TCM Notes : 9/30/09

• Distribution days have picked up recently, but Tuesday's action was skewed due to holiday volume seen on Monday. 4 for the Dow, 3 for the SP500, and 2 for the Nasdaq now. Lot's of data points hitting today, so volatility should return to the tape. The balance of the action rests in the jobs number due out Friday. Today marks the end of the 3rd quarter as well. 1060 - 1070 is being sold for now in the ES.
• Sold UCO at 10.12 for a hard earned nickel. Tried to let it breath, but the action was such that I thought it best to remove the risk heading into the energy numbers at 9:30am ct. SCO looks like it's set up in a small flag formation and resting above some key moving averages. On top of that the 9dma crossed upward through the 86ma advancing the chances for further upside. The market is focused on demand at the moment even though geopolitical concerns are brewing. It's not my place to tell the market what to focus on. It's my job to listen to what Mr. Market is telling me. And at the moment he's telling me crude is at risk for a rude awakening to the downside if that inventory builds too much.

TCM Notes : 9/29/09

• Morning star reversal patterns were seen in many equities after a 3 day selling bout. The context of this pattern could be scrutinized as it didn't come in a long down trend. However, a 3 day oversold condition could be enough to satisfy this pattern. Confirmation would be a gap higher at the open. Financials reclaimed their 9dma reasserting their leadership within the indices. All sectors participated in the rally giving credence to the breadth of this market. I'm looking for the energy sector to assert itself here on this next push towards new highs.
• Which leads me to the UCO position. I had ratcheted up the trailing stop intraday only to cancel it when oil waffled midday. I want to give it a little room to breath, but am leery of the muted action. One would've thought oil would have at least been up 5% on the day off the saber rattling. Keeping a close eye on this one. SCO is structured technically to move higher as it has cleared most of it's moving average resistance. Whereas UCO is still beneath them all. Catching market turns is never easy and can sometimes be a costly endeavor. Our stop will be the low from Monday now. 9.96 up from 9.81. 7% stop rule calls for a stop at 9.36.
• UYG had the morning star reversal I spoke of. Strong finish on the day. Expecting some follow through as it has reclaimed the 9dma again after a test/violation of the 20dma. All the things outlined in my UYG narrative still apply. http://tcmllc.blogspot.com/2009/09/uyg-pattern.html

TCM Notes : 9/28/09

• While there was an outside reversal that occurred on most of the indexes and leading stocks after last week's FOMC meeting....my bias still remains tilted to the long side of the market. To become overly biased towards pessimism at this juncture could prove to be folly as we enter into the 4th quarter. To be sure there are plenty of short trades to be had for the nimble as we pullback into supporting averages and fibonacci levels. Obviously you don't want to blindly buy anything, but opportunities can be found on emerging patterns and tests of key moving average support.
• Saber rattling of the G-20 security council speech led me to take an after hours position Friday in UCO. UCO is the double beta on the front month of crude oil. Drawing a regression analysis channel shows that UCO is near the bottom of this range. It's overshot before through this channel, so it's possible I may have been too soon. However, my stop is near a level that may prove to be strong support. Also, this level of 10 is an area that I highlighted here months ago as a breakout level due to it's prior resistance. This level should become support now. GS reiterated their $85 target for oil by year end 2009. Dollar weakness is another factor in this play. Demand numbers are not helping this play from a fundamental standpoint, but I'm looking for geopolitical concerns to trump that for the time being. We'll see. Long @10.07 Stop @9.81 to 9.36 depending on the action. Obviously 7% max stop loss is in effect unless I add to the position on a secondary entry which would skew the cost basis adjusting where a 7% stop loss would go.

FOMC Statement

http://www.federalreserve.gov/newsevents/press/monetary/20090923a.htm

Press Release

Release Date: September 23, 2009
For immediate release
Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be 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, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will continue to employ a wide range of 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. 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 $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010. As previously announced, the Federal Reserve’s purchases of $300 billion of Treasury securities will be completed by the end of October 2009. 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 : 9/23/09

• Staying focused on UYG and IPOs this week. AONE, GAME, and ART should move. A flood of REITs coming public too as mentioned in the last note. Not expecting much from the Fed despite what some are saying.
• My efforts have been concentrated within a professional stock trading chat room the past several weeks. Real time chat with 430 folks is a very focused, fast moving endeavor. I'm getting it incorporated into my routine now, and we should start seeing benefits from it shortly. It's all about chart patterns, price, and volume. The same things we preach over here.
• Still holding GRRF too as it's up 13% now from my cost basis of 4.55. When it gets some heavy volume it's going to move 15-30% in a day. Comparable company TSTC saw a huge move yesterday. GRRF didn't get the memo though!

TCM Notes : 9/15/09

• Early morning weakness turned into late afternoon strength. Yet another sign that the bulls are still stamping those hooves. UYG continues to push near the top of this high channel that it's in. The push through 5.72 Monday to me eliminated the possibility of a small head and shoulder top. With all the top weightings pushing into higher territory it looks like UYG is getting set to push into new higher levels again.
• IPOs remain red hot this year. SWI is one that was flagged here going into it's IPO date. It saw a move with volume right through it's fresh buy point of 21.72 Monday. It's up 78% since 5/20! In the tradition of CYOU Goldman Sachs is getting ready to roll out GAME (Shanda Games Ltd. ADS) very soon. I will most certainly be looking to get in on that one. The way the IPOs have performed this year I'm surprised the media has not paid more attention. Some new filings coming soon show that REITs make up a good bit of what's rolling out. ARI, FSQR, CLNY, and CXS are just such names. GAME, AONE (A 123 Systems) , SEM, ART, and VITC are other names coming. GAME and AONE are due out next week and could make for a nice trading opportunity. ART, which is a carve out of Julius Baer's asset management business is expected next week as well, and the word is it should have some interest. http://www.reuters.com/article/marketsNews/idCNN1439382220090914?rpc=44
• This is a good place to look up info on these IPOs. http://www.renaissancecapital.com/rencap/default.aspx

UYG pattern

I've got the levels on the UYG inverted H&S. The ultimate load up zone is 4.71-5.13 on this pattern. That would be a retest of the neckline/breakout. You know which week is the head obviously (3/1.) I'm determining my neckline using the weeks of 1/11 and 8/2. The high of 5.13 on 1/11 and the low on 8/2 of 4.71. That's the load up zone. I messed up not getting aggressive in those 3's the week of 7/5, because that was the completion of the Right shoulder on this larger H&S on the weekly chart. The left shoulder was the week of 11/16/08 low of 3.22. We actually already had a smaller reverse H&S within the one we're retesting the breakout on now. Is that a one off? A smaller reverse H&S within a larger reverse H&S? The sheer idea of that results in nothing more than wildly bullish thoughts dancing across my horns! The only overhead moving average resistance now rests in the 86dma on weekly at 14.38. What is more, the moving average support beneath us ties directly into my neckline range assumption.

The current levels are :
9dma = 5.14 } .01 above the high end of the range
20dma = 4.81 } .10 above the low end of the range
50dma = 4.94 } mid point of the range

With this we are buying an option (a swap / hence the double beta) on some of the most active names in the market. And the most controversial in some respects. More fuel for the fire.http://www.proshares.com/funds/uyg.html?Daily%20Holdings

Even if there is a H&S in this upper channel on the daily right now. It doesn't matter. Why? Because the measured move down falls right into my neckline/retest/support zone.

TCM Notes : 9/11/09

• My thoughts and prayers today are with those that lost loved ones in the World Trade attacks 8 years ago. Life is indeed fragile, and should be embraced with vigor daily as we really never know when it will be our time. Today would be a perfect day to tell family and friends how much they mean to you in your everyday existence. Peace and love are the two things that we should all strive for.
• All the same market themes we've been looking at remain. However, new leadership has emerged again via the transports. That triggers a Dow theory buy signal, and refreshes the market for a further advance as the financials take a bit of a breather. GS crossed a buy point of 171.04 yesterday and continues to be a perfect barometer of general market direction.

TCM Notes : 9/4/09

• Short gold here on overbought conditions despite a technical breakout. Looking to cover off the jobs number. If the market finds hope in the number the dollar should rally sending gold and the associated miners lower. Long GLL at 13 with a stop at 12.97. Target is the 9dma on a daily chart which currently rests at 13.97. So risk .03 to potentially make .97. Don't really get that set up too often. Looking for a gap up to sell in the morning. If not the stop takes me out, and I look for the next set up in GLL. I may be too early here, but the crowd around gold now is inexperienced at best. And that will provide a great short opportunity once the metal shows some signs of a reversal. Hopefully today.

ISM sell the news

Seems that the expectations of 50.5 were beat handily today with a reading of 52.9. Alas the market sells the news. This should tell you something when the market sells good news. It was already priced in, hence the run we've had. Always be aware of this type of action. If a market is strong in the face of bad news that is not a market to go short. And a market that shows weakness in the face of good news is not one you want to be long. At least not yet.