the Yuppie Pig

It continues to be a trader's market, so I'll continue with trying to find some ways to make trades, with a smattering of fundamental reasoning. The 60 minute chart worked off its overbought condition and has now turned up. It's actually pretty neutral at this point, with the MACD just below zero. However, the 5 minute and the 15 minute charts are pointing down, so we should see some more weakness tomorrow. Futures are down 10 points, but let's see what happens tomorrow.

I'm still short positions in IYR, ANF, SBUX, HOG. Long LQD and WMT.


I'd like to rebuild my short in IYR in the 27-28 level. I'm still short a small position, but I remain bearish on this sector. There's likely a lot of supply above 28 so it makes it a low risk trade at that level. And a break lower, spells death for this sector.


Here's BNS again. I'd like this to break down towards 22, where I think it will hold. Perhaps we see this with some additional selling tomorrow, but I want to wait for the downtrend to break.


A continuing move in grains. Hopefully, we see some of the Ag names sell down.


Gold never took off the way people expected it to, after the most recent helicopter drop of cash. However, we only need the thesis to catch on again, and the metal gets a huge run. There's a nice bullish wedge forming, so I'll go long a break of the pattern. 93 and 95 are my short term targets.



I'm also looking at MA or V.

The market had quite the pullback today, which at very least is constructive for a sustainable rally. I'm not expecting an immediate repeal of the rally as things have gotten better (at least for short term stock prices) in the past few weeks. Despite views on the "kick the can down the road" policy this government is taking, off-loading toxic assets off companies and onto the public, is indeed good for companies! - just not the tax payers.

As this pullback plays out, I'll be looking to take in pretty much all of my shorts and look to re-short on an oversold condition. The 60 minute chart has moved into neutral territory from being overbought with today's move down.

With that in mind, I'll be back to front running the market as it hops from thesis to thesis. Right now, the "oil had no fundamental reason for rising" thesis is in play, in stark contrast to last months, "china is buying oil" thesis. I'm neutral on oil until I see real signs of economic recovery, so I'll take the opportunity to buy oil down, and sell it into a thesis rotation that seems to occur every few weeks.


I expect this uptrend to be broken and a good chuck of the gains given back.

In a similar vein, I was looking for some confirmation that at least grains were holding up. It no longer trades lock step with oil, so a bounce off support here makes me consider buying some of the Ag names as they trade back down. I'm going back to Monsanto, and possibly Mosaic. I remain somewhat weary of Potash for the next little while.


Continuing on the search for long positions, I'm back with the Canadian banks. I'd like BNS to break down here, and find some support at lower levels. This would just be a better entry point, and give some time for the 60 minute MACD to give a solid buy signal. Still waiting.


And here's DUG from last night. I sure wish it didn't gap up.


Next time...

I'm seeing that spot crude is down a dollar tonight, along with the market. Crude oil, and oil stocks have been doing well recently on the "re-flation" thesis. But in the short term, I dont think it has any merit for the move up. However, that said, long term, I remain bullish on a finite resource that essentially has no alternative. But for the trade...

The 60 minute MACD has rolled upwards, and DUG has broken the downtrend. I could see a quick move up to 27 and then to 29 in short order, especially if the market pauses or pulls back here. A stop could be used just under 24, where a tiny flag has formed.


I don't want to pile into a gap up on this name, but at the same time, I do want it to trade up a little, to break this tiny flag and get some momentum.

I see two basic outcomes over the next couple of weeks of equal probability.

1) The market continues to push higher into major resistance above from 825 to 875 where I see at best, upward moves are muted. There's likely a very large supply of stocks available from continually bouncing off this range from last October until the middle of Feb.

2) The market breaks down here and enters into a range between here and the lows. Due to the asymmetrical magnitudes of the two scenarios, I have to conclude that I believe it's best to be bearish here, at least until the market is able to digest these gains.


The MACD on the 60 minute chart has rolled over, but has yet to break the uptrend. Will it be this time?


The commercial REITs have really lagged in the "worst of breed" bounce here, so I'll want to push short again whenever the opportunity shows itself. I did manage to take some gains at 24, but I'll likely reload again, as long as the this name does not gap down. (note - the futures are down 9 points near midnight here, so i might not get that chance)


I went long LQD for a quick technical trade. I don't really have a short term bias on credit movements, nor the USD. For me, this is a short rallies, buy dips type market in a tight range. On one hand, the Government is tossing money to drive long rates down, but at the same time, I'm not convinced that the demand is there to soak up bad bank assets. (at least not at prices that banks would be willing to let them go) However, I remain bullish on Canadian Banks and will build a trading position on a pull back.


Also still short a range of "consumer spending" names such as ANF, SBUX, WMFI and HOG. So far, these names are stomping me into the ground, but I've kept position sizes small, limiting damage. I think these names head the way the market does, so I'm holding still, betting on my asymmetrical downside risk view.

I guess the textbook thesis trades are back today, as a slew of the early cycle stocks were up huge today. I basically got shredded on my short consumer spending positions. I plan to wind them down and try to hold a more neutral portfolio. I still think the market need to pull back, but I've been wrong so far. And while I feel intellectually correct, I'd much rather be making money.


One of my few long positions is finally beginning to close the gap. I've been trading around this position for weeks, expecting the gap to close.


I'm not sure how some of the credit positions are going to play out. There's some uncertainty in the amount of private demand for bad bank assets, and the willingness of banks to open up and let go of assets. But right now, LQD appears oversold and is back to levels since before the latest Fed/Treasury cash give-away.

It's been a really volatile market, the past few days filled with alot of intraday moves, and plenty of gaps. I think another is brewing now, as I see the S&P futures up 8 points. I took today's late day sell-off to lighten up some shorts in IYR and SBUX which reversed hard right at the close. For me to be convicted of a more significant downward move towards the 740-760 region, I'll want to see a move below 800 with some conviction.


This 60 minute chart, indeed has rolled over on the MACD suggesting downside ahead, but it does not have to happen, as the previous two roll-overs show.

Another bearish cross-over day, but so far these have not lead to sustained sell-offs. We'll see if there is any follow through tomorrow. I'm still short positions in ANF, SBUX, HOG, IYR and now WFMI, while long WMT. I'll look to close things out on any sustained selling as I'm not expecting a huge pullback.


While I'm short a few names, I'm actually neutral on the market, and I think fundamentals are actually beginning to mean something again. I remain long term bullish on the Agricultural space, but now that the grains are showing some strength with good volume, I once again want to buy Ag stocks on pullbacks. I'll list MON and MOS as two names that interest me. I don't like the price wars in Potash, nor their cut in production.


Some of the Tech names for long trading purposes also interest me on a pullback. RIMM, GOOG and CRM interest me. AAPL does as well, but I'm finding it very overbought and a little expensive. I'll add in BHP on the commodities front as a variety of metals are showing some strength and volume.

Blame Canada!!

RY, TD, BMO, BNS, CM all beat the American banks, and now have the size and scope to take market share in the US Market and are yielding about 6-7%.

Citi now has a market cap of 16B. Bank of America, has a market cap of 46B.
BNS has a market share of 26B, and RY has a market cap of 42B.

Yes, the Canadian non-zombie banks can compete.



Like every bank right now, it's heavily overbought so I'm looking to build a larger position both for investment and trading.

Long BNS in retirement account

But I like all of them here.

Today's charts that I present are the exact reversals of what I posted on Friday, with a little extra to boot. Being fairly confident with at least a little negative follow through to the downside, end of day Friday, I expected to start to take in shorts this morning. But that was not to be. Instead, we got our trusty old government working overtime on a Sunday to drive the markets up causing me to give up all my gains from last week.

This market is like technical clockwork, making precise pit stops at key technical levels. Today, SPX 820. The next upside stop is 840, followed by 870. I'll have to reiterate this again, that it is around the 50 day EMA that acts as major resistance in bear markets, so I do expect the market to lose steam here, but it certainly has not shown signs of doing so yet.


Back at the resistance level. This has been a real yo-yo for me in the past week.


Way over extended, but if the market continues to power up...


Another over extended chart, at resistance


And more of the same.


Regardless of what happens, I'll be trimming shares and moving towards a neutral stance until we get signs of a break down. I'm still long shares of WMT, but clearly, this is not hedging against these types of moves. I'm glad that I'm still very much positive this year, but like other days, its days like this, of relative and absolute under performance that really irk me.

Finally, the market is pausing after its huge run from SPX666, and the 60 minute chart is rolling over with some conviction, end of day Friday. I think a quick move to 740 could easily be in the cards this coming week, at which point we can re-evaluate things.


I've short a few names, expecting some further downside. These are fundamental shorts as well as technical shorts. Essentially, all of these names exhibit the same chart with nice runs in the past couple weeks, pushing into resistance, and now rolling over on the MACD and breaking their up trends.

The market finally paused as this rally takes a breather. It will be interesting to see how this pull-back performs. First target on a break down is about 740 to 750. This would coincidentally create a nice right shoulder inverse "H&S" pattern and retrace 50% of the rally.


I'm still tilted short and I actually pushed more so, with a new short position in HOG. This is one name I've been attempting to short for the past little while.


I've also got a short on SBUX as this chart just seems very over extended.


Still rebuilding short on IYR.


And still short ANF.

Today was certainly an important day for the market and economy in general. Helicopter Ben is truly here! I don't want to debate too much about his "kick the can" policy, but I will say that I do agree with the tactics being used. What will be important later on, is will he be willing to take rates up when things recover? Will the government regulate more prudently? Sure, this is all "pro investor" but as human nature has shown time and time again, people will get greedy and excesses will grow. Now, on to the markets...

I fought the tape and I lost a couple fingers today. I entered the day tilted short and of course, took a bit of a beating, on a major up day. It's days like this, absolute and relative under performance that hurt the most. The market is up from 666 to 800 at one point today. That's a 20% gain! While I side stepped the decline, I missed most of that run. Note to self - Stop fighting the tape! The market remains overbought, but of course, things can always get more overbought. The 60 minute, which has been key this year, finally failed me, as the recent roll-over mounted only to a 1 day pullback.

The SPX is not pushing up against 2 major resistance levels. One created by the downtrend line from this year, and another horizontal level. If things roll over again here, I will again, push short. But we'll see how things play out. There was a bit of a reversal after the Fed this afternoon, so this might have been a short term top.

The next upside target would be 820, but lets take this one day at a time.


IYR actually looks somewhat bullish here with a nice inverse head and shoulders pattern. I'm short this name unfortunately, when I should have covered when the "right shoulder" was completed. Or at least took some profits.


I also have a short ANF and long WMT, of which ANF, the lesser of the two companies rallied harder than WMT in a "what's worse rallies hardest" day.

I have to take a serious look at gold now, on a play regarding to days helicopter money drop. One way is to short the USD, but global currencies are a mess. I actually repatriated all of my profits this year back into Canadian dollars which turned out to be the correct thing to do, as the CAD seems to be one of the more stable currencies now. It's all about relative performance. Gold is now interesting on that same thesis.

Yesterday's gains were today's losses as I made a classic round trip on IYR. Other than that, my short in SPY offset a long in WMT. I also closed out TBT and LQD as I don't really have a view anymore on treasury and credit, as the direction will be based on the upcoming "tone" from the Fed minutes.


I started a short in ANF today with resistance above and it rolled over on the 60 minute chart. If this breaks to new short term highs, I'll have to close it out.


And here's the round trip chart. I had planned to hold it until the 60 minute chart gave a sell signal. I still has yet to do that, despite giving all of my gains up.


I'm still weary on the market, but the momentum is clearly bullish as the dip was bought nicely and pushed to 780, a major resistance area.

After that, march on to 800.

Today we had a strong morning, which reversed by the end of the day on strong volume. So far, the volume on this rally has been rather anemic which has been somewhat of a red flag. Today's increasing volume in the afternoon reiterates that red flag. The rest of this week, we will get a better idea of where things might go. Does 740 act as support, or do we break back below? The daily chart looks like a reversal day, but lets look at a shorter time frame.


The 60 minute chart is clearly oversold and finally rolled over on the MACD and broke the uptrend. I was early in starting a short position in SPY last week, but by the end of the day, that position is flat and looking promising. 740 and 720 are my downside targets for now.


I also took the opportunity to start a short position in IYR, which by the end of the day offered a 7% gain. Nice. Unlike the last rally in this sector, I wasn't willing to wait for the "perfect" setup before starting a position. It paid off this time.


I'm sticking to my trading strategy to cover on oversold conditions on the 60 minute chart and I'm not too focused on the overall index whether it is making new lows or pushing higher. So far in '09, it's been working great, so why mess with a good thing?

We've had 4 days in a row to the upside. And just like how I must be incrementally more bullish when the market is oversold, I must be more bearish when it is overbought. I'll do a quick re-hash of the "big picture" before moving on to the shorter term trading (60 minute) charts.

Bear market rallies have tended to find major resistance at the 50 day EMA. Right now, that is at 800, and is likely to fall perhaps to 780, coincidentally meeting the averages if it were to continue to push up over time. At an absolute minimum, I would expect some type of corrective activity at those levels.


The 60 minute chart is quite overbought, so I'm actually a little bit bearish for the immediate future given this time frame. Late Friday, I decided to do a little house cleaning as I did not want to go into the weekend overly long. As a result, I closed out CAT, THOR and even ended my suffering in SQNM which just doesn't catch a bid. Perhaps I marked a bottom with that sale. I went as far as starting a trading short position in SPY. I'm still long WMT, TBT and LQD.


I have a target of 96 for LQD as I think fear will continue to drift out of the market. While the banks may be insolvent, they are making money borrowing for nothing, and lending at a much higher rate. This is basically a bet on narrowing spreads.


TBT is a similar trade to LQD. I suspect it will break out to the upside after this period of consolidation.


Over the next while, I am planning to build a short position in IYR. I've been patient in waiting for an uptick before shorting it... and what an uptick its been! At 30, I'll definitely want to layer it on. The 60 min chart is already rolling over, but I already have short exposure. I may just swap into this.


And GLD is rolling over. I'm actually neutral on gold for the short term (next few weeks) so I will play it both ways.


Good luck trading this week!