After this past weekend in Omaha, with Mr. Buffett discussing the businesses he likes most are the ones with “moats,” or high barriers to entry in a given field, it is only fitting that a firm involved in a low barrier to entry segment of technology gets taken out back.

ZAGG was once a momentum favorite for hot money longs. But as you can see on the weekly chart below the stock is now in deep trouble, technically, breaking down from well-defined multi-quarter support. Their screen protector business for smartphones and tablets is under intense competition, and the market does not like it one bit.

Unless bulls can recapture $6 with authority a plunge back below $1 is not out of the question.

(I have no position in ZAGG at the time of this writing)

___________________________________

Bespoke had a good piece on Friday about the 15,000 level on the Dow Jones Industrial Average. I has been a very long ride to get here. Now, staying here is another story. 

In the table below, we list the first day that the DJIA closed above each thousand-point threshold from 1,000 to 14,000.  Given the law of large numbers, with each thousand point threshold crossed, the percentage gain needed to cross the next threshold declines.  For this reason, the amount of time that has elapsed between 14K and 15K is even more noteworthy.  To get from 2K to 3K, the DJIA rallied 50% in the span of 1,560 days.  To get from 14K to 15K, though, the DJIA only needed to rally a little over 7%, but it still hasn’t been able to do so after more than 2,000 days! (Emphasis Added)

In the above chart it is also interesting to note how minor the 1987 crash now looks more than 25 years later.  While the drops from 2000-2002 and 2007-2009 still look daunting in the chart, we can only hope that 25 years from now the DJIA has risen enough that those declines look like nothing more than a small blip!

Full Piece Here

The last few times we looked at a multi-year chart of Ford we surmised the stock was either forming a head and shoulders top (purple lines) or an even bigger inverse head and shoulders bottom (light blue lines).

$12 continues to be the long-term line in the sand, and after a recent consolidation bulls are winning that battle. The head and shoulders top smacked of a trap last year. While the consolidation may morph into a larger, sideways one, the potential for the explosive inverse head and shoulders bottom spanning a decade is an intriguing one with the $12 neckline breach holding.

___________________________________

Much to the chagrin of Jim Rogers and his bow tie (pictured above, on the right) the DBA, ETF for some of the more popular soft and agricultural commodities, has been in a clear downtrend since 2011, if not early-2008. On the monthly timeframe, below, note the potential for a massive descending triangle breakdown as price is currently struggling to hold the 2012 lows.

If those lows are lost, a retest of the 2008 crash lows figures to be on deck. I would extrapolate such a breakdown out to many segments of the materials complex in equities as well. In other words, lagging sectors like steel, coal, ags, etc. are being viewed as inevitable rotation beneficiaries by bulls, not unlike what we saw in the late-stages of the 2003-2007 bull market as speculation reinforced itself to the upside.

As I noted last week, I am watching major industrial/materials complex firms Caterpillar and Freeport McMoRan closely to see if they roll back over after recent oversold rallies, or instead can display a significant change of character to follow-through to the upside in such a way that would smack of serious capital rotation.

While there may be plenty of moving parts to this puzzle, they are all worth watching as the stakes are quite high.

Courtesy of etfdb.com

The DBIQ Diversified Agriculture Index Excess Return is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. The Index is intended to reflect the performance of the agricultural sector.

DBA Top Ten Holdings

1. Sugar #11(World) Jul12: 13.36%
2. Live Cattle Futr Jun12: 12.68%
3. Corn Future Dec12: 12.17%
4. Soybean Future Nov12: 10.69%
5. Cocoa Future May12: 10.05%
6. Coffee ‘c’ Future May12: 9.52%
7. Lean Hogs Future Jun12: 7.64%
8. Wheat Future(Kcb) Jul12: 6.38%
9. Soybean Future Jan13: 4.66%
10. Cattle Feeder Fut May 12: 4.54%

% Assets In Top 10: 91.69%
Total Holdings: 28

______________________________________

Here are some excerpts from my Weekly Strategy Session, which I published and sent out to members earlier on Sunday. Keep in mind, the following is just a very small portion of the full Strategy Session. I also provide specific trading ideas and levels to watch on the indices. 

Turning to the S&P 500, our updated weekly chart analysis illustrates that the 10-week moving average (light blue line) held true as valid support in recent weeks. Despite the wild price swings, bulls remained resilient. As we had noted previously, it was awfully tough to become aggressively short (e.g. north of 50% of a swing trading portfolio positioned short) the market, as a general proposition, with that under-watched 10-week moving average having not been breached. Also note price could push higher yet before touching or puncturing its upper weekly chart Bollinger Band, which would only then be a sign of quite overbought conditions.

Headed into this week, it would behoove bulls to now turn those 1597 prior highs into support. Doing so would also throw a wrench in the ‘”blow-off top” thesis, since a true blow-off would likely come crashing down through 1597 just as soon as it blew off.

…

4. Charts of Interest

Treasuries continue to look vulnerable to the long-term topping thesis. They have been in a secular bull market for decades. However, as you can see on the updated weekly chart below, despite how difficult it is time a major top, Treasuries have struggled to regain sustained upside momentum since last summer.

For several quarters now, Treasuries have floundered. Friday’s aggressive downside rejection away from the potential right shoulder of a head and shoulders topping pattern (denoted by light blue lines on my chart) could be coming to fruition now. Furthermore, the bearish rising wedge (purple lines) we discussed in these Strategy Sessions dating back to last summer has yet to be negated by bond bulls. Recapturing $124 on the TLT ETF would be a blow to the topping thesis, however.

Also note that discipline remains paramount for breakout plays, even in a market where the major averages are printing all-tme highs. As an example, consider a stock like Shutterfly. The breakout higher was ephemeral, and subsequently reversed sharply lower. The best strategy when this occurs is to quickly take a loss and move on. The stock need not fall apart. But technically-driven swing traders are playing for the upside breakout momentum and must stick to that philosophy, as opposed to locking up precious capital in a stock at least in need of more time and consolidation before a true breakout occurs.

Finally, the “alternative thesis” we have looked at for a few weeks now is still under pressure but has not yet been fully negated. The alternative thesis focused on three sectors in the market which had led the way up and were now bearishly diverging from the major averages.

 Those were some excerpts. To read the full Strategy Session, please click here. 

Great piece from the June 2013 issue of Vanity Fair 

The Hunt for Steve Cohen

With arrest after arrest in a massive, seven-year insider-trading investigation, U.S. Attorney Preet Bharara is getting closer to the biggest fish of them all: Steve Cohen, founder of SAC Capital, the $14 billion hedge fund, who some regard as the most successful stock picker of his time. C.E.O.’s have fallen, lives and companies have been upturned, but Cohen has thus far escaped. Bryan Burrough and Bethany McLean go deep inside Bharara’s probe—and SAC’s org chart—to reveal just how much blood is in Wall Street’s waters.

…

Cohen seems determined to ride it all out with sheer bravado. A week after the settlement, news broke that he had paid the casino owner Steve Wynn an astounding $155 million—a record sum for a U.S. collector—to buy Picasso’s Le Rêve (which Wynn had accidentally put his elbow through in 2006). Days after that revelation Cohen paid $60 million for a 10,000-square-foot, seven-bedroom mansion with ocean views, on Further Lane in East Hampton. Taken together, it all had a “Let them eat cake” quality, as if Cohen were waving his billions in the government’s face, daring it take him on.

Their looming showdown draws on themes of money, privilege, and class that define the era. Steve Cohen isn’t just another hedge-fund billionaire; he is the hedge-fund billionaire. He doesn’t live in just another Greenwich, Connecticut, mansion; he lives in the largest of them all, complete with its own two-hole golf course and Jeff Koons’s Balloon Dog sculpture adorning the driveway. Inside, the walls are festooned with paintings from his fabled collection of Impressionist and contemporary art, which includes Francis Bacon’s Screaming Pope, hanging just outside his bedroom. Doughy and clerk-like, Cohen is nevertheless the Gatsby of our age, a middle-class kid from Long Island who caught the gambling bug fleecing his high-school pals in all-night poker games. Today he tosses around his winnings in transparent attempts to join the social elite that’s never quite accepted him and his 48-year-old Puerto Rican second wife, Alex, whom he met through a dating service.