$IMAX: 3 Weeks Tight Pattern

I applied a Fibonacci retracement to the $IMAX monthly chart. Start point was 29.43 the high in 8/2000, and the low point occurred at .55 in 9/2001. It has essentially trended higher ever sense. Sans a few corrective waves.

Currently it just ripped through the 38.2% fib level of 11.53. Closed above it, and then it did a 3 weeks tight pattern that it has currently moved out of with volume as of today. 13.18 was the buy point in the pattern. 50% level is up at 14.95. I think that's a fair target for now. Piper's target is 16.

A 20% move from my 13.18 buy point would equate to 15.81. The 61.8% level sits up at 18.37 just in case things get real heated. 15 seems fair for now though. Today's close puts it 4.5% above the 13.18 buy point. It can be bought up to 13.83 from the buy point, or 5%.

***UPDATE : I sold this at 13.70 Thursday due to light volume, and general market weakness. 3.6% profit. I'll take it. If it holds 13.18 and can't break it on volume I will re enter. I don't want my views of the "valuation" to get in the way of a potential 3 weeks tight break out. We'll let the market be the final arbiter of what happens. Watch that 13.18 level.

TCM, LLC Tweeting Levels and Patterns Intraday

Getting more active on Twitter these days, and finding micro blogging to be a much simpler way to convey the trade. In that spirit I'm only trying to use it for actionable levels in the equities I'm following, or trading in during the day. The TCM,LLC blog will continue to play it's role as the repose of my more long winded market prose.

There is a handy Twitter tool embedded to the right that the tweets are sent to as they are made. You can follow me by clicking the follow link on this page, or you can go there and find me under TCMLLC.

Thanks, and a very warm welcome to all the new readers.

SmartHeat (HEAT)

My buy in on HEAT @ 12.25 on 11/24/09 has started to move in the right direction. With an all time high of 15.10 today along with a closing high of 14.95, HEAT looks poised to go higher yet still. Big volume came pouring into the name this afternoon with over 1.5m shares being transacted in the 1pm to 2pm cst time frame. This speaks to institutions piling in. They want to take this one higher, but they will most certainly shake the trees of weak hands along the way. So buying right is the key, as to not get shook out.

Our first buy was nothing more than a retracement level from the Oct lows to the most recent highs (post impressive eps w/ strong forward guidance.) At the time that high was 14.50. The 38.2% level from that was 12.25. That's where I got in. As of today we're up 23% on that purchase. So what now?

Well, we HOLD, and we buy more on the dips! According to IBD (to which I subscribe) when you buy properly, and your stock then goes up 20-25% in the first two weeks of you owning it. You sit tight, and give it another 8 weeks to see what it will do. HEAT's volume was up 462% today in this strong move. However, because it was sub $15most of the day it didn't show up in IBD's stocks on the move screen. It will soon though. The trend is heading for higher prices. Of course you always have your 7% stop in under your purchase price just in case it reverses. Managing risk always comes first! However, you never want to cut a winner like this loose too early, so you have to let it "breath."

And keeping with the theme of letting your winners run; I want to pyramid up in this trade. To do that I will most certainly be using major moving averages to determine support levels. However, the best method for buying right again here would be to use the Fibonacci levels again. With today's 15.10 high our fib levels move up again. I'm measuring from October's low as to capture the post earnings renewed interest in the stock.

So my adds could come at any of these new levels:
23.6% line = $13.53
38.2% line = $12.59
50.0% line = 11.83
Other levels to pay attention to would be the 9ema, 20ema, and 50sma. All of those are conveniently spread out by a dollar each here. 13.15 , 12.15, and 11.14 are where those averages were at after today's close.

All this said, if the stock reverses lower on increased volume, and starts to close in on my stop. I'm out. While I love HEAT now. I'm not in love with it if you catch my drift! Let the winners ride, and kiss the losers bye bye!

Testing The Oil Break Out

Crude oil has fallen back down through the 75 level now. Potentially erasing the break out seen from the the ascending triangle pattern in crude at $75. Sometimes these patterns see throw backs so violent they actually get halfway down in the ascending triangle base and then snap back up. Keeping the pattern valid. At the current moment with the Dubai news shaking the world markets crude finds itself trading in the high 73s. SCO should be the big beneficiary from this action during Friday's shortened trade. We'll have to see if 75 becomes resistance now in crude going forward.

UCO / USO / UHN / ERX / DIG should get hammered Friday.

SCO / ERY / DUG should move up nicely, and potentially trend for a few sessions.

DE : A Buck In It's Rut

MS put a "rare opportunity" target of 64 on DE. I missed that earlier today. However, that's the measured move out of this ascending triangle break out we saw at 48. First line of resistance is at 55. New box between 50 and 55 now. Major moving average resistance above on the weekly could keep this one contained for a bit longer giving ample time to grind toward's the measured move target. This one is a buy and hold candidate to be bought on the dips going forward for another 10$. Earnings on Wednesday before the open.

Morgan Stanley (MS) says :
" Deere & Co. was upped to overweight from equal-weight by Morgan Stanley, which lifted its price target to $64 from $48. "Demand for U.S. farm equipment is growing as customers add acreage, a secular phenomenon that is widely underestimated. Cyclical factors are also more favorable than most believe, with corn likely higher into 2010 and the potential for recovery in Brazil. We see this as a rare opportunity where consensus is too conservative on both cyclical and secular factors, making DE risk reward highly favorable vs other machinery stocks," the broker said."

GRRF 3Q 09 EPS

I decided to hold this one through their earnings ( a highly risky proposition) and it has paid off. Closed normal hours trading at 4.92 after it was pinned flat all day. Trading 5.60 here in the after hours. Showing a 24.26% gain on this trade now. Shorts are trapped here, and they could gap this one yet even higher in the morning. A very key level is the 23.6% retracement which sits at $5.27. I would like to see that level hold in as support. Holding that level would be very positive going forward. Failure to hold that level will cause me to get flat in this name. Tomorrow's action will bring in a lot of day traders, so there is most likely going to be a shake out several sessions down the road. TSTC also reports on Friday, so we have another catalyst as they are in the same sector.

The IBD investor in me thinks that this one could be a 15$ stock at some point in the future as it hits more radar screens. I don't want to make a mistake similar to STAR and get out before the full potential is met. However, these Chinese stocks are slippery as to "when the music stops" regarding accounting standards. Price and volume will guide us as to our ultimate decision. Tangible book value is reported as being 8.95, so to a value player this one is still cheap.


http://finance.yahoo.com/news/China-GrenTech-Corporation-prnews-4077980183.html?x=0&.v=1


Third Quarter 2009 Financial Highlights
-- Total revenue increased by 85.8% year-over-year to RMB394.9 million
(US$57.8 million).(1)
-- Revenue from wireless coverage products and services increased by
97.9% year-over-year to RMB309.3 million (US$45.3 million).
-- Revenue from base station RF products increased by 52.4%
year-over-year to RMB85.6 million (US$12.5 million).
-- Gross profit increased by 67.4% year-over-year to RMB105.2 million
(US$15.4 million).
-- Operating income increased ten-fold year-over-year to RMB29.8 million
(US$4.4 million).
-- Net income attributable to the equity shareholders of GrenTech was
RMB20.1 million (US$2.9 million), compared to a net loss attributable
to the equity shareholders of GrenTech of RMB8.4 million in the third
quarter 2008.
-- Basic and diluted net income per ADS(2) were RMB0.85 (US$0.12) and
RMB0.84 (US$0.12) respectively.


(1) The Company's reporting currency is Renminbi ("RMB"). The translation
of amounts from RMB to United States dollars is solely for the
convenience of the reader. RMB numbers included in this press release
have been translated into U.S. dollars at the noon buying rate for U.S.
Dollars in effect on September 30, 2009 in the City of New York for
cable transfers in RMB per U.S. dollar as certified for customs
purposes by the Federal Reserve Bank of New York, which was
US$1.00=RMB6.8262. No representation is made that RMB amounts could
have been, or could be, converted into U.S. Dollars at that rate or at
any other rate on September 30, 2009.
(2) Each ADS represents 25 of the Company's ordinary shares.

FOMC Statement for 11/4/09

Release Date: November 4, 2009

For immediate release
Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

TCM Notes : 11/4/09

Well first off let me say to the few of you that actually read my scribblings that I'm sorry for not having anything posted for the past few weeks. I've taken on a new consulting job, and it has been eating into my "analysis" time in the evenings. That said the bulk of all my market calls are being made in a chat room and thoroughly explored instantly with 400+ active traders during the day time. If interested it's a paid for site run by Daniel J. Zanger. It's $78 per month, but for an active trader it can be considered a value. www.chartpattern.com is where it's at. My handle in the room is "spm." By the time I've finished the day I'm typed out. Enough with the excuses though. Let me update.

By luck or perhaps by skill I was able to spot a gap island reversal on the XLF, UYG, and FAS charts during the session of 10/13 - 10/16. This sent a huge red flag up for me that the financials had stalled, and may very well roll over. I wanted to make sure it wasn't a fake out, so I sold only half of my position in UYG on 10/20 for 6.05. Well, the next day the other half got sold out as UYG violated it's 20ema. I was out. Now the next two sessions that followed I wasn't looking too smart, but I knew I would get back in if the resistance gap was filled. Which it did not. What's gone on since for the past 9 sessions is very bearish and could continue on for some time. Financials are offering up tremendous intra day bounces, but the swing long set up I'm looking for has not shown itself yet. This is the fourth instance that I've identified the gap island reversal in real time trading (CHK, DBA, DAG being the others) and it generally stays in place and determines the trend for some time to come.

SPY remains below it's 50ma as the DIA has been propped up by it's 50ma for the past few sessions. The moving averages I use have begun to cross down over one another as prices compress. They are now offering temporary support levels as the market comes down into them for a test. Only to then offer resistance once support gives way. It's going to take some very powerful action to get these averages moving up sharply again. The scenario I see playing out is a choppy grind lower where the averages all "tie up" and converge at some point. Then we will see which way this market really wants to break. For the moment long trades look capped to the upside.

With BRKa making a 44 billion move for BNI one would think the market would've been sharply higher Tuesday. It was not. A market tell perhaps. What it did do though was to goose the transports which have been steadily moving lower after their recent double top. IYT gaped higher reclaiming it's 86ma and closing above it's 9ema. With only the 20ema and 50ma sitting above it, the transports could re trigger another Dow Theory Buy Signal. Keep in mind a Dow Theory Sell Signal was issued shortly after the double top. This is the type of sharp, choppy action we are navigating these days as "owners" of real assets continue to restructure (bankruptcy), reassemble (sell off divisions/cut work forces), and reassert (new jobs/ipo issuance) themselves back into the economic landscape.

Still holding a small stub of GRRF as they head into earnings Nov 11. Louis Navellier issued a buy on them on 10/20 as well sending the volume and price dramatically higher. Since then I think we've seen a sufficient shake out of the hot money that was chasing it higher that day. This is an exploratory stake, and the reaction to earnings is what will determine what comes of this one.

2x As Slippery On The Upside In Crude Oil w/ UCO

My focus this week is on the front month crude contract /QM_Z and the 2x beta etf UCO. On some days the service companies could outperform front month crude, but i think the big guys are loading up for a December spike in oil futures based upon USD$ seasonalities. And that is where the action will be. The measured move out of that ascending triangle is roughly 16.68+/-. So a move to 91.68 is definitely under way now from the break out at 75. $100 is attainable, but I think the easy money will be made by buying now any serious correction down from 79 (a throwback testing the 75 break out) in front month crude. Stops at 72.50 can be placed under buys at 75 on the retest of the break out. A break below 70 would cancel my bullish view of a sharp increase coming.

For the hyperactive trader SCO can be day traded against an accumulation strategy in UCO. Longs in SCO can be deployed on down days in crude, but should exercise a "close at end of day" mantra. This should be most effective in balancing out the beta shock incurred when playing this type of accumulation strategy on a juiced up derivative etf that re balances daily. Unless of course I'm wrong about the whole trade! If so you better be able to flip flop over to SCO fast.

The front month crude break out will be uncorrelated from the broader market, and actually should cause a 5-15% correction in the equity indexes. Because generally when oil begins to become more than 4% of GDP it causes a strain on business activities. This will cause analysts to adjust earnings models again with a downward bias on the most input cost sensitive firms.

Also, I think crude may get a run at much higher levels from here based upon several other reasons. As in Saudi bail outs via the American gas pumps. And it also serves as a job creation engine as "Drill, Drill, Drill" becomes a louder chant in the Halls of Congress. In order to keep the national debt buoyed up by "friends in the Middle East" they'll drag their heels on CFTC regulations. Doing so will allow for another speculative push in oil, so that the Saudis may capture higher prices in order to give them their bail out. Also, Texas regions hit with unemployment due to uncertainty in oil prices (less drilling activity) could see speculative drills put back to work as crude moves higher. BHI has already seen the rig count stabilize and begin to expand ever so gradually again. YoY eps comparisons should begin to see double and perhaps even triple digit percentage gains going forward; as earnings begin to re accelerate against crash level comparisons. All of this will be made possible by a steadily increasing oil price.

And what about those alternative energy jobs? Believe it or not higher oil is needed now more than ever in order to push capital back into those industries too. If you want green jobs they have to be economically viable. Oh, and don't forget about Iran. Sprinkle in some saber rattling from them and add it to the above outlook, and voila`! You get a push into much higher levels. It has begun. The Speculators are on the loose again!

**UCO trading notes:
Holding 13.89 or the 38.2% retracement line is important, but could see a dip below as I expect crude oil to revisit it's 75$ break out level once more. That could make UCO dip to as low as 11.91 - 12 area if that were the case.

On the weekly chart UCO is moving out of a descending channel, and this data also translates into a bull flag on the monthly chart. All signs seem to be pointing higher in this name. A move to 10 would cancel out the bullish bias.

TCM Notes : 10/14/09

• Wednesday should provide ample action as JPM is set to announce Q3 eps pre-market. INTC already got things moving by beating their numbers and guiding higher for the 4th Q. As it stood going into the after hours close the markets were set to gap higher today. If JPM doesn't please the crowd though we could see some serious selling. Which works for me too since I want to buy pullbacks into support. However, my belief is that Jamie Dimon will speak well about the future of banking and the markets should have a 1%+ up day. A key level I've been watching in the SPY held (107.32) and after INTC reported the SPY moved all the way up to 108.52. That's a new high in this move. There are plenty of bears out there with buy stops above this level, and they are getting squeezed pushing us higher still. I actually added more UYG at 6.18 into the close of after hours trading. Today should be electric. I can hardly wait!
• STAR a company featured here back in April found itself being bought out by CSCO Tuesday morning. 2.9B or 35$ cash per share. It validates the fundamental and technical work we did in the name, but there is one thing we did wrong. We didn't hold it long enough! A nice trade from 14 to 19 is good and well, but realizing a trades full potential is something I sabotage myself on regularly. I knew STAR was a winner, but the grass looked so much greener else where. Oh well. Another lesson learned.
• BX blew threw the 15.30 buy point Monday. I would expect that level to become support.
• IT spending has already been in focus and received numerous upgrades by various analysts. While the stocks associated with this have run; they should still be considered at major moving average support on any weakness.

What Mr. Market Is Telling Us

With all do respect to the flamboyancy and arrogance of Mr. Market (an irrational man, with a disposition for brashly telling you on a whim, the worth of a viable company's market capitalisation) he is now telling us one simple thing. EMBRACE RISK! The global flow chart for capital is showing this very phenomenon now. Fiat dollars are being sold and rolled out into almost every risk asset imaginable. The fastest place to put all this capital to work at is within the equity / currency / commodity markets. Viable businesses in the real economy are seeing some forms of lending returning to their disposal (perhaps not on the terms they would like.) However, most of the money at this point in time is only being pushed into the capital markets. By forcing artificially low interest rates on money market instruments, investors are being forced to take on risk in order to capture some price appreciation. Indeed this price appreciation could go on far longer than anyone is willing to concede at this point in time. It doesn't make sense to the rational thinker. A jobless recovery. How does that work?

Well, by forcing capital off the sidelines into the waiting hands of risk; Mr. Market is able to repair the otherwise impaired portfolios that make up the entire equities universe. In doing this folks begin to get "uptick fever" again. The notion of confidence reappears within this emboldened group of investors, and then real economy decisions begin to get made. Partnerships are entered into, LLCs are formed, charitable contributions are made, tax incentives are created, and slowly but surely American business begins to re surge from the funk. Does it happen overnight? Nope. It takes time. And Mr. Market is usually the determining factor of the primary trend, so it's best not to fade his collective wisdom.

Dollar and Treasury watchers fear of an oncoming currency/debt crisis is prevalent. Rates on treasuries are too low and the steady fall of the dollar undermines our recovery. However, rates are just right for those seeking mortgages and signaling to me that capital is still better put to work in risk assets. The decline of the dollar actually fuels this move to risk, as most materials are priced in dollars. Foreign demand increases in our goods and services as their currencies give them an embedded leverage that was unavailable before now. And we begin to export our way to recovery. Except this time maybe we won't export all of our jobs. The potential for a Rust Belt revival could become self apparent. This all can go on for a while without hyperinflation kicking in as deflation remains the primary concern. The beginnings of the Fed Funds rate being raised again will not end this cycle immediately, but will be a warning that the emphasis on CAPITAL vs RISK should become our focus again. Last time the move was from 1% to 5.25%. 425 basis points higher until the risk appetite was killed. This time should see a sharper rise.

So how long will it last this time is the $2 question? The best answer is to just follow Mr. Market's lead. To fight against him is to fight in a losing battle. He'll tip his hat to us at some point in the future and let us know when he's favoring an approach to capital preservation again. It's best to look at the weekly charts to get a less noisy picture of where we're going for now. Here's a hint: think up! For the time being Mr. Market is paying up for stocks. We should listen, and follow his lead.

*** The 50sma on the weekly chart of the SPY has bottomed, and is now hooking upward; increasing by .30 last week. This is very positive from a support standpoint, and should continue to aid in the beginnings of a new uptrend.

TCM Notes : 10/7/09

• Despite a higher volume gain today IBD still has the "uptrend under pressure" status in the Big Picture column today. The level I'm keying in on for refreshed upside momentum is 105.99 in the SPY. This was the low seen on the 9/23 outside reversal day. Getting back above that level could trigger many buy stops in the market that would naturally send the index higher. There is still a 50% retracement up around the 1121 level that is a viable target. The type of action we're seeing as far as market breadth is concerned is impressive. One day the XLF will lead the charge. Another day will see the XLE lead the charge. Rotational leadership in my eyes is very healthy, and lends itself to refreshing momentum on these shallow pullbacks. Still plenty of major moving average support beneath this market. And with the debasement of the dollar one should be very cautious about holding a short bias for too long in this market.
• BSBR completed it's $8B ipo. Starts trading today. Careful not to chase this one. Fair value according to many is $13. Anything over that is nothing more than trading demand.
• The 50ma hooking upward in the SPY weekly chart is something that should be made a note of. Last time this happened was in 2003. The golden cross did not occur until 7/11/04. So this very well may be 2003 again.
• BX has been on my screen, but my attention was called back to it by another trader last evening. It caught nice support off the 50ma and saw a bullish engulfing pattern the next session. Appears to be in a cup with handle pattern as well. Buy point on this one is 15.30 with volume.
• PTEN was another one talked about. This one looks like it's finished dancing with it's 23.6% line at 14.49. That level has become support now. With the rig count starting to creep up again this one could start moving soon.
• MGM looks to have a buy point on the weekly chart from a perceived cup with handle pattern. 14.25 - 14.35 is the buy point.
• WMS has a buy point in a high channel at 44.50 - 44.90.
• WYN has a channel set up. 16.50 - 16.60 with volume is the buy point.
• AOI could see a powerful cross over soon with the 50ma crossing upward through the 86ma.
• WCRX is shaping a six week cup without handle pattern. Buy point is 23.04.
• KFN needs to get through it's 86ma on the weekly chart before it can move higher.
• AMX was raised to a buy by a few firms yesterday putting a target price of 50 to 53 on it. Something I learned in looking at this is that T owns 8% of this one.

Brazilian Watchlist

Seems that everyone wants to emphasize the "B" in BRIC again as Brazil has received the 2016 bid for the Olympics. Well that's fine, so long as you realize it has ran quite a bit already. And the growth of Brazil is not a new market theme. All that said here's my list :

• EWZ - broad market index etf
• BRF - small cap index
• BZF - real currency etf
• PBR - oil and gas
• GGB - steel (although half of their output is US)
• SID - steel (concentrated in Brazil)
• MELI - internet
• CZZ - agriculture / sugar / ethanol
• BBD - finance/banking 3160 branches
• ITUB - finance/banking 4895 branches
• STD - finance/banking 80% owner of BSBR
• BSBR - $8B ipo starting trading tomorrow. fair value $13 per morningstar
• CBD - grocery stores
• GFA - building/ residential & commercial with operations in 18 states
• ERJ - aerospace
• VIV - telecom
• AMX - telecom - this is a Mexican telco play as well, but they are large here too.
• GOL - transports - airlines

This list may expand and contract as different plays emerge. For the moment the most viable play is the BRF, and the financial names. BRF is more heavily weighted in consumer discretionary names. EWZ is more energy/finance related. Looking to deconstruct them both soon to see who the outperfomers are.

TCM Notes : 10/2/09

• We kick the 4th quarter off with a bout of selling again on Thursday. While most indices escaped another day of distribution the Nasdaq was not so fortunate. IBD has changed it's market outlook to "uptrend under pressure." Count stands at 5 for Dow, 4 for SP500, and 3 for NYSE and Nasdaq. Thursday's action was very similar to Sep 1st's action. GS lowered their job number estimate to -250k in line with what was seen from the ADP numbers today of -254k. The street is looking for -175 to -180k jobs. Not sure if we have another "less worse" rally in store. Generally these job numbers have been bought into the last few times and a trend day up has been the result. We'll know soon enough if this is the case.
• As noted in my Sep 14th UYG pattern piece we are getting near my "ultimate load up zone" in this etf. 4.71 to 5.13 is that area. Currently it aligns itself with the 23.6% fib line and the 86ma. Currently I had an after hours order in the system for a few thousand @ 5.40 or the 50ma. 5.43 was as low as UYG ticked in the after hours. I'll be looking pre market to see if the selling will exhaust itself before the market open. Jobs number will be the key to the day.
• TWI coming back down to it's 200ma would be an ideal spot to try a few long shares. GTI hitting back down in this channel between it's 38.2% and 50% line looks like it might be good for a few. HF at 6.09 would be a good spot for a few if it can hold that level which is it's 23.6% fib line. KFN still trading below management's stated book value of 5.79. Appropriate stop measures should be put in place as always on new buys. 7% stop is the rule of thumb.
• Doug Kass points out in his Thursday piece that the ISM was one of the indicators that got the upside move juiced up. It's disappointing showing the other day has juiced up this move we're seeing to the downside. If indeed SP500 eps turns out to be 73$ as is expected for 2010, then the current forward multiple rests at 14.17 +/- for the SP500. This is a level that could be perceived as "value," but we have seen instances of single digit multiples several times before. Albeit inflation levels were much higher when those single digit multiples were achieved. So whether the market is offering "value" at these levels is a hotly contested notion at best. The bears are becoming more emboldened as we sell off here. Opportunity is being created again. For whom though is up to Mr. Market to decide.
• I did get filled for a small buy of GRRF at the 50ma of 4.42. Stock closed a few pennies underneath it. Stronger support lies beneath at the 4 level. I've been buying this one on weakness since it's earnings gap in early August.

TCM Notes : 9/30/09

• Distribution days have picked up recently, but Tuesday's action was skewed due to holiday volume seen on Monday. 4 for the Dow, 3 for the SP500, and 2 for the Nasdaq now. Lot's of data points hitting today, so volatility should return to the tape. The balance of the action rests in the jobs number due out Friday. Today marks the end of the 3rd quarter as well. 1060 - 1070 is being sold for now in the ES.
• Sold UCO at 10.12 for a hard earned nickel. Tried to let it breath, but the action was such that I thought it best to remove the risk heading into the energy numbers at 9:30am ct. SCO looks like it's set up in a small flag formation and resting above some key moving averages. On top of that the 9dma crossed upward through the 86ma advancing the chances for further upside. The market is focused on demand at the moment even though geopolitical concerns are brewing. It's not my place to tell the market what to focus on. It's my job to listen to what Mr. Market is telling me. And at the moment he's telling me crude is at risk for a rude awakening to the downside if that inventory builds too much.

TCM Notes : 9/29/09

• Morning star reversal patterns were seen in many equities after a 3 day selling bout. The context of this pattern could be scrutinized as it didn't come in a long down trend. However, a 3 day oversold condition could be enough to satisfy this pattern. Confirmation would be a gap higher at the open. Financials reclaimed their 9dma reasserting their leadership within the indices. All sectors participated in the rally giving credence to the breadth of this market. I'm looking for the energy sector to assert itself here on this next push towards new highs.
• Which leads me to the UCO position. I had ratcheted up the trailing stop intraday only to cancel it when oil waffled midday. I want to give it a little room to breath, but am leery of the muted action. One would've thought oil would have at least been up 5% on the day off the saber rattling. Keeping a close eye on this one. SCO is structured technically to move higher as it has cleared most of it's moving average resistance. Whereas UCO is still beneath them all. Catching market turns is never easy and can sometimes be a costly endeavor. Our stop will be the low from Monday now. 9.96 up from 9.81. 7% stop rule calls for a stop at 9.36.
• UYG had the morning star reversal I spoke of. Strong finish on the day. Expecting some follow through as it has reclaimed the 9dma again after a test/violation of the 20dma. All the things outlined in my UYG narrative still apply. http://tcmllc.blogspot.com/2009/09/uyg-pattern.html

TCM Notes : 9/28/09

• While there was an outside reversal that occurred on most of the indexes and leading stocks after last week's FOMC meeting....my bias still remains tilted to the long side of the market. To become overly biased towards pessimism at this juncture could prove to be folly as we enter into the 4th quarter. To be sure there are plenty of short trades to be had for the nimble as we pullback into supporting averages and fibonacci levels. Obviously you don't want to blindly buy anything, but opportunities can be found on emerging patterns and tests of key moving average support.
• Saber rattling of the G-20 security council speech led me to take an after hours position Friday in UCO. UCO is the double beta on the front month of crude oil. Drawing a regression analysis channel shows that UCO is near the bottom of this range. It's overshot before through this channel, so it's possible I may have been too soon. However, my stop is near a level that may prove to be strong support. Also, this level of 10 is an area that I highlighted here months ago as a breakout level due to it's prior resistance. This level should become support now. GS reiterated their $85 target for oil by year end 2009. Dollar weakness is another factor in this play. Demand numbers are not helping this play from a fundamental standpoint, but I'm looking for geopolitical concerns to trump that for the time being. We'll see. Long @10.07 Stop @9.81 to 9.36 depending on the action. Obviously 7% max stop loss is in effect unless I add to the position on a secondary entry which would skew the cost basis adjusting where a 7% stop loss would go.

FOMC Statement

http://www.federalreserve.gov/newsevents/press/monetary/20090923a.htm

Press Release

Release Date: September 23, 2009
For immediate release
Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010. As previously announced, the Federal Reserve’s purchases of $300 billion of Treasury securities will be completed by the end of October 2009. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

TCM Notes : 9/23/09

• Staying focused on UYG and IPOs this week. AONE, GAME, and ART should move. A flood of REITs coming public too as mentioned in the last note. Not expecting much from the Fed despite what some are saying.
• My efforts have been concentrated within a professional stock trading chat room the past several weeks. Real time chat with 430 folks is a very focused, fast moving endeavor. I'm getting it incorporated into my routine now, and we should start seeing benefits from it shortly. It's all about chart patterns, price, and volume. The same things we preach over here.
• Still holding GRRF too as it's up 13% now from my cost basis of 4.55. When it gets some heavy volume it's going to move 15-30% in a day. Comparable company TSTC saw a huge move yesterday. GRRF didn't get the memo though!

TCM Notes : 9/15/09

• Early morning weakness turned into late afternoon strength. Yet another sign that the bulls are still stamping those hooves. UYG continues to push near the top of this high channel that it's in. The push through 5.72 Monday to me eliminated the possibility of a small head and shoulder top. With all the top weightings pushing into higher territory it looks like UYG is getting set to push into new higher levels again.
• IPOs remain red hot this year. SWI is one that was flagged here going into it's IPO date. It saw a move with volume right through it's fresh buy point of 21.72 Monday. It's up 78% since 5/20! In the tradition of CYOU Goldman Sachs is getting ready to roll out GAME (Shanda Games Ltd. ADS) very soon. I will most certainly be looking to get in on that one. The way the IPOs have performed this year I'm surprised the media has not paid more attention. Some new filings coming soon show that REITs make up a good bit of what's rolling out. ARI, FSQR, CLNY, and CXS are just such names. GAME, AONE (A 123 Systems) , SEM, ART, and VITC are other names coming. GAME and AONE are due out next week and could make for a nice trading opportunity. ART, which is a carve out of Julius Baer's asset management business is expected next week as well, and the word is it should have some interest. http://www.reuters.com/article/marketsNews/idCNN1439382220090914?rpc=44
• This is a good place to look up info on these IPOs. http://www.renaissancecapital.com/rencap/default.aspx

UYG pattern

I've got the levels on the UYG inverted H&S. The ultimate load up zone is 4.71-5.13 on this pattern. That would be a retest of the neckline/breakout. You know which week is the head obviously (3/1.) I'm determining my neckline using the weeks of 1/11 and 8/2. The high of 5.13 on 1/11 and the low on 8/2 of 4.71. That's the load up zone. I messed up not getting aggressive in those 3's the week of 7/5, because that was the completion of the Right shoulder on this larger H&S on the weekly chart. The left shoulder was the week of 11/16/08 low of 3.22. We actually already had a smaller reverse H&S within the one we're retesting the breakout on now. Is that a one off? A smaller reverse H&S within a larger reverse H&S? The sheer idea of that results in nothing more than wildly bullish thoughts dancing across my horns! The only overhead moving average resistance now rests in the 86dma on weekly at 14.38. What is more, the moving average support beneath us ties directly into my neckline range assumption.

The current levels are :
9dma = 5.14 } .01 above the high end of the range
20dma = 4.81 } .10 above the low end of the range
50dma = 4.94 } mid point of the range

With this we are buying an option (a swap / hence the double beta) on some of the most active names in the market. And the most controversial in some respects. More fuel for the fire.http://www.proshares.com/funds/uyg.html?Daily%20Holdings

Even if there is a H&S in this upper channel on the daily right now. It doesn't matter. Why? Because the measured move down falls right into my neckline/retest/support zone.

TCM Notes : 9/11/09

• My thoughts and prayers today are with those that lost loved ones in the World Trade attacks 8 years ago. Life is indeed fragile, and should be embraced with vigor daily as we really never know when it will be our time. Today would be a perfect day to tell family and friends how much they mean to you in your everyday existence. Peace and love are the two things that we should all strive for.
• All the same market themes we've been looking at remain. However, new leadership has emerged again via the transports. That triggers a Dow theory buy signal, and refreshes the market for a further advance as the financials take a bit of a breather. GS crossed a buy point of 171.04 yesterday and continues to be a perfect barometer of general market direction.

TCM Notes : 9/4/09

• Short gold here on overbought conditions despite a technical breakout. Looking to cover off the jobs number. If the market finds hope in the number the dollar should rally sending gold and the associated miners lower. Long GLL at 13 with a stop at 12.97. Target is the 9dma on a daily chart which currently rests at 13.97. So risk .03 to potentially make .97. Don't really get that set up too often. Looking for a gap up to sell in the morning. If not the stop takes me out, and I look for the next set up in GLL. I may be too early here, but the crowd around gold now is inexperienced at best. And that will provide a great short opportunity once the metal shows some signs of a reversal. Hopefully today.

ISM sell the news

Seems that the expectations of 50.5 were beat handily today with a reading of 52.9. Alas the market sells the news. This should tell you something when the market sells good news. It was already priced in, hence the run we've had. Always be aware of this type of action. If a market is strong in the face of bad news that is not a market to go short. And a market that shows weakness in the face of good news is not one you want to be long. At least not yet.

TCM Notes : 8/31/09

• This is end of the market commentary, but better late than never. I had warned in a note to my partner on Friday that the market was not discounting for a Shanghai index 10% drop, or a sharp dollar rally either. I also noted that the new risk with oil is being long into a weekend for the previously noted scenario. Remember when the risk was being short going into a weekend with the continuous Iranian saber rattling? Anyway, all my scenarios kind of played out today (including KFN popping 20% on an analyst upgrade.) I'm kind of at a loss to whether this marks a trend shift of the recent bull, or rather it's the welcomed dip the street has been waiting for. We buy moving average support until it is violated.
• KFN as noted above saw a sharp move of this upgrade: "KKR Financial Holdings (KFN, $3.80, +$0.55, +16.92%) was upgraded by JMP Securities to outperform from market perform and set a $5 price target. The firm said the upgrade is based on recent actions taken by management at KKR Financial, which have improved the liquidity position of the company and have restored cash flows to equity holders. The firm also said it believes that investors should also consider positive trends in the credit markets." That speaks to our target of management's stated book value of 5.79. Here in lies the dilemma. Do you chase after what is mispriced? The analyst community seems to be doing just that. So what we may think is overbought; to them is not even close to being at fair value.

TCM Notes : 8/28/09

• The market continues to show it's strength intraday with persistent bids emerging for equities on any weakness. And if the market finally gives way to the weakness there is an interesting opportunity now setting up in the 2x ~ 3x leverage space. SDS and SPXU. The super duper shorts on the SP500. There's about a 7$ differential between the two, but if you are playing with a short bias SPXU may provide a better opportunity.
• KFN looks interesting. I actually listened to their call a few weeks ago, and enjoyed listening to Leon Cooperman go after them for not paying their dividend anymore. These guys supposedly have a book value of 5.79. Which is currently the b/v being purported for C. More upside in KFN obviously based on current market prices. It may continue to rest in this channel area, but watch for heavy volume and a move above 3.20. No overhead resistance on the daily, but the 86dma is resting overhead on the weekly at 6.14. That's our target as it corresponds with b/v.

No Morning Notes?

Uh, yeah.....about that. It's all been said. The push higher off the open was there today, but the volume was a little slack to sustain the move. Many leading stocks saw sharp moves. A little Chinese stock I bought at 4.68 on Friday saw an 8% move today on better than average volume. GRRF is the call sign for that one. Rising window gap higher on triple digit eps from 8/14. Huge volume that day. Looking at the institutional holdings and they seem to be increasing. Float is tight, and it's at the magical 5$ level that mutual funds can start participating at. Looking for a double from here, but will sell and move on if it reverses. For now it looks to be trending nicely. Which leads me to this Ed Seykota video. You can google him up if you don't know about Ed. He's a trend follower as I try to be.

TCM Notes : 8/20/09

• I have to keep reminding myself that extreme patience is required when waiting for a market to retrace. That said, this may be the shallowest pullback seen. Much like the elusive head and shoulders that faked out all the bears; might we be in the midst of the August/September pump fake? Imagine a train pulling off and folks are chasing it. The train starts to slow down and those chasing decide that since it's slowing down they may continue to benefit by walking. Then all of the sudden the conductor throttles up the diesels again and the train keeps a rollin'. And now the crowd that thought they were smart to walk are now running like hell to catch that train! Such is the situation we find ourselves in with Mr. Market. And he loves to play games. Almost like when you go to let your friend in the car, and right as they reach for the handle you pull forward. That never gets old!

TCM Notes : 8/18/09

• Well the indices showed us another distribution day Monday bringing the total to 5 for the SP500 and 4 for the Dow and Nasdaq. IBD takes the market outlook from confirmed uptrend to market in correction. No new buys advised at this time. Many of the names I'm looking at now gapped lower into 50dma supports today. It will be critical to see how they respond at this level. A sharp bounce higher is the ideal scenario, but my gut tells me they will dance around those levels before breaking lower. It's the non earnings month and a half grind now......straight into the statistically worst month for the market....September. IBD had the distribution days flagged and we were getting weak before the Shanghai index broke it's 50dma. So it's funny to see the folks on cnbc asking the question if this is the pullback. Yes, this is it. How will you trade it? That's the question. By the end of the week they'll probably figure out that the market is selling off and the dollar is showing some strength. Shouldn't take long after that for a resumption of the bearish overtones to get louder causing those wanting to buy the pullback to waffle. This will create another nice buying opportunity heading into the fall. Or so I think....until proven right/wrong by Mr. Market. And he can be an asshole from time to time!
• Kudos to Investors Business Daily for calling it from a price and volume perspective daily.

TCM Notes : 8/14/09

• This is a post market note. These guys are still buying the dips as a persistent bid stays in the market. However, there is some divergence as new 20 day highs continue to come in lower as well as leadership names showing relative weakness. Oil had been showing me that it was running into resistance at 72, but the fear of a break out kept me out. The 8.8% move on SCO today was a slap in the face as we were flat in the name. In retrospect there was no reason to not be in with a protective stop at 15.38. Trade and learn I suppose. The way a survey of 250 people on "consumer confidence/sentiment" can make a market break to the downside shows me that there is still a lot of uncertainty in the minds of those that have been chasing this market. We just need to be vigilant here and place our buys at important moving average support levels to insure the best risk/reward.
• Of note to me was today's close in UYG. The 50 and 200dmas are now equal at 4.24. The golden cross is coming. We could probably see something similar to the cross that happened in the SPY when it sold off further after the golden cross. So the timing may be intricate, but the overall trend will be in BUY mode after the cross materializes.
• CISG is another breakout stock I am tracking. It broke out of a bull pennant yesterday on heavy volume of 1.2m. Today it pulled back sharply albeit on less than half of Thursday's volume. Will be an interesting one to follow as it reports eps on 8/26. This one fits the profile of a powerful breakout candidate. I took my eyes off of it as it worked things out in the pennant. Not having a price/volume alert in above the trend line left me unaware of what was happening yesterday. To me it's the first signs of really big institutional money coming in. And those are the guys/gals that push stocks materially higher. Stay tuned in to CISG.
• It was a lazy week for me as far as trading is concerned due to some new strategies I'm working on. I have a tendency to try to rationalize every move I see instead of trading the moving averages and volume as they are happening. Watched a really great interview on google video with Dan Zanger last night. I already traded this way, but need to refocus efforts on really staying focused within that strategy.

FOMC Statement 8/12/09

Press Release

Release Date: August 12, 2009
For immediate release
Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

TCM Notes : 8/12/09

• Distribution struck the indexes Tuesday as selling volume picked up heading into today's FOMC announcement. I have a couple of scenarios I've envisioned as to today's trading, but the way things are the market could break in either direction at the moment. The most critical thing will be the stance the Fed takes on it's Treasury program. Perhaps this statement could be such that it causes pause in equities and bonds? We'll know at 1:15pm, and that's what I'll be waiting for.
• Another thing I'm waiting for is the 4.60-4.80 level in UYG to pick up a little bit more. There is also a golden cross setting up in this one as the moving averages work themselves back into a bullish up trending structure.
• Oil backing down off 70 is what I was looking for, but it didn't break that level with much authority. This leads me to believe that it may still have another push higher before another significant correction. SCO will be deployed for oil shorts.

TCM Notes : 8/11/09

• Volume was lighter in a Monday pullback. I'm expecting more of the same today, but there is a retail report that could put a spark in the market. Other than that Mr. Market is waiting on the FOMC statement Wednesday.
• FRE seeing some heavy volume and upside call buying.
• Looking to buy more financials into moving average and Fibonacci supports.

TCM Notes : 8/7/09

• Volume came in lower on Thursday's dip except for the Nasdaq. Nasdaq handed in another distribution day making it 2 in 2 days. Not enough to end a rally, but definitely enough to raise an eyebrow. While some may want to sell these markets short at this level in order to play the pullback. I think more risk is inherent in that strategy than simply sitting on your hands until support levels are approached. The trick will be to not change views as the market starts a corrective phase ie: the head & shoulders hullabaloo recently transpired. The rest of what I would point out is in the shared items to the right. Waiting on the job numbers.

TCM Notes : 8/6/09

• A distribution day was handed out to the 3 main indices Wednesday as volume increased on a downside day. Most interesting to me is the relative performance of the financials. UYG looks to have air above it up to 6.60. This time stretch we are seeing in the moving averages is further aiding in flipping these markets into a longer term upward trend. At the moment I think there is some rotation out of tech into financials going on. Tech has been performing and most already had full exposure to it, but had shied away from financials for the obvious reasons. As overbought as financials are it's surprising to see them push on, but indicators be damned in this tape. Moving averages and Price/Volume are the focus with indicators serving in a confirmatory role.
• Oil continues to grind higher. I'm patiently waiting for a blow off type move to the upside, so that I may deploy SCO. The dollar continues to remain weak, but depending on what comes out of the ECB and BOE today it could catch a bid. SCO/UUP ~ UCO/UDN
• 84% of the SP500 trading over their 20dma. Looking at some of the better performing stocks from the IBD 200 composite I'm seeing some short term pausing action on many charts. Just a pause though, as there is too much support underneath us now.

TCM Notes : 8/5/09

• Another session of late day gains. Financials were strong today, and all in all things are trending quite nicely. SP500 is up 12% since the golden cross (50dma crossing up through the 200dma.) March 12th was the follow through day for the start of a new bull (according to IBD's methodology.) I'm reading stories now of Bears who made fantastic windfalls last fall and winter. Only to have given it all back pressing a macroeconomic view that has been fully discounted for in the global markets. And now saying that all they need is one more break to 935 so they can get some back. I mean I can't make this stuff up! A market that rallies on the absolute worst kinds of news is a market that cannot be shorted. Not to mention the moving averages are stacking up and trending from the bottom left to the upper right. Who needs jobs? Right? Pullbacks are welcome and support can be found in the moving averages.
• OCN was sold Tuesday morning @13.68 above the 20dma as that was my trailing stop. And quite frankly I hate it when these companies report 2 days early and at the crack of dawn. And then they announce a 250m$ stock sale too. Dilution this early in the morning?!? Sold to you buddy. I'll book the 10.7% profit. It got down and tested it's 50dma to finally bounce into the close. It could test it's 86dma as the 50dma has been tested several times lately. Too many times and it will eventually break. With the secondary looming, and the reluctance of participants in the Affordable Home programs I can't even hold this one overnight on the best of technical set ups. Perhaps after the water settles.
• Looking to the energy pits for some action today as the CFTC has another hearing today and some big names will be on hand. Already the WSJ reports that John Arnold of Centarus (5B energy fund, ex-Enron trader, biggest spec in Nymex natty gas futures) will say that the pension funds need to be shown the exits in this market. Also he's talking about having a cash market seperate from the physical hedgers. Energy inventories are also due out at 9:30am. A draw of 1.2m was reported by API, but another build could be in the cards. Traders will be waiting for the number. Whichever way it breaks on the number is the way the market will trade the remainder of the day. SCO/UCO are the vehicles to play.

TCM Notes : 8/4/09

• Nice round numbers have now been achieved across the board. Now what? There are some events that could cause a nice dip on any given day, but I don't think it will be enough to slow the stampede. The Bull is out. Most charts I look at are turning all out bullish on daily time frames, weekly charts are bullish with price targets of potential resistance above, and monthly charts are beginning to show a turn albeit not confirmed fully yet. Futures pointing down at the moment, but with hoofs stamping in Boston you have to watch for the dips to be bought with conviction.
• CNB didn't fill for us as the actual trading differed dramatically from our envisioned scenario. Low was made in the second and third minute of the open with the high coming 37 minutes after that. After that was an 84% retracement and chop in a .02 range for the remainder of the day. Volume was 14m way less than the 26m I was looking for. Interesting storyline here, but no order tickets from me.
• IPOs continue to show impressive returns this year. Looking for more follow through on that theme. Finance, software, and China specific issues have fared the best. I'll be looking to participate more actively in these issues on at least a 90 day cycle once they've started trading.

TCM Notes : 8/3/09

• Welcome to August's trading. Let's get after it this month! I'm looking for a final push higher going into Friday's jobs report. And then we may see a sharp reversal. A correction if you will. It's healthy, and it will provide for even better risk/reward set ups. The urge to chase is showing up in the futures this morning as the /ES marches to 995 on it's way to the fabeled 1000 level.
• My focus at the open today is CNB. It's an event day for them as they had critical news come out in the after hours Friday and traded down 11%. I will be looking for it to make a low in the first 80 minutes of trading, and then will be looking for a retracement trade. A 23.6% retracement from the morning low is the most likely scenario. 50% is probable. My view is you'll see panic sellers and then some analysts will circulate their "opinions/rumors" around to the hedge hogs and trading desks and a rally from the lows will ensue. This for me will be a one day event. You could push it to a two day event, but the risk profile in my opinion increases with that. Looking for volume north of 26m. The FED has given them until August 21st to get their Tier 1 up. FDIC takes banks over on Fridays and Saturdays, so if they make it to the open there should be wild action all week. Think CIT when they had the incredible two trading days when their news first broke. TRADE THE EVENT!
• Dude, I got a Dell! Ordered a new Inspiron 15 as the deal was just too compelling to pass up. For a little extra I walked it up to the t6500 chip, 4mb cache, intel 5100 n card, and a HD 1600x900 true lite screen. 583$ tax and total. Versus models for 499$ this one blows them away. 9.25% tax in TN, so that was 49$ of it. Sale ends 8/6/09 @6am. Without upgrades 399$.
• Keep an eye on the relationship between SCO / UUP and UCO / UDN. First pair is oil down / dollar up. Second pair is oil up / dollar down. Oil through 70.50 at the moment. Looking for a push to perhaps 73-75. This one will reverse hard on job numbers too, so watch it closely. Trailing stop took us out of ERY Thursday morning (to which it's tweeted on the right) on that sharp reversal back up.
• XLF and UYG are shaping up into potential up trending environments as their moving average structures are beginning to offer support to the pattern. Looking to add on any considerable weakness.
• OCN still holding as the earnings date is Thursday 8/6. Looking to be a seller on a wide range candle.

TCM Notes : 7/30/09

• Well we were dead on the money in our ERY play as the crude oil inventories showed a build of 5.1m barrels. We gapped up and ran, but I didn't cash out the position. I will say I screwed up with this one because it's not 100% correlated to the futures contract. Much like DUG it has exposure to the actual oil companies ie: integrated, service sectors. I should have gone with SCO, but I got wrapped up in the whole triple beta thing. SCO was up almost 13% as it doubled the move seen in oil. Lesson learned. While earnings will still support a bearish tone in the energy names, and ERY should go higher still, my aim was to purely short oil. Trading 63.50 in oil now in the overnight session up .15. It could have a bit of a rebound, but if it gets up to 65 I expect it to be sold with vigor again.
• OCN continues to move higher up 14% for us now. Haven't added to it, but a dip to the 20dma or 50dma would cause me to add. More than likely it will continue to stretch out these averages going into earnings, and then a final thrust before pulling back. We shall see.
• CBG is in a clear uptrend as defined by my moving averages. They are "stacked" as I say. Meaning the order is 9, 20, 50, 86, 150, and 200dma. That's when you have support beneath an equity.
• Consensus on the SP500 is calling for a breakout upward from the flag formation. 1000 is the obvious target.

TCM Notes : 7/29/09

• I must say Tuesday was a great day for me. Not because ERY gapped up and confirmed my short oil bias, and certainly not because we are now up 13% on OCN. No, none of that. What made my day was the new platform rolled out by TDameritrade due to the acquisition of Think or Swim. And it's awesome! I have live futures quotes now, I have an active trader matrix, prophet charts, all kinds of risk tools, more bells and whistles, and it even has CNBC embedded into it! I'm like a pig in shit today! So as you can see I'm remotely pumped up about the new platform. Command Center was getting old, but I'll still run StrategyDesk alongside the TOS platform. This is going to take us to a new level as we have all the critical data inputs that we were lacking before. For instance I have time and sales and all that jazz on /QM(U9) (that's the front month on crude oil) right now and they are hitting the bid. 65.55 now down 1.68! I love it because I added more ERY @ 18.36 into the close (.02 off the low!) And it should gap up very nicely for me when the bell rings.
• I've got some other trades I'm looking for setups in. CISG, RAX, UTA, VIT, EXAR are just a few. More to come, but it's very late as I type this and I'm hanging it up now.
• I hope they give the Tomahawk chop to crude for the balance of the day today. Inventory numbers will be a key data point. And the whole CME / ICE cat fight in front of the CFTC is cute as well. That should keep some uncertainty in the crude ring. I say we see 60 before we see 70 again.

TCM Notes : 7/28/09

• The indices continue their march higher, but in my eyes the prospects of a pullback from these highs is almost a certainty. Early weakness reversing into strength at the close is typical behavior in a bull market. The pop and drop seen after the housing inventory numbers to me was kind of a tip of the hat that a sell off is near. I'm not talking about some major sell off, or anything cataclysmic, but a nice tradable pullback. If for nothing else but for those chasing to get in, so as they may have a chance to load up from a lower level. Why didn't they do it already? Because most are still shell shocked from the beating that ensued for the bulk of the last 18 months. And the real economy is still facing a series of hurdles going forward. This should lend way to some more chop in the market. Longer term moving averages should be used as support zones and areas to begin long based accumulation. At the moment the speed at which we are moving towards 1000 on the SP500 makes me wonder if we won't achieve the newly raised target levels now, and then drift into the holidays.......with no Santa rally in sight. Looking that far out is jumping the gun at best for the moment.
• Decided to go long ERY again Monday as I think oil is too expensive at the 68 level. Not to mention the CFTC will be holding hearings on speculative abuses in oil futures this week. To me crude was flashing some weakness despite the little mark up into the close. I realize many have 70-85$ price targets set for crude, but likewise there are 55 to 30$ forecasts swirling around as well. JPM said they see the average at 55. For me I see a trade that has a decent risk reward set up. I've taken a starter, and more than likely will become bigger in it today. Last time I only scalped it for the dollar. Hopefully this time I can hold out for a more significant move. Anyway, we are shorting oil here using the ERY. DUG could be deployed for this trade as well. Another catalyst for this trade could be some dollar strength. My view on that is if the Treasury auctions go well this week it should goose the dollar a little bit. We'll see.
• OCN is now an 11% gainer for us. Earnings August 6th. I don't have near the size I would like on this one to "make it count," but it will most certainly give me another opportunity to catch it on longer term supporting averages. The 20dma has been holding and advancing it higher to fresh new highs as it marches towards it's earnings release. More than likely I will be a seller that day.
• SDS is looking appealing for a trade at these levels. This would fit into my pullback theme, but it may only prove to be a very shallow pullback.

TCM Notes : 7/27/09

• The rally over the last two weeks has erased all the distribution days, and has confirmed the market's uptrend. From Bernanke to Art Cashin the consensus seems to be to hold your nose and buy. While I agree the markets have flashed confirmed buy signals, being a market timer, I would caution about chasing strength when conditions are getting overbought. With over 85% of stocks trading over their 20dma there is room for a pullback. There is also plenty of economic data on the horizon to lend way to a modest pullback.

Trade Update for TYP

Stopped out of TYP mid session today. Of course after hours all of today's loss has been erased as MSFT and AMZN have disappointed. That's how it goes, and that's what stops are for. Could have been the complete opposite and a 7% loss could have accelerated into a 10+% loss.

Today's action was odd to me and had the feel of a blow off top, but adding to losers is not how you properly manage a trade book. And when taking such bold trades as fading a forceful trend......go small so the stop doesn't have a devastating impact on you mentally or financially.

TCM Notes : 7/22/09

• New highs, eh? Okay, but don't say I didn't short you! Futures are pointing towards a lower open as I type this, but that doesn't say anything about the final outcome today. With the earnings beat rate being better than 71% at the moment it's foolish to really get heavily short anything here until the catalysts run out. I took at stab at TYP near the close yesterday. Nothing big. A small stub to see if the bottom was in. For a while with YHOO and AMD selling off I thought I might have been in today's upside mover. Then AAPL crushed their numbers, and I think it has a 13% weighting in my TYP 3x short. That's what stops are for! Updates to follow.
• OCN continues to make higher highs and higher lows. The 20 has offered stronger support the last few sessions. I like that because it shows that folks are willing to stay with the strength demonstrated in OCN's trend.
• Many banks report today, but Nasdaq strength could mitigate any losses seen in the financials. Of course I'm looking for a pullback in tech, but that's like pushing on a string at this point.

Fighting a Trend

I went long TYP into the close at 16.86. Why? I was feeling a bit contrarian as everyone was chanting about the strength of the Nasdaq. YHOO, AMD, and AAPL were set to report in the after hours. YHOO missed on a few metrics and goosed TYP a little. Then AMD missed big time and goosed TYP a little bit more. And then AAPL. At first blush I thought they missed and I was going to be to the good fast, but they didn't miss (b/c they never miss!) With AAPL trading at highs now in the after hours up 5.50 I don't see it pushing higher tomorrow. My stop loss on TYP sits in the high 15s, so perhaps I won't get blown out of the trade. The trend is very powerful in tech and I knew that going into it. If I get an outside reversal day tomorrow in AAPL and some general weakness in tech I will add more TYP unless of course I get stopped out.

TCM Notes : 7/20/09

• The weekly moves of 7% on the indices were similar to the powerful moves we saw on the follow through week in March. The likelihood of SP500 at 1000 seems more plausible as we got a peak at some decent earnings from some tech bellwethers. The semiconductors are leading the way this year as is seen in fresh bull markets. Waiting for further confirmation at this point is a fool's game. The market has confirmed the trend now once again. Dips are to be bought going forward.

TCM Notes : 7/16/09

• 3% moves across the indices Wednesday are reconfirming the recent confirmed market uptrend, and they are providing maximum pain for those heavily short. The boys in Boston were snapping up stocks with volume today across the board. We'll have to see if the earnings can continue to impress investors moving forward. JPM, GOOG, and others will report today. JPM will set the tone for the day in the morning. Needless to say Jamie Dimon's commentary and guidance will be relied upon for quotes all day.
• CIT being halted almost got me yesterday. I had an order ticket punched up and was waiting for the pullback to 1.61 for an entry on an afternoon delight trade. Thankfully I got caught up in an email and didn't submit the order. It never came back to 1.61 before being halted, so the order wouldn't have been filled anyway. These are the types of traps that lay in wait when dealing with these special situation plays. Talks have failed with the government and bankruptcy should be upon them by Friday. Will be interesting to see what they do with themselves, and how the common trades once the halt is lifted. My gut tells me that the low of 1.08 is coming fast, and most likely zero by Friday.
• OCN continues to behave properly and sits 5.7% higher from our 12.35/12.40 buys. Looking to add more on any weakness. Earnings are August 6. More than likely I will be a seller of strength that day.
• The UYG position still remains and is beginning to close in on it's continuosly dropping 200dma. JPM is a huge component of the XLF and UYG, so a big move from them today will push the financial etfs higher yet still.

TCM Notes : 7/15/09

• I've been focused on CIT this week. Monday and Tuesday offered tremendous trading opportunities as Fibonacci retracements provided support and extensions offered realistic targets for long based trades. Well the volume is still high today, but dying down compared to the 200m, and 150m share counts Monday and Tuesday.
• The market itself has enjoyed more positive earnings out of a few stalwarts, and is reacting by doing the opposite of the consensus view. That head and shoulders set up that was so obvious to all is now proving to be a pain for those that were heavily shorting those levels. Buy stops have most certainly been run on these guys and a squeeze has ensued. I guess this is why the rule on shorting a head and shoulders set up is to WAIT for it to break the neckline.
• Haven't added anymore OCN as it has popped 5% from our buy point. I will pyramid up in this trade, but I will only do so at the 50dma. That currently stands at 12.52 today.
• One positive developing today is the reclaiming of the 50dma by many names.

TCM Notes : 7/9/09

• We saw some volume on Wednesday. Morning star reversals were seen in the 10 minute time frame on many of the things I was watching. This made for some good long trades into the close.
• I was a buyer of OCN at 12.35 which corresponded with the 50dma. Support came in big at that level.
• ERY hit it's price objective and could see some consolidation for several sessions. If one felt so inclined they could play ERX for the bounce. Oil is up $1 in the evening session, so we should see some carry through to the long side today. For a trade only.
• TYP still interests me very much if the leadership in the Nasdaq continues to deteriorate.
• All other themes remain the same.

TCM Notes : 7/8/09

• Markets escaped distribution Tuesday as volume was lower than Monday's. IBD did change their market outlook to uptrend under pressure though. The head and shoulders pattern that has persisted amongst the indices looks to be taking control. A break of the neckline will be needed for most to ratchet up the selling. That level varies depending upon who you talk to. 870-880 is the range given. A break of 880 could precede a move to 810, and an overshoot of that level could see the larger inverted head and shoulders pattern complete. We'll take it a session at a time though.
• ERY could see some resistance at 28.45 today. This corresponds with the 86dma and I suspect it will provide consolidation much like the 50dma did. Of course then we gapped through it to higher ground. We could see a similar pattern unfold with a target of the 150dma currently at 33.41. It almost appears that this one has completed a bullish inverted head and shoulders pattern. Only until all moving averages are beneath can we say this is in an uptrend. With the CFTC reviewing the oil casino for the next two months we may just see cooling out in crude. And that would be a good thing for ERY.
• OCN remains strong amongst weakness. This one has a story that is not widely followed. The high volume up days are a dead give away that this one is under accumulation. They should report earnings around August 4th. I'm expecting a measured move higher establishing a whole new trading range.
• XLV, XLP, and XLU are looking to provide shelter during this correction. The bias has certainly made the rounds recently. And when it becomes the consensus view it will garner momentum. And then those who made the bias available will use those levels to scale out. And this will give way to the next quarterly rotation.
• As the Nasdaq continues to breakdown TYP could be a nice way to capture the move. It's long counterpart TYH is trading at 77.50 and breaking down. TYP is showing me some very bullish signals. It's finally garnering some attention via the volume expansion. There was a hammer low recently. 20.17 is the low from that candle which will serve as the ultimate stop on this, and it also represents a double bottom. It's had a sharp move, but I expect it to consolidate around the 50dma before heading higher towards the 86dma. That would make for a target of 32.72 at the moment. I'm going to try to pick some up around the 9dma or 20dma. The 9dma is setting up to cross up through the 20dma which is another bullish move.

Long on Clairvoyance!

Seems that my assumptions on ERY were spot on for the past 17 sessions. As we finally get the news today that speculation in the oil pits is going to potentially face some restrictions. The rogue trade at PVM last Tuesday I believe was the tipping point, although this has most certainly been in the works.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1.QbgWdF8aY

http://www.nytimes.com/2009/07/08/business/08cftc.html?partner=rss&emc=rss

http://www.cftc.gov/stellent/groups/public/@newsroom/documents/pressrelease/genslerstatement070709.pdf

Cramer's take is similar to my own.
http://www.cnbc.com//id/31781232

TCM Notes : 7/7/09

• Nasdaq chalked up another distribution day bringing it's count to 5; although many say the volume comparison to Thursday is unfair (being a shortened holiday week and all.) No change for the Dow which stands at 5 and none for the SP500 which stands at 4 still. The correction continues on as some sense of perspective is starting to overpower the hopefulness reflected in the recent rally off the lows. While this re pricing continues on I'm sizing up some small/mid cap names in several recovery sectors. GTI is one that comes to mind. They make graphite rods used by mini mills to make steel. Seems to be a good high beta play when capacity ramps back up in the space.
• XLP, XLV, and XLU should continue to see money flows in the 3rd Q. This is the exact opposite of the risk trade that has been deployed recently encompassed by SPY, XLF, XLY, XLI, XLB, and XLE. Those have all rolled over. Dr. J noted over the weekend that from 49 years of data the 3rd quarter usually sees the health care and staples outperform the financials by roughly double. This fact continues to play into our view that rotational money flows will continue to push those laggard sectors.
• OCN is still trading in a tight range. I'm becoming more bullish for them as 36% of the Q1 modifications are now currently delinquent or are foreclosed. I believe they benefit further if the people actually foreclose, but I need to check that fact. I'm still shaking my head over the fact that Freddie is accepting 125% loan to values.
• An 8yr high of 262 companies have issued debt so far this year. Investment grade debt of 301B that is. Even MSFT, IBM, and CL have gotten in on what Bloomberg calls the Money Dash.
• ERY had a great day Monday as oil broke down some more. I'm looking for at least a 60 print while expecting a break into the 50s for good measure. All the excess demand in the system is for paper barrels and that wreaks of speculation. Or as one analyst called it "money flows that are speculatively oriented" because he didn't like to call it flat out speculation. Needless to say with the Hill looking at selling some sweet for sour from the SPR these pecker woods had better watch themselves. These electronic oil casinos pose true systemic risk to the global economy as a whole, and a move favoring wet barrel operators may be what's in store for the future. Look, I'm a speculator, and I don't want to see free markets tampered with; but the fact of the matter is they are being tampered with by investors now. So much so that we have been paying too much for gasoline compared to inventory levels all because a crowded long trade had RBOB futures selling for a premium. The hack lawyers on the Hill are going to do something here. What I don't know, but I wouldn't be getting to heavily invested in energy at this point in time.