Saturday Rock Blog: Last Christmas

Short set-up on DD

In October DD broke below former support at ~$45.45 on very strong volume and has since sold off much further ($41.67) before recovering back to almost $45.  This sets up a low risk shorting opportunity as DD encounters its rapidly declining 50 dma at $44.79, with a stop somewhere around $45.70 and a measured rule target of ~$38.40.  If you want to lower your risk try entering shorts higher (but below $45.31).  DD seems like a great investment otherwise, its a blue chip with a ~4% dividend, so I might want to be long a break of $46.  For now though, I like the odds short, and so I am.

Disclosure:  I own DD puts.

Sunday Rock Blog: Dance of the Sugar Plum Fairies

Last weekend I posted a long term AAPL chart showing rising support at $530, this trend line broke with volume and follow through last week. The next level of support on the weekly chart comes in around $350-$425, roughly, in my humble opinion. Taking a closer look at the daily chart below, I am seeing a pretty bearish looking intermediate term trend here which does not bode well for the Nasdaq:

I wouldn't say the AAPL bulls are going to definitely get coal for Christmas just yet, if it can retake $530 without going lower then this could start to look like a double bottom. If AAPL gets back above $550 then it brings a test of the falling 50 dma and soon to be falling, higher, 200 dma into play. But the benefit of the doubt goes to the AAPL shorts, and various indicators are setting up new shorts right here right now. My guess is AAPL heads sharply lower.

 Disclosure: I have sold or hedged all of my solar positions and have some broader shorts on now.  I have no position in AAPL but I am short RIMM as of the close Friday.

Saturday Rock Blog: Time to Pretend

Sunday Rock Blog: Time For Shorts to Fry

Taking a look at the (market leading) small caps (IWM), its pretty clear that something violent has just happened. Stocks were in the midst of a healthy correction (pennant pattern) and finding support at the rising 200 dma in late October. After a shaky bounce IWM got slammed through its 200 dma but ultimately reversed in a V-bottom-like pattern retaking its 200 dma. Recently the CCI and stochastics have given buy signals and now that IWM has regained its 50 dma I see nothing but pain ahead for shorts in the coming weeks:

While most people point to the poor performance of former market leaders (like AAPL and GOOG) new leaders are emerging. Take a look at FB over the past few weeks, the rally is relentless and on strong volume. The ~3.5 month base is really paying off now:

Whether they are new leaders or just heavily shorted stocks getting squeezed (shorts fear higher taxes in 2013), 100%+ gains in popular stocks like FSLR, GMCR, and RIMM over the past six months makes for some very positive sentiment. FSLR seems to be just getting started after breaking $26 last week. It should see ~$32 by Christmas:

Shorts seem to be panicking on GMCR as it has soared 100% on huge volume spikes:

RIMM, the stock that everybody loves to hate, bulls sure aren't hating it right now. Volume has been through the roof as RIMM surged above its 200 dma (declining):

The point is, despite all the negative press lately about the "fiscal cliff" stocks have rebounded very strongly from the November lows and appear to be starting a new leg up. While many stocks have struggled lately, others have been exploding higher (see above). I'd be surprised if we don't see a continuation of the recent rally to new 52 week highs on the indexes by the end of the year. Happy holidays to all!

Disclosure: I am long IWM calls and FSLR stock.

PS.  I see all solar rallying strongly here (I am long TAN, SPWR, JASO, ASTI, ENPH, MCP also)

Saturday "Rock" Blog: Saturn in Time

Outer Space from Sander van den Berg on Vimeo.

Saturday Rock Blog: Dance This Mess Around

Disclosure: I'm long PHYS (pretty much the same as GLD)

Saturday Rock Blog: For Whom The Bell Tolls

Saturday Rock Blog: Its Over (Yen Bull Market)

Disclosure: I own Dec FXY $123 puts

Saturday Rock Blog: Walk Away

Saturday Rock Blog: Superstition

Its time to get long Oil

Looks like $105 is a good target:

Saturday Rock Blog: In The Middle

FSLR Symmetric Triangle

Disclosure: I am long FSLR stock and calls

Troubled Transports

Saturday Rock Blog: Hold On Tight (WFT)

Like most stocks in the market right now, WFT has a really nice (i.e. bullish) looking daily chart. After hanging out in a narrow range ~11.50-13 for four months, the Euorpean oil and gas equipment company broke out on news of QE3. Unfortunately, the break didn't come on strong volume and the stock pulled all the way back to the top of the range. It even slipped below $13 to 12.59 yesterday but surged back above to close at $13.54 on four times the average volume. Needless to say, I'm looking for further upside to perhaps $14.50-15 on this move. If WFT can hold above its 200 dma we could be looking at a much longer term reversal of the downtrend.

Disclosure: I am long WFT.

Narrowing Range in Crude Oil

Crude is looking a little extended in the short term after the past three months of rallying but this weekly chart shows a longer term neutral to slightly bullish formation. Crude has made lower highs and higher lows for about two years now forming a narrowing range currently ~$80-105. With all other equity markets heating up on QE3 I'l like to see crude at least challenge the top of this range, perhaps break out of it after some consolidation. It will be interesting to see if Crude can hold its 50 and 200 dmas, if not, $87 should provide good support. Clearing $115 would make for a beautiful chart, maybe for Christmas.

Saturday Rock Blog: L.I.F.E.G.O.E.S.O.N.

Random Rock Blog: Unity

Ain't nothing wrong with another unity song....

Bullish Solar ETF Chart (TAN) ~$18 neckline

Disclosure: I am long stock and Oct calls on FSLR, SPWR and JASO.

Saturday Rock Blog: Mr. Blue Sky ('78)

My recent track record on IWM posts haven't been stellar lately.  I've generally been bearish given the lower highs and action relative to the previously declining 50 dma.  Also, the market leading small caps haven't participated as much in the recent broader market rallies hinting at underlying weakness.  However, over the past few weeks IWM has pushed higher and broken out of a very nice base formed in 2012.  The chart now has a very nice looking cup n handle pattern.  Although the target price doesn't seem very realistic ($105), I think a +$10 move isn't at all out of the question (so ~$92.5) by the end of the year.  We can argue all day about the reasons why the market might make such a strong move up (oh its because the election, no its because of QE3, its gotta be the unlimited scope of the ECB easing), but regardless the chart is screaming "higher!"  I had an IWM call position until Friday when I got nervous and decided to take profits.  My gut tells me there will be a pullback next week ahead of the fed meeting and and even bigger pullback if the fed holds steady again.  With all of the major indexes at 52 week highs now, its clear blue skies above.

Disclosure:  I will rebuy IWM calls next week.

Labor Day Rock Blog: No Quarter ('73)

Saturday Rock Blog: Remain in Light ('96)

Disclosure: I am long FSLR

Break this or DIE! (IWM on the verge of collapse)

Disclosure: I own IWM puts.

Saturaday Rock Blog: Call Me Maybe or The Best Swim Team in History

Saturday Rock Blog: Healthy Body

I'll be the first to admit that I've been very wrong on solar stocks this year. When the bottoms fell out on FSLR, SPWR and others they got into a "death spiral" and kept going insanely lower. Now that they are priced for bankruptcy you could probably make some good valuation arguments to go long these stocks. I won't do that though. I just wanted to note how great FSLR's chart is shaping up after it spent the past month consolidating the 40% rally from the all time low at $11.50. I especially like how FSLR closed Friday above its now rising 50 dma near the high of the day. Closing near the high seems like a simple feat to accomplish but shorts and nervous longs have prevented this from happening for months. On days when there is a big rally in FSLR you always see a 2-3%+ tail on the daily candle. We could imagine this whole move as a healthy retracement of the long term downtrend and call it a ABC correction or we could call this a long term bottom. Regardless, using a measured rule approach, you get targets around $20-22 should FSLR break out above $15.50-$16. I see this as a very likely possibility but I don't plan to exit my position at $20 should it get there, I might sell some covered calls though. Of course this all depends on Earnings which FSLR reports Wednesday after the close. QE3 from Bernanke won't hurt either. Disclosure: FSLR is my largest long position by far so I might put on some sort of hedge before Wednesday. I am also long SPWR.

Monday Rock Blog: Lovin' Touchin' Squeezin' Breakin' (DOWN)

Is it just me or dows the market look like it is about to completely melt down? Watch IWM collapse if it can't hold $77.50. Disclosure: I own IWM calls, but will exit them tomorrow

Saturday Rock Blog: Neckbrace

Saturday Rock Blog: I've Seen All Good People

Sunday Rock Blog: Karma Police

The increasingly bearish developments in the Russell 2000 (IWM) were negated by the huge rally we saw Friday taking the small cap index above their 50 dma and the neckline we've all been watching at ~$78.  Even though this was the last day of the first half of 2012, and fund managers certainly had a vested interest in this kind of rally, it does appear to be genuine (like it will stick).  Volume was healthy and bullishness was wild eyed across the board after every major US stock index appeared to hold their (rising) 200 dma.  Its hard to ignore the bullish look of many daily charts including IWM above, but the weekly's still show a long term double top to me.  I'd be surprised to see IWM trade below $78 in the near future, but if it did, I'd get bearish in a hurry.  For now though, the bulls are in control.

Disclosure:  I still have a few IWM puts to get rid of, unfortunately.  

Sunday Rock Blog: Zoot Suit Riot

Saturday Rock Blog: Beautiful Disaster or How Long Term Trends Change (IWM Weekly)

In summary, it looks like the Russell 2000 index entered a new bear market in July-August 2011. The massive "santa clause rally" we had last year now clearly appears as a retracement to the bull market highs. We now have new long term bearish signals and a perfect head n shoulders top to boot. We could see a cross of death (50 dma cross below 200 dma) in weeks. A rally above $78 would bring this thesis into question. The first target is $71, then $60. As a reminder, I think the Russel 2000 small cap index (ETF: IWM) is a leading indicator for the entire US stock market. Disclosure I am short TNA

Saturday Rock Blog: Somebody That I Used To Know

Saturday Rock Blog: On We March (FB)

Saturday Rock Blog: Dark Side of the Moon

Enjoy the eclipse of the sun by the moon tomorrow afternoon!

SP500 61.8%

Overnight the Emini SP500 futures fell into its next level of support following the break of its daily channel earlier in the week as it hit lows of 1320.75, retracing 61.8% of the 1259.75-1419.75 rally at 1320.83. The market has went into short covering off this important support level as buyers have stepped up to defend. This is not only a fib level, but where the market broke out of early February that began the bullish momentum and took the market 100 points up to 1419.75 which was the last level of defense for sellers off the 1441 target. 1320 is a major level to be defended for the year lows to hold. To show strength, buyers should look to close the market above 1335 off these lows to setup a reversal and to offer buyers a low to defend to buy the dip the following day. Resistance comes in at 1345-1363.75 being the range the market failed to hold, this will be the area to work through to get back within the daily channel and attempt to target the next major upside resistance of 1390 off the failed 1411.75 high from the 1st of May. This gives sellers another level to defend as a break through this level gives way to move through the year highs and look to complete the target of 1441. On the downside support is seen at 1325 off these 1320.75 lows. Failure to hold 1320.75 sees next major support at 1315 with major stops below 1296 which matches with the next major fib level of 76.4% at 1297.51. A strong bull will not allow this fib level to be tested, this would leave room to fill the gap that sparked the move higher during the start of the year within 1252.50-1259.75. Filling this gap puts the ball back into the sellers hands as it gives up all the gains of the year for the bulls.

www.chicagostocktrading.com

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.

Saturday Rock Blog: Put Your Head On My Shoulder (IWM H&S top)

Saturday Rock Blog: This Must be the Place (IWM)

Saturday Rock Blog: Raise Your Weapon

FSLR/Natty

Disclosure: I am long FSLR.

The REAL Problem With Solar (collapsing natural gas prices)

Disclosure: I am long UNG and various solar companies.

Saturday Rock Blog: In Motion

Sunday Rock Blog: Right Back>What Happened

The Bottom in Solar Shares

Today the long awaited preliminary results of the US Commerce Department's investigation into unfair trade practices by Chinese solar companies were released. While the Commerce Department's investigation hasn't yet concluded, and a decision on the charges of dumping by Chinese solar companies hasn't been made yet, they said today that "countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies." You'd think this is a good thing for US solar companies, after all this should boost their margins as they see higher module prices in the US. You might think the beaten down, and heavily shorted, shares of FSLR and SPWR would squeeze on this sort of news. But in fact, just the opposite happened. Shares in Chinese solar companies (eg. STP, JASO, YGE) surged 10-20% on the news today while FSLR languished in the red and SPWR sold off 7.5%. Wall Street was clearly looking for larger tariffs on Chinese modules with one analyst claiming that the 3-5% tariffs are too small to be meanginful. I don't claim to know enough about the economics of solar to know whether 3-5% tarifs will be meaningful fundamentally, but psychologically this feels like a meaningful event. If this means that module prices will rise in the US, then great, anything that can stop the death spiral in solar panel prices is welcome. If US producers see higher contract prices going forward, then that will mean analysts will have to revise their earnings estimates higher, also good. Naysayers will say that this will dampen the US solar growth, but much to the surprise of those who follow the stock prices of US solar companies, the US solar market doubled last year. I find it hard to beleive that a 3-5% tarif on modules from China will significantly dampen growth. I could go on an on about how bullish I am on solar for the long run, but finally things seem to be starting to improve on the shorter term.

Despite the weakness in US solar shares, the solar etf TAN managed a gain today on more than triple the three month average volume. I see this as a sign that the tariff news is seen by the market, on the whole, as good for the solar industry. We can speculate as to why investors are buying or covering, but the price and volume action is how the market speaks. Should the strength continue, solar will have carved out a very solid looking inverse head and shoulders bottom. If the bears want to push their solar shorts further, they'll need to quickly reverse today's action. More later...
Disclosure: I am long FSLR, SPWR and JASO.

St. Patrick's Day Rock Blog: Kiss Me

Saturday Rock Blog: While My Guitar Gently Weeps

Fifth Wave?

Yesterday's breakout in the major indices brings into view the all time highs on the S&P 500 and the DJIA. As stocks continue to rally through new 52 week highs towards all time highs, investors should keep in mind that this is the third major multi-month push in the bull market that began in 2008. In terms of Elliot Wave Theory this would be the fifth and presumably final wave of the cycle. There's a very good chance that we will push up to those all time highs soon, testing the highs of the 2000 and 2007 bull market peaks (at ~1500 on S&P). While everything is 100% bullish in the short term, this fifth wave is likely going to be the end of the recent secular bull market. The direction is higher for now but I feel fairly confident that sometime later this year deflation will rear is ugly head. Be prepared.

Do or Die for the Dow

After breaking down out of a huge rising wedge pattern last Tuesday, the dow (dow tracking ETF DIA seen above) retraced back to the break point where heavy cumulative volume (see volume by price on the left) seems to confirm strong resistance near $130 (or ~13,000 on the dow). The multi-year uptrend is still clearly in tact, in my view, but stocks are positioned for a correction from here. In just glancing at this chart, a correction to 12,000 looks very reasonable and well within the scope of a longer term (~3 years) uptrend. If you zoom out further you see that stocks have been range bound for about 10 years, and we are near the top of that range. I wouldn't be surprised if something more serious developed than a 1,000 point correction but you can't make a technical argument for that here. I think even the most bullish of bulls would like to see stocks pullback to gain lower risk entries in overextended stocks. With the federal reserve meeting this week, the bears could finally get the catalyst they've been waiting for for the first real decline in stock prices this year.

However, should stocks push just a little higher from here, say above 13,060 on the dow, there could be a powerful squeeze as new shorts once again run for the exits. This would set up the dow for a test of the all time highs near 14,000. A correction to 12,000 might be just what the pulls need to muster the strength for a rally later this year towards those highs. We'll just have to wait and see how things play out but caution is warranted in the near term.

Sunday Rock Blog: Illegal Alien

Saturday Rock Blog: I'm a Believer

Saturday Rock Blog: ICE Smugglin'

Five Charts Suggesting a Top is Near

1. Key divergences on the S&P 500. As the index has made new highs recently, key price indicators such as RSI, CCI and MACD have made lower highs:

2. Apple has capitulated. The three year rally in AAPL shares from $100/share that has made the company the largest in the world appears to have ended with a blow off top:

3. The VIX broke out. Despite the recent rally in stocks, the volatitlity index has broken out and remains off the recent lows set a few weeks ago:

4. Bonds remain in a long term uptrend. Bulls want to see yields rise as investors favor stocks over bonds. Instead, bonds have held support recently and remain well above their 200 dma:

5. The dow transports are rolling over. Dow theorists will note that the transports are significantly underperforming this year, hinting at underlying weakness in the market:
It feels like most market participants are expecting a massive rally after Greece gets bailed out again and are afraid to sell. I don't claim to know how the market will react to the inevitable bailout news, but stocks are well positioned for a fall from here. I'm thinking that any push higher (perhaps on bailout news) from here provides a low risk shorting opportunity, at least in the intermediate term. So far I just have a few small shorts on but hope to add more this week.

Disclosure: I have no positions in the above stocks but am short IWM with puts.

Saturday Rock Blog: Get, get, DOWN.

Yes, I've turned bearish! More details to follow... tomorrow.
Disclosure: I am short SPWR, IWM and SWKS with more to come.

SP500 analysis

http://www.chicagostocktrading.com/index.php?option=com_easyblog&view=entry&id=58&Itemid=279

Saturday Rock Blog: Burnin' (S&P 500)

Saturday Rock Blog: Scarborough Fair

Sunday Rock Blog: Midnight in a Perfect World

There's no denying that this gold chart looks pretty bullish. After a six month correction, GLD has broken out and targets the low $200's (new all time high). This isn't terribly surprising because ANYTHING priced in US dollars has rallied lately and gold was well positioned for a technical move up. This action comes as GLD nearly confirmed a new primary downtrend with the 50 dma coming close to crossing the 200 dma (might still happen). So long as GLD holds above ~$162 the trend is bullish. However, if GLD trades below that level in the next week or two, I'd expect things to unravel extremely fast. Deflation or more inflation?

Some stocks are just falling up lately, but hitting resistance today

Saturday Rock Blog: Dow Golden Cross Positivity