Thursday, April 28, 2011

Reasons to not be in the stock market....

There has been a good bid in the TLT lately. I see an inverse H&H on the daily, with the right side shoulder higher than the left. Neckline just above where we are now. Buying in the present market where everybody is screaming about inflation just has to be flight to quality.

I have been seeing a lot of individual stocks that have what appears to be distribution over the last couple months. Including many of the natural resource stocks.

And I would have to conclude that there is a massive short interest in the USDollar, with the possibility of a violent countertrend rally at any time. When the US dollar goes up the indexes go down lately. (For the last year?)

I just can't get myself to stay long the indexes lately. And got a little short the S&P today. Tops are a process and it seems to me that stocks have been trying to top out for some time now. Maybe wrong. It is all in the timing and I'm probably early.

OH, I almost forgot. I got short silver again. Made a little on the last shorts, made some  on the long side early today, short a little again...
Here is that 20 yr. long US Treasury chart,
And something to ponder:

Tuesday, April 19, 2011

Is there another problem with the banks?

There are a lot of things in the markets that seem to be signaling trouble. The apparent accumulation in the financial short ETF SKF.

The continued weakness in the U.S. dollar even as the end of QE2 approaches.

The skyrocketing price of silver.

Is there another banking crisis coming?
Here is an interesting link:

And the update on SKF:

I still see accumulation.

Can you spot the inverted Head & Shoulders formation in TLT?

And then there is the 20 yr. US Treasury ETF: TLT.
Why is it so strong after the warning of downgrade by S&P?
If the dollar is so weak, and inflation pending, who is buying treasury bonds?

When trading or investing it is not profitable to be afraid to miss a rally.
Instead, fear losing money.

"He who loses the least..... WINS!"
                             Richard Russell

Monday, April 18, 2011

Standard & Poors places United States on watch...

Standard and Poors, a credit rating agency for the world, put the United States on watch for a downgrade of the debt of the U.S. government. This will place much more pressure on our elected officials to balance the U.S. budget. This also means that we as a country need to balance our books, or at least make a credible effort to do so.
As far as the stock markets go, this latest development will give investors pause, as they ponder and wait to see what develops in the Congress. I see the bid for U.S. stocks being weak for the foreseeable  future. The indexes should be weak for awhile. Despite the risks that bond funds hold in a world of rising interest rates, they may be the best way to limit risk now...
Here is the link to the story of the S & P story:

Wednesday, April 13, 2011


Here are some updates on past predictions and charts.

Recent action in Cameco shows that the "bottom" did not happen...
And SKF, the short financial ETF, still looks interesting. Still a bottom forming, with increased volume on the up days and declining volume on the down days. This usually means accumulation.
From Feb. 22, the chart of RIO was definitely a failed breakout, but is now back near the highs, although on lower volume.....

And TBT, the short U.S. Treasury ETF did go down....

Tuesday, April 5, 2011

A trade setup.....

Here is a trade to watch in Wells Fargo Company. This stock's price has traced a series of "cup and handle" formations over the last two years. Right now it is in a tight consolidation triangle. If the price breaks out to the upside, there could be a couple places to buy this stock as it moves upward.
I am not making a prediction as to where this stock is headed. I am not saying that now is the time to load up on this stock. The point of this post is to point out a relatively low risk trade that MAY happen.
Take a look at these two charts of the price of WFC. The first is a longer term weekly chart. (each bar represents a week of price movement) The second chart is the daily chart of WFC.

On this weekly chart I have highlighted the first "cup and handle" that formed over the period of time from Oct. of '08 to Feb. of '10. (green line)
The second "cup and handle" is from Apr.'10 to present.

On this daily chart you can see the "handle" that has formed over the last couple of months. You can see that the price made a high in early February and the volume (at the bottom of the chart) has declined with the decline in price over the last couple months.
The price of this stock could go up or down from here. However, the consolidation pattern, that triangle outlined by the green, gives a speculator a good spot to limit risk.
The trade would be to buy a 1/3 position at about $32.50. If price continues higher, buy somemore at $33.00. If price makes it to $35.00 buy the last 1/3.
Keep track of the average price of your buys and at no time let your trade cost you more that 5%. You will note that if you put on a position in this manner that your average price is always below the present price of the stock. Therefore you always have a profit before you add more shares.
If the stock turns down, and costs you more than 5%, sell your shares.
If you get a full position on, then it is up to you to sit on your trade as long as you can.
Remember: I am NOT saying that WFC is going up! I am saying that IF it goes up there is a low risk way to get into this trade.
 Notice that this stock broke out of the first cup and handle in early '10, then fell back in. That trade did not work. So one should have sold and taken a small loss.However I have discovered that when multiple cup and handles form in different timeframes they can be very profitable trades if done properly. Also there is a saying: "There is no such thing as a triple top". There is no fundamental reason why a stock will reach the same high for a third time. If it does, it usually means that it is headed higher. WFC has hit $35 three times now.....

good luck,