Monthly Archives: October 2012

Time for JNK to join S&P in Sell-Off

We first wrote about the negative divergences in JNK on August 03, 2012 in a post titled

Junk Bond ETF – $JNK – Opportunity rising on the short side

Since that time, JNK is a little higher, and the negative divergences are getting bigger.

Yield chasers be warned: “The ill-advised “reach for yield” could stop paying dividends” – Beachcomber

JNK – Daily

JNK – Weekly

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

Debunking the Myth of QE3

Debunking the myth of QE and dimming prospects of a Q4 performance chase

SPX : GOLD : CRB : XLF : USD – Daily

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Roadmap for the week – $DIA, $SPY, $RUT, $NDX

Roadmap for the week: a gap-filling, short-term oversold bounce, followed by renewed selling

DIA – Daily

SPY – Daily

RUT – Daily

NDX – Daily

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

The Peabody Energy Poll – $BTU

If the polls leave you wondering who the next president will be, the action in Peabody Energy suggests there is some institutional money with an opinion.

BTU – Monthly

BTU – Weekly

BTU – Daily

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

Goldman – How we See it – $GS

Trading stocks is a funny business.  It’s on the mind 24/7; it is tough to escape.

Yesterday, I was driving to a doctor’s office before the market closed and passed a McDonald’s (MCD) sign on the highway.  I wondered how the stock (MCD) was trading, and what the chart looked like (shit)? In the office, I saw a cast removal saw made by Stryker (SYK); I wanted to see the SYK chart.  Later in the hospital (yes, rough day), I saw a new kind of hand sanitation dispensers everywhere I looked made by Steris (STE); another chart to check.  You get the picture, and if you trade for a living you know what I mean.

So what brought Goldman (GS) to the fore?  It was a comment form a friend in the business.  We were discussing the various ways the big firms screw clients.  Goldman’s name came up and he commented that “every time he gave Goldman an order he felt he was putting his foot in the mouth of the lion.” (trading OTC pre-Manning was a racket) then he added, I am shorting GS-their move into managing the affairs of high net worth individuals will never be as profitable as ripping off their investment banking clients or their proprietary trading.”  Priceless…

It was chart check time.

A bearish stance on Goldman fits with commentary we posted October 12, 2012
Financials showing Weakness, forming possible Top – $XLF

We are already short USB and TMK which we consider Stray Birds within the XLF index.

The Goldman (GS) chart tells us it is ripe to start building a short. We started yesterday and added a little this morning. We rate GS red in the Bikini State

GS – Weekly

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Homebuilders update: the S&P might need to find new leadership soon -$XHB

 

XHB – Daily

XHB – Weekly

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Why are Long Rates Firm? -$TYX

With growth hopes fading and equity money seeking shelter in Treasuries, why are long rates firm?

The complex answer(s) leave a lot of room for experts to argue.

30 Year T-Bond Yield – Weekly

30 Year T-Bond Yield Monthly

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

 

Dr. Copper Looks Sick

For the uninitiated: Doctor Copper is market lingo for the base metal that is reputed to have a Ph.D. in economics because of its ability to predict turning points in the global economy.

Copper prices at primary trend risk, from falling users and producers

CU – Weekly

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

Bonds: What if? (interest rates rise)

Tale of the (bond) tape: consider the consequences of potentially rising long rates, even as the economy fades

TLT – Daily

TLT – Weekly

USB – Monthly

Slumping Oil Beginning to Drag the S&P

We started posting red flags on oil back in September.  We have an update today.  Links to the series are below for your convenience.

OIL Preparing to Reverse – $WTIC  September 04, 2012

The Oil / S&P Correlation  September 19, 2012

The Oil / S&P Correlation – Risk now being Realized    September 26, 2012

Update: slumping oil finally beginning to drag the S&P

WTIC – Weekly

WTIC – Daily

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

$VIX – 2007 Redux?

VIX perspective: the only precedent for the currently evolving daily, weekly and monthly divergent upturn in the VIX came in 2007

VIX – Daily

VIX – Weekly

VIX – Monthly

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

$VIX – Upside in Volatility Suggested

VIX indeed kicking in; additional upside in volatility suggested

VIX – Daily

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R.I.P – Donald Takayama (1944-2012)

Donald Takayama (1944-2012) 

By Steve Pezman

Donald Takayama, Ala Moana, 1961. Photo: Leroy Grannis

Donald passed away this morning, October 22, 2012. Much will be written about him.

Dale Velzy invited him to California to shape when he saw a board that Takayama had made in Waikiki. At 12, Donald came over and made the West Coast his home. Originally living in the South Bay, he later moved south to Oceanside, where he built Hawaiian Pro Designs into his personal statement on the topic of making fine surfboards. He always remained tight with Dale Velzy. When Dale passed, Donald was deeply shaken. Married to Diane, both a wife and business partner, Donald was far from a perfect human. A fun-loving guy, he enjoyed jamming the penny slots and letting them roll. He experienced his travails, many in plain view for us all, yet he was universally loved and respected—a sweet, sweet man who was Hawaiian-style, generous to a fault, giving to those he felt worthy, and, finally, a teacher—the highest attainment of the human condition. His contribution to surfing in general was broad and lasting, not only in what and how to ride, but in what it really meant. Among surfers that he mentored were Joel Tudor and David Nuuhiwa. Dale lovingly called Donald the “little guy” but we all knew that Donald was huge beyond size. He was a rock among pebbles, from a beach that is changing its look and character. Remember him.

Courtesy: The Surfer’s Journal

XLY signaling risk to 70% of U.S. GDP

XLY Daily

XLY Weekly

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

Silver Wheaton, a Second Look – $SLW

On October 08, 2012 we posted Silver’s Short-Term Bear Case which was followed by Silver – Commercial Hedging Suggests Prices Should Fall – $SLV on October 12, 2012

The short-term bear case for silver has played out well for us.

That said, one name we used to play silver short in our fund needs a second look. The stock is Silver Wheaton – SLW.

At the time of our bearish postings on silver, SLW was overbought on a daily basis.  We traded SLW aggressively and were rewarded  for shorting intraday rallies for the last two weeks.

With Friday and today’s price action, the daily technical metrics of SLW started to improve, that has us taking a closer look at the weekly SLW chart.  What we see tells us SLW is not a safe trading short now and it could move higher.

The most bullish aspect of the SLW weekly chart is the simultaneous break-out of its price trend lines and its momentum oscillator trend lines.

We are still bearish on silver, and short a small amount of SLW at the time of this post but we will be reeling it in soon.  We have not yet done the technical work, but the silver miners may be diverging from the metal.

SLW – Weekly

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Why Homebuilders are diverging and likely peaking – $XHB

Housing leadership not yet broken, but emerging industry data confirm why the XHB is diverging and likely peaking

XHB – Daily

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Natty Gas – We still Love it!

NYMEX Natural Gas – Weekly

We rate Natural Gas Green in the Bikini State

Names we own: CVX, KMI, NFX, SWN, XOM and CHK is on our wish buy if she pulls back

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)

 

NDX – Classic 50% Retrace

“You can make a fortune by following this one rule alone.” – W.D. Gann

The rule is the 50% retrace.  Edward Dobson wrote a book about it in 1979 titled The Trading Rule That Can Make You Rich.*

We use the 50% retrace in multiple time-frames for trade entry and exit.

In technical analysis the longer the time-frame, the more significant a pattern.

Below we present a doozy (with a macro thought), combined with a rising wedge, that is inside a defined channel. All increase the significance of the pattern.-

NDX’s likely wedge break portends more than a quarterly earnings issue-

NDX – Monthly 50% Retrace & Rising Wedge

Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)