This chart is self explanatory, well maybe a bit will be helpful. Every time net free credit was this low with SPY stretched to the 200 EMA, pressure was released through a correction through the 200 EMA, which is 113.50. Buyer beware.
Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
Energy Stock Breakouts (by BKudla)
A chart pattern I always look at is when the lower bands of the 3 month LR intersect with the 6 month, with price. Below are three stocks that met that criteria, and decided to breakout. In fact I suggest a look at the entire sector, it looks constructive, near term. A failure of the 20 seems like a good place for stops.
Dollar Swing Low? (by BKudla)
The collapse of the long bond must have policy makers very concerned, with the banks not lending, and holding bonds to play the spread for income, marking capital losses on your bonds does not move you forward on your capital ratios. Plus, with the 10 year backing up you can kiss the mortgage and real estate markets bye-bye, further pressuring the banks.
So what to do? Well, nothing like a good scare in the equity markets by strengthening the dollar to take some of the pressure off. Conjecture aside, I am safe in saying the dollar drives all, and the persistent strength is starting to take its toll. Today it (the dollar) hit a swing low, as I understand it, and I became even shorter in my portfolio. Below are some landmarks for me.
I will post some trade ideas after I have a chance to reveiw my charts and filters.
Shorts Update (by BKudla)
On my blog and here, I posted on a number of short positions I have taken, with ERX this morning being my latest. They are moving as expected, and wanted to reiterate that this move is just beginning, IMO. I commented in the charts below. I am also short SPY PKX, PTR, and MCP (not pictured in this post).
As a caution, I am always moving stops to reduce my risks in case I am wrong. I am only painting the idealized view.
Read the WSJ and Barrons this Weekend (by BKudla)
For me at least, this weekends Barrons and WSJ opined on many sectors/areas of interest for me; Extreme exuberance, low volatility, rare earths, China's oil and gas industry, solar inverters and wind energy/components. I have also recently posted my concerns in the area of rare earths, solar energy and China oil and gas, but a new name came up that I have traded in the past, American Superconductor.
American Superconductor relies on one, yes one Chinese supplier for 80% of their revenue. That company is Sinovel, and in their latest filings they reported production vastly outstripping sales and wind energy farms sitting idle in China because they are not connected to the grid.
If you are long this stock take heed, but these articles are speaking some larger truths, we have some serious imbalances forming due to the nature of how the Chinese manage their economy and the reliance some companies fortunes are tied to them (MCP, REE, AMSC), and if we build it, they will come mentality that is creating excess inventories in some hot industries that rely on Government largess to grow (PWER). Power One's margins are twice that of the largest Inverter company SMA, and inverter prices are expected to fall up to 20% next year into the teeth of falling subsidies. This is hardly a growth story for a growth stock.
Finally, the WSJ noted that margin is at extreme levels ($300 billion) and every time it reaches these levels a significant retracement occurs. Also of note is the use of leveraged ETF buying on top of the use of margin, that is a recipe for disaster.
Be careful out there.
