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.