Its even better when your portfolio is growing!
I made my move into a short position on the DJIA today as it is the last day of August and it seems the trend has already begun. Im using the proshares short ETF to gain my position. I have a feeling that the financials are going to get hit the hardest this fall because their fundamentals are by far the worst out there but I've choosen to go the safe root. The way things have been going so far it just seems like the government almost wont let anything bad happen to the banks. I know that they are in a horrible position and they are most likely going to get slammed but I just dont want to take the risk. I guess I'm still to new at this whole thing and I have trouble trusting my gut feelings yet. But I do believe the financial shorts will most likely be prove more profitable.
I always enjoy september, almost as if I may never see it again.
Oh how I hate to say goodbye to the summer months, but
Monday, August 31, 2009
Saturday, August 29, 2009
Sitting on the Sidelines
Right now I find myself extremely eager. I have a strong desire to trade but the markets just seem like their in a very weird position. There are very convincing arguments coming from two opposing views; the first swearing the rally will continue because of liquidity in stimulus and signs of "green shoots", the other stating the markets are overbought and a correction is due very soon. I've always found it easier to clear my head when I remove myself from the situation and do something else, maybe even take a weekend getaway to the beach. So this past weekend I took a trip to the Vineyard to enjoy the beaches and island quality of life. With a clear head I reviewed all the information I've gathered and came to the conclusion that the current markets are no place for my money. I believe that in the short term there will be a correction in the markets.
I am waiting for the right time to enter a short position. I think I will most likely short the financial sector because they have the worst underlying fundamentals. Right now alot of the wallstreet gurus are on leave, but since september and october are traditionally the worst months I believe their return will spur a stiff correction for the financials.
I do believe though that companies directly effected by the stimulus will do excellent in the longer term. The government has a few major changes that they will push no matter what, and the money will flow towards their ideals. The first one is healthcare, Obama has vowed to digitize all health records by 2012, thats as close to a guarantee as you'll ever get.
The second change will have to do with natural gas. The US has an abundance of natural gas and yet we continue to use foreign oil. We could save trillions if you were to use our own resources wisely, which Obama will most likely push.
Third is the fact that the US has always been known as the information and technology giant, and in order to maintain that crucial status we've got to push technology.. and hard! We can't let ourself slip behind in this field, so anything linked to new wave technology will most likely see serious gains in the future as the entire world evolves.
Fourth is the need for Cleantech. Alternative energy, water purification, recycling, etc. All of these fields and more will grow intensly as the world moves into a cleantech era.
Fifth is the oil shortage, its a guaranteed gainer. There is only so much and the price will only grow as the supply diminishes, especially with BRIC economies growing dependence.
Sixth is the Smart grid. Our nation electrical grid is still based in the early 1900's. We need a major overhaul in the way we produce and manage our electricity. And this new smartgrid push is no joke. It has to happen if we as a country are going to grow and evolve.
So those are my potential investment ideas for the longer term, but like I said Im going to sit tight until things make more sense.
I am waiting for the right time to enter a short position. I think I will most likely short the financial sector because they have the worst underlying fundamentals. Right now alot of the wallstreet gurus are on leave, but since september and october are traditionally the worst months I believe their return will spur a stiff correction for the financials.
I do believe though that companies directly effected by the stimulus will do excellent in the longer term. The government has a few major changes that they will push no matter what, and the money will flow towards their ideals. The first one is healthcare, Obama has vowed to digitize all health records by 2012, thats as close to a guarantee as you'll ever get.
The second change will have to do with natural gas. The US has an abundance of natural gas and yet we continue to use foreign oil. We could save trillions if you were to use our own resources wisely, which Obama will most likely push.
Third is the fact that the US has always been known as the information and technology giant, and in order to maintain that crucial status we've got to push technology.. and hard! We can't let ourself slip behind in this field, so anything linked to new wave technology will most likely see serious gains in the future as the entire world evolves.
Fourth is the need for Cleantech. Alternative energy, water purification, recycling, etc. All of these fields and more will grow intensly as the world moves into a cleantech era.
Fifth is the oil shortage, its a guaranteed gainer. There is only so much and the price will only grow as the supply diminishes, especially with BRIC economies growing dependence.
Sixth is the Smart grid. Our nation electrical grid is still based in the early 1900's. We need a major overhaul in the way we produce and manage our electricity. And this new smartgrid push is no joke. It has to happen if we as a country are going to grow and evolve.
So those are my potential investment ideas for the longer term, but like I said Im going to sit tight until things make more sense.
Friday, August 14, 2009
The Steam has run out.......
All data points to a market correction!
If you check the chart data for equites, gold, and the USD they all seem to fall right into line for a market correction. I'll show you what I mean....
On the DJIA chart below notice the areas that I've circled. Up top you'll see the relative strength Index(RSI) which has just begun its decent from a huge peak; a good sign that some weakness is to come. Also notice that the MACD lines at the bottom of the chart have just turned down from a serious peak as well, and they have crossed paths, usually a sign of a downturn in the chart. The Dow has been losing some momentum in the past few days and this is the first time in five weeks that it closes down at weeks end. All of this paired with some not so good retail sales and some scattered negative sentiments should point to a market correction.
Typically when the markets turn down, the Dollar becomes a safe haven and gains ground. So again if you look at the circled areas you'll notice the corresponding evidence in the RSI and the MACD. Looks like the dollar could have a rally; how big I dont know.
All of the inverse evidence can be seen in the gold chart below, as it moves opposite the dollar. The RSI still shows above average strength however the chart is for the 13th of august and doesnt include todays negative closing. I believe that the government is going to pull the country from this recession by any means necessary(increased gov. spending). Likewise inflation is bound to follow once the trend begins, so I think gold is a great asset to any portfolio however any purchases should be postponed until the price comes down a bit with this correction. Again I dont know how extensive the correction will be given that there is still a major mortgage crisis unfolding, and we all know how bad news can effect the markets.
I positioned myself in Proshares Short Dow 30 (DOG) to try and gain from the downturn. There is an ultrashort position named DXD and also there are financial short positions which are SEF and SKF. This fall we're going to see the first major spike in option Arm resets, so a real estate short could be in order as well. All though it must be timed very well, for minimal exposure.
If you check the chart data for equites, gold, and the USD they all seem to fall right into line for a market correction. I'll show you what I mean....
On the DJIA chart below notice the areas that I've circled. Up top you'll see the relative strength Index(RSI) which has just begun its decent from a huge peak; a good sign that some weakness is to come. Also notice that the MACD lines at the bottom of the chart have just turned down from a serious peak as well, and they have crossed paths, usually a sign of a downturn in the chart. The Dow has been losing some momentum in the past few days and this is the first time in five weeks that it closes down at weeks end. All of this paired with some not so good retail sales and some scattered negative sentiments should point to a market correction.
Typically when the markets turn down, the Dollar becomes a safe haven and gains ground. So again if you look at the circled areas you'll notice the corresponding evidence in the RSI and the MACD. Looks like the dollar could have a rally; how big I dont know.
All of the inverse evidence can be seen in the gold chart below, as it moves opposite the dollar. The RSI still shows above average strength however the chart is for the 13th of august and doesnt include todays negative closing. I believe that the government is going to pull the country from this recession by any means necessary(increased gov. spending). Likewise inflation is bound to follow once the trend begins, so I think gold is a great asset to any portfolio however any purchases should be postponed until the price comes down a bit with this correction. Again I dont know how extensive the correction will be given that there is still a major mortgage crisis unfolding, and we all know how bad news can effect the markets.
I positioned myself in Proshares Short Dow 30 (DOG) to try and gain from the downturn. There is an ultrashort position named DXD and also there are financial short positions which are SEF and SKF. This fall we're going to see the first major spike in option Arm resets, so a real estate short could be in order as well. All though it must be timed very well, for minimal exposure.
Thursday, August 13, 2009
Wednesday, August 12, 2009
Market Pop could Boost Dollar
The market rally may be very close to hitting its peak. There are alot of mixed feelings about the markets which seem extremely overbought. Is there really enough supporting data to jusitfy the extended rally? Irrationality seems to have taken the reins recently as markets surged higher on only better-than-forcasted earnings and positive words from the fed. There seems to be more supporting evidence against a recovery than for one, which is why I think that our rally could return to bear market before long. The third quarter could still hold positive earnings for some businesses, especially those that benefit from the cash-for-clunkers programs and the like. The second wave of the mortgage crisis will most likely amplify the downturn as negative sentiments and bad news mix to create a greater sell-off. move into short positions on the Markets and Financials, Real Estate shorts are a good position as well. I may also buy a small stake in Atlantic Energy Solutions(AESO) as it seemed to perform well during the last market downturn.
Wednesday, August 5, 2009
Gold Chart Convergance
After todays performance it seems as though the convergance trend I posted yesterday has a higher level of validity. If the chart continues along the trend we should see a bottow around the 935-940 level and from there we could see a breakout to the upside.
There is a chance obviously that the breakout could be to the downside but I think its unlikely. The converging boundary lines are leading higher and thats usually a good sign that the breakout will be a positive one.
There is a chance obviously that the breakout could be to the downside but I think its unlikely. The converging boundary lines are leading higher and thats usually a good sign that the breakout will be a positive one.
Tuesday, August 4, 2009
Natural Gas Outlook: begin taking profits
I shifted my position on Natural Gas Fund UNG today to begin taking profits. I really hate to change my stance before the winter months because normally thats when price increases would take place. If you bought around the low 12's when I originally posted my buy short order you would be up about 10% now, which isn't a bad gain by any means for under 30 days. The reason I had only suggested to buy for short amount of time is the same reason I'm postponing my buys on all other commodities right now; I believe the "bull market" will come to an end this fall. I've named some of the reasons for a turn around in earlier posts but to reiterate; second wave of real estate/ credit crisis, an overbought market, poor underlying fundamentals, unchanged or growing unemployment, and very low consumer spending. These are many reasons that the huge bull market is a fake. We're not even half way through the real estate disaster that started the whole mess, right now we're in the eye of the storm.
I would reccommend holding your shares long but the supply is so great and there have been so many new discoveries that I think the prices will be held down until a greater use for gas surfaces. It would be a great alternative for fueling our cars. Buy the lows when the markets turn down if anything, Im sure there will be some profits to make from there.
I would reccommend holding your shares long but the supply is so great and there have been so many new discoveries that I think the prices will be held down until a greater use for gas surfaces. It would be a great alternative for fueling our cars. Buy the lows when the markets turn down if anything, Im sure there will be some profits to make from there.
Gold Chart Outlook
The uptrend continued today with a gain of 1.14% while the dollar seemed to flounder around not really making any significant movements. What we accomplished today was a hurtle over the resistance level around the 960 and now the next resistance level we're looking at is around 980 so actually a great feat today. Once we break through that 980 we'll be ready for testing the 1000 mark again. I just hope that we can break through 1000 before anything serious starts to take the wind out of the bulls sail. I have a feeling that things will be good throughout august and probably into the October range before people start hearing about the next wave of Real Estate disasters and so on, but no sweat for us because there is always a balance and we've located the other end of the see-saw. So for now we have clear skies with a light breeze, a possible chance of showers tomorrow, but all in all a strong end to a rollercoaster summer.
Thanks for reading, and good luck!
Monday, August 3, 2009
The Rally Continues: Time for the Handoff
Today we had a huge rally in the markets, and it seems like the Dollar made up for its friday performance.
The bulls have officially taken the reins... let them! Its funny how this always happens, the market works in extremes. First everyone gets scared and people panic (the market gets oversold). Then a natural rally occurs, and some how people become overly bullish (the market becomes over bought).
If you havent already passed off your shares to a speculative bull, I advise you do so.
This market, though very impressive, is getting to the tipping point. Sure we've beat alot of horrible earnings forcasts, but we're seeing minimal consumer spending, excessive unemployment and an ever-looming threat of continued credit carnage spurred by toxic mortgages. The financial sector is about to recieve another aggressive kick in the groin when these option arm's, ALT-A's, and commercial loans begin to default.
So where should you be positioning yourself to benefit from the disaster?
Chances are that when the bears regain control of the markets the dollar will see a decent rally as investors look for a safe haven. That means that commodities will most likely take a hit. I don't think that its necessary to sell off your commodity positions as long as you have some extra funds to average down, but I would recommend holding any purchases until you see a decent pull back. Some other positions that I see as profitable are shorts, especially in the real estate and financial sectors. There are ETF's that are set up to take advantage of bearish moves in different markets. So take any profits on equities pretty quick here and keep your cash ready for attractive prices in gold, oil, silver, and also short positions on financials and real estate.
SEF - Short Dow Jones Financials
SKF - UltraShort Dow Jones Financials (2x leveraged ETF)
SRS - UltraShort Dow Jones Real Estate (2x leveraged ETF)
The bulls have officially taken the reins... let them! Its funny how this always happens, the market works in extremes. First everyone gets scared and people panic (the market gets oversold). Then a natural rally occurs, and some how people become overly bullish (the market becomes over bought).
If you havent already passed off your shares to a speculative bull, I advise you do so.
This market, though very impressive, is getting to the tipping point. Sure we've beat alot of horrible earnings forcasts, but we're seeing minimal consumer spending, excessive unemployment and an ever-looming threat of continued credit carnage spurred by toxic mortgages. The financial sector is about to recieve another aggressive kick in the groin when these option arm's, ALT-A's, and commercial loans begin to default.
So where should you be positioning yourself to benefit from the disaster?
Chances are that when the bears regain control of the markets the dollar will see a decent rally as investors look for a safe haven. That means that commodities will most likely take a hit. I don't think that its necessary to sell off your commodity positions as long as you have some extra funds to average down, but I would recommend holding any purchases until you see a decent pull back. Some other positions that I see as profitable are shorts, especially in the real estate and financial sectors. There are ETF's that are set up to take advantage of bearish moves in different markets. So take any profits on equities pretty quick here and keep your cash ready for attractive prices in gold, oil, silver, and also short positions on financials and real estate.
SEF - Short Dow Jones Financials
SKF - UltraShort Dow Jones Financials (2x leveraged ETF)
SRS - UltraShort Dow Jones Real Estate (2x leveraged ETF)
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