UUP with Ben!

Ok, ok... so I'm not a whiz with Photoshop; you get the point. It's after 2 AM and I finally finished the image I had in my head this weekend.

I've noticed other traders are talking about throwing their hands up in disbelief in this rally. We all know it's tied to the dollar, and all the money that's getting conjured up and thrown into Treasuries. I've been in and out of UUP and some other small stocks that I was watching for patterns, like KKD.

Speaking of which, WTF happened with KKD today? I sold in the panic this morning, as it dropped lower and held it for most of the day. Then, in the afternoon it took off and closed higher for the day. Sheesh!

Update: I'm out of KKD, still riding HW, and now have a spot of TIV. I was thinking of getting back into UUP, but that ticker moves so slow that it would probably be better to find some other vehicle to ride any kind of dollar comeback. Then again, I might have a while to look for one if this death-defying rally continues.

I heard an interview with Tom McClellan of the McClellan Oscillator Clan, on The Disciplined Trader podcast. I liked what both of the guests said that I listened to the show twice. But the reason I bring it up now is because Tom McClellan mentioned that he forecasts a dip in the US markets through much of December. He even went so far as to say that we might go back to screaming 'doom & gloom' before it bottoms, even though it won't go farther down than maybe what it was in July. So, I'll be keeping that in mind for the next month or so.

Alright, gotta go to work in a few hours, time for some sleep.

Power UUP

Looks like the Dollar is trying to make a comeback en force. Today's move bounced it off the 20MA and punched through the 50MA. Last time, it was stopped by the 100MA, which now stands at 23.12. Rising past this barrier and continuing on may spell doom for the local markets as long as the Dollar-Stock Market inverse relationship continues.



But if it does go though, I'll be interested in learning the reasons why. I've been hearing a lot of noise about a Dollar carry trade, which could make dollars 'worth' more. But that didn't really seem to work for Japan. Then again, we're not Japan.... read it how you like.

On a tip from the ChartAddict I bought some PLA today.



I had actually been watching this one as it was forming a nice Holy Grail setup, easing back down to the 144MA. But I didn't check back in time, and I got in at 4.00. Right now, I'm losing in the aftermarket, and I found out later that the jump was due to news that Playboy might get bought out. This was a rumor play, and I might have moved in too late. Support is at 3.82, so that's where I'll start to sweat. Otherwise, I'm going to see how this 'plays' out.

I dumped GSX at .48, and I might have to wait until December to see if it will bottom out. Trendline support is still only around .45 or so, but that's a healthy 7% for this penny pincher!


I also might include a short of the Dollar/Yen through the FXY etf. Don't know if I'll be able to short that etf until I try, and I'm still watching for a few more weeks as it approaches resistance. The wedge it's riding in now has such a low slope, it might not be until January or almost February before the Yen falls. Say, is there a Euro/Yen etf out there for us to buy?

Modern Warfare 2 Released, Volume Low. Coincidence?

We don't have an XBox, and I surely can't afford $80 for COD6:MW2. So, I have time to work out some more trading techniques.

I've been starting with the weekly charts to find patterns, since my schedule prevents me from trading more frequently than daily. I've stuck my toe in the water with the following four tickers, and the charts are shown daily for a little more clarity.

UUP

Boy, looks like I'm bucking the trend on this one. But I've thrown a little fundamental assumptions into this, since it's a Dollar Index follower. I jumped-in following the break in trend on good volume last week. I later found through ZeroHedge that the big spike might have been limited insider trading, and not actual capitulation. Notice that UDN didn't move in tandem, and only UUP was announcing more share issues.

Nevertheless, UUP is still fighting support at this time. There is one heck of a lot of noise on which way the Dollar is going to go from here, and most of it is bearish. So, I have my doubts, but I'm trying to make a point of ignoring the noise more and more, and just watching the charts. For now, I'm holding out and ready to pull the plug. One thing that gives me hope is that yesterday's candle sure looks suspiciously like a stop-sweep...which are often followed by swift moves in the opposite direction. But I've only found those intraday before.

KKD

I was so excited when Krispy Kreme went IPO about 10 years ago... it was around $18 and I wasn't even trading stocks yet then. It closed at $3.39 today and hasn't ever split. I remember thinking about how a share was only a dollar back in March, and wondering how many shares I could get for the price of a dozen "hot doughnuts now."

This chart shows a nice and steady uptrend that might also be a rising wedge. As long as this trend holds I'll keep confident all the way up to 4.38... where I'll keep holding through the 4th attempt to break support. From the first test on resistance, this chart actually looks like a cup and saucer formation brewing.

HW

Headwaters, I don't even know what they do. But this chart shows another rising wedge squeezed near the end, looking to break out. It appears that I may have jumped in a bit early, as there's more downside risk in this narrow range at the tip of the wedge. It also might be a failed pattern since resistance was broken for several days in October, but then failed to become support. This stock may be entering a new trend, but I've put my money in that this could be a bull-flag and the main trend will continue. There's low tolerance if this trend gets broken, however.


GSX

I bought Gasco thinking we might have a Holy Grail pattern off the 51 MA, and that's when I got in. Unfortunately, the 51 MA has been broken and I have to count on the upward trend holding out. This is a penny stock, so moves either way could be severe. Keep the safeties off.

About that Time...

I've been getting itchy to find a solid point to jump into this market. After getting burned over and over again, I've held back to observe the 'pros' and see if I can learn something. Well this recent over-the-top action in the indices is looking ripe for action.

To work with my busy schedule, I've zoomed out to daily charts to look for patterns, but will zoom in for details. It looks like the Dollar might finally get a second chance, as UUP has broken it's falling wedge trend and stayed there with increasing volume. It's already close to resistance, and I'll be watching it and the S&P for further confirmation tomorrow and dip-buying opportunities. But it appears that the 6-month trend has been broken, and a new one must form. Now that trend might still go in the same direction, but I have an itchy-trigger finger that thinks it sees opportunity.

NASA took 2 days and continuous launch-time pushbacks to get Ares 1-X off the ground. I heard several engineers were quoted saying something to the likes of, "just push the button and light it up already!" Likewise, I've held off getting back into the markets for fear of being too late on a trend. It's time to fly.



Hooah.

More Extensive Research

As I sit in my makeshift lab, the sun long gone and the children in bed, I have come to the conclusion that the most reasonable explanation for this insane (an inane!) increase in our beloved Stock Market is inversely related to the falling Dollar. But I AM biased: I stay emotionally bearish because I don't see or hear about any of the true problems getting fixed. All it seems is that the people with the ability are using this crisis as an opportunity to amass as much wealth and power toward themselves as fast as they can, while the chance is still there.

Whatever, there's nothing I can do as a debt-laden, middle-class serf. So I shall accept the situation and adapt by trying to ignore my emotions and rolling with the flow.

For charting & trading, I'm watching UUP, which tracks the Dollar Index (see DXY). And I've noticed that we are rather close to a strong low that was established almost 2 years ago, back when Countrywide and Lehman were names to be reckoned with.


Notice the long, orange support line extending from early 2008 to today.



Same chart zoomed-in to the present. There's that orange support line, and the Aftermarket trading just hit it! This should mean higher Index futures tomorrow morning.



Here's SPY, which follows the S&P 500. Looks like we have room for another gap-up in the morning. Last time we hit this resistance, you can see that we went flat for a week before bouncing back to the lower support. I don't see why we can't do that again.



This chart got a little busy, hence the extra colors. I anticipate that we'll keep the uptrend until the second week of December. That might also correspond with UUP hitting around 21.85, which could happen since SPY:UUP doesn't move with a 1:1 relationship.

In the short-term, I see a very bullish opening tomorrow, with a possible doji day. Next week will be flat, followed by some consolidation down to about 1050 S&P. And then the final push to the finish line in December. After that, who knows? Also to note, UUP is showing a falling wedge, while SPY has a rising wedge. This rally has shown me that such patterns are almost useless, so make of it what you will.

On the other hand, I just do all this to try and get a big picture of the whole Market and its direction. For actual trading (simulated for now), I'm usually only looking at small-priced stocks with decent volume, scanning for breakout formations and positive trends. They are mostly moving independent of the S&P, and I'm using them purely for technical trading practice.

Watching and Waiting

Here's what I'll be watching tomorrow and the next few days to see how they play out. I'm all cash right now.

DSU (+3.63 BREAKOUT [BO])
AIS (1.06-1.25 CHANNEL [CH])
AVII (1.52-180 SYMMETRICAL TRIANGLE [SM])
CFW (1.15-1.16 CH)
FLOW (2.73-2.91 CH)
HILL (2.01-2.38 CH)
KERX (2.17 SUPPORT [SP])
MNI (3.11 SP)
LVLT (1.22-1.58 SM)
SRZ (TARGET ~6.00, BREAKING OUT)
SYMX (1.12-1.36 SM)
TPI (3.65 SP)
UIS (TARGET 3.10)
VVR (BO ABOVE 4.09)

It's late, so I'll have to fill in the rest tomorrow.

Still Bearish at 30,000 ft

Good rally today, but this SPY chart feeds my pessimism. Looks like S&P resistance is around 1070, low support around 970. But I'll respect a breakout.



I'm still overall Bearish. Pro's on Bloomberg are saying with confidence, "the Recession IS over!" What bothers me is that volume has been falling since the beginning of the year, and long before this recovery started...until now. Volume is climbing on negative movement in this recent downward push.

It's hard not to get emotional, as there's still that feeling that the fundamentals haven't improved yet. I must give credit to the Feds for trying to lubricate the Markets again, but I think the effort is fading. The commercial real estate shoe to drop is looming, and it appears that foreclosure and short-sale buying is meager. Meanwhile, the Dollar is falling which I theorize is partially to blame for the rise in all Dollar-denominated products: stocks, bonds, oil, gold, McDonalds....

Which reminds me, it's Monopoly time at the Golden Arches. Here's to Crack Fries!

Situation Normal

I've closed out all positions and am now in cash. My brother is winning our trading game with a nice win in FAZ a few days ago before pulling out just in time. That dropoff in AONE killed me yesterday, and I've made a little back today with a quick trade in FAZ, and by pulling out of everything else before it fell off.

Around 11:30 today, I had a feeling that the S&P was getting tired, and that's when I setup the FAZ trade. I considered tweeting it to GreenFaucet and StockTwits, but Zero Hedge had just posted a commentary on how the S&P is headed higher today and tomorrow. Those guys know a bit more that I do, so I decided to keep my opinions to myself for the time being. There was also the thought that some other Direxion ETF might have been better, like a Russel 3x Bear, but there really wasn't much time to check it out and compare.

Right now, I'm clueless on market direction: both Bears and Bulls seem to be getting more passionate about their opinions. I'm still hearing bullishness on this market, but it doesn't feel right! So, for another reality check, here's a weekly S&P:



Roubini's been out there saying that we have to drop now to recover from all the gains made since March. But this chart shows that what just happened WAS a recovery from the October plummet. And now the S&P can go back on the track of steady declines like we've been doing since 2007. But there's good support at 1015, and I see light resistance at 1090, and 50% retracement at 1122. If we break above these levels before the end of the year, my inner Bear might finally go hibernate this winter.

A123, Back to Step 1

AONE just lost half of a week's gains in one friggin' day. I didn't see it coming, and only a stop would have saved my (play money) losses. I didn't have any stops in place because I didn't anticipate a drop like this, and I wasn't watching the Markets today.. still had to take care of that day job, ya know.



I haven't found any news yet to explain why the drop. And since this stock is still only 2 weeks old, all the indicators are in new territory. I'll try to be watching at the opening bell tomorrow morning.

First of all, hats-off to India for discovering water on the Moon a week before LRO does. At first I thought NASA slipped-up to play some politics... trying to influence the Administration's decision for the future of the Space Program. But, now that I know India made the discovery, I will forgo any further political commentary.

I jumped on a few of the stocks I was watching, and I have a few in play money that I'm using in a game with my brother out in Cali. Here's the list of stocks I'm riding, most are about 3%-5% of equity as I see which way they'll go, while I'm riding big on others:

CBAK
FAZ
AONE
NGD (short)
CHTP
XJT
EJ
VRMLQ

I had jumped on a couple of others, but they broke down and I got off. Most of these are small-price stocks who aren't necessarily moving with the Indices, they seem to have their own rhythm, and must be watched individually.

Meanwhile, what's the S&P going to do?


Looks kinda like anybody's game tomorrow. We're right in the middle of a channel that also defines 100%-78.6% Fib retracement using the March lows to September's highs. RSI is already bouncing off support, and we're already respecting an upward channel that also goes back to March.

After looking at this chart, I feel that we're still in a short-term bearish move for a few more weeks. But, the first few days of this week are geared-up to see positive action as the S&P takes a breather from the losses last week. I see Monday's range of activity between 1020-1050 for the S&P. The direction the Market wants to take beyond that should be more clear within a few days on this same chart.

Until then, I'll be checking on Gold, Oil, and currencies to look for correlations.

Watch list for Thursday & Friday

I went through some patterns found through ThinkOrSwim's ProphetCharts. These are the ones that look promising in the near future:

SYMBOL (SUSPECTED SUPPORT LEVEL)

AONE (20.90)
APAC (5.84)
CPST (1.30)
CBAK (4.70)
DPTR (1.72)
HAFC (1.61)
LAVA (1.70)

I'm not finding a lot of good stuff out there right now, but what do I know?

Turning this into Rocket Science?

I've been trying to get a feel for the big picture of the economy these days. I was listening to Bloomberg talk bonds, commodities, and FOREX, trying to piece it all together and figure out what hand is moving this market.

The way I figure, the Fed is printing money to buy government debt (even if it's only 20 days old) as well as everybody's mortgage. To do this, it is printing money by the billions, which is making the dollar fall. The falling dollar intrinsically raises the prices of dollar-based stocks, thus giving us a 'bullish' market. I happened across Motley Fool for the first time in years today, and read a claim that the falling dollar raises local stocks because it increases export revenues (in dollars). Sorry, but that just sounds like reaching and cheerleading a la CNBC, and I'm still too cynical.

To get a big picture, one must survey the area from 10,000 ft. So, I decided to just get technical and examine the S&P on a weekly scale, figuring this would also be a good time to take a closer look at the technical indicators that I've been exploring.


By taking a step back and looking at the weekly chart, it seems that a few of these indicators forewarned of the big October 2007 slide, and the March 2008 recovery. It's a matter of simple divergence between the stock price and RSI and the slower %D of Stochastics.

The red line of %D is hard to see in this picture, but the yellow arrows follow the higher lows, and lower lows. I also noticed that there were three lows in the trend before the reversal occurred, which is something Constance Brown mentioned in All About Technical Analysis. She said to watch for three peaks or valleys in Stochastics when looking for divergence to price; that will be the more reliable signal.

Also of note is that weekly RSI has powered its way back to a value close to 65, which has been a reliable level of resistance for the 5 years shown in this chart. Support for RSI is kind of rough around 50, and sometimes 40. Combining where RSI is with the direction of RSIS and %K Stochastics might help signal immediate and short-term trends.

Here's the same chart again:



While staring at this chart, I suddenly noticed the double top at the peak of the market. Another important indicator mentioned by Constance Brown, she says that double tops/bottoms are the most reliable reversal indicators around. Volume is supposed to play a part in that, but for some reason Think Or Swim won't give me volume for the S&P 500 Index.

In short, looks like the S&P is due for some more pullback from a rising wedge formation. But it probably wouldn't go below 1012.

Time to Get Back in the Game

The pizza joint I bought a few years back might finally be getting liquidated this week, and I'll have almost nothing left but bad memories and a LOT of debt. Work's been full of deadline after deadline as we race to a finish that we wonder might never come (pending Congress cancels the whole #$!#@ program). And then there's that family to tend to...

I've been spending my few quiet moments trying to listen to Bloomberg and figure out what is going on with Bonds. Who's buying and why? It would seem that foreigners (China) are still buying Treasuries because there's not much else to invest in around here. Corporate bonds are all the rage (bubble), and gold crossed $1000 but is about to get flooded by 1/8 of the IMF's gold reserves. They say it's about $13B worth, way to cash out, guys.

I've finally accepted that this bull market won't quit... just like I finally accepted that we were in a Bear Market back in March. I don't understand how program trading is supposedly the driving force, volume doesn't seem that low as other traders are claiming. I see that a correction is in effect right now, and I'll be watching for new setups.

Sometimes I'd like to stop thinking about the Big Picture so much, and just look at 20-day charts. But I've there's real work to do, and this trading thing is still part time.

Nothing Posted in Weeks

What? Nothing to say for weeks at a time? But of course!

I have a job, you know!

It's been 6 months since the triple-6 bottom, so where are we now?



Remember when we had a rising wedge back in May/June and we thought that the rally would finally end? Bought FAZ and lost more money? Yeah, I remember now. It appears that this was a smaller wedge within a larger wedge that should be nearing breakout soon. With the smaller wedge, we got "sideways action" back to a nice, 23.6% Fib retracement from the Oct, 2007 high to the March low.

I'm thinking we won't see much excitement from this next correction. We're flirting with the 38.2% retrace level (1014), and we might not drop below that. If we do, however, the next best choice to me seems to be back to the 23.6% level at 881. But if this wedge wants to freak us out and retrace to its own 50%, then we could bottom around 851.

Whatever happens, RSI has negative divergence so it's gonna go down before it pops up!

Meanwhile, I'm still trying to figure what to make of Treasuries. The Fed is flooding the auctions with new paper, but it appears that there are still buyers out there. I thought China & friends had their fill of our debt. So who's buying??? And how will this affect all this corporate paper that every one's been hyping for a few months now? Can you say, 'bubble?'

Creeping inflation can't hide anymore; millage rates have gone up to compensate for the lack of taxes coming from all the empty homes in foreclosure. Rates for electricity and natural gas have been officially hiked, and more permanent 'transportation/energy costs' have snuck their way into invoices for everything from pizza delivery to hotel rooms.

On the bright side, I hope Americans will start to lose weight with all the reduced sizes of the portions inside every package at the grocery store. Oh sure, the package is still the same size or made to appear the same size, but we're getting less per ounce, while the price stays flat. We're getting closer to par with the rest of the underprivileged world. So I don't want to hear any more complaining from over the wall, ya hear?

'Nuff Said

How Much Wal Mart Stock are These Guys Holding?

So.... I'm catching up on Bloomberg Surveillance and listening to two different people regarding the Retail numbers that just came out on August 13. And I hear two different analysts discuss how great Wal Mart is these days, that they have better selection, new brands, and are poised for growth in the Mid-West and Western States. The idea is that they'll get you in with good grocery prices, and then try to make profits on the rest of the inventory.

I don't know what Wal Mart these guys are visiting, but my local non-Super Wal Mart is still the same old overgrown Dollar General I've always known. Sure, they've added some coolers to sell chilled beer, but it's no grocery store. More and more over the past few years I have walked the isles observing that their stuff seems more and more cheaper, while the prices keep creeping up. I think if Sam Walton knew what his kids allowed his store to become, he'd be turning over in his grave. On the other hand, Wal Mart has evolved to seek organic growth and had to change its business model. Nevertheless, I don't see Wal Mart trying too hard to be a 'better' store, just a store with more volume.

Mrs. Edgy and I use to enjoy going to the Wal-to-Wal Mart when we first got hitched almost a decade ago. We see some of the same items we used to buy in smaller quantities, thinner materials, and higher costs. One easy example is Christmas tinsel rope that we string around the tree. We're glad we manage to find the 15-footer for less than the 6-footers sell for today. That's good ol' inflation, and it has snuck up on us.

I'm finding less reasons to head to Wal Mart all the time, they are no longer the low price leader!

Meanwhile, there's another interview with Robert Prechter, someone whose books I've been wanting to read for a while now. He's putting his money into "cash equivalents" (like T-bond and T-bills), and doesn't expect stocks or commodities to be a real value for a few more years to come. I like his theory, but I still think that we'll see one more mini-bubble before the value buying time comes. I don't think it will be the "square root" shaped recovery that Binder and Prechter seem to be planning.

Anyway, that's for long-term money. I'm still trying to work on practicing daily and weekly swing trading. Still busy with the deadlines at work, and now the Honey-Do list is getting enforced. Fortunately, I've been in cash since Thursday and missed out on all the fun Friday and Monday. S&P took a breather today, but I see the Daily trend is still down. When I get time to look, I'll be looking for small priced stocks ($1-$5) with some volume that are following their own patterns.

The Struggle Within

100% Cash. Made small gains today on ZIXI offset by losses in CY. Dropped CY shortly before it made a wonderful comeback into gains for the day. Oh well, I don't like the way the tape is moving right now. I'm seeing ascending triangles and upward channels getting broken on the bottom (failing). I'm starting to feel a bearish sentiment, or maybe just consolidation.



But after looking at the daily charts, the last two day's candles look like they might be a Bullish Harami on low volume. I think tomorrow is going to be another good day for the SPX.

Wednesday Trade Review

Despite my real job deadlines looming near, my 'customer' decided to move up my due date to today. But then stated an understanding if everything is not quite in tonight. I had to break the excitement with a few peeks at the boring, ho-hum, droning stock market charts to keep my sanity.

I thought I had JAZZ with a wide enough margin to avoid the stop sweep, but I got knocked out early in the day. The stock is still down, so maybe I'm not ready for it yet.

Meanwhile, I added CY to the holdings, keeping AMD and ZIXI company.

Overall, the SPX was down -0.29%, and I was up +0.50% for the day. Not bad for also working a 12-hour day to get drawings in on time. I think I spent a total of 20 minutes checking on trades today, using the time as a break between the stress of meeting deadlines.

I noticed that the real traders that I follow raked it in with AIG, CIT, and C to name a few. I'm hearing about double-digit gains, so it pays to keep your eyes open.

President Obama: Mission Accomplished

Over the weekend I heard bits of Obama's announcement that 2nd Quarter performance of US GDP was, quote, "...better than expected." I immediately thought of all the government intervention that seemed to pull the S&P unrealistically out of the hole it was in back in March. During the whole rally I was in disbelief, and was even financially rebuked for my beliefs until I set myself back on the strait and narrow. Like they say, a rally climbs a wall of worry, and now I know what they mean.

Back to the Big-O, when I heard him say the above quote I pictured him in my head saying, "Mission Accomplished." The government intervention does well to explain the 'unbelievable' behavior of the rally of the Markets over the past few months. And I view this regardless of my personal political opinions; because the $750B Stimulus program was started by President Bush right before he left, and then completed by the next president. The politicians are just trying to recover tax revenues by encouraging the morale of the country, touting success to get consumer spending back up, GDP in growth, and strength back to the Dollar.

However, I'm in the camp that fears that all this spending is going to come back to haunt us soon. All this stimulus is acting like a defibrillator, trying to jump start consumer spending back into full swing. But I think that American business in general is still carrying too much fat to keep pace. I fear that there needs to be another correction, but I don't know if it will be within one year or 5 years. But I do believe it will happen within that time range.

As for the S&P and this great rally we've been having since March, we have finally arrived to the major line of resistance, going back to the peak in Oct. 2007. In a sense, this recent rally has been a correction of the oversold condition that started in Oct. 2008. At about 2:25 pm today, it appears that this resistance was tested and respected. The next few days might be rather interesting.



I'm thinking that the S&P resistance will break, but not beyond the Fibonacci retracement around 1053. That is my perceived line of resistance, and I'll be truly optimistic (bullish) if this line gets shattered.


Here's one of my current holdings, ZIXI. I bought-in around 1.65, right before the recent spike-up. We're pushing resistance right now, and I'm hoping for a breakout. My stops are not far below the support line of this rising triangle, but far enough to avoid most stop-sweeps.


I'm also hanging on to KLIC. This one is starting to wear old, but has behaved itself otherwise. My patience is beginning to get tested.


I'm looking at JAZZ, thanks to a tip from Trader Stewie. This one shows a little more promise than my other two holdings. Thanks, Stewie!


One more potential rising triangle is CHDX. I don't like how it penetrated support today, but I'll be watching it tomorrow morning for signs of life. That last line looks like a bull flag.


I noticed that I've also missed the boat on a few other stocks I put on my watch list last week, like OMX and CCO. It may not be too late to get a piece of those, but I haven't figured how to tell if they still have life in their runups or not. Meanwhile, I'll be continuing my studies under Constance Brown's All About Technical Analysis.

Thursday Trade Review

Here's a couple of trades that didn't turn on me already, KLIC and ZIXI.

KLIC has just completed a big move up past resistance, and I'm looking to hold it while it shows promise. Fibonacci retracement looks like resistance around 6.13.

ZIXI looks to be completing a wedge, as shown in the graph, and I bought near the support. This wedge still has a few days before it ends, but I'm not confident in any triangle formation with more than five 'points'. That's from Constance Brown, and I haven't found it fail since I read it. Using the five-point rule, I now realize that ZIXI may have already failed. I'm giving it enough benefit of the doubt to make a comeback, but the stops are tight just in case.

I was also in and out of AEA and PVX yesterday, but got out quickly as they moved against me. PVX ended up being a winner today...too bad.

Notes for Friday:

• Friday feels like it's going to be a down-day for the SPX, but my bias is always accompanied by a healthy dose of Murphy's Law.
• I'll be watching HCF more closely the next few days, it just tested daily 200MA today for resistance.
• MGAM has been bull-flagging for days now, and would hit major support tomorrow if it keeps trend. I'll be watch that for a bounce. My target buy-range is between 5.35-5.45.
  
• OMX might also be ready for a second bounce at the open, but I'm thinking it will end up as a doji.
  

Playing Ketchup, & Many Mad Ravings.

First I had overtime for a couple of weeks in a row, then I got sick with a fever and a wicked cough. The fever left but the cough wouldn't. The doctor said it was "Walking Pneumonia" and gave me some antibiotics. I still have the cough and have been back at work for a week, but everyone avoids being around me. Heh, don't blame 'em, something's been going around.

All this time, I have been out of the markets and research. I even put down my copy of All About Technical Analysis by Constance Brown and read Harry Potter 6 & 7 instead during my time out. Today I spent some time doing some research, and I see I've missed a few more swings in the Markets. I'm going to try to tune-out the news once again and look purely at the price action.

I tried something I hadn't really done yet; I used ThinkorSwim's platform to do a pattern search using criteria to look for low-price stocks with decent volume, max 30 hits. I went through those 30 stocks to see if I could spot anything worthwhile. Here's my notes for the watch list I came up with, I'm bullish on all, but I expect some consolidation first on some.

AMD: Riding up-channel support (sppt) ~3.56 (buy target if all goes well)
CHDX: Rising wedge to 14.35, sppt ~12.64
AEA: Showing acceleration back to 5.80
ZIXI: Rising wedge to 1.80, buy ~1.63
DYN: .05 below 200MA, watch for crossover/breakout
PVX: Short-term bull flag, watch for bounce around 4.74
MCGC: May be about to enter consolidation around 3.00
CY: Been riding higher, get on it if continuing
KLIC: Just hit resistance (rst) at ~5.00, watch for breakout
MCCC: May retest sppt ~4.48, bullish
MGAM: In bullish flag, sppt ~5.39
AFFX: Just popped up, watch for flag & rebounce
OMX: Just passed daily dbl btm, consolidate then uptrend
CCO: 200MA @4.75, watch for pullbacks to buy
HCF: Strong uptrend, approaching 200MA of 5.25
TER: Due for pullback, sppt ~7.00/7.30
OPWV: Buy dips ~2.65, watch for 2nd breakout
PESI: Rising wedge to 2.72, sppt ~2.42
ARQL: Breaking out NOW, rst ~6.35
HGG: Entering consolidation, spt ~17.00

I'll be referring to these notes while I check on the watchlist to see which ones to follow, and I usually have no more than 5 holding at a time. I'm not going to post 20 charts tonight because I don't really see the need at this time. I might post charts of my trades later.

Also, I see S&P 500 reaching for 1050 right now, possibly 1080. It needs to get past resistance around 983. I am, unfortunately, biased from listening to Bloomberg Surveillance and reading Ritholtz (The Big Picture). I believe that this rally is government funded with money that doesn't exist (yet). China is concerned about our credit rating as we have promised unprecedented sums of cash to float the economy internally. But the Dollar is spiraling, as it looks about to fall through the floor and plummet. I am VERY concerned about the immediate future of this country, and continue to fear that this rally is built on sand, not stone.

A few months back I predicted that we're going to slowly come back to S&P 1600 around late 2013, before we crash even farther for a third and final time of this Secular Bear market. I still hold to that, but I'm not sure how the "recovery" is going to look until then. It looks like the S&P is going to hit major resistance in October, and I'm concerned which way it will go. I've got an itching suspicion that we'll break resistance just enough to turn around and fall through again. The chart tells me that this "rally" is still just a recovery from an oversold condition that went from Sept 2008 to March 2009. And my news-watching bias tells me that we have not corrected enough.

This is because I'm still seeing way too much f*ckery going on in the corner office AND the government from the city to the county, state, and federal levels! When the guys in charge realize that raising prices/taxes isn't working, THEN we'll see the final stages of this big correction.

On a personal note, my neighbor just moved out last weekend. He was complaining of his mortgage and the mortgage on a rental property he's had for several years. The other property has been empty and for sale for 6 months now. He now lives in another rental at a rather nice fly-in community up the road, and I asked him how he'll handle two mortgage payments and a rent payment. I didn't really get an answer, and I'm thinking he's going to walk away from the house next door if he can't pull off even a short sale. That would be too bad, the house right across from him is a foreclosure and has been sitting empty for 2 years now. Lately, people have been coming by weekly to check it out, but no buyers yet.

I also found out that Zillow.com says my house is now a few grand less than what I paid for it back in 2004. As long as I can keep my day-job we'll be alright. Here's hoping Obama doesn't cancel the Constellation Program (wince)!



Don't those people realize that it's us 'citizens' that fund this whole economy??? I think they do, just enough to B.S. us while they help themselves. D@mn, I'm freakin' cynical!

Picking off the sick and weak

I've been laid-out with a fever and annoying cough for a week now. It's been nothing but bedrest, fluids, hot flashes, and the kids on summer break all day.

But, I decided to check in on the SPX this morning, and I see we've popped up over the past few days. But we're still within the down-channel that began in mid-June. The index has appeared to enter a narrowing trading range that starts between 900 and 915 as shown in the pic. above.

While typing this, the markets just opened with the SPX above 917. This is within a margin of error of the boundaries, just like when support was broken on July 8 (see blue circle below). I don't believe that channel boundaries and support/resistance are hard, definitive lines that must be absolutely respected. Especially when there's many technicians out there drawing those same lines, and putting their stops a few pips below those lines. There will be some techies who put their stops a few pips below that, and a few lower, until the trend is finally exhausted.



If the SPX keeps above 915 today, then I'll need to look for a new trend.

Head & Shoulders fakeout, and Michael Jackson

Who's Bad?

Man, what a ride these past few weeks have been! And I've been out of all of it the whole time, trying to make deadlines for the day-job. But looking back on what's going on, it's very tempting to see a head & shoulder's pattern forming in the SPX.

However, a wise trader once said (actually, he won't stop saying it) that the 200 day MA is a force demanding respect for that index. And right now, the 200 MA is marking support, which WAS respected today. There are other lines of support that are being toyed with right now, and we've been flat for weeks. A novice such as myself is probably best to stay away, anyway, and practice from the sidelines. It will be interesting to see if the 200 MA gets retested along with other supports around 885, it looks like a nice pivot point for future reference.

As for the bit about Michael Jackson. I was a fan back in the Thriller and Bad days, so I made a little song in tribute. You can find it, and many of my other creations here. Enjoy.

O.T.

Still working overtime this week, trying to meet deadlines. In my "spare" time I've looked on the markets and saw the Indices had a Doji day. It's look pretty bearish for many of the popular names (go FAZ, TMF), but a couple of dollar stocks are showing strong interest while the prices still remained flat.

I'll be keeping an eye on ABAT to continue it's runup, AXL, CENX, UIS, VSH, and ZIGO. On the 5 min chart they look promising, but on the 60 min charts they might only be pulling some bear flags. I won't put any money in until resistance is tested at least twice.

Right now I'm 100% cash, as I don't have much time this week to watch the markets.

Volume doesn't exist

Can someone tell me why my Prophet chart in ThinkOrSwim's trading platform will not show volume data for the S&P 500 or NASDAQ indices? Before exploring TOS, I've been a regular on Prophet.net to use their Java charts, and I've noticed their volume data for the S&P started to be missing around the time of the March rally. There's a little in April, then it's gone again.



Here's the TOS chart, different scale but same story.



Fortunately, Stockcharts.com is still coming through. RSI and the short-term MA's are at a similar situation to where they were around May 21, which led to more rally action. However, we've also crossed the 200 MA, which should provide added support. But the volume and price-action is looking bearish for the short-term.


I'd say Monday isn't looking too good, but there is Strong support at 910. But if it breaks through, I'll be watching the next support at 894. I'm 100% cash right now, so I'm looking for opportunities, long or short.

On a side note, I took a short walk this Father's Day while visiting the in-laws. I walked up to the local Buick/Pontiac/GMC dealership up the road from their house after it had closed for the day. As I browsed the lot, I started by ogling the GMC Yukons, and noticed that the first one I saw was priced over $59,000. Man, my first house almost cost that much! These days, it's no wonder these cars aren't selling.

As I moved on, I saw the Pontiac G5's and G6's that they had to liquidate ('cuz GM is terminating the brand). I looked at one particular G6 with some bells and whistles, and couldn't believe the price was over $23,000. In 2001, I bought a new Chevy Impala, and got the "employee discount" (for other reasons) and bought it for $22,000, 5-yr loan with 0% interest. I still have that car, and it's about 20% bigger than this G6. I just couldn't see inflation being so great that this smaller (yet newer) car would cost more than my family-wagon only 8 years later. Then I saw that it was a 2008 model....that car could be sitting on the lot for almost 2 years!

Prices need to correct, just like in houses and stocks. I sure hope this purging process we're going through will truly clean out the system for a while. Even if the cars come out more 'inferior' for the next few years, I would like them to at least be priced right! Enough said, it's after 1 AM and I have to go to work in a few hours.

AtLas(t)

The Atlas V carrying NASA's LRO/LCROSS missions took off this evening at 5:32 pm EST. I went out to the parking lot for the building where I work across the bay to watch it. I couldn't see it because of the low cloud cover, but BOY! was that thing LOUD! The rumbling just kept going...and going... I could definitely tell the difference from Shuttle launches that I've seen from even up close.

BTW, we're across the bay because NASA can't seem to find room for us contractors on Center. Since we're working on the new launch vehicle, I'm sure a few spots will open up in a year or two, after Shuttle winds down.



In the Markets, I pulled out of my losing FAZ and TMF positions. Both had worked stellar yesterday morning when I got them before they turned on me. TMF shot down from one Fibonacci line down to the next before stalling. FAZ took its time, but it's there too. Now I'm back to 100% cash while I step back and take another look at what's going on. I've been so busy with work and doing overtime that I haven't been able to check much lately. I don't think I'll get much breathing room until July.

Meanwhile, I had to return that book to the library and ended up buying it on Half.com. The book again is: All About Technical Analysis by Constance Brown. I'll be reading it upon my leisure (pronounced: lez-shure) for the next couple of weeks to help me work on a new plan of action.

The markets are so choppy, and people are getting more aggravated about which way things might go in the short-term. One interesting note, I heard on Bloomberg today that a certain, successful hedge fund is looking to bet on mid/long-term hyperinflation. I wonder if I can do that through the Bond-short ETF's and commodity ETF's (both long and short)? Dollar Index is going down, which is going to cause a rise in commodity prices. I've got this itching feeling to get my money out of "US Dollars" for the next 5 years.

Shuttle Launch: Redux

Ok, second chance to drag the family to go see the Shuttle launch tomorrow morning. I say, "drag" because the launch is now at 5:40 AM, I have to be inside the gate within an hour before launch, and it takes almost an hour to drive there. Soooo.... that means getting up around 3 AM or so and loading up the car. At least this should count as a night launch and the sun won't be in our eyes like the last date. Here's hoping!

As for the Markets, I've been in cash since last Wednesday, and I'm glad I did. Although Thursday would've been a better day, but that was probably short-buying getting ready for this week. Judging by the Daily chart, I see more slippage down to daily RSI of 45, and then to 40. That should time about right with the Yellow Channel/Blue Fibonacci intersection I have in the chart below. It predicts S&P 500 could see an important pivot point around 894 on Thursday around 11:30 AM.



I might buy a little FAZ to ride this down, but it's too early to get brave with swing trading.

30-yr Bonds still look like prices are rising, as yields keep falling. Someone's buying, but I don't know who. I'm still bearish long-term on these bonds, and continue to keep an eye on TMV.



However, the 30-yr Bull 3x ETF: TMF is riding a significant Fibonacci retracement level (38.64). If it punches through I'll look for a good time to jump on board to the next level around 42.50, as a short-term swing play. After all, you have to be active with these multiplier-ETF's or you'll lose money due to time-decay.

Golden Ticket

I just scored front row seats for me and my family to watch the STS-127 Shuttle Launch this Saturday morning. Since I work here, I usually get to see these launches up close, but now I get to bring the kids. Here's the approximate location:

http://tinyurl.com/l6wabz

The pad is about 3 miles NE of this spot. If you look around, you can also see the crawler with an empty mobile launch platform near the upper pad, not far to the North.

As for investing/trading, I ended up pulling out of all positions yesterday. After first getting stopped-out of ILMN, I examined the others and saw breakdowns across the board. Since my account is all cash, I have to wait three days for settlement before I have access to that money again for trading. I'm out until Monday, which is just fine since I've got too much going on otherwise.

Besides, it will be good to take a step back for a breather, and to get a fresh look on where the Markets are going.