iBankCoin
Read Scott here on iBankCoin and also at http://www.createcapital.com/
Joined Jan 19, 2010
717 Blog Posts

A Counter-trend, counter trend…

Holy crap! The dollar is getting spanked and commodities—primarily oil (up 3% today) are skyrocketing in a dynamic bounceback from the last two weeks of hammering (profit-taking).

There is no real news that is fueling the markets. This is simply the first bounce from the first correction that broke the latest breakout. The December breakout was broken and technically failed. That was the first time that occurred since July. So traders and investors began to “gird their loins” for the pullback to SPX 1040 then 1000 then 960. But it doesn’t work that way, son.

As we marginally broke the key 1080 area on the SPX, we figured on a marginal breakdown and then a recovery to the upper portion of our trading range, at DOW 10500, SPX 1120 and Nasdaq COMP 2225. That is why we reco’d a financial Goldman Sachs Group, Inc. [[GS]] , a material Century Aluminum Company [[CENX]]  and a semi-capital equipment stock Kulicke and Soffa Industries Inc. [[KLIC]] . And we remain short eBay Inc. [[EBAY]] .

We are profitable on all four positions, an average of 4%. Seems like chump change, but not bad for a couple of days. Quite franky, I’m not looking to hit home runs. Just single and doubles. All day long. Don’t forget to keep your stops at the appointed levels.

You should be looking at General Electric Company [[GE]] of all things. The low 17’s is a monster breakout for the stock.

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Predictable–to the extreme…

I forget the statistic; 14 of the last 15 Monday’s have been up. Or something like that. After the markdown of last week, the new month starts fresh with nice new money.

All manner of commodities–especially gold–are moving up quickly to test their near-term downtrend lines. The dollar (DXY) challenged 80 but has been turned away by stiff resistance. The dollar will now pull back, giving the all clear signal to buy everything else–at least up to major resistance or a testing of the near-term downtrend lines.

Volume is once again punk but breadth is half-way decent. Everything related to energy, commodities and industrials are bouncing sharply. Tech (sans AMZN) is also bouncing nicely today, though nothing to write home about.

Today’s rally appears to be mostly the beginning-of-the-month allocators plus the no-end-of-the-world shorts covering. It is not generally believed–at least by the one-way market crowd.

The consistant and relentless up market of the past ten months looks like history. Therefore we will probably rally to test the highs and maybe make a new marginal one before going below 10k. And yes, we should break 10k as we estabish a new trading range in order to digest the crash and snapback that has been our history over the past 18 months.

Take the time we crashed and recovered and divide it by 2 and you’ll get the time for the consolidation phase. This “rule” didn’t work in 2003-2004 as the consolidation lasted almost 2 years–almost exactly as long as the crash and recovery, until the 2006 breakout to new highs. If that happens now, then expect a boring trading range between 9500-10500 until 2012. Not a pleasant thought to you mo-mo’s.

Keep your eyes on semi-capital equipment. I like KLIC here below $5. Feel free to buy anywhere below 5 with a 4 stop and an 8 target.  

klic-copy2-copy

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BLAM!

What a difference a day makes! For the past few days everyone was quaking in their boots and getting ready for the end of the government engineered rally. The end of the world was neigh.

But in our comments yesterday, we plainly stated that you should be long and not short. That positioning does not come from any ingrained position or point of view. It simply came from the near-term technical status of the market. Major support was tested and held. Bernanke was confirmed. Everyone knows that banks will get less free money, but still get free money nonetheless.

The bottom-end of our trading range looks like it has been established for now. Expect the major indices to rally to major resistance and further establish what may be an important top. Some may think that we blast right through, but I doubt it.

Keep your targets clear: SPX 1115 then 1130, Nasdaq COMP 2225 then 2275.

I’m loving the simulcast of the radio show. If there are any suggetions to make it better, please let me know. Constructive, please….

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CRUSHECTOMY

So, we are back to a 2 way market. These past day’s are certainly proof of that. But moves in either direction become exacerbated by our friends, the momentum HFT traders. Plus, today, all NYSE quotes are suspect. But there is no doubt that there is hot money leaving the market.

The markets have lived on government largess. Now, payback will be a bitch. This is the reason that this has been one of the most hated rallies in the history of markets. Because it was “engineered”, bought and paid for with newly created money, courtesy of Uncle Ben and Aunt Timmy.

So, for now, let the market release the one-way (bullish) trader-types and establish the new low area for our new, and possible extended, trading range. Many stocks are in the process of testing their primary breakouts. This is the first area of support. There may be some overshoot, but don’t expect much worse here. Much of the near-term damage has already been done and we will go through a period of hammering out the recent lows before bottoming and bouncing for real.

Our GS long trade remains as $149 is a good entry. Everyone was expecting the Prez to finger them as responsible for the world’s maladies and the earthquake in Haiti. But since they were not, then this remains a good entry. BUT keep your stop tight at 147.

Our CENX long  is fairing worse as metals are getting crushed across the board. Super-near-term traders should stop on this break of 12, down something less than 5%. But I plan on doubling up near 11.

Our EBAY short was done above 24 and that is working its way towards testing the 20 area.

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