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CHARTS AU COURANT: Here are the updated versions of two markets I have been on top of for months. With crude, I gave several warnings of a blowoff building, targeted peak possibilties, and have been updating you as the decline develops. With euro, I did one better, giving you entries and exits, with stop levels and position management ideas. I'll save Gold for next time, but it's in lock step with euro, and headed much lower. Recall from past posts, I like initial support of $800 (which could happen this week), but ultimately testing $600.
CHARTS AU COURANT: Here are the updated versions of two markets I have been on top of for months. With crude, I gave several warnings of a blowoff building, targeted peak possibilties, and have been updating you as the decline develops. With euro, I did one better, giving you entries and exits, with stop levels and position management ideas. I'll save Gold for next time, but it's in lock step with euro, and headed much lower. Recall from past posts, I like initial support of $800 (which could happen this week), but ultimately testing $600.
Euro: In my June 10 post, I said: "From my call of a Euro top a couple weeks ago near 1.58, it has fallen to 1.53, and is also short term over sold. If you have profits in your short from up there, take at least half off here at 1.53. Add this piece back around 1.56 or if 1.52 breaks. Take profit on half again at 1.5050. Then, again add it back short if 1.48 breaks, taking half off again near 1.44, and so on." And, in my July 2 post, I revised as follows: "The Euro has moved back up to the 1.58 level, nearing its 1.60 high. There is a chance it'll make new highs prior to another multi month decline, next time toward 1.40. My suggestion to short near 1.58, then to cover on June 10, near 1.53 worked out well. Conserative traders should stand aside now, awaiting a short on a new high in the 1.61-1.66 area, or on a break of 1.54 for the slide toward 1.44-1.48 initially, with lower levels possible toward 1.38-1.40. Aggressive traders would short here again at 1.58, adding into the range just mentioned." This resulted in a 5 handle gain from 1.58 to 1.53 if you exited completely or 2.5 handles if you took half off (or either $6250 or $3125 per contract) on the initial trade alone. Then, several opportunities for re-entry, depending upon your risk aversion. Any way you sliced it, it's been a wonderful strategy for the past 60 days! Currently, the Euro is as oversold as it has been since late '06, so we'll NOT short again on a break of 1.48, but await a bounce towards 1.5150 to consider a new short. We have to acknowledge that this decline COULD be a wave iv low, as it finds support near the lower yellow standard deviation line in the mid 1.42's, as well as the upward sloping trend line (pink line) currently in the mid 1.44's. Further, the weekly stochastic is in extreme oversold territory along with the daily stoch (not shown). 1.4680 would be an interesting gamble for a long side bet if any spike gets down there or below, with 1.42 as a stop. If filled, exit above 1.50 as we'll re-short into resistence just listed.
Crude: Following warnings for several months, crude has absolutely tanked, along with Nat. Gas, per our prior posts calling for imminent peaks. Crude barely bounced at initial support of $120 for a couple days. As of this writing, crude is testing $113, approaching the upper end of our "major support" range of $111 or $85-$100. Like the Euro, an oversold extreme is being pushed that hasn't been seen since late '06, when crude broke under $60. This time, however, rather than launching another 100%+ from that low, crude has LIKELY peaked for a long, long time. $135 should NOT be closed above to keep the bearish picture intact, but $125 to $133 is a very reasonable bounce target before the next wave lower, toward the lower end of our "major support" range of $80-$100. This is not the time to establish new short positions, and the most aggressive traders would consider a long bet under $113, adding into $98, and again into $85 for a quick (possibly Russia-Georgia war related, or Hurricane threat to Gulf Oil production?) bounce toward the $130 area.
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MARKETS: Last post, with the S&P at 1285, I said "Either the stock indices begin their decline within two hours of Thursday's (July 31) open, or will do so after a short, sharp extension rally into the 1300-1325 level in the S&P 500 Index (SPX). The difference will soon become moot, as the decline that follows both alternatives will be "a wonder to behold." Mid-day today, SPX reached 1313, then rolled over and closed at 1305. Resistance remains 1325, but there is a good chance that today was it. We should know this week. Even if prices make another push, and even if it reaches 1325-1350, this rally is built on memories of times gone by, and destined for disaster this Autum. As you'll see in the trades sections, we exited long again, and beefed up short positions, anticipating the ride lower. Don't stay at this party too long or you'll wind up in stock jail, unable to leave when you want.
MARKETS: Last post, with the S&P at 1285, I said "Either the stock indices begin their decline within two hours of Thursday's (July 31) open, or will do so after a short, sharp extension rally into the 1300-1325 level in the S&P 500 Index (SPX). The difference will soon become moot, as the decline that follows both alternatives will be "a wonder to behold." Mid-day today, SPX reached 1313, then rolled over and closed at 1305. Resistance remains 1325, but there is a good chance that today was it. We should know this week. Even if prices make another push, and even if it reaches 1325-1350, this rally is built on memories of times gone by, and destined for disaster this Autum. As you'll see in the trades sections, we exited long again, and beefed up short positions, anticipating the ride lower. Don't stay at this party too long or you'll wind up in stock jail, unable to leave when you want.
POPULAR STOCKS TO LIGHTEN UP ON OR SHORT SELL (this list is about to get very large): IBM above 130 or below 126, GE above 30 or below 27 (entered 30.18 on August 11), AMGN above 55 (entered 62.08 on July 28), GS above 211 or below 170, RIMM above 130 or below 114 (entered 132 on August 11), AMZN above 90 (entered 90.18 on August 11), AAPL above 174 (entered 174.18 on August 11), CSCO above 24 or below 21 (entered 24.18 on August 11), INTC above 26 or below 24.19.
INTERESTING STOCKS TO ACCUMULATE OR BUY (if you have to in a dangerous environment. Notice how small this list is becoming! See July 23rd posting for profit taking on a lot of former trades): MSFT from 26.5 (entered 26.5 on July 1, exited 28.18 on August 11, +6.3%) and will re-enter under 23, adding under 18, EBAY under 28 (entered 24.62 on July 17, exited 26.82 on August 11, +8/9%) will re-enter under 18, and SNDK under 18 (entered 17.55 on July 1, added 13.25 on July 22, exited both at 17.50 August 11, +13.6%), NVDA under 13 (entered 12.78 on July 7) for bounce toward 23-25, adding into the 7-9 range, VMW under 38 (entered 37.95 on July 8, exited 36.95 on August 11, -2.6%), SBUX under 15 (entered 14.91 on July 8, exited 16.18 on August 11, +8.5%), and all home builders for bounce of 30-50% from their lows, but specifically, KBH under 16 (entered 15 on July 11, exited 20.89 on July 23, +39%), and will re-enter in the 15.5-17.5 area (re-entered 17.18 on August 7, exited 19.80 on August 12, +15.2%), HOV under 5 (entered 4.97 on July 7, exited 7.77 on July 23, +56%) and will re-enter 5.50-6.5 (re-entered 6.5 on August 4, exited 7.95 on August 12, +22.3%), TOL under 18 (entered 16.80 on July 11, exited 21.80 on July 23, +29%) and will re-enter 18-19.5 (re-entered 18.95 on August 4, exited 21.50 on August 12, +12.9%), YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11), and finally GOOG under 480 (entered 473 on July 21, exited 505 on August 11, +6.7%), . SCHN under 67 (entered 66.95 on August 11). XLF from 18-19.5, using 16.75 as initial risk level (entered 19.50 on July 28, risk level raised to 19.50 on July 30, exited 22.44 on August 11, +15.1%).
For what it's worth,
Ken
