Re-allocation time

(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

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.

Well put by Todd Harrison.

Who said that Investing is dead?

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

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I had expected the market to move higher, especially towards the end of this week.
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I had NOT expected the vix to fall off this much however.
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(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.
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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)
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I simply can not feel comfortable being long the market looking at the vix weekly chart as it stands now.
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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)
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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)
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However the resting on that line is more than enough itself to make me pull back and watch/wait.
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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.

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

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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)

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IYR (update)

Gold vrs Grains (second entry)

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.

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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.

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.

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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)

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-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

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)

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.

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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)

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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

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)

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

(full post w/ discussion)

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

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

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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)

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

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(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.

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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.

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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....

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)

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*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?

(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%).
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-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

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$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?

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.