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When the pundits came out two weeks ago stating that the easy money [trade] had been made; they weren’t candy coating it. The Feds program of purchasing its own debt had ended and while they continue to purchase MBS, the hard-core selling of the US Dollar had come to an end. That doesn’t mean that the greenback skyrockets. No way. It’s still enormously weak and the amount of debt now owed will take years to be repaid but by the same token, they can’t allow it to plummet being sold by other soverign nations either. For one, it must be somewhat propped up to appease China [our largest buyer]. It’s selloff has also inflated other countries currencies to the point where they need to somewhat deflate their own currency a tad. [There've been a few articles in WSJ and Bloomberg to this which I will hunt down and add here]
Aaaaannnnyway, while there are many more crosscurrents involved, it’s all adding up to some short term strength [chop] in the USD which is putting pressure on the market. I’ve adapted my trading style here to buy equities at the USD top of the channel and sell equities at USD bottom for as long as this pattern holds. Who knows how it will continue. Could be a day or two. Could be longer. In the meantime, I’m playing the pattern until it’s not anymore; then I’ll get long for one last leg up.
*If* investors are taking profits on their riskier positions, I’d think anything in the shaky auto industry will be one of them. Ryder [R] broke down out of symetrical triangle Friday on high-than-normal volume and now poses a low capital risk short opportunity. While I will short this Monday morning for a one-three day swing, I wouldn’t be surprised to see it come back up and re-test that breakdown resistance; at which point I will add to my position. Risk appetite and the uncertain mood of the market adds to the probablility of success in this type of trade. While I have a box highlighted for a potential target, beware that it *could* bounce and reverse off its 200d EMA. After all, the holidays are coming and Fund Managers aren’t selling yet since they came late to the [rally] party. This increases the possibility of a Santa Claus rally so I would not be surprised to see buyers lingering there, a bounce and surge back higher to at least the 50% retracement level; possibly up to 61.8% before any major profit taking.
This channel’s pretty straightforward. Set alerts for the top and bottom range. Whichever breaks is your direction to trade however, do not be surprised if it comes back to backtest support or resistance. Be prepared and don’t get shook out. A breakout would be nice b/c of the enormous 15% gap. No real resistance until the gap is filled. o/c one could trade within the channel, but how boring would that be 
[Edited to add content]
Flipping through futures charts this evening [looking for longs] I stumbled across Sugar futures coming close to the apex of a flag. Sure enough, the sugar ETF SGG is flagging and although these are typically continuation patterns, that doesn’t mean you should buy now b4 the break - here’s why. First of all I don’t endorse watching the news during trading hours [I'm a music or AMC person myself] or trading based on small news-related price swings. Such movements can fail and price reverts back to the direction of the original trend increasing your chances to be left with a loser. More importantly, however, is that flagging patterns formed over a long period of time are very often created due to mounting tension on important sector news such as earnings or, in this case, a crop report. Just recall the Duke brothers from 1983s Trading Places when Billy Ray Valentine and Winthorpe eventually destroy Randolph and Mortimer Duke who had bet heavily on the orange juice report. The Bulls/Bears argue back-n-forth over which direction the price should go until ultimately the crop report comes out and wham, one of the two parties is run over [this is why you don't trade such setups until they breakout or breakdown unless you have the stomach for large losses]. A quick WSJ news 
search revealed that not only is the sugar cane crop in India in question right now due to a lack of rain, but there is also a fairly-heated debate taking place in the country as Parliament argues over higher state-fixed sugar cane prices for farmers. Obviously seasonality has much to do with this trade and who has time to sit and watch the news reports so alerts and triggers are your tools to catch the move for future profits. Maybe an alert for an increase in volume or a close above the 100d would be sufficient but in either case, sugar’s certainly one to keep an eye one. Best of luck
Very intrigued by JCP action here. While I was originally eyeing this as a good entry level for a long, I’m not convinced that market sentiment is what it should be for the trade. After all, SPX has retraced almost a full 50% of its ‘07 high and while this doesn’t mean the market has to sell off, it does begin to make investors nervous and they begin to lighten up on their riskier positions [small caps & financials as of late]. So to enter this JCP trade I decided I’d 
better do further research. Looking around the retail sector what I found was many like JCP; already under distribution. LTD just broke down after earnings on Thursday and many others are forming triangles or in their tight little channels with weakening MACD so yeah…………….don’t think I’m ready to pull the trigger on JCP just yet. I’ve drawn another new channel on its downtrend and set an alert for a close above the 200d EMA; above that with some convincing volume and I may just take a dip for the holidays.
I’d play this pattern in miner BBL until it doesn’t work anymore. I especially like the declining volume. A short entry here with about a $1 stop above todays high and let it ride.
No, I’m not nat gas hater and no, I don’t prefer crude or solar or burning corncobs as a heating source. I’m merely playing the charts in front of me and removing the emotion by pointing out that CHK continued its selloff today and nat gas has finally broken its support, diving off the cliff into the abyss called the *gap*. It could be due to overwhelming supply. I really 
don’t know and I care not to ponder because as traders, we’ll never truly know or maybe we’ll find out in six months but ultimately, it gets us absolutely no where right now but wastes our time and energy. It’s best to simply trade what’s in front of you, move your stops and cash in as you go.
Ouch! Silver. That trade definitely left a mark and I know better than to bet against the current trend but that’s why I do my best to limit my capital risk and keep stops in place. I was able to take off 1k of my ZSL before everything fell apart but the pain [like arthritis] continues to linger which got me to thinking……. It continues to amaze me the things that have and have not worked since the March lows and it reminds me of this post from Tim Knight @ slopeofhope.com.
What Isn’t Working in 2009
- Elliott wave
- Fractal analysis
- Historical analogs
- Classic pattern application
- Volume analysis
- Fundamental analysis
- Sentiment as contrarian indicator
- Seasonality
- Intermarket analysis
- Sector rotation
What Is Working in 2009
- Buying stuff cuz Obama and Cramer told me to.
We have truly come full circle. 2009 is 1999, and the Greater Fool Theory reigns. This is getting really, really demoralizing.
I’m not one to question why [*] but it appears that CHK broke down from its triangle today on higher-than-normal volume. If so, an short entry here with a stop above todays high poses low capital risk with a swing target of at least down to the 200d and potentially $5.00 overall.
[*] It could have something to do with dropping seasonal demand. Only the shadow knows…
I could be right or I could be wrong on golds unsustainability after its last move up but here’s a play on gold miner CDE. Set a trigger higher/lower for a breakout or breakdown with volume. Either way it should be good for a $4-5.00 run whichever way it breaks
