Crossroads....

To cover or not to cover that is the question?

Rarely am I surprised with market movements, but I must admit, today has me a bit perplexed....an announcement of a band-aid solution yet again in europe with no true structural shifts has the market ramping right into the heavy resistance area that has held the S&P back over past few weeks....

So, what to do?  Well I've peroused in detail all the foreign market charts, large cap domestic charts, currency charts, interest rate charts, commodity charts and of course the US indicee charts....To me there is a lot of mixed messages...

Many international indexes are still well below that established outside week I spoke about recently...then there are a handful making new near-term highs...mixed

then some individual dow stocks are breaking out above small down-trend lines (AXP, BA, CVX, GE)... while many are still well-below established resistance levels (JPM, DD, TRV, UTX, INTC)....mixed

currencies, obviously euro is rallying heavily, but still nowhere near breaking above its heavy resistance at $1.2725-$1.2750....still bearish

crude oil is breaking above small resistance @ $82, which gives it room to run all the way to $86/87 before next resistance...throw that on bullish side of ledger...

interest rates...not confirming this as a breakout at all...10 year treasury smack into heavy resistance @ 1.66-1.69%....30 year treasury smack into 2.78%-2.82% heavy resistance...if growth was returning these yields should be a lot higher....this to me is bearish ammo

Now S&P chart...smack into higher channel of downtrending channel...right at previous gap of 1353ish...next KEY resistance is 1361...

My analyis concludes I have no probablility edge here, therefore must get smaller....

Here is what I've done today:  Covered OXY short @ $84.15, Covered PCLN short @ 660.85, Covered TIF @ $52.15, Covered HON @ $54.67.....and took hedges around 1353 S&P for rest of open short positions....next week will likely determine my positioning for next 4-8 weeks! 

WMT chart...

no current positions in WMT...

VZ chart...

no current position in VZ...

TRV chart...

no current positions in TRV...

MMM chart

no current positions in MMM...

JPM chart...

shorted JPM today @ $35.43

I'm now on the darkside on this one...as I was long JPM and took a 20% gain earlier in the year!

Here are links to my original buy (long) and sell calls:

BUY:

http://mychartdiary.blogspot.com/2012/02/jpm.html

 

SELL:

http://mychartdiary.blogspot.com/2012/04/jpm-update.html

INTC chart...

no current positions in INTC...

KFT chart...

no current positions in KFT...

HPQ chart...

no current positions in HPQ...

CSCO chart...

no current positions in CSCO...

SBUX update...

original post and chart from April here:

http://mychartdiary.blogspot.com/2012/04/sbux.html

JPM

shorted JPM a bit ago a at $35.43...this thing is going lower...chart below....

SLW press...

Just added to SLW short at $25.6...now have double position with avg @ $26.52...original short was $27.45....

stop now at b/e $26.52......looks imminent for continued decline...stay the course...SHORT!

MRK chart update....

MRK doing exactly what I expected it to do from initial post and purchase...stay the course, it's progressing nicely...

link to original post below:

http://mychartdiary.blogspot.com/2012/05/mrk.html

MSFT chart....

no current position in MSFT....although will watch this one closely, looking like a decent long trade could be setting up...stay tuned

EWA update

remain short from original post @ $23.95

PIN update...

remain short from original post @ $17.75

RSX update...

remain short from original post @ $29.89

EWI update....

remain short from original post @ $12.12

CAT chart

Full disclosure I am currently SHORT CAT...I shorted it originally at$110.02...then added to it at $98.05 so average of $104.035...I'm not counting it as an open position if you've noticed on right hand side, because I did not post the chart when I entered the position, therefore can not fairly count it as part of my track record...

BA chart

no positions in BA currently...

BAC chart

no current position in BAC...

AXP chart...

no current position in AXP

AA chart

no position in Alcoa at the moment

Dow Charts....

Over the next couple of days or week my goal is to post all the 30 Dow Stock Charts with my notes, analysis and forecasts....I posted KO & IBM earlier....I like to do this exercise because obviously individual stocks make up the Benchmark indexes, so looking under the hood gives a good picture of what the indexes should be looking like

Only Dow stocks I currently have positions in are SHORT: DE, HON and LONG: T & MRK

KO exit...

Sold my remaining 1/2 position today @ $74.65....including the June $77.50 calls I wrote for $0.77 my exit price on this 2nd half is $75.42....here's the chart

Some Charts...GOOG, MCD, IBM

Just did the work on these...I don't currently have a position in any of them, just thought I'd share the work....

China & Brazil....

These 2 countries are leading to the downside making fresh 2 year lows and severely under pressure....If my analysis is correct we should see some sharp downside moves for next 1-2 weeks pretty uninterupted...I remain fully short with all my open positions on righ hand side....nothing to do but let them run!

The street is still treating this as a buy the dip....until this strategy changes, we have much more downside coming....I'm still sticking with my low 1100's as place to cover and await next counter-wave up to finish to short again for final thrust / wave lower to complete bear wave...stay tuned

EWC update...

remain short from original post @ $28.45

EWZ update...

remain short from original post @ $60.44

EWU update...

remain short from original post @ $17.65

EWQ update...

remain short from original post @ $20.98

EWG update

remain short from original post @ $22.67

EWJ update...

remain short from original post @ $9.75

Thoughts...

worth noting is the large amount of Outside Weekly Candles forming across the world  (Germany, France, China, UK, Japan, Brazil and on and on)....Almost all of the top 15 countries are making outside weeks...many of which have candles (wicks) smack up into resistance...these patterns are very noteworthy....my take is that next week should be a rather Swift move lower if these patterns are correct....Japan's is occuring right into the neckline (resistance) of a 3 year H&S pattern breakdown....
It's looking like remaining as short as you can below those "wicks" or last 2-3 days highs is the play...above there and markets would have a lot of upside due to the fact that an inordinate amount of energy by sellers was used to create these patterns...

compliment that with a weekly Doji on SPY....you get a recipe for a very BEARISH set-up

AND look what XME is setting up for....how eerily similar huh?  look what happened preceeding the yellow oval in '09

Here's some updated charts with Notes

remain short FXI from original post @ $38.00

Back to fully short

Removed all my hedges this morning as market moved negative and european markets where firmly in the red and showing strong negative follow-through days after yesterday's DOJI candles right smack into resistance....From just above 1350 I removed all hedges and am letting all my open shorts resume downward moves...

Market looks like higher levels need to get hit...

S&P @ 1338

It appears market is preparing for some sort of pop and euphoria after greece vote and central bank mumbo jumbo over the weekend....which is fine because it will simply set-up an even better shorting opportunity.....

I see the SnP filling gap left from May breakdown at 1353....then most likely on it's way to nail the 61.8% retracement level from 1415 to 1268 downmove which is 1357-60....lots and lots or resistance between 1360-70 if there is an overshoot....

Remember the market is never wrong...and if you get mad at it or upset, then you will only make worse decisions down the road....I nailed the top call above 1400 and have some incredible profits racked up through all my shorting activities over past few months and even my long trades have been solid....which reitterates how much charts/technicals don't lie....

Most of the international shorts have between a 7%-14% gain....I will be Neutral going into next week and react to what the market is telling me then....Everything on my current position list as an open SHORT still has a broken chart...could it rally more or throwback more?  ....absolutely, but I'm short from much higher levels...so instead of closing these positions out I will so using hedges...

No reason to make a big bet here....my trading strategy is playing the bell-curve not the tail events....

When you look at all my closed positions this is why you clearly see a pattern of my losing trades being small draw-downs and percentage losses....and my Winning trades much larger average gains....with this probability trading strategy it will allow me to make money in any market environment....

Haven't covered....

going out fully short today....still....remember I removed hedges around 1319-20....

we will see what happens tomorrow...bulls are BANKING on continued goosing my world central banks...without it and we have HUGE downside...

Sold half T

just took off half my T position from Cost of 32.76 @ $35.75....

It hit a lot of my projected targets if you go refer back to my original post and chart

Another wild one...

Removing my hedges yesterday and returning to 100% short was a good move...let's see if we can finally get some more downside follow-through....last few days have carved out a pretty good range of 1307ish to 1330ish....

I still favor the market continuing down to complete the first leg of the "bear" that nobody has really recognized yet....once that ends (1100's is my prediction) we can see a pretty sustainable and powerful bounce back up very reminiscent to what we saw in march of '08 where SnP bounced from 1256 to 1440....today it would look something like 1150 to 1300-50....I will look to cover my shorts at completion of first leg down....

With that being said I'm on the look-out for this bounceback counter-trend rally which I just touched on starting on June 1st when S&P got shelled to hit a low of 1268....this would mean we are smack in the middle of this move higher....I stated yesterday I will look to hedge or simply exit all shorts on a move above 1330-35 this still holds true....this is not my favored scenario but have to be ready for anything and make sure NEVER to get caugh flat-footed...especially in this market landscape with central bank intervention seemingl every other day....

Chart above has my "cover shorts" zone indicated....pretty simple right now as I see it....1) we remain in this downtrending channel labeled in thick blue dotted lines and we go down to test bottom of it and remain in the first leg of bear move down....or 2) we break out of this channel and we see the counter-trend rally continue which began from 1268 SnP....

PS-All world charts still look terrible....single sector domestic charts ditto....our market indices ditto...and individual leading company charts look awful as well....not a good sign...Question really is do we go down further now?  Or do we go down further from higher levels?  I'm betting on the former but prepared for latter...

More chop...removed hedges

took off all my hedges just a bit ago when S&P was 1319-20....if market can get back above 1330-35 I will be putting hedges back on....

Market still in downtrend....BUT trying to change that

S&P @ 1308-09 and +22 handles on the day

My previous post I stated I would not real in any shorts until Market had strong reversal and got through 1297-1300....so this morning in order to stay disciplined I again took on full hedges around 1301-02 on the SnP...the reason I haven't covered any shorts on my individual names or eff's is because I'm short from much higher levels and those names are still clearly broken...I expect all of them to see lower levels down the road...BUT the short-term strength and rally from breakdown has to be recognized...If it continues I will be hedged up...If it fails then I simply take my long hedges off and go back to fully short...at this point market still has a lot of proving to do...but many shorts were caught leaning wrong direction and many longs were underinvested which can cause some extreme bounces...

I will try and post all those individual short ideas throughout next few days...

Chart below shows how S&P is right at downtrend line which began this big move lower...above that and there is room to run all the way back to 1337-40 range and even all the way up to 1360-80 range....this is why I'm fully hedged and market neutral at this juncture...once waves clear up and path of least resistance becomes clear I can reposition...

Still no reason to cover...

S&P @ 1285...... -25 handles

Quit frankly:  It is utterly amazing to me how orderly these down moves are...down 25 handles on S&P really isn't even scratching the surface of panicky....last August we closed on the 3rd at 1260...August 4th down 60 HANDLES at 1200!!!  Closed the 5th at 1199 so flat...next Monday the 8th of August the cracking came down 80 F'n HANDLES at 1119!!!

My analysis has been spot-on...no reason to change anything...I see no reason to real in any of my shorts...if we are still in 1st wave down we have lower levels to come...a strong reversal from here and a close above 1297-1300 will have me closing some shorts...if we stay down here and close below the prior lows than we still have lower levels to come...

riding the bear wave still, no reason to cover....