Today is the window dressing, VIX breaking down

The window dressing is coming today, it will show its face near the end of the day as i predict the fund will snap up all the outperforming names they did not have on the books during the beginning of quarter 2. What is interesting about this VIX breakdown is it has happened in the last few days as the market has traded basically sideways without much volume and or attention. The volume levels here really tell the story, remember VOLUME precedes price movement. I haven't seen any decent volume in days, which has correlated to a muted market, this afternoon could be another story. The last hour of trading if we rally hard on larger than average volume the vix is going to be crushed hard contrary to what my previous posts have been stating. The breakdown has been larger than i expected but i am not worrying yet as Wednesday the fund are going to dump all the overbought crap they have on the books, which is a lot of crap. This should send the markets into a tailspin, putting the nail in the coffin of the "correction". Hedge Accordingly.

Slow trading week ahead, Bernard L. Madoff gets 150 years

Breaking: Madoff sentenced to 150 years.


This week as most of you know may not know is a shortened week with the market closed on Friday. Weeks like this especially in the summer bring very low volume, BUT on the contrary you can see wild movement on thin volume. So be aware if you are intra day trading. Another key event everyone should have their eyes on is quarter 2 coming to a close Tuesday. This could bring some interesting action near the close tomorrow in accordance with the window dressing theory. Notice today the VIX got crushed after its initial opening prints, this coincides with the window dressing, im sure the vix will get crushed at the close tomorrow, only to pop Wednesday when the fund start dumping all the overbot names they snapped up late in the quarter so they look "smart", ie they have the names on the books so when they report to their clients they will look like they had all the winners on. AAha! Stay on your toes and don't over trade this week as opportunities may be there but volume may not be, you could get stuck especially in options with wide markets like ETFs.

America's entrepreneur Billy Mays

What bothered me more than the death of Michael Jackson is the the death of Billy Mays. I wonder what the heck is going on this weekend, so much tragedy. I know this topic is not really on par with what i normally talk about, but Billy was an entrepreneur. If you are a trader and or in individual investor you are an entrepreneur also. Mays was just getting his empire going he was on track to be huge. He was also a self made millionaire and philanthropist. If you need motivation think about how much he had to do to make it big, little steps to the big time. IF you apply these thoughts to trading and investing you will eventually win, it takes passion, time, effort and most of all the entrepreneurial spirit.

The Angry Southern Bear is back!

He is back with a new video, this one is quite interesting as he smashed a toy car to pieces. This guy is gonna be famous as he is cheer leading the death of the green shoots. The green shoots have been sprayed with weed killer as we can all see. The markets today still have selling pressure weak but steady. You can tell the summer is here, low volume nothing really trading. But what is trading is really ripping on the light volume.

Market observations today:

OIL down with the dollar down, normally this is inverse but today is odd. Also the market is down in general with the dollar down.

Oil trading in line with the Dollar

An interesting anomaly has happened this morning, USO is up along with UUP. Normally if you remember the past few weeks oil has been down when the dollar is up and vise versa, today was different. I am thinking today will be another flat day, probably will close green through, as the window dressing trade is coming closer and closer. Solars had a decent attempt to close the opening gap down but completely fell off trend when the natural gas inventories came out. If you played this technical entry signal you would have made great trade.







Bernake is getting grilled currently





Initial jobless claims were up





UNG is popping a bit here





Trade idea*




19bil$ set aside for highway funding. Concrete companies and or companies directly connected to the contracts will surely benefit.

Time to run with the bulls till next week

A major hotel discount hotel defaults on debt, specifically The Red Roof Inn. What do i read from this? I read middle class is retracting on spending specifically in business travel. Further signs the economy is still melting. I could see this coming for years, most of these hotels are built in area's where many similar hotels exist in a cluster. A cluster of overbuilt over developed farm land on the outskirts of urban sprawl.

The trading action yesterday was very muted and casual. There was not much going on in any of the major markets, this was expected. I say this because after a large down day the following day traders and market participants psychologically are thrown off. Days like these you must lay off and not over trade when opportunities are thin. As for today i think the rally starts on technicals rebounding. This will more than likely continue until Tuesday of next week, followed by steep selling on Wednesday.
If you were following my calls about Apple you noticed the steep sell off, i attribute this to the Steve Job's liver fiasco.
UNG has been selling off nicely. Looking to take profits at this level.

Interesting sentiment change: More bears than bulls

I did a quick search this sunny afternoon in Chicago for Bear market in google followed by a search for bull market.




THE SEARCH RESULTS:





Overall Bear Market: 36,300,000


Overall Bull Market: 19,200,000


News headline search only "Bear Market": 9,129


News headline search only "Bull Market": 4,375


Interpret this as you may. Everyone is an individual. Speculation is what drives our markets.
Im speculating the overall sentiment is bearish.

OIH chart update. Natural gas falling along with Oil

Today's action was very indicative of people finally understanding fundamentals are not driving Oil higher. As i noted last night OIH is trading in a topping manner, today it fell off 6 bucks, ring the register but stay strong. UNG is a follower trade, i think getting short Nat gas here is a bit late. I would watch how it holds at support, which is the bottom of the pennant it has been forming. The charts below are of OIH and UNG as of today. NOTE the red circles in OIH which are periods of volatility, there is a clear pattern forming. The UNG chart as you can see has a clear consolidation followed by breakout.

The Apple trade.. Steve Job's liver woes

One would be a fool to think Jobs' liver transplant is positive news for Apple investors. THis news, basically in a odd way of thinking reveals Apple lied about the true condition and severity of Job's condition. Whatever really i say, i think the Apple ride has peaked for the short term. Longer term viability probably will not be as affected. Given the current market trend and particular overall sentiment change this could spell disaster for Apple's stock price. I'm sure longer term investors were pissed off about the news. Liver transplants are serious things and now forever Job's will have a wild card attached to his tenure, uncertainty is not good for business, especially regarding top level brass. So yes, you can say i am bearish Apple short term.






The chart on the left is one of OIH, this is the Oil Service Holders trust ETF which is showing signs of Oil topping. Notice the trend inside the red circles, they show upward thrust of buying followed by a period of volatility, we are entering these waters. The Mideast conflicts on the contrary side of the trade could halt a decline. Its a traders market, keep this on the radar, maybe dip a bit short and look for a momentum trade. IMO.







Bearish news:

Oil is falling off, inventories up


The Job's liver story


THe Fed is giving up in the short term


FTC now looking for blogger disclosure on conflicts of interest

OIL update. WE are seeing signs of a overall pullback

This pullback has been slow coming but believe it will be welcomed when you see pump prices move back down. Gasoline prices are synthetic tax on Americans, a tax which is very hard to take when your retirement is evaporating. IF you remember back a few days ago i posted a chart of DUG (link here at originally posted June 4 at a trading price of 16 pps Chart.ly) the chart exhibited a very distinct pattern of breaking out to the upside of a descending wedge after a period of consolidation. The green line has been broken by the PPS to the upside. I am looking for a small pull back or straight shot up next week and into July. THis was a good trade if anyone played it take some profits and keep on truckin.

OTHER NEWS:

Bank fail Friday!!!

Sir Allen Stanford arrested 7 bil fraud

The RIM Trade... Blackberry Storm is terrible (RIMM)

Imo Research in Motion has reached as many people as they can given the current market cycle.   THis period of time is going to hurt rimm growth, as you can see what happened after hours today. I am expecting a gap down in the AM and maybe a bounce.

 MY theory on BLackerry is everyone who wants one has one, everyone who needs one has one. The same thing is going on with the IPhone, everyone who wants one has one, or now will with the cheaper version. Growth is now limited by network obligations.

The latest device i have used is the Storm, it was A POS out of the box. I had to upgrade the software numerous times.. . The long trade is over unless you want to play the downside coming up in July. Hedge Accordingly

The Crowded Natural Gas Trade (UNG)

Update november 2011.. post R/S still trading below 10 bucks..








All i keep hearing about is UNG going to da moon. At the same I'm thinking overbought crowded trade, i am a pessimist.

If you look at the chart UNG has been in a horrendous downtrend that has probably benefited many and confused others.

THe current UNG trend is a good example of a security which can remain oversold for months. We had a pop beginning of MAY have subsequently been coiling up on an uncertain trade. From what i understand about the current situation regards Nat gas supply/demand forces there is plenty of supply both in the proven ground and in storage.

Like OIL paper chasing is running up this trade, there are two sides to every trade. I take the bearish stance. I could be wrong but that's what trading is about taking managed risk. If you can manage risk you will win. My risk management thoughts in another post.

SPY VIX overlay pivot point correlations

THe chart on the left of the SPY with a VIX overlay is unique because it highlights what happens at the end/beginning of quarters. Usually, per back tested data, there are periods of volatility surrounding EOQ. The window dressing trade appears to be very much in play whether the mainstream media will admit it or not. NOw having that thought fresh in your mind refer to the chart on the left. Look at the circles highlighting key pivot points where the VIX has touched the upward trending line. Each time this happens equities sharply reverse direction on high volatility. THe large red circle is the area of most concern, where the kiss of death is going to happen. The kiss of death is when the vix the 50 SMA and the end of the quarter collide. This will happen volume will pop volatility will allow for large block trades to be executed on the sell side. Then we are in for the ride back down to earth. Call me a pessimist, i am a realist and a chartist. The chart is telling me something very interesting is imminent.
LONG dollar
Short commodities/specifically OIL
Short equities
As July 1 approaches this trade will become much more clear to understand.

Dollar strengthening overnight, futures red

Good morning fellow market participants. The overnight session is bringing some red to the forefront of the days top news. Only green I am seeing is the dollar strengthening. I posted a few days back on the topic of UUP finally bottoming and oil topping, looks like we are seeing some more support here at these levels. Basically market participants are getting worried this whole rally within the commodities arena is all based on that good ol' thing we called paper chasing, er speculation! The Sheik of Iran even stated he thinks the current run up is all fueled by speculation not by supply and demand forces! RIGHT THERE should be telling you oil is topping and the dollar demise is not coming anytime soon.

The rates are near zero they cannot go lower, money will only get more expensive. This trade is playing out as planned, im liking what i see. Stay on your toes, dont put on more positions than you can manage, focus on core positions here. THe market is very finicky here, could reverse very fast.

The Angry Southern BEAR! this guy is nuts, but right.

I buddy of mine shot this video my way this weekend and i must say i am glad he did. This guy is quite the financial commentator LOL. This guy might become famous of the course of a week, or heck even better he might make it to CNBC

Some charts to digest: Goldman Sachs & JPMorgan

You all know i am a bear, yes you got me. You ask why? The charts speak volumes. I like technicals yes. They speak volumes. Case and point Golden Slacks.

The chart on the left shows Goldman in a upward trending wedge and or pennant, WHATEVER they both signify consolidation. I'm thinking we have a greater percentage chance of a drop here, though others may think we are in for a fake out with a quick run to 165. If you take into account the massive trading programs we are over extended, the funds are levered up and need to cash the register.. AHEM end of quarter. The highlighted red circle is where the PPS has fallen out of the wedge, just barely... to early to call, but a straddle could be in the cards or a cheap strangle.

LOWER INDICATOR signals:

Look at the volume decrescendo since April 14 till today *consolidation patterns form on decreasing volume in anticipation for the breakout. THE large red vertical oval highlights a volume spike which coincides with a breakout of the channel leading to the current trading pattern. This is signal 1

Signal 2, the stochastic is indicating overbought conditions, just in time for GS to kiss the 100 SMA purple line. Back test.. GS kisses then drops back.

MACD indicating overbought.

lets wait and see

Here you have JPMorgan, i posted a chart back in May highlighting its odd trading pattern. THe pattern started forming July of 2007 where it sells off touches its lower downward sloping trend then trades back up to 48 PPS, back down in even intervals each time back up to 48. This has repeated four times. THe current trend we are in trending upward toward 48 but has given out around 34. My basis for putting this chart highlights this breakdown, whereas JPM trades down to 12 pps hitting the lower red line. THis is a very drastic scenario but crazier things have happened. stories are made of people who execute trades like this with success. Take a look a the DEC 09 JPM 15 puts.

Futures Catching a bid early. Can we hold above 950?

Futures looking up quite a bit here in the AM. We are at key levels here. Will we push past resistance or gap up then trade back down to flat? Im not sure exactly whats pushing us up, could be Asia making fresh 8 month highs, could be Chrysler.. I really couldn't careless about Asia, they follow us anyway. REMEMBER the wizard behind the curtain will buy up the market on ANYTHING. The window dressing is going to disappear in July beginning july 1, so ride the train. THe funds are buying up all the out performers so they look smart at the end of the quarter(they are gonna need it later). Then they sell the overbought crap and buy the under performers from quarter 2. So Stay long through June short the dollar, long equities, long oil.. but not gold. Get into DIG, RIG, OIH, UDN for a quick trade if you dare.

ASLO: The FED had been supoened, wouldnt that be a negative thing?

BTW.. CNBC's morning show Squawk box gets worse by the day.

Another flat day in the market today. Are we tired yet?

The past few trading sessions we have seen fairly low volume compared to the past. Though this whole move overall has been on low volume, it makes everyone who understands the phrase "volume precedes price" a bit sceptical. Including myself. I do not want to sound like a broken record preaching conspiracy and fighting the trend, but i feel like getting the word out to main street of this very possible false propping of the market is a richeous duty. Nothing particularly material changes today.

Chart via ZeroHedge

Though i did observe:
Oil up along with commodities
Dollar Down
89 billion in TARP funds have been approved by the fed to be paid back. Most of the firms paying back tarp have level 2 and 3 assets which still suck.
Some food for though, Kuwait Oil minister seems to be on top of his game. (via GreenSheet)

Sheikh Ahmed Abdullah al-Sabah stated:
"You see, the problem is that the market is not moving or responding to fundamentals. It is only sentiments driving the market."

He goes on to say something strikingly intelligent:
"There is no good price. There is a logical price. Logical is what market forces prevail at that time and for the time being $60 to $70 to $75 per barrel is acceptable."
Granted i think those prices are still overvalued, they are better than 100+.
HedgeAccordingly

VIX update. Pandit and Sheila in personal feud

MOst must agree BAC's Kenneth Lewis's testimony is gonna stir the pot Thursday. i will be watching. Pandit over at C has a personal feud with Sheila... this bull train is going nowhere fast, once the window dressing disappears one will realize nothing has changed. BAC and C are still in a pile of sh$t.. If the global deflation/inflation issues snowballs those who are under the tarp will see their shares become worth less and less.

The greatest short in history could be coming up.. the time is not NOW it appears, lots of strength in the form of program trading. I think when the time comes the interest rate debate heats up we are in for a sentiment change. When everyone starts getting worried again its a big ol' train that gets going... The funds sell into all the upgrades, take profits.. and then become sell side players.

The CHART above is a chart of the vix. I am playing this as a possible breakout... we are in a very large pennant formation. Im looking for the support under 30 to hold, which is the ascending green line. If we do hold we are gonna break out to the upside and July will be interesting. if we break down, we have a long way to fall. ALways have an idea of where the vix is trading.

TRADE IDEA:
If you are currently long term bearish on US equities you should consider buying protection on your longs in the form our further out puts on the SPY, or calls in UUP. SInce the vix is down, the volatility variable of the Black-Scholes model is smaller thus making puts cheaper.

Nonfarm job loss 354,000 for may, now 9.4%

As i sat watching the job number come out, i watched the futures rise. and rise and rise. Futures rose before the number came out, eventually topping out at up 120 after the number. People are making the best of crappy news, im tired of it.
Market opened we gapped a bit then traded up 70 points then back down. To me this shows we hit resistance then pulled back under where we are now up about 28. For today i think we will probably close flat, not much volume and or volatility on a nice spring Friday. Where are we gonna top out in job loss you might ask? I'm thinking we will see well over 10% before the numbers start looking better. WE need 200,000 new jobs a month just to keep the number from going lower. I do NOT see this happening in the next year.

BTW Steve jobs is returning to Apple, this could be bullish for apple.. I know there was a lot of talk about it being overvalued... who knows how this trade will play out.. but have Apple on the radar.

Oil looking technically ready for a oscillation, IF dollar strengthens

As most of you might already know the black stuff that runs the world has had quite a run the past few months, beginning when the market rebounded. Initially the rise as i interpreted it was a technical rebound. THis interpretation based on markets overshooting large violent, volatile moves. My hunch for the oscillation in oils current micro trend is technical, we are stretched. I have a chart on the left of DUG, which is the ultrashort Oil&Gas, notice the vertical ovals. They highlight consolidation moves which appear in pattern. Per back testing, the trade i am pulling out of this has not been pinpointed in its entry, but in theory im looking for a move up in the stochastic signaling this thing is gonna pop to the RED line of resistance, and oscilate. Like it has done since inception. Just be aware, this could be a play. Onto other things....

On the other side of the trade, if the dollar keeps collapsing on fears of the US losing its AAA credit rating, like Jeff Friedman(his twitter) thinks so. We are in for some more turbulence.

A bit more evidence...Something interesting happened around mid April. What? The dollar fell off like a rock in an empty pool. Remember dollar lower, oil higher in the current situation hedgeAccordingly... these markets are coupled like it or not in this current environment. they could uncouple it has happened.

Rant:IF OPEC would actually start reporting how much oil is in the ground and real production numbers maybe everyone would realize OPEC is full of shit, then their influence will not matter. OIL demand will be lower in the near future, paper chasers are pushing markets up again. What im saying is i am bearish OIL, demand destruction remains.

You gimmie the Gold ill give you the cocaine!

Interesting story first reported over at Clusterstock, seems as there has been a corrilation betweewn the the price of gold and transfers of the heavy stuff to the domicican republic. Dennis Kneale reported it on CNBC Reports. Its funny how the little guy's story gets picked up by the big boys. Im sure the demand will decrease in the NYC area, to many wallstreeters layed off!

New GM retirement benefits data

ZeroHedge mentioned a few key data points worth repeating relating to the GM bailouts and how its employers are compensated. According to the Kansas City Star:

"GM is offering $20,000 cash and a $25,000 car voucher to production workers who decide to retire with their benefits.
For skilled-trades workers, the cash portion of the retirement package is $45,000 with the same car voucher.
For those not eligible to retire, GM also is offering more cash to walk away and sever all ties with the company, along with the $25,000 car voucher.
Employees with less than 10 years could get $45,000. Those with at least 10 years but less than 20 are being offered $80,000. For those with 20 years or more, it’s $115,000.
Those with 28 or 29 years at GM are being offered a bridge to retirement, with the company providing a monthly gross wage of $2,850 or $2,900 until qualifying for retirement."

Sounds good. I am all for helping the layed off workers. But wow.

Look here, pending home sales up 6.7% in April. Buy up the markets!

IF you look at how the current markets correlate compared to historical data you will notice we are primarily out of whack. We have gold down & stocks up, the commodities we eat are up yet the vix is has risen since Friday, down today. Believe me i know when things are acting odd, and things are acting odd. Will we have a massive snap back into reality, probably. When? no idea.

This morning pending home sales were released, up 6.7% in April. My guess shows we are still declining in sales, but a few key areas such as south Florida, or other areas severely depressed will probably see a small upturn skewing the market. I do not see this as anything to jump around about, Florida real estate, specifically south Florida, should not be used a bell weather for the overall market.

If the market shows some signs of signs of life in the AM which it is, we are probably in for another up day. Its getting to the point where you cannot fight this tape, i am mentally fighting it but i currently not short. Ill play with UYG/FAS as trading vehicles today.

Irrational exuberance you say? GM goes BK no one cares

Traders took hold of GM today and whipped it around like a ragdoll.. NO reason in hell for a BK company's shares, basically deemed worthless to be UP on the day AT anypoint. Per what i said yesterday, GM's bankruptcy appears to have been baked into the PPS. I have a hinkling the run up today was some institutional short covering. Whatever the case may be, today was historic. Though the market is exhibiting symptoms of a sickness, myself and others will refer to as irrational exuberance, I am still bearish.

A few bullish indicators earlier today were released, still only shows the decline MAY be slowing down. NOthing has reversed. THe key issue which remains is real estate. I see no reason to think the worst is over until we see housing bottom, and the beginning signs of price recovery. Then AMerica can place a true value on homes which they understand and are comfortable with. Not until then will the middle class become trusting of the financial system as a whole. Fear is removed, people will start spending again, people will start hiring the ball will get rolling. This hasnt happend yet. Hedge accordingly.

CHART: SPX

As most of you can tell we have broken out and are now approaching longerterm resistance, but we could run up a bit from here. IF you notice we are approaching overbought again. We have yet to reach a neutral or oversold conditions for months.