I haven't plugged my book, Chart Your Way to Profits, in a while, so – there – I just did. If you use ProphetCharts, you should seriously consider it. I think you'll find the reviews to be overwhelmingly positive. Check it out!
All right, on to the markets. The best news to me today wasn't whacking 200 points off the Dow or the big surge in my portfolios (which, ahem, aren't 50/50………..I guess my even suggesting that was a good sign, eh?) The best news was the divergence in where crude oil is heading versus where all the oil-related stocks are heading. In other words, we've got crude oil which went on to its umpteenth never-before-seen in human history high price…………
And yet oil-related stocks, which to date have wallowed around in bathtubs full of gold coins during this entire melt-up, didn't have the power to participate anymore.
So……….perversely…….my position in the double-inverse oil & gas fund actually had a great day!
My point is that my abundance of oil and commodity related items is well-positioned to benefit from this divergence. Because if they fall on a strong day for crude, can you imagine the damage waiting for them when crude falls? (And, yes, it will fall; nothing goes up forever).
Likewise, my $XAU position did pretty well. The formation for 2008 is very similar to the smaller one spanning October-December 2007 (which didn't amount to anything), but a break from this pattern downward would easily send the $XAU to the mid-$150s.
And – tip of the hat to Jana – China is finally starting to get kicked around again. It was the best down day in seven weeks. A monster bearish engulfing pattern. A break below $212 (far away, I confess) would be highly destructive to this index.
I've been contending recently the $XBD had peaked out. For now, that seems to be the case. Just look at that sweet set of descending scallops.
And – perhaps my favorite pattern of all – the $MSH is obediently staying beneath that not-quite horizontal line you see below. A fully materialized head and shoulders breakdown would send this at least a hundred points lower.
I entered a put position on the S&P relatively early today, and it's nicely in the green. Perhaps 1423 is as high as this retracement is capable of carrying the market. I sure hope so.
Due to (of course) a lack of time, I can only offer the following charts without any commentary. I'll let the lines do the talking for me. These are some favorite shorts now.
Good night, and may the rest of the week pan out even halfway as well as today!
