Cara's Commentary & Community Chat, Monday, Jun 29, 2009

$INDU

http://tinyurl.com/kmrbw6

had the same thing (I'm supposing of course) a couple years ago. The pain was so bad centered at the base of my neck and right shoulder radiating up and down my arm. I couldn't even fall asleep and had to put my arm in a sling for a few days and train my little brain to use my left hand for all mousing. (took me about 2 weeks to retrain myself but now I switch back and forth with ease anytime I start to feel it coming back).
Getting old is not for sissies (64 and still upright).

Good morning – The 10 year U.S. Treasury bond price is up again today to lower the yield to 3.46% - well down from the close Friday of 3.57% and 3.51% early Friday. China reaffirmed it’s reliance on U.S. debt for the time being - continuing the perceived security of Treasuries for foreign buyers. These comments strengthened the dollar, lowering the yield and by extension mortgage rates further in this cycle; however, the national mortgage lenders do not seem to pricing the rates as would be expected with these lowered 10 year yields. Happy Trading
And Bill -- ditto on Dr. C's comment

the American people want Something... lot of congressional jobs will be on the line.... still see spwra as the choice to make..... large utilities will start the conversions in 2010.... Duke Power already requesting rate increases...

Just a reminder - The US markets will be closed this Friday for the July 4 holiday.

I've been toying with the idea of being strictly a shortist again...Vad disliked the idea so very much that it must have some merit.

But do you see...? Yamana only falls when it's NOT "supposed" to....like when gold's rising? Today with gold futures down 6 bucks it's hanging in there like a trooper, even though it's stuck below the pivot and gold and stocks are dropping.....

Of course there is the dollar to consider....

wow, it's actually rising.....

The stock market is a scam one needs to learn to work....It's VERY counter-intuitive eh?

Dollar rising....gold falling...stocks swooning....Ymana tenaciously hanging in. Wow....Better wait to go short until gold starts coming back eh?

...

would be my opening take

If I were still a Paramedic and you told me those symptoms, you'd be on the way to the hospital...No way around it.

The indexes are 30 hours away from EOQ. Fund managers can visualize the EOQ statements. How can we not close higher on Tuesday?

2nd, "Common sense say's we should go higher." Don't need much more than that to bet on it going lower.

bobbyo- Well, I wouldn't be betting lower until Tuesday's close. Even then, it would be too easy- maybe short an opening spike on Wednesday? I can't really time the spike down. But betting on human nature gives us an edge in timing the spike up. JMO.

I didn't like the way precious metals was acting. So when the market opened, and SLW opened up, I jumped fast and sold my entire position at $8.81. Phew!!It then dropped like a rock.
Now, 100% cash, I'm just waiting for the dust to clear before making anymore moves. I do fear that we are setting up for a big market correction on Wednesday, July 1. I am strongly thinking of getting set to buy ETF market shorts, SDS and DXD, as examples. Hopefully I do that tomorrow. Today I just watch.
When do I re-enter SLW? Great question! I don't know yet.

Did uou check out Bev"s chart. Were sliding off the shoulder and heading to the feet! I am going to probablly sit on my hands until Thursday. Bev, So what is the strategy. SHort until 50 % retracement then go long?
Bob

Hey Bev, I just noticed that you have the LS labelled as RS and vice-versa. Does that mean we are going up instead of down? :P

So this one is a puzzle. Gold is looking pretty weak - it might recover from its morning drop, and it might not. Miners are stronger, but they will fade as usual if gold doesn't recover.

On the other hand, oil is just on a tear - it opened way up and kept on moving up very strongly.

The S&P took off like it was goosed this morning, after a head fake down.

The dollar is basically unchanged. Treasuries are fading after opening up.

Why did oil get so much love, and not gold? Especially since oil is seemingly more extended, and the only thing I see supporting oil is reflation and dollar weakness - certainly not demand.

There must be stuff going on that I'm not seeing. It's not making sense to me. Maybe they're trying to pump up oil stocks for quarter end?

Shark,

I frankly thought it was a funny joke and that your generalizations have some basis in fact as illustrated in the Old Testament admonitions to remain separate as a people. I didn't see it as intentionally degrading to anyone, but some subjects are better to be covered elsewhere.

Shooting from the hip you can hit yourself in the foot.

Thanks Grym, I am in your camp on this one. Gun control anyone????

The buy limit order I placed on UNG last night was executed today at $14.25 for 400 shares, increasing my core position by 1/3. I canceled the buy stop limit order I placed at $15 (so as to catch UNG if it started moving up today instead of moving down) and instead placed a sell limit order on the UNG I just acquired at $14.75. Naturally, when it became obvious to me that UNG is trading in a range and I became ready to start trading it in this range (buying at $14.25 and selling at $14.75), it should move out of this range. Since UNG turned down today without rising even close to its recent high at $15.88, that may be the signal that the "upwards" force that made UNG bounce off the $14 level has ended and now UNG will move down to $13 and below. So I would caution anyone about buying UNG now, until its next "low" becomes evident. I placed a sell stop limit order on UNG (EDIT: stop $13.99, limit $13.95).

On another note, I just bought a little SKF at $41.50 to replace the shares I sold last week at $45.50. Placed a sell limit order at $45.50 for these shares once again. Just to keep a little trading going... I believe SKF is basing and is ready to start moving up, as the realization of the next wave of foreclosures starting right about now seems to be slowly sinking into investor's minds. So I am trading with 1/6 of my long-term core position in SKF.

positions.

SPY looks like a bull flag here. no clue which way she breaks.

" BCI ( Baltic Capesize Index) gained 1.5% today... 3 Qt. futures contracts closed Friday at $ 55,375 vs. $ 48,969 a day prior..... 4 Q futures experienced about the same percentages "....... I do like Dry because of the 2010 contracts I mentioned last wk... PRGN is very interesting...( worry about ocnf proposed share increase ).. Thanks for info.... baz

The weekly looks sick. This also coincides with the view of silver. The MACD histogram looks like it is ready to fall below the -0- line, Stochastics are falling in a deep descent, RSI 7 below 50. Weekly silver also weak.
The daily is still unclear. The MACD histogram has been underwater (below) since June 10, stochastics around 30 but vulnerable for a retrace below 25. Fibonacci 50% is 8.29 and 61.8% is 7.68
With these indicators acting the way they do, I wouldn't rush back in unless there was a breakout, i.e. MACD histogram breaks above -0- line at a minimum with no negative divergences.
Gold contrarians think that gold will break down before assuming the advance over 1000. They could be right. Miss Yamada, the highly regarded tech analyst, suggested that the gold advance should have started in the last half of June. To date, we have seen no advance, only retrenchment or consolidation at the most.. Thus, I suggest waiting until there is a resolve to the dilemma, up or down.

Was able to snag a copy of the weekend report by McHugh. This is his wave count and outlook on $XNG. But when I compare UNG to $XNG there seem to be very little to no correlation between the two. Looks like UNG marches to its own beat I guess. Has anyone here determined what affects UNG?

As Dr. Ron points out, it could be via price or time....

Yes, isn't it always price and/or time? Now if I only knew which one...

I have some other longer-term (I no longer believe in anything related to the stock market being long-term) positions I am very nervous about. I would have thought there would be more of a run into Q2 end. Summer is coming. I'm putting some tight stops in place so I can relax a little more.
s

That was my thinking too Bev. Playing with a little kryptonite as we speak...

If you're ever in a situation headed to surgery, remember to tip your anesthesiologist.

excellent skit - it deserves to be seen by many so that they can understand what has happened

A lot of the supply to the US comes from Canada, as the CDN$ drops, so should the price of natural gas, theoretically.

Craig

You have to be the ONLY trader never burned by UNG. You have no fear of that account wrecker. ;-) Go boy!

Haven't posted for a while, but have always read yours earnestly.

Divergences among the indexes. SPX could shape out an inverse cup & handle on 5min chart aroun 198 area, like GOOG.

Thank you for my daily laugh.... LOL.... Back to back laughs at that[remember to clean and press them before returning them]. +1 for Craig

A virtual "wall" of LNG is headed for the U.S. and will certainly impact our domestic supply and price...

http://tinyurl.com/lsslyj

or was that brain surgery :)

For those who follow the CDN markets, Westjet Airlines (WJA.TO)appears to be moving into a possible capitulation. RSI7, RSI14 both well below 30.

Just an idea to consider; no position.

Good luck!

JR

Thanks for the LNG link, JimG. I read it after I sold at $14.16 the UNG shares I acquired earlier today at $14.25. It looks like UNG is testing its support at $14 once again, after only a one day jump in prices. That is weak. Moreover, every time a support level is tested it becomes more likely to break. At this point, the UNG chart gives me the feeling that we'll see $13 before $15. I already have a medium-sized core position in UNG, and so I can afford to be more selective as to when I add to that position. I'll probably wait until UNG hits $13 and then sell some $13 puts on it.

"Why did oil get so much love, and not gold? Especially since oil is seemingly more extended, and the only thing I see supporting oil is reflation and dollar weakness - certainly not demand."

davidfairtex - I believe you answered your own question: Oil support = reflation. Oil is perhaps the grand daddy hedge against USD$ collapse/coming inflation. Consider sheer magnitude of confiscated U.S. tax dollars looking for a large opaque market/safe haven. Oil fits that bill. Precious metals markets too small to handle large influx while at the same time serving duty as GS/Comex support for fiat dollar strength ...

They're not dogs today.

TBT and SLW hedging each other. I made some effort to study technicals this weekend, so happy to see I'm not being burnt in their purchase. Admittedly, TBT not showing positive reversal signals, so that was a bit of a gamble.

congrats papa d for making the call on SLW on the back of gold's movement this morning. I was looking for further speculation and a positive reversal above 940.

Oh well, tomorrow's another day.

night all.

Yahoo was yapping on about traders looking for investment in "recovering economy", whatever that means. Nigeria's got some social issues and a reported attack on a rig or refinery, so that gets the speculators in I guess. Saw how speculators got into gold on the back of the ECB's actions last week. My guess is we're being taken for a ride by commodity traders.

It is worth remembering that articles in press (such as the LNG article) only explain what has been happening to the UNG price in the past, since "Big" players already knew about the LNG situation long ago and this article was published only for the "rest of us." My decision to sell some UNG shares today at a small loss was only based on the fact that the UNG price chart looks weak and that I already have a medium-sized core position in UNG and so I can afford to be more selective as to when I add to that position.

Am new to the blog and learning alot - great stuff. Here's a beginner's question - appreciate if someone can help explain what fly paper channel is? Was reading a research report on TRP (Transcanada)- as the stock moved lower the Fly paper channel acts as support but now that TRP is below the fly paper, it acts as resistance.

Craig/Bev- It's not a lead shield, of course. It's position size. It's been several weeks since I've even approached 60% of allocation in any position; most positions have been opened/closed using only the first 20%. Most trades have resulted in minor losses.

Back to 100% cash.

I'm going to wait for more volatility.

2nd ..... "I'm going to wait for more volatility"

I am betting you will see some at EOD tomorrow... maybe to 895. But for sure next week. [That is what my "8 Ball" says]

I've noticed a lot of people in this site play UNG so I'll offer the following...

I play almost strictly inverse straddles/strangles and variations on that theme.

For all its' volatility, selling UNG short puts @ 13 and short calls @ 17 has been fairly easy money for some time. I generally have 2 or 3 positions working at any given time that vary by strikes and/or expiration date. Some are slightly delta positive, some are delta negative. I roll legs from time to time as premium is exhausted and/or RSI(2) reaches maximally oversold or overbought levels.

The short calls can be especially dangerous so this is not something you can 'fire and forget.' On the other hand, UNG is one of the most rangebound things I know of but still has the volatility to pump up premiums.

I use the ThinkOrSwim analysis utility to help me structure the overall position and to ensure that I can exit without undue damage if needed. I would not try this without such a tool.

TGLP - Temporary Liquidity Guaranty Program

http://www.fdic.gov/regulations/resources/tlgp/ind...

Apparently GE is on a mission to raise $340B by issuing paper, and this paper is under temporary guarantee by the FDIC. The Guarantee expires some time in 2012...

Personally, I don't trust Immelt any longer.

Is anyone on this board tracking copper?

Seasonally the market is supposed to be up from the end of June to the end of July, then sideways to early September, then down to a bottom in October. BUT this is modified by: China halting it's stockpiling of copper and other resources. (See International Business Times: "COMEX copper up over 60 percent since the start of the year on the back of China's buying program and economic optimism, but have drifted recently as investors looked for signs to justify that optimism." http://www.ibtimes.com/articles/20090629/us-copper... )

I had not looked at VFIIX, so thanks for the idea. It is indeed less volatile than JNK and LQD, but only has a 4% yield. For my risk/reward perspective, instead of VFIIX (or other GNMA funds), I would rather add to my holdings in stocks such as JNJ and T which have that or more yield.

I think a fairer comparison could be the vanguard funds:
Vanguard High-Yield Tax-Exempt (VWAHX) Yields 5% tax free
Vanguard High-Yield Corporate (VWEHX) Yields 8.5%

jmorris1950 - Thanks for offering up some of your strategic ideas, this type of input is much appreciated here.

Bev, I think there is less psychological basis behind the symmetrical triangle pattern than behind the failed UNG efforts to rise above $14, with each attempt being weaker than the previous one. Anything can happen, but I think I'll stay back (and just keep my core position) until UNG either reaches $13 or breaks above $15.

"Why Oil? Because GS is playing it. Gold, they wouldnt" - Shiva

GS manipulates Comex paper trade of gold through bullion banks (see Gata.org).

Oil trade is not opaque and can handle large sums of sovereign wealth as well as massive confiscated U.S. tax dollars now in the laps of the bank barons. Oil is rising regardless of the cap and trade tax bill bamboozle that wasn't read but nevertheless passed the U.S. House of Reps last week. Contrarian indicator on steroids, IMO.

G - I was stopped out of MTW at $5.80. I think this will be a very solid investment over the long term (i.e. 3 to 5 years). However, I don't think it will make a significantly move until we know for sure the economy globally is on sound footing...

G - Agreed, it looks as though a reversal for MTW is possible here, it may have begun today. TEX appears to be 180 out of phase here, their financial situation looks somewhat better than MTW...

I may add to MTW this week... I really like LECO's financial position though, torn between two lovers....

teamonfuego - Do you have any ideas on MTW's eligibility for shovel-ready projects? I'm envisioning a crane(s) sitting on rails while laying high-speed track and wind farm tower erection kind of projects.

http://www.nni.nikkei.co.jp/e/fr/freetop.aspx

http://ronsen.blogspot.com/2009/06/drum-solo-it-in...

If you do nothing else, go to 3:59 of the video.

...

http://tinyurl.com/m2gmqu

"In Jack Schwager's famous interviews of the 'Market Wizards' he compiled a list of the ten criteria that are present in all successful traders. Amongst that list was one which I believe to be the most glaringly difficult to master, that of patience."

"The basis for most trading methodologies is to focus on trend analysis. Clichés such as "the trend is your friend" are rife in market lore and there are many good reasons for this. Whether you trade Gann's mechanical trading system or derivations thereof, or whether you focus on Elliott Wave Four trades, you will notice that the most success comes from identifying a trend and taking the appropriate action."

2nd- I know this is hard to do...but let's say we both held until now from 666. I think it would take a little more pressure than we've seen the past 3 weeks to shake me lose at this point. The problem I have is all of the room for gains seem to be on the down side.

Mark- That's the problem- the overwhelming agreement that we need to go down, or at least pull back significantly. Everyone knows we have to go down. What if last week was it? Just trying to keep an open mind.

There is either little resistance, or market bids just vault past the resistance points. In the absence of manipulation, it just seems very bullish.

I guess it depends on the volume. Low volume would make it a bull trap. High volume, on the other hand, would change the scenario to a lock-out gap-up, preventing sidelined bulls from reboarding the train.

http://www.etfconnect.com/select/FindAFund.aspx

search for bond CEF at big discounts to their NAVs. I was buying the Insured Muni ones at 25% discounts in late 2008. They are still at 10-15% discounts w/ 6-7% tax free yields for US investors.

I bought DHF for HY exposure it traded as low as $2 in Nov

their are some equity income ones that are pretty attractive too

Today I received the following buy signals:

XLE, DBC, SSO, IYR, VEU, TAN, SMH, EWM, EEB

Today's sell signals:

TWM, SMN, DUG

Good luck to all! Thanks Bill for this page to comment on!

MK

6/29/09

"The only way Guaranty Bank will survive is with assistance from the Federal Deposit Insurance Corp. and significant capital from private investors, the bank reported in a regulatory filing Monday.

Guaranty’s parent company, Austin-based Guaranty Financial Group Inc., stated that it is in discussions with the FDIC and its primary regulator, the Office of Thrift Supervision, for a plan whereby the FDIC would absorb a portion of the bank’s losses while private investors provide a “significant equity capital infusion.”

"For 21 years, Guaranty was been a subsidiary of Temple-Inland Inc., a maker of cardboard boxes and timber building supplies.

Guaranty was spun out of Temple-Inland at the urging of Icahn.

Temple-Inland (NYSE: TIN) completed the spin-off on Dec. 28, 2007, just as the excesses of the residential mortgage lending bubble became apparent.

Guaranty invested heavily in securities backed by mortgages made in California. It has not reported a quarterly profit since it became a stand-alone institution.

Since its spinout from Temple Inland, Icahn and Rowling have invested heavily in Guaranty. In July, the duo invested an additional $600 million in the company and they now control 37 percent of Guaranty’s stock."

"Guaranty Financial Group Inc. (NYSE: GFG) is the second largest publicly-traded financial services holding company headquartered in Texas and one of the 50 largest publicly-traded financial services companies based in the U.S. ranked by asset size, offering a range of financial services through its primary operating subsidiary, Guaranty Bank."

http://sanantonio.bizjournals.com/sanantonio/stori...

So oil today had a wonderful gain of 3.37% - $2.33, and after hours it just kept on going. But the move in oil equities can best be described as tepid. It didn't even beat the S&P today. So either oil stocks are going to catch up in a hurry, or oil is poised for a dramatic drop in the near future.

Look at APA. Oil is back up at its year high, but Apache is still down 16%? One would think the recent four day $5 move would have moved the needle a little more than it has.

If this was gold, and the gold miners were performing like this, Dr. Cosa would have some strong words to say about their performance!

So a low risk trade might be short USO long XLE. Something has to give.

http://weeklyta.blogspot.com/

Waiting and Watching

Hi MK, Bill's reminded me to look up your comments in the last post. For all comments here I'll use XLE as a reference, since you've remarked upon it and it seems to be good to go for a trade today.

So a quick lesson in moving averages tell's me that the time frame of the MA you're playing with (5) is for short term trading - correct? Are you using SME or EMA with this time frame? I noticed a little difference between the two when plotted on the chart. You say you calculate 5dma after hours every day. I assume you mean that you plot it on the charts every day as another signal to help your decision making process.

So I see ROC climbing, RSI 7 increasing yet low, yesterday's candlestick rising above the 5dema (is that a trigger for you? the candlestick rising above the 5dema line?). Parabolic SAR has yet to flip, but you're not concerned by this?

Could you comment on MACDh for this chart please? It bottomed out 5 days ago, has risen approx. 24%. All I can see from Stockchartschool is that it anticipates divergence quicker than the MACD moving average crossover. I assume that it could represent a false signal and is thus something that you wouldn't use on its own?

But the signals combined offer a short term buy signal. What are your selling outcome strategies? I am guessing:

1. RSI 70+ or
2. BB centreline simple moving average of 50.61 or
3. BB upper limit of 55.27 or
4. rollover of positive indicators or
5. 50dma of 49.26 or
6. 200dma (or maybe not, cause that's support)

(of all the above, I would guess for the upper BB limit, as XLE has in recent months bounced of the 200dma (which is now support) or it's pinging between the BB sma and the upper limit) unless the market goes bearish big time.

comments appreciated. TIA

Question for anyone. Does subscription to Stock Charts permit more overlay and indicators that can be viewed at the same time? Cause it's annoying to have to change indicators with only three entry values permitted at any one time.

the ' Funding crisis ' ?? Fleck has made note of this many times, per his main contact in Europe... anyone have thoughts on this ????????

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Bev- Just having fun?