat. (great feeling after a big up day)
- short cme and goog (offset each other today)

I think that wed/thurs are down, and friday is flat, and monday is down
yep....that's my call, as deviated from all beneficial sources.

Friday's have not been deep red in a LONG time (market wants people to "feel good" for the weekend to spend more money?)

Monday's have been large moves, both ways, next is due down. (if we do happen to sell off hard to end this week tho, i then wont bet on it though)

my gut is mixed on time intervals, but it tells me:

Short Term: pull back over next 4 trading days (till end of monday only, but spx 1000 will hold short term)

Intermediate term: I have a strange (yet stong) feeling that the "announcement of 3rd qtr GDP" is perhaps "THE" BULLISH magnet that we are being pulled upward by. A major buy the hype, sell the news such event. What phrase have you heard on the financial news media more than "second half recovery", ya haven't. It's been pumped to the hills. I have NO IDEA, nor will i even begin to speculate how it will go down. However, if it goes down in a specific way, just as the close of Sept 30 (window dress final)..i will trade it heavy. That is this.
- imo, we are rallying INTO the announcement of 3rd qtr GDP. It should be positive, and i have a hunch that IF we rally hard the days leading up to it, that it very well might be one of the best "sell the news" short terms trades, since...ohhhh 1 oct. The bulls (bernake, cramer, maybe even Obama)...can then say "see you stupid bears, its confirmed now, we won". Which will then create a sentiment so lopsided that it can not go anymore, b/c its full tilt.

A classic buy the hype, short the news trade set up Oct 29th

http://www.bea.gov/newsreleases/news_release_sort_national.htm

- my plan: Sure Not going to put the cart infront of the horse, as it's conditional... IF we rally the preceeding days before GDP, and when it is announced as "positive", IF the market flattens or leans down, immediatly after it's initial impulse on that announcement...I will short it with 2 fists (so its conditional on the set up). And i will likely only play that for 2 days only, but heavy, again IF it sets up.

Long term: bear market

Disclosure: (short till monday's close, stop is if the spx looks like it will CLOSE > 1050)
goog nov 470 puts (11.20)
cme oct 280 puts (5.00)

Note: the reason such a super tight stop, if we do not pull back right here starting Wed,..then to me maybe it's voodoo but this looks alot like the 2007 "top" right before p1, which we had a lower high, lower low, as it looked like trend was reversed, then we had one last large spasm breakout up, before the fat lady sang. (if they do happen to take out spx 1050 on a CLOSE, i think we could and perhaps WILL make new highs in a blow off top). There is No reason it should look like 07, however, I am wary/cautious that it might. Another thing, "time frame" wise, that could very well if the pattern repeats itself be again the 3rd qtr GDP top theory, which preliminary is 29 Oct (bulls cigar smoking party lol), so that coincides also.

I think we pull back here for a few days..........but that's what having plans/stops are for.

Window Dressing

2009-09-22T22:04:00.005-04:00

could be whats holding the market up here ??
..........well that and the ever crumbling USD!

- preface what I am saying by first making it aware that I am NOT watching tape every 10 minutes of the day intraday currently.
Nor am I trading it currently. Just doing market watching at the end of each day, looking at the longer term trends.

See all the top callers are lining up to get sliced one by one, yet still.

- remember Doug Kass, the one that got "all the fame" for calling the bottom to a T.
,well he has been calling for large down moves and yes a "top" since about spx 900!!!!
That is no knock on Kass. The point is simply........

Ya know how it goes: The market can stay irrational, longer than you can stay solvent.

Take home message: calling and trying to TRADE tops and bottoms is a fools game.
-better to miss the "turn" yet get all the meat and potatoes, than to pass it up, by "trying" to be cute and catch it. etc. I myself don't always abide by all my own rules 100% of the time. But that doesn't mean it's the "right" thing to do.

This current "short dollar / Long commodities" is about the most lopsided trade we might have seen here, since ohhhhh "short the financials right after LEH". Dunno, but I have to agree w/ Waxie, that come the very start of OCT we are likely to see a monster short squeeze in the dollar, come POST window dressing.

Today, USD was down 1%, yet market was only up .5%.
That is not bullish/healthy. I mean the correlation was only 1:2, that's not good.
That means the buy h hold american investor LOST wealth today being long. *yes lost*

That being said, it sure does NOT mean its time to short the market yet however.
Heck I have NO CLUE....

Daytraders, gap-faders, scalpers, news based intraday traders should continue to crush the market w/ good discipline.

Swing traders: well for myself, no clue. Way to over-extended to go long, yet NOT enough conformation to go short. If we have a few more days like today (relative weakness. ie spy/usd) etc, and push even higher, then on OCT 1st (post window dressing)...I will look to take an another entry swing to the short side. But that's conditional on how it plays out from now till then also.

Weekly momo stocks charts fwiw
- goog
- gs
- fcx

Defeat the Debt.com

2009-09-15T00:08:00.001-04:00

interesting

And the bulls go marching on.....+ (GOOG update)

2009-09-14T23:12:00.008-04:00

Trying to time this market on a short term swing (overnight) basis is beyond my imagination.

...
- all you intra-day scalpers, and news based 20 min duration traders, ya should continue to crush it.

That's the only way here to rock it consistantly, cash in and OUT before the end of the day. (or at least that is what I observe from reading numerous traders and observing the trend that ONLY that group is in the high percentage zone)
........
Hopefully my PCU oct puts (which I do still like alot) will make up for the qqqq sept's (which have rapidly evaporated into thin air)

- the fact that Copper is failing to make new highs while the market did, and the USD made new

lows, is to me a sign that copper is trading very heavily)
.............
Here is an update on GOOG as posted before, still "waiting".....no signal.
- which will most likely be the next trade I do make, when it finally comes.

http://erikmarketview.blogspot.com/2009/08/goog-i-will-be-waiting-for-you-when.html

Copper looks very toppy

2009-09-09T02:00:00.005-04:00

My call: PCU will be trading at 23.00 within 4 weeks.

(don't follow me on this trade, do all your own dd X 10, b/c its a nasty market. But I have to go w/ my gut and the charts on this one)

.........

Disclosure: qqqq sep 39 puts @ .31

+ buying pcu oct 25 puts in the AM

Watch the $TRAN this coming week. (edit)

2009-09-06T19:47:00.007-04:00

All Candlesticks compared.
It appears to hold the key here, for the immediate short term.

(IF) we push higher, it will be the likely first to break out.

I think that we are going to pullback to the short term support lines of all these this coming week. However I will watch the $TRAN for a leading breakout short term.

best of luck, enjoy Labor day.......

Disclosure: qqqq sep 39 puts @ .31

edit: new chart, had the ndx on logarithmic and others at linear

(all are now set at linear)

The Major lines in the sand ($NDX)

2009-09-06T13:45:00.008-04:00

My last post is just that "speculative", I am not saying the market is going to follow that pattern over the next several months.
(although would not be shocked if it did)

I do strongly believe that the $NDX (NOT the comp, rut, indu, tran, spx) is the clear market leader for many reasons. (2 links below w/ rationale as to why)

- the spx head and shoulders "failed" break down was also a simultaneous clear BUY signal for
the NDX
- the ndx was the ONLY index that made a higher low in March 09, compared to Nov 08
- the ndx is the only index ALREADY back at "pre-lehman" levels here

http://erikmarketview.blogspot.com/2009/09/closer-look-at-leader-ndx-and-why-last.html

http://erikmarketview.blogspot.com/2009/07/nasdaq-100-ndx-gets-no-respect.html

I am short the NDX (via QQQQ) here into major confluence of resistance, for a short term trade
(target of 1595):
(chart above, as it has the cleanest support/resistance lines compared to other indexes)

- IF the NDX can break 1668.57, the next resistance up is at 1790
- IF the NDX can break 1790, the next lines appears to be not till 1995
- IF the NDX can break 1995, it looks to be destined for 2055.82

And those are the key levels I am watching to see the duration, and magnitude of this rally. The NDX performance as the leading index has proved itself over and over again all the way since from the bottom.

Shall see, I have no CLUE where the market will be in 2,6,12 months. My gut says lower
The only thing I can do, is play the chart, by scalping at key levels, with pre-defined stops, for quick swing trades.

The bearish "speculative" head n shoulders play-out for 2009-10

2009-09-05T19:55:00.009-04:00

...continuation from last post. Cleaner chart.

- Fall from here to 880-920est over Sept to early Oct establishing the neckline on right, as the volume returns to the market and the manipulation takes a vacation (1 of p3)

- bounce to 960est, kick-started first by the "positive gdp of the 3rd qtr, announced in late Oct" and then lastly maintained by the seasonal anemic Dec holiday volume, establishing the complete right shoulder (2 of p3)

- the crash......starting in Jan 2010, and the "hype of the 3rd qtr recovery is now past tense, as well as the holiday anemic volume, collapsing through the main right shoulder

(3 of P3)

Disclosure: QQQQ sept 39 puts @ 0.31

A closer look at the Leader ($NDX) and why the last head n shoulders went wrong.

2009-09-05T18:12:00.008-04:00

My Thoughts on why the $NDX is the real leader (link)

http://erikmarketview.blogspot.com/2009/07/nasdaq-100-ndx-gets-no-respect.html

.........
Why did that Head n Shoulders fail back in June..????

Besides "too many people were looking at it".....

................

- The last head n shoulders failed, b/c it was ONLY the spx (well the INDU too)

However, not the NDX (which is the leader) (see large chart)

- The same reason the Nasdaq had given an EWT signal that P1 was over, and that P2 was

underway WELL before the spx had. (which dano called back well before the spx rule

violation)

................

Lesson Learned:

- When noticing a bullish signal, ensure the weakest of index's is also forming it as well

- When noticing a bearish signal, ensure the strongest of index's is also forming it as well

..............

On a side note, It's tempting to speculate here, that in addition to this possibly forming out a short term head and shoulders right now, we may also being forming a larger head and shoulders (with the failed spx mini that occurred in June...being the left shoulder, and right now being the head) That would also fit it the scenario of many EWT's who say P3 is underway. If this is wave 1 of p3, then wave 2 of P3 would be the formation of the right shoulder, with 3 of p3 being the break of the neck line running from June. (hmmmmmm)

...................

At any rate, I am short as of the close Friday, with target being the current neck-line: ie NDX 1595ish (one thing at a time)

...............

Disclosure: QQQQ Sept 39 puts @ .31

The head n shoulders part 2 marches on....

2009-09-03T20:15:00.009-04:00

............

spare the love (hate) goldbugs, I don't wanna hear it. That's WHY i sold all my DZZ (and EEV) on Monday. (and w/ profits too....for the DZZ portion it was almost even enough to to fill up my gas tank once, after the commission fees). I feel bad for anyone who was short gold after Monday. When things don't feel "right" at all....how does the saying go? "when in doubt, stay out"

Well, It saved by butt this time, by abiding by it. No reason to "fall in love" with a trade if your sentiment decreases while the trade hovers at nuetral.

http://erikmarketview.blogspot.com/2009/08/twilight-zone-bear-etf-crack-down.html

That is exactly why I went in all cash.

Again, what i would "like" to see, is a pump job up on anemic volume tomorrow from some fabricated jobs numbers. That would be awesome. (if we got that, I would strongly think of buying some puts before the close, actually I know I would, on the market, not gold)

........
-BLK puts to be specific, is one that I am looking at very closely and if it moves up tomorrow AM, I will be buying puts on it for a short swing. (unlike the intact spy wedge from 666, blk juuuust broke from its own) . I think BLK is as overvalued as they get. However I also thought sbux was overvalued 25% ago, and I still do. So i could be dead wrong. (that's what i get for gaming earnings) But if we get a pumpty pump tommorow, blk puts are getting some of my attention.

Hopefully, after this holiday weekend ahead of us, the SEASONAL volume starts to increase as it typically does for September, thus making it more difficult to manipulate the markets, and the 20 min prior to close "pump jobs", wont be as effective. But again, that's just bearish speculation. The main point is that more volume makes it easier to identify trends, be it in either direction and LESS prone to drastic moves by 1-2 players.

VIX leads, Gold follows

2009-09-03T07:45:00.003-04:00

Breakouts: Tue....Wed

SPX: Looks time for a retracement move back up here is due to correct some of the down move from this week

VIX: has still plenty of room to digest its breakout, yet still be

above the wedge line.

Gold: same story as the VIX, just 1 day behind it on the pattern, appears off to the races.

USD: Coinflip, lines in the sand are clear and identified as well as narrowing.

Disclosure: 100% cash

Twilight Zone & Bear ETF crack down?

2009-08-31T21:37:00.011-04:00

I "think" that tomorrow is an up-day............
-Auto Sales data and ISM is on the docket tomorrow, and if "Cash for Clunkers" did anything, it will be or should be reflected in the data Tue.

As I posted yesterday, (see chart) today's move COULD be signaling that 988 is the next intermediate target. As this is a mirror of the the past set up, with the R shoulder being 10pts higher than the left last time, hence the 988 intermediate target here. I still don't think it happens in a straight line, as i cashed in my two small short plays for zero exposure tomorrow.

Case anyone missed here is a 40 minute interview w/ Robert Prechter talking about social moods......and his latest on the market.

http://pragcap.com/robert-prechter-the-rally-is-over

Disclosure: 100% cash
Sold all my EEV (7% gain in 1 week)
Sold all my DZZ (1% gain in 3 weeks)
Sold all my DBA, covered all my GLD short (pair: 5% gain in 5 months)

.....obviously not any homeruns here. As the quicker strike plays that I have gone for over the past 2 months are hitting about 40% accuracy, hence I am not too giddy to jump into those currently.

Something does not feel "right" here, and IMO the market is going to go much lower, but when??? no clue when. And even if now is when it should. It does not earn extra cash points to "catch the top". I would prefer to wait till its obvious the trend is back down, then just wait for a BOUNCE to short, than to play it heavy up here in the turbulence zone.

http://slopeofhope.com/2009/08/and-so-it-begins.html

That is an example of what I mean. Jim Cramer hard at work? trying to BAN the bear ETF's?
That is to me, yet another sign that we are VERY near a top. However that could also cause another final spasm to the upside as well. (remember when they banned shorting the financials, oh yea, they had a lil pop from that, off an initial knee jerk reaction, yet also in retrospect recall how GREAT of an entry that gave to buy puts on them or go long SKF? any time there is a forced one sided trade, it just opens the door for a basically "gimme" reverse side trade immediatly after. 100% bulls and 0% bears = go short. Well, this bear ETF kinda noise smells like that to me. How far will they take this? No clue. However the further they do, the better future short it sets up. So heck, I hope they ban ALL short etf's tommorow and have forced liquidation. Because one the market starts to stall AFTER the initial pop it get's from that, well its as good of a short entry as their is. Whomever is in charge of these kinda decisions just must be out to lunch. Bears get all the blame for hurting the market, yet NONE of the credit for when it goes up. You want to know one of the reasons that the market has rallied so much? B/C bears keep trying to short it!!! (trust me, i know! lol) If they want to get rid of the bears here and now, then so be it. But the bears are the main reason the market remains in an uptrend.

This kinda action in regards to that e-mail about the bear ETF's reminds me alot of when they banned shorting the financials.

However as a bear, even though the charts appear to be signaling a move down, and 988 seems like a good target, I am cautious of TUE's data (car sales), and also of Friday's data (jobs)

2 Must Watch items this week (Head n Shoulders & Jobs data surprise)

2009-08-30T12:06:00.011-04:00

1) Developing Head n Shoulders Pattern
(see chart, this looks identical to the formation of the prior head)

2) Unemployment "up-side" surprise caution on Friday
http://erikmarketview.blogspot.com/2009/08/unemployment-up-side-surprise-curve.html (this explains how we are NOW entering the curve where a very large portion of people are now running OUT of benefits, hence the "monthly reportable numbers" may very well surprise even more over these next couple months)

1) Speculation here, but you can not deny the move up here is identical to the last formation of the previous head.

IF the black support line of this consolidation breaks, THEN look for:
Pullback to 988 (neckline)
Bounce to 1018 (right shoulder)??
Pullback again to 990 (neckline)???

....have a feeling IF this plays out, bears wont go bonkers at a "break of the neckline" nearly as much this time. Heck due to recent memory, I would not be surprised to see people buy it! (of out fear?) again, this is speculative for the overall playout here. However a break of the support line from it's current consolidation it is in now, looks like a short trigger w/ a target of 988 to me.

2) In regards to Friday's unemployment data, there are 2 things that I think are worth sharing.

....
a) last month, on Aug 7th, we had a nice pop from a "better than expected Unemployment number".
(read the link posted above, for why we should EXPECT a better than expected "reportable" number, yet things are not actually getting better)

b) last month, on Aug 7th, that very same mini-euphoric pop was also a very nice swing entry for a short trade for 3 days.
(see chart)

............................
Another opinion of mine why this potential pullback here (988 target), is just a short term one and NOT a load the boat short scenario is this:

On a fundamental (my personal hunch) side of the house, I do have a strong feeling that the "3rd qtr GDP" is something that many bulls have on their calender and are front running here. And with the bigger picture, even though some are suggesting that we might have the "top" here and now. Even if that holds to be true, I have a feeling that we would then even yet make a "double top", around the announcement of the 3rd qtr GDP. Many people (smart), are watching sentiment here, AAII, BPSPX, etc, and everyone is looking for a "euphoric climax". Which makes total sense, as Prechter pointed out, there were only "3% bulls at the march lows". When sentiment becomes THAT one-sided, so does the trade.

So what kind of catalyst could give us "ultimate bullish euphoria" causing a one-sided trade?
- well the conformation and complete media blasting of a "Confirmed 3rd qtr recovery, POSITIVE GROWTH IS BACK!, GDP in the GREEN AGAIN BABY!" is my #1 guess.

My speculation is that the 3rd qtr gdp will be in the GREEN, and that may very well the euphoric climax the bulls have all been salivating for. (how the GDP gets there with the internal numbers, I am sure that Denninger and every other economic bear will be able to elaborate on that.) However Joe Blow, the common man of the US, he just wants to hear "positive 0.1" and he jumps for joy. Keeping things simple, as the powers that be have him fooled.

I can not think of any cliche or phrase that I have heard or read more often than "positive growth in the 3rd qtr". I swear I must have heard or read that 10,000 times over the past 6-12 months. So that alone, for the bigger picture, is why I think it has potential for being a large longer term buy the hype, sell the news and that if we do get a 988 pullback here, that is likely a short term move only for now.

Best of luck this week.

Disclosure: Long DZZ, Long EEV (will look to exit both early this week for a small profit, then wait for Friday's "potential of a surprise", for a potential better re-entry point)

Weekend Reads

2009-08-29T23:29:00.007-04:00

The 5 stages of panic buying
http://thereformedbroker.com/2009/08/27/the-five-stages-of-panic-buying/

Doug Kass: Market has topped
http://www.thestreet.com/story/10590765/1/kass-market-has-l ikely-topped.html

Individual Investors, not as bullish as the Pro's
http://bespokeinvest.typepad.com/bespoke/2009/08/individual-investors-not-as-bullish-as-the-pros.html

The biggest 2 risks to the bull market
http://pragcap.com/the-2-biggest-risks-to-the-bull-market

Disclosure: Long DZZ, Long EEV

GOOG: I will be Waiting for you, when the levy breaks.

2009-08-26T00:03:00.008-04:00

.
.
.
.
.
.
.
.
When the Levy (RSI) breaks.....
If ya want an EW count, look no further..... (thanks as always Dano)
http://danericselliottwaves.blogspot.com/2009/08/google-upgraded-rejoice.html

Upgraded today, by the same idiots who Downgraded it at the friggin bottom?? LOL
(ya just gotta love it when those kinda signals come.... :o)
......not saying its there yet, (actionable RSI trigger per chart: self-explanatory)....but GOOG appears to be getting close to putting in a top, for a long long time. (497?)

Just a few charts to watch short term

2009-08-24T20:45:00.010-04:00

The charts on these look to offer some clean set ups, or are positioning themselves to be setting up for for that possibility.

XOM: looks like a nice short w/ a predefined stop right here, OR a waiting to trigger breakout long (preferance, short)

ETFC: looks to be consolidating to tip its hand very soon whether its a breakout long or short
(preferance, long...only IF it triggers first)

FEED: IF it is digests its gains from today.....ie pulls backs a lil...and THEN breaks >50RSI, its looks like a conditional long trigger.

DZZ: the rsi already looks good here, but the PRICE has yet to still breakout. Could be very soon, or a failed attempt here.
(I am long @ 20.15)

EEM: neg divergence on a double top, looks like a nice short w/ a defined stop, OR a waiting to trigger breakout long.
(preferance, short)

Disclosure: I only own DZZ, and my stops are at entry. I am not trading these short term, nor do I intend to either. However if i had the ample free time to trade short term, these would be some that I would be watching. Just happened to notice these from my watchlist, as some of the "cleaner appearing" setups fwiw.

Hitler Capitulates

2009-08-24T00:23:00.001-04:00

Picture of Day (19 Aug)

2009-08-20T01:44:00.003-04:00

Short Term Charts (spx, vix, usd, gold)

2009-08-20T00:28:00.004-04:00

Just some levels/pivots to watch for, going either way.

disclosure: Long DZZ 20.15 (swing)

Short BLK 196.75 (till end of week only)

DZZ update: 50% move coming?

2009-08-16T22:15:00.006-04:00

Pole height of triangle measures at 10.5pts

rsi wedge looks nicely coiled here, it could very well lead price.

dzz daily rsi: 48.97

gld daily rsi: 50.64

Disclosure: long DZZ @ 20.15 (w/ a tight stop)

- looking to add more, only if

the pattern declares itself

Unemployment "up-side surprise" curve

2009-08-16T14:46:00.008-04:00

It very well might just be starting here, and hitting it's sweet spot over the next couple months.

For the "reportable" data that is....

Just a heads up...... don't be surprised to get a couple more "better than expected" unemployment numbers in the next couple months. I would almost expect it.

In a nutshell, a large curve of people are about to fall OFF the books in terms of their benefits running out over the next couple months. (ie less to "report")
....details below

http://www.calculatedriskblog.com/2009/08/unemployed-workers-starting-to-exhaust.html

http://nelp.3cdn.net/fc4bd4e4ad6f2e26c6_oqm6i2qrf.pdf

Different views on the macro-economy: North vrs South

2009-08-15T00:27:00.011-04:00

Which one's gonna give?

2009-08-12T19:32:00.007-04:00

Sometimes it can help to look at them all at the same time.

Looking at the candle's only, it appears to me, that no one has proven themselves "yet" as far as an intermediate term breakout trend.

Sometimes it may be helpful to put away the oscillator's (for a minute) and also appreciate the pure candle patterns alone. At times I know I can get over big-eyed on "excessive negative/positive divergence".

It definatly can't be ignored, but it also can't take precedence over price itself either..

So for the candlestick repeating pattern purists, (and for kicks....) we can see for tomorrow if there is a:
-small down tight consolidation day for the SPX
-large down move for gold

-gap down, mild down day, with a high wave on the VIX
-mild up day with wide candle expansion for the $USD

Disclosure: Long DZZ @ 20.15

Taking time off....

2009-08-08T01:15:00.006-04:00

I will be posting here much much less frequently over the next couple months, (likely till Jan 2010) when I do they will be simply observations. (just something to spark thoughts or outside the box ideas that others are not mentioning etc)

For anything beyond intraday/daytrading, to me market is too difficult to trade on swing basis.

Most importantly, I am in the final leg home of my training and all my focus will be on just that. Over the next 4 months I will be: completing my Masters, taking my PANCE (Physician Assistant certification board), visiting family in NC, traveling to Texas for 2 month long Army Medical Officer Course, visiting family in NC, then moving to South Korea for a 12 month tour. (hence pretty busy w/ priorities, ie no time to trade).

Great thing about Korea, is that I will be able to day trade intraday, especially the opening gaps in the evenings (due to time zone difference).

I will continue part time to watch the tape, scan the blogs and keep my charts updated as much as possible to not loose complete touch w/ the changings of sentiment, etc. The market will still be here when I get settled in to Korea.

IMO, the market will be in grind mode for a while here. I don't see any more short term rocket blasts to the upside OR the downside coming up very soon here. But who knows......

Short term sentiment change

2009-07-31T22:40:00.022-04:00

To Bearish.

I see a move down next week.

Here are 5 things to chew on.

I almost now wish I shorted the close more aggressively than I did.

(my apologies for all the url links, instead of posting all images. Some are older observations)

1) SPX and VIX both up on Friday: 9 of the past 12, resulted in a down day for the next day.

http://lh6.ggpht.com/_APmrYvpA45s/SnNnkmUw8QI/AAAAAAAAEEs/32rFGtLH_R0/s1600-h/SPXVIXWatch%5B2%5D.png
Courtesy of Cobra's Market View (link on right)

2) Friday's end of the day spike in VIX makes it even more interesting.
(the last time i recall one bigger than Friday's, was 2 Jan 09. Which was a prelude to a large
intermediate move down)

http://lh3.ggpht.com/_APmrYvpA45s/SnNnlKrjmZI/AAAAAAAAEE0/hZxnMwXpQvA/s1600-h/VIX15min%5B2%5D.png (Friday)

http://i204.photobucket.com/albums/bb15/Erik28tx/vix_5min.jpg
(Jan 2nd, 2009)

3) SPX and VIX both up for the week
(although one might "assume" that since on daily basis equates to 75% down probability, this would be automatically "mega-bearish". However, the past 2 times this happened were actually large intermediate direction changing points, Mid Sep 08 and Mid Mar 09 were the past two. This one is arguable, as it has come before a crash as well as before a large rally. Also the last candle stick structure looks almost identical to the March week, there can be a bullish argument for this. For probability sake, I think it's best to say that "for now" we can call this one UNDETERMINED as of yet. So I wont say this points bearish, however since its a very rare occurrence and has happened right at the crash and the rally "start"... I wanted to mention it here.)

http://stockcharts.com/h-sc/ui?s=$VIX&p=W&yr=1&mn=0&dy=0&id=p68264773822&listNum=12&a=174352066

4) USD / SPY decoupling
The dollar was absolutely hammered Friday, yet the market was barely up.
The last time I remember seeing a divergence that strong was 19 March.
(on 20 March, the spy fell over 2%)

http://2.bp.blogspot.com/_Qdtp9kZdS-Y/ScMtQZdrZyI/AAAAAAAAAE8/3WbvcK1CGtc/s1600-h/UUP.jpg

5) Weekly dogi at key long term resistance on the Leading index ($NDX)

http://stockcharts.com/h-sc/ui?s=$NDX&p=W&yr=3&mn=0&dy=0&id=p25925276563&a=172339768&listNum=12&listNum=12

Broad Market Pullback "target": 1525 $NDX (trendline)

http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&mn=6&dy=0&id=p17589378026&a=171083389&listNum=12

..
Disclosure: Long DZZ (1 swing) & Short MAR, AEM... Long SRS, QID (4 short terms)

Just a couple random charts w/ thoughts

2009-07-29T22:50:00.004-04:00

Can't really think of anything to post tonight....

added some thoughts/ramblings on the charts.....fwiw

bkx

ndx

dzz

Gold looks like absolute garbage

2009-07-27T23:29:00.007-04:00

Excuse the phrasing, but really.... It's just trading that way.

I stand by my call from March: Gold will see 750 before 1000.

I will be the 1st to admit, gold is very VERY difficult to time on the short term basis day to day.

However, with that being said, I am looking to open up a large core IRA Swing Trade position in DZZ here shortly, place a very tight limit stop loss, and just and let it go for a couple weeks to likely months followed with a loose trailing. It's not my favorite vehicle (etn), but for a multi-week swing ira play, it fits the bill here.

Using $GOLD 967.10 as my stop out, and 880 (the 200ma as my price exit/target)

Since March, the $USD has tumbled from 89 to 78.64 here.....that's a very big move down.
During that same time, $GOLD has done....well nothing at all.

Ya know, if gold can not go up at all when the dollar is tanking, what is it going to do when the dollar catches a bid? I dunno, but there are way too many stars aligned here to bet against gold NOT going lower. It has had everything going in its favor, yet its looked stale the entire time here.

The Nasdaq 100 ($NDX) get's No respect.

2009-07-26T21:28:00.011-04:00

Since Sept 2008, the INDU, SPX and RUT are all right on the verge of retracing 50% of the down move from September. The $COMP is at around 57%. While the $NDX is at 61%.

$NDX is the "ONLY" index that made a higher low in March 2009, compared to Nov 2008, the only one.

If you take the Monthly, Weekly, Daily and 60min charts....the $NDX has cleaner patterns and channels on every single time frame than any other index.

Ok, so the charts are very clean, got it. On to my hypothesis, which is this.....

#1: What the difference in the NDX vrs the COMP?
- well the NDX is the Big Cap Tech, the COMP is all tech.
- Big Cap tech is alot more stable, has more cash, ie more market cap, less speculative,
and more household established.

#2: Why has NDX been by leaps and bounds the strongest performing index since this became a bear market?
- Simple, they are the MOST removed from the financial crisis.
- Liars loans, excess leverage, real estate bubble, derivatives, etc etc. that all has a direct
relationship to the banks and brokers, reits, and also since its credit related it has a
stronger impact on the smaller cap type stocks that have loans, and much less cash on
hand. Tech, most specifically large cap tech is the safe haven from all this.

#3: The $NDX has been the safety trade here. It has not been the leader due to potential future growth potential. As if that were the case, the COMP would be neck n neck w/ the NDX, as "growth potential" is more reflected in smaller caps going up in relation to larger caps. The bottom line is with "Large cap Tech" there there is the LEAST amount of chance of a ponzi scheme, a dividend cut, a bail out, even an eps miss with these stocks in the $NDX. They have so much cash on hand, they can most easily cut costs to make numbers.

Another thing, that I think people forget alot of the time is that Large Cap tech has one of the "least" amount of harm from deflation, as compared to other sectors. It "arguably" has almost none. With telecoms actually being the least of all.

http://pragcap.com/performance-and-the-dollar-correlation

And when you look at the sectors and without getting too "economist like" about it, it is pretty simple to understand.

The closer it is to something tangible, that the consumer is buying with his/her US Dollar to live from (eat, build with, produce) that makes it the most inverse to the dollar.

The less tangible, and less related to something local to the the US is then less inverse to our local dollar. (telecoms, tech, etc)

....and I digress.

People are not all piling into GOOG because they think it's going to 1000 (it's not)
People are not all piling into AMZN because they think it's going to expand 5X (it's not)
People are not all piling into INTC because they see it getting more market cap (it's not)

These are rallying so much b/c they are safety trades, based on balance sheets.
When all the prior collapses were from suspect balance sheet stocks, it only makes sense that the leader here on this "P2" is based on balance sheet strength.

However where is the growth? Revenues are declining. One can only cut costs to beat eps for 1-2 qtrs, maybe 3. Eventually all the costs will be cut to the bone, and the only way to beat is via actual top line revenue growth.

...i digress again

Daneric had a very interesting speculation tonight, and I agree with it 100%.
http://danericselliottwaves.blogspot.com/2009/07/citibank-and-banking-laggards.html

-The banks have lagged this entire move here very badly.
-According to the "dow theory" fans out there, for this to be the "end" of a bear market, doesn't the same sector that led us down have to lead us out to the upside? (I really do not understand why so many people are in love w/ the Transportation sector as some kinda of forever leading indicator signal.) It just seems like one of those things that way too many put too much stock into, and therefore it makes it actually worthless. Almost the same as being dead-set on trading the spy only, even when/if the qqqq or dia have a much cleaner set up. It just does not make sense to me, being stubborn and using the same thing over and over again and not adapting or being open to new things can only hurt the bottom line, or at least that is how I am trying to see it here. If everyone is watching the exact same set-up, its not a set up...it's a trap.

-Aside from the charts, I think we need a bearish capitulation to signal the "top" of P2 here. And I do not see that ending with this current sentiment here, there are some signs yes (such as Roubini's more bullish call, etc). That is defiantly a "bear capitulation" sign. But its not there yet. We had Harry Dent on TV just last week "betting" Dennis Kneale 1000 bucks that the dow would be at 3,800 in 2010. (that's not bearish capitulation!!!)

-On to dano's point. For us to reach a euphoric/climactic top here, it's going to have to be done with the financials. (NOT w/ big cap safety play tech!). I don't know what it is going to take to jump start them though. I mean we had Meredith Whitney, we had Roubini. Yet looking at the $BKX chart, one can not even tell that the market has had a 10% 2 week rally. It looks dead. Of course the Brokers have rallied huge. However the $BKX is a bank index (not broker). Moving forward, no one knows "WHEN" it is going to happen, however we all know that eventually the fed lending rate is going to increase to higher than its current ZERO. That will put pressure on the banks. Since the market is forward looking, I can understand why they are not popping here, even with the 100,000,001 upgrades and pumps.

But to achieve bearish capitulation and reach the top here, I don't see it happening any other way than there being "re-assurance" , well actually "false-assurance" that the Banking system is totally good to go. The money flow is still headed as FAR away as possible from anything even close to a "bank". (ie the $NDX!) Which is why, I don't believe we have bear capitulation yet.

So for a longer term change of sentiment/direction, I am looking for 2 specific things:

a) the NDX chart to show a double top w/ neg weekly divergence
(there needs to be a signal, a strong one that this "safe" piggybank is totally full and no longer accepting deposits. When there is no more upside in the NDX, there will be no more upside in any index)

b) a euphoric pop in the financials (mainly banking/$bkx) sentiment.
(this is the only way to break the bears backbone and suck in all the last of the dumb retail into the game)

My Earnings trade Gameplan: Hedge (Pair-Trade) Ideas of the Week: July 27-31 (MAR, GMCR, GOOG, X, DO, XOM)

2009-07-25T23:38:00.021-04:00

I try to trade what the market gives me, as we all do.....

There are times I have "NO CLUE" what the broad market is going to do short term. (like now)
That does not mean there is not money to still be made and trends to play, there still is (imo).

You can (if you choose too) browse through my May-April posts, and most ideas I posted were Weekly Pair/Hedge trades. Why? Because I was not that confident of the overall market direction. Past performance is NOT indicative of future results. (Those went 5 for 7)

I said it before that last qtr the earnings trend was "easy". That might be an overstatement, as no trading is "easy". But last qtr there were so many shorts on board, that once the earnings trend was established early as a very bullish one, the game-plan was pretty simple. ----> find the highest shorted stock, and buy it long 3 days before the ER, then sell it 1 hr before. (since everyone was "blowing out the estimates"...most shorts were covering prior to the report out of fear)

For this qtr, so far that trend has somewhat carried over. However, even though the broad market is very strong, just as last qtr, due to the reactions being more "mixed" this qtr, especially some of the last few and not as "everyone bullish across the board", I do shy away from employing that identical strategy.

This qtr, it seems that many companies are missing the top line (revenue), but beating the bottom line (earnings). The market's reaction is all the truly matters. However that it not really a bullish long term sign there at all. That means the reason they beat the bottom line is from cost cutting, not actual growth.

So after browsing through a few hundred charts and deciding if i was going to trade these earnings, and if it was even worth it here as the market direction seems tricky. I decided that I would, and to employ a pair trade only (hedged) strategy based off the same trend that worked last qtr PLUS the revenue/eps reality of this qtr. IE:

Fundamental Game plan:
Long a momentum stock that is getting ready to report, and ideally has lots of shorts.

...
Short a momentum stock that has already reported and had weak revenue, yet ideally still had an initial knee jerk reaction UP
(exit the pair trade prior to the ER, as no "gaming")

...

Also, I am looking to be putting the options to the side for a bit, and going straight STOCK here.

(larger size plays, as they are hedged 50/50:short/long)

(energy)
Long XOM
Short DO
(exit on Close of Wed, as XOM reports Thurs AM)

XOM reports on Wed, and I can not find a momentum name stock YET that has sold off "before" its ER. Yes some sold off after (amzn, msft, goog). However the earnings "sentiment" is still bullish, and people are buying before reports here. I would "expect" that to weaken somewhat, as per the MSFT and AMZN rude awaking. However not enough to kill the entire market trend.
DO did "beat the eps", however they had a decline in income, and I like the chart set up alot.

(consumer)
Long GMCR
Short MAR
(exit on close of Wed, as GMCR reports Afterhours on WED)

GMCR has 34% shorts as of the last Bi-Monthly data. And with the SBUX "reaction" here fresh in traders heads. (mine included!) I have a pretty good hunch that "SOME" of those 34% might cover before the report. I think GMCR is a train wreck longer term, but its a short term trade, that has a rationale to it here. MAR already reported on the 16th, and cut their fwd forecasts, also with a 76% decline in Q2 profit. (yet they "beat the street eps" lol) I feel the only reason MAR has held up and retraced most of that sell off, has been since that exact same time the broad market has been on complete fire pulling it along "somewhat" with it.

(no relation)
Long X
Short GOOG
(Only for 1 day:Monday, as X reports before the Open on Tue. The GOOG short could be held open longer. But jmo, MAR i "think" is the individual best looking short)

X has 15% shorts on it.
GOOG already reported, virtually no shorts and a triple top at 447, which the $NDX has been pushing higher the entire time and index wise looks the most set up for a short term pullback.

Index Intermediate Levels to Watch. ($NDX is the Leader)

2009-07-25T19:37:00.014-04:00

Short term: no clue.

And I am not trying to guess it either. (100% cash for short term trading)

I did purchase a few DUG aug 17 calls @ .90 on Thurs PM, only to sell them all right back Friday AM @ .90. After contemplating and thinking it....XOM reports this coming week, and as the biggest portion of DUG, I seriously doubt they sell off XOM running into the earnings. Even the stocks that have reported bad numbers this season still ran up "into" the earnings. (amzn, msft, etc). So no reason to fight the prior established tape trend here to me.

Short term charts (60 min and almost the daily's are screaming "overbought"), but we have seen how long that can last both up and down.

It still "feels like" to me they are about to pull the rug from underneath this market and leave all the retails holding the bag here. But the tape on Friday sure to me did NOT suggest that is ready to happen yet. I mean all the signs "seemed to be there".
a)msft and amzn had terrible numbers and both sold off.
b)typically Friday after a HUGE up week is normally profit taking
...
However as the day went on, bullish strength was built up later towards the close, which is NOT indicative of end of the week profit taking at all. When volume is anemic thin, it is usually bullish more so than bearish. (as we also saw in late Dec as well)

Which is why to me, short term: NO CLUE

I know most people follow the COMP (more than the NDX), however the NDX is the real leader. Remember that NDX was the ONLY index that made a "higher low" in March.

We still do NOT have neg divergence yet on the weekly charts, that would be something bearish, when it does finally comes, but it actually has not yet.

So here are just some longer term FIB retracement levels to watch.
If they do break the 1st level, (to me, intermediate term), It could be a sign then are headed to the 2nd levels/targets.

Again, I have NO CLUE short term.

Although I do strongly feel that the $NDX is going to be the best signal here and should be watched the closest, as it is by far been the huge leader here for the entire market. (which is why I also included the $NDX monthly chart)

$XII: 480, 495
$SPX: 994, 1014 (as well as the psychological "1000")
$INDU: 9200, 9422
$NDX: 1615, 1629
$RUT: 553, 599
$COMP: 2012, 2063 (as well as the psychological "2000")
$VIX: 22.79, 19.00 (if 22.79: the 200ma weekly does not hold here, it looks like it could very well continue down in it's current wedge until the wedge completely runs out of room, which would be at around 19.00est, which is also the same low from Sept)

USO and UUP

2009-07-23T20:07:00.011-04:00

UUP: double bottom w/ pos divergance

USO: lower high (as market makes a higher high) + rsi backtest

....
Short term (1-4 trading days), It looks like Oil/Energy wants to pull back here. Since its been a lagging sector here on this push and was the first to drop on the prior leg down, I "think" that it looks like one of the better risk/reward "falling knifes" to attempt to catch here.

...

DTO, DUG or ERY look good here to me, for a quick mini swing, with a conservative short term exit target based off of:

...

Target: USO 33.00 (the trendline)

Let's see if the ole technicals work here....USO is giving one of my "fav 2 signals"

http://erikmarketview.blogspot.com/2009/07/my-2-favorite-technical-entry-signals.html

Wrong

2009-07-22T19:06:00.005-04:00

No clue short term.

Didn't obviously see any kind of SBUX blast-off coming at all. (oh Kudlow is talking about it now.....geez)
.
That just re-enforces to me to not "break" any rules, no matter what I "think", that's what they are rules for.....one of those being "gaming earnings".

There are just too many signals that "feel" like they are about to pull the rug from underneath the market here. Guessing when that happens...who knows, I surely do not.

With the overall earnings trend thus far, it would "almost" seem that a smart trade-plan would be the same one that I kept running into the ground last qtr. (go long the most heavily shorted name 3 days before the ER, then sell it 1 hr before the ER, keep doing that 1-3 stocks a week over and over).
But I feel that its also trap, even going long with those set defined conditions.

When in doubt, stay out.....I myself will be taking a break for a week or 2 and watching the tape move several times before trying to read/trade it.

If the market gaps up or flat tommorow morning....I "think" DUG looks like good 2 day swing buy, very good relative strength today. (then again, im just watching....for now)

Numbers to watch for the Week.

2009-07-19T20:17:00.021-04:00

Going into last week, I was nuetral...and wanted 8350 before looking to go short.
Waiting for a 200pts dow pop..on "MOST" cases is a "usually" pretty safe way to play things, especially on an expiration week. (just as waiting for a 200pts down swing to go long would be).
.........How the market humbles you.

...
Looking ahead to next week......
If the DOW can take out 8877
If the RUT can take out 535
If the SPX can take out 956

If those 3 happen, then I will "change my tune" on my intermediate term setiment and NOT be in "short the pops mode". (in other words, those 2009 highs-are my "mental stops" for the intermediate broad market trend)

As for the short term, I think even the most bullish scewed opinion sees a likely pullback ahead here. The cleanest bullish longer term set up, could be that all indices pull back and find support on TOP of all the old wedges from which they broke out. Which would be

1) the top of the channell
2) the old "neck line support"

In other words, if 1) does not hold......I think that it heads to 2)

Even if every single index heads to 2)....the intermediate UP trend is still in place.
(see charts)

RUT: 510, then 500
COMP: 1850, then 1820
NDX: 1485, then 1470
INDU: 8500, then 8400
SPX: 905 (1 & 2 are one in the same)

If we do get these levels short term, I will then move to nuetral for the short term and then let the market decide what the intermediate trend is. However due to the intermediate signals from:

A) the VIX continuing to make NEW lows, yet the SPX not a NEW highs
B) the Issue:Volume ratio >3

Because of those 2 signals, on the Intermediate term I still do favor the bearish side. However I am just playing it short term bearish to those index number pullback targets, then I will wait and see what the market wants to do.

When there are Intermediate signals that say SELL, and let's say Short term signals that are mixed, I lean to the SELL side. (especially if we just had a huge move up short term)

I am sure there are many EWT traders who are labeling last weeks' move a "wave 1", as it was the first "impulsive move up" in quite a long time. Hence in theory that would be followed by a wave 2 pull back, then a wave 3 ROCKET RIDE upwards. I am not an EWT trader, so I have no clue in that regard. But with combination of news and charts, its hard to imagine a stronger up-move than that as we get into the 2nd and 3rd tier companies earnings reports...just my 2 cents.

As far as Sentiment wise, I just don't see the "probability" of another week of
-GS blow out
-INTC great numbers
-Perfectly timed M.Whitney pump
-Very well spun Roubini twist/pump
....all together launching all like a firecracker trigger, set-off to explode in sequence just after TOO may people jumped into the "head and shoulders" breakdown "set up".

The shorter term time frame charts do "appear" as if last week was "the real deal", and that the next pull back we get is a definite BUY. But to me, there are WAY to many of the longer term indicators saying otherwise. From my experience, the longer the time frame charts and indicators should always be given more clout.

Lots and lots of variables and smoke out there....if/when it total doubt the best trade at times is no trade.

The Giant appears to have been stunned.

2009-07-16T01:58:00.011-04:00

GOOG------------->

(thank goodness I can still pick individual stocks pretty well, b/c the spx has admittedly baffled the *&^%ing *&*@ out of me since after the gap up Wed)

Top em up......Chop em down.................

http://erikmarketview.blogspot.com/2009/05/lvs-appears-to-have-topped-out.html (11.84)

http://erikmarketview.blogspot.com/2009/06/goog-has-very-possibly-topped-out-at.html (447.00)

http://erikmarketview.blogspot.com/2009/07/sbux-looks-like-it-might-of-topped-out.html 15.54....?

SBUX: You are next, see ya on Tue buddy.
(I got my mocha-java latte ready for ya......)

SBUX looks like it might of Topped out.

2009-07-15T20:35:00.013-04:00

Short, Intermediate....and perhaps Long Term....it possibly has.

Weekly and 60min charts to the upper right.

Gaming earnings is never the "best trade", as I re-iterate that now and again. Very very rarely will I speculate of an earnings reaction. I much prefer to watch the reaction, THEN jump on board and forgo the initial portion of the move to in turn obtain the ability to watch it's hand tip first. Sometimes even that is difficult too. Ex: something just did not "feel right" yesterday to me with GS, even tho I wanted to short at 150, and had planned to if it could not get over it... I think it was b/c i felt EVERYONE in the world was watching that ezact same set up right there. Plus they way they closed it at 150.00 right on the button, just seemed "strange", felt like a trap. It just didn't feel right, so I didn't enter it. I'm now in hingsight glad I had that feeling, b/c I had strongly contemplated entering heavily short at 149.50.

I don't normally like to trade earnings, and the only earnings report that I have ever given an opinion on w/ rationale on this blog was TM back last qtr. http://erikmarketview.blogspot.com/2009/05/toyota-motors-early-entry-to-one-of.html

I do have a strong opinion SBUX is going to have a terrible report. I feel they have a terribly flawed business model.

(***I am short SBUX for disclosure and will remain short for at least 1 week, possibly for 2-3 weeks***)

Also MCD, GMCR and THI...are there to gobble up it's market cap and all 3 of those have a better business model to me.

Estimate EPS for Tuesday is .19. They have not earned that much since the 1st qtr 2008.
Why is it that high?....sure there are many factors beyond what the eye can see, so that's not something worth over-analyzing or breaking down. However the "momentum" of the broad market is one of the factors. Remember, when the market goes up=Analysts raise the bar. When the market goes down=Analysts lower the bar. Analysts are chasers and pumpers. (that does not mean they are always wrong or always right...they are just almost always kinda late to the party)

GS can make money in any market. INTC has tons of foreign exposure and they even said that China was the best part of its earnings. Yea SBUX has a couple franchises overseas, but its backbone is almost entirely the U.S. consumer. (which I feel is a very bad thing here, and if people think that everyone is going to report like GS and INTC, they they are out to lunch)

I think that intermediate term (over the next few weeks) that the more likely scenario is that many stocks are getting set up for a fall, as we get into the 2nd and 3rd tier company's....I don't see the likely hood of a majority of "intc/gs" type blowouts.

I could be dead wrong, I could be...and that broad market hunch is NOT one that I will "fall in love with".

I have always been a far better individual stock trader, than a broad market trader. As far as the broad market, I think that once we get 1-2 more weeks worth of earnings and can disect what differant sectors have done before and after and we can start to notice some trends, whatever they may be, then look to front-run trade them.

Again, last qtr's stradegy of simply find the most heavily shorted stock, and buy it 3 days before ER, then sell it 1 hr before...I doubt that will work as well this time. That only worked so well last qtr, b/c the vast majority of stocks were "reporting well"...so there was a broad market fear drivin into the shorts, no matter who the company was.

This is just my opinion, and yea it's a strong one.
I think Starbucks is dead money, and that without a timeline:

My call is that it sees 9 before 15.50, possibly sometime in August.

Wed, July 15th

2009-07-15T19:09:00.004-04:00

I did NOT forsee todays afternoon action coming AT ALL.
I had felt that the gap up today was a nice SHORT entry, and I did add to my sbux short today midday, and do still hold it....only position.
(stoped of tin and mar at the open)

VIX was up today along w/ the SPX.
8 of the past 9 times we have had that, the next day was down, fwiw.
I remain bearish short term.
If the $COMP and/or $NDX make new 2009 highs, then I will re-evaluate.
(as they are both close to a new high or a double top, we shall see)

The VIX to SPX divergance: Bearish, plain and simple.

2009-07-14T20:34:00.007-04:00

http://erikmarketview.blogspot.com/2009/05/falling-knives-vix-and-usd.html

Here is a prior post of mine (link above) just talking about my opinions on the vix, and it's use as a longer term market tool. (fyi: the vix moved to 35 on that move, not 36....so I overshot the target by 1)

Ok, so big deal... when the market tops the vix bottoms, what good is that? It's not any good
Is it "EASIER" to spot a vix bottom than it is a market top? Nope.

So Why it is important:
Since 956, one would expect since the market is now lower....so obviously the vix must be higher right? WRONG (vix had it's lowest daily close today since Sept 2008!)

This is bearish for the market, and I am sure some super bull would of course argue that the lower vix is bullish, but I would ask them to show me a chart where the vix served as a leading indicator. (its NOT a leading indicator). But more importantly, ok....so if a LOWER vix is bullish, then why are we now NOT above 956 spx? I mean the vix is lower now, so if its "bullish", why are we only at 905? I rest my case.

So the 64,000 question would be "Has the vix bottomed"? I haven't a clue. No one has a clue.
Again there is NO difference is trying to spot an spx top OR a vix bottom, those are BOTH total fools games, and they award no "bonus" points or money in your account.

All that I am reading and interpreting from this divergence is just what it is and nothing more.
It is a piece of the larger puzzle.

The VIX is moving down more, even though though the spx has not moved up.
So back to why this is bearish. Pull up at 20 year chart on the vix.
The vix does NOT go under 10. It just doesn't, there is a blip of 9.37 in 2007, which was about it. Is this VIX going to 10 here? I doubt it, it just illustrates that its actually NOT a totally unknown variable, as we know there is a floor to it.

Mathematically...the spx might go to 30,000. (trying to make a point, bear w/ me. There is nothing saying that it cant, this is a total unknown variable)

We do know, that the vix can NOT go below ZERO.
And it basically never goes below 10, from its history, even in raging bull markets.
(So this has a limit to it, making it differant)

In conclusion, the observation is such:
The "Fear" is departing, yet the market is NOT moving up "lock in step" with it.

Well if the market is not really going up (as much compared relativly) when the fear is departing, then what is going to happen to the market then when the fear returns?

Intermediate/July Target: 846 SPX - Booyah!

2009-07-13T23:03:00.013-04:00

I know almost everyone is watching the Head and Shoulders breakdown, (even Jim Cramer ? lol) and most following that have an even lower target. Even though I believe alot in the chart pattern set up, I do not as much with the target "must be met".

Why 846? Because that is the 38% retirement of the entire move up, so even from a "bullish" argument, that also could be an expected and accepted "pullback". So to me that makes it actually to me fairly cconservative target as well. So if this "perhaps is" a pullback before a end of year rally higher. (which I do NOT think it is) then 846 can still be a likely destination in that scenario as well, so in my opinion it's my end of July target.

Just for a list, with out targets or specifics, some stocks that I follow and look to enter short periodically here for the intermediate term FWIW:

...

MAR, TIN, SBUX, GOOG, GRMN,

ISIL, GMCR, AEM, WFMI, MA,

BLK, DO, SPG, MS, GS, BCSI, BIDU

....

(I prefer NOT to short anything within 1 week before earnings, and nothing over earnings)

....

Jimbo Cramer, I am going to replay your reaction at 846 later this month, because I want to compare them. Because (from my experience), when you get REALLY CARRIED AWAY an over-animate, it is more likely a good time to short the market. A few years ago (when I didn't know any better) I remember watching your show and you said something that I actually thought was a pretty good mentality. Something to extent of "when there are more bulls than bears we go up. When there are all bulls and no bears, we stop going up. So you are calling the top Freudian slip, thanks. I knew that you inside probably do have a decent idea where things are going.

Meredith Whitney rocks the House!

2009-07-13T20:28:00.012-04:00

Looks pretty much close enough for me, so thank you Meredith Whitney
(Close as in those ...... Index Numbers to Watch, that I posted this weekend)

http://erikmarketview.blogspot.com/2009/07/index-numbers-to-watch-for-next-week.html

I think SHORT term, that this right here looks pretty decent spot to "dip" into some shorts
We could go a tiny bit higher perhaps, so maybe I am a little bit early, but I do like the entry.
I just don't feel in my gut its one to go totally BONKERS with though.

I am looking for around 890spx Index wise to exit my short plays this week
(very conservative play, nothing big here)

And I am only playing these 3 till the end of this week, b/c I know they are not reporting till at earliest next week.

(I started to scale into shorts right at the close, SBUX: 1.97, 1.971, MAR: 1.9, TIN: 1.95, 1.96)

Those are my stockcharts charts numbers of them.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3381442 (link)

(fwiw....I will mention what I "think" are some great stocks to look to short, cover and re-short over and over again for the summer time on the next post, those are 3 of them) For now I have to go. (super busy, I missed the whole Meredith Whitney trade, as I was not around for the AM, it sure looked like an FAS delight for the day.

I had twittered (is that a word?) that I had a very strong hunch that she would send the financials higher I would buy in front of her for the day. Oh well...I'll take the next likely direction. which is back down I think. But again, this is not one I feel like going hard and heavy with, but I do like the 3 plays I have here short for the next couple days.

For the SHORT TERM outlook, watch the SPX index. I "think" it holds the key here actually. If you re-look at those 60 mins charts I posted this weekend of the Index numbers to watch, EVERY index actually closed below the backtest line.
(except.......the $SPX and the $XII, they actually closed right back ABOVE IT).

If the SPX leads tomorrow and is the STRONGEST index, technically that "might" suggest we digest this move today and do not go lower immediately. However, the spx has to hold onto 900 and NOT dip under for that rationale to be valid, so it has practically no room to breath at all. But giving today's move the benefit of the doubt, that is the one outlier index that actually got back INTO it's old channel, by 1pt. So if the spx is lets say up a little bit, and the others are down tomorrow, I would interpret that as LESS of a bearish signal. But I am also I think stretching here, as I am trying to give the bulls the benefit of the doubt on purpose to try and be safe about trading to the short side, that's all.

Just something to consider, but even today the spx max pain fell from 91 to 90. (why?) B/C the rally induced chasers (ie call buyers) and once more people buy more calls, THOSE are also calls that the writers do not want to PAY out. (ie that lowers max pain). GS still could not break 150? come on Meridith? I dunno. But short term I do like this overall as a SHORT entry, as I am net short here since the close. Sorry, but I don't have time to post all my charts on here, but the 60 min index charts that I talked about this weekend and those numbers.

Those index charts are 0.2.0 to 0.2.6 (on my stockcharts list)

Just go to the upper right and click on Chartbook, which makes them much easier/faster to search)

*Rambling thoughts, for 2 "conditional" things I am watching*
-If tomorrow 20 minutes before the close, GS does NOT look like it's going to close over 150..I will likely be buying some AUG puts on it

-If on FRIDAY goog has a neutral or slightly negative initial reaction to it's earnings, I will be buying quite a few of the AUG slightly OTM puts on it. I just do NOT want to "game the ER", nor do I want to buy any options before it, as they are being overpriced here with the I.V, as all the straddle buying manaics are driving them up too expensive before the ER. However since Friday is options expo, if the reaction to GOOG does happen to be negative, then I do have a strong hunch that they will do their best to "hold it up and cushion it"...as its expiration day. (remember RIMM the AH reversal prop last month?) The beneficial thing then is for an option buyer is that since the ER is now over, the IV should shrivel up alot, especially if the reaction is a minimal one. So I would love to see goog trade in a very tight controlled range on Friday. Remember, goog does have a strong history of doing that on expiration day too. So that particular set up, would be a good one to me, if of course it even comes like that.

Another one for the Toolbox

2009-07-12T14:40:00.005-04:00

Idea Sparked and derived from something somewhat similar, that Cobra uses.
(listed on my blog roll: http://cobrasmarketview.blogspot.com/ )

http://lh3.ggpht.com/_APmrYvpA45s/Sllr2YpgRQI/AAAAAAAADzs/9Hc6jXdlgyw/s1600-h/NYADVandNYUPVDivergenceWatchI%5B2%5D.png

This to me if for the INTERMEDIATE outlook

This does NOT change my short term outlook, which remains: http://erikmarketview.blogspot.com/2009/07/index-numbers-to-watch-for-next-week.html

Index Numbers to Watch for next week.

2009-07-11T16:15:00.019-04:00

Unlike last week's numbers and projections----------------> http://erikmarketview.blogspot.com/2009/07/numbers-to-watch-on-way-down.html
(my apoligiies for overshooting the $RUT target by 3.54 ;-)

I do NOT have a strong directional bias going INTO the week. As we have some heavy hitters ER reports to watch and digest first. My gut tells me that the "cult" stocks that people expect will do very well (ie GS), are at a disadvantage intermediate term here. Just as everyone was "bracing" for the AA disaster and the stock sold off huge before the report, then look what happened.

The higher probability is almost always that any excessive hope OR fear going into a specific event is likely to produce much greater movements than the actual event itself.

(IE: Buy the hype, sell the news ---OR--- short the fear, cover the event)

If gs blows out, and still can NOT break 150, I think its a short with that scenario set up.

(agree w/ charts and coffee) http://chartsandcoffee.blogspot.com/2009/07/goldman-sachs-earnings.html

These below are just numbers that I think would be present a nice risk/reward entry SHORT (w/ stops). I am not that excited to play these long into these potential targets. I am more looking at them as ENTRY levels that I would like to see to re-enter short. We might crash to start the WEEK, heck I have not a clue. (maybe we rally and BLAST through these levels!!!--i think that is of pretty LOW probability, but we shall see)

I am NOT leaning any direction to go into the start of this coming week.
I just think IF we do get a bounce to start the week, these are levels to watch short term.

Here are the numbers, fwiw:

INDU:8350
RUT: 500
SPX: 895
COMP: 1800
NDX: 1440

Remember: The Weekly charts always trumps the Daily chart, the Daily chart always trumps the 60 min chart.

However they way I am reading them now, the weekly and the daily both look fairly neutral to me, just my opinion. (unlike last week, when I stated how the Russell weekly looked VERY bearish!)

*****Will try to rememeber to post these every weekend******

My 2 favorite technical entry signals

2009-07-10T19:12:00.016-04:00

I do NOT trade soley off technicals. I trade off what I feel + the charts.

What I am saying, is I am NOT a "pure chartist", I have to have my gut and the chart agree to enter. (which many times they dont, which means I dont trade!) There are some people I know who trade the chart only and use nothing else, they dont even watch or read the news at all, they dont even turn on the tv or read the newspaper, just pure chart and nothing else. (that is not me. I am like most others, all those are used to gauge when broad sentiment is too excessive or growing or waning)

(For those of you who have been reading my blog a while, you probably already know these, from a decent portion of calls)

But on the technical side, these are 2 of my favorite simple signals that make me much more prone to go enter the trade. (especially if my gut agrees). I look at alot more signals than just these, however these 2 are definatly at the TOP of the list.

Actually the way I enter almost every single trade is
#1. Select a stock that I "feel" should be at a higher or lower price
#2 Chart it and watch it and wait for a technical strong signal to enter in that direction

***FOLLOW THE RED CIRCLES lol****
(if my text explination is sub-standard, :o)

1: An RSI failed backtest (to go short, I like alot this as a reversal signal)

Ex: LVS & GOOG
http://erikmarketview.blogspot.com/2009/05/lvs-appears-to-have-topped-out.html

http://www.bostonwealth.net/2009/06/29/goog381-target-update-2/

2: A breakout from an RSI narrowing wedge, especially when the rsi also crosses >50 (or is >50 at the time of the wedge b/o (I use it for both long and short, but it's most beneficial as a continuation signal, to resume its prior trend)

Ex: FEED
http://erikmarketview.blogspot.com/2009/05/is-feed-consolidating-for-another.html

**** The trades are all PAST TENSE, I do not share the same current sentiment on any of these 3, they are examples, I am neutral on the entire market currently short term.*****

My Current Sentiment: I am totally flat, 100% cash and neutral the entire market.
The charts to me to not have enough conviction to want to lean heavy either way short term
The feel to me says WAIT till a couple momentum stocks report and watch the TREND of their reactions to the ER.

Have a great weekend!

Nothing much to say

2009-07-08T20:23:00.010-04:00

Still neutral for the immediate short term time frame, actually a tiny bit bullish **dont strike me w/ lightning!!* (as in from now till the middle of the day Friday....i'm NOT playing w/ the close!) but overall not enough to want to trade heavily.

(98% cash, 2% july lvs calls, which I will be out by end of week no matter what)

My rationale for being neutral here is mostly due to the vix chart, from my experience very rarely does any eft,index or stock go from the bottom of an established channel all the way to blast out ABOVE the top of it on the very first try. That is where we are at right now. I do expect the vix to break out of this long toothed falling wedge, matter of fact I guarantee it!!! (eventually it has too! lol). I just don't think it happens on THIS push-this week.

I would absolutely LOVE to see the vix pull back to 27-28 here short term, which was that old support area. If we get that I would aggressively look to re-load select short plays.

My stockcharts for the vix daily and weekly charts are numbered 0.0.4 and 0.1.3, click on chartlist (not view 10 per page) for ease of viewing.
(that alone makes me cautious to not want to re-enter short right here right now and wait for more signals)

Also I would like to see the 60 min charts at rsi resistance to go back short, which they are not.

875 /ES

2009-07-07T21:17:00.002-04:00

It is a line in the sand...the LAST 2 times we "touched it"...we rallied huge from it.

It's not so much that I "expect" it again, as it is that I respect it...

also 485 RUT and 1400 NDX (that's 3 of the key ones to watch we are right on top of here)

http://erikmarketview.blogspot.com/2009/07/numbers-to-watch-on-way-down.html

Woah, hold on there Tonto.

2009-07-07T19:05:00.012-04:00

and there it went....don't chase it. Another will come.....

Was looking for minimum of 890spx and within 3-5 trading days time, from back on last Wed evening, when we were trading at 925spx.
......Well here we are now @ 881spx.......3 trading days later.

Call the catalyst what you want to, to me the MAJOR player was QTR RE-ALLOCATION.

That now makes the last 8 of 9 times the vix and spx were both up in the same day, the NEXT day was a down day. (and most of those 8 were ugly too!) That is the same link/stat from Cobra's blog, I posted last night.

To me, this mini-swing trade is pretty much over now. It's done.
(too short term oversold to want to continue to push it here)

I would still rather overall market wise short a bounce rather than to buy a dip, but I prefer to PASS on either for right now, and just wait for the pitch to get very nice and fat again to trade it heavy. Remember, they have defended 875 very VERY aggressively before, so I will not blindly assume "this time it breaks". I respect that number as a bounce target, as it has proven it has been before already twice prior.

I still think TIN will see 8.00 this month, I still think GMCR will see 43, I still think goog will see 350, but not in a total straight shot line.

Maybe I have an unintentional bias here b/c I have been short w/ July puts the past 3 days and just closed out all my positions today totally. So to me, the trade is over. When you get 3 day moves like that, you just have to ring the register. This market has NOT been super swing friendly for a while, more of a daytrader and scalpers paradise of late. If I rang the register too early, oh well....but ya just have to, IMO.

Regardless what anyone says, IT IS TRUE that subconsciously 95% of us will chart and think in the direction we hold. Of course we took that position b/c of a leaning. However, in this market after 3 days in a row like that, if you not at least letting HALF way off the gas, you are asking for it, imo. I'm neutral short term now. I don't see a catalyst perse, however there are 2 sides to every story, and it's not that i expect. (but i could very well see it happen). The media now do its fade to the initial reaction and Tomorrow something like....."Obama, is prepared to do anything or nothing....he is just open to many things, that does NOT mean stimulus coming!"...whatever, some kinda reassuring thing. Not that I would expect the market to RALLY super hard off that, however I would expect it to NOT go lower more than likely.
That's the news side of the house, psychology side of the house.

Technicals: I think the better trade is STILL to short the pops MORE than buy the dips, there is no change to that to me. However, the key is to short the POPS...(so to me again maybe i am bias b/c i have been short the past 3 days, but this is NOT the ideal entry right here)
Kenny made a good point on one of his last blogs, and I agree 100%. As vix traders will be aware, when the vix gets close to the EDGE of its 20EMA envelope, pull off the juice then. I think vix 35 is possible short term, but I also think that is where i would defiantly peel out of the short side.
My game plan has not changed, its just that the best entry is after a POP...not after 3 down days.
I am sticking to those key NUMBERS that I outlined a couple days ago on the 5 separate indexes, as the major support levels.

I actually think LVS is tempting to a close spec buy if it gaps down tomorrow. (as in for a 2 day quick swing) The chart to me says that the momentum is drying up very much to the downside and 6.60 is the 50% retracement from the entire move up. Again, nothing fundamental...but remember the stocks that go up the most on those OUTLIER up days in the middle of a down swing are the biggest clunkers and the most heavily shorted! (ie insert your favorite heavily shorted...short squeeze play of choice) LVS catches my attention b/c of the 6.60 is again 50% the entire retracement of the move up. So i think it has a chance to bounce from there, for again a 1-2 day kinda play idea, that's all. Not calling it here long, (its conditional) but If the market goes down even more tomorrow, and it rests on 6.60 lets say and bounces around there...It's a buy then to me till the close on Friday. The chance of that set up coming are low, but waiting for the better ones and not settling for the "ok" ones is the whole idea.

Edit: forgive me for saying "3 down days", as Tue many will say was an up day (spy/indu)...just all the stocks on my watchlist and that I trade short were down, as was the russell, and those were the ones that I was watching. Yes Tue was an up-day for the indu/spy, but to me from trading we just had 3 nice down days across the board.

Monday, 6 July 2009

2009-07-06T23:47:00.014-04:00

Not much to really write about tonight. No changes of sentiment for me.

Was able to cover up some nice shorts entered on wed (tin,goog,sbux: 3 of the same ones I posted/called on Tue night, 3 trading days ago for a 3-5 day swing. All 7 of 7 are now lower by the way$!)
http://erikmarketview.blogspot.com/2009/06/market-30-june-looks-like-more-short.html

I had ran my mouth on and on and on about Window Dressing and the re-allocation side of it and that's what it really is! (not just bullish/bearish for all 24/7) So heck, I better of hit that call hard, as I follow the tape and rotation side of it very closely qtr after qtr, as that was the main basis for all 10 of the plays (7 shorts, 3 longs).

RUT was the weakest index by far (as I had expected)
INDU got the most love (as it was already by far the most beaten down)

Strength from the weakest index + weakness from a stronger index (ie: index narrowing) just that trend alone means consolidation. (but not really a strong cue for direction itself)

SPY and VIX up today together, so Here is what it has meant before.
(Props to Cobra for all his stats that this guy does!)
http://cobrasmarketview.blogspot.com/2009/07/07062009-after-bell-quick-summary.html

Everyone and their mother's continue to watch the Head and Shoulders on the SPX, so we shall see.

AA is selling off before the report here big time. So it is going to interesting to see if the "worst" is baked in already. Then again last qtr, they had a terrible report (as always), and the market then proceeded to lift it along with every other stock.

So it's time to start to watch the earnings TREND, and play what they give us this qtr.

Numbers to Watch on the way Down

2009-07-05T19:41:00.013-04:00

NDX: 1400, 1340
RUT: 485, 470
SPX: 875, 846
INDU: 8259, 8000
COMP: 1715, 1660
(daily charts attached)

Also looking at the Weekly charts (not posted up here, but on my stockcharts list)...I think the Russell looks like its in for the biggest % short term fall here. (rsi:50.88 angling down). I think that 470 is more likely than even 485 as the next short term destination. I think that the 2nd targets (the lower of the 2 numbers) are the most likely next destination for these indexes, some even more likely than others. But...we shall see.

Weekly wise, INDU is already the by far the weakest (relative) at like 47, and the SPX rsi had just crossed under 50 last week.

Those same targets are some potential support levels worth watching. (personally am looking to cover some shorts (goog, tin, sbux) at etc.)

I will respect them all. However as the first ones "go"....it just to me makes it most likely they are headed towards the 2nd level.

Good Market

2009-07-02T19:26:00.005-04:00

How was that Bounce, window dressing Jun 23 call?
Go neutral (vix is too low relative to spy) Jun 25 call?
Go short, reverse window dressing June 30 call?

Ok, enuf chest pumping, all my prior posts are listed on here. Lemme stop...

(finally confident enough again to start trading full size lots over the past 2 weeks, as the market had been admittedly VERY VERY tricky (IE difficult to find high probability trades) to me since AFTER april 2nd (the M2M ruling), with the one exception trend of the several April/May pre-earning 2-3 day long run up plays on the short heavies throughout the 2nd half of the past earnings season, thank goodness for those)

I think that if we pay attention to the TAPE here for earnings we can catch some nice trends. Last qtr was easy, since 80% of stocks were going UP off earnings, you just go long the most shorted ones 3 days before, then sell 1 hr before, rinse and repeat on to the next one.

I feel very strongly that trade will NOT work this season.
But another one will, we just gotta find it and watch the tape to recognize it....

****I do this part-time, I have school/job (one in the same), which occupies a good 60hrs a week, I am NOT a full time-primary income trader, I am just a part time small fry looking to learn the market well enough to take it full time without any apprehension) I still have TONS to learn on scalping, futures trading, advanced options trades to where I am even CLOSE to taking it to the primary level.*****

Will post a detailed opinion of the next week ahead lil later this weekend. (I need to do my dd and charting)

My cliffnotes opinion is:

I think we still have MORE downside on the very short term, and the cessation of it will be ONLY accomplished most likely by a bank or broker PRE-announcing good earnings. (so I would not be short the banks/brokers heavy overnight, in case that happens as it would likely be before pre-market hrs most likely again, can never be too safe ya know). Also when stocks DO SELL OFF, it's likely that they also stop selling about 5 days or so before earnings. (as everyone gets nervous and stands still, both the bears and bulls). However before that "might" come, and I am not sure it will, but I respect the potential it has, I think we are going LOWER next week, and even though summer volume is anemic...NEXT week will be higher volume than this week. (historically it is almost every week AFTER a holiday week). And since Oct 2007, 95% of the time we INCREASE in volume the next week we move LOWER. So hence, i remain bearish short term even after todays move down. After next week, I will likely move back to neutral, as we will be too close to earnings to want to lean either way. (let the earnings trends tip their hand first, remember last qtr, the earnings run up trend before the report (3 days-ish) was crushing it.

jmo, fwiw.

That is my view of the tape/momentum. I still need to look at all the charts and go through them a time over. (weekly/daily, etc)

Have a great 4th of July weekend!

Dennis Kneale

2009-07-01T19:55:00.016-04:00

Please shut up Mr Dennis Kneale pull up a chart and tell me since oct 2007....WHEN we have gone from an anemic volume week to a normal volume week and NOT sold off? (look hard, there is actually 1 exception)

We already KNOW that volume is going to pick up next week in comparison to this week.
You wave the pom pom's, Illl play the most probable odds.

(Yea, the guy does guy under my skin LOL. Somewhere, someplace out there....there is a little old lady who sold everything at the lows in March 2009, out of panic when Cramer was screaming and crying and now she's about to buy back (close to an intermediate high, imo) in after being inspired from "hope" and a false golden cross signal from a guy that does not even know what the VIX is?)

When friggin Dennis Kneale starts talking about the "golden cross"...LOL.....the market is about to pull BACK. That's my 2 cents.

I will take Karl Denninger's side of the viewpoint. (very good read)
http://market-ticker.denninger.net/archives/1175-To-Dennis-Kneale-Youre-An-Idiot.html

Re-allocation time

2009-06-30T20:49:00.007-04:00

(Reverse Window Dressing)

Short term, over next 3-5 trading days (before Monday's close) I think we are headed to 890 SPX (I know, conservative target huh)

WFMI
TIN
MAR
GOOG
AEM
GMCR (knew a bogus upgrade was coming (came 2 days ago)....was a week late to that call though)
SBUX
(are 7 names I think look nice here short over the next few days)

HOC
BKC
FDO
(are 3 that I think "may" do "ok" to the upside over the next few days)

Google outlook

2009-06-29T22:47:00.005-04:00

http://www.bostonwealth.net/2009/06/29/goog381-target-update-2/

There are 3 of my posts there (that one and 2 priors below the chart)

That's is just my current and most recent past opinion on the GOOG.

I post there also at times, as it's a great medium to read and exchange opinions with other traders.

950: most important level of the year.

2009-06-27T18:55:00.004-04:00

Well put by Todd Harrison.

Who said that Investing is dead?

2009-06-27T13:45:00.010-04:00

Proshares looks like they are throwing up a nice lob alley-oop here to me.
.....and I am looking to slam-dunk this "Investment."

Yumm, Fresh $73 & $86 meat.....

Proshares just released two new ETF's to return 3X the sp500 index.

http://finance.yahoo.com/q?s=spxu&.yficrumb=RuaNuv22mi7

http://finance.yahoo.com/q?s=upro&.yficrumb=RuaNuv22mi7

UPRO (3X bull spy)
SPXU (3X bear spy)

Here is some data on a few of past 2x and 3x etf's:

(proshares 2X financial)
SKF opening: 46 (Jan 2007)...........................now 42.11
UYG opening: 69 (Jan 2007)..........................now 3.91

(direxion 3X sp500)
BGU opening: 57.50 (Nov 2008)...............now 33.69
BGZ opening: 61.50 (Nov 2008)................now 35.46

(direxion 3x financial)
FAS opening 55.42 (Nov 2008)...................now 9.15
FAZ opening 60.22 (Nov 2008)...................now 4.73

http://www.fool.com/investing/general/2009/06/26/this-is-not-how-you-triple-your-money.aspx

Looks to me like pro-shares is going to hit another homerun and looking to capture that 3X exposure that direxion has.

These are all great Long term "SHORT and HOLD plays"

We all know the decay on these things is horrible and they are ONLY daytrading vehicles, that is common knowledge and overtime all of these (bear or bull version) things rot away in price.

When I say short, I am referring to being short BOTH the bear and bull version 50/50.

However, shorting both at just ANY ole time is NOT the same.
Ex: if one went short on March 8th, both FAS (@ 2.32) and FAZ (@115.50)They would be up 95% on the faz position, yet DOWN 400% on the fas.

So when do you enter? Well that would take knowing what the market is going to do, if we are about to have a major rally OR a major crash, then it might not be the best time to enter these both short, as one has the potential to go UP over 100% thereby making it a losing hedge trade.

Entry and timing IS trading, it's everything.

To me this is not a trading idea, this is an investment.

Example, to enter faz short at 60 in Nov 2008, then have it go to 200, that means your UNDERWATER 300%. (with only a +80% or so FAS to hedge)...ie -220% net.Basically, If you are on the verge of a monster RALLY or a monster CRASH, there can be short term PAIN shorting these things. But in the long run, to me...the evidence is clear, they are all headed lower.

I would expect these to perform just like BGU/BGZ, as they are the same a 3X spy etf.
It is unfair to compair them to FAS/FAZ, b/c that is just one sector.
BGU/BGZ is the only true fair comparision.

BGZ achieved a "max" of 110% gain at it's peak, compared to it's inception price. So again, the outlier tilt is there as a short term risk to at a specific "paused" point cause an underwater position. However one has to look at the most exteme or ranges and specific dates to find such that "ezact" time that short BOTH bgu/bgz was a losing trade, that also came and went in no time.

But that again get backs to the core of what the INTENT of these etf's are for. They are for the volatility junkie in all of us. That takes extra effort, that takes knowing what the market is going to do. I just like an investment to take a core position and not have to think about it daily when one arises, as they once in a blue moon it seems. (I do remain short gld, long dba for the long term also)

If you think the market is going to rocket higher for the next 2hrs, you play BGU (not spy). That's because you are trading.This is not a trade, this is an INVESTMENT.Buy and hold might be dead, so may short and hold..... but short and hold (levered etf's) is not.

Disclosure: I will be looking to get short BOTH upro and spxu for a long term core play, (ameritrade, options express, think or swim, or if need be I will open up a new account to obtain shares short) If the market crashes or has a monster rally (and ones goes up over 100%)...i will suck it up short term, no worry...gravity loves the leverage. I plan on holding them both short for possibly even years.

Chart of the Day - VIX weekly

2009-06-25T20:13:00.009-04:00

.

I had expected the market to move higher, especially towards the end of this week.
.
I had NOT expected the vix to fall off this much however.
.
(in other words, I expected stocks to be bought, yet not too many calls)...as purchasing of calls is more indicative of FUTURE bullishness, not immediate short term. Window dressing is about last minute clean up, not future planning.
.
There only 3 prior touches on the VIX weekly, yet that is still enough to be a trend.
I will respect it, till it proves that it shouldn't be as any trend line should.

Is the vix bottoming here right now? I have no idea, But I will again respect the chart, till it proves otherwise. Also the last day the vix had a red candle this big (may 26th) the next day the spy fell by 2% (may 27th)
.
I simply can not feel comfortable being long the market looking at the vix weekly chart as it stands now.
.
Remember, when the vix bottoms...the market TOPS, that's how I look at it at least (link below w/ prior vix results) and the chart to me says there is a "CHANCE" the vix could of bottomed here.

http://erikmarketview.blogspot.com/2009/05/falling-knives-vix-and-usd.html

I would love the most ideal of all to see the vix HOLD here at this level, and have the market yet still push up even a little higher into the end of June, then enter SHORT select names. (TIN, GOOG, MAR are 3 that come to mind I think will be great shorts for the summer time)
.
Maybe 26 on the vix does NOT hold....maybe it goes to 20, and the spx to 1000! (I have not a clue. Not trying to predict the market, just respecting what it shows me)
.
However the resting on that line is more than enough itself to make me pull back and watch/wait.
.
If the market moves higher into the end of June, hey great...it wont be with much of my money though. But I still do "hope" it does, b/c I believe it will be just giving a better entry to go SHORT in July.

Plus the #1 dimwit on CNBC (can't even remember his name, I think its King Cheerleader) was just yapping about 10x saying the recession is officially over, "ya heard it here first".

I see the VIX is a very popular chart today:
http://danericselliottwaves.blogspot.com/2009/06/vix-chart.html

expecting and looking forward to reading many more thoughts on it

I feel a BIG bounce coming.

2009-06-23T21:08:00.007-04:00

I remain short term bullish, actually VERY bullish.

There will be a time to swing short the market w/ both fists.
That time imo is NOT now, still not yet.

There are way to many technical indicators that a very large bounce is coming.
- Weekly spx, rut, indu all ALREADY crossed UNDER 50 on the rsi from Monday
(it has already happened, all of those happened on Monday)
-Every index is at support trend lines from May here, every single one.
-Pos divergence on every 60min chart (macd/rsi)

GOOG has very possibly topped-out at 447

2009-06-21T21:06:00.009-04:00

I can not help but notice the 56% retracements being equal on the dot.

(I am not saying this is the ideal entry short, for that I would like to see a double top rsi weekly w/ lower price or a break of the rsi trend line on the weekly..basically a little pop up from here w/ divergence signs compared to the 447 peak)

IYR (update)

2009-06-20T17:30:00.001-04:00

Gold vrs Grains (second entry)

2009-06-19T01:55:00.008-04:00

13 weeks ago I had mentioned the pair trade of Long DBA / Short GLD.

(almost 2 months before you Gartman...lol)

http://erikmarketview.blogspot.com/2009/03/gold-ags-hedge-trade.html

It has done very well, but after really taking off, it has pulled back here a little bit recently, looking like another potential good entry spot.

No time idea at all.

Looking to take off 25% size for every 5% profit.

Why I am a short term BULL on the REITS.

2009-06-18T20:35:00.017-04:00

IYR

Sectors:SPY

(lots of charts I know, I could of posted many more sectors, but I didn't want to overload it X10)

For window dressing only, as an entire sector (now.....till next Friday)

Of all the sectors that have OUT-performed the broad market (ie: spy) this qtr, it to me it has the best set up here, to be most likely to get another (perhaps the last) PUMP.

IYR: Target 35 (200ma)

(short srs for disclosure of course)

Remember, window dressing is not always bullish across the "entire board", although it may be.

(my elaboration/explanation, fwiw............)

http://erikmarketview.blogspot.com/2009/06/getting-prepared-for-window-dressing.html

It is simply: adding to the winners & removing away the losers before the final buzzer.

However, I do lean bullish for the broad market till the end of this month (to June 26 to be safe)

-FOMC next week: I expect them to re-assure that rates will stay at ZERO for a while.

(market should like that)

-Window dressing is typically more bullish than bearish (even though there is more to it than

just that)

On the individual side of the house, I prefer to sit back and watch and wait, and perhaps let it run till the end of the qtr, then play the inverse side of this trend.

Bottom line: I am looking for the trends that have OUT-performed spy since 1 April to get a nice push higher through end of next week. There are 4 trades to it, don't feel like going over it all again, its in the old post above.

IYR is going to re-visit the 200ma, and SRS will form a triple bottom around 16.80.

That is how it's going to go down for the Window Cleaning by the end of next week.

(I.M.H.O.)

Looks like it's time to Short the Ultrashorts again

2009-06-18T10:44:00.002-04:00

for the next 7 trading days.

SRS/SKF/FAZ (July puts for a swing into NEXT week)

I "think" the buyers were waiting for 8500 to step in heavy. The later this week goes, the more window dressing picks up.....

+SAKSD in at 1.80 (looking for >4 by next week)

All levered etf's are made to SHORT more than to go long, for swing time frames.

(will add charts later)

COPS & Next QTR's Earnings (looking ahead)

2009-06-16T19:31:00.015-04:00

When one says the words "Earnings" or let's say "Financials Earnings", what comes to mind?
- Bullish? Manipulation? M2M accounting change? Exceeded expectations?

Different answers for different people. The first 3 are truly just opinions and viewpoints. The only one that matters is Exceeded expectation. (Well actually the only thing that really truly matters was the market's REACTION to them..... which was UP)

Most people's memory's are fairly short, and the last thing that comes to mind on the earnings front, especially financials was EXTREMELY bullish.

Regardless if it was all due to M2m changes, (as it was) that is not what matters. All that matters was the market reaction.

Some traders are "chasers".
Almost all analysts are "chasers".

What analyst would downgrade GOOG below 300, yet not at 700? It was done.

What analyst would put a 0.50 target on MGM when it was trading at 2.50, yet not at 20,10 or even 5? It was done.

What analyst would raise targets on AEM at 55, but not 30? It was done.

Analysts are not stock pickers, they are not advisers, they are salesmen for their firms.
99.99% of the time are making recommendations in attempts to benefit the firm for which they represent and nothing more.

Analysts are like the cops, when they all start showing up the to the party, the party is busted. (best analogy I can think of. 1 or 2 cops...ahh no biggie, it must just be their patrol route.........25 cops,something is up)

For example the last 2 qtrs (I believe it might be the last 3, but I know the last 2 for sure) that GOOG reported, they "beat expectations". Yet if they would of been held to the expectation set 4 weeks prior to earnings they would have missed both times. The bar was lowered in the last 4 weeks so much that enabled them to "beat the street". No one talks about that, as the final result is all that matters. But watching how it got there is key. (bar raising or bar lowering)

So twice a week I take a glance at the estimates of GS, BAC, AAPL, GOOG for a "chaser-gauge" broad sentiment check. I jot down those 4, and I keep track of the direction those estimates are moving. They pretty much they move w/ the current stock price. When the market is bullish, the chasers raise the bar.....when the market is bearish, they lower the bar.

Let's take a look at Goldman Sachs for example:
http://finance.yahoo.com/q/ae?s=GS

GS: 3.31 currently, raised 13 times in the past 30 days, and 4 times in the past 7 days!!
(watch that number 3.31, as it will change....that is important to watch)

Last qtr Goldman earned 3.39 with the expectation of 1.64. It was almost like the analysts did not even attempt to try to gauge the M2M impact. (ya think that was done by mistake? lol)They went from missing by 33%, to exceeding by 106% the next qtr. And these are the analysts experts who do this for a living.

When July comes around, and "Window Dressing" is over. The ONLY 2 things I can see that will push the market higher intermediate term are either:
a) great actual up-side surprise earnings results (that's a fools guessing game, and less likely)
b) large bullish momentum going into earnings (I think that could be likely)

From my experience of how the market usually reacts I "think" there is a very strong possibility that before they report many analysts will be extremely rah rah bullish.

Such things will be said as: "You remember how good they were last time, don't miss the train this time!!! Financials = blowout baby! don't you remember...M2M has assured that for us! etc"

The Market is always trying to get AHEAD of the next trend. (the hard part is knowing what the hell the next trend is!) And with the most recent memory of the financials being "everyone exceeds earnings"......until proven wrong, people like to stick with what has "recently" worked.

I know myself, after witnessing a few blowout ER's, even dummy me caught on. I would go long 3 days before earnings of the most heavily shorted stock I could find, and sell right before the ER, over and over again. Heck, I must of done that about 15 times this past season. (w/ only 1 loser!!) Trend was raining money, and I "think" that because of it's results this last qtr, it has a good shot to get the the benefit of the doubt at least going into the season this time.

If it set's up like this however, I dont think the results will be the same however.
The cops are in a totally different mood now at this next party.

Many people I have read refer to last qtr as an "earnings trough". I look at as more of an "expectation trough". As the "sky is falling sentiment caused all the chasers (ie analysts) to set the bar so low, no wonder it seemed like every day there was another "blowout report". With the sentiment now almost seeming like "new bull market euphoria". I have a feeling the chasers might overshoot again, as they almost always do and the high's of the year are IN. (right before earnings season).

Just thinking out loud and speculation as nothing should be a dead set thought in this market.

However if numbers like 3.31 continue to rise going into GS earnings, It likely means the kool-aid has become way too thick. Now if numbers like 3.31 start creeping lower plus, then that's the more tricky one, to be cautious of, dont get "googled"!

Aside from watching the actual EPS estimate changes going in. CNBC (Jim Cramer, etc) should as always give a good "red-alert" sentiment gauge. I fully expect massive pumping of the financials before the earnings and upgrades to be flying out of the wazoo. I'd love to hear talks of GS to 200 and such. Pump it up, because that's just means that much more downside to come in my opinion.

Intermediate wise, I see very few factors keeping his market up after early July.

Alot does rest on RIMM here this week. It's still a huge momentum stock. I "hope" they get a bullish reaction from the ER. Just as I "hope" that every one on CNBC pumps the financials next qtr earnings like the great lottery ticket rush that you just MUST be in front of!

Because if that happens, which I think is pretty likely considering the last results, I also think it's going to give us the best swing short entry since the beginning of Jan. (after the end of year Window dressing/Jan Effects)

Now mind you, back at spx 720....(link below)..I was a raging bull and said stay long, and wait till April 2nd, then do a 180 and short the be-geezus out of the market! (well, at least I got the up part correct LOL). But that's why "calling" tops and bottoms is a fools game and it doesn't get you any bonus money in your account. (hey, I had to try just once....)

http://erikmarketview.blogspot.com/2009/03/rally-will-top-out-monday-at-close-or.html

Conditionally, I am just speculating...that the actual earnings will NOT be as good as last qtr for what is expected, b/c of the sentiment now is not as fearfull so the bar is higher. And for this to get set up nice, i would like to see a huge pump fest w/ cops galore surrounding the area for it to have that nice risk/reward ratio in favor before hand.

3 stock ideas/calls for this week.

2009-06-15T18:24:00.015-04:00

Short term, I think that today gave a pretty decent entry to some "select" plays.

(shall see, as I was buying in the A/H)

In addition to the short term t/a set up + daily rsi slightly under 50, I only selected stocks that are also UNDER their June max pain. (which is not that many)

Targets are conservative. (If/when reached, I will trail them from there and let it run till end that day)

Do you own dd.....

DRYS: Target 7.40

MGM: Target: 7.50 (I also like lvs here, but mgm a tiny bit more)

GMCR: Target 60.00

DRYS/MGM: The flag formations are pretty long in the tooth, with some nice divergences to them. I think they will "touch" max pain ie 7.50 at least this week.

GMCR: Yea it's overvalued here big time, but PE's are not things to trade over. Yea I "think" it's going to be one the better shorts of the year, setting up starting in July, but not now. The trend is up, and today just took it down it to the channel support line, that's all. Max pain is 85, it's 33% short, with 95% fund ownership. If i was a fund, as correct as I "will be" one day...I sure would not want to show off that I have been "short" this thing all qtr...as that is one of the worst trades there could be on one's books. I actually would not be surprised (kinda almost expect) one of those pumper UPGRADES here soon, just for the "window dressing / squeeze".

Stockcharts watch list

2009-06-12T20:14:00.008-04:00

Added a link, for a public chart list.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3381442

All stocks up there currently are >90% fund owned.
It's my evolving watch list for watching window dressing set-ups, soon to trade.

(dont forget to vote daily, if you want to of course.....bottom right below charts)

A Chart that caught my attention (Window Dressing 2)

2009-06-11T23:39:00.012-04:00

http://www.bostonwealth.net/2009/06/11/beginningend-of-quarter-correlations-in-spy/

(full post w/ discussion)

This is not mine. This is from a fellow trader, whom I bounce ideas and discuss the market with.

http://www.hedgeaccording.ly/ is his blog.

It a great chart of the "broad-market allocation based" Window dressing trend that I mentioned early this week, to further show the trend. (the example charts I posted were in reference to the spy relative performance difference of individual stocks, the other part to Window dressing)

Again, this is in reference to the "allocation" part of Window dressing, NOT the outperformers vrs underperformers.

(there are 2 trends to quarterly window dressing, differences mentioned in my prior post on Monday)

If you think too long, you probably won't change your mind.

2009-06-10T21:23:00.014-04:00

923.26 and 951.69 are the 2 lines in the sand here....

It does look the most like a consolidation here, preparing for another push up for the bulls.

IE: going higher than 951.

60min: resetting on the stochs/rsi, and if we chop around any longer, that 200ma might very well come a prop-prop-propping up again.

Daily: Looking at the past 4 candles....that does not look like indecision, it looks like ALOT of indecision! Again, if one thinks for too too long, they are less likely to turn the ship around the other direction. 1 doji or 1 highwave....ok look for a reversal, but 3,4....etc...they start to get diluted and lose their reversal probability ya know.

Also, FYI. The $COMP did squeek out a High of Year right at the gap up.

....again nothing to get bullish bonkers over. But also not to be discarded either, as it is a "higher high".

(I am not participating heavily in it if it does push up. By choice I prefer to wait, and be mostly cash heavy till mid June and let some window dressing plays start tipping their hands. I'd would like to "try" to have more trends and probabilities in place to really mash the gas hard)

http://kennystechnicalanalysisblog.blogspot.com/2009/06/ebony-and-ivory.html

http://danericselliottwaves.blogspot.com/2009/06/elliott-wave-update-10-june.html

I am not an EWT trader, it's just a minor adjunct for me.

However Daneric and Kenny's last few posts are ones that I do recommend.

I would not be surprised one bit to see those targets met.

Getting prepared for Window Dressing....

2009-06-08T19:48:00.020-04:00

Let me preface this by 2 things first.

1) Defining Window Dressing

Mutual fund managers are required to disclose their portfolios at the end of every qtr.

When the end of the qtr approaches, there is very often excessive buying and selling of stocks to "window dress" the fund's quarterly holdings. Using the SPY as the benchmark, stocks that have outperformed the SPY will more commonly get bought up even more. In contrast, stocks that have underperformed the SPY will more commonly get sold off even more. Thus making the fund's holdings at end of qtr look "really smart!...wow you guys had tons of SPG, and barely any FDO....good work!! etc etc" Statistically, this trend starts around 7-10 trading days before the end of the qtr. Many will say/argue that it also concludes 1-2 days before the end of the qtr, due to the settlement date so they can disclose for their portfolio, etc.

I use Simon Property and Family Dollar as examples, as the trend for this qtr is that the funds will want to ADD to thier SPG and SELL on their FDO.

Fundamentally, I think anyone would would rather be long SPG over FDO is "bonkers". But window dressing is telling us the fund manangers are more likely to want just that, at least till the end of June. Not going to fight the trend. As if that is the case, I will be MORE than happy to short SPG at a higher price, and also more than happy to possibly buy FDO at a lower price at the end of June.

The past 2 qtr's were total disasters for the mutual funds. However, as you can see we had very nice rallies at the end of each of them both. Heck, it was basically the only time the market had a rally for each entire quarter. Which segways into 2)

*Window dressing is NOT always a "Bullish Trend". This is a misconception*

2) Window dressing also at times applies to allocation (stocks vrs bonds vs money market etc)
If a mutual fund is supposed to be 80% in stocks, and they have been hammered for most of the qtr, so they are down to 75% and fudging it, they know they have to get back to 80% before the end of the qtr comes. So there is going to be buying. In hindsight, this also is a partial explanation to one of the reasons why we had a broad market rally for the end of BOTH the past 2 qtrs, allocation back into stocks.

This qtr however, is very differant. For once, the mutual fund managers are actually drooling to show off their books here. I do not think that they are "underweight" stocks from an allocation standpoint. If anything a strong case can be made they are possibly overweight. Perhaps we see an allocation based broad market SELL OFF at the end of June. It's possible. But that is not the trade that I would look for. I would look for more than 1 favorable trend to jump aboard.

Why settle for 1, when you can have 3?

Q1: So first of all, how do we backtest this?

I do not have massive cumulative statistical calculations for every single out and underperfoming stocks for the final 7-10 days of every qtr, and the few days of the next qtr. I will post a few examples, again only those with >90% institutional ownership and show the results. As with any trade, doing you OWN due dilligence is the key.

Q2: And second of all, how do we track this for THIS qtr?

http://www.finviz.com/screener.ashx

Use a stock screener, Finviz is pretty good (and free)

a) First only select stocks that are HIGHLY owned by institutions. (I use >90%, which is alot)

(remember, retail traders don't care about qtr window dressing, this is a mutual fund trend. If the stock is not highly owned by the funds, the trend is of lower probability)

b) I also like to filter by only >1,000,000 shares a day avg volume (to rid the low volume plays, just personal preferance)

c) Then to seperate the bull vrs bear plays, I use >50% gain for the QTR for bullish and no gain for the qtr for bearish. (considering how much the broad market is up...having no gain since April 1st is very bearish. I would have select gained <10%,>50% gainers)
14 for bearish (down for the qtr)

Separate them by 2 groups: Out-performers and Under-performers.

The bullish play is to buy the OUT-PERFORMERS roughly 7-10 trading days before qtr end, and sell PRIOR till the last day of the qtr.

The other bullish play is to buy the UNDER-PERFORMERS right at the beginning of the new qtr, or the last day of the existing qtr.

The bearish play is to short the UNDER-PERFORMERS roughly 7-10 trading days before qtr end, and cover PRIOR to the last day of the qtr.

The other bearish play is to short to OVER-PERFORMERS right at the beginning of the new qtr, or the last day of the existing qtr.

Will this make me want to buy or short a stock JUST based on this alone? NO, never.

However, from the results there are stocks that I do know I would be looking to buy as well as ones I would be looking to short. That narrows the list down even more.

Then the final selection of which to play will be chosen based on technicals at that time.

A few of the out-performers that stand out to me that I will be looking to SHORT, but due to Window dressing might likely NOT starting really selling off till JULY. (SPG, ARO, COF, DO, JCP, LM). Especially if they hold up here or even run them up even higher relative to the spy, which would indicate that "Window Dressing" is in full force. Inversely these would also be good to play LONG for the end of June, however by choice I am not looking to play that side as heavy.

A few of the under-performers that stand out that I will be looking to go LONG after July 1st (HOC, BKC, LEAP, FDO), especially if they sell off hard at the end of June, which would indicate "Window Dressing" is in effect". Inversely these would also be good to play SHORT for the end of June, however also by choice I am not looking to play that side as heavy.

As we are not quite at Window dressing time just yet, but getting pretty close so I thought I would blog regarding it.

For me to be safe, untill the qtr is over the only LONGS I will play will be ones that have outperformed SPY since 1 April. As the only SHORTS I will play will be ones that have underperformed SPY since 1 April.

As it can never ever hurt to have yet another trend probability on your side. $$

US Dollar: Start of a strong uptrend -vrs- Just a stabilization?

2009-06-05T19:10:00.017-04:00

(a follow up from my last post, UUP did break upward though the backtest, so the "dollar crash" short term is suggested technically to be of VERY low probability here.)

So is this the start of a dollar RALLY? or Just a stabilization to trend sideways??

Watch 24.50 and the RSI resistance line for a pivot.

Today did not mean its time for the dollar to go parabolic. (don't get too exited yet fellow deflation bears)

It does however suggest that there has likely been a support floor put underneath it for the time being. (IE: uup chart is now neutral.....from prior bearish)

For the dollar to have a bullish trend BREAKOUT signal, it needs to break above the rsi wedge, , which also coincides with the 50 rsi level, which also coincides with taking out 24.50 which appears to be an old support.

Why is it so helpful to chart the $USD or UUP?
- b/c on a day like today, instead of going shorting ISIL (a tech play - 1.22%) one goes short SLW or AEM (commodity plays, -5.30% & -5.11%).
.
-b/c even though some times the "broad market" might not follow inversely to the dollar, if
you look at the individual SECTORS, they almost always do.

Some sectors have MUCH more dollar correlation to others.
Here is a good post, for decent average of the correlation (link)
http://pragcap.com/performance-and-the-dollar-correlation

**Write these kinda of percentages down if you don't already.... If you are BEARISH uup, but also BEARISH the market for let's say a given day, or any of the 4 potential combinations, etc. This makes a HUGE differance for criteria of what sector to play, etc**

US Dollar: Technical Backtest

2009-06-03T20:41:00.010-04:00

.
.
.
.
.

$USD looks like it's going to tip it's hand for the INTERMEDIATE trend direction and .....in the next couple days.

The $USD is at a RESISTANCE level here. (yes.....no typo, "resistance" level)

What I mean, is that it is "back-testing" what used to be a critical support level. It can either:

a) stall here over the next couple days, which is suggestive that the dollar IS headed lower in the intermediate term.
--OR--
b) break back INTO the same channel it had before, and regain the prior major support level, and head higher over the intermediate term.

intermediate term: meaning over the next couple weeks

- Daily RSI - right at prior support, "back-testing" from the bottom
- Daily Price - right at prior support, "back-testing" from the bottom.

the move today, just brought it back to where the "test" is.

To me RSI (and any 0-100 oscillator type tool for that matter) is best used for PATTERNS (narrowing wedge, double top or bottom w/ a divergence, etc) much more than the just actual number or level it currently resides at.

- imagine what happened if every time indicators got "a high level" and one went went to SHORT this rally, they would be blown out.

- imagine what happened if every time indicators got "a low level" from (sep-nov 08) if one went LONG the market, they would be blown out.

Today "might" of been just a dead cat bounce for the dollar
Today "might" of been the start of an true uptrend for the dollar

In summary, I think that the $USD fate over the next couple weeks will likely be "shown" here over the next couple days.

stay tuned......

Bipolar Monday: Turnaround Tue?

2009-06-01T23:41:00.009-04:00

Market UP big
VIX UP big

Dollar down yet again
Gold down, even more

FAZ closes at the same price that it opened the pre-market on a +221 day.

Wild market, to say the least

Oh, Grains continue walking all over gold, long-term fyi.

Now (+14%)
GLD: 95.77
DBA: 28.77

March 20th
GLD: 94.35
DBA: 25.01
http://erikmarketview.blogspot.com/2009/03/gold-ags-hedge-trade.html

As far as tomorrow, turn-a-round Tue has been a very strong trend for a good while. Also the vix/spx divergence leads to a higher ratio of a down following day. So with that being dealt to us already, I do feel pretty strongly that Tue is a red day. After that, gotta play it by ear.

For some good, easy to follow insight of VIX + SPX up days, check out Cobra's Market View, and Vix and More. (on my blogroll to the right). I believe they both wrote about it tonight as well.

Oh, im not calling a top. But i will say this, financials did not look that good here today, nor have they since the GS program buying savior on Friday.

FAZ/SKF are as of now back to THE BEST daytrading vehicles to BUY for intra-day daytrades.

Some charts/stocks to Watch

2009-05-31T21:18:00.010-04:00

,,,

...

ISIL

MAR

WFMI

WFT

MTL

HERO

Denninger on Friday's Close

2009-05-31T16:00:00.001-04:00

http://market-ticker.denninger.net/archives/1072-What-Was-THAT-Friday-Market-Close.html

"Eurozone inflation drops to zero"

2009-05-31T15:40:00.006-04:00

http://debtsofanation.blogspot.com/2009/05/debts-of-spenders-eurozone-inflation.html

Nice fundamental/macro read from JP. Watching the technicals on the miners very closely.

Hedge Idea of the Week, June 1-5

2009-05-31T13:33:00.008-04:00

CASH, till market tips it's hand.

I do continue to like WFMI and ISIL here as short plays.
.
Also watching MAR and SPG as well short, although they have not "shown" it just yet.

Some longs I am watching: CY, HERO, WFT.

The miners looks about as parabolic as can be right now technically. (AEM, SLW). These are high beta, and when the metal and the market are both going in the same direction (which has been up), these things fly. The very same goes on the way down too. They look very over-extended here to the upside. That does not mean they can not go higher, b/c they probably can. They are like 2X etf's for gold and silver w/o the decay factor. Nothing technically about them says short right now. Timing is everything. Same reason I called to pull out of AEM at 54, after entering at 53. Now its 61!

I will call em when I see em, and since they both hit High of 2009 on Friday, now is not the time to short, nor chase long. I do believe they will both roll over, very hard, when? (no clue) I'll wait til a double top w/ neg divergance to tip it's hand.

Fade the opening gaps and use the 30 min rule. (link)
http://erikmarketview.blogspot.com/2009/05/30-minutes-into-trading-day-rule.html

Swinging for singles, no doubles I see worth the risk/reward currently.

Breakout!!

2009-05-29T19:09:00.006-04:00

don't look at the volume, never mind the man behind the curtain.

This end of day push up here, is about as skeptical as I have seen in a while, with that late day monster push up. They wanted to close > 8500 indu, they got it.

Since the market traded this week off very few earnings, and a good amount of economic data. Regardless of the volume, I think that leaders and laggards need to be respected here, and followed. Because the lack of intervention from things such as (m2m, earnings trough, etc), should help indicate WHERE money is going into and out of more.

WFMI does not look strong relative to the broad market.
ISIL which I mentioned last night was red today.

I trade on technicals and trends (ie: news/earnings/seasonal, etc), and much much less on fundamentals.

Fundamentals and P/E ratios however are NOT things to trade stocks over, short term wise.

However they do admittedly make me "look" at them and put them on my watch list (short or long) and chart them, only then when the chart looks like it agrees, I enter.

I think AEM, SPG, MAR, GS, MS are extremely overvalued here, but they are not being traded that way just yet.
(like wfmi and isil have already started too)

I believe this push up at end of day was very suspect. Maybe we go higher? I don't know. Something seems very fishy to me w/ today's tape. Might come of "perma-bearish".

I will continue to look more to find relatively weak stocks and Pops/gap ups to enter selected stocks short, until the vix re-tests it main resistance line (36 est).

If I do find another NUE type set up, I will play it. The "earnings trade" however is pretty much over here. So it's all back to T/A and sector to market relationship watch basically here to me.

Stocks like ISIL and WFMI that are tipping their hand that they are "non-participants here", look the most attractive to me. (even more than select longs, like nue was)

green = long
red=short

Follow through

2009-05-28T23:57:00.007-04:00

No one expects it, but I can see why...bulls nor bears have had any for a while.

Just when it looks like it's going to take off, OR crater, it pulls back or bounces up.

There is alot of divergences made on stocks and sectors now though, alot.

WFMI looks very sick relative to the market, so does CYN here.

I should-a-coulda-woulda looked more to continue to mash the gas on past winners short, as they have had more legs, vrs looks for new canidates. I do still think SPG and MAR are very yummy short, but they have not "tipped" their hand off, like WFMI already has.

ISIL is another one to watch, that looks pretty sick here.

I don't know what's left to go long with, maybe lots. But nothing that I see to feel comfortable and low risk with. NUE was great, but it took ALOT of weekend digging to find that kinda set up too. I don't see another one out there right now, but I will definatly look.

Short term, we are range bound untill we prove we are not.

Bulls AND Bears, neither are stepping up here too heavily.

Check out Cobra's N to N rule to looking at short term direction change, if you have not already.

http://cobrasmarketview.blogspot.com/2009/05/05282009-market-recap-firework.html

The 30 Minute RULE

2009-05-26T19:58:00.013-04:00

This is a "different" name, to a rule that I trade by. It's waxie's 10AM rule, but not everyone lives on the east coast, so I will change the name to not make it "obvious" here. Just trying to share information, which has been very beneficial to myself. (his book is on my library to the lower right, fyi)

- When looking to enter a stock LONG, only do so on either
a) a GAP DOWN
or
b) a HOD that occurs after 30 mins of trading

- When looking to enter a stock SHORT, only do so on either
a) a GAP UP
or
b) a LOD that occurs after 30 mins of trading

This is a rule, that I trade by, and NEVER violate. (I used to violate it back when I was brand new to trading, and before I had ever heard of it, thank goodness that was only for a very brief time)

Not referring to just today only. (yes yes news driven, I got that)

To either a very minor or very major level, THIS HAPPENS EVERY SINGLE TRADING DAY.

The first 30 minutes of the market are, hmmm let me try to think of a decent analogy, of WHY following the 30min RULE helps so very much. Ok here goes:

First 30 mins of trading = Ice Patch
Stock Market = 600 H.P. Muscle Car

A Muscle Car, with summer/slick tires, running at 6000 rpm, just spinning out on-top of a patch of ice. You know in a very short period of time, that the tires will move from the ice to the pavement.

But ya know how when tires spin really really fast, some times they look like they are going backwards? So we don't even know if this Mustang Cobra is in 1st, or it's in reverse?!!! All we know is that when it moves from the ice, its going to MOVE and move convincingly either forwards OR backwards, and then we will be able to tell crystal clear, but only when it get's OFF of the ice.

When you finally get off the ice patch, it's means you can much more TRUST the direction after that point, as in if its Forward or Reverse. Remember, those tires were spinning on the ice, so again it's very hard to tell if they were spinning forward or backward! When you finally get off the ice patch, It does NOT mean that you go 0-100mph and get whiplash from the push (huge rally or huge crash). Maybe your only stuck in 1st gear all day and just put put put along. But at least you have a much better idea what DIRECTION the "put put putting" is in. You can trust the pavement (post 30 mins). You can not trust the ice (first 30 mins)

So again since you have NO clue looking at the tires if it's in forward or reverse, you know that it is a 50/50 coin flip, which you also know is NOT a trading plan! So you do what what's best, you LOOK to gain higher probability.

Here is how: If you slip to the BACK of the ice patch, you place your chips for it to go FORWARD. If you slip to the FRONT of the ice patch, you place your chips to go in REVERSE. (why???? b/c the odds are still only 50/50 on direction, but now there is much more room to travel from that selected point, and much more whiplash to catch in your favor (ie profit)

And if your wrong, and it does happens to continue to move back onto the pavement, you are already headed in that direction, so the whiplash (loss) is much less.

That is my terrible attempt at an analogy for the ONLY short gap ups, and ONLY buy gap downs.

On to the BUY if HOD after 30 mins, and the SHORT if LOD after 30 mins: That is along the same "analogy". You don't trust the ice patch (first 30 minutes). You only trust the pavement.
Once 30 minutes of trading has passed, you are no longer on the "ice patch" you are now on the pavement, so you trade WITH the market.

Trade WITH the pavement. (after 30 mins)
Enter AGAINST the ice patch. (initial gap)

I hope this is understandable, and/or helpful to at least someone.

Hedge Trade of the Week, May 26-29 (bcsi, big, mrvl, azo, nue, spg, wfmi, mar)

2009-05-23T06:47:00.041-04:00

BCSI: (Long) 6% short

This one is only a 2 day play here. Theme, yep you guessed it - "pre-earnings". Earnings are after the close on Wed, so get OUT before the close on Wed, no "gaming!" To me, this stock is a tech version of WFMI, an overvalued PIG. So also after earnings get's out of it's system, it will be one to look to short-bombs away. Did you see WFMI and how it was trading on friday on NO news?.....call the life-alert!! Anyhow, getting off-subject, more on that later. BCSI-long, tue / wed. Ideally on a gap downs of course.

BIG: (long) 14% short (favorite long)

Another "pre-earnings" runner here. Yep. Earnings are before the open on Thurs, so again get OUT before the close on Wed.

JCG: (Long) 27% short

Earings are after the close thurs, so GET OUT before the close Thurs.

MRVL: (long) 3% short? 32%?

Same theme. Earnings are after the close on Thurs, so GET OUT before the close Thurs.

I like BIG the most. I do think the market goes LOWER this week, so longs are going against what I think will be the "tide" here. I am also getting some conflicting data on MRVL's short float, one site says 3%, another says 32%!

Hey, I could be wrong, maybe the market rallies!? That's why I always like to try to have longs and shorts selected, under any weather, to play the difference.

As far as the broad market, like I mentioned in my last post. I "think" the higher probability is to play more heavy on the SHORT side, and with signal/target to "back-off" of VIX 36 (ie: the "main" resistance line)

I would not look to "jump" into all these long plays right from the open on TUE, especially MRVL, since they don't report till even later.

I do NOT have a set price target on any of these perse, I just feel they head higher going "into" earnings, via short covering + spec buying, that's all. That has been the trend pretty much all earnings season long. So for target, target is 5 min BEFORE the close - PRIOR to when they report, that's the target.

Also AZO reports Wed before the open, if your looking for a TUE only long, that looks to be in play.

NUE: (long). No earnings play here. (ballsy huh?) I do like the T/A set up it has. RSI is just a hair below 50 on both the daily AND the weekly here. I "think" it has some good support at the 37-38 range, which looks like it would be a better entry spot, so again I would not be drooling to gobble up this one up out the gates Tue, as I think it might be had a little bit cheaper. It's been trading in a 38-45 range, so if 38ish comes again especially, I would like it even more.

Target: 44-45

As for the Shorts: (inverse...ideally market GAPS up to start the week for better entries)

SPG: I think it has a decent shot to hit 40 this week. Weekly rsi AND daily rsi are both barely hanging > 50 by a thread. They both cross, perhaps at the same time, it's gonna be ugly. (similar to an opposite technical set up from NUE, albeit it SPG is much higher beta, so it makes bigger candles). Heck to just go "pure" hedge. SPG short + NUE long for the entire week, and profit the difference I like.

Targets: 44, then 40.

MAR: Targets: 19.90, then 18.42

(if you do not already use fib's as at least an adjunct to setting target's, I would. Recall my weekly 7.84 LVS target from 10.50?.....being off .05 isn't too bad)

http://4.bp.blogspot.com/_Qdtp9kZdS-Y/SgUKEuUKNKI/AAAAAAAAARQ/595aoUi-TyM/s1600-h/lvs.bmp (lvs - low that week was 7.89)

WFMI: Targets: 17.51, then 16.04

(I like these 3 equally)

Using the two falling knives: VIX and $USD

2009-05-22T18:37:00.013-04:00

Stick a fork, Falling knife (utensil analogy week huh?)

VIX bottoms = Market tops

USD tops = Market bottoms

You can see VIX tops and USD bottoms do NOT have nearly as strong as a market correlation.

Q: Did the vix swing bottom at 26.57?

A: Depends what you mean by swing time frame. I do think the vix is going to 36 as it's next stop. (the major resistance line) Look for an RSI wedge b/o conformation first here, if we get that mon/tue, then you can book the vix at 36, it has a FREE RIDE there.

Trading plan: stay leaning bearish short term, ESPECIALLY shorting the gap ups.....till the vix gets to 36. (then............go to neutral)

I am not as confident 875 spx will hold & bounce this next time as I was on the last.

I am not saying we "must" cut through it like butter (although we might).

I am just not "expecting" a bounce/rally off of it, like I had warned/called on it's last touch.

Enjoy the Memorial day weekend.......

I will be posting some play ideas later on this weekend, as I narrow down my lists.

US dollar correlation

2009-05-22T18:05:00.001-04:00

http://pragcap.com/performance-and-the-dollar-correlation

Stick a fork in it

2009-05-21T22:35:00.005-04:00

turn out the lights. This market is dead, we are headed MUCH MUCH lower longer term, of that I am certain.

Trade-able............ yes, always.

AEM call was obviously off time, as that is why I mentioned 2 days ago to EXIT, w/ a stop above the same entry price I called.

When I do see something "change" that was different from my original view, I respect it, and I will mention it.

The most successful and profitable skill to have as a trader is the ability bail on a changed trend, and not be stubborn with a prior idea, to take tiny losses.

Cut the losers off so fast they are barely even losers
Ride your winners all the way till they prove they stopped being winners

I mentioned last week, that this week I was NOT going to be trading heavily, as the POST earnings trend is now behind us. And that trade was pouring money w/ a firehose, so I wouldn't expect the "post-earnings" trade game plan to be a GIMME. So how I trade, I prefer to sit cash heavy, then when i observe what some new trends are, then start mashing the gas and posting several ideas again.

sector rotation wise, besides the "hyper-inflation" plays, it's difficult to tell what is strong and what is weak here just yet to me.

But I am seeing some trends here, and I will post them in the next thread.

The market action this week hasn't really shown any "gimme" trends here, of course the hyper-inflation trade yes. But now with the "hype" it has already, ie fast money etc. It's chasing big time here, and the easy money is already made. Maybe there are much more legs to it, I don't know. I just hate chasing, if you follow how I trade you know I prefer to scalp reversals swing trends, or jump on at least early in the train ride, and also bail early and reduce risk.

From how the market is trading here this week. It does gives me added conviction that on the LONGER term, we are headed much much lower.

AEM (update)

2009-05-19T20:34:00.005-04:00

Its right back to the same price it was when i called it, on Thurs entry.

(timing is everything, and if you trade mostly options like me....theta kills)

If it breaks OVER 54.40, I will be looking to stop out at that price, and keep my losses small.

Double top here w/ neg divergence. (even tho the same price as thurs, it looks technically even better short today, so) I still like the play ALOT, just respecting the technicals here. (double top made, and if there is possible "support" at 50)

I'm looking to take half off at 50.50, and trail the rest. If it drops to 50, finds support and can NOT break below 50, I will be exiting all there w/ small profits.

If it breaks below 50, I see it going to 44.....

Stops are a must

Plan your trades, trade your plans

There went the 875 bounce...

2009-05-18T19:47:00.007-04:00

I said it was likely going to happen......

http://erikmarketview.blogspot.com/2009/05/i-want-to-go-home.html

If you watch futures, you know they bottomed at 876 last night, and from then on (overnight and day session) the market kept going up, and up and up!

That's why it is wise to glance at the futures chart before the day begins. (think or swim has a nice set up)
- to watch HOW exactly the gap up, or gap down actually developed.

- Bottom at 876...going up, up since that = more bullish

- basically up and down all nite, just happen to end up = more bearish

So for anyone who says futures do not matter, they must not fade opening gaps too often.

Will it go higher? -- I don't know
Turnaround Tue, take it all back? -- I don't know

My intermediate stance remains to let the market tip it's hand, we are in a new chapter here now, and earnings is no longer going to be the driving theme, something must replace it. I don't think that is possible, for the bulls to replace it, yet get the same results, so I do lean bearish. But again, this is a new chapter here and I think it's best to see the market trade in it for a week before pushing on it hard.

On a daily note:
If we do gap up tomorrow, is Tue a day-trade short? Yes, I think it's almost a gimme.

Gap n Go's (market gap up, then continue up, or gap down, then continue down) do happen.

Two Gap n Go's back to back however, is extremely rare.

With that being said, the market typically likes to make it tricky, so watch us open flat, or slightly down tomorrow. LOL

YGE - another "Earnings" pre-run play

2009-05-17T23:29:00.007-04:00

Chinease Solar Play - YGE - Yingli Green Energy Holding

Earnings are Friday, May 22nd - Before the open

Short Float: 15.38%

(same theme....only looking to catch the pre-run / short covering move before the report)

Idea: (conditional Long)

- ONLY if the stock sells off Monday - ideally pulling back onto the price channell / 200ma/ rsi support.

If that does happen, I would like it long from tue am --- thurs close. (again, sell before earnings, no "gaming!")

Target: 10.49 (double top)

**If it doesn't pull back Monday, I pass**