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.