There is no sense day-trading this market. Its way way way to choppy. The tape feels like its sucking in a lot of dumb money here. Notice the huge gap we filled. Its almost way too easy for the bulls. I have a conservative entry for multi-week swing shorts on the chart.
…we’ll see.
I have family arriving from New York today, which usually means time for good food. Can’t wait!
Comments »Hey traders… we are heading into the close of tax season, so that means I’m very busy. For now I am keeping everything light, since we could have an extended breathing period for a few weeks. Right now I am focusing on individual stocks, most in gold and oil names. Those [[FAZ]] and FAS stocks are very dangerous here, and I think you can only try to catch sprint ups and downs, no fading. I predict they both go to 0.
Right now I have only 3 shorts, just playing a possible sell-off on Friday. Other than that, I’m reluctant to get long here.
I’ll probably be useless for some time, but that’s just how it goes. I always take periods to lighten up on trading. If you trade just to trade, you will always lose. Besides, its sunny outside.
Comments »More news-driven squeezes. The Government attacks with queen and rook. Watching <7572 for entry to fade. Keeping eye on momentum first than VIX, since market still moved up while VIX moved up. So far, all day green on momentum.
I will be focusing more attention to the commodity sector for the next few weeks.
I think we will have another wedge pattern developing in the overall markets as exemplified by hesitation in the financial sector… we got our technical bounce, and we got our first distribution day off the bounce (last Friday’s quadruple witching day). Therefore expect another tight range in those sectors participating in this classic bear rally bounce. Is it time to switch scenic routes?
Meanwhile, behind all the drama of the banks and financials and real estate volatility (on the news), precious metals like gold silver and platinum has made a nice breakout of a two week consolidation period. This is normally a bullish pattern if you are a textbook momentum trader; however, all momentum traders know the ride up is never straight up. Therefore I am expecting dramatic intraday pullbacks (ie, profit-taking) with some specific names giving up -5% haircuts. Although I am medium to long long long term bullish on gold, do not rush your entry here. There is a high probability for a pullback as gold is still hesitating to get above 1,000. Current price is 950-957. I have no problem shorting it until it gets under 900 where I will initiate long positions because I think it sort of overshot its price on all the news that the US is going to spend trillions of dollars. If you use moving averages, these precious metals are one of the few sectors with uptrending patterns. Finally, remember if the market rallies, short gold.
The other two commodity sectors I will focus on are Ags and energy. Oil needs to pullback soon. If it breaks out here, that will not be good for a recovering economy. There’s no real reason why oil is moving up above $50 other than yet another technical bounce. Personally, I am ignoring all the “shortage” arguments and I think its better for oil to trade under $50. Remember, oil was well above $100 last year, and the steep decline really really hurt the profit margins on oil producing companies. Its just way to early in the year for oil to rally here, since everyone is treating it as a foregone conclusion. Meanwhile, I’m starting to notice a few oil stocks are reaching capitulation levels. Its almost like oil is behaving like the infamous .coms. If that is so, find the strong companies and focus on those for investments.
Ags… I kind of hate them. I mentioned them as a good place to buy up if the dollar goes down. But yet again, the timing of entering them here is bad. Of all the commodities, I am the least bullish on them, and would much rather short these since I do think they will get new 52-lows before presenting a better buying opportunity.
Anyway, as you can see, I’ve already been studying these sectors for the past few weeks, but all the action was in financials. I will revisit these sectors for possible setups as all the drama in the bank sectors subsides. Fly has nice arguments for shorting the real estate sector. I especially like shorting the storage rental niche. That particular real estate section will be crushed. Strictly from a supply-demand point of view, I just can’t see retailers and especially consumers keeping up with the storage fees. Over time, this niche area will be hurt. So far I only have one stock in that area I want to short, so the fun part is finding out how to indirectly attack it. Will let you know, as I go.
-gio-
Comments »Seeing how stupid our leaders can be in monetary policy, I think you should really be considering on diversifying into gold. This is not a new concern, I’ve been warning of this strategy for the past several months, ever since the Fed has been bailing out companies. I like playing it straight up by buying the ETFs, like GLD, or Powershares Double Long Gold DGP.
This rally we are in is one big bear shake-out. Go ahead and talk to some folks who lived during the Great Depression. It took years to get out of that crisis. No one was “bailed-out.” I talked to a friend who was a teenager during those times, and he went and searched for any job he could- mow lawns, deliver paper, wash cars, deliver stuff, whatever… no bailouts! They grinded it out, and you in know what, it taught them something. It taught them how to be responsible, how to work hard, how to appreciate what you have, how to be simple and happy that you have a job…
In the recent years roles have switched. People are bored with their possessions and want new things; the technology boom has nursed an insatiable appetite for the latest and the greatest… everyone wants a new phone, they don’t just want one that can call, they want one that they can command by touching its screen. And who needs to live simple? We can buy everything on credit! So yeah, I can afford the latest and the greatest. Ha!
Isn’t this a “crisis”? We haven’t even been a 1/2 a year into this crisis and people are thinking the Fed’s new policies and strategies are going to fix this in a month? There’s just so much fundamentally wrong with printing money to buy money. And the charts have been telling us this- have you seen the topping pattern on the dollar? Meanwhile, what about those huge spikes in volume in gold after settling on a healthy consolidation? Every dip in gold should be bought since we are going higher in commodities. If the dollar continues to drop, then I also suggest you start hedging by buying other commodities like DBA, since the price of the actual food product will rise with demand (Economics principles).
GLD- Look at that volume on the news! This should shakeout some bulls soon, so plan your entry accordingly.
Double Gold (DGP)
Eldorado Gold (EGO) – A speculative road, but so far its golden. Nice hair-cut to low 7s, then bounce off the double bottom.
Pan American Silver (PAAS)- What a beautiful gap fill. Nice “hesitate-delay” pattern earlier in the month. Buy on the shake-out.
PCX- Copper Resurrected
Ipath Platinum (PGM) – my favorite shiny metal (as jewelry) isn’t that shiny, unless you observe its chart. Its about to quietly breakout here, again, after a healthy multi-week consolidation.
Powershares Agriculture (DBA)- heading above 25, I like it on a pullback and also above 25. Again, the resurrection in volume on trillion dollar news. People are speculating the dollar will be devalued.
This trade was orchestrated on forums and Twitter. Notice how all three reversed to the upside. SRS performed better than FAZ.
