TCM Notes : 5/4/09

• Keep your eyes on those moving averages. They have turned sharply in most sectors, and are offering trending opportunities in the other direction now. Nasdaq has led this rally, and it has now crossed back up through it's 200dma. This bodes well for other indices and their many individual sectors. Most of those have had short term average (9 and 20) crossovers, and even crossovers of the 50 and 86dma. Put simply : My price targets on most trades correspond with the 200dma now. Support levels are generally showing up at the 9,20,50, and 86 day moving averages as they rise up underneath the price moves now. Another technical thing that is happening comes out in the weekly charts. Many things are starting to get up through their 20dma in this time frame. With many exhibiting crossovers of the 9 up through the 20dma which indicates strength. This all simply translates into the intermediate direction the big money is pushing. And that direction would be UP right now. Trying to fade it remains futile and costly at this juncture.
• X is starting to exhibit said strength after finishing up on a secondary. The 200dma for them is over 100% higher from these levels. 25.50 high volume capitulation on 4/29 may have marked it's lows for now. GS had them as a short in a pairs trade with AKS. AKS being the long. X does have a lot of exposure to the O&G industry, but with protectionism starting to creep in I can't imagine US Steel would not benefit. The default etf SLX has broken out on a daily heading to it's 200dma at 41.90. SLX is also on the verge of a 9ma / 20ma crossover on a weekly chart. So you got that going for you too.
• Fed's TALF to take on CMBS paper. We knew this was coming. Barron's cover story was called "The Other Shoe." All about commercial re. Makes me want to go contrarian to them. While the pain is not over here I'm more prone to be a cautious buyer of quality names in this space even while they re-equitize themselves. RNP was a cef yielding 15% and discounted 15% to nav mentioned in the piece. The other pertinent fact was reit value has dropped from 400b to 160b with debt of 260b. 60% of equity is debt. Much more to come in this space. RNP looks like a $9 target could be achieved with support in the 4 to 5 zone.
• "Mortimer.....we're back!" Nice intro for the private equity trade. Don't get me wrong they still face tremendous headwinds, but never underestimate their sneakiness. BX just closed above it's 200dma on Friday. FIG touched the 200dma and resisted. And rounding things out KFN has just bounced up on heavy volume and could see it's 200dma soon. And that would be good for an 85% move.
• SPY and RSP continue to grind towards their 200dma. RSP is the equal weight, and it has seen massive volume inflows the last two months.
• Agriculture is picking up steam. DAG, DBA, and MOO get you done in this space.
• V looks like a better buy than MA. I wouldn't go so far as to suggest a pairs trade, but MA is hitting resistance on a weekly chart. Mid to high 50s on V could offer a nice long trade. Stop below 54.
• TMA filed for bankruptcy. I can't believe they made it this long. Jumbo loans are hard to come by in a world of negative equity.
• LFT has made a higher high after hitting it's 50dma for major support. This leads me to believe that YTEC could be in for a big move soon. Volume has been ultra thin to this point. Quant funds could target these two for a pairs trade soon, or just push YTEC as laggard catch up play. Making a directional bet without volume confirmation is speculation at it's finest!
• XLE and XLV are seeing rotational inflows. I don't condone that though, but it could be warranted.
• Looked hard at the Russell 2000 etfs. IWM is the beta 1, but we all know UWM is where the juice is. Ah, but the real juice lies in the TNA. If this rally continues the small caps should continue to perform. Moving averages set up favorably to the upside at the moment. UWM has a 26 target with support at 16. Stop at 14.
• Growth has outperformed Value in this latest up move. So it would not surprise me to see Value gain some traction this quarter versus growth. IWN is the big liquid stall worth, but UVT is the thin volume double beta counterpart. Weekly volume has picked up in UVT since March.
• HIG is seeing heavy call buying in the May 10 strike. Also, folks are selling the May 10 puts for .85. They would need a close above 9.15 for those to pay off. Bets are calling for more upside.