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.