Weekly Picks- Buy:IYR,XLF Sell:DRYS,SRS,SKF,SMN,VXX
This week was mostly a reversal of calls made last week, the only new call is a Sell on DRYS.
When the week moves in a range (market Zig Zagged 30 points up and down) they are called False Signals because my system is a trending one.
Nobody has called me out on my calls but this is the first back to back week that signals have reversed in my blogging days so I thought I'd clear the air 
.
I will be introducing a new Feature this week. A chart to accompany each call. The charts are 3 months and they show all signals that might have occurred during that time-frame.
Red Dots means SELL and Green dots signal BUY. Simple enough? Great Let's get started.
Here's a look at SPY SPDR S&P 500 ETF Chart
(Click to Enlarge, Same goes for the rest of the charts)
Upgrades
IYR iShares Dow Jones US Real Estate (ETF)
Upgraded to BUY on Apr 21 at $52.23
XLF Financial Select Sector SPDR (ETF)
Upgraded to BUY on Apr 21 at $16.74
Downgrades
DRYS DryShips Inc.
downgraded to SELL on Apr 19 at $6.20
SRS ProShares UltraShort Real Estate (ETF)
downgraded to SELL on Apr 21 at $26.98
SKF ProShares UltraShort Financials (ETF)
downgraded to SELL on Apr 20 at $17.32
SMN ProShares UltraShort Basic Materls (ETF)
downgraded to SELL on Apr 23 at $32.37
VXX iPath S&P 500 VIX Short Term F
downgraded to SELL on Apr 20 at $18.27
Disclaimer:
I am only giving the latest signal for the stock mentioned. Use at your own risk and make sure to take the date into consideration. If you have been trading for a while you should have realized that relying solely on the strategies of others (think Analyst Opinions) will lead to failure so please only take the signals I provide just as another indicator in making your informed BUY or SELL decision. Now go Make some MONEY!
-K
A Special S&P 500 Chart courtesy of Investingfreak
This weekend I will share with you a chart that I view at the end of every week.
When I glanced at it last night i saw that we are right at the bottom of a trending channel.
It will be an interesting week coming up so I decided to finally share it with the rest of the world (including the masterminds at Gold in Sachs)
As always click the above image to enlarge. Since a picture is worth more than a thousand words there is no need for me to comment on it further.
Have a profitable week ahead.
-K
Nightly Recap 3-23-2010
Market Summary:
DOW +102.94 (10,888.83)
S&P +8.36 (1,174.17)
Nasdaq +19.84 (2,415.24)
Nightly News Links
US Economy:
Existing Home Sales fall further in February (The Mess That Greenspan Made)
The National Association of Realtors reported that sales of existing homes fell 0.6 percent in February after a drop of more than 7 percent in January and sales are now at their lowest level in eight months. It's probably best not to make too much of the winter data for existing home sales because it is a very slow time of the year but, the "Months of Supply" metric certainly looks to be going in the wrong direction right now.
What is the Homebuilders Index pricing in? (Investment Postcards)
David Rosenberg, chief economist and strategist of Gluskin Shedff & Associates, states that his regression analyses show the Homebuilders Index to be pricing in the following:
Housing starts: pricing in a level of 800-900k (versus 575k currently)
Existing home sales: pricing in a level of 5,500k (versus 5,050k)
NAHB Housing Market Index: pricing in a level of 35 versus 15 actual.
Is this the most expensive part of the US stock market?
US Debt Update: 6 Months To Revised Debt Ceiling Breach (Zero Hedge)
As a reminder, the debt limit is $14.3 trillion. We are $1.7 trillion away from the limit. At March's run-rate of about $300 billion per month, the debt ceiling will be breached by October 2010. If somehow the government manages to reduce the monthly issuance to "just" $200 billion, we have eight and a half months until breach, or January 2011.
World Economy:
Spain to join Portugal in issuing Dollar-denominated Bond (Zero Hedge)
Yet more countries are anticipating the Fed finally killing the dollar sooner or later, as Spain now joins Portugal in issuing dollar-denominated bonds. If Europe's most insolvent countries are getting on board of the asset side of the Fed's balance sheet, it can only mean one thing: the odds for the winner of the currency race to the bottom are squarely in favor of the US currency. (K remark: I really see this as a contrary indicator being that there is an imbalance in those countries who are betting on a collapse of the dollar.)
Germany Sets tough terms for EU help for Greece (Reuters)
ermany signaled for the first time on Tuesday that it may accept European financial aid for Greece as a last resort, but only if the IMF is involved and euro zone partners accept tougher budget discipline rules. "The condition for action, as a last resort, is that Greece's financing on the capital markets is exhausted," the official said."Furthermore, it would be necessary for the International Monetary Fund to provide a substantial contribution," he said, stressing there will be no decision on actual aid at the summit.
Interesting Reads:
Jim Rogers Starts Some Short Positions (Market Folly)
Potentially the most notable bit of his conversation was when he said, "I had no shorts for about 15 months so I started putting out some shorts recently. But the fact that I've been putting out shorts means the stock market won't pull back." So, it's interesting to see Rogers fight the current trend. In his mind, it's the right play, but he knows he's going to potentially feel some pain first.
Morning Humor- American And Greek Capitalism Explained (Video) (Zero Hedge)
Explaining US economics (with an emphasis on generally accepted criminal accounting practices).
Have a Good Night
-K
Nightly Recap 3-15-2010
Market Summary:
DOW +17.46 (10,642.15)
S&P +0.52 (1,150.51)
Nasdaq -5.45 (2,362.21)
Nightly News Links
US Economy:
NY Manufacturing Index Shows Strength (Econompic)
Manufacturing activity in the New York region continued at a solid pace in March, the New York Federal Reserve Bank said Monday. The new orders index shot up 17 points to 25.4. Shipments also moved higher. Inventories climbed above zero for the first time since August 2008.
ECRI Leading Economic Index Drops For 12th Week In A Row (ZeroHedge)
Leading indicators in the U.S. are telling a similar story about a possible double-dip. Friday’s reading from the ECRI continues to show a weakening recovery. Their leading indicator’s growth rate fell to a 31 week low. The smoothed ECRI leading economic index for the U.S. fell last week for the 12th week in a row, to stand at its lowest level since July 2009. Something tells us a slowdown is about to start.
World Economy:
Moody's warns nations to cut spending or risk AAA ratings (Washington Post)
The United States and other top world economies need to make potentially painful government spending cuts or risk losing the high-grade credit ratings that have kept borrowing affordable, the Moody's rating agency said Monday. Outlining the dilemma faced by policymakers in the United States, Great Britain, Germany and France, Moody's said that debt levels in the four large credit-worthy economies had reached the point at which they are at risk of being downgraded -- a step that would drive up interest rates, increase borrowing costs and mark a turn in perceptions about the world economy.
Germany's Manufacturing Jobs Fell 4.9% in January (Business Insider)
The Federal Statistical Office said Monday the number of Germans employed in manufacturing fell to 4.9 million workers from about 5.15 million in January 2009.
Chinese Economic Indicators Are Starting To Roll Over (Pragmatic Capitalist)
“Early signs of softening in data momentum suggests we should be much more cautious about corrections in those markets that benefited late last, and early this year.” Despite being the strongest leg of the economic recovery, Chinese investors have turned remarkably cautious in recent months. The Shanghai Index peaked in July of 2009 and has traded down ever since. The index has declined 9.5% this year while U.S. investors have continued to run head first into stocks.
Interesting Reads:
Consumers Don’t Strongly Identify with Brands (Marketing Charts)
trendwatching.com calls these products and services “functionall,” or providing function for all. Often designed for lower-income consumers in emerging markets, they also have broader crossover appeal for more affluent consumers in mature markets. Look for brand manufacturers to produce more of these products, and for more global brands to try to penetrate mature economies.
Is The US Preparing For a Strike on Iran? (HeraldScotland)
Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran.The Sunday Herald can reveal that the US government signed a contract in January to transport 10 ammunition containers to the island. According to a cargo manifest from the US navy, this included 387 “Blu” bombs used for blasting hardened or underground structures.
National credit card statement (Cracked)
A National Debt happens when governments spend more than they actually have, and everyone getting the money agrees that's absolutely fine.
60 Minutes: Michael Lewis' The Big Short - Video (CBSNews)
If you had to pick someone to write the autopsy report on the Wall Street financial collapse 18 months ago, you couldn't do any better than Michael Lewis. He is one of the country's preeminent non-fiction writers with a knack for turning complicated, mind numbing material into fascinating yarns.
Part 1
Part 2
Have a Good Night
-K
Apple Poised For a Big Move $AAPL
I have been watching Apple Inc. ( $AAPL ) form a symmetrical triangle for the past two months. This is a Continuation Pattern, which means that the triangle is used as a way to head higher if the trend has been upwards and with AAPL it has been.
A symmetrical triangle is generally regarded as a period of consolidation before the price moves beyond one of the identified trendlines.The sharp price movement that often follows a breakout of this formation can be captured by traders who are able to identify the pattern early enough.
The Symmetrical triangle pattern needs to have a few things working for it and we will check them off here.
1. Trend Should be at least a few months old: Check !AAPL is from march to december.
2. Duration of pattern should be at least 3 weeks old: Check! This pattern is 6 weeks old.
3. Breakout occurs between 1/2 to 3/4 of the way through the pattern: Check! It's about 3/4 of the way.
So now that we checked a few major points off let's look at a price target. We take the distance from the widest end of the triangle and in this case is around $20.
From the breakout at around $200, this being a bullish trend apple has been in we add $20 to the upside and put it at ~$220 for a potential breakout target.
There are a few hurdles here for AAPL though the $207-208 area is major resistance so if it can break that $220 is well in sight.
I bought a January $230 Call option at 0.23 to prepare for the move instead of putting major capital in the stock
Here is the chart (Click to Enlarge)
Update: I tried posting it last night but my host was down so i gave up. $AAPL is currently at ~$207.50 (in between the resistance I mentioned)
I have also sold my Call options for a hefty 140% Profit from yesterday's buy-in price, if Apple breaks above 208 I might be re-buying some.
Merry Christmas!!
Volatility Index $VIX Is moving higher.
On Friday The VIX went up 23.95% while the market fell well over 2.5%.
VIX is a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index, it represents one measure of the market's expectation of volatility over the next 30 day period.
With the upward movement in the past 2 weeks the VIX has successfully broken a trend line going back to November 2008
See Attached Image (Click To Enlarge)
The VIX also had a bullish candlestick pattern on the 2D frame (2 days per candlestick)
Defeniton of this candlestick pattern is quoted below from Candlesticker:
Bullish Three White Soldiers Pattern is indicative of a strong reversal in the market. It is characterized by three long candlesticks stepping upward like a staircase.
The following are two charts; one showing the Three White Soldiers pattern on the 2D chart the other showing it on the hourly.
2Day Chart (Click To Enlarge)
And finally the Hourly chart (Click to Enlarge)
What does the bullish Vix momentum mean? Well by itself it means nothing to me. But when combining it with the increasing TED Spread, Broken S&P trendline, Numerous bank failings each weekend and many more indicators then it all signals that things are not well and the jobless recovery is not going to last much longer.
As always use caution as these are my observations and I do not make decisions for anyone other than myself.
Happy Halloween!
-K
$TED Spread caught in an Ascending Channel Pattern
Let's start off with once more defining the TED Spread.
The TED Spread which measures the general risk in the economy. TED increase - is a sign that lenders believe the risk of default on interbank loans is increasing.
I first mentioned TED Spread around September 28 and what occurred was a decline in the markets the following week.
Here we are a month later and the TED spread hasn't lost steam and in fact it is now in an Ascending Channel (Bullish Pattern)
Price Channels usually show trends, With the moves in the TED from Sept 14 till now we are seeing unrest in interbank loans.
I won't keep the TED out of my radar but wanted to document the current possible move upwards. (Which would signal a major market correction underway.)
In the attached image I realized the lowest trend line isn't parallel to the other two but it's close enough to be valid for my benefit. (Click Image to Enlarge)
Happy Investing from K the Investing Freak.
$SPX Psychotic Line Resistance
It was a fun day today.
Market opened up and rallied 10 points by 10:45AM. It was all downhill from there but the big kicker came at 3:10-4PM when the market dropped 17 points.
I will let 2 charts and this link be the hint of what I think we are going to do in the next few days at least.
Chart 1 is a closeup of the past month with the trend lines drawn almost a month in advance. (Click to enlarge)
Chart 2 is a zoomed out view from where the rally began. (Click to enlarge)
That's all folks. These are the charts promised almost a week earlier.
Have a safe investing season this fall/winter it should be epic.
-K
Downhill from here Or more upside?
The SPY made a hanging man candle today and so did a few other stocks like C (reporting tomorrow before open)
It happened on a bullish trend so it is defenetly a bad sign.
It is late but I will update tomorrow with more writing and of course my favorite thing; charts!
-K
S&P at 1035 by October 1st? I Believe it is doeable.
On September 23rd at 9:24Pm I wrote the following prediction on Twitter.
Prediction Alert: $SPX 1035 By Oct 1st9:24 PM Sep 23rd from web
I made that prediction based on a few trend lines I was watching that had begun to break down. This is from September 16th. it took then 1 full week of the SPX moving along that trendline before finally breaking below. (Click To Enlarge)
The next day my system began throwing out SELL alerts and that confirmed my bearish case. I acted upon a few of the alerts and am happy to say that so far they are green.
Here are the alerts for the Major indices.
In my previous post I was expecting the correction to start 10 days earlier than it actually did and that post now stands at 67% accuracy.
Today S&P Closed at 1044. Will it close at or below 1035 by October 1st? I believe it will, what about you.
Have a good Weekend and check out the rest of the signals by clicking above on the "Current Picks" Tab.
-K