TCM Notes : 6/24/09

• Tuesday offered up a Doji candle on the SPY closing beneath the 9, 20, 50, and 200dmas. The markets have been correcting for 7 sessions now. Last Wednesday's doji offered a tradable bounce the following sessions, but nothing more as we are firmly lower from those levels. The FOMC's statement comes out at 1:15pm ct and then things will become real interesting again. My gut feeling is the crowding of the "reflation" trade will unwind further today as the Fed shoots down inflation fears and zeros in on deflation which still looms. This should be enough to cause managers to sell the broad indices in an effort to stave off losses on their single stock positions; as most of these guys have quickly gotten net long the reflation trade again. It's crowded and when group think changes volatility picks up. 1:15pm ct we shall see.
• DBA and DAG bounced off their 86dmas. DBA reclaimed it 200sma. As with most things I'm looking at these are beneath their short term averages and they could begin causing overhead resistance.
• Some of the refiners have caught my eye for a potential tradable bounce. VLO has the most interest around it recently. FTO, and WNR are pretty liquid and offer wide volatility envelopes on their charts.
• OCN continues to stay contained within the bull flag it's forming. I need to find out when they report their earnings, but rest assured there is going to be a huge move that day. Looking for a 1.50 move up from these levels in the short term and a double in the next 12 months. At the moment this stock is still only being accumulated by hedge funds. When the larger mutual funds start getting involved then the volume should expand and the offer should lift quickly. This is a very nicely controlled uptrend.
• The oil shorts along with broad sector shorts pulled in some today as "stuff" saw a stronger session on dollar weakness. We are at the cross roads in most everything. A further correction is still warranted it seems even though we are starting to show oversold levels. These conditions can persist for dizzying amounts of time, so going against their trend is not advised here.
• Almost forgot. We had the golden cross on the SP500. It was worthy of a whimper. I was not a buyer of it. Another study was done that shows a slight edge in buying the golden cross only when the Dow Jones Transportation Index has done the same. To which it still has not.