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Thursday, March 21, 2013

Spanking the Market - Like a Baws.


Was awesome.


It was just one of those days (and weeks) where longs and shorts just seem to be working. Some of this is luck and some of it skill - but I just love when the volatility starts to increase... The cracks are starting to reveal themselves.

So, Anything Interesting?

A lot, again:

GS got murdered. I participated in only $1 of its death, but it was slashed by 3+% or almost $5 today. GS has been a market leader for some time now, leading the XLF rally since November 2012. This weakness is quite telling. After breaking that $147, next MAJOR support is in the $130 range. It has been forming a huge pennant on the weekly chart, and the bottom side of that pennant is where is see its next MAJOR support level - in the low $100's. This is huge for the bear case, and a major crack.

EUR/USD continued its slow slide down. This one has been weak for some time now, and cannot manage even the smallest of bounces. This scares me a bit, for I think it is due to bounce some time soon. Only time will tell. The contrarian in me says it will bounce - and also when you compare the US FED policy to the EURO central banks, the US FED is much, much more aggressive with monetary easing. So, while technically speaking, the chart looks lower to me, fundamentally, I think we go up. Final answer? I have no idea. WAG? EUR/USD drops over the summer, maybe testing the mid to low 1.20's, and then bounces back toward the 1.30+ level.

IYT - very weak today, giving up 1.6%. Another market leader is showing big time weakness and now looks to be very toppy. There is a lot of underside support in the 102-107 range - wide range, I know - so I don't really have a nice target here. It is just noteworthy that it was THAT weak today, weaker than the SPY.

XLF - continues to look very toppy like the rest of this list. $17.75 is my first target here, and if selling really accelerates, I am looking for that $16.50 area (10% correction).

SPY - breaking below that $152.90 area would be huge - that is what I am watching for my first SPY target (The SPY was rebalanced last Friday, so this number should be closer to $152.5 or so). My second target is $148, and third $142.


Yeah, some thoughts are that the market appears to be quite toppy here. This is a little abnormal that it is coming about one month before its typical pullback. Remember that tops are a process, and that this jerking up and down choppy price movement can easily continue for days or weeks. I am relatively confident that we are going to correct by at least 5-10% over the next few months.


Positions Closed:

VXX +2.1%, TVIX -1%, DDD 4.3%, APOL 4.5%, GS 0.67%. Another 10% gainer of a day for me. Huge.

Open positions:

FDX long from $97.29, EDU short from $17.17, LNG short from $22 (ugh), SPXU from $29.30 and BX short from $19.32.

Awesome day again today. Incredible last 5 trading days now. I feel at my best in this type of trading environment. Longs are ripping, shorts are working  -  it is beautiful. FDX is a bounce play, it could very well go lower, but my opinion is that it is oversold. I am looking for $98-100 on this swing. EDU is more of a fundamental long term play, I just don't believe in the product/service, and I think it will fall. My PT is $10. LNG will (or should) drop during the summer. I will continue to hold into April and May. My position is mid sized, and when it appears to be topping, I will add to this short. My PT is $18-20 by mid/end summer. BX PT1 is about my entry, $19.38 - but I think it will fall a bit further. To be honest, I'll probably just exit this one at B/E.


The market will probably remain choppy to slightly heavy biased. The NYMO is slightly low at -18, but has a LONG ways to go before it receives an 'oversold' name tag. The news from Europe will control our destiny, so stay quick and nimble. The sells can easily end in 1-2% flush or distribution days, and those days can easily be followed by 1-2% sharp rallies. Stay smart and very disciplined with stops. Until this topping pattern plays out, I will continue to buy stocks on dips, and sell short the rips.

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