Friday, December 21, 2012

Tuesday, December 18, 2012

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, December 16, 2012

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, December 08, 2012

Sunday, December 02, 2012

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)