Monthly Archives: July 2010

250 to 5

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I currently have 207 short positions. I went through all my charts today, and I also did some new searches for other opportunities. Having done that, I found a couple dozen more stocks that I like on the short side.

How many stocks did I like for potential long positions? Just five. I promise you, I am not going out of my way to shun long positions. But there were only five patterns that I thought merited consideration for purchase. They are

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It's been days since a guest has put up a post, so it's just been little old me lately. I hope you're having a relaxing weekend. Remember, Sunday is Arch Crawford Day (!) Let's see if the magical mystical alignment creates some real downside, or if all this astronomy is just a bunch of rings around Uranus.

Deflation Upon Us

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I enjoyed my "Spotlight Session" with Tom Sosnoff yesterday afternoon. Tom spoke a lot about his fondness for bond futures these days, and I'd never really look at these charts. I was intrigued by his favorite (finally! a market exists with a clear trend!)

0731-tz

The biggest question before us, I believe, is whether inflation or deflation is going to be the course of the next few years. A lot of folks – precious metals fans in particularly, obviously – have signed up on the inflation side of the ledger.

To my way of thinking, so many indexes out there are screaming "deflation" that it's difficult to ignore. The above chart, at the very least, suggests inflation is nowhere on the horizon. Have you seen interest rates? I never thought I'd touch my 4.875% mortgage, since it was so good, but I'm going through all the paperwork right now to refinance at 3.75% – amazing! This is not an inflationary environment.

I would also note that the gold bugs index is hinting at some action very similar to what we saw in that glorious summer of 2008. Take note of the tinted areas and their relationship to each other.

0731-hui

I'm going to check out the new comments section now and see if anyone is having trouble. Have a good weekend!  

Be Gentle with Me

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I have been writing this blog for over five years, and although I didn't plan for it to work out this way, the simple truth is that the comments section has become the heart and soul of this community. My little missives might help get conversation going, but Slopers have created their own momentum, and I want to foster and promote that as much as possible.

Having said that, I am pleased (and a little nervous) to be introducing a new comment system of my own design. Why am I doing this? There are many reasons, and over the course of time, those will become more clear. Suffice it to say that I want to do everything I can to keep the comments section lively.

Now I know there are some "costs" to doing this. Requiring people to take a few moments to set up their name and avatar is the least of my worries. I recognize there are some features that people are going to miss right away, although most of the basic features are certainly intact. Please be patient with me as I add these back; in the end, you are going to have a much, much better comments system than before.

For those not as acquainted with the culture of the comments section, please read this overview. I choose the weekend to launch this system so we'd have a little time to address any serious issues. I thank you in advance for any patience that may be required, and you have my pledge that it's going to be worth it.

Bye-Bye, July

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0730-bar 

Well, this month was a clunker for me. Although this week brought some relief, the near-vertical surge in equities did me harm. In any event, the month is done, and now is a time to reflect and think. And, for me, it's also a time to get ready to do my "Spotlight" session………have a good Friday evening, all.

Short Quintet

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Anyone feeling seasick from today's action? I sure do! Talk about a directionless market!

As of this particularly moment, the IWM is up 0.22%, the SPY is down 0.13%, and my portfolio is up 0.06% – – hardly a riveting performance, but if I can end the day with a profit, fine, I'll take it. My P/L has been swinging above and below the zero-line all day long.

Oh, incidentally, I'll be doing the Spotlight Session today on thinkorswim after the close.

Having gone through all the charts (which I'm getting really fast at……..) I found over 40 new positions to take on. Here are five new shorts I've entered that I liked particularly.

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0730-fcn
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0730-skx
0730-tns

Crossing the Line (by Springheel Jack)

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I'm in two minds about market direction this morning. As I expected, ES
has returned to the lower trendline of the large rising wedge formed
since the low, and once there it can obviously bounce back up towards
the top trendline, or break the wedge and start resolving down much
further.

I therefore have two scenarios for ES, which become the same scenario
next week, as we form what I am expecting to be the right shoulder of a
bottoming IHS. Here's the first scenario where the lower trendline of
the rising wedge breaks today, and ES falls to my next target in the
1050 – 1060 area:

100730 ES 60min IHS Scenario 1

On my second scenario, ES bounces back towards the top trendline of the
rising wedge, and turns back either at the recent high, or the June
high, both of which are possible necklines for the IHS that I think is
forming. It then turns back down towards the 1050 – 1060 ES area to make
the right shoulder of that IHS

Resistance at 1104.5 ES could hold however, giving only a partial rise. I'm looking for an upswing target of 1.575 on GBPUSD and (less confidently) 1.314 on EURUSD, If they are hit before or as we hit 1104.5, then the chances are that we will go no higher.

100730_ES_60min_IHS_Scenario_2

For today's direction, the key is the strong support area at 1084.5 ES.
If it breaks and we close an hour below it, then we are going with
scenario 1 IMO. If it holds then we are going with scenario 2. I'm
leaning towards scenario 2 slightly because EURUSD and GBPUSD have not
yet made my upside targets for them, but it could easily go the other
way.

I've mentioned before that I think we have bottomed for the summer, and
the reason I think so is because of breaks down in USD and long
treasuries, among other reasons, but the target of the large rising
wedge is obviously for a full retracement of the rise since the low,
though I'm not expecting to see that hit.

Instead I am assuming that the rising wedge will evolve into a rising
channel, as they often do and from that I get my target of 1050 – 1060
ES, though the target would be 1045 ES if it was hit today. If that
theoretical trendline breaks, and if the mid-July low is broken, then we
will most likely see a return to and possibly beyond the lows, despite
the many indicators suggesting that won't happen.

The Hypnotic Market

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The market continues to resemble an EKG with some faulty circuitry. I have become accustomed to big profits swooshing to big losses and then back again, even on an hour-to-hour basis.

At the moment, my portfolio is virtually unchanged, which I feel pretty decent about since the IWM is up 0.52% as I am typing this. I'm listening to They Might Be Giants, and "Spiraling Shape" seems to capture this market beautifully ("And now that you've tried it, you're back to report/That the spiralling shape was a fraud and a fake……") There's a gent on YouTube who does an amazing job with TMBG songs on his piano, so I've placed his video below, along with the core lyrics.

You have been edified.

Down, down, down you go

No way to stop

As you fall, hear me call

No, no, no

Listen to this warning and

Consider these

Simple words of advice

Stop, stop, stop

Fogging the view, cupping face to the window

In darkness you make out a spiralling shape

Putting all reason aside you exchange

What you got for a thing that's hypnotic and strange

The spiralling shape will make you go insane

(Everyone wants to see that groovy thing)

But everyone wants to see that groovy thing

(Everyone wants to see that thing)

And nobody knows what it's really like

But everyone says it's great

And they heard it from the spiral in their eyes

This could lead to excellence

Or serious injury

Only one way to know

Go, go, go

Go ahead, wreck your life

That might be good

Who can say what's wrong or right?

Nobody can

Put out your hands and you fall through the window

And clawing at nothing you drop through the void

Your terrified screams are inaudible drowned

In the spiral ahead and consumed in the shape

And now that you've tried it, you're back to report

That the spiralling shape was a fraud and a fake

You didn't enjoy it, you never believed it

There won't be a refund, you'll never go back