Patience

We did see the market come off Monday but no real follow through YET. I expect all those sweet set ups will prove themselves this week.

Short and sweet this week. (Pun intended)

Text Book

Well although the markets did make another new high this week momentum has definately slowed and we are seeing a number of text book MACD divergent setups coming into this week including the Q's. GAIA, AMZN, CSCO, JCI, MU to name a few (thanks Dan). Dan has al;so remonded me that RIMM is due for a earning announcment this week. Staddle anyone. (The street is expecting godd earnings though)

OIL continues to make new highs and this is one I am not ignoring. GLD gapped down Friday and you should be short this now on Fridays open.

There were a number of commodities that moved well last week. I was long both GSG and DBB. I am starting to focus most of my trading around the commodity based ETF's. I think OIL has something to do with that.

Standing Aside

Although markets made new highs once again momentum has definately slowed. I am thinking we are completing a fifth wave now and am going to stand aside for awhile to see how things unfold.

Still long the OIL, but got stopped out of the GLD trade Wednesday.

Onward and Upward

Well the consumer confidence numbers were enough to get the markets rally back on track. Did not add to shorts and stopped Tuesday morning. Did not get long.

OIL on the other hand I could not ignore. This has been my favourite trade this year and I jumped back in again this week. We do try to initiate a lot of positions from a counter trend trade perspective. When they initially do not work out you definately want a re- entry strategy so as not to miss the continuation move.

The gold trade continues to perform for us with a gap up Friday to end the week nicley. With the US$ tanking commodities in general is the place to be.

Our WFMI short did follow through. I took profits Friday with the market strength and will watch to get short again at the low.

Sell in May and Go Away

An old Wall Steer Adage but does it apply now. As you know I was ready to add to my short Q's last week if it took out the previous weeks lows. This hasn't happened but still looks toppy to me and I will be ready this week after the long weekend. Of course this may just end up being a 4th wave here with one more move up in June/July. In the meantime I am still short.


Although I sold my OIL position the week before , last week saw new highs Wednesday. I did not chase this on with the gap to big. Will look to get long again on hourly basis if the gaps get reasonable.


Gold continues to make new highs for us and should be long this one.


One other position we added on Friday short was Whole Foods. (Thanks Dan) This is a text book setup with the MACD divergence. Hopefully we will see some follow through here.

All Good Things Must Come To An End

As expected the markets finally took a breather. If you are not already short we have a nice entry now below Wednesday's low. This applies to a number of the DOW stocks as well so if Wednesdays low is taken out I would want to be on the bear side of things. A lot of stocks and the indexes themselves have not been able to penetrate their 200 day MA's. That will be a critical resistence to get through for the bulls to keep their heads high.

I also took my profits this week on my OIL trade. Like the Q's this one worked out like a charm. I have not been as anxious to short this one yet but will be watching closely this week for either a re-entry long or short. Need more info from the market at this point.

The gold trade was the only one that kept up this week making new highs on Friday. Lets see what this still has to offer.

Time for a Break

Well ththis sure has been a great ride. The Q's continued the upward climb making another new high this week. Friday's strong action resulted from slowing job loss rates and relief on the banking front. Although the other markets continued upward Friday Nasdaq was not as strong.
In fact I have raised my stop and am considering a stop and reverse trade on Monday depending on how the open goes. You can see from the hourly chart below we have had a sell off Thursday and it was not able to gather much strenght on Friday. I can't help but consider a short Monday and would have to at least be out of my longs below that $33.88 low.
In the meantime my patience has paid off in the OIL trade with continued strength all through the week.

I have also been long silver which continues up slowly. I am considering adding gold on Monday. It looks ready to make its move here.

Never Say Never

Most people thought a rally like this was impossible, but they are kicking themselves now. Eight weeks in a row! I am still trading longs only and patiantly waiting for a short signal. Just like picking bottoms anyone picking a top for the last month have paid for it.

I am also still long oil waiting for something to happen here. Finally had some action on Friday with a rally up to $19.50. Still feel the $17 low will hold and will wait this move out.

Another new high for the Q's that makes 7

Okay this is starting to feel like a trend. Hopefully you have all been able to ignore the bears and stay focused on the long side. This is a classic example of wanting what the market wants not what the talking heads want you to believe. No one can denie the continuous bad news, layoffs, bad earnings and continued banking scares. However the market is rising and that is all that counts.

With 7 up weeks in a row however the odds sure are leaning towards some profit taking here soon. Some are feeling that the party is almost over and the bears are about to return. Be careful out there.

In the meantime the gold play last week is working out. The double bottom held and we had a nice rally for the week.

I still have not given up on oil yet. The last month has been boring but I still think the bottom is in here and will continue to add after this 4th wave correction.

6 Weeks it is

And so it goes for another week. The talk around the water coolers are now about missing the boat. The type of thing you would expect at the end of the first wave up. After some profit taking the miss the boaters will be only to anxious to jump on board. This is what 3rd waves are made of. In the meantime, the buy on the dippers have had a great run here and as long as your stops remain tight the ride continues.Of course with all the favourable earnings and positive news the safe haven investments in gold and silver had the wind knocked out of their sails. The double bottom in gold may just be tieing in nicely with a market top???

Make that 5

That puts the Nasdaq up 31% from its March 9 low. Everyone is complaining about losing 55% over the last year and a half and here we are up 31% in just over a month.

Don't let the bears, and there are a lot of us out there, convince you to end this ride before its time is up. The market wants to go up and up it is going.

Like RIMM last week Well Fargo had the earning this week and helped fuel the bank stocks and indices to new highs.

Make that 4

That makes 4 weeks in a row now with stocks advancing once again. Even with more negative news like jobless rate at 8.5% buying still continues. Short coverings and early to the party traders have now taken the Q's above the previous resistance point.

It helped having RIMM in the picture!!

Its easy to think that this rally needs to end soon and try and pick a top, but you have got to stay with this as long as it continues. Riding this bear market down has been great but the % moves from the bottom here are amazing and not to be missed.

3 Weeks in a Row

Although we ended the week with disappointing economic data and losses accross the board we still continued with a 3rd week in a row of market gains. This is great for us traders to see some trends here. The Q's have now rallied up to the top of the previous resistance area we dealt with for the last few months. Personally I took advantage of the rally by playing, believe it or not, GM. Although I know I should be avoiding this dog I can still remember Chrysler when it was near bankrupcy and the gains that were made back then for those with faith in a bailout. On a hourly basis we are now seeing multiple MACD divergences and tight stops below Fridays lows if you are still long. Might even consider a stop and reverse here for the inevitable sell off that will come soon.

OIL trade was boring last week and I decided to get out. I will be monitoring this to re enter. Another option is to hold a longer term position and trade around it on a short term basis.

March Break Madness

It was a quiet week for me with a March break holiday. I maintained some shorts from the week before that are working out after Friday's witching saw the indices fall on heavy volume. HMSY is one that is finally breaking down after multiple MACD divergences. Although the markets were off Friday I am not going to ignore the rally the last 2 weeks and will be prepared to jump back on the long side if the rally resumes after some profit taking here.

The markets were weak led by financials after the craziness on Capital Hill. AIG was off 50% in 2 days. Although I have been expecting stories of waste and misuse of government aid, I never would have expected retroactive revisions to laws. What a cluster....

Gold and silver saw a KRD on Wednesday and buys for Thursday morning. OIL continues its rise from the ashes.

Want what the maket wants

And what the market wanted last week was a nice little rally. Although still bearish last weekend by Monday mid- day you couldn't help but feel the mood shift. Tuesday saw a break in the trendline from the last month's drop and it just kept going for the week.

I have been taught that you must not trade your belief's but be willing to hold the dog by the tail and let him guide your trades. Last week I had to put my bearish beliefs aside and run with the bulls. It was a great feeling to see the tide shift and make some money on the long side. (I did close out my longs Friday afternoon however and put on a few shorts for Monday.)

As far as the OIL trade, on Monday we did see a breakout, but it fizzled on Tuesday so I closed out the trade. We are now considering OIL and GSG on the short side again.

Coming into next week it will be interesting to see what this rally has in store. My belief is that it we will se some profit taking. (but I will be ready to trade whichever way it goes)

Unemployment at 25 Year High

Unemployment sored to a 25 year high this week with employers shedding 651,000 jobs in February. This brings the total jobs lost since the end of 2007 to 4.4 million.

Its getting to the point that not only do most people know someone that has been laid off, but they are also fearing for their own jobs.

The Nasdaq has now reached a 6 year low losing all the ground that was made up since the last bubble burst. The NYSE and DOW have lost even more ground gong back more then a decade.

The Q's have not quite broke the bottom, but I continue to be short.

This definately is a bear market like no other. The equity position is still to be fully in cash or short only. We have been able to pick off a number of tops that have rolled over with the market in the last couple of weeks and the real money is in holding these for maximum gains.

A lot of people are being tempted by the high dividend yields and perceived low prices at this point. Just remember dividends can and will be cut and even though a stock is off 90% doesn't make it cheap.

From the commodity side of things we picked the top on gold and silver and it looks like there may be another short opportunity this week. I recommended USO long last week and personally traded OIL. I will be adding to my position on Monday if OIL takes out the high again. GSG looks awful similar.

The above charts show why I am bullish on USO/OIL. The daily shows the MACD divergence and a breakout on Friday.

The Carnage Continues

Well we are continuing the bear move started last week with the DOW making new lows again. The Q's are still above their Nov lows ($25), but it wouldn't suprise me to see those tested soon.

It was another great week for trading and the equity curves should be on the rise again after a long dry spell. We had a number of beautiful set ups coming into the week that finally came through. FNF, CUB, ATHN, CWT, ASEI, RGLD, GDX to name a few that Dan had provided. All beautiful 5 wave, divergent setups that fell when the market finally broke down. Like shooting fish in a barrel. And the action may not be over yet. Remember patience is the key to squeeze all the money from these moves. Remember AFAM. This was the darling only a few months ago highest rated, highest momentum but when it showed its true colours to us we knew what to expect and look at it now.

The health sector was the latest darling to also take a big hit this week as Obama unveiled his budget that cuts medicare.

The other big news this week was around Citicorp. Speaking of the mighty falling. Look at this stock.

Over 6 billion shares traded last week as the government struggled with what to do with this banking giant. No one else wants it so the government might as well buy it. Swapping preferred for common and diuting shareholders equity was the game. Something like swapping chairs on the Titanic.

The only good news is that the further we fall the closer we are to the bottom. (Unless you are starting to believe the doom and gloomers) A number of the stocks are now sitting in the 5th wave target areas, most of the weak money has left the system and there are some stock values out there that have really over shot the mark from a value basis. Not that I am expecting a turn around any time soon, but the time will come..

For this week I will continue to hold my shorts and for a long trade I may take a stab at USO.

The Dow Makes New Lows

Although the Q's have held at the channel support the Dow has broken down making new 6 year lows. I love it when a plan come together.

Unfortunately the economic situations continues to deteriorate. In fact as of Friday Senate banking Committee Chairman Dodd was talking about the possibility of the government taking over some banks.In the meantime safe-haven buying continues with gold crossing the $1,000 mark and silver making new highs. Yes we got back in last week. Even though the golds were looking like the momentum was weakening you always need a re-entry strategy just in case. All other commodities continue to drop with year over year prices now flat. The lowest growth rate in 53 years.

For this week will be looking to take profits on current positions as shorts are over sold and longs are over bought. Of course if the markets continue to crash tomorrow will stay on for the ride.

Devil in the Details

A week ago Friday the street was excited about the stimulus package. Last Friday as we awaited the vote things were not so positive. Investors exited positions coming into the Presidents Day long weekend and it would appear want more details before they put their money on the line.
We are however still in this trading range waiting for some direction. I know it sounds like a broken record but patience is key and rest assured there will be action soon. I am still expecting new lows and expect more individual stocks to pull a RIMM, slowly crawl a wall of worry only to be hit with reduced expectations and a slamming from the street. Be careful out there.

In the meantime although I did get out of gold last week I did re-enter on Monday but took silver for a ride this time. It is definately in a 3rd wave here, a beauty to behold.


In the meantime OIL and GSG continue to make new lows as we await signals to get long.

598,000 versus $780 Billion

Well we know which number the street liked better don't we. Although 598,000 jobs were lost in January, bringing the total jobs lost in the last year to over 3 million, it was the $780 Billion stimulus deal the street focused on, enjoying a nice rally Friday. The Nasdaq rose 2.9%.

I have attached the above chart though to put it into perspective. This market is still very much range bound. Although we have been playing around a bit for the last few months I just want to remind you that this has been with only a small portion of the portfolio. The rest is in cash waiting for a trending market again. Patience is key at these times. Do not be one of those traders that give back their profits trying to tell the market what to do. Listen and it will tell you.

As you know I still beleive we are in a bear market in a 4th wave and expect new lows in the future. That is my belief only and I will quickly change this belief once the market tells me otherwise. In the meantime the only way to trade this market has been on an hourly basis.

For those of us long gold I have taken profits last week and will explain why.

This has been a text book trade. Back In mid November we had a double bottom with MACD divergence. The KRD on Nov 13th gave us our buy signal to enter on the 14th. We have now completed the 5 waves and the MACD is once again showing divergence signalling the end of this trend. Now of course you have a number of options here. Take profits and look to re-enter, take partial profits and give the balance some room or continue to hold. Although gold seems to be the place to be I am going to cash and monitor.

One of the reasons is that this is the set up we look for to short. Case in point was this weeks pick from Dan EPIQ. This was again a classic set up for us. Major divergence late last week with a KRD in place. It broke hard as we both attempted to get into some puts.

As far as commodities these are still scapping the bottom of the barrel (pun intended). Still lookinf to get long at some point. (Copper is the new gold)