the Yuppie Pig

To make things a little more interesting... and as a better way to keep score; I thought I'd start to list out totally frivolous and excessive "yuppie" things I'd one day like to own and see how far I can get. Here's the first toy; utterly reckless but oh so fun!

The Yamaha R1
998cc
MSRP $16799 cdn


This is the 2007 model. It's a shame the 2009 doesn't come in this red/black.

I'm neutral here. While I still have a little WFC and FXI left after scaling out more today, I'm neutral on the market here. All of the indicators of various time frames point in alternating directions. We're also in the middle of the range, and in the middle of this symmetrical triangle


As I look around for something interesting, I'm not finding much. Perhaps I try again with USO as it's once again pressed down at its lows creating a "triple" bottom this time. I wouldn't be surprised if it breaks through this time.

On the short side, I had hoped the REITs would rally to create a safer entry. No such luck here. Maybe I used it all up.

The only impending trade I can see is maybe a long position in SPY for a day-trade based on the 5 minute chart. No need to force trades here.

Okay, I don't know how many 7's I rolled in a row on this one... Maybe it WAS skill? Okay, maybe not... Must have been Milla!


This time, I gave her a big gun to pose with.

The "Bad Bank" bet played out by far much better than I had ever expected as shown by a one day 30% gain in WFC! I find it so curious that the market had not differentiated the good from the bad. WFC's outperformance, I have to chalk up to partly being that traders/investors/whoever realize that the "bank bank" plan might take the common shareholders of those who use it, to the woodshed. For that, I'll thank WFC management for doing well, what banks are suppose to do.

As far as trading WFC, I took 2/5ths of my position off, and will scale out of the rest very soon. I see resistance on the chart at 22ish and 25. I want to be out by then, even though I believe it could go higher. The risk:reward no longer interests me at those levels. Besides, as details of the "bad bank" plan leaks out, I suspect the momentum will dwindle as reality once again sets back into the sector even if WFC is ultimately the long term winner here.


For the S&P500, the momentum is definitely up, but as we push over 875 towards 900, I have to start to become more incrementally bearish. I still believe that S&P500 at 600 is still a very plausible scenario over time. Of course, in this market, I'll let the 60 minute technicals be my ultimate guide.


My target for FXI remains at 27.5, so I'll look towards exiting just below there. If we get some type of continuation of the positive momentum (It's amazing how quickly sentiment changes) we should reach there in a day or two.


Once the market starts to form a topping pattern, I'll be going back to the short side on the commercial REITs. While IYR is the chart I use to trade, I'll consider supercharging it with SRS despite its many documented evils.

In this market, never mistake fortune for skill.

What was for a moment a sizable gain in USO turned into a round trip. Fortunately I had stops which gave me a minor gain. What's important to remember, is that even if my thesis of major oil production cuts are true, it still does not justify such a major move in crude oil in a single day.

On a better note, WFC is starting to play out as the "bad bank" thesis plays out. I suspect this will be a buy the rumour, sell the news type reaction.

Plan for Banks' Toxic Debt May Be Unveiled Next Week

Still long FXI until some the charts say "sell" but I'm becoming more weary of being long as the market has worked off its oversold condition on the 60 minute chart. Most of the short term indicators are all quite neutral. Should the market continue to rally, I'll once again be looking at short exposure in the commercial REITs.

Mercedes Benz this time...

No trades for the day.

It was dissapointing to see a nice early morning gain vanish by midday.

Stops are just below the current levels, so I'll ride them out.

Friday morning nearly matched Thursday, pound for pound beginning with a early morning stop hit on SPY, followed by restarting another position (this time, WFC - omg; a financial) instead. But the close was a different matter. My bets on USO and to a lesser degree, FXI have started to pay off. The stomach churning volatility was worth it in the end. On to this week...

The SPX is filling into this symmetrical triangle and with an actually decent close on Friday, I have to be at least somewhat optimistic for a continuation for a bounce. The markets still remained oversold, and seems to be carving out a short term tradable bottom.


Instead of piling back into SPY, I decided to go with WFC, where I suspect (and perhaps overly optimistically) that this new administration will inevitably do what has to be done to the financials; and split the bad from the good. The bad become decaying zombies like these guys:


And the good become investable hotties!


Long Milla.

I'm still holding on to my stake in FXI - waiting for the inevitable hope rally where the hedgies bank everything on the China thesis based on the Baltic Dry Index and Copper holding up. I'm unsure where it's going over the next 12 months, but fairly confident that the thesis gets played. Target of 27.5. I want this current low to hold, or I'll bail on the whole thing.


Similar for oil, I'm betting on production cuts from producers. Thus, the commodity over the stocks. 36 and 40ish are my targets but I'll let the 60 min chart give me some guidance as we move along.

Thursday sure did have a whole lot of chop.

The gap down triggered my stop loss on my SPY position which I incorrectly believed had more than enough room to weather short term volatility. Initial glee, as the index declined further, turned into frustration as the market turned higher midday. I did take that opportunity as the 5 minute chart showed some positive developments to restart the position. In the mix of it all, I layered into POT, which after a quick few points and placing a wide stop - kicks me out with a tiny gain enough for a few slices of pizza. It was good pizza. Along side POT, I added USO and FXI as per my game plan. Only the latter two remain.

I don't have much to add in terms of commentary, as much of what I wrote yesterday still stands in my opinion. I'm moderately bullish on a Friday since this week was all about beating the financials with the ugly stick and of course, Sunday is the day the Government doesn't rest when it comes to the financials. I wonder if this Administration is so hard working as compared to the last...

I think Friday's going to have a whole lot of chop.

And because Microsoft had a bad day...

The market continues to be a day-traders dream; closing up nicely after a faded gap and a test of the lows. On today's actions, both fundamentally and technically, I've got some reasons to feel constructive. And more importantly, some ideas for the long side. First; the S&P500 could be filling out this symmetrical triangle depicted below. If prophecy fulfills itself, 900 appears to be an objective target on this run.


The VIX has retreated to 46.42 where history has taught be to use the 60 minute chart for technical analysis. Here are my thoughts:

1) The market is still heavily oversold (bullish)
2) Asian markets did not decline on yesterdays intermediate lows (bullish for the "rest of world" thesis)
3) Double bottom on oil
4) Treasuries did not really rally on the financial disaster that was yesterday and retreated today
5) Selling has actually been aimed at financials which have dragged the index down
6) Gold up - inflationary?
7) Oil production is getting slashed now that every nook and cranny is filled with stored oil for the contango play
8) Copper holding up nicely (china)
9) AAPL is setting a bullish tone tomorrow

Slap these all together in my head, and I come up with USO, FXI and POT

USO over oil co's as its the production cuts that are giving a lift to oil. As a result, I suspect oil companies lag the commodity. On a tangent to that, avoid infrastructure names as projects get slashed. Except for CAT on the Obama/China thesis.

FXI is the best way to play the China thesis as any bullish hedge fund move is going to push this up. Copper is the other way.

POT I like for its technical aspects and low risk reward. With oil now at low prices, converting food to oil is no longer as economical. Thus, food is no longer correlated to energy. Falling natgas prices expand margins on N producers. Now, I know Potash is not a N producer, but the group trades in a monolith.

All 3 have good 60 minute charts. I urge you to take a look at them, as I can annotate them with the technical analysis trend lines and you can see them up to date. (see my stockcharts listing at the top right) Of course, if the SPX can't retake 850+, I disavow all the above; but AAPL is giving us a push.

And for a great interview with Google CEO Eric Schmidt

short term indicators are all oversold...

playing with fire...

godspeed...

81.85

Just horrid... Next stop 750.


A cautionary note here - the market on every short term time frame is oversold and ready to bounce. Who knows what's about to happen. Anything from another major failure or government intervention is on the table.

The VIX is now at 56, which is borderline psychotic volatility. One "layman's" way of looking at what that really means, is to take the VIX in percentage terms; multiply it by the S&P500 and divide by 22 (for the number of trading days in a month)

Right now, that yields 805 x 56% / 22 = 20.5. Thus, one can expect that the market will move up or down 20.5 SPX points in a day! No wonder, when the VIX is at these levels, the 5 minute chart trades like the daily chart in good times. (1000 x 15% / 22 = 6.8 SPX points for bull markets)

As long as the VIX is at these levels, technicals rule, and I'll follow the lead of the 5 minute chart - up and down.

Here are some other thoughts
1) oil and natgas held up reasonable well
2) Ag stocks (particularly N producers) look like a good trade to the upside when things settle. Since oil is so low, its no longer efficient to convert corn to gasoline. This falling crude no longer forces the Ag sector down, while falling natgas expands margins.
3) Gold is also holding up well. Trades for the long side when the charts permit.

And last, but not least...

I'm looking at buying UNG for a trade. Let's not kid ourselves; the chart of UNG is HORRIBLE. There seems to be relentless selling with a steady descent to oblivion. However, the 60 min chart is on the bottom of the channel which has signaled corrections to the upside in the past. The cold weather in the east should also help give an excuse for a minor rally. I've added my chart of UNG to my stockcharts listing so you can see what I mean. A stop can be used just below the lows. A bounce could potentially be a 10% move.

As for the rest of the market, I'm neutral. I will continue to use the 60 min chart to guide the majority of my trades. Currently, I'm slightly biased to further upside movements but the 5 min chart is quite overbought. No heavy bets in either direction tomorrow.

As I said in the last post, for most technicians, that intraday reversal off support is going to look very bullish for at least a bounce.

Unfortunately, I see plenty of resistance at 850 and then 860. Typically, I'd like to see little resistance in front of me, and more support behind me. The bull case does not have this, so any long trades would be very short. I've added a 60 min chart of the SPX on my stockcharts listing so you can see it as it develops. It's now biased towards long positions, so I'm now lying in wait for the 15 and 5 minute charts for a good entry.

I went long as I'm betting that 820 will hold for at least a cursory bounce. The 60 is deeply oversold, and the 5 and 15 are looking constructive. With the banks again on the edge of disaster, I think we should get some stabilization as traders realize its Sunday night they have to worry about. I'm making a field bet with SPY since I don't know which to play.. rock, paper or scissors.

Support at 820, overhead resistance at 860 - and really don't want to be holding into the weekend.

EDIT 1320 Eastern - I've closed out SPY as the SPX has neared upside resistance now! (Very timely exit on SRS this morning!) I'm moderately bullish only because 8 days of selling is a little excessive, and if today closes at or near current levels, it's going to look like a bullish reversal day. I'd like to see a tiny pullback only to get the 5 and 15 minute charts to reset and give me a safe entry. It's been a really good couple weeks, so I don't want to push my luck...

The market has been down for 8 days straight... I may be bearish, but I'm lightening up my short view by closing my SRS position as the SPX nears 820 and IYR nears 30. In fact, I'm becoming short term bullish if the charts show some stabilization at 820. Some potentials longs charts/ideas to be posted later.


Just don't interpret my view of covering to be at all bullish for this sector. (REITs) Fundamentals DO matter, but are merely shrouded by a mass cloud of volatility. I will look to re-enter this short position at a later time. It's been a fun ride!

In summary, I remain long only in WMT, which has been acting very well despite the horrid tape.

Australia offers 'best job in world' on paradise island

Wow, that's sweet! I could see this yuppie pig lounging in the sun by day, and trading the US markets by night; and blogging in between!





Still short REITs, but IYR is showing some bullish indicators on the 60 minute MACD. If the overall market wasn't so overbought, I'd have covered. Still planning to give this a little room.

USO and oil stocks (DIG) are starting to interest me for another trade. I'd like to see a bit more of a push down.

SQNM is still holding up well and isn't giving me a chance to pick up some shares on the cheap.

Still long WMT to fill the gap.

Exactly what the title of this post says... Everyday the monolithic trading is like a game of rock, paper, scissors over and over, where the name of the game is to guess what the hedgies are going to do, and you pick your response

A few quick thoughts:

1) We're still range bound in the 750 to 950 range. Wide; I know.
2) Targets for the SPX are 860, 820 and 750.
3) The VIX at 60+ means all bets are off; and the 5-minute chart rules
4) REITs are still in trouble and I think lead the way down
5) Bond yields (US Treasuries) can easily retest their lows
6) Short term indicators (5, 15 and 60 minute) are bullish and set to bounce
7) The daily charts are SCREAMING SELL to me - but this market is manic!

So far so good on the commercial real estate short (SRS). Despite the evils of ultrashort ETF's, I'm using it as a trading vehicle for this position. The market remains overbought on the daily chart, so there is the potential for sustained multi-week selling where I would expect the commercial REITs to come under significant pressure.

A 60 minute chart of IYR and SRS is available in my stockcharts listing, so feel free to take a look. I'll be using 60 minute IYR (not SRS) for technical signals.


As an aside, the VIX is starting to move up and should the market continue lower over the next few days, we are going to enter crisis volatility levels where I may switch indicators to an even shorter time frame.

I've long been a huge fan of the quintessential Calvin & Hobbes.


Saw this at
http://theamateurinvestor.blogspot.com/

I'm taking my gains in this short trade as the 5 and 15 minute charts look like they can easily roll over and produce buy signals. (currently at 902 as I write this) The 60 minute still looks strong to the downside, but the psychological 900 mark, along with a confluence of other technical indicators/patterns suggest a bounce here is likely. Maybe re-short later.

Still holding ultrashort REITs, however.

On a separate note, I wasn't able to purchase any short oil exposure (DUG) this morning, even though I had planned to. The Gap prevented me from diving in and being ultrashort all three of the following: S&P500, REITs and 20 year treasury, I felt I was pushing it to also be ultrashort oil.

EDIT: Also closed the other half of my short US Treasury (TBT) and will look to re-enter

Very Cool! Something every yuppie needs for a coffee table.

And so the thesis trade continues - long anything 8 arms lengths related to China. I'm a bit perplexed to see why there was strength in the REITs since last I checked, North Americans purchased from China, and not the other way around. What started out as a nice gain in the morning quickly fell apart. I'll still give it some wiggle room, but it's a trade and no more than that.

DUG also broke out of the down trend on the 60 minute chart at the end of the day. I'll look into entering that tomorrow in the face of the thesis trade at my own peril.

I'm also really liking SQNM as both a story and speculative stock. I'd like to see it pull back to retest the breakout.

Recap of the trading day;

Started a position in ultrashort S&P500 (SDS) and ultrashort REITS (SRS). Both are for short term trades as volatility still remains high. And what I mean by short term, is that I'm using the 5, 15 and 60 minute chart for entry and exit.

Also looking closely at DUG for a potential reversal in oil; just waiting for the 60 min chart to look a bit better. I've put up a link to my stockcharts.com listing so you can view the 60 min chart of DUG.

Break out on light volume... Large Base with overhead resistance... Now what?

I know that many people want to remain flexible given the rather pathetic state of the economy, and yet not get in the way of the tape; but I'm leaning more to the bearish case waiting for weakness at above resistance (950 and 1000 or tomorrow) to push short. Now that the VIX has reverted back into normal bear market range, I'm going to act accordingly to the previous bear markets where areas around the 50 day ema acts as minor resistance and the 200 day ema acts as major resistance in bear market rallies.

I'll also say that this rally feels like it is coming to an end as its starting to feel like a worst of breed rally. Commodities and late cycle stocks shouldn't outperform early cycle; and I just don't see a meaningful recovery until home prices bottom and the financials act better.


The 10-year has filled its gap rather nicely, but now what? Since US Treasuries are so overbought, I'll let this ride a little further; and target the yield at 2.7% where there is some chop and then re-evaluate.


Some moves I just don't trust.
1) the rally in oil (and DIG)
2) strength in retailers (RTH)
3) strength in REITs (IYR)
4) casino's - c'mon!
5) I'll tolerate the financials just because interest rates are so low

And some things I'll entertain
1) recent strength in grains
2) strength in gold (but overbought)
3) and recessionary stocks of course

I've started a short position against US Treasury. TBT is an ultrashort 20-year US Treasury ETF; however, I'm I've been using the 10-year US Treasury Chart for my closing signal. ($TNX using stockcharts.com)

Trading requires patience and timing. Bruce Wayne provides a lesson.

Happy New Years:)