Wednesday, June 11, 2008

Deutsche Bank AG - heading for $44 ?

My apologies for not posting yesterday. I had a family matter to attend to which is much better now thank you.

I want to bring your attention to an existing position we have on here at Prudens Speculari, that being short 2 units of Deutsche Bank (DB) at $117. I had some issues with the prices on the chart of DB on my Prophet.net feed which is being corrected (great service which you should check out) so I have posted the DB chart (below) via stockcharts.com

Regular readers remember my large head and shoulders formation (left shoulder Feb/07, head May/07, and right shoulder autumn/07) that had its neckline at $120. That was the basis for my short position.



I want to bring your attention to a MUCH LARGER head and shoulders formation with the left shoulder May/06, head May/07, and right shoulder May/08. Now I am no mathematician but it is mere coincidence that all of these points are in symmetry 1 year apart? I welcome any reader's thoughts or views on this. I do remember a cat named Steve Carolan, who a technician buddy brought to my attention years ago, who did some work on spiral calendars but I never did any serious investigation in this arena. If you have any info on this subject I would greatly appreciate it and recognize the source, unless requested otherwise. I wouldn't admit publicly I read this rag either !

Anyway the neckline on this new and much larger H&S formation was about 102.25-50. Lets call it $102 for simplicity. The head was formed at $160, so we can ascertain a potential target by subtracting the height of the head from the neckline (160-102=58) from the neckline. Therefore (102-58=44) I come up with a target for Deutsche Bank of $44.

Outrageous you say. Judge for yourself. I only let the charts speak to me since they sometimes tell fibs(short term) they rarely lie and absolutely never can or do over longer periods of time. I am going to watch DB close and will be considering adding to the short position on any rally back into the neckline or just above. We have to respect a move such as this given it happened back in May rallying just above the $120 neckline.

That being said, wouldn't it just be like the market to do that to us the last time and now that we are looking for it to happen again, it never looks back.

Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 3 units Ultrashort Dow DXD@ $50.12 stops 2/1 at DIA $130.26/127.34
Long 2 units Ultrashort Financials SKF @ $103.90 stops at XLF $26.72/25.54
Long 1 unit Currencyshares Swiss Franc ticker FXF @ $96.25 stop at $93.82
Long 2 units Ultrashort Real Estate ticker SRS @ $88.80 stop at IYR $71.08
Long 1 unit US Gasoline Fund ticker UGA @ $60.35 stop at $60.92
Long 1 unit US Heating Oil Fund ticker UHN @ $58.00 stop at $60.87
Long 1 unit Ultrashort QQQ ticker QID @ $37.05 stop at QQQQ $52.24
Long 1 units Ultrashort S&P ticker SDS @ $57.20 stop at SPY $141.54
Short 1 units Daimler AG ticker DAI @ $86.20 stop at $82.48
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $22.44
Short 2 units Goldman Sachs ticker GS @ $191.53 stops at $184.43/180.76
Short 2 units Darden ticker DRI @ $36.35 stops at $36.37/$35.24
Short 2 units Lehman ticker LEH @ $43.70 stops at $36.27/$30.92
Short 2 units Deutsche Bank ticker DB @ $117.03 stops at $114.89/105.37
Short 2 units HSBC ticker HBC @ $83.23 stop at $86.78
Short 1 unit of Visa ticker V @ $86.25 stop at $91.17
Short 1 unit of Netflix ticker NFLX @ $31.10 stop at $34.64

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