Monday, June 14, 2010

Charts as Promised

I know I promised you some charts and no I did not forget but I have some mitigating circumstances. First off, the World Cup is on, that in and of itself should be sufficient. While on the subject of the World Cup, I simply cannot wait for the Argentina vs Germany match up as winners of Groups B and D, game of the tournament, if it materializes, in my view. Second off, the charts have, as they do from time to time, become less and less reliable. No before you even get started, I am not making excuses here but with the proliferation of HFT-ibots free taxpayer funded prop accounts at GS, JPM, et al. mucho gamz are being played which can distort the charts.

I am not ruling out charts in any way, but in an environment like we have now, one must be on guard for shenanigans if you will. Break out/down fail and reverse. Reliable patterns no longer seem reliable. The rules seem to no longer apply. My refrain is to focus on longer duration charts as the longer duration chart will be less susceptible to da gamz da boyz are playin'. If you don't believe me ask yourself how many good looking, seemingly surefire patterns have been obliterated of late. I thought so and this echo bubble, just like the Japan bubble, the dot com bubble, the housing bubble, and every other bubble before it, it will end when it ends and will spare no one. Not Bob Doll, not Lloyd Blankfein, not Ron Insana, no one.

That said, here are some charts for you to ponder.

Back on a post dated Dec 10, I remarked how I wanted to get short the Euro but didn't want to chase it as it had broken hard. What an absolute fool I am in hindsight. An updated weekly view on the Euro is shown below..

So given this, here is a then and now comparison of the Spiders for you to consider.

First up we have a 5 yr weekly view of the Spiders ticker SPY (below).

Okay, now that you have that hi-lighted yellow area in mind I am going to magnify it so you can see it up close. Remember now that these are still weekly bars. Also note the imaginary flash crash tail I have drawn on the chart, it will come in handy when comparing it to the next chart.

Hang on now. Before you check out on me for good, quickly have a glance at a daily view of the Spiders off the peak back in August.

With the flash crash tail is drawn in the charts look eerily similar. Okay, so even if you don't believe any of my noise and garbage, just ask yourself this question... how often do triple bottoms hold? Ahhh who cares. Lets all just turn on CNBC and get our daily dose of bullish technicals alongside bullish fundamentals, alongside bullish economic news and be happy. How could that crew ever be wrong?

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48

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