Daily Archives: August 23, 2010

Chart on Trina Solar (TSL) by Mike Paulenoff

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All of the action in Trina Solar (NYSE: TSL) off of the July high at 22.45 through today's trading has the right look of a mature (read: nearly complete) bullish coil pattern, which if accurate means that the next significant directional move should be to the upside in a thrust out of the coil towards a target zone of 25.00/50.

Only a decline that breaks and sustains below key support at 21.90-21.60 will damage the coil and morph the pattern into a top rather than a bullish continuation.

TSL, which reports tomorrow and may see some earnings-reaction swings, should benefit near-term from UBS's upgrade today of First Solar (FSLR). In addition, after the FSLR upgrade, Collins Stewart noted: "Trina Solar (TSL) remains a top pick in sector… Trina Solar has one of the lowest cost structures in the industry, a strong balance sheet and strong brand. Shares are Buy rated with a $29 price target."

Finally, there is a China connection to my technical preference for TSL, which is based in Changzhou. China energy costs and demand for cleaner sources of fuel argue strongly for a huge presence in solar in and from China. In addition, the technical outperformance of the China market is a theme to my outlook now and in the months ahead.

SDKMwoBTg
Originally published on MPTrader.com.

Pendulum Swings to ‘D’

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Anxiety is rising… I know this from the emails I am getting.  If I
have to hear the words "treasury bonds" one more time, why… :-)  But
of course we are going to hear about T Bonds… just look at the yield. 
It is now the 'in' thing and it feels okay.  Time for the big D
to hit the airwaves.  Step right up and dance everybody, just like you
used to do in the discos when that awful music compelled you to get in
line and shake yer thang.

Tyx

Back in the spring I was taunting the inflationists
with the chart that showed bullish ascending triangles and symmetrical
triangles in various treasury bond funds of varying durations (TLT, IEF
& IEI) after the long bond failed to break the "line in the sand" at
the monthly EMA 100.  The i Boys (and girls) largely took this in
stride or ignored it in favor of chasing down the dreams of rising asset
values into perpetuity.

Now, the input is about deflation, 24/7 and it generally comes from some
very smart people (I have always contended that the average d Boy is
more financially astute than the average i Boy – and I'm an i Boy!) and
cites some very smart sources.  But sorry d Boys, you will not sway me
until my own analysis sways me.  How can you sway someone who has been
awaiting your event for so long?

It still says here that your 'event' – regardless of how destructive it
may be for the US and other entities that are levered off the balance
sheet without the reserves to help compensate -is a lever in its own
right.  Your treasured T Bond is what Bernanke needs.  I did not and do
not know how he got his gun reloaded and got intellectuals and the herd
alike into the Bond, nor do I care.

Anyone who could read a chart and maintain an independent viewpoint
(from the respective I & D dogma) could see the bond was going to
rise.  Now, on cue we have the mini hysteria.  It's Prechter
time!  Personally, I have short, middle and long term plans on how to
use Prechter time, beginning with being aware of what this smart man
recommends and as I have done over the years, actually implementing some
of it.  But it does not end with that.  No, not by a long shot.

The last time I was scolded by a d Boy was over at SeekingAlpha in early
2009, as I forecast bullish on copper and oil.  They are scolding again
and while things could be very tricky and difficult in the coming
months, they are just getting cooking my friends.

Also for reference:

Suddenly Treasury Bonds Are Not So Bearish, Are They?  April 27, 2010
D Boys Coming Out to Play  May 20, 2010

And there were plenty more.  All I ask is that readers resist the
compelling urge to herd.  Whether one case or the other (i or d) is
right or wrong ultimately is not the issue so much as the proven
destructiveness of allowing one's market stance to be whipsawed around
by very smart people with very persuasive arguments.  These are the
markets, and they go to their own  beat.

Edit (1:30)  You are a stout and savvy reader of this blog and
have not yet turned me off with a contemptuous "screw you".  Therefore, I
need not put any of my own words to the inherent meaning of the MSM
blurb below:

A big beneficiary has been bond funds, which offer regular fixed interest payments.

As
investors pulled billions out of stocks, they plowed $185.31 billion
into bond mutual funds in the first seven months of this year, and total
bond fund investments for the year are on track to approach the record
set in 2009.

Charles
Biderman, chief executive of TrimTabs, a funds researcher, said it was
no wonder people were putting their money in bonds given the dismal
performance of equities over the past decade. The Dow Jones industrial
average started the decade around 11,500 but closed on Friday at
10,213. “People have lost a lot of money over the last 10 years in the
stock market, while there has been a bull market in bonds,” he said.
“In the financial markets, there is one truism: flow follows
performance.”

Another Bullish Monday? (by Springheel Jack)

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Pug was asking on Friday why I
had switched back to being strongly bearish from having switched to
bullish a few weeks ago, and the reason for both changes was EURUSD. A
few weeks ago EURUSD broke up from a broadening descending wedge and a
rise to a target in the 1.46 to 1.50 looked likely. That was bullish for
equities. On Friday EURUSD, having formed a new broadening ascending
wedge, broke down from it, and is indicating towards a retest of the
June lows. That is most definitely bearish for equities.

It isn't just me who thinks that about EURUSD, the positive correlation
with equities is well established, though complex and obviously a proxy
for the complex equities inverse correlation with USD. On the EURUSD
direction, Arthur Hill wrote in his Friday night post that a retest of
the EURUSD lows (at least) now looks likely, and technically that's
obviously right.

Longer term I'm considering the possibility that the EURUSD broadening
descending wedge that broke up was just the lower section of a much
larger broadening descending wedge where we have just touched the top
trendline at the recent high. If so the next EURUSD target is the strong
declining support trendline currently below 1.10, and if so then we
could see a very major fall in both EURUSD and equities. I'm short
EURUSD from 1.2835 and I'll be holding on to that for a while in the
expectation that I could well extract a 2000+ pip fall from this short.
If EURUSD recovers to 1.28 I will be adding to that position.

I always liked the bear scenario here, we have multiple patterns
pointing towards 870, and it has the force of economic logic behind it
as well, given that the economy is quite obviously still in a mess, and
that we have finished one major bout of stimulus and quantitative easing
(shortly before the SPX peaked this year) and have not yet started
another.

The short term bull case looks DOA to me here and now, and if it is to
rise from the dead, we'll have to see a break of the SPX declining
channel, currently at 1115, and a return to the June highs to complete
the right shoulder on the possible IHS indicating towards the 1250 area.
I don't suggest that anyone hold their breath waiting for that to
happen but you never know. We are only ever dealing in probabilities of
course .

I've marked the technically flawless SPX declining channel on the daily
chart below, and marked in the potential IHS that could be forming. If
the declining channel is to break though, I'd be very surprised to see
that happen soon as I have a number of indicators suggesting that no
major swing low has yet been made. Two of those indicators are the RSI
and MACD on this daily chart, which form patterns sometimes with clear
support and resistance levels. You can see that we are still well short
of the obvious support levels. Even on a bull scenario, the right
shoulder of the IHS bottomed twice in the 1040 SPX area, so the obvious
target for the bottom of the right shoulder would be in the same area:

100823 SPX Daily Declining Channel

Short term though, we could well see some retracement. The nice little
declining channel within which ES closed the week has broken, and an IHS
formed with the neckline at 1074.5 and a target at 1087.5. As I've been
writing the neckline has broken and we have risen as high as 1076 ES.
I'm expecting at least one, and possibly several retests of the strong
resistance level at 1084.5 ES. I'm doubtful about getting as high as
1090 ES but that can't be ruled out. I'll be regarding any moves higher
primarily as an opportunity to add to longer term short positions,
though I am scalping as well and went long at 1071 ES this morning after
looking at the overnight action.

100823_ES_60min_Declining_Channel_Broken_and_IHS

On EURUSD we could see a retest of the broken wedge
trendline just over 1.28, but it is looking very weak this morning, and
hasn't followed ES up overnight:

100823_EURUSD_Daily_Broken_Wedge_and_HS_Pattern

GBPUSD is looking slightly livelier than EURUSD today, and again, we
could see a retest of the broken wedge trendline just over 1.57:

100823_GBPUSD_Daily_Broken_BA_Wedge

Oil has found support at an obvious rising support level, and I'm
expecting a bounce here. That bounce could go as high as a retest of the
broken channel trendline slightly above 76, but the obvious longer term
target remains the May low just above 67:

100823_Oil_Daily_Broken_Channel_and_Gartley

I posted a chart on natural gas a few days ago suggesting that the
obvious decline target was the strong support level at 3.8. Since then
it has made some progress and has broken a minor declining support
trendline, and I'm fairly confident we'll see 3.8. Technically the
triangle target could be a retest of the 2009 low at 2.4 though, and
while it looks worth a spec long at 3.8, if that strong support level
breaks with any confidence, then gas could fall a long long way.
Regardless of direction UNG looks a poor way to play gas as it has
failed to track the gas price well over the last year:

100823_NGas_Daily_Triangle