Saturday, October 30, 2010

Saturday, October 23, 2010

ETF Golden Crosses (50/200dma) Galore

IWM (Russell 2000 small caps) daily:

FXE (The Euro) daily:

DBA (Agriculture commodities) daily:

FXI (Chinese stocks) daily:

QQQQ (Nasdaq 100) daily:
Disclosure: I am short EUR and own QQQQ puts.

Saturday Rock Blog: Thunder Busters



Happy Halloween everyone!

Friday, October 22, 2010

US Treasuries Cross of Death


30 Year Treasury Bonds Daily 04/13/10-10/21/10:

The 30 year is currently trading under its 50day moving average. The last time the market was under this average was in September and bonds were able to hold to move higher. This move comes as bonds failed to retake the August highs of 137 and have now fallen under this 50 day moving average that has the market bear flagging and testing the trendline support from May’s breakout. Seeing the bear flag confirm with another leg down will have the 20 day moving average cross down and through the 50 day creating a “death cross”. The last time the 20day crossed through the 50 day was in April as it created a golden cross and the market began its move higher. This current cross can attempt to change direction in the market’s current trend. A test of the 100 day moving average down to 129 along with the September lows would be targeted. The fed is expected to buy treasuries today and the question is will their purchases be enough to hold yields at these levels? The St. Louis Fed President James Bullard has proposed the central bank buy $100 billion in long-term Treasuries next month and consider more purchases later. Are they bluffing? Buy stops to be triggered on a move through 133.

Bloomberg: Treasury Traders Increase Bets on Inflation for a Third Consecutive Week- http://bit.ly/cJVyrL

RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

Tuesday, October 19, 2010

Saturday, October 16, 2010

Saturday Rock Blog: Time Bomb (The Euro)





Disclosure: I am short EURUSD

Thursday, October 14, 2010

Apple's 240/230 Put Seller


On September 28th, 2010, Apple had opened at $291.77 and was followed by a sharp and quick sell off down to $275.00. Moving down $16.77 in a matter of seconds. As this volatile move came about, someone took advantage of the day by selling 4000 240/230 put options: http://twitpic.com/2subbs. This created a spread with a net credit of $1.50 4k times giving the seller a credit of $600,000 and a max risk of $3.4 million dollars with Apple closing under 230 by Jan 21, 2011. (240-230=10, 10x100shares per option = 1000, 1000x4000 = 4mil, 4mil-600k credit=$3.4m).



Apple held those lows and retested them on October 4th with a low of $277.77. Since then, Apple has marched higher with yesterday breaking through the $300 benchmark. Today, Apple has made a new 52wk high of $302.47 and that same spread sold on 9/28 for $1.50 is now trading worth about .88. A 62 cent gain on the 4k spread has made someone $248k richer. Is the person out? We do not know, but we do know that this person took on some big risk, and gave us the indication that they thought Apple would hold above that level. The longer it holds above $240, the more of that $600k they can keep. In any event, a very nice trade indeed!


RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

Saturday, October 09, 2010

Tuesday, October 05, 2010

Exchange Stocks ICE & CME, Bullish?

ICE Weekly

ICE is on the break out this week as it made a new 13 week high of $111.84 before settling at $111.30 on Tuesday. On Monday, ICE reported record futures volume for the month of September (http://bit.ly/duKHbG). This breakout has ICE above the $110 neckline of an inverted h/s formation that has been forming since July. The market will need to close above $110 for the week for a confirmation on the weekly chart above. The h/s has a range of $17.82 (neckline 110.00 - head 92.18). Holding above the neckline of $110 gives bulls a target level of $127.82 (110+17.82). This level also tests the highs in June of $129.53. In the chart above, resistance is seen between $114.93 Dec 2009 highs, and $121.93 June 2009 highs. This also puts the 200day moving average in play at $115 level.

CME Daily

CME is also showing a potential inverted h/s formation in development. The stock rallied $35 from the August lows of $234.50 before meeting resistance at $275. The market appears to be trying to build a right shoulder as we have seen it consolidate between $255 and $275. This flagging formation is taking place above the resistance trend line from May highs to June highs. The most recent low in this right shoulder is $256.53 made Oct 1st. The market held and reversed to make a high of $269.72 today. This high as you see in the above chart is testing another resistance trend line from the August highs to the September highs. Market bulls will need to hold above $272 to break out of this range and try to leg higher. First resistance to be met at the 100day moving average around $279 followed by the neckline at $290.00. This makes a range of $55 (290-235). Holding above the neckline of $290 gives bulls a target of $345 (290+55). This lands bulls on the door steps of the April highs of $347.50. However, there is work to do on the upside, with the 200day moving average currently at $297.51 and a gap to fill at $296.8 from June 28, 2010. CME is expected to report earnings before the bell on October 28, 2010.

RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

Friday, October 01, 2010

10/01/10 Copper Breakout & Australian Dollar Correlation


Continuous Australian Dollar Futures 12/21/07-09/30/10:
The Australian dollar has rallied 61.5% since the lows in October of 2008. Following this move from .60 to .95, the Aussie tested its 2008 highs for 6 months (10/09-04/10), before it sold off sharply and shook out down to .80 in May of 2010. Since then, the Aussie is up 19.9% and has managed to break above this resistance level of .95. This leaves the market breaking out and in an area of resistance as it heads to test the highs in July of 2008 at .9770. The Reserve Bank of Australia has raised rates 150 basis points between October and May and expected to raise another 25 basis points next week. Australian banks are looking to raise their lending rates faster then the pace of it's central bank. As you will see below, the chart of copper and the Australian dollar are very similar.

Continuous High Grade Copper Futures 12/21/07-09/30/10:

Copper is breaking out the upside riding its Bollinger Bands and testing the highs from April 2010 at 3.68. China's September PMI was released today showing a rise to 53.8% from the 51.7% in August. The rise in PMI reaffirms China's slowdown is not that sluggish and their manufacturing is picking up. This adds a boast to copper as China is one of coppers biggest consumers. Technically, copper has been rising since it tested and held 2.80 back in May: http://twitpic.com/1pl6z8 and http://twitpic.com/1z5l4w. This move has been resilient as it has been able to push through resistance levels of 3.40-3.60 and head to the April highs. Taking out this high leaves the market in a bullish momentum with next major area of resistance between 3.80-4.00, and ultimately the highs of 4.27 from May 2008. In both the Aussie and copper, pullbacks to trend line should find support and be bought.

RISK DISCLOSURE: 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. OPINIONS EXPRESSED. INFORMATION COMPILED FROM SOURCES BELIEVED TO BE RELIABLE, ACCURACY CANNOT BE GUARANTEED.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

10/01/10 US Dollar Index Targets New Lows

Continuous US Dollar Index Weekly 12/28/07-09/30/10:

The US Dollar Index broke down and lost 5.8% during the month of September as it failed to hold above 80.00. In the previous market update, I noted the dollar index being at a "critical level" as it was testing a neckline from it's head and shoulders formation, "...breaking this neckline here will suggest the market may believe QE2 will happen and if confirmed this could lead the dollar index further depreciating and targeting down to 71.00." Looking at the above chart, the dollar index broke below this level, and has made lows down to 78.620. Is the market anticipating QE2? Possibly, but nothing is confirmed and all we see is the price action in the market. Technically, a head and shoulders is in the charts, 89.10 head, 80.00 neckline, giving a range of 9.10. The market has broken below its neckline giving a potential target of 70.90 (80.00-9.10=70.90). This would lead the dollar to test it's lows from 2008 of 71.05. Short term, the US dollar may be oversold, any retraces back to 80.00 should resist and be seen as an opportunity to sell. If the market can find itself getting back above 80.00, the right shoulder area of 80-83 would need to be worked through for any attempt to move higher and retest the highs of 89.00. The Euro has moved higher against the dollar in hopes that Europe may be removing their stimulus policies before the US and Britain. The Euro futures gained 7.7% in September.

RISK DISCLOSURE: 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. OPINIONS EXPRESSED. INFORMATION COMPILED FROM SOURCES BELIEVED TO BE RELIABLE, ACCURACY CANNOT BE GUARANTEED.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK