Thursday, December 31, 2009

Tuesday, December 29, 2009

Renewed US dollar bullishness

Today I rotated out of euros and gold and back into my Aussie dollar short. The euro bounce I was looking for played out and now I think its time to get back on the US dollar bandwagon. As mentioned in a previous post, I think that the recent decline in the US dollar which began in early 2009 is over. I am looking for a significant rally in the US dollar overt he next 6-12 months. I am still bullish on gold but its been weaker than I anticipated after bouncing off of key $105 support. So I took profits on GLD with the hope of getting back in lower sometime soon.
Disclosure: I am heavily short AUD/USD again.

Saturday, December 26, 2009

Wednesday, December 23, 2009

Fairytale of New York

I think this is my favorite Christmas song, hope you like it too. Merry Christmas geometricians! Rest in peace Kirsty MacColl.

Buying Gold and Euros by Selling Dollars

I think these charts are pretty self explanatory. With the euro (above) I see an opportunity to profit from a 200 dma bounce after taking profits on my Australian dollar short. I'm targeting the 50 dma and the 200 dma will be my stop.

Gold (below) is something that I have wanted to own for some time now but didn't want to chase a parabola. Mr. market obliged and gave me a huge pullback to support at the last breakout price. I don't think the gold bubble is over yet and am expecting new highs for gold in 2010 (based entirely on the chart). If gold drops further I'll add.

Disclosure: I covered AUD/USD (at a very nice profit) but expect to reshort it in a week or so. I am now long EUR/USD for a bounce. I started buying GLD yesterday. Good luck!

Wrong! (QQQQ is going to be 10% off)

When I'm wrong I'll be the first to admit it and boy was I wrong about the broad market the past few months. I was seeing IWM diverge and the Q's roll over at the top of a broadening wedge (see above). Given the general expectation that Q1 will involve a hefty correction in stocks I thought that maybe this move would start in December or sooner. Wrong! My "out there" prediction is going to turn out incorrect by miles (Q's hit $40.50 by xmas). Fortunately I've done well on other positions like the Australian dollar short and JASO so my Christmas spirit will remain in tact! lol. For whatever its worth, I do still believe a severe and sharp correction in stocks is coming and I am not discouraged really at all by the recent breakout in the Q's.

Disclosure: I am slowly adding to a put position in QQQQ.

Thursday, December 17, 2009

RIMM strikes back

Disclosure: I bought some RIMM at $71.15 in the after hours today.

Tuesday, December 15, 2009

Commercial Real Estate (CRE) Christmas Carol

JASO's got it!

Investors who took heed last month when I recommended buying JASO before it broke out of its solid five month base did well today. After breaking out last week, JASO soared 10% the past two days in a row. As is often the case, the breakout preceded the extremely bullish news released last night by the company. JASO remains my favorite public stock in the solar energy sector and has been so for about two years now, I don't expect this to change anytime soon. While I am impressed by the recent action I expect that the stock will pullback as we approach options expiration Friday. It has closed above it's upper BB two days in a row which is not sustainable and the open intetrest on December $5 strike calls is huge. A great place to enter/add JASO would be the lower $5's later this week.

Disclosure: I own JASO stock but sold Dec $5 calls against it today.

Saturday, December 12, 2009

Monday, December 07, 2009

Aussi dollar wedge part deux or Has the US dollar bottomed (for a while)?

I make a lot of calls on this blog and I think that I get feedback equally about the bad calls (UNG, DECK, etc) and the good calls (FNM, FSLR, etc), but more often than not, I get no feedback even when it was a spectacular chart read. My last (and only) post on the Aussie dollar back in August of 2008 was perhaps the best call I ever made and I'm pretty sure not a single person noticed it. I basically saw the rising wedge #1 in the chart below and targeted the bottom of the wedge. Well, FXA got to the measured rule target (77) and it kept going, ultimately declining 39% from peak to trough. That is an incredible move for the currency of a developed nation. An even more incredible move is the 59% gain it has made in the past year as FXA retraced 100% of its decline out of the wedge. Damn!This has set up an amazing short opportunity right here as FXA rolls over and breaks out of wedge #2. I find it hard to believe, but the target for this move is $59. Lets start with the rising 200 dma in the lower $80's first and go from there.

To further strengthen the notion that the US dollar has formed a longer term bottom lets look at the Euro ETF FXE (below). After consistently finding support at its rising 50 dma for eight months, the euro closed below it for the second day in a row today. The CCI is flashing a sell and given the recent false breakout I'd be inclined to judge this topped until proven otherwise.
*Note: When the US dollar bottoms all assets will get the axe.

Disclosure: I have no positions in either of these, but I plan to open a long term position against the Aussi dollar soon.

Sunday, December 06, 2009

Dow Jones Three Month Chart

I'm fairly confident that markets will sell off next week but what will the dow do at its rising 50 dma? A break to the downside of this narrow range should give us a 50 dma test but if we bounce from there the bulls may get the confidence to push us to close at new year highs for op ex the following week. In that scenario my "out there prediction" would clearly end up false. On the other hand, markets are ripe for a sharp and severe correction as the US dollar corrects to the upside. I know its not exactly with the Christmas spirit but I would love to see a bloodbath this week that follows through into op ex as the VIX approaches its falling 200 dma. I like how most bloggers I am reading are looking for a big push before the market severely corrects, few seem to be expecting Christmas carnage. Maybe I am early, that's often the case. I certainly wouldn't be surprised if the Dow clearly broke out of the current range to the upside for a few days before getting whacked. But the market tends to move in such a way that makes most traders wrong so we shall see.

Disclosure: I have no position in the dow but I am net short.

Friday, December 04, 2009

The punchline...

Disclosure: Own SPY puts.

Another day, another gap, another joke.

Disclosure: Same positions as last night, going to add after the reversal. Expecting a red close. US dollar rally will murder this silly gap up.

Thursday, December 03, 2009

VIX Filled the Gap

I thought it was interesting that the VIX went back and perfectly filled the gap it made on the Dubai panic last week. I'm not sure if the concept of a "gap fill" even makes sense for the volatility index (VIX) but heck, how much "sense" does it make with stocks either. Fact is, a huge gap showed up in the chart and precisely after it was filled the VIX made a huge move higher. Maybe we shouldn't be suprised that the VIX dropped so much following that gap up, after all, the S&P 500 and the Dow Jones both made new 52 week highs today. On the other hand, thats a pretty huge and seemingly significant divergence that the S&P 500 made a new cycle high while the VIX made a low which was 3% higher than its cycle low. Thats not necessarily a sell signal for the S&P but its a big red flag.

Point is, if the VIX were a stock I'd buy it with a stop at today's low and a target at the 200 dma (currently about 30). It will be interesting to see if this turns out to be a long term bottom for the VIX following two tests of the 20 level. A sharply rising VIX would be bearish for stocks and extremely bullish for put options. However, a volatile VIX is a headache.

Disclosure: I own SPY puts

Tuesday, December 01, 2009

My "out there" prediction: Q's hit $40.5 by Xmas

Yeah I know, the dow jones hit a new high for the year today and bearish predictions are not so popular when the dow is making news highs. But what about the market leading small caps? Despite all the falling dollar market euphoria, the Russell 2000 (small caps) again failed to retake it's 50 dma. Even the S&P was unable to reach a new high and still lies well below the recent gravestone doji. Looking at the Nasdaq 100 (above), I see a series of lower highs in place now leading up to today's new gravestone doji. Take a look at what happened to AAPL today(below). After being up most of the session it got slammed in the final hours of the day to close down $3 out of the blue. I think everyone knows this market has gotten far, far ahead of itself and has turned into a momentum game of musical chairs. Jittery investors are hitting the sell button at any hint of weakness, like with AAPL today.
While these charts are not overwhelmingly bearish, by any means, this market just feels like it wants to sell off to me. I haven't taken a significantly bearish position in a while, but I'm going to stick my neck out here and bet on a big drop in December. I'm looking for the Nasdaq 100 to break its 50 dma and hit $40.50 this month.

Disclosure: I am short BIDU and own SPY puts, for now.

Sunday, November 29, 2009

All quiet on the nasdaq front (QQQQ)

Disclosure: I have no position in QQQQ but I am short some tech stocks like AONE, SPWRA and BIDU. I also own SPY puts to hedge long positions.

Saturday, November 28, 2009

Wednesday, November 25, 2009

Initial gold target was reached but its parabolic

*Note, I'm still looking for $130 but wouldn't buy until after a pullback.

Monday, November 23, 2009

Gravestone dojis (reversal pattern)

The stock market looks to pullback here as we enter the holidays, I tightened up my stops today, wrote some covered calls and even picked up a few shorts. Yeah, markets generally made a new high for the year and closed with gains today but I see many reversal candles out there (gravestone dojis for example), stocks seem tired. IWM tried again to retake it's 50 dma but failed. You could even say that today there was a collective failed breakout as stocks made new highs but did not close at them. From failed moves come fast moves, tomorrow will be telling.

Even the shining star of customer service (Best Buy) was not immune to the bearishness of the day. Errr, don't ask. Lets just say I won't be going back to Best Buy after a bad experience this weekend.

Disclosure: Short TNA, SPWRA

SNL on US/China Relations

Sunday, November 22, 2009

A nice sound rounding base for solar?

I want to be bullish on solar. It seems obvious to me that in the not so distant future the cost of solar cell technology will drop enough as efficiency rises to make it the cheapest, and not to mention cleanest, source of energy. In the last energy bubble solar came close to competing without government subsidy (cost parity was effectively reached with natural gas at the peak by FSLR). I personally believe that the next leap forward for civilization (following the internet boom) will come cheap distributed energy provided by photovoltaics. Thus, I keep a close eye on the sector in the expectation that when the day comes for solar, the winning companies will see their stocks increase by orders of magnitude. Ok, enough of the anticipatory irrational exuberance, what do they look like today?

Well, not so great to be frank. Solar has underperformed the market in 2009 and as a whole is basically flat on the year. The sector is very mixed but I find that the ETF TAN is a good way to follow the industry trend. In the seven month chart above you can see that similar to JASO, the industry has been forming a wide rounding base. While TAN seems to be having difficulty getting any traction upwards, there is a series of higher lows and higher highs in place. Clearly, in order for this trend to continue TAN needs to take out $10.77 relatively soon. A break of $11.67 would be *big time* and target $18.69. I like how TAN has found support at its 200 dma for the past six months or so consistently (plus or minus a few days).

SPWRA is a stock that I bought last week in the sector but I'm not feeling so hot about right now. I picked it up after what I perceived to be an over reaction to accounting issues announced last week. The stock was down about 25% in two sessions and it seemed like a good value to me given their leadership in the single crystal silicon PV market. That being said, take a look at this beautiful bear of a long term chart:
Yikes! I think theres a good chance SPWRA is just washing out long term holders here given the volume last week and the severity of the break. But... this stock was at $165 in 2007 and aside from the global recession and a decline in energy prices nothing fundamental has gone wrong with this company (well and some recent, minor, accounting issues). I mean, many would argue that this company is the blue chip of the solar space. For the cheapest lower efficiency thin film PV its FSLR, but for the high efficiency single crystal PV its SPWRA. However, given the chart, I will have a very short patience with it. In the absence of a sharp rebound in the next week I'll be out and might even try a short. The chart is suggesting a price target in the $10 range.

Disclosure: I own JASO and SPRWA shares.

Saturday, November 21, 2009

Divergences in the uptrend (WLL)

This week I'm going to try and post at least one chart per market day, maybe more. Lets start with this WLL chart. The obvious thing here is that there is a solid uptrend here on multiple time frames. The blue line currently at $50 connects the March low with the first correction low in July and represents the "long" term uptrend. In the intermediate term, WLL has found support at its rising 50 dma, which is clearly above it's 200 dma. So long as WLL can hold that 50 dma (currently at $59.5), which was tested Friday, I'll expect this thing to make a new high soon above $65. The measured rule target for a break of $65 is $70.

On the other hand, and this applies to many other stocks I'm seeing, especially small caps, there is a series of lower highs in place and are divergences are showing up. As seen in the chart above, CCI and RSI have been making lower highs for a few months now and to make matters worse, CCI just crossed zero as the stochastics gave a sell signal. So while the trend is up there is reason for extreme caution here. I also find it interesting that the first leg up from March lasted about five months and since the July low it has been about five months. This doesn't mean that WLL is going to correct here, but I wouldn't be surprised if it headed down to $50. Watch for a close below $59.50.

Disclosure: I have no position, but I will take one if it breaks.

Side note: This is an energy company so keep an eye on crude if you trade it.

Saturday Rock Blog: Long Overdue Zappa

Monday, November 16, 2009

Saturday, November 14, 2009

Friday, November 13, 2009

JA Solar (JASO) looks promising once again

Disclosure: I own JASO shares

Thursday, November 12, 2009

The beauty of a broken parabola (rent-a-car stocks)

Others in this sector look equally bearish, like HTZ and DTG. I've seen this happen a number of times, once the crazy hyped up parabola ends they quietly die.

In contrast, the market leading small cap index...

Sunday, November 08, 2009

Saturday, November 07, 2009

Saturday Rock Blogging: Loving Cup

Ooohhh, what a beautiful buzz, what a beautiful buuuuzzzz! =)

Tuesday, November 03, 2009

Saturday, October 31, 2009

Saturday Rock Blog: Musical Costume Edition

Tonight I'm in Indio, CA to witness the phish musical costume for Halloween. This is where they play an entire album by another band straight through and it's something they've done in past years, see here for the history. This year phish posted 99 potential albums, and narrowed it down to the final few contenders by "killing" a few off each night. Here are a few of possibilites for what I will be getting down to tonight. Happy funky halloween to you all!

Wednesday, October 28, 2009

Saturday, October 24, 2009

Thursday, October 22, 2009

Monthly US Dollar & Commodity Charts


Wednesday, October 21, 2009

Market leading small caps (IWM) are acting toppy

And here's why:
Disclosure: No IWM or any other index positions (I'm out of QQQQ).

Tuesday, October 20, 2009

Saturday, October 17, 2009

Saturday Rock Blog: Happy Birthday Chuck Berry!

I had the pleasure of seeing him a few days ago and I have to say, what a pleasure life will be if I have half the spark and energy of an 83 year old Chuck Berry at that age. He may not have been as quick and sharp as he was in these videos but he had me smiling and laughing the whole show. Chuck Berry turns 83 tomorrow.

Friday, October 16, 2009

Rule of thumb: The bad guys (Wall St. banks) win

10/16/09 Energy Market Update - Crude Oil & Natural Gas

Continuous Month Light Sweet Crude Oil Weekly:
The coiled up consolidation mode in oil has sprung and in the favor of the bulls. The nine month trend higher from the lows has now exceeded the seven straight months from the record highs to the lows, a movement in which started in February with oil at $35. Prices doubled by June before reaching a wall at the 200 day moving average and have since been consolidating for five months as the fight between bulls and bears emerged. Currently, the market is breaking out of its five month highs, and attempting to continue its upward trend by trading through the 200 day moving average. The strength and momentum should give the bulls drive to reach for and test the upper 80s. This breakout is also fueled by shorts who are being squeezed out as they are looking for the market to fail and move lower. Bulls continue to look for the $85-90 target. Off of the lows, this also retraces oil 50% to the highs. Major support is at $65-$60.

Continuous Light Sweet Crude Oil Monthly:
Black gold has shined 133% off of the lows from February of 2009. Taking the perspective from a big picture standpoint, this move is a 38% retracement to the highs of last year. What will be important here is how strong these levels will hold and if the market can continue at this pace. The market is trading within strong resistance between $75 and $80, with next major resistance and bull target of $90.

Continuous Light Sweet Crude Oil Daily:
A failed head and shoulders formation in oil with a failed breakdown late September leads oil to breakout to new highs for the year.

The lows of $58 in July and the highs of $75 in August spanned a $17 range. As the market has broken out the pennant recently (at $72) and through the 'head' of the h/s formation August through September, strength can add $17 to the breakout of $72 giving a reference and target of $89 for this new momentum.

Continuous Natural Gas Monthly:
Natural gas has tested the trend line from the 1999 lows and even traded under by a little over 50 cents, washing the market out as natural gas worked on finding a bottom. This was not done previously and many were trying to pick this bottom. Sure enough, the bottom has taken it's time to form, eroding the nerves of longs. After making a new low down to $2.409 in September, natural gas reversed and started the squeeze higher. This has created an engulfment on the monthly chart for September (seen above) and closing above resistance of $4.50. Support should be found down to $3.90 which is near 50% of the move in September from the opening to the close.

Continuous Natural Gas Weekly:
Natural gas tried breaking out early May only to find that the market was unable to move past $4.50, which repelled confirmation buyers looking for signs of strength in hope for a turn around. Natural gas has flagged lower for four months to make new lows, which then reversed off of those lows and created a "false breakdown" (highlighted in red). This false breakdown and reversal squeezed prices back to the upper part of the range. However, as the November natural gas became front month, this created a $1 gap higher on the continuous chart (from $3.98 to $4.94). In my opinion, this opening higher above $4.50 can now attract confirmation buyers that were standing on the sidelines and can be seen as a sign that the market is turning around. What market bulls will want to see is for the gap to act as support and look for weaknesses as opportunities to position in the market. Patience will continue to be the key in my opinion, buying close to $4.00 if given the chance. Using the green shaded area for entry, and a move under $3.00 as a reference for exiting if the market gets back to those levels. A target of near $6.00 is reasonable for bulls, as this also marks a 50% retracement from $9.60 to $2.40. This may also be where the 100 and 200 day moving average meet with prices.

I have previously been cautious about the markets attempt to bottom out. From my perspective, however, I now believe natural gas is ready to move higher. I would be more comfortable establishing long positions and letting the market work. If gas fails to rally and makes new lows then exit the trade.

Continuous US Dollar Index/Natural Gas Daily:
Remember the head and shoulders formation between March and May with the ratio of the US Dollar Index to natural gas? This topping formation that would potentially bring natural gas strength failed to materialize early and 19 proved to be strong support. After natural gas made a new low and washed out, this ratio climbed above 30. Now it is back down and through support of 19. This number should now act as resistance and we shall see if the trend continues lower as natural gas strengthens against the US Dollar Index. See '06/08/09 Energy Market - Crude Oil & Natural Gas Update' for reference.

Continuous US Dollar Index Weekly:

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Tuesday, October 13, 2009

An Uptrend: Nasdaq 100 Five Month (QQQQ)

Disclosure: I own QQQQ calls.