Daily Archives: September 2, 2010

Through the Lens of a Few ETFs

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Well, I’ve been in “retreat and regroup” mode today. I’ve scaled back to 20% cash, 60% shorts, 20% longs, and 0% margin. The jobs report tomorrow morning is a big, looming uncertainty.

I just wanted to share a trio of ETFs and some thoughts on each.

First, the past year of the DIA illustrates quickly and simply the “grind” we’ve all been going through. It is astonishing to me how trendless this market has been for such a long amount of time. The bulls and bears just keep shoving each other back and forth. The only party happy in this market are the brokers, thanks to their commissions. At the current price level, we are definitely in “no one knows what’s next” mode.

0902-DIA

I’ve had pretty good luck with individual retail stocks lately, and the recent recovery in RTH might be a good short set-up if the jobs figures doesn’t blast the market higher tomorrow. I personally have zero large short positions right now. My only large position at all is IWM, on the long side.

0902-RTH

Lastly, there is the all-important financials. This chart is screaming “potential breakdown”, but until it slashes below that lower price level, this is nothing more than the range from hell.

0902-XLF

Slopers know all too well there is a direct correlation between my participation in comments and frequency of posts to how I’m doing in the market. Things have stunk the past couple of days, so I have been laying low. I think this post will wrap it up for me today, and we’ll see what tomorrow morning brings us. As things stand now, I have positions that will profit from either direction, but I am not strongly committed either way.

Hurricanes Suck (by Nathaniel Goodwin)

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I wasn't planning on doing a post this week, I'm terribly busy working on some sort of shelter to protect me from this hurricane that might hit. Stun Gun and I are working around the clock trying to reinforce our cardboard home.

Here are some quick chart updates…. 

TLT (2) 

TNX 

SPXDaily3
I think TLT has topped, it hit resistance. $TNX hit support. Bears couldn't crack that down-sloping black trendline in SPX, now the rising black trendline is going to be some support. Unless we plunge down with force below it very quickly, it could act as support and we might keep drifting up.

Finally, I saw some great advice from many on an earlier post. I hope everyone is okay. My biological father would drink whiskey and gin to help him through tough times. I suffer from acid reflux, and don't recommend that at all. I prefer boxed wine mixed with 7-up or gingerale. I also like good tunes to lift my spirits. (I apoligeze for any spelling errors in this post and the crude charts, I'm drunk and my spell cherker is not working)

xoxo

Nathaniel

The Devil and the Deep Blue Sea (by Springheel Jack)

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The move off 1040 SPX this week was a familiar sight.Since the beginning of October last year there have been six previous moves up from 1040 or below and it is worth noting that not one of those failed to make it to at least 1099 SPX. That's what I'm expecting to see this week as well.

I was thinking about Trader1's BAR (Big Ass Range) yesterday and looking over the SPX over the last twelve months we have spent a majority of the last year, and over ten of the last fourteen weeks, trading in the range 1040 – 1105 SPX:

100902 SPX Daily Range 1040-1105

I'm wondering whether we will see a major break out of this range anytime soon. The bears are expecting a significant break downwards, and the bulls are expecting a significant break upwards, but it's possible that we could just chop around here for quite a while longer, trapped in this range between the devil (Fed threats to intervene if assets prices fall) and the deep blue sea (a US economy that is failing to produce much in the way of good news).

I was talking a couple of days ago about the possibility that the markets saw a technical low (the bottom for several lead indicator markets) in late May, with USD peaking slightly later in early June. One of the things I was thinking of was EEM, the Emerging Markets ETF, which saw the low in late May and diverged sharply from SPX from there. It is interesting to see on the daily chart that EEM has just bounced at wedge support from that low:

100902 SPX_EEM Daily Divergence

There are several commodities, currencies and markets that are now close to their April highs. Copper is one and another is AUDUSD. I posted a right-angled and descending broadening formation on AUDUSD back near the SPX April top with a suggestion that it looked shortable for a move down to the 81.5 to 82.5 area within that pattern. You can see that post here. Since making a double bottom near 81 in late May & early June, AUDUSD has moved back up towards the top of the pattern, with a target in the 93.85 area and it looks very likely to make it to that target. The pattern may break up from there but if it doesn't then the next downside target will be in the 72.5 to 75 area, so it looks like a very interesting short from the next hit of the top trendline.

100902 AUDUSD Weekly RADBF

In the short term on ES / SPX, yesterday's close raised the possibility that we have just completed the head on an IHS indicating to 1123 SPX. I'd be disappointed to see a significant pullback today to make the right shoulder, as a move to that target would break the upper trendline of the main declining channel on SPX from the April high, which will be in the 1105 SPX area early next week. A break of that trendline would blow a huge hole in the bear case over the next few weeks:

100902_SPX_15min_Possible_IHS_Forming

We have a rising channel on ES that I'm expecting to hold today and tomorrow. The lower trendline of that channel will be at about 1086 ES by the close tomorrow, which fits with the sideways to up chop that I'm expecting to see until then:

100902_ES_15min_Rising_Channel

I've been receiving the (free) daily charts from Clusterstock Chart of the Day for a long while now and they often have something worthwhile to show. Yesterday's was very interesting showing a strong positive bias for the week before Labor Day, with a particularly strong bias for the first day in September. I'm expecting to see a short term swing high tomorrow or early next week followed by a sharp retracement so it was good to see that COTD's chart is showing a significant negative bias for next week. You can see the full COTD post here:

100902 COTD seasonality-map-09-2010


Leisa here, reminding you that it is NOT too late to join in the fun of Slope-Fest East in Myrtle Beach.  You can read about it here http://www.slopefest.com/2010/09/slope.html or e-mail Iggy here:  iggyslopefest (at) gmail (dot) com