From one of Slope's own readers, The Energy Analyst, here's the latest.... It was tough for Slope to call a “top” in crude last Friday
morning, but this morning (Monday May 12) looks better with crude trading down
between $1-$2 per barrel in pre-market. Ostensibly, the catalysts are USD
strength versus Yen with USD now up 1% and overnight data from China on lower
April crude imports. However, the real driver is more likely that oil was up for
six straight days thru the end of last week, rising over 8% during that period.
Profit-taking in crude is clearly overdue. Interestingly, Yen was up (dollar
down) for six straight days prior to this morning. So, that trade was due for a
reversal, as well. Energy stocks likely to open weaker with DUG now up 2%. OIH
looks weaker driven by slippage in SLB in Europe. In sum, DUG looks okay as a
near-term trade on a slight negative shift in sentiment on energy and may have
potential back to the recent mid-30’s range.
The real issue is whether oil can stay down. The first “fib”
line is at $111, which also happens to be the 50-day MA. The 100-day MA is at
$102. Note that oil has not traded below the 50, or 100 day moving averages
since early February. These are key levels to watch, but may just be ‘a bridge
too far’ right now. Overall, news flow still supports crude with reports that
ENI may have to delay the world’s largest oil project (Kashagan) by another two
years out until 2013. Initial volumes here are targeted at 370,000 barrels per
day (b/d). Also, Chinese oil imports may have been down y/y in April, but are
still up 10% year-to-date. (Note that monthly data is not that meaningful for
discerning real trends, in my view). The collateral damage from higher oil still
has not been fully discounted and is actually just beginning – note FedEx this
AM. The S&P may be relieved short-term if oil “drops” to $110, but the
economic impact will still be a real negative at such levels on a longer-term
basis.
I'm occupied for the rest of the day, so I'll do my "end of day post" on Saturday morning. Until then, here are a few bearish ideas I'm considering (the dollar figure following each symbol is, as always, the contingent stop price; that is, any price above that level would result in me closing the short/selling the put).
AEM 66.99 AKS 70.79 AA 40.12 AAPL 188.20 ACI 68.49 COG 62.99 XEC 70 COP 89.99 CNX 99.99 ECA 87.69 FSLR 287.20 NE 64.99 PXD 69.99 X 173.99
Today is going to be analysis-free, as I offer a couple of videos people have been pestering asking me to do. The first one introduces the Grid feature in ProphetCharts (sorry, it used the internal laptop mic, so the audio is a touch raspy).
And the second one is about Patterns within ProphetCharts (in which I actually managed to use the right microphone).
The chart below makes me uncomfortable, so I am taking index profits. I'm crazy about most of my equity positions, but as nasty as the past seven weeks have been, I am in a cautious and defensive frame of mind. The prospect that yesterday's romp was just a retracement back to a large breakout patten is too real, and the price action over the past few months has been constructive for the bulls. We haven't broken any serious levels of support. Thus, I'm going to play it safe on those index puts.
I've closed S&P and FXI for now, and I've got my finger on the button for RUT and NDX.
Welcome to the first public sneak peek of the Slope of Hope on its new platform. Although there are bound to be plenty of rough edges, I look forward to your feedback.
Besides the goodies located on the right column, one of the nice features about this new blog system is the ability to see 'before' and 'after' charts. That way, when you look at older blog entries, you can see how charts have done since the original posting.
For instance, let's say I was writing positively about Mosaic (MOS). The chart would look like it does below as of the writing. But if, much later, you were looking at it, you could click on Present to see how it looks with all the up-to-date prices, and since this was a bullish idea, the area shaded in green would indicate what the chart looked like when I first wrote about it. Try it!
By the same token, a bearish suggestion (such as NutriSystem, symbol NTRI) made last year would look like the chart below, but now that several months have gone by, clicking the Present tab would update that chart and show the original area in pink.
The remainder of the charts are some of my current favorite shorts. Clicking the Present button won't really make any difference (unless you are reading this well past February 2008!) since these are new or at least very recent ideas. So here we go.......
Akamai (AKAM) did a nice break and retracement already, and there are actually two horizontal lines at play here. I've got a nice tight stop on this one, and a break beneath that lower horizontal line would be sensational.
Readers already know of my love for ATI. This has pushed up against its former support (now resistance) level, represented by the horizontal line. This is probably one of my favorite patterns right now.
Dryships (DRYS) is more speculative. I've drawn the Fibonacci retracements, and it already did a massive bounce from about $50 to $90. If this was truly a retracement, we could ride this all the way down to $35 or so, the next level lower.
Genco (GNK) is, like DRYS, also somewhat speculative, but there's a lot of potential "juice" in these puts, because intrinsic value gains or 10, 20, or 30 points are possible.
A much larger and more conservative stock, HPQ, had great earnings recently which caused a nice bounce. This, to me, was a super entry point, because it made it almost the entire way back to its major broken trendline. So we have two resistance levels working in our favor, represented by the broken trendline as well as the horizontal line.
I've been very bearish on the Dow Transports, but I haven't found a good way to short the index itself. Ryder Systems is a play based on my bearishness there.
Walt Disney (DIS) has been sporting a terrific cascading series of lower lows and lower highs, and I entered a put position in the $33 area during its most recent bounce.
Long term chartists could make a plausible argument for ACI being in a very bullish pattern. If it breaks above the horizontal line, I agree with them. But if it fails this breakout, as I'm betting it will, my puts will prosper.
My main purpose in this entry is for you to get a sneak peek of the new blog. Please add something to the Comments section with any feedback, and if you feel particularly strongly about something, drop me an email. Thanks for taking the time to stop by!
