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.

TCM Notes : 7/6/09

• All the themes we are watching are still in play this week, and even gaining momentum. As I type oil is down 2+$ to the 64ish level. ERY is going to gap higher again, and it seems my 29 target may be here sooner rather than later. Concerns about demand are shifting back into the forefront.
• The Dollar is strong this morning as risk is being repriced in the equities market. This will further push commodities lower today magnifying recent weakness.
• The Goldman Sachs trading code theft story should be widely covered today. In actual trading action I wouldn't be surprised to see security software firms trade higher. MFE is in play already as a takeover target, but 42.53-.57 will be a critical area of resistance to overcome in order to keep the move going higher. SYMC and ARST should see some action. ARST is starred in my notes as is was an IBD100 member this weekend and it deals directly with enterprise security management. I can't wait to find out who the firm is in Chicago that the "spy" was going to work for. And who's server in London received the data? If it comes back to Citadel that would be the stuff of great fiction novels (or movies.) However, with the state of the world now who needs fiction?! We've got everyday life to keep us entertained and on our toes!
• Just remember if you find yourself swept up in the mania of the crowd in the next few weeks and things don't seem clear. Buy 735-745 on the SP500 if it shows itself. That would complete an inverted head and shoulders pattern.

TCM Notes : 7/2/09

• Same themes are at work in our playbook today. Give us the job numbers, and then talk about them all day.....and debate.....and ponder. I've got moving averages telling me something big is happening. Long term money is being put to work, and short term scalpers are dancing around these money flows. Yes, there are head and shoulder setups emerging on many things. However, if you look close many of them offer up measured moves that would put you into levels that correspond to a larger completion of an inverted head and shoulders base in many indices and individual equities. Meaning the buy signals would flip back to GO, GO, GO! So now that Q3 is underway we'll need to pay very close attention to the leading sectors during the first two weeks. I'm thinking we'll see carry over strength in XLU, XLV, and some select tech names.
• Oil is still meeting resistance at current levels, and a major break down into the mid 60's would be a great catalyst to send the ERY up through the 50dma. Oil coming down a dollar in the overnight session should provide a gap higher for ERY at the open.
• XLF is above the 200sma while it continues it's decent. Changing of the term structure of the moving averages from a resistive to a supportive function is the stuff bull markets are made of. Financials may not emerge as the next leader, but their participation is critical. While their shenanigans are held in much disdain the report of their death has been exaggerated.

TCM Notes : 7/1/09

• Tuesday's action chalked up distribution days for the indices. 5 for the Dow, and 4 for the SP500 and Nasdaq. This adds further mystery to daily decisions as the SPY needs to see the 9dma retake the 20dma to the upside for the bulls to take a charge back at new highs.
• Energy may be showing the signs of rolling over in the short term as an outside reversal was spotted Tuesday by Dennis Gartman. He also confirmed our hesitation in DBA and DAG as the crop report was quite bearish for the softs. While DBA could have seen a potential short term hammer trade again, it may not last long. The gap island reversal weeks before a bearish crop report lets me know that I'm not in the "know." Also it shows that I don't have to be in the"know" because it's going to come out in the charts before, during, and after the news is disclosed.
• Back to energy ERY may have a move to 29 in the cards. These ultra shorts are looking to push higher again. Looking to DUG and possibly SCO as well.
• CBG has set up in a cup with handle pattern with a buy point of 9.97.
• All other ideas are still in play.