We are not in another bull market just yet… so lets all calm down, and stop listening to Cramer. (Don’t buy ‘just because things are going up’.)
Do not forget what this rally is… its a rally due to stabalization, and that will only take us so far. We will have to consolidate this rally, which means we will be range bound for a bit.
Use caution here, seriously.
I took on a GOOG short, and some market protection. We are getting too overbought. Will add to these positions if we continue to go up.
Listening to Fast Money, via on-demand links from cnbc.com, the crew thinks 870 is a major resistance point for the SP500. I happen to disagree. I am still iffy on the current market status, as my previous post blatantly states, but part of that iffiness comes from that fact that there is weak top-end resistance.
Other then the recent rise to 870, last week, there really was not any stand alone selling in that area. Prior to last week, the previous cap at the 870 level was coming from very real, very negative internal via multiple SMAs that were acting like a concrete wall. Currently, the SP500 internals and dynamic of the market is far different, with no SMA resistance. This does not lead the SP500 to similar head winds. The real head winds have to come from outside the SMAs, and that is why I think the 900-910 level is a much stronger resistance then 870.
As the SP500 begins to approach 900 I will take on protection. Depending how overbought the market gets, I may take more of a full trading position vs protection of my core positions.
(Although I will say the Nasdaq is very near its 200SMA, and would be more cautious against the Naz.)
The market is still giving mixed signals. The market itself is indicating a continued push upward via the trend…
Yet there are a few internals that contributed to this rally are started to break. I alread showed how the metals are breaking via JJC (copper), and now financials look stressed. The XLF looks to want to test its 50SMA.
There are a few bullish undertones aswell, such as the Nasdaq (although it is approaching its 200SMA resistance) and the internals of ‘late blooming’ stocks… ie BNI and PG for example which supports the SP500.
When leaders begin to break, I get cautious. Not shorting yet, and simply waiting to act w/my core positions. But I am getting ready to short if this rally continues, and the SP500 seems out of strength.
A note… its rants like this one that give people like John Stewart the leverage to make Cramer look like an idiot when the market retests the high 700s/low800s.
using protection is always a good idea 
Now… the results were good, can’t argue with the data, so I would look to close out the protection once trading begins again (if not already done so prior to being halted… a 40% decline was far too much w/this data).
If the FDA is going to hold upto their word, they will approve the treatment based on the current data. But we know the FDA has pockets, and if they are filled, they may just want to see the final results. Or heck, they may even invalidate the data thanks to the leak in the statistics mentioned last month via the schill Forbes article.
Whatever the case, all that is left now is the political risk, and that maybe worth taking an unhedged position with the current data in hand. Especially since DNDN, with Provenge as a viable revenue generator, is worth far more than $12 per share.
A theme I have been noticing in today’s readings, banks will need to be better capitalized… ie BAC and C along w/UK regulators singing the same song.
What that means is less capital in the system, which mean less inflation. Which means to short GLD. (sorry gold bugs… its still not your time yet.)
I was waiting to short GLD, via June 91 Puts, as GLD approached its 50SMA well before today…
… but seeing today’s premarket action in GLD, the gig appears to be up (as the above realization sets in).
Despite this fact, I doubt the gold bugs will ever come to terms with it. (Once capital requirements begin to ease, then bet on inflation… but not now.)
Copper, via the JJC, appears to want to test the 50SMA, as it is broke the current support and wanting to become oversold.
If this is the case, FCX will break down from its SMA support, and most likely test 34-36 before it gets oversold and due for another nice bounce.
If playing FCX after the break down, becareful as the SMA may now act as resistance.
There is no other way to really put it, except that the analyst is an idiot or a schill. (And since the analyst is from Citi, he could be both.)
The trading dynamic of the stock has clearly shifted. The internals are far better than anything in the last 8 months. As I pointed out before, the SMAs have shifted to a much more bullish tone, and the negative trend has stopped its pattern.
A pull back is in the cards since the earnings report was unable to break BNI from its 114SMA, but the set up does not merit a ’selling-and-forgetting’ BNI. The chart set up is saying to purchase at the 32SMA support.
Also, the fundamentals matter here too. BNI is trading at a depressed multiple, rightfully so due to the economic situation, but the free fall action in the economy has ended (as the bultic dry index suggest), so too low of a multiple is not merited either.
In other words, don’t expect a trailing PE of 17 (which is where it trades at in normal times), but don’t expect a PE of 8. (I will look to sell calls, for income/protection on BNI, if its PE hits around 13-14.)
Lets not forget about the discounted cash flow… with a estimated eps of 5.00 for this year (which is conservative as they will probably do 5.20-5.50), assume a 5% growth for 5yrs (which is grossly conservative), a require return of 9% and terminal PE of 8.5 (which is also grossly conservative, as explained above)… yields a stock value of around $76, with a 5 yr price target of $106.
hmmmm… so yet again, there is shit coming out of Shiti Group.
Across the board… especially amongst the ‘gurus’. Everyone touts the premise that they are the contrarian. Despite the fact that the market has consolidated, and is no longer overbought. These extreme views are what makes really good market for traders.
But I am also getting some mixed signals on the market via the charts. I can see the SP500 going to 900-950, or the SP500 going to 780-800. (I am leaning to the higher side, but with no real conviction.)
A look at the chart clearly shows we are still in an uptrend with multiple SMA support. And those SMA are showing some bullish cross overs that confirm the higher moves.
One stock of note… and an important one since its a transport… BNI is clearly showing a change in pattern
1st – the stock riding the 114SMA
2nd – the shift in its 6 months negative trend
3rd – The 32 and 50SMAs are showing internal strength as this is the first time in 6months the 32 is crossing the 50, and pointing upward
BNI looks like it will break out to the mid 70s. (BNI is a core holding)
The traditional on-line trading broker platforms suck balls… Over the past few weeks, I have come to realise I am too quick for them, and need the more powerful platform. The trading level to which I am currently at, seconds matter, and they are costly indeed.
Was able to get into FCX and covered my protection. The broker platform was too slow for WFC… Will look to add WFC after 10am (when the market usually takes a breather after a strong rally prior to 10am… or later in the day).
Started to close some of my short positions (ie GOOG), and am looking to go long a bunch of names. The SP500 looks to wanna test around 800 level, specifically 810-820. (or at least that is the level I will cover my current protection)
Along with this consolidation move I am looking to get into FCX, FXI, PBR and JPM and/or WFC…
PBR – mid 30 (or when the CCI indicates an oversold position, especially with oil approaching a $45 level with support)
FCX – low 38
FXI – low 30, will be an initial position, but it may touch the 28 level
WFC – low 15 to mid 16 (can’t really argue w/Buffett in the Fortune article talking about WFC)
JPM – mid 27
