SPY, Stockpicks (29 November 2008)

Dec 1, 2008 - Updated Watch List

The month of November has ended, Monday will be the first day of December. The SPY chart is raising a smart alarm bell, indicating that the market is close to a point of deciding which direction to head....? The message does not necessary mean you should go short...It just means that you just be cautious in taking up big and agressive positions.

If the market heads up on Monday, the first level of resistance is 90.96 followed by 91.73.
I have enjoyed my past 5 trading session because it is so calm and I like the clear direction.

If I have a choice, I don't ever want to short the market...because it creates violent zigzags...seems so stressful to trade.




News headlines in CNBC are mixed and misleading, some analyst expect oil to hit 80 some expect oil to hit 20 in the coming weeks. This is very confusing, so I guess I will just follow the charts.

Santa claus rally or not...I will just trade what I see.

My strategy remains...to daytrade.

My stance shall remain neutral...market could be in consolidation mode, so watch out for any potential shorts or longs:
GS, STT, PNC, MA, V
AZO, JEC, FSYS, RTP, BHP
OIH, HES, DO, MON
FDX
FSLR, ENER
EXC, ETR
BIDU, SOHU, SINA
ITRI
PCLN
CMG
BGC

If you think you sported a long term trend and dislike options go for these ETFs:
Long: ERX, TNA, FAS
Short:ERY, TZA, FAZ

GS, OIH, BIDU (28 Nov 2008)

I hope you enjoyed your Thanks Giving holiday!

Friday will be an interesting trading day, it is the end of the month and most fund managers might wanna maintain those gains from the rally. The I kinda look through some stocks which I think have a little more room to run.

GS, OIH is in overbought territory, but that doesn't mean they can't run further....just keep an eye on them.





BIDU still has plenty of room to run IMO, the resistance is at about 178.

The SPY is a simpler chart now, any upwards move will like encounter resistance at 91.73, breaching past this level of resistance will lead us to 94.06. As for the short side, I will be crazy to suggest to you now, but just beware if SPY breaches 84.2.


Strategy:
Daytrade

SPY (26 November 2008)

Tuesday action shows that the market is getting ready for a big move soon. Most likely there will be a gap up or a gap down coming, this will trap either the bears or the bulls.
Its like a casino game, I am not too much into betting...good luck with your bets! ;)

The dollar decline might seem like a beginning of inflation, but I think you need next week to confirm this. Trading as we approach a holiday is usually thin so it is easier to manipulate the forex markets.



On GLD, it is likely that we will see some sideways action or possibly hit 83 before we see a decline again. I do not expect the decline to be much, but it can be traded. We shall see....still pending confirmation. Need more data to see whether this is a "buy the dip" or "short"




Here is an outline of my trading plan:
1. Attempt a short at 83
2. Go long at 88.45
3. If non of the above, expect another session of sideways action. Trading range will be very tight, these MMs are good.


My picks:
Long: PNC, ERX, RIG
Short: ERY, RIG

SPY (25 November 2008)

Another huge move to the upside, fantastic day. I got out of ERY early to avoid any more pain, learned another lesson not to hold positions overnight. I will never ever do that again...better to settle for less profits than to lose some money....lol

Today's rally SHOCKED many bears including myself, even though I have a trading plan....but the mental side of it is still bearish....and I have to admit that...it was only after reading a few postings on some other credible blogs.

The charts have been telling the truth thus far...and technically...my trading plan has been working.

Here is the trading plan for Tuesday.

My strategy is to daytrade only:
1. Get below 79.82 then we are headed for 78.11 or 75.41.
2. Get above 88.38 then we are headed for 90.1 or 92.83.
3. Else expect some sideways trading. Plenty opportunities for day trading in this environment
Most likely the trading range is between 81.3 To 87.9.

Keep in mind that MM will take every opportunity to try to rally the market. The forex market is on the bull's side. And we are also approaching month end, so there could be some window dressing if not expect some sideways trading to maintain the gains from the 2 day rally.

On the downside, I have no comments at the moment...it is hard to go wrong if you follow my trading plan because it is neither bullish nor bearish.

My picks are:
For Shorts: ERY
For Longs: ERX

SPY - Possible Scenarios (22 Nov 2008)

Interestingly, we had a bounce on Friday...Question is ...do we call the 750 level an intermediate bottom?
I own some ERY with an average point of entry near the SPY 77 - 80 level.

Friday was option expiry day for SPY and major market players needed to bounce SPY to the 80 level to maximize profits.

I admit I am not an expert in counting smaller waves, but allow me to present you with the Elliotte wave counts.

Note the relatively short Wave 4, which did not even make it back to the 110 level....which brings into question whether Wave 3 has actually ended...? Technically we have breached the lows from back in 2002 so this is a whole new ball game.


I have to admit that, I am holding on to a nervous short on Energy. I base my decision on XOM which is my barometer for ERY...which is just 2 dollars away from the maximum pain. As long as Crude Oil prices keep falling, I will hold on to this shorts.

In the weeks ahead, the issues on my radar are the auto bailout and possibility of more bank failures. My main concern is the amount of job losses in those sectors that can cause job losses in other sectors as well.

Sure the government can bailout the auto sector, but who is going to buy the automobile for the next year or two. So there could still be round two or three of more begging for more money.

This recession could be deep until jobless people find employment again!

Conclusion: Less demand for Crude Oil, Energy


On Monday I will base my trading decision on the SPY chart below



Strategy
1. Some fellow think we are going to rally...sure....that is a possibility. Get above 82.4 with volume and we are in for a rally to retest 85- 86
2. Break below 79.4 and then we are back to about 75.
3. Break below 74.43 and then we are heading to 70.85
4. If none of the above, then we will most like trade sideways in a tight range for a while.

My picks:
For shorts: ERY
For longs: ERX

SPY (21 Nov 2008)

Major indexes rebounded very early. I am following the SPY because it has some energy and materials component stocks in there.

The chart below shows the SPY, notice the light volume of the early rebound. I have two charts prepared just for today's trading for you as a guide.

If we rally today, the bulls will face some resistance at the 80 or 84 level. In the event that, there is any attempt to push stocks higher....the bulls will have to get pass 84.4 to show that this is the bottom. But I think this is unlikely because today is Friday and nobody wants to hold stocks over the weekend. I am posting this chart to be prepared for any big surprises.

Due to weak market sentiments, I think the chart below is another likely scenario. In the event that the market wish to push lower, I see the two possible levels of support as 71.15 or 67.65.



Kindly note that these charts are only for today. I will make another update before Monday.

Price and volume action is extremely important to see what happens on Monday.


Strategy: Day Trade only. We are very close to a possible support for a strong rebound.

Caugt while taking a piss (20 Nov 2008)

Holly molly...bought some TNA trying to catch the rally yesterday at SPX - 830, went to take a piss and the next thing....SPX tanked.... F#$%&.

Anyway, have been analysing SPX for close to 1 hour to see all possible scenarios. Doesn't look good, no matter how I draw the fibs...the trendlines.. I have arrived at the conclusion that 835-840 area is going to offer some significant resistance.

I think the SPX will likely retrace a little bit to somewhere close to 825-840 before going down again. Some possible levels of support from my analysis are as shown in the SPX chart.

The conditions now are ideal for a move down with the Dollar getting stronger and Financials tanking each single day.

But I must warn you that a bear market rally is imminent at some point. You have all seen what happened when a short sale ban was enforced by the SEC.

So the question is whether this downtrend is a result of short selling or real selling? I would pray that it is due to short selling because this is the only way that SPX is going to have a very big bounce. If this is due to real selling, GOD help us....


I have not forgotten the Maximum Pain for SPY = 94, it is quite far from where we are now. But I will advise you to always stay alert for a bear market rally today because today is Option Expiry day.


Strategy:
Daytrade: ERX, TNA, IWM (puts)

A possible scenario (19 Nov 2008)

Today's price actions demonstrates that, MM is trying to get as many people to buy puts or go short.

Personally, I don't favor going short due to certain technical indicators I see.

First, the VIX is overbought and is making lower highs. If it stays above 65 this week and does not go higher...this just shows the market will go sideways. On the other hand, if the VIX makes its way to 55...then we will likely experience a nice rally to about SPY - 88 or slightly above.



Althought Max Pain shows a possible move to SPY - 96, I don't think the market is quite ready for such a huge move. But I suspect that MM might try to push the market higher to kill off as many shorts as possible with a good profit.


In short, I think a scaled down year end rally is coming. Get ready with your favourite stocks or etfs.

Here is a typical scenario for the SPY, if there is a rally.

As usual, my bias is as neutral as ever. Im watching the price and volume actions on a daily basis.

A big move is coming soon (18 Nov 2008)

I am trying to make some post here as often as I can, but its important that you guys don't lose money by following any advise that I give....lol

I've been very careful trading these markets as we are closer to options expiry. Usually, the trading range is quite tight...when you realize that a move has begun...you might be too late to catch it.

Chart below shows SPY. I think a big move is coming soon. If there are more shorts in the market, I suspect there could be a push higher for MM/ Whales to lock in profits. On the contrary, a push to the downside shall retest the lows (82.5, 78.15) if we breach 835 - 840 level.



The chart below shows the UUP, indicating that the dollar is a bit overbought...but has found some support on the trendline. I believe the dollar is the key to unlocking any moves higher, a strong dollar is bad for commodities.



Strategy:
I have no strong bias on any stocks, Im daytrading.
Here is my watch list: FDX, CMP, FSLR, PNC, V, XOM.
....NUVA, ISRG, BWLD

Gold and Dollar (14 nov 2008)

There is also a story developing in gold and the dollar.

The dollar is retreating back to its 20 MA, and will likely find some support there. Notice the lower high made in the UUP chart.

Any weakening of the dollar will be an opportunity for gold to rally, but I am not saying that the dollar trend for going higher is over....its just taking a break.


At the moment GLD is still under pressure, note the low trading volume. I have charted a possible path for GLD if the dollar can ease up a little.



If you wish to play gold purely... go for the GLD, but you could also go for the gold miners. Of course, the risk for playing through the miners is the risk due to lowering of earning guidance.

Kindly take note that, playing gold through the miners is speculative in nature and its quite a difficult game IMO.

SPY chart for coming days (14 Nov 2008)

Interesting day, to revive hopes for the bulls. As usual, my stance is as neutral as ever.... lol

The chart below shows SPY with trading levels of interest in "Red".

In the coming days, SPY will attempt to get above the 50 MA of 102.09 for any hope of going higher. If it fails, expect a reversal and resumption in the downtrend.

An important retest of 112 will then follow to determine whether SPY will be heading down or up for the rest of the year.



Strategy: I am planning to daytrade agressively.

SPY, DECK, PNC (13 Nov 2008)

Good morning all, hope you enjoyed your trading session yesterday. :)

Firstly, take note that we are 8 days from options expiry. So try not to hold your options overnight, MM might have a few surprises for you.

I am still maintaining a neutral stance on the market, this morning's price behavior will determine what I wanna do next.

Looking at the chart of SPY, we are approaching a key support level. So if we bounce with volume, I might wanna enter some short term longs using ETFs like TNA. If we breach that resistance level, then it is safe to go short to ride along.


However do be careful with some stocks that you wanna short. Take DECK for example, I think it is reaching a key support or trendline. I am planning to daytrade this stock only.


Another potential short that I am looking at is PNC, if this breaches 60 by the end of the day...it could reach 55 before any short term bounce.



Intraday Updates: Not sure if this is a fake...?

Bounce coming soon (13 Nov 2008)

Im staying neutral for tomorrow, I think there is a possibility for a gap down followed by a bounce or continuation of selling.

Clearly, today's selling was not due to pure selling....I think it is due to short selling. So whenever there is short selling, there will be a bounce sooner or later.

If you take a look at the chart of SPY, stochastic indicator shows oversold with positive divergence.


Crude Oil prices are under pressure today due to the weak GBP and EURO.
We need to observe the major currencies tomorrow to confirm the trend. Shorting or going long blindly is a big risk at this point.

If there is continuation of selling the next SPY level is about 750.

SPY - Nothing has been broken (12 Nov 2008)

Despite yesterday's move, nothing has been broken on SPY. Stochastic indicator shows oversold, meaning that there could be a bounce or some sideways action tomorrow. Anything is possible in this market, so just take this as a guide and remain open minded.


There is not much movement in XOM, hence little movement in DUG. I recommend that you use XOM options to catch those intraday moves if the VIX is increasing. Don't play options if you see a decreasing VIX, unless you are willing to fork out a lot of money for Deep ITM options.




The US Dollar was stronger, but indicators show overbought. I expect UUP to correct itself back onto the trendline.


Generally, commodities are oversold and is due for a correction either this week or next week. But due to negative sentiments in the market, I do not write off some sideways action.

Strategy: Planning to daytrade only.

FSLR, NKE, BIDU, RIG (12 Nov 2008)

Today was a fantastic day to daytrade, the market tends to wear you down with a few days of low volatility to make you feel frustrated and sleepy

I found some nice stocks that you might wanna look at, no promises that it is going to repeat its behavior tomorrow.






So all you need to do is stay awake and perform.

Lack of market direction (11 Nov 2008)

Major currencies and commodities are showing mixed signals, currently there is no solid trend ... so I expect non other than a continuation of sideways trading in tight ranges.

Crude oil prices is holding up well thus far, despite a serious recession in the EURO zone. My barometer for commodity stocks is XOM, as long as this stays static...I am not expecting DIG or DUG to move very much.

I have identified a possible pattern to use as a guide for your trades. The chart below shows that SPY is quite well supported by the "Buy Line". You can use this trend line as support , but kindly note that this "Buy Line" has an expiry date which is on 17 Nov 2008. Use the "Sell Line" as a guide in the event of any bear market rally.

In the event that the "Buy Line" is breached, this will become invalid...then the best course of action is to wait for the bottom and buy your favourites.

Trading Range (07 Nov 2008)

I am seeing some calm in the EURO at the moment, I think we could be seeing some sideways trading in the EURO until the market finds its direction again.

At the moment I am neutral on commodities.

One observation after the rate cuts by the ECB and BoE is....the GBP and EURO has not been declining as aggressively as expected. This is due to the recent bad economic news in the US in regards to the increasing losses in jobs and slowdown in the manufacturing sector.

At the moment the SPY is still not oversold at all, downside risk still remain. On the contrary, stochastics reading is also pointing to a possible resumption of the uptrend (note the divergence).

So I am anticipating a possible sideways trading or another huge move to the downside or upside.


I think at this point in time, oil stocks are a weak short. I experienced strong resistance while holding DUG at the 41 level, so I got out of my DUG positions. As of this morning, Crude Oil has rebounded by 0.89 due to traders covering their short positions.

USO has found some strong support at about 50, the stochastic indicator shows possible tight trading range moving forward.



Strategy:
Wait for a retracement to 98 then decide to go short. Buy small if it hits 84 or lower.

Stockpicks for long or short:
Long: TNA
Short: TZA
More updates later

Fundamentals back in play (05 Nov 2008)

Markets are positioning for the coming rate cut decisions by the ECB on Thursday.

This morning, I am keeping an eye on the EIA report. I believe this is key to understand where commodities are heading after the ECB rate cuts.

Despite having an opportunity to purchase more DUG at 3 dollars discount, I stick to my guns to avoid adding more DUGs because I think there is potential for commodities to come alive again after the ECB rate cuts. We will see if Crude Oil prices deteriorate further to hit the lows in the coming weeks.

The strength of the US Dollar will also be put to the test in the coming weeks to validate that fund repatriation activities from overseas are over.

Historically many trend changes happen in October, it is important to see where this market is heading by looking at the fundamentals again. So I am merely taking this elections as just a short term event.

Lets examine the chart of USO.

I think we could be testing 47 soon, ECB rate cuts and other economic numbers from Europe, US and other countries are key here. I see global deflation as a key reason for deterioration of Crude Oil prices and a lot of these has to do with job numbers.

To the extremes, Crude Oil could see further declines to 30 or 40. I expect this decline to accelerate to these levels at one point in time. I think OPEC countries are going to compete among themselves to grab every tiny piece of business available due to slowing demand by lowering prices further. So who sells the cheapest will get the business...

Defending prices by cutting production at this point is in my opinion....not a very wise move...especially when the main goal is to heal the world economy to improve demand for oil.
Sooner or later, consumers are going to find a way to cut their demand for oil.

Possible outlook and updates (04 Nov 2008)

The market remains in a wait and see mode, but MMs are making plenty of money at this moment....while buyers or sellers are positioned for a bull run or a plunge....

Commodities are suppose to fall hard if not for the elections. I think Thursday will be a key day for commodities, if ECB cut rates....I think this might have a negative impact on commodities. But if EURO rebounds on the same day, we could possibly see commodities hang around for a little longer.

The EURO could be due for some correction later in the day or tomorrow during European trading hours.


As for the SPY, it is still trading below the "Chop Zone". Usually, I would favor a slight pull back before any attempts to breach past the two layers of resistance highlighted in red to get past the "Chop Zone". But it is possible that the historical buyers might want to delay any selling until after the elections for a better price.


I think SPY could possibly pullback a little if we base on the VIX. I see VIX falling to about 51 (red trendline).

Unless, we have no pullbacks and have a really powerful rally, then we might see VIX fall towards 35. I seriously have some doubts that this can be achieved overnight.

Perhaps we can learn a little about the market this week...lol.

Strategy:
1. Buy some inverse ETF when VIX reaches 51, go small first. I still own some DUG and am continuing to observe the EURO

Bulls and Bears are losers today (04 Nov 2008)

In case you guys have not learned your lessons, just wanna share with you. Don't try and be a bull or a bear in the options market today. The VIX is in the midst of correcting itself.