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  • Tag Archives financials

  • 25 Oct 11

    Posted on October 25, 2011 by Administrator

    1. The SPX now has 90% of stocks above their 50MA, which is very bullish, however this is an overbought condition, so we may anticipate some sideways movement in the very least. On the other hand, a lot of money that was on the sidelines is coming back in to the market.

    2. Our AA position is performing quite nicely. The correlation of AA with the SPX has increased to 77% and its inverse correlation with the dollar to 76%. The full stochastic is overbought however. AA is resting right below the current pivot point. Note that the top of AA’s keltner band is about 11.2 and the 50CCI is still below the zero line, which suggests AA has plenty of room to rise. Note that AA broke resistance at 10.26 and 10.47. One the daily, next resistance is 11.54 and on the weekly 11.2 and on the monthly 15.88. Observe that AA is well below the kumo in all timeframes. Very bullish on AA.

    2. GE has been underperforming the market and our position has an irritating loss currently. Note the 50CCI and the full stochastic are overbought though the stochastic is declining. On the daily, GE is in the kumo and has several resistance lines to deal with. We can expect volatility until it breaks out of the kumo. On the weekly, GE has been fighting resistance at 16.63 and is well below the kumo. On the monthly, GE is fighting resistance at 16.59 and is rapidly approaching the kumo.

    3. BAC is has been underperforming the market and our position has a very small loss currently. On the daily, BAC has broken above resistance at 6.61 which will now be support, and next resistance levels are 6.97 and 7.3, the latter of which is also the kumo. The full stochastic is approaching overbought but the 50CCI merely indicates a nice uptrend. Woodie’s CCI is over the 100 level which is bullish. The weekly and monthly Woodie’s are still in downtrends but are moving steadily toward the zero line. On the monthly op-ex candlestick chart note the bottoming candle with high volume.

    4. The Sunday feed of Seeking Alpha market currents writes

    9:43 PM “The 21st Century may be American after all,” writes Ambrose Evans-Pritchard. “Re-inshoring” – the process of jobs lost to China coming back – is a new buzzword as U.S. manufacturing has subtlety become very competitive. Additionally, the country is closer to energy self-sufficiency than commonly believed, and about to get more so. Toss in the best demographics of the major economies and the continuing EU troubles, and it’s advantage America.

    Couldn’t agree more. Buy America and go away.

    5. From a contrarian point of view, the major thing the SPX has going for it is all the fear and negative sentiment, which I think, as I speculated previously, soon disappear.

    6. Nov is seasonally bullish. We have the Europeans on Wednesday and the Fed meeting in early Nov, both of which will probably cause volatility but in the end we should see bullish reactions. The Europeans have no choice but to get their act together and it is seeming increasingly likely that the Fed will do some form of QE with mortgages, both of which should amplify seasonally bullish tendencies.

    7. IWM broke consolidation range–here and with AA, the breakout remains bullish until proven otherwise.

    8. Financials as a whole have had 3 up days in a row. (BAC 1 day.)

    9. Gut feeling? Some consolidation Oct 26-28  to alleviate overbought conditions, however, the overbought conditions might get overwhelmed by money rushing in.

    10. Seriously considering going long GLD…

    This entry was posted in AA, BAC, financials, GE, GLD, IWM, SPX and tagged , , , , , , . Bookmark the permalink.

  • Normality

    Posted on July 9, 2011 by Administrator



    First of all, I’m now placing this preface before each post. I know many of my readers are day traders, I should note that I hold options positions with 1-3  month windows, and when I comment here, I am assessing the risk situation for my options positions.

    I wish the market would settle into some semblance of normality. I don’t like making directional trades, despite the face that we have made large profits. The Company trades options spreads as a rule. What we want are non-trending markets so that we can put on iron condors. Haven’t been able to do this for several months now; everything is trending. You might notice a lot of my charts have the ATR tool at the bottom of the charts; this is used for calculating risk with iron condors. Silver for example would have been a great short-term iron condor, but who could have predicted sideways movement for silver this month?

    I said yesterday was the moment of truth for commodities. No breakout:

    I believe the 10 year commodities bull market has ended and we are now going to see another leg down. I think the push above the downward trend line (blue line) is a fake push, what some would call a hyperbolic push. I’m probably going to adjust the downward slope (orange) though it still remains to be seen:

    I don’t like the 50CCI here, need to refine the cycle.

    We’re short BAC and it’s behaving nicely:

    I see a break below10.5 soon. BAC is a dog and it’s barking. I like BAC actually, they’re the Company’s bank actually, but they have some serious issues. The financial sector as a whole is on a downtrend:

    We hold Jan calls on C and I think they will pay for various reasons, partly because C has been doing a good job shedding non-core assets. However note we hold Jan calls; don’t expect any positive action soon:

    Anyway I am tempted to place vertical puts on XLF, but am going to wait through op-ex week before I make any decision about that.

    Note that gold has actually been range-bound since May:

    and while goldbugs are all pumped up, I am a little skeptical, because the dollar range-bound as well. Further I am bullish on the dollar in the long term for various reasons which I have discussed previously. Seeking Alpha writes:

    I said that Congress would raise the debt ceiling back on June 13th, and I still believe this to be the case today. It’s what they do best. There’s no looking back at this point. Even despite this increase, which I believe is already priced in the markets as we’re sitting at almost $14.5 trillion as we speak, the dollar should continue to rise because of all the Eurozone problems. Things won’t end pretty in Europe, and the U.S. dollar can act as the safe haven, as we have seen with U.S. Treasuries paying nothing yet still being sought after.

    and I agree. This leaves me skeptical of a gold breakout. With UUP note that the 50 and 100 EMA have been efficient resistance but despite this the greenback is slowly making higher lows:

    Now, silver. We are heavily invested in Aug silver puts. Silver has been irritating me immensely. Note that it, too, is range-bound:

    Silver is our primary investment at the moment but I’m going to wait through op-ex before I raise any opinions. Silver needs to break out of this range, and I strongly believe it will be to the downside, but as I said, I will comment after op-ex.

    This entry was posted in BAC, C, commodities, CRB, dollar, GLD, gold, silver, SLV, UUP, XLF and tagged , , , , , . Bookmark the permalink.


  • PLEASE NOTE

    We are not day traders. We trade options with a 1-3 month window. Our discussion here reflects this.

  • The Cloud

    /SI AA BAC Bank of America C Citibank Copper COT CRB dollar EUO euro Eurozone crisis EWG EWL F financials FOMC FXF GE GLD gold GoldMoney GS Hang Seng ichimoku iron condor IWM NDX oil PALL palladium platinum QE3 RUT S Shanghai Composite silver SLV SPX Swiss franc TZA UUP XOM ZSL

  • Quotes

    "I'm a great believer in luck, and I find the harder I work the more I have of it." --Thomas Jefferson

    "Markets are constantly in a state of uncertainty and money is made by discounting the obvious and betting on the unexpected." --George Soros

    “The United States debt, foreign and domestic, was the price of liberty.” – Alexander Hamilton, 1790, First Report on the Public Credit

    "There must be a beginning to any great matter, but the continuing unto the end until it be thoroughly finished yields the true glory." --Sir Francis Drake 1587

    "War was where a brave man found his truest sense of life." --Guy G Kay, Lion of Al Rassan

    "No! Try not. Do, or do not. There is no try." ---Yoda

    "Own nothing. Control everything."---John D Rockefeller

    “The game is rigged. But you cannot lose if you don't play.” –The Wire (the reason to play iron condors and butterflies)

    "Capitalism is the legitimate racket of the ruling class." —Al Capone

    "Only those who risk going too far find out how far they can go."---Fringe

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  • Philosophy

    Our basic theory of investing is that markets are chaotic, in that prices are not necessarily an efficient reflection of value; rather, prices of assets depend largely on the emotional reactions of traders who buy and sell them.

    We generally trade options to minimize capital risked. Our primary aim is to preserve our capital. We trade with a 1-3 month window generally; we focus on the macro picture and are not interested in hourly movements or short term trades.

    Opportunities can be found by carefully studying value; by this we mean both undervalued (buy calls) or overvalued (buy puts).

    Psychology is predictable and pattern-based. People are very slow to change. Thus in the markets, history often repeats itself, and the market can be predicted by carefully studying past performance, including correlating the performance of other asset classes or other markets; this is the repetitive geometry of markets. Patterns tend to replicate across or between assets, asset classes, and time frames.

    If everybody on Wall Street is saying something, it's probably wrong. We are contrarians.

    We generally advocate heavily concentrated positions in which we are extremely confident, rather than wide diversification.

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