Rendering Ratios

One final chart post for the weekend.

My NASDAQ indicator keeps printing X's signaling lower volatility and more bullish stocks.

The intervention I was looking for here is underway. Don't fight the BOJ until you see another X printed.

Gold and precious metals like silver continue to put in nice uptrend work. This remains the best sector for any long bets.

More NASDAQ stocks are trading above their 50dma on lower volatility, another bullish sign.

The only thing holding back the inflation trade is the strength of long term Treasuries.

Nothing too crazy in this mix, but I like to keep track of EVERYTHING. Sometimes it feels like busy work, but you never know where future insight will lie. Next up, getting my X-mas wish list ready.

New Themes and Old

A few things to watch this week.

Even though the dollar has had a bounce, US bonds are still under performing global ones.

India looks poised to make a run with this second Bollinger violation.

The defense sector is making a break. Guess we're gonna need a war to end the recession.

My TRAN indicator has gone bullish, so this up move looks like the real thing.

The utilities sector has been basing for over 2 months. If energy costs remain low, this sector will have fundamentally sound legs to invest in. Sadly, without momentum, this is a dividend play.

The action in the bond market doesn't bode well for the dollar. Foreign securities still hold an edge, but there are domestic sectors worth looking into.

Portfolio Theory

I was browsing here when I decided to start this column. I'm going to track 5 uncorrelated ETF's with the premise that a combination of them will yield better risk adjusted returns than the SP500.

Till I can find a better proxy, DBC will serve as my commodities aggregate, even if it is oil heavy. The volume suggests that a potential bottom is forming, but the trend is still down. This is a very high risk long, exclusively for masochists and daredevils.

EEM is a good emerging market proxy, and now that it is in a newly confirmed uptrend, this looks like a good time to start buying the dip.

IWN is my stand in for the small cap value sector. Now that it is trading above its upper Bollinger, buying the dip is in play, but we're still in a long term downtrend.

IYR is a nice liquid way to play Real Estate. While we're getting more bullish, the volatility of this sector make the returns here tricky without proper position sizing.

PLW is a proxy for the total bond market, but I might replace it for a more liquid ETF like TLT. The trend is up, but the asymptotic move is bubbly.

The emerging markets are establishing a new uptrend as the bond market enters the vertical ascent often seen before volatile reversals. The commodities markets continue to be dragged down by oil, so one can only feel a reversal coming, hardly the kind of one should trade one. Another bullish theme is the out performance of small caps over large, and the sector does seem to be finding its legs. Finally, real estate is improving, but the risks are still very high. Cash is still a reasonable position, but with weakness in the dollar, the 'fraidy cats may stand to loose the most.

StockTwits Hot Picks

Here are the ticks making noise on StockTwits

ARTC looks like it is headed to 0, but I would cover some shorts on that volume. Hawaii Trader had the scoop on the short here.

As I mentioned here, CPB and consumer staples will lag the market's inflation bounce.

FAS and FAZ were both DOWN by the close Friday. Very fishy, but I'm day trading these Madoff's till the party is over.

GM has had a nice bounce, but anyone buying this for more than a trade is nuts.

The SP500 is putting in some good work here. The upper Bollinger rests at a critical resistance level, so there will be bullish major interest if we break through.

The market continues to show remarkable strength in the face of scandal and underlying economic weakness. Don't fight the tape, ride the wave of bullish profits till we make the next leg down. A SPY price target near the Lehman collapse days of early September is the most bullish scenario for now. Small position size is warranted as the falling volatility is still unusually high.