Can you say Bull Trap

We got back onto some straddles a couple of weeks ago expecting a breakout from this boring trendless market the last 2 months. And a breakout we got on Wednesday that got the bulls and us excited there. Thursday and Friday put a damper on things however making it sure look like a bull trap.

As you know I continue to be bearish expecting new lows in the future. The dailies are now looking more and more like the time is right.

I will continue to hold the straddle, and am ready to short this market. The stock plays are primarily on the short side, currently short EBS and HPQ.

A sucker for the odd spec play I am long GERN after the stem cell injection approval last week.

As far as commodities, gold and silver are the only place to be long now. I was starting to get excited about oil and the grains last week when some signs of a potential bottom were forming, but still need a little more excitement here.

Much to do about Nothing

Although we did see the biggest one day drop for an Inaugeration Day, there was no follow through and the week was still aimless.Although we saw divergence at the end of November, I still think this last 2 months are still a fourth wave, a good time to have stood aside. After 2 1/2 months though there has got to be some action soon. We have added some more straddles again last week.
The big news this weekend was that the UK has fallen into a severe recession. The pound has fallen to a 23 year low. Suffice it to stay the stimulus packages are going to take some time to work globally.

Obama will now be under the spot light, but like a bad flu it takes time.

Commodities
Gold and silver continue to make new short term highs and is the place to be. The other commodities look like good bases are in place however and posted rallies last week. I am looking for entries now on GSG, USO, OIL.

The Markets will be Anxiously Awaiting a New President

Well this is the week we have all been waiting for. President elect gets sworn in and we finally get to see what he has up his sleeves. (Our economic woes are over and he might even have a cure for cancer...) Let's see if the investors are willing to put their money where their excitement is.

Of course negative economic data will continue to pour in and Q4 earnings will be announced for a number of companies over the next couple of weeks to dampen the excitement.

For the Q's as hoped for last week we had continued weakness for the first 3 days. I sold my puts Thusday expecting a bounce into expiration Friday and after 6 days of weakness. If we see stalling at the $30 area will probably add some puts back.

As far as the hourlies we can look to go long Fridays high or short Fridays low.

Commodities, with the exception of metals continue to scrap the bottom of the barrel with inflation following suit.

Now the Hangover Begins

Our expected New Years rally was short lived. It continued for a couple of days but fizzled big time Friday on news of 524,000 US jobs lost December. (34,400 for Canada). Economically we are continuing in this downward spiral of job losses, reduced spending followed by more job losses. This ship is going to be hard to turn around.

Meanwhile as the US awaits the swearing in of the President elect, additional stimulus packages are being proposed and debated. We are still waiting for the balance ($350Billion) of the TARP funds to be released as a new bill is being devised. Tighter controls and restrictions are being proposed. Like for firms receiving government funds not being able to give bonuses to their top 25 earners. Suffice it to say this was met with opposition from the Financial Services Roundtable. (You mean we can't just take the money and keep it ourselves) It will make for some interesting reading in the future as the investigative journalists dig into how this $700 billion is really being spent.

As far as the market the rally we were hoping for seems to have given up. I was hoping for more, but the market is the master and we must obey.

As far as trading I did sell my calls on Tuesday. After a 5 day run I thought we were getting a little over extended plus we had MACD divergence on the hourly chart. Still holding the puts and I am hoping that we see continued downward pressure on Monday. If it breaks that channel the 4th wave may finally be over. I will also consider buying the calls back on Monday given the 50% retracement of the up move and the channel support.

HAPPY NEW YEAR

Traders were so gald to see 2008 behind them they came to the street Friday still in a partying mood. The first day of trading for 2009 saw the markets advance on light volume even in light of continued weak economic reports.

We have been waiting for the markets to give us a signal on which way it wants to go and we finally have one. Even though this may turn out to be a huge Bear trap - long it is until we get the nod to reverse.

Here are the Q's which broke into new short term high on Friday. You can also see the MACD has crossed the 0 line into positive territory. For those of us that were straddling the 30's are now in the money and this play may now work out if there is some follow through.

Both the Dow and the S&P have similar charts. Almost all the Dow stocks took a jump Friday. I am still of the opinion that we will ultimately see new lows down the road but as the saying goes "want what the market wants".

From the Dow I see 4 stocks that are in true uptrends: MRK, PFE, UTX and T. The rest still look like 4th waves to me.

Currently I am long Q's. I also tried to get on a few on Friday. I was able to get onto ITW. I am also looking at getting long the commodities see below and got into SLV on Friday.

We have also seen a nice bounce off the bottoms in a number of commodities. Corn, beans, cattle, hogs, coffee, sugar, copper and of course oil.

USO, OIL or GSG are some good plays here. I am hoping for some profit taking and will enter.

As far as shorts, the bonds sure look toppy and we may see some nice short action here. TLT is one way to play this.

Well lets hope the New Year has finally brought us some action again. It was getting kind of boring there.