Jim Cramer

Noise Noise and more Noise!

Posted by Investing Freak on September 06, 2011
Market Analysis / 1 Comment

The news have been going on and on about how the US economy is back to disappointing data, European countries are all in trouble as Italy is now getting thrown around just like Greece, Ireland, Portugal & Spain.

If you think the market action of the past 4-6 weeks has been on the data then please stop reading and save yourself five minutes which you can use to watch Jim Cramer over at CNBC.

On the July 28th post titled “Deal or No Deal -Debt Ceiling Edition- $SPY” I talked about how the market had been setting up and that no “Debt Ceiling” deals would matter. It was obvious a debt “downgrade” was coming but that should have been no reason for the market to really go skydiving as it did.  If you were an great A+ student and partied a bit too hard, if your next grade was an A nobody would treat you with less respect especially when they’re getting grades from B+ and lower, (the analogy here being US credit rating vs ratings of many countries in the world).

The market was simply setting up for a technical Head & Shoulders pattern and there was a great chance of it playing out (which it did). Click chart below to enlarge.

 

The chart above is an updated chart of the previous post. The light yellow represents all the time It took since my last submission to the blog. The Fibonacci retracements drawn on the monthly chart really have helped see that we were about to enter a rangebound market (the area between the Red and Green boxes).

The “crash” from 1300 to 1170’s surprised me in terms of the velocity in which happened.  I expected it to trickle down for a few weeks but when the dam broke there simply wasn’t enough incentive to stay short the weeks following as there was a great possibility for a short cover.

The suggestions I made was to buy some SH shares or SPY puts.  I did both and got out with enough profits to allow me to break away from the markets for a few weeks.  Now I am back and so are many professional traders and when they fire up their charts they will see what I am showing above. They will wait out this rangebound trade until either a break above 1235 or a break and close on Weekly chart below 1120 which could set up for another 80 point slide.

Right now we are mid range and since Daily is too noisy I’ll keep checking the Weekly every few weeks and report the progress.

 

Hope some of you made money or at least the posts have been helpful to give you a second view from a Freak’s viewpoint.]

Till next time,

K

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Market Analysis: A technical look at the $SPY

Posted by Investing Freak on June 28, 2011
Market Analysis / 3 Comments

Nearly six months ago I was wired to around 200 news feeds constantly receiving mixed news both from bearish and bullish camps and I sided with one side after doing my own “biased” research. I decided that the market was nearing a top. Ha!! Uncle Bennie wouldn’t let the party die down would he? Everybody loves the cool-aid and the party hats on CNBC keep coming back and making weird noises (yes Jim Cramer I’m talking to you haha).

Fast forward to what happened during those 6 months is summed up in one sentence. “Life happened in ever aspect, got very busy and also stopped the information flow to clear my mind”.

Now that I got that out of the way I will point out that while I took a break from financial news and focused on life I also shared informal emails with a few InvestingFreak readers.

Lets have a look at a few charts I sent out in early May, keep in mind that I like to mainly focus on the weekly for trends while trading on the daily with an eye on the hourly. I will explain why these are the only 3 time-frames I watch in an Investing School video coming soon.

The SPY on a weekly chart dated May 9th 2011. It shows an uptrend channel with the market at the very top of it poised for a correction. The green lines moving up are EMA’s which act as support.

The chart as of today shows the progress for the past 7-8 weeks where a correction did occur and it is bouncing just on top of the Exponential moving averages. There is a bit of “resistance” at 130-130.50 and plenty of support (remember this is weekly and a lot can happen within the week so remember that) at 120-125 area.

Lets have a closer look at how its doing in the daily chart to see what we should look for temporarily.  On the daily the Moving averages are hovering right above in the 129.83-130.57 range and causing the SPY to stay range-bound in this box like formation. Notice an added support line on here and its thinner than the others? That is because its drawn on the daily chart and its a way for me to distinguish importance. The past two days the market has bounced nicely but be wary of the impending resistance on top.

Going long two days ago would have been a good risk reward with a stop below 126 but at this stage going short on the daily $SPY is a better risk reward ratio with a stop right above 131.
Whatever your play is just be cautious, do your own research and feel free to use these charts and my numbers (which aren’t perfect science) to make better trades. Stops are important to being liquid and getting out when you are wrong, do not move stops if the trade isn’t going against you and until we break Pandora’s box there might be more sideways action to play with.

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Mother Nature Shorts the Market: Volcano errupts, Cramer Says the Recovery is Real

Posted by Investing Freak on April 16, 2010
General / Comments Off on Mother Nature Shorts the Market: Volcano errupts, Cramer Says the Recovery is Real

Mother nature is fed up with the mountainous stock market climb and the Icelandic Volcano has finally put a top to it.
There have been many canceled flights across Europe and airliners will be feeling the effects of the volcano for at least a quarter if not more. This is one of those news items that is still not priced into the market (at least wasn’t as of 4pm closing bell) so shorting an international Airliner should yield results (British Airways or AirFrance perhaps).

This is not just a minor news article as many airports have yet to close but will have to as the ash travels farther from its origin.  According to BBC “Such a large eruption… would have the potential to severely affect air travel at high northern latitudes for six months or more.  “In relation to the current eruption, it is worth noting that the last eruption of Eyjafjallajoekull lasted more than 12 months.”

This could be a major win for global warming activists because it might cool us down according to an article in the Guardian that states “The dust can also help reduce global warming. The effect of the Iceland ash cloud will be small but larger eruptions help to cool the planet as they reflect sunlight back into space. The 1815 eruption of Mt Tambora in Indonesia produced so much volcanic ash that it triggered the “year without a summer” that brought widespread failure of harvests across Europe, famine and economic collapse.”

Now that we established Mother nature’s attempt to stagnate or destroy the economy lets turn our heads to the lovely Jim Cramer who tells us that the Recovery Is Real!
Maybe this time, the recovery is better, Maybe it’s healthier and more sustaining. Maybe this time we’ve got it right, not wrong, and Maybe the recovery will be responsible and Maybe fueled by a longer-term health in the consumer, and Maybe it will not be turbocharged bad lending.”   Now I added a few more maybes on my own to emphasize that Maybe the recovery is real and Maybe Cramer is a genius.

We know mother nature is short and Cramer is long. Lets take a look at some economic data domestically and around the world.

US Economy:

March Foreclosure Activity Highest on Record (Calculated Risk)
7 million households are behind on their mortgages. Now that the worst of the financial crisis appears to be over, banks are finally stepping up the foreclosure process again. Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.

Weekly Initial Unemployment Claims Increase to 484,000 (The Big Picture)
Today’s Unemployment Insurance claims “unexpectedly” spiked to 484k vs. a 440k consensus, and were 24k higher than last week. Lets get to the excuses as to why the weekly claims for unemployment insurance are not dropping as quickly as everyone would like. “A Labor Department economist said this latest rise can be pegged to lag effects from the spring holidays, including Easter and Cesar Chavez Day, which is celebrated in worker-heavy California.” If that puts a dent in employment then here are the Holidays: Thanksgiving, Christmas, MLK Jr. Day, snow storms, Easter, Cesar Chavez. Upcoming next week are Administrative Professionals Day and Take Your Children to Work Day, so fear not when UI claims breach 500k again.

Empire Manufacturing Index Soars (Econompic)
A gauge of manufacturing in New York State rose to a six-month high in April as new orders advanced and employment continued to improve, the New York Federal Reserve said in a report on Thursday. The New York Fed’s “Empire State” general business conditions index rose to 31.86 in April, the highest since October and up from 22.86 in March. Economists polled by Reuters had expected a figure of 24.

World Economy:

Greece On Verge Of Activating Rescue Package (Zero Hedge)
A senior Greek Finance Ministry official told Market News that With the call for a meeting today, Greece is seeking to iron out “immediately” exactly what the details of the joint EMU-IMF plan will be, and what fiscal, macroeconomic and other conditions will be imposed on Greece in exchange for the aid. Last weekend Greece issued $2.1 billion in Bills, which auction by the way bankingnews.gr recently reported was a scam, with half the bids being fake!

Israel accuses Syria of arming Hezbollah(AFP)
Israeli President Shimon Peres on Tuesday accused Syria of supplying Scud missiles to the Lebanese militant group Hezbollah while publicly talking peace.
“Syria claims it wants peace while at the same time it delivers Scuds to Hezbollah whose only goal is to threaten the state of Israel,” Peres told public radio.

Have a good night.
-K

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