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All I can to do in this limited amount of space is breifly describe what I see in the market or a stock at a given point in time
Outlooks or projections are purely speculative and can change materially at any time and without notice
Nothing presented here is intended to be given as investment advice
If you use any information presented here, you do so at your own risk

Sunday, August 30, 2009

Trying to Put Things in Perspective - P3 or not P3

While I do agree with the main idea that P3 will retrace 50-62% of the rally off the March lows, it is also a matter of when that retracement will be complete. That retracement will probably be the next best buy opportunity.

So far this rally is following the playbook for a typical recession/recovery scenario and I am keeping in mind that it will likely do so until the "Market" is convinced that stocks either reached their full valuation based on future expectations of the strength of the recovery. Barring any unforeseen events, S&P should continue to rally into early 2010 to the 1150 level after October earnings season is over if earnings expectations hold up and especially if they are revised upward again. Markets can and usually do trade in a range of +/- 10% (or more) from the midpoint of fair valuation. So, to see the S&P puillback to 1000 or a little less by late October would be perfectly normal and should not be looked at as the beginning of P3 unless the earnings outlook deteriorates or currency issues arise (which I do not expect to happen ) for example.

So, yes, while I agree that P3 will retrace, it is a matter of how high the market goes first. If 1150 is the final top, then that retrace will likely be back to around the good old 875 level, the breakout point of the V-bottom. Any retracement can take various shapes, and the normal list bearish arguments including "W" shaped recovery, more housing forclosures, etc., will have an effect at some point. There is not doubt that more housing foreclosures will have a negative effect on related sectors, that alone will not be the catalyst for a steep retracement anytime soon. It is too early to call a "W" recovery with LEI's still pointing up. The unemployment/jobs outlook, although bleak, is still in the very early stages of a possible recovery and the market is likey going to wait until the 4th quarter of 2009 at least before throwing in the towel on hopes for an improvement there. Emerging markets are also expeted to continue to be the growth driver for the gloabal recovery. So, I expect the energy sector to help support the earnings outlook for the S&P, while high expetations for an earnings rebound in the consumer sector could be dashed and end up being a dissappointment and drag.

To sum it up for now, I will not be too quick to throw in the towel on this market rally, be it a Bear Market Rally or otherwise and plan to use any coming weakness to add to some long positions and start new long positions in energy and Emerging markets.

more to come .......

Saturday, August 29, 2009


Check charts at My Public Chart List (link on the right of this page) for more daily updates and look for notes on the charts.
I do believe S&P could see a 5-10% decline after this next peak in the first 2 weeks of September around 1040-1070. It is a little too early to tell exatly where or when it will peak at this point but I am confident S&P will be back below 1000 at some point before the end of Oct. That is the dip I plan to use to add more long positions to hold into yearend or longer.
I have been adding some gold miners recently since the rally in gold that many were expecting for the last 6 months back to 1000 seems to be ready to get started. I look for oil to follow gold's lead and resume the next leg up for a few months after gold peaks as is the case most of the time. The decline of the US dollar is the main catalyst for this, and has not happened yet, but if it breaks the most recent lows soon, that will be my cue to add some more gold or oil positions.
DGP is a great way to play the gold rally too!
I dont think the decline in the dollar will be of the magnitude that I like to play the etfs like UDN or UUP, but if/when the dollar bottoms around 75-76, I may try a long position in UUP.

Enjoy, relax, and let the charts point the way.

Tuesday, August 18, 2009

Short Term Bull but not with Blinders on

That seems to be the psychology of the market and is why I expect this market to work its way higher into 2010, provided that several moving parts dont get hung up. Financials, Transports, and Technology so far have begun their move and the rest of the market seems to be in a consolidation pattern that may continue into late October before it breaks out above 1018 to the 1150 target that many are looking for.

Saturday, August 15, 2009

Currency outlook

I could write a lot about this topic but keep in mind currency relationships are all relative and dependent on what the foreign bankers and the FOMC decide on policy. That said, it is right to assume that if US$ is going to put in a bottom, it will do it based on Fed rate hike expectations (and foreign bank rate decisions too). At this point there is no reason to expect a bottom in US$ for a few more months at least! ( especially after looking at Fed funds futures not pricing in rate hikes to start until Dec meet at the soonest and ECB being more hawkish as of last meet this week )

There are some other interesting notes on currencies below the charts of the $USD (and some others) on "My Public Chart List" (link on the right of this page). It is not a matter of where a technician draws a line or % of bulls/bears on a currency.

Wednesday, August 12, 2009

My bad for not posting here a little more, but CNBC just interviewed a floor trader on where the market is headed, and said "going nowhere" which is my thoughts exactly. Market not ripe for the huge selloff that the bears are looking for, but the dip buyers will be back soon and should run this back to the recent highs. My strategy is to get long soon and short the next peak ahead of Sep. That will be the best short entry IMHO.
Comments to that effect are in the chart notes. Looking for a range of 985-1018 for next couple weeks.

GL in trading

Tuesday, August 4, 2009

The Clincher

Rising interest rates on the US national debt is going to be the straw ( or should i say "log pile" ) that breaks the camels back ! and has been on the back of many minds for a long timewhen the US$ finally tanks, it will take any assets priced in US$'s down with it, like bonds etc sending interest we pay on all that debt to a level that will be much more difficult to pay. Can you say "higher tax rates"?

When will it end?

all this bullishness is getting many very excited and optimistic, but at some point soon around 1100 or higher, you have to believe all those who are still holding since 2007-2008 will be looking for an exitOverhead will be the stopper on this rally, and is why 1050 at this point in time is the absolute highest we should expect for this leg up without any consolidation.Funds are buying now in hopes of making that 10-20% return by early 2010, and the reason to run this market up much over 1000 reduces the attractiveness of the market. That 20% return was only attainable when buying under 1000, at this point of 1000, it is more like 10-15% upside. Momo will disappear soon.The last in better be the first out unless they want to be the next bagholders!