Monthly Archives: November 2012

The more China “recovers,” the more someone is selling

The global economic implications of the SSEC breaking down are the stuff bad dreams are made of.  This chart is sending a worrisome message.

SSEC – 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)

 

China’s “Recovery” – A sign of Global Risk?

Either China’s response to “recovery” is delayed, or this is a sign of serious global risk

And the word is spreading…

ZeroHedge: Shanghai Composite Drops To Four Year Low As China Says Over 1 Million Jobs Per Month Created

SSEC – Weekly

SSEC – 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)

Expect a B-Move Down this Week – COMPQ

Updating this week’s trading message: Market Roadmap – DIA, SPY, IWM, QQQ, VIX

The pattern is similar for the DIA, SPY, IWM, & QQQ. You can see more detail on their charts and our outlook by clicking the link above.

Reference to a C move up in the chart below is for the SPX.

COMPQ – 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)

 

Small Stocks Threaten a Big Bull

Putting big picture perspective around the trade.

We recommend our readers spend some time with this chart and contemplate its annotations and relationships.

SPX : COMPQ RSI Comparison – 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)

Market Roadmap – DIA, SPY, IWM, QQQ, VIX

We expect a corrective move down from the last five days of rallying.  If a move lower accommodates our expectations, it will be the b wave in an a-b-c corrective phase described by the Elliot Wave Principle .

The simplest explanation for what we are looking for is a visual aid below from StockCharts.com – ChartSchool Elliot Wave Basics - You can click the preceding link for a quick tutorial if you are not familiar with Wave Theory.

We are looking for b down noted by the dashed red arrow.

Elliot Wave 5 wave down sequence with an a-b-c upward corrective wave

DIA – Daily

SPY – Daily

IWM – Daily

QQQ – Daily

Conversely, we expect this last chart shown of the CBOE Volatility Index (VIX) to rally in confirmation of selling in the broader market.

VIX – 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)

Natgas – Trading Update

Primary trend is still positive, but daily divergences warn of a likely pullback

NATGAS Spot (EOD) – Daily

NATGAS Spot (EOD) – 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)

US Treasuries Breaking Down

The chart below shows US Treasuries are breaking down, and rates are turning up.  Without economic growth question is why?

SPX : TLT – 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)

Spain – The IBEX signaling possible EZ issues

The problems in Spain and the global implications for the banking system are the stuff that keep a lot of the best global macro minds up late at night sweating.

Fortunately for us, we have the charts, and we can sweat with less effort.

IBEX – 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)

Oversold indicators and divergent VIX suggest we have a tradable bottom

On October 14th, and again on October 16th, we posted commentary about our anticipated development of an oversold condition, that would setup a trading bottom in the market.

VIX diverging now; S&P trading bottom approaching?

Transports set for a flush – $TRAN

Our fund had gross market exposure of 40/60 – long/short, until the morning of October 15th, when we started the shift to our current gross exposure of 58/42.

We don’t know how long the expected rally will last, but we do know the market likes to confound expectations.

SPX – Daily

DIA – Daily

VIX – 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)

 

Gold’s longer-term breakdown/deflation scenario

Gold’s anticipated sell-off confirming the deflation risk suggested in its potential longer-term breakdown.

Gold – Weekly

Gold – 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)

Apple – some retracement likely, but it won’t be a lasting bottom

Even a 35% decline in AAPL to a 50% rally retracement can’t produce a lasting trading bottom

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)

Safeway – Just for U stock price savings

On October 10, 2012 we posted our bullish outlook on Safeway: Safeway – Double Coupon Special – $SWY  Last week the stock traded above 17 and looked like it was going to fill its July 2012 downside gap but it failed.

We believe this market likes to punish the obvious, and the failure left momentum chasing new longs trapped, and brought back in the short sellers.

We came across the note below at The Motley Fool; looks like we are in good company.

Billionaire Ray Dalio’s Latest Stock Picks

Bridgewater increased its holdings of Safeway (NYSE: SWY) by about a third to make that the second largest stock holding by market value in its 13F portfolio. The trailing and forward P/E multiples at these two companies all come out to 8x, which normally represents value territory. Both stocks also pay dividend yields of about 4%.

Safeway’s current short interest is 77,110,275 which is 30% of the float and 15.68 days to cover.

That is a crowded trade.

SWY – 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)

 

VIX diverging now; S&P trading bottom approaching?

Our short positions are working, and we are getting comfortable.  That is never a good sign for us.  We are going to trim our short exposure.

VIX – 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)