A Few More For Your Radar

Keep IYG, Financial Services Index on your radar for a break below todays low of day.  This index is comprised of companies such as BAC, Visa, AXP, MS, JPM and more, all of which have exhibited weakness over the last few weeks.  Another breakdown could take it down over the next few weeks to as low as its 200d for a $7 swing trade.

Another is XLE, Energy Sector SPDR.  It broke down from a triangle and closed below its July trend line and 50d SMA which I believe is significant.  Maybe the recent rise in the USD has finally broken this puppy down.  Of course both of these trades are dependent on continued USD strength via short covering from Brazil, Chile and other countries but one could get short with a stop above the 50d and move your stop down as things progress.  My ultimate target on XLE would be $52

Visa Fell Out of Bed

V broke below its rising wedge today which, for some stocks may occur easily; however Visa is considered strength and not easily taken out by shorts or news blips so when its Slow Stoch dropped below 80 on the Daily, it became a *watch* for me.  Today on USD strength and overall market weakness, V continued its selloff breaking trend line support and closed down 2.6%.  One could say *so what, it had a down day* but take another look.  Not only was there negative divergence where MACD was dropping while price rose, but check out it’s upper Bolinger Band.  It’s turned down.  Bearish folks.  We may have a true reversal on our hands.  A short with a stop above todays high would be a good bet here.

Remember the Megaphone?

In an earlier post I highlighted Broadening Tops, otherwise known as Megaphones where a trading range broadens until it ultimately snaps and the trend reverses.  Such has been forming in SPY over the last few weeks and while this does not mean that the rug will be pulled out from underneath us tomorrow, it is prudent that you realize this *could* transpire in the days/weeks to come and protect yourself accordingly.  For me this means gradually building short positions at the top of the range as the pattern broadens.  I also must bear in mind that this pattern could take weeks or longer to actually break so I’m jumping in and out of small swing trades and day trading as well but longer swing trades [for me] are out of the question at this juncture.  I recommend drawing extended trend lines on your charts and monitoring because while the pattern will widen and allow us to creep somewhat higher [I'm still watching SPX for a full 50% retracement], I highly doubt we’ll see any true trading above the trend line.    Of course, anything is possible in this rally so it will be interesting to see how things play out.  Just another item to keep on your radar going forward

The Bank Trade

Another round of Doctor appointments has hampered my posting of trades.  Hopefully I’m done for the week and get back to the nitty gritty here.

In any case, Bank of America announced after hours tonight their intent to repay TARP funds within the next fews days via convertible share issuance and cash on hand payment.  While I have absolutely no idea how the market will react, initial after hours trading pushed the stock [and XLF] higher.  For anyone like me with no position, you will note that BAC [and for that matter XLF] has formed a triangle and a break higher or lower with increased volume should run for about a $3.50-4.00 swing trade [$2.50-3.00 for XLF].  Time in the market about a week.  Place your stop above/below the breakout/down area to limit capital risk and happy trading.

Gimme’ Some Sugar!

Just a reminder that in an earlier post I had pointed out the Sugar ETN, SGG forming a bull flag which is now come very close to its apex.  A great number of traders have been monitoring this move so believe me, when it moves, it will move with volume.  If you’re not long, set an alert as its breakout price target is a tidy $79.00 [currently $64.07]

Focus on Construction

The market is at a sensitive area here this morning as traders in the US want to go higher eyeing the full 50% retracement in SPX @ $1123ish however I believe they’re looking for some form of catalyst; an excuse if you will to stampede over the Bears and this mornings economic releases may give them that fuel.  ISM Manufacturing, Construction Spending and Pending Home Sales are all released @ 10:00 EST.   After all, there’s news of improving conditions in Australia and China but the US wants to hear of improvement here.  Improvement sufficient to justify a higher valuation that the current.  For further information on these releases CLICK HERE

Golds New High

They shiny stuff hit a new all-time high of $1200.50 in overnight trading after the RBA announced yet another .25% rate increase.  Yesterday I had tweeted that gold had formed a small ascending triangle [bullish] and next stop was $1200.  I actually took off some of my gold position on this move but expect another pullback and re-test of the breakout point near $1183 which will give me another opportunity to add more again with a small capital risk.  I’ll place my stop just under this buy point and if for some reason this gold move fails, I’ll be stopped out at the top and lose very little.  There IS a higher possibility of this being a failed moved vs. when gold cleared the $1000 level because there were numerous attempts to climb above $1000 and once it finally pushed above, all those people who bought near the top had formed some tough support defending their position.  Such is not the case here.  Traders will be focusing in on this mornings ISM Manufacturing #s [10:00 EST] as further evidence of an economic recovery.  Anything in the mid 50s backed up by strength in orders, will point to steady improvement for the mfg. sector which will benefit AUD/USD.   Next support for gold $1174

The Retail Bubble Hath Burst

I can smell the downgrades being written as I type after sales numbers were released today from Black Friday and folks, it ain’t pretty.  A miniscule increase of 0.5% vs. 3.0% in 2008 and 8.3% in 2007.  OUCH!  If that’s not proof that while the Bernanke states the recession is over, the consumer is just now beginning to show just how cashstrapped his/she truly is.   Looking closer at the retail ETF, XRT, it has retraced over 61.8% from the ‘07 high and is sitting pretty in a triangle.  Daring traders will just try to short it premarket on Monday while others [more prudent] will wait for a break below the triangle on higher volume before jumping in; thus increasing the volume selloff.  I just don’t see how any pundits or tv news personalities will be able to spin this in a Bullish manner, other than to say “it’ll improve by Christmas”.  Come on.  What a joke.  Here are six retailers that have already broken down or are near breaking.  The recession may be over for the banks but for the consumer, it’s down into the firey pit of unemployment Hell.  Let’s at least take the retailers down there with us.  Downgrade ‘em…………..downgrade ‘em now boys.

They’re Not Going To Get A Penny

This filed under the heading of “I’ll believe it when I see it”.   The Obama administration plans to announce a campaign on Monday to publicly name banks who are not doing enough to lower payments for troubled homeowners. 

“Washington would try to shame the lenders by publicly naming institutions that fail to move quickly enough to lower mortgage payments permanently. The Treasury Department also will not pay the lenders promised cash incentives until the payment cuts become permanent, he added.  “They’re not getting a penny from the federal government until they move forward,”

Yep, sure.  And that’ll really do anything?  Not.  As far as I know, pigs haven’t learned to fly.  Mr. Obama, you’re in way over your head dude.

A Pharma Bounce?

I do like VRTX for a possible bounce long next week as it broke out of its trading range and has now come back to re-test that support.  If the Dubai news was overblown last week, risk appetite in equities should return and VRTX benefit and head higher.