Thursday, February 25, 2010

Sp500 & VIX

As the SP500 index started the year with a 1113.25 low on Jan 4th, the market rallied to 1150 by the second week of the year. As the market failed to hold above 1150, it sold off and broke the lows from the first day of trading during the 3rd week of January. These Jan4 lows have now become resistance creating a right shoulder in an larger "h/s" formation. This recent test of 1113 has also created a baby "h/s" formation within this right shoulder (1092 neckline 1113 head). Bulls will need to clear this downtrend line from the head to the right shoulder to attempt to break the head and violate this "h/s" pattern. Bears will look for a neckline break as confirmation of "h/s" targeting the low 900s.

Island reversal created in the VIX on 01/11/10 occured as volatility closed higher after making a 22 month low. This reversal may end the 13 month downtrend in volatility however volatility will need to stay above the January lows in order for this reversal to be considered.

Past performance is not indicative of future results. The risk of loss in trading futures and options is substantial and such investing is not suitable for all investors. An investor could lose more than the initial investment.

Wednesday, February 24, 2010

The Latest Jim Rogers

If you have a question for the wise Mr. Rogers then you can ask it here. The questions will be up for voting for a month or so before the top 10 actually go to the man himself. I plan on submitting a question myself but not until I think carefully about what I'd like to ask!

Monday, February 22, 2010

Here Comes Capitulation (Maybe)

The bulls finally seem to have their act together for the big squeeze. The small caps (IWM 6 month daily above) should easily make it back to the high at $65 from January and a break of that level should initiate some serious panic buying. I have been skeptical of the recent bearishness because my gut tells me that no major move, i.e. the bull market of the past year, ends without capitulation. While there are plenty of good reasons for the recent bearishness in the markets, the fact is, the charts don't show any obvious top pattern. As I've mentioned before, I'd like to see a few short crushing up days, maybe +5% or more on the indexes, with massive volume, say IWM trades more than 100M shares, at the top. Following such a move I'd look for a sharp reversal, this is the ideal time to short and this is what I'll be waiting for. That being said, this is a bullish looking chart to me on a daily time frame.

In the mean time I will remain long and short (hedged). Shorter in the long term, longer in the short term. =)

Saturday, February 20, 2010

Monday, February 15, 2010

Simple ABC correction to the fib for the euro?

Here's a two year weekly of the euro ($EURUSD index $XEU):

On the other hand, the six month daily has major issues:

Saturday, February 06, 2010

Saturday Rock Blog: Wildfire

The S&P 500, 3 month, daily:XLF (Financial sector ETF), 6 month, daily:

Wednesday, February 03, 2010

Monday, February 01, 2010

Going long the Euro whilst short the Aussi dollar

This is a cross that I have been watching for a few weeks now with interest because it hasn't moved much off the recent low. I decided to pull the trigger on it tonight after the Aussie central bank unexpectedly changed their rate posture and this cross broke out. The recent bearishness in the Aussie dollar now makes a lot of sense in the context of an easier central bank policy. As it turns out, I am not the only one who likes this trade. I saw a report today that none other than Goldman Sachs recommended clients make this $EURAUD trade a few weeks ago, although they just recommended closing it for a small gain. So in other words, I am buying Euros and selling Aussie dollars for a long term trade here.

Disclosure: I own Euros and am short Aussie dollars (using FX).