A good 2 day whack for the markets

This 2 day whack should bring the p/c from very bullish to average , we can see some rallies before it goes to bearish.
There are a lot of things out there which might bring about a rally, passing of the stimulus etc. , a short rally that is. So trade accordingly , do not become too bearish or too bullish. Look for opportunities.
I will probably get rid of my RIMM puts , the BRCM calls are all "written off" now and all I can do is wait for them to come back by feb 21st .Will wait for a pull back in AMZN before I buy any calls.
I should probably hang on to my GLD calls but lets just see.

AAPL setting up nicely

AAPL has done good since the earnings and is now pulling back on low volume to the 50 dma and also towards the area it broke out from.
I think it would be a good buy if it does not go down on huge volume.
My main fear is that we are no longer oversold and other than the good earnings which helps only those stocks , there is news which takes down the whole market.
In that case AAPL might go back to fill the "gap" it created when it opened up after its earnings. That level would be 83. I will tell you this that if APPL falls there , there will be no more buyers and only sellers, which would be a great contrarain sign and a great place to buy.
Trading is all about risk/reward.
Gold is doing just great and Oil is hanging around doing nothing but not breaking down and not breaking out. Maybe its being accumulated .

GOLD breaking out

If GOLD closes here , then it will have qualified as a breakout above resistance.
Click here for the chart.
It has done good but should extend further, but if it falls back below the resistance line, that will be a short term issue.
BRCM is down a lot and AMZN is up a lot. I kept BRCM calls and sold my AMZN calls before yesterday.
Well that turned out to be a bad call but no worries , BRCM premium was low anyways but AMZN premiums were high. If it wold have been an AMZN miss I would have lost a lot more. Its the risk/reward always.
RIMM is not giving up, I think it will break resistance soon or pull back toward 50-52. I will not be patient with this one though.
USO is doing nothing, just wandering in a range. But I am expecting a short upside breakout , just a trade, long term Oil might not go far.

AMZN up over 10% after earnings

AMZN up over 10% after earnings, too bad I did not get any calls. BRCM seems to be ok, down a tad.
I got some USO and GLD calls. Lots of people are short GOLD as it has been rejected in this area, but thats a good contrarian sign and the fact that GOLD turned around HUGE today is good too.With a convincing break of 920 , gold should be racing to 1000. We shall see.

Markets down as expected and AMZN dilemma

So the markets are down as I expected and the volume is picking up. I expect this downturn to turn around quickly but the heavy volume is making me think twice.
As of now I am in a dilemma , should I buy AMZN calls or should I not, before the report earnings today after markets close.
I am sure, I think, that they will beat earnings but what about guidance . We know the economy is down and that must affect them and they might become cautious.
What about the fact that they are a discount retailer and maybe people are flocking to AMZN to buy their stuff and they may keep guidance intact which would be good imo in these market conditions.
Anyone have any thoughts on this?

Markets close higher

The markets closed up but I think a lot of good news is already factored in. So when the news comes out , like setting up of a "bad bank" , then we go down . In fact if the news comes out and is not as expected or is delayed , the markets take a bigger hit.
Its not good to predict when they will turn or where , but looking at the indicators gives one an idea. Overbought can become more overbought and oversold can become more so. But looking at all the indicators and charts gives you set ups.
Example RIMM is hitting against a lot of resistance, the 100 day mvg. avg. , Previous highs etc. Also the stochastic shows its overbought. But in the case of APPL , its not overbought and has room to run, at least to 100.
So I got some RIMM puts . I have BRCM calls and tomorrow before the close I might get rid of them , as they report earnings and I usually do not keep them before earnings.
I like AMZN a lot and want to buy a few calls , far out of the money calls , as they report earnings. This will be the first time in a long while that I but a stock for its earnings.
I will but a very small position , so if it tanks I do not lose much and if it soars then I make a good profit. If it does not do much or just goes up a few %, then I stand to lose some money.
But the majority is bearish on AMZN and they are doing very well, their kindle is selling very well and their holiday sales were the best ever.
Plus the stocks has come down in recent days so its not overbought. The risk/reward ratio is good.
We shall see tomorrow.

Markets holding up very nicely

Looking at the strength today in the markets and in some big cap tech I am going to respect this up move even if it is just for today.
I got a few way out of the money RIMM puts but honestly I think we move higher even after 2:15pm when Mr. Bernanke speaks. It looks like the bulls have made up their mind to run this market up.
Click here for the S&P 500 chart, it shows that it can run up maybe even to 900.
The low p/c and low volume are good indicators but do not tell you the exact turn, so bullish sentiment can become mega bullish and the markets can keep chugging along.
So I plan to do this. On further weakness , get some APPL calls and keep a tight stop for my RIMM puts.
GOLD and USO look buyable but one can never be sure. But essentially the fed setting up a "bad bank" is good for Gold as its one step closer to nationalization of banks, as if this does not work , what will?
I will buy some Gold calls if it looks like GOLD is ready to rumble again. Frankly though the chart of GLD does not look appealing right now, it needs more consolidation.
So though I think the markets will move lower soon I am here to make money and I am respecting this move up and going to buy a few calls. If this rally disintegrates , then I know what to do and am ready for that too.
Watch what happens to the US$, I think the news is factored in but lets see.
Remember I am trading , what I think about the markets is not important to me , whats important is if I make money. There is a axiom for that "Better lucky than right".

Breakout? or bull trap

It seems the markets are very happy about the govt/fed setting up a "bad bank".
This bank is supposed to buy all the toxic paper from all the banks. This was the original purpose of the TARP.
OK a lot more intelligent people who know a lot more about that will debate about that. My goal is to make money in these moves in the market.
It seems we have broken out , but 2 things worry me, the low p/c ratio and the low volume. Also the markets are not oversold anymore and not overbought, so we can go up or down.
The fed is going to speak at 2:15 pm EST. That will be important as in not what they speak, but what the markets do after that. "The reaction to the news is more important than the news", at least in the short term.
So given all this , the best path to do is hang on to the longs/calls and/or buy some more stuff,expecting more upside , till the markets prove us wrong.
But I am not thinking of that because of the low p/c and low volume.
Best would be to have some calls and some puts with tight stops. SO if the markets continue the upside we gain and if they turn down we make some money and get out of the calls quickly.
So I am thinking of APPL calls ( triangle breakout remember?) and RIMM puts, resistance in the 55-56 zone.
USO touched 28.63 and is now trying to move higher. Lets keep that in mind too.
But after 2:15 it will be so volatile and the markets will make huge moves up and down and finally some move will stick.
Lets wait for that.
There are just too many parameters out there, so lets try to keep it simple and not make bad decisions. No one said trading is simple.

Markets doing almost nothing

The market has done almost nothing , though we see huge moves daily. It keeps getting rejected at 850-855 or so and also keeps jumping from 810-815.
We will get a break on one side and then we can jump on puts or calls depending on where its going , but be aware of a fake breakout or breakdown. Meaning many a times the markets create a bull or bear trap wherein it , lets says breaksout of congestion and attracts bulls and then immediately turns down forcing all of them to sell for a loss. It can do the same thing to the downside too, creatign a bear trap.
But recently the P/C has been too low as the markets have just gone sideways in this oversold condition.
An oversold condition ( or overbought ) can be resolved by prices going higher ( or lower for overbought ) or by price going sidewyas for a long time. So time can also relieve the condition , not just price.
This seems to be the case this time, but lets not say that yet.

Also yesterday when I sold AMZN and USO , I felt I could hang on longer, but it worked out well. Especially Oil , it fell a lot today by 8% and was down almost 10% intraday.
many a times when a stocks or commodity is going in one direction and then a few days in the uptrend its up good and then suddenly turns down and goes negative, thats a sign that prices cannot hold and there are a lot of sellers, so its better to get out.
AMZN is totally dependent on its earnings but if it can fall why not buy it at a lower price. Also I mentioned it had tested its 50 dma so many times that today it finally broke below it and is not right at the 50dma , 4 cents above it at close.

Apple brokeout of the triangle but not convincingly , volume is low, and it fell right back in.

Usually trades look for 2 days of close above resistance. But there is no hard and fast rule.
Keep tuned in.

On second thought, if the stimulus plan passes?

On second thought, if the stimulus plan passes we will get a huge rally , even if it is momentary , like a few hours or so, it might he huge . But because the p/c ratio is so low, it might not hold up and will fizzle so maybe I should hold off on any puts as of now.

Puts on my mind

With the market rallying and the p/c ratio really low, I think I wnat to get some puts.
Oil is week but I will stay away, GLD is being rejected at resistance but those are long term buys so I will stay away.
Tech has been moving up an lower volume, I think I will look at that space.
Remember I am a trader and buy/sell very quick so investors keep that in mind.
APPL., AMZN and RIMM all look good for some puts.
AMZN has its earnings very soon so I will stay away , as the calls/puts are very expensive given the fact that IV ( implied volatility ) goes up before big events.
That leaves APPL and RIMM. RIMM is going to print a inverse H&S Imo with the neclike at around 55. SO if RIMM manages to move to 55 I will buy some puts.
APPL looks weak here but it has formed a triangle and is near the top of that, if it goes over 91 on good volume, then thats a breakout and below it has support near 80.
Maybe I am wrong as the market is oversold but I am taking a small position and the extremely low p/c has worked very well for calling a down day or two in the markets.
Will keep you updated on what I do. I still have the BRCM calls.

AMZN has tested its 50 day mvg. avg. too many times

AMZN has tested its 50 day mvg. avg. too many times over the last week or so. Usually this leads to the stocks breaking the 50 dma and moving down, but the volume has been low and AMZN is oversold on the stochastics. Also earnings are on Thursday and I think it might beat easily but what they forecast is something I cannot predict. I wanted to keep it through earnings but am having second thoughts given the weakness.
Looks like this one will be a last second decision. Cannot buy ,cannot short, just watching it now.

Link of a blog I like with Interview of Jim Rogers etc.

Here is the link of a blog I like, stockshotz, as they have good interviews over there.
I checked out the interview they have with Jim Rogers and I will tell you this , it asks him all the questions I would to Mr. Rogers. The major TV networks do not cover questions in depth, they just ask him usual stuff.
While I still do not agree 100% , Mr. Rogers has got many things right and if you followed him you would have made money, lots of it. I still do not see commodities having a roaring bull like 1999 to the first half of 2008, I do think they can rise .
But since Jim Rogers is so bullish on Agriculture etc., its wise to keep checking those stocks for a bull run .

Tough trading with these indicators

Oversold markets v/s very bullish sentiment. I think we get choppy markets, like we have had the last few sessions, markets go down but come back , markets go up but come back down.
I am trying to find a trend but do not see one. Gold ran away and is pulling back. Oil turned red ( down ) after being green ( up ) by a good margin.
Plus resistance in Oil is at 50-52.
So as of now I have just my BRCM calls. If we get a huge down day where the p/c moves higher , that will be good to buy some stuff.
Texas instruments, TXN, is up as of now after earnings in the after hours. Lets see if it can hold on to that gain by tomorrow.

Got out of USO and AMZN for now

Very bad action, Oil managed to turn a great day into a negative and AMZN somehow is very very weak though on low volume.
I almost never keep a stock during its earnings but I think BRCM and AMZN qualify .
So lets see, hopefully AMZN goes to my ideal level of 45-47.
I totally messed up on GOLD/GLD. I got out fearing some weakness and it broke out.
I still think Gold cannot go much higher but as a trader my job was to make full use to the strong move.
Well opportunities will be there. Gotta protect that capital and keep growing.
Also the put/call ratio has been very very low, that's another reason for the sales.
Of course I can jump right back in any time.

Here is a thought about GOLD

The British Pound got hammered last week as they nationalized their banks. I think this rally in GOLD is something about that. Maybe this is in anticipation that the US will nationalize their banks and then the Dollar will be hammered.
But Gold has one more hurdle or should I say at least 2 more hurdles to jump. The resistance at 915-920 and then the previous high of over 1000. If in the meanwhile the Dollar strengthens ( as a result of other currencies weakening), then it will be interesting to see what Gold does.
So the actions and words of Obama and team matter a lot. Any hint of nationalization or not doing that should affect the $ and Gold. In any case Gold accelarates now or pullsback an then goes higher.
I better get some calls on it huh?

Nouriel Roubini and others predict China slowdown and further downside in the US markets

Read that story on bloomberg.com here.
It argues to further down of as much as 500 on the S&P 500. That is by a Soc. Gen analyst.
It also has comments from Jim Rogers and other China bulls.
Its pretty interesting so make sure you include it in your weekend reading.

Gold at a major turning/accelaration point

Gold crossed 900 briefly. Now its been over 900 recently so nothing new there.
But this time it did it with a strong dollar.
In fact all the commodities seem to have followed Gold higher, Oil is higher .
Does gold keep chugging away or does it now pullback or even go down a lot? resistance is very near at 915 or so. It all depends on how GOLD does from here.
Meanwhile tech is performing good.
I got some BRCM calls, based on the chart and also the fact that the semi-conductor space seems to be doing good even after horrible earnings.

Not buying GLD / GOLD just yet.

Gold is marching ahead, but I will wait for a pullback. Chasing anything has not given me much profits.
AMZN looks strong. Oil is "backing and filling" meaning getting ready for a strong move ahead.
I am looking at APPL and RIMM and also BRCM. But the put/call ratio is coming in very low meaning folks are getting rather bullish. This is a great contrarian signal meaning the rally will not be strong.
That's one reason why I am so skeptical and not jumping in. I should have kept my GLD calls.
But that's what trading is all about. It looks like the US$ is going to remain strong for some time given the weakness in other countries. Lets see how high GOLD can really go given that.
Though it might have "decoupled" from the inverse ratio to the US$ , it does not happen overnight but its a process. I am sure many traders will look at the strong US$ and sell some GLD. If not then there will be some pullback anyways.
Meanwhile GLD is going much higher compared to the GOLD move.

Gold breaking out?

Gold is higher this morning and everything else is down. Maybe the markets test 800 or shoot below 800 and rebound or maybe they close lower and become exteremely oversold for a good rally next week.
The volume on such a decline should be low or extremely high which would mean capitulation. if the put/call zooms up and stays there it would be great.
I sold GLD at the wrong time it seems, but Gold should day high and not give up its gains.
Lets see what happens as the day progresses. usually when we are this oversold and the markets get a very low opening , we bounce very strong. Lets see if we can do that. The tendency this year has been a low open and relatively stronger close.
Its gonna be a busy Friday folks.

Got some AMZN calls

Since AMZN earnings are next week and it is not breaking below its 50 day moving avg , I got a few calls today. With the markets and AMZN oversold, it makes sense to me to buy a few now and if it breaks toward 45-47 then buy some more.
If it starts going up , well then lets see.
It IV ( implied volatility ) is pretty high and will keep going up as the earnings approach.
Lets see how GOOG does today, ah as I write the earnings are out and GOOG is up , its trading at 319 or so after closing at 306.
Lets see if it holds up.

I sold my GLD calls

I do not like the fact that GOLD cannot overcome resistance easily. It might anytime but as of now i booked the profits, if and when Gold goes down a bit more or overcomes that resistance, see the blueline on the GLD chart, I will buy it again.
This way I free up capital , only thing is sometimes GOLD can jump huge overnight but is can also fall huge. With the recent happenings in Europe region I do not think those currencies will strengthen up soon and so the US$ will remain strong and thus GOLD might tend to be weak, or at least rejested at resistance.
But if it breaks resistance, in a few minutes or a few days or weeks, I will buy it.

What a weird trading environment

Why Weird? Well APPLE surprises and is up huge, but MSFT disappoints. IBM is on a roll and that with other news lifted the whole market yesterday , imo, way too much.
Then RIMM was up on the Apple news and now its down.
Oil which is up huge now is down a bit but USO is down almost 5% at the open.
GLD is good as GOLD is not going down much. The dollar and GOLD were inversely proportional but that seems to be changing now at least on small US$ moves.
We are back to the DOWN UP DOWN trading environment where the markets seem to have no memory . There is follow through.
Well lets see how today goes, I think there is a bit of an upward bias but the bulls throw caution to the wind too often and instead of a slow steady climb upwards we get some huge days followed by down days.
Will keep you posted.

Calm at the surface but many things going on in the markets

Maybe even the sufrace is not so calm, markets were up huge and then the DOW went negative for a while and now again is up. Gold is down and Oil is up just a bit.
I think we will get a good rally which lasts a few weeks at least somewhere here. Maybe we break 800 today but we can still get the rally.
APPLE reports today after market close, just imagine them giving a great report, that will be enough to spark a rally.
In my opinion the bar is so low for apple , all they have to do is not warn or take next quarter estimates down by a lot, that will be enough for a rally.
Many other companies report too but APPL is the most important.
The p/c ratio is now getting higher, meaning folks are turning bearish, meaning thats a good contrarian signal for a rally to start.
Why? Thats a whole different topic but in short , when folks are bearish they are not invested and already have sold their holdings , there is money on the sidelines and its easy to positively surprise the markets.
Example APPLE, all the bad news is reflected in the stock now , so any good news, or the perception of good news sends its higher.
Having said that I am staying away from the stock. I usually do not buy just before earnings as volatility is high. Also the news has a chance of getting worse.
Plus the options get very expensive before earnings as the implied volatility goes very high and then after earnings its plummets ( will explain that later in detail ).
BTW Gold is now higher than the S&P 500.

Markets fall a lot

The markets fell a lot today, The S&P 500 over 5% and the nasdaq by over 5.75%.
The down volume compared to up volume was huge. We are nearing a oversold condition on all kind of oscillators ( believe me there are many ). But the P/C ratio is not high and shows bullishness or at least not enough bearishness.
This tells me that we have more downside remaining, a break of 800 is a given in my opinion .
But IBM came out with good earnings and is up after hours by 4% and there were some other good earnings like CREE , so we might open higher. But where the markets close is what matters, so lets see.
We shall see what happens next. AMZN looks like a great buy at 45, but it might not get there. 47 - 47.5 seems more likely. Its going down on low volume , so I am going to buy calls on it once it tests the 45-47 zone.
Good Luck

Opened a new trade in USO

I got some USO calls. With Oil rallying huge after going down a lot this morning pre-market open , USO is not exactly following it due to market weakness but will soon in my opinion.
Looks like a good deal, time will tell.

Took profits in my RIMM trade.

I sold my RIMM calls at it went higher this morning in spite of the market weakness.
Rimm might go up more but I made a great profit in a few days and did not want to push it.
I am looking for a rally this week but before that we can get a good test of some lows , it will lead to a good oversold reading.
I still have GLD calls , Gold extending this morning.
I will look to buy AMZN and/or USO sometime soon.

Jim Rogers , Commodities, US dollar, Gold etc.

Jim Rogers , whom I like, said this about the US dollar and some other stuff.
Now I know Mr. Rogers has been right but he has been calling for the Raw materials and other commodities to go higher for a long time. Not sure if he saw the commodities crash coming. He did say that every now and then we have corrections, but this does not look like a correction to me.

Many might not know , but there is a view that there are cycles in the economy and the commodities bull cycle was correctly recognised by Mr. Rogers when he called for higher prices in 99. So in 99 or 2000 this commodity bull cycle started and acc. to Mr. Rogers and others it can last 16 years, yes 16. So we are about half way through according to them.
No one I know warned about this commodity crash, almost everyone who predicted the stock market crash and bank problems saw a deep recession but never thought that commodities would fall so much. Maybe they expected a normal correction.
A correction is around 10-20% , we have fallen a lot more than that.
Here is a link to the commodities index as tracked by bloomberg.

Now this is my logic: what happened is as the banks started having issues and the markets crashed , everyone started hoarding cash and the US $ as that's what they did usually in bad times. So the US$ started getting stronger.
Almost no one saw this , not anyone I know predicted this ( if I am wrong then please let me know who did ). They thought as the markets and US banks crash US $ will weaken and go to 1.9 to 2.0 against the Euro , meaning 1 Euro = 2 US $.
That did not happen because we saw a deflationary environment and therefore huge US$ buying and also European bank problems and recession.
I would count that as a big miscalculation by many many bears.

But now the view , as far I read things and hear them , is that we will have this deflationary situation around for some time and then later when things start working, we will have a Hyper inflationary or at least high inflation scenario .
Why? because the Central banks and govt's have brought down interest rates to almost zero ( ZIRP - zero interest rate policy). There is almost universal agreement that the US dollar will lose its value by a lot when that happens.
Well none of these bears saw the problems with the other international banks, non-US.
So though the dollar is weak , the other currencies are weaker.
So who knows what happens next, Bernanke says/suggests that as soon as things start getting better they will have to increase the interest rates to stop inflation.
But Bernanke is a student of the Great Depression and knows what will happen if he raises interest rates too soon.
So as of now it almost looks certain that we will have a inflationary period and you can see wide support for this in the price of Gold.
Gold is going up in anticipation of that. If Gold does not keep going up, then expect a little twist in the story of inflation.

To sum it up:
Right now we have deflation so commodities are down and US$ is up.
When the economy starts getting better , deflation will be history and we will have inflation and therefore commodities start going up and US$ will get weak.
Now here is my corollary to that, if the US economy does better than other economies the US$ still remains high and thereby "arresting" the rise of commodities ( Oil and gold especially).
Now no one as of now talks of that, but many agree that the US is doing a better job by being pro-active about not letting the economy slip into a depression.

So it is my view that the "coming" dollar weakness is not a given and therefore the commodities rally is not a given too.
Now commodities can rally but maybe not as much as some bulls might like.

So I agree the with the statement and commodities might rise again but so not agree that the US$ is going down a lot .
If the US economy improves then the Asian economies improve too, obviously, but they are dependent hugely on the US and europe that they cannot rise and rally without the US .

Of course these are my thoughts and I might be totally wrong as one thing I have learnt is no one knows whats going to happen 100% .
That is exactly why I am a trader and the trend is my friend.
But one has to have the bigger picture in mind while trading. But be humble , do not stick to your theory if things are not going according to that.
But the trick is that things might go against you for a loooong time and then start going just like you though.
But I am here to make money and I would rather be lucky than right.
making money in the markets is totally different than predicting what might happen or what might not. You might think that the S&P500 is going to rise but still not make any money even if it does rise. The market is a weird mechanism.
Example: I am expecting the consumer to save money and not spend too much , but I still got RIMM calls though RIMM is a high end device , but why did I buy RIMM then?
1. The Chart says so,
2. The chart says so and I believe it because the market overshoots in both directions and it overshot to the downside with RIMM too fast .
3. The trend is your friend and its up for RIMM at least for a while. There are traders who will buy this and take it up.
4. The Risk/reward ratio, risk to downside is limited with the heavily oversold condition , so all the bad news is in the stock ( careful there though as the banks show that oversold can get more oversold).
5. Finally its just a trade with tight stop losses and very little capital.

Timing is essential in trading, you might know that a sector is bad/good but if you short/buy it at the wrong time , it might go against you.

Good Luck.

Krugman Blog ( for the detail oriented )

For those who want to get into the details of the Govt. bailout , the TRAP and things other than plain old stocks and markets I suggest you read Paul Krugmans blog.
Also I really love listening to Tom Keene on Bloomberg Radio, 1130 AM . Or go to bloomberg.com and get his podcasts.
Plus NPR's marketplace has a unique prespective, they cover what usually is not covered by usual financial media outlets.

The weekend is here ....

The weekend is here and instead of trying to fit in the whole story of the economy and markets in your head just take it easy , relax, and try to take an unbiased look at the markets.
Tell yourself that you have to use the markets to your adventage and not let the markets frustrate you. The trend is your friend.
I will be posting stuff over the weekend. Try to tune in.

Nothing new today

Todays weakness is a bit unexpected but its good the markets do not run away from us.
This way we get a better rally next week. The p/c ratio should come in high by then and sentiment should turn bearish.
I expect more weakness by mid-week. maybe I am biased as I want to get AMZN for 45 and GDX for 25.
But Gold is up good and GDX too , but if the markets get very bad short term , GDX can "de-couple" from Gold and test 25-26.
Markets are closed Monday , if you'r getting bored play the bailout game. The link is on the post before this.

Play the Bailout game

Someone actually created a game for the bailout, whooohoooo.
Play it here.
I found it on Barry's blog at http://www.ritholtz.com/blog/

Intel is up after hours, RIMM zoomed ahead and GLD looks good

Exactly what I wanted, so I am keeping RIMM calls for now with a stop nearby.

As for GLD, it looks good for now, though its been rejected at some trend lines pretty often.
The ECB ( european central bank ) reduced rats by 50 basis points to 2.00 . The reaction to that news was the US$ weakening a bit against the Euro. Why? I guess because the move was expected .
Anyway Gold seems to have rebounded after the recent weakness , there is resistance above for Gold but lets s where it can go. See the chart here for GLD ( ETF which mimics Gold ), the blue trend lines will prove to be resistance but if those are cleared we are not away from $1000 for gold.

After market Intel news is being taken well as the stock is up a bit and futures are up, but what will happen tomorrow is another story.
I am expecting some pullback again before a decent rally next week. AMZN seems to have run away, but if it goes to 48 area again I will buy it.
I like GDX too but it can still touch its 50 dma at 26.76. GDX at 25 would be great but maybe it will not go there this time.

USO, crude Oil ETF is refusing to go down much and crude oil itself staged a bit of a recovery . I have my eye on that , If Oil runs from here to 50 again , the profits will be huge.

Got me some GLD ( Gold ETF )

While I believe that sentiment is a bit bullish and we will see a better rally next week, ( Obama inaguration time ? ) I saw that GLD tested its 50 day moving avg at 79.19 and then went to 79 and bounced.
So I got a few calls on GLD. Now this is a quick trade just like my RIMM which I still hold but I will probably sell both very soon unless they just zoom ahead.
Looking to buy AMZN at 45 and GDX at 25 next week. Lets see how it works out.

Similarities of this market to 1973-75 ( good news there)

Veteran analyst Dick Arms has a very encouraging post on Barry Ritholtzs blog ( I have a link to that blog on the right of my blog ), click here to read it.
He argues that just like we fell from October 07 highs to Lows in Oct08 and then rallied and fell back in Jan, similar stuff happened in 73-75.
So what happened after 75 Jan? Read his blog, Dow rallied 40% that year.
I think one has to look at all the angles while trading/investing. It surely can rally.

Let me try to explain my logic here. This morning I was watching CNBC and they had the CEO of Saks and two other veterans.
What they said was very interesting. They said most people were blaming the retailers for putting up sales too early. But they said they order merchandise/inventory 12 months or so before, so they did this in 07 and then the slow down/ recession started and then the economy /consumer came to a standstill in Sep 08. So they had this double whammy and a huge supply and no demand.
They had to clear the inventory by putting everything on sale. But now they are trying to get the supply in line with the demand so by summer they expect it to be in line.
This might mean ordering less, ordering what consumers want, cheap stuff maybe.
They expect demand to be very bad for the next 2-3 quarters at least.
But the demand and supply is expected to come in line.
So as they lower forecast its going to be easier and easier to beat that lowered earnings forecast with each quarter. Expectations are very low and any upside is going to send the stocks higher.
The only problem is if the demand keeps falling and present supply is still too high.

My point is everyone is adjusting to this recession. Earnings estimates are being slashed and some quarter its going to be low enough for the companies to beat it.
Is that time now or is it still far off? Thats the question most are trying to find out.

Reading the opinions of many analysts/traders/investors who have been right before and some not, this whole thing might take years and years to play out and in between we came get sharp rallies. So a 40% up year is quite a possibility .
But remember it not a new bull market even then, what about the years after that, the consolidation and churning is expected to continue.
Many expect this bear to play out in 3-5 years and some think it might take even longer.

That is why I keep saying be a trader and not a investor. Protect that capital.
There will be a better investing envoirnment and you will know it when you see it. These rallies which are bear market rallies just get people over-excited and pull them in just so that the big guys can sell to the small guys and get out. This is what i think and my opinion. While the economy remains bad, stocks can rally but does not mean everything is fixed.
Understand that the markets and the economy are two different things and do not go hand in hand. There are many money making opportunities , but its not going to be what it was , not those sectors/stocks and not those strategies.
New leaders will emerge and new sectors will fly. I will try my best to keep you updated, but for now I do not thing buy and hold forever is going to work .

Apple stock ( AAPL ) in trouble for now, down after hours

$77 is a new low for Apple stock. Steve Jobs is taking leave till June and that's why the stock is down to $79 as I write this.
It might even open flat ( $ 85 ) tomorrow but people are selling it for now.
I think its traders panicking as the image perception is Apple inc = Steve Jobs.
Well I do not think it should be sold but who knows.
I have no clue how Apple Inc does but I think it will do just fine. Of course leadership is leadership and that affects stocks a lot.
But it might turn out to be a good buying point.
I usually do not touch stocks where there is a doubt over things. But you gotta make exceptions. but I will look to buy AMZN , USO and/or GLD like I said earlier.
AMZN is sitting at its 50 day moving average, a very tempting place to buy. Volume on this decline is low.
But let it show its strength, I might miss 10-20% profits being re-active and not pro-active but I might save myself from a 50% or so loss, as if it breaks the 50 day mvg. avg it will test 45 next imo.
Nasdaq will be down is Apple is down huge, remember Apple is given the highest weithage in Nasdaq100.

I got RIMM ( research in motion the blackberry maker ) today which is a member of nasdaq100. But RIMM is up as Apple is its biggest rival.Not a good reason to be up I would say. i would rather they go higher due to some good news from RIMM.
But I am a bit Apple inc, the company fan. I like the imac's etc. I hope Steve Jobs is fine and comes back soon.Good luck to him.

Retail sales scares the Markets

The retail sales numbers were worse than expected and that has sent the markets down.
The numbers were bad and this is the 6th consecutive monthly decline.
Read it here, bloomberg.com analysis.
But I think the markets are going down too much, first this was expected , like no one knew it would be bad.
I am looking to buy RIMM , AMZN , GLD or USO calls.
In fact I had an order for RIMM calls and it triggered, would have lowered it but whatever, its a small position.
AMZN is a great but at 45 I think, but might not get there. Not so sure of GLD and USO, do they turn here or later. Next week would be the best time to buy I think. But some strong stocks can start rallying now.
But waiting a bit would not hurt I guess.

Gold ( GLD and GDX ) coming in buying range?

A quick post , I think Gold is now nearing the buy zone, the daily chart for both the ETF's GLD and GDX are nearing oversold and the RSI ( relative strength) is still good.
Also as the US$ rallies , gold has not sold off like it used to before. That alone shows a great change in character .
I am not buying yet but getting ready to buy some calls on either GLD or GDX or both.

QQQQ puts, sold them to book the profit

I sold my qqqq puts to book the profits. Todays volume to the downside was very very low. Also NDX ( Nasdaq 100 ) made a low and showed good strength later by not going back to the low even as the dow kept falling.
While the markets may go down a bit more, I think the overbought condition has been resolved and the risk/reward is to the upside .
But I am not buying yet, hopefully AMZN will come down more or maybe RIMM will.
Earnings season starts so we will have that going on.

Markets and stocks to watch

The markets are down now but people are still bullish. There are many stocks which show good action and many others which stink. On the whole the Tech sector shows good action and the Banks are weak.
We might get some rally as we are down a lot but look for a good sustained rally only when sentiment gets bearish and/or there is lots of good news.
I have my qqqq puts but am looking to buy amzn and/or rimm on weakness.
The charts look good.
At this point I am looking to play the OBAMA transition rally, if it does work. He takes office on 20th Jan, so sometime around that.
I will post chats on AMZN, RIMM etc soon.

Non-Farm Payroll data for the Month of December is out

The BLS , Bureau of Labor statistics, released the December 08 unemployment data this morning and they reported a loss of 524,000 jobs in the US.This was less than forecast ( average forecast was 525,000).
But the umemployment rate went up to 7.2% which was not expected ( they have some formula to calculate this so though analysts on avg. were right forecasting number of jobs lost they were not so right on the unemployment %).
Check the bloomberg.com story here.
For the year 2008 the total number of jobs lost were almost 2.59 million, a huge number.
The market futures went up when the number came out at 8:30 am as people expected the number to be much worse.
But then they consolidated the gains and when the markets opened, it took no time for people to start selling and take it down.
Check out this bloomberg.com story for that analysis.
Folks this is no small thing, the economy is getting worse it seems.
I listen to and read quite a few analysts, economist and many seem to be very pessimistic. A contrarian might say thats good but these people are not investors , they are economists and I do not that its a contrarian buy sign.
Remember in contrarian investing/trading , they say the herd is always wrong at the extremes, at tops and bottoms but the trend is always your friend. Right now the trend is down.
Having said this I will post why a Obama transition rally might still take place.

Trade updates

In my opinion the markets needs more work to the downside but tomorrow is the jobs data so there might be some volatility. I sold my HPQ puts just as HPQ fell pretty quick and volume decreased on the downside. I am a trader so I locked my gains,
still holding the QQQQ puts and looking to buy either MOO,DBA or USO calls.
But I am in no hurry.
This market rewards patience.
When looking at these markets a lots things are going on. If the jobs report comes very bad , then the US dollar goes down , in that case the commodities ( Oil, gold, soy,wheat etc. ) all can go up as a weaker dollar is good for coomodities.
But if this is interpreted as a bad for the world economy , which leads to deflation and therefore people start to hoard the US$, then it goes up and commodities fall.
Like many veteran market analysts say, " its not the news , its the reaction to the news that matter".
Stocks can be bid up if the number is around what is expected. i think some 500,000 jobs are expected to be lost, so unless we lose more than say 535-545K , no one will panic. Of course if they come in less then the markets will catch a bid and try to rally.
So tomorrows reaction to the number is important but overall the markets might have to go down more.

US consumer borrowing falls a record 7.9 billion in November 08

Here we go, latest data shows that US consumer borrowing fell a record $7.9 billion in November.
This article on bloomberg.com talks about it but they mainly say that is was due to the fact that credit companies are cutting lending and not starting new loans, aka credit freeze.
No one seems to suggest that the consumer is saving and therefore this fall in borrowing. I think its a mix of both reasons.
Also this raises 2 important points.
The TARP program ( $700 billion ) which gave taxpayer money to banks so they start lending again and do not hoard cash ( to survive ) seems to be either not working or seems to be delayed?
Like I wrote below, if the consumer is saving money and not spending, then the Obama tax breaks/tax credits which are a part of the stimulus package might not work.
We shall know soon.

So Walmart cut forecasts? Are consumers saving money? Now what.

Walmart cut its forecast, along with some other retailers, click here for the Bloomberg.com column on this.
Now Walmart is where people go to shop for cheap stuff, that is the reason they do good in a recession. But now they are having problems too?
Maybe this shows people at all income levels are saving and not spending or Walmart might not be executing some stuff right. Should be clear in some time what it really is.
Minyanville.com's Kevin Depew thinks this will be when people shift to saving , which is not common in the US, click here.
Remember US economy is a consumer economy, consumer spending makes up 2/3 of the US economy. That means most companies expect the consumer to spend and spend. When they start saving , the companies do not sell that much .
So right now so many retailers and other companies have expanded so much that if the spending goes down a lot and stays down , they'll be in trouble if they are not already.

ADP unemployment data - US companies cut 693000 jobs in december

ADP has its own Jobs number, the main one which most people watch is the Non-farm payroll data from the US labor department which will come out on Friday at 8:30 am.
Click here for the bloomberg.com news on ADP's number which they say should be close to the US labor department number.
That and Intels bad numbers were enough to send the market down.
Oh also yesterday evening Alcoa ( the aluminium producer)came out with its report saying they see a prolonged downturn and that send metal stocks down.
Oil fell huge today around 12% and though the US$ fell a bit , Gold tumbled too by about 3%.
USO fell a lot. Once the overbought condition of the market is worked out and we start getting earnings reports/pre-announcement, thats when we will see if the bulls have any strength. I will post a list of stocks which look strong. But remember its a bear market.

Intel to miss reduced forecast (even after it reduced it by $1 Billion .)

Intel is going to miss their numbers even after the reduced them huge a couple months ago. Read the story here .
Not good huh?
The markets were rallying good but then this news.
About the put/call ratio which i keep talking about. The put/call ratio is a contrary indicator. Meaning when everyone is bullish the markets pullback go down and when everyone is bearish they do good.
Of course its not that simple and has many other conditions. Last fall when the markets fell the put/call was very high for a long time .
No indicator in itself can forecast anything. But yesterday the markets were overbought, the index put/call was below 1.00 ( meaning folks were very bullish ) and the equity ( stocks ) p/c was 0.64( again traders were very bullish).
So when we get late in a rally ( near overbought ) and the p/c comes in this low that shows that people are way too bullish and probably the markets will pullback at least.
Once we get the pullback then we look at the volume and decide if its just a pullback or something worse.
The market breadth ( meaning stocks going up v/s stocks going down ) has been good in this rally. So now as companies warn and surprise as earnings season is near, lets see if we get a small pullback or we again go towards last quarter lows.
As of now the feeling is that this will be a pullback and we rally again.
Lets see.

QQQQ puts

I did not start a position in MOO as it looked rather iffy, not going up strongly in a strong market.
Apple retreated from the resistance I showed before, of course during the day, intraday, it went pretty high, but the close is what matters.
The markets too closed a bit high after being up huge intraday.
Looking at this overbought condition and also the low put/call ratio I decided to buy some Feb puts in qqqq and also HPQ. Very small positions and lets see what happens.
I am hoping Oil and USO pull back good. More later.

Quick take on the market

I feel the markets are overbought. Some stocks like AMZN and HPQ are doing good but overall going up further is looking tough. This is not to say the markets cannot go up, if the bulls manage to break some resistance at SP500 940-950 then we might get some new money in chasing stocks . But other than that we will consolidate/go down in my opinion.
I have not done anything new. MOO is not jumping, just sideways movement . I want to see some decisive move before a trade.

Market Vectors Agribusiness ETF (Ticker MOO) Looks good to me

MOO is an etf of agriculture stocks , top holding acc. to yahoo are POTASh, DEERE,MOSIAC, AGRIUM etc, click here.
I like the chart a lot and also I think it has put in a "inverted head and shoulders pattern" , fancy name but great pattern. Click here to see it.
This pattern has a "neckline", which when broken after the pattern is completed , the underlying equity rallies . This is totally a technical pattern and so for a trade I am going to buy this tomorrow , depending on how it does.
From what I know , the rally after the neckline has been broken can go as far as the neckline - head difference , so in this case it would be approx. 30-20 = 10.
So that means 30 + 10 = 40.
So in my opinion MOO can rally to 40 if it breaks the neckline cleanly on good volume. I am going to risk just a little money, the risk/reward ratio is just great here.
Best would be if MOO consolidates a bit , meaning pulls back a bit on low volume to say 28 or 27.5
If it goes lower then I would think the pattern does not hold anymore. But the pullback might not come and it can break it tomorrow.
I usually do not buy anything in the first 30 minutes of trade. I am going to buy calls for Feb 09 for the MOO trade. Also this is all my chart analysis, I have been wrong , like any trader so be careful, tight stops and risk very little money.
I will cover more on Apple tonight.
Oh btw if you read the trade for USO in december, I sold my USO calls I bought for 1.25 today at 1.75. I had Jan 09 calls so did not want to wait more.
I will wait for USO to pull back before buying but it can keep rallying.
After I bought USO it went down quite a lot but that's why they call it risk/reward.
Lots of risk here. I could have bought it lower but then it might not have gone lower.
I did not buy more as that is something I have learnt the hard way that never double down, avoid price averaging .
Trading needs discipline more than anything , its very easy to get wiped out totally. Consistent returns is a great thing is you can get those, but for that one has to be very disciplined, that's how you avoid the huge wipe out losses.

Apple rallying today

I wrote a piece on Apple Saturday and today its rallying on some news.
The news is related to my point # 5. on why AAPL was under pressure.
I wrote about Steve Jobs unclear situation. But this morning Mr. Jobs wrote a letter to shareholders and everyone likes what he had to say, click here to read about it on bloomberg.com. How do I know they like it, because the stocks is rallying. I showed the APPL chart and the stocks has rallied right into resistance. If it manages to break it , on good volume , then we get the upside breakout we were looking for.
What is good volume? good question. Acc. to yahoo Finance,for the last 3 months, daily avg volume is 47 Million and for the last 10 days, daily avg volume is 21 million. A huge difference , while I would like to see volume higher than the 3 month daily avg, since I trade , even the 10 day daily avg is good enough. Its looks like we will get good volume today, but its better to be reactive than proactiove in this market. Apple has to close above that downtrend line I showed.
I am not going to chase it here I will wait and see. If it break out it will surely come back to test the breakout point.

APPLE , Inc charts vs real story

I think AAPL ( ticker for Apple , inc) is a good example of how the charts shows one thing and what we hear day ti day show another thing.
Now aapl is a good company acc. to anyone who has anything to do with the markets except a few. The company has products which are always in demand.
But of late many things have affected the stock. The news can be summed up , acc. to me , in the following way.
1. The recession means Apples high end stuff is not selling as much and whats selling is low margin stuff.
2. A company which has never compromised quality has started selling stuff at Walmart, nothing against Walmart but the heavy discount on the iphone is something which has got to be taken into account.
3. Apple is always very conservative in their guidance which is good but it is well know and most analysts expect great things in the earnings report.
4. MAC sales , these were growing a lot till the last quarter and now they are supposed to come in lower then before. Low growth.
5. The companies dependence on Steve Jobs , recently news is floating around that he might quit and what then?

If you look at the chart, it has done badly, but look at the daily chart, it shows good signs of turning around in my opinion. Click here for the chart.
I see this as a triangle with all the indicators showing good improvement, the RSI, The MACD etc. The ADX shows no trend after that huge fall.

Now usually a triangle is resolved in the direction of the previous trend, which is down. also a breakout above 95 will resolve it upwards and breakdown below 85 would be resumption of a downtrend.
But this is just a daily chart, if you look at the weekly , you see how bad the last few month have been for apple. Click here.

The weekly shows how important the 100 level is and how the recent fall has damaged it.
But that's just technical analysis.
If Apple comes out with great earnings it will just zoom ahead.
Acc. to yahoo finance the short ratio is just 0.6 with only 2.4%of float being short. This according to me is very low.
So not much in short covering gains I think.
Now apple is the most influential member of Nasdaq 100 ( click here for the qqqq % holdings ).
I am assuming that most fund managers hold apple and even those who do not and hold Nasdaq 100 or SP500 are indirectly affected by it.

With all the recent rallies Apple has just done nothing great. If earnings are not good then the stock is going to be hit again with many more selling and the whole Steve Jobs not giving the key note at Mac world etc. just makes it more difficult.

Given all this, though the daily chart looks good to me, I am passing on apple until the volume really improves and it breaks the 94-95 area clearly on good strength.
Plus the 100 area will act as resistance and has to be taken out on good volume. IMO only then can you look at apple as a long investment, until then its just a trade.
Now lets see the other side. How low can it go ? Well below 85 there is good support in the 70-75 zone. But if that does not hold then its 65 and then that low at 50 where it went briefly in July of 06 .
I remember that I passed on that trade and it just zoomed ahead. It fell there because of the options backdating issues which basically did not amount to much .

Also if it goes up, then there is heavy resistance at 100, 115 and 125.
I am sure many people believe this is an investment of a lifetime and its very cheap. But if they are not selling the high margin stuff then its tough to see how apple stock performs good.

IMO fundamental analysis is key but its not easy and therefore its easy to do Technical analysis on the chart as you know what smart money is doing. But that's why Technical analysis is good for traders .
I will write a bit on the sentiment stuff later for apple and why it can still rally.

Nice rally today but look at the volume

What a rally today, consistent, went up throughout the day after being low in the first half hour or so. But look at the volume, very low.
Yahoo finance shows qqqq ( which traces nasdaq 100) avg. volume to be 220 Million, today it was 107 million, not even half.
AAPL which is the largest holding of qqqq was up 6.33% which helped the nasdaq a lot and the volume on AAPL was a bit better than 50% of its avg. volume.
Good rallies do not come one such low volume but hey at this point I am sure most people will just look at the rally and not care about the rest.
I am going to be cautious and not chase any stocks here.

The economics of sports ( selling teams in this market)

Here is a link to Minyanville.com's Andrew jeffery's column on the topic of value of sports franchises liek the Cubs etc.
The way economics affects almost everything is quite amazing.

HPQ ( Hewlett Packard) stock behaves erratic

I used to be pretty bearish ( pessimistic ) on HPQ after it fell in the fall ( fell in the fall , now thats a phrase which we can apply to the whole market in 08 ) I was pretty sure it would keep falling after some short bounces.
But HPQ came out with great earnings and raised their guidance for the next quarter.
But the stock did not jump a lot on that news. It did but not very convincingly.
Click here for the chart .
Now the chart looks good and HPQ behave good on some days but today when the markets are rallying huge, HPQ is not rallying much. The chart in my opinion says buy on a break of 37. But there is lot of resistance till it gets to 40.
I have read some lists of best stocks for 09 and HPQ is present in some of those.
But imho ( in my humble opinion ) HPQ is in a sector which will do badly. Also Dell is not the Dell of last fews years , they are trying to get the market share back. So HPQ has thet competition again.
Also HPQ's most famous products are all high end, over $1000, which are great maybe but if Apple is having a problem selling MAC's then how come HPQ has no issues.
Is HPQ so great that during this recession they actually keep doing good? I am very very skeptical. But lets give them some benefit of doubt and see how they do going forward.
Acc. to yahoo they report earnings on Feb18.

More on crude oil and USO ( technical )

Great action this morning is crude oil and USO ( assuming going up is great for oil ). USO is approaching its high of 34.87 from Wednesday, well as I write it has breached that and is now at 34.95.
This looks like it will reach 40 pretty soon. I see no great resistance between here and $40.
ok let me post this cos now USO is at 35.4 already.

How come everyone on financial TV is bullish for 2009

I am seeing a lot of bullish analysis for 2009, almost 90% of people expect 2009 to be good. But the ones who saw and warned of the Bear market in 2008 expect the economy to perform badly and markets to be down or in a trading range. They expect any rallies to be bear market rallies.

In my opinion most on TV are bullish and expect 09 to be good just because, try to understand this, these guys are mostly money managers and if the common man removes money from the markets due to whats going on , they get less and less money to manage and therefore less money for themselves.
Now they get paid to manage the money, regardless of their performance.
Do you know that when they say they beat the markets for 5 years, it means that when the market was up they made more of course but when it was down all they have to do is be down a bit less than the markets and hey can claim they beat it.
Last year, 08 , the dow was down some 36%, so if a fund was down 35%, then they beat the market. Like that really helps the person whose money they manage.
All these guys want to make sure is that you do not withdraw money. They may be right that you make money in the long term so do now withdraw now, but I feel there is no need for someone to put new money.
Also if you see the markets we are a little over where we were in 1997. Click here for the S&P500 chart for the last 2 decades.

Most who saw this housing crisis were not perfect on when it would occur with the some warning for years going as far back as 2003-04 and many in 2005-06.
I am trading and in my opinion everyone should keep tight stop losses and trade in small sizes, smaller than usual.

So in my opinion these talking heads on TV have no clue whats going to happen but keep calling for rallies. These guys who are calling for a great 2009 , did these guys even see the recession coming? before September 08, when the markets fell off a cliff, most of these guys were questing the recession, waiting for the GDP to go negative.
So then they needed proof but now suddenly they have become great forecasters?

Now there are some smart people who are calling for a good rally and I will post that in the next post but overall do not worry about missing a great bull run , even if the markets rally, a healthy rally always comes back to the lows and then rebounds again , the process can take months.

If the consumer drives 2/3 of the US economy and retailers say business is very bad how can the TV talking heads now claim everything is good? Maybe it is for them , since these guys get paid even if they lose their clients money.
But i'd rather trust those who have been right.