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.