Saturday Rock Blog: Frank Zappa's Hot Rats and Ugly IWM Breakouts

Disclosure: I am mostly short, including a significant long position in TZA

Lose Yourself to VIX

If this thing breaks 20... yikes.

Disclosure:  Yeah, I own some puts (on other stocks).

The S&P breaks 1600!!!

FSLR 1 yr chart (+possible support levels)

Disclosure:  I am long FSLR and short $40-strike June calls against the entire position.  The calls make me nervous, because I think FSLR is in the early stages of a long term uptrend which started almost a year ago.  That being said, the bulls would do well to consolidate their (massive) gains of late, but not to beyond recent levels of resistance (i.e. build support above $30).  So I'd like to see FSLR hang out here or drift lower to these levels ($33.3-35.6) for a few weeks at least (i.e. form a bull flag and wait for MA's to catch up).  Plus, hedging against a broad market decline seems prudent given the circumstances.

Saturday Rock Blog: ICE Smugglin'

New Home Sales Breakdown, New All Time Low

Gold is up, but still has 30% to go

Gold has been getting a lot of press lately for breaking the famed $1,000 mark. The gold ETF GLD (above) has performed slightly less well, but is also breakout out to the upside on long term and short term time scales. The pattern above looks like an inverted head and shoulders but I won't call it that because H&S patterns are reversal patterns. In this case the "H&S" is acting like a continuation pattern, since gold is in in a decade long bull market that recently had a very substantial correction. I guess it looks like a H&S bottom but we can prob expect it to act more like a cup n handle. Whatever you call it, we can be sure of a few things. Gold is bullish and it just had a major major breakout after a lengthy base formation. Using a simple measured rule I get a target of $130 for GLD or about $1,300/oz for the precious physical stuff.

By the way, for those of you who are worried that you aren't really buying gold when you buy the ETF GLD which holds gold futures and apparently some actual gold. Chicagostock and I recently explored the basement of the CME (Chicago Mercantile Exchange) and we were shocked by what we found in the vault: nothing. So beware, comex may be out of gold! Goldman Sachs must have taken delivery recently!! If anyone asks, you heard this rumor elsewhere. The second picture below is one I took of the S&P futures pit on a slow summer afternoon.

Saturday Rock Blog: Sweet Jane (it's a bull trap!)

I took some heat Friday but this action is feeling more and more like a capitulation top despite some obviously bullish technical signals. I maintained all my positions with stops set at Friday's highs. I'm hoping the recent breakouts will fail and that this is just a big bull trap to end a bear market correction rally. If the recent breakouts hold and there is follow through with volume then I'd be ready to declare the bear market over. On the other hand, if the market reverses then I'd expect a ton of late comer weak hands to panic. XLF should retest $11 if $13 breaks.

Disclosure: I own XLF puts.

A Chart a Day #13: Lululemon Breakout! (LULU)

CVX Deja Vu

I've been bullish on CVX for a while and it isn't surprising that this blue chip has been outperforming all other dow components with the dramatic rise in energy prices. Nothing new here in that respect, but tonight I noticed something pretty interesting in the long term chart. Things are shaping up quite a bit like the second half of 2006. After being range bound ($50-$60) for about a year , CVX broke out, pulled back and staged a massive rally from just under $60 to ultimately over $90 within a year. The initial push reached the measured rule target by the end of 2006 ($60 +$10 = $70) so I'd like to think the rule will work again as a good target by year end. Again, over the past year CVX was range bound ($75-$95) then recently broke out and has been pulling back since. Using the measured rule you get a target of $115 for the next push ($95 + $20) but I wouldn't be surprised to see it rally higher in the first half of 2009 after reaching $115 this year followed by a pullback to roughly $100. There are other similarities, like the 50 dma dip below the 200 dma that rarely occurs (see orange circles) and the 200 dma has been rising continuously over the past three years.

There is no question about the bullish nature of CVX long term but things are actually looking really good for the short term too. At worst I could see a pullback down to the 200 dma (like what occurred after the 2006 breakout) which would mean the lower $90's. If you really expect things to play out exactly like 2006 then this pullback should get deeper (down to the lower n$90's) and longer (another month or so) before CVX heads to $115 but I wouldn't count on it. It might or might not be worth noting that the Smith Barney analysts have a $116 target based on fundamentals alone, neat how fundamentals and technicals match up all the time huh?

Saturday Rock Blogging: Run Like Hell

There are breakouts galore right now and many stocks look poised to run like hell. You know how I feel about this broad market breakout, and that it is basically creating many amazing selling opportunities. But some stocks are legitimately continuing long term uptrends, stocks that are really running like hell. I'll be adding what I think are bullish breakout charts to this post over the weekend so check back. To start with lets just take a look at this gorgeous pattern on DRYS:


Nice call btb, Dry Ships is really running now! It broke $90 in the after hours yesterday after a big run through Feb resistance during the day. I maintain my longer term target at $155 based on the symmetric triangle breakout and a conservative measure rule. There's a good chance of a throwback to the $88 level or maybe slightly lower in the next two weeks before it really rockets higher. So if you aren't in yet, I would watch for an entry near $88.

Here's another nice looking weekly chart on Chevron:


After consolidating for 9 months, CVX broke out to new all time highs last week despite the weakness in oil. I could talk about how CVX earnings were great and how they may be coming back into favor as the multinational oil company of choice over Exxon. Instead, I'd rather focus on the long term uptrend in that stock and how the recent breakout has a short term target of around $115. I especially like how the 50 dma crossed over the 200 dma recently (golden cross) and both are increasing. On a cautionary note, if oil weakens further, if the market tanks or if the tax-big-oil rhetoric intensifies, CVX may loose $95 in which case I would exit and try again at the 200 dma near $88. If it can hold $95 though, CVX should really run like hell.

Another beautiful uptrend on a weekly time frame is DECK, the makers of UGG, Teva and Simple shoes:


This one has been running like hell for years now and sadly I remember buying it sub $20 pre-split (but took quick profits). Earnings last week broke this stock out of a symetric triangle with a price target "way up there." Depending on how you want to define the pattern I get a first target around $170 but then that will be a break out to new highs which gives a measure rule target in the mid 200's. Any way you slice it, DECK appears to be continuing its long term uptrend and headed much higher.

Disclosure: I own DRYS calls.