Tuesday's Tidbits

Hooray, an up day! Here are some things to consider.

My bullish SPX indicator lives to see another day, perhaps it'll make a new X by the week's end.

FINALLY, the BXM/SPX spread is heading lower, and that is a sign of more aggressive risk taking which is good for equities. Due to the overbought condition, a gap open tomorrow in the SPX should be faded if this chart can't get below the 10sma.

The equity/bond spread has stabilized over the last month, but I suspect we're in for a breakout to the upper Bollinger.

Hrmmm, this is tricky. The Yen might be worth getting back into, but that doesn't jive with my reflation scenario. USD/YEN is a must watch because of the chart below.

Japan has broken its massive downtrend, and looks capable of hitting the upper Bollinger. If the Japanese market is rising with a strengthening Yen, I think I'll go invest in Japan to take advantage of the equity and forex trends.

Jibbidy jabbber jab, I don't want to repeat myself tonight. I could talk this shit all day, but it's pointless when I have better things to write. We're still going up, but don't bet the farm, because the decreasing volatility is still high and can make you loose your shit faster than a hooker with rubber sheets.

Today's Twitterd Tickers $APOL $JASO $POT $SOL $SVNT

Here are the tickers making noise on StockTwits

APOL is in an uptrend and rising on increasing volume. This looks like a strong candidate for further upside, but it remains under resistance.

The strong volume is indicative of accumulation, but since JASO is in a downtrend, bets on further upside are high risk.

POT has managed to make some ground since I first covered it here. Though it is enjoying a short term uptrend, the volume has been anemic and I remain suspicious.

SOL had a huge rally, and while it may have more upside, pros like TK are taking profits. This is a risky long.

SVNT is showing a nice breakout with strong volume. The primary downtrend makes this a speculative long, but the pattern offers a good risk/reward setup.

My primary indicator has remained positive for awhile, and thus I'm relieved to see some bullish action. I'm currently in IWN, DBC, and EEM, but I sold my TBT this morning for a b/e trade; bonds just aren't ready to go yet :( Things feel overbought and I expect a pullback, but the picture continues to grow bullish. Risk remains high, but the uptrend has yet to fail.

Off the record, there are some assholes appearing on StockTwits. We all know who they are, and somehow, I can't seem to stop following them. I enjoy watching these tools act like total fuck clowns, because I'm praying for their public demise and subsequent humiliation. God forgive me for my malicious thoughts, but truly, some of your animals test my resolve. One of my New Years resolutions is to be more hospitable towards blustering idiots, but it's Dec. 31st, so fuck em.

Monday Mutterings

It was a choppy roller coaster day, but there were some bright spots.

International markets stayed afloat as commodities moved up.

The financial sector finds itself in peril once again. Stay away from the big names who are too big to fail. Their bond holders might see cash, but the equity gets wiped out.

HYG printed another near term high, but the upper Bollinger is a good place to take profits.

Treasuries made a new high, but in an ominous fashion, reversed and sold off sharply till the end of the day. I've acquired some TBT and will add more if the tape presents itself.

The weakness in equities and strength of commodities versus bonds was unusual. I purchased a tiny amount of DBC to take advantage of the money leaving Treasuries.

Short trades continue to pay, but the weakness in bonds is divergent with the direction of equities. The money leaving the safety of bonds must go someplace, potentially energy and precious metal related categories. This market continues to move slowly relative to the past few months, but stay focused and take advantage of the few opportunities 2008 still offers.

Assorted Auguries

A few themes to keep an eye on during the week.

The housing sector remains in an uptrend, but like so many indexes, a break below the weekly low is likely to bring sellers.

The regional banking index hasn't made a lower low during the last round of selling, perhaps this is the first sign of real stability in equities. At the risk of sounding like a broken record, the weekly low is critical.

I first mentioned JNK here, and it continues to be a profitable trade, making nice moves up with little volatility. My target is the upper Bollinger.

My first post about RGLD can be found here. It continues to make new highs, but the lack of volume isn't very encouraging. Nevertheless, price is the only thing that pays, and the trend remains long and strong.

While this chart is nothing to trade from, it is interesting to ponder. It represents instances of the word "recession" found via Google over the last year. Mumbo jumbo on how this statistic was aggregated can be found here.

Gold and fixed income will continue to keep my attention in the coming week. The potential for reflation is increasing, and since my indicators are technically positive, I will be giving the benefit of the doubt to the bulls. All the same, we are still in very high risk territory, and my small position sizing reflects this reality.

Portfolio Theory $DBC $EEM $IWN $IYR $PLW

A weekly look at the five least correlated ETF's.

Although oil made new lows, DBC has yet to do the same. If I see a X with volume, I may begin accumulating.

EEM is pulling back within an uptrend, and once I see a X, I'll get on board with a stop below last weeks low.

IWN looks poised to break the downtrend and violate the upper Bollinger for a second time. Last weeks low is a critical boundary.

IYR needs to stay above last weeks lows, otherwise we will see a sell off across the board.

Even with the brouhaha this past week, PLW didn't rise to new highs, which may signal waning momentum.

It is likely that equities from the Emerging Markets, Small Cap Value and Real Estate sectors will share a similar fate if they breach their weekly lows. If that should happen, PLW will continue to rise and DBC will probably fall some more. As always, stay flexible and manage your emotions.

Digesting Indecision

Not much action in the equities market this week.

According to my indicator, the SPX has managed to stay bullish, but it is very close to resuming a downtrend.

The buywrite/index spread is rising (bearish), but it is in a resistance area, and any turn around would be bullish.

 

The NAMO has turned positive, which is good for equities.

 

The summation index continues to rise, another reason to be positive on stocks.

 

Finally, the 30Y Treasury is beginning to show weakness relative to Gold.  This may signal an end of deflationary fears.

 

Until volume returns to the market, any move should be view with suspicion if you’re a trend trader.  Equities remain range bound, so I’m focused on opportunities in fixed income.  I suspect the primary direction of 2009 will be revealed within the first two weeks of January, so I will continue to sit patiently, watch Twitter and play the Ukulele during market hours.

Today's Twittered Tickers $AMZN $FCX $GLD $PLD $WMT

Here are the tickers making noise on StockTwits

The last time I mentioned AMZN was here, and contrary to my forecast, it has risen over 15%. Now that it is approaching the upper Bollinger, I'm technically more bullish, but I suspect this stock is an investment trap.

FCX remains in a vicious downtrend, but a bounce to the upper Bollinger looks like a potential trade in the coming week.

GLD is rising on non-existent volume, but a breakout would be a nice place to trade a long scalp, and then swing short on a pullback to the trend line.

PLD is experiencing a high volume rally with tons of momo, and though it looks due for a pullback, it is a dangerous place for shorts to play.

WMT continues to show strength, but like AMZN, I suspect that fears of fundamental economic weakness will reemerge and bring this stock lower.

GLD is the most interesting trade on my radar, because it is an indcator of global economic stability. Weakness in gold will reestablish deflationary fears, but if it starts to make a run for 1000, there will be talk of hyperinflation. AMZN and WMT have had nice bounces, but regardless of their sector out performance, they will be dragged down with their siblings if there is no sign of economic relief in 2009.

Holiday Wish List

Dear President Obama,

I'm writing this letter to you because I hear Santa had his assets with Bernie Madhoff, and I don't think he's gonna be giving out much this year. With so many lining up for billions of dollars, I thought I'd try and get my share for sport.

1. Legalize it
You've done it, my dad has done it, everyone knows where to buy it, just tax it already. We need the revenue, and I wanna make something useful in my apartment. If you really want to avoid a Great Depression, ending the prohibition will create an Era of Creative Empathy... not much, but it's a start.

2. Free health care
I'm not talking checkups and dental (though that's good too), just catastrophe insurance. The kind I'll need when I'm hit buy a car driven by a dude having a massive coronary as he listens to Market Place.

3. Buy the IOU's in the beer fund jar
These assets will have value once the drunk assholes who sold them to me graduate and get jobs. The recent slowdown has made their line of work less productive, but I'm sure you can give em jobs in government.

4. Pay me to live in the USA
It is snowing everywhere. I've been betting on global warming and I get this?!? I could be King in Kashmir rather than a Slob in Seattle. How about some restitution?

5. Miniature pony
This requires no explanation other than my insatiable loneliness.

6. Lump of coal for self pity
With plummeting energy prices, you can certainly afford to send this timeless message to the self flagellating crowd. If coal isn't en vogue, then plant a wind turbine behind each house to employ the local community and advertise sustainability.

7. Update the national anthem
As the first Hip Hop President, you need to establish a search for the illest Jimi Hendrix/Dr. Dre Star Spangled Remix. The chorus will be a war cry to shake our enemies in their sleep.

8. Less waiting in/online
I hear they don't have lines in South Korea... or was it Taiwan? Either way, remember this, the less I wait, the less irate. If the information superhighway was so super, my connection wouldn't drop during torrential rains and missed cable payments.

9. Punish my enemies via a small regional war
This is an old favorite, so I trust you're handling it with care.

10. Less pantsuits on women of power
Pantsuits are hideous. Girls know it. Guys know it. Get rid of them.

If anything here seems ridiculous or impossible, just make it happen during a late congressional session before a holiday and nobody will be the wiser. Better men have done more damaging things, and this will buy you enough time to figure out a plan of action before the people publicly hangs their leaders for rampant fraud and corruption. Happy holiday.

Indexes, Oscillators and Bears, Oh My!

Today wasn't quite enough to put the nail in the bulls' coffin, but it isn't getting any prettier.

My SPX index is clinging to a bullish signal by a few points.

The NAMO is signaling a downtrend, but we remain in bullish territory.

Banks look ready to break down and test their lows.

MLP's continue to get sacked as oil goes lower than most can imagine. Looks like a good short.

I got stopped out of my SLV position for a break even trade. A new downtrend could bring a retest of the lows.

It is getting harder to defend the bullish side of things. My favorite long play is GDX, but it was up on weak volume as precious metals fell. It smelled like a suckers rally to me, so I've closed the position. For now, I will stick with fixed income until the equities tape gets a bit more positive. I'm shorting whatever pops up on StockTwits and keeping my positions small for the sake of my own psychological well being.