some action

Took a bit of action this morning.

1. With the decline of the optical player LLNW is sitting on some nice support. Ever since the CEO was interviewed by Cramer I have been keeping on eye on it. (I really liked the way he projected himself, and the business.) I will post the link to the interview and charts later today.)

2. ATI - The decline is near the support to which I would like to enter, and it is oversold, so I entered. I will post an updated chart later today.

3. I eased up on some IBM that I purchased in the 159 area. (Still my largest position. Should be trading in the low 170s/very high 160s as we approach next quarter's earnings report.)

4. With the new additions I added SPY protection in case this 'Day of Rage' in Saudi Arabia is a market spooker. Keeping an eye on it, but since I did a lot of adding to the portfolio, discipline demands protection.

Market Thought... update

My current market thesis has not changed since Feb 23rd, via the 'acceleration' post. The market appears to be drifting, and for the time being, the drift is sideways. The threat of drifting lower, to the 62SMA is still present, and I still think the downside is limited to the 62SMA as per the 'filter the noise' post.

A few trading notes:

1. I entered a position in the TBT on Friday. If the only scenario is rising rates, might as well be positioned for it. The only instance I can see 10yr rates actually decline is if global instability rises significantly. Right now it is very contained, and various indicators are saying the global economy can more than handle it.

2. I am very tempted to short gasoline, via UGA puts. It's a technical call, with a bit of macro-economic trend mixed in. Gasoline is very overbought, and frankly, I thought current prices would have been the very high-end limit of the current summer driving season (if getting this high at all).

Basically, the Slow stoch is showing a very overbought condition, with a ton of bullishness from the DMI. (The etf is showing a more bullishness than the charting of the continuous contracts.) This should support the CCI to elevate as the price rises. If the CCI rises over the next few days, I will take on this trade via July 2011 50 or 55 strike put.

Jobs data... pretty good

A break down of the numbers show an nice report.

Private sector growth: +222k

Average Weekly Earnings: $782.15, slight rise. (The non-supervisory weekly earnings rise was better.)

All-and-all the report was pretty good, enough to merit current market levels, especially a cause to 'buy-the-dip' if the SP500 sees the 62sma.

rising rates

Global rates are rising. (Brazil is the most recent rate rise to 11.75%. If your looking for yield, take a serious look at their Gov bonds.) With economic growth, higher rates are inevitable. But there is always two schools of thought. Whether you're a believer in Bill Gross' disagreeable outlook that rates will rise because of QE2 ending, or the 'I still believe in America' Buffett camp of American economic growth, the conclusion will be the same: higher rates for America.

If this is the only outcome, for good and bad scenario, a way to play it is the TBT. It looks interesting here, via the weekly.

Market Thought... filtering the noise

The intraday action indicated some near-term weakness. Technically, the 28/32 SMAs have not broken downward yet, but if they do, the trend is to hit the 62SMA.

The 62SMA on the daily is interesting because it also corresponds to the 14SMA on the weekly, which is proven support for the rally's trading dynamic.

So regardless of the intraday weakness that caught my eye, I think the weakness will be limited.

Many individual stocks are by no means over bought, some are lightly oversold. Basically, at the moment, they seem like they will go with the flow.

Adding support to 'limited-downside' thesis is the oversold condition of the 10yr yield (or very overbought condition of 10yr note). Fundamentally speaking, a declining 10yr yield suggests a declining US GDP. (This contradicts the recent survey.) The fear amongst the big-boys makes sense. If oil stays above 100 for an extended period of time, it will chip away at the consumer and cause a declining GDP. But the technical set up of the 10yr yield suggests this fear is over done right now.

Market noise, caused by a feared slowdown in GDP, may bring the market to the 62 SMA. IMO, that level will bring already consolidated stocks to very oversold conditions. And I will be buying as indicated in the post below.

Despite my belief in the above, we always have to think of all the possibilities. An unlikely scenario, but one that plays off the fear of sustained +$100 oil, may bring the SP500 to the rally's long-term support, the 360SMA.



However I stress this is a very unlikely scenario right now, as it would push stocks of very high cash-flow generating companies to levels that are far to inexpensive, and implies unrealistic geopolitical assumptions. I would have to see real hints of these geopolitical assumptions to think we go to the 360SMA.

If the market heads toward this level, with out hints of the geopolitical assumptions, I will go all in.

left wanting

Here are a few stocks I am looking to enter (or add more to):

ATI around 61-62, AAPL near 342-343, IBM around 158-159 and WFC near 30-31

i'm back... quick market thought

The SP500 looks to wanna break the current SMA supports (28/32), but I do not believe the SP500 will decline past 1280.

I am just so tempted to increase IBM, AAPL and others right now. But I think in the very short-term, a better entry will present itself. That is the trader in me. (If you are not a trader, I am only talking about a few points to the downside. ie IBM may see 158.)

I will give more details and charts later.