Interesting week ahead of us..
1) Options expiration
2) Financials Report
Currently...
Asian markets are tumbling..but our futures are not off as much as I expected.
I see two different scenarios at hand:
1) too many institutions probably still have too much inventory on hand, so they may "prop" these markets up before the earnings
2) or they short this market (beginning of the week) prior to the earnings and then spike it back up (Reverse of what you might see in a bull market - buy the rumor sells the news - BUT a sell the rumor, buy the news), before unloading in May.
We probably won't see any "huge" crashes...they will relentlessly put a positive spin on "not-so-bad" news, but we know the overall market trend is down. We will make news lows before we make new highs.
Our RSW position should pay off in the long term and the intermediary we should not worry about the minor market fluctuations (the games the institutional trading floors have to play when unloading stock).
SOME IDEAS:
1) Creating some option spreads in the front month, on some of these volatile stocks that are reporting such as GOOG, BIDU, or a financial such as C.
2) SWC is poised to drop hard, ALL day tomorrow. Platinum, palladium prices are tanking in the Asian markets. Probably a good place to scalp some profits either with puts or a short position (if you can find shares).
3) I would like to buy up some SID on a pullback...it's a Brazilian steel company, with a very healthy chart and GREAT balance sheet.
Sunday, April 13, 2008
Thursday, April 3, 2008
Indecesion - Sector Rotation
Time to stick our wooden stick in the Sand, and wait for the tides, to give us a better sense of direction.
This is a bit delayed but my feeling Monday was that there are many "psychological reasons" to push this market higher
* bear sterns was the bottom
* people are seeing value
* Technically the chart might make an intermediate term higher high (it's been a while).
* the market has discounted all the bad financial, and real estate news
*The notion this recession will be short lived (economic data isn't very transparent)
*regulators won't be muddying the water until next year
But I still remain skeptical of these rallies.
An interesting option strategy idea:
buying VIX May calls at 32.50 and May 25 puts. I noticed some unique volume at these two levels intra-day...I believe someone was creating this spread. Seems like a good strategy on a risk/reward basis.
Time to look at some individual selections.
NLY -
1) huge GAP down from 22 down to 11.
2) retraced back to 17.25, formally a line in the sand, where there was a war between buyers and sellers, previously the buyers were victorious. Now it's once again acting as resistance and has rejected the buyers three times at 17. (volume is drying up)
3) Put stops above the 17.25 region.
4) My goal is to see an exhaustion gap back to around 12.50.
SWC -
1) on 4/1 one could call that a reversal candlestick but the volume wasn't quite there for an actual reversal today.
2) Todays up move was healthy in the construct of the supply/demand equation.
3) I suspect it will trade in a range from 15-19, while inventory is unloaded (or maybe accumulated - if that's the case will be bad for my position). It's temporarily poised to break out to around 19, which could create a great shorting/selling opportunity - under the premise that the volume is light. BUT I wouldn't be surprised if the price heads back into the falling the wedge and it fails to break out.
Also keep your eyes on some of the bigger solar names (ala FSLR) -- see if they break out to new highs. If they fail to produce newer highs, many of them might be short candidates again.
AZO - could be forming a very (rare) bearish diamond formation. Started adding to my short today.
AND LASTLY, we should keep our eyes glued to the homebuilders, namely RYL, really healthy chart. I would like to see it pull back some - then maybe buy some up. One of the best inverted head/shoulder patterns (very bullish)
This is a bit delayed but my feeling Monday was that there are many "psychological reasons" to push this market higher
* bear sterns was the bottom
* people are seeing value
* Technically the chart might make an intermediate term higher high (it's been a while).
* the market has discounted all the bad financial, and real estate news
*The notion this recession will be short lived (economic data isn't very transparent)
*regulators won't be muddying the water until next year
But I still remain skeptical of these rallies.
An interesting option strategy idea:
buying VIX May calls at 32.50 and May 25 puts. I noticed some unique volume at these two levels intra-day...I believe someone was creating this spread. Seems like a good strategy on a risk/reward basis.
Time to look at some individual selections.
NLY -
1) huge GAP down from 22 down to 11.
2) retraced back to 17.25, formally a line in the sand, where there was a war between buyers and sellers, previously the buyers were victorious. Now it's once again acting as resistance and has rejected the buyers three times at 17. (volume is drying up)
3) Put stops above the 17.25 region.
4) My goal is to see an exhaustion gap back to around 12.50.
SWC -
1) on 4/1 one could call that a reversal candlestick but the volume wasn't quite there for an actual reversal today.
2) Todays up move was healthy in the construct of the supply/demand equation.
3) I suspect it will trade in a range from 15-19, while inventory is unloaded (or maybe accumulated - if that's the case will be bad for my position). It's temporarily poised to break out to around 19, which could create a great shorting/selling opportunity - under the premise that the volume is light. BUT I wouldn't be surprised if the price heads back into the falling the wedge and it fails to break out.
Also keep your eyes on some of the bigger solar names (ala FSLR) -- see if they break out to new highs. If they fail to produce newer highs, many of them might be short candidates again.
AZO - could be forming a very (rare) bearish diamond formation. Started adding to my short today.
AND LASTLY, we should keep our eyes glued to the homebuilders, namely RYL, really healthy chart. I would like to see it pull back some - then maybe buy some up. One of the best inverted head/shoulder patterns (very bullish)
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