Some Sensible Price Action

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Balls, balls, and Avalon.

A strange way to start a post, but it's relevant – – or at least real. I receive a lot of nice emails about my blog on a daily basis, for some reason reason, two back-to-back (or perhaps front-to-front) emails congratulated me on my cajones. I'm not sure what the term is in the zeitgeist right now; perhaps Helen Mirren's utterance (in a cultured tone, of course) during the Oscars did the trick.

As for Avalon, during my demonstration yesterday at my company's headquarters, I had a crew of about a dozen men in the room checking out the new blog platform. Things came to a halt when someone saw Avalon's avatar. "Who's that?" Oh, that's a popular commenter on my blog. "Is there a bigger picture?" Sigh. And this is in Salt Lake City, center of all things Mormon.

One thoughtful reader sent me a couple of images from Elliott Wave International which I found fascinating. It illustrates how the Fed's actions tightly correlated to the 3-month T-Bill yields. Many people will find this patently obvious, but I've never seen it expressed so well in chart form.

What this indicates is that the Fed is "due" to cut a full 100 basis points off the rate (assuming nothing changes!). I'm all for it. Get those interest rate cuts done, Ben. Then you're painted into a corner.

Thanks to my handy-dandy new blog platform, you can see for yourself for my positions are right now. Here are a few favorites: Baker Hughes (BHI) is a terrific head and shoulders pattern. Energy has been pretty cruel to me lately (I've got huge put positions on XLE and OIH), but this is one of my kinder energy plays.

Genco (GNK) is more speculative. You can see the last high back in December was a skosh higher than the present one. Obviously I'd like to see this fall away, since January's tumble cut the price of this issue nearly in half (which, percentage-wise, which be far richer for my options).

And on the conservative side of the ledger is Disney (DIS) whose "slope of hope" is a beautiful site to me. The trendline gives me a nice, clean stop loss price.

I have shied away from banks and investment banks in general – -  I had a ball with BSC and the like last summer – – but one exception is Bank of America (BAC). This, like all my positions right now, is a put.

Honeywell (HON) has been a source of frustration for me, but I've bought puts again since it is at the high end of its approximately $52-$61 range (which is some nine months old at this point).

Today was really good to me. I got out of my housing longs yesterday (taking about 15% profits on those stock positions in my little IRA account) and the equity market's softness today was terrific. If only energy could join in the downward action, I'd be a happy camper. Stay tuned.