Sunday, October 25, 2015

Daily News Roundup: I hate being bipolar, it's awesome.

China's 6.9% growth in "context" (Zero Hedge)
Barclays, Black Rock: China rally won't last (Bloomberg)
Market unfazed as Sino Steel defaults on 2 billion yuan bond (South China Morning Post)

International Affairs:
Tony Blair: Iraq war led to ISIS (Zero Hedge)
Hurricane Patricia makes landfall in Mexico (Bloomberg)

Natural gas futures sink to 3 year low (Market Watch)
BP and Shell prepare more cost-cutting as oil continues slide (The Telegraph)
U.S. prepared to help Vietnam in civil nuclear projects (Vietnam Net)
U.S. natural gas inventory rose for 29th straight week (Market Realist)

Art and Design:
3D printing arteries (Bloomberg)
Nissan bringing back Nismo R Attack GT-R to SEMA (Slash Gear)
Deus Ex Machina custom a Plymouth Barracuda (Design You Trust)
Statue of Vladimir Lenin changed into Darth Vadar in Ukraine (Design You Trust)

Tuesday, October 20, 2015

Bearish Ascending Wedges Abound: Russia (RSX) and Semiconductors (SMH)

Sorry but I have an exam this week combined with some data problems so I am not able to post as much and as often as I would like, but I would like to point out that a number of bearish ascending wedges have appeared in some index funds. A lot of indicators are flashing oversold and since options expired last week I am expecting a pullback over the next week or two.

Monday, October 12, 2015

China: A short too good to pass up

Need I say more?

Where crude oil goes, Russia will follow

I was quite happy when my short on Russia today returned almost 7% at one point (via RUSS), and then I happened to notice that crude had also took a tumble today. Geopolitically the link between the two is quite obvious, and certainly the thinking that trouble in Syria is bullish for oil as the Suez transport link is threatened, but then again what could punish Russia's involvement in Syria more than driving the price of oil down again.  

On the daily charts, USO today failed to break above a high put back in the last week of August at $16.25 and an ascending bearish wedge has appeared. Furthermore, the pink lines representing a Fibonacci fan based on the high put in July of last year and the low put in March of this year has revealed that oil failed to break the second fan throughout June/July and looks similarly destined to fail again.
Similarly on the weekly chart today's pullback has coincided with contact on the final channel resistance line for the third time.
Because of the sudden bearishness in oil (and commodities in general, please read this excellent article in The Telegraph) the knock on effect has been a decline in Russia which has traditionally has been very heavily weighted in oil. In RSX's current descending channel, contact was made over the last two days with the channel resistance line (for the second time) and repulsed strongly. Stochastics were already hinting at an imminent decline with support first appearing $16.50.

Sunday, October 11, 2015

Biotechnology and S&P: Earnings week and options expiration

Supposedly we just had the best week for the stock-market of 2015, and right on the heels of it we are entering a week that is going to be characterized by options expiration's and earnings reports. Taken together both of these are bullish, and yet the market is quite over-bought at the moment. The first half of the week might see a slight ascendancy in the market from current levels but I expect this euphoria to wear off in the second half. With some help from writers at Slope of Hope, I've modified my S&P chart a little. The first thing you should notice is that a green dotted line is now connecting previous lows in December and Febuary with recent highs in September and October. This line has only been violated twice in the last year so I expect it to represent serious resistance. The second point of interest on the chart is that S&P is currently in a bear flag. Taken together I think short positions are a prudent idea.
Curious to buck-this-trend is biotechnolgy. So far it has appeared to have entered a rising bearish wedge. The first high which sets the upper limit of the of the wedge has been set. It has since retraced, whereupon a slow grind along the lower wedge support line follows. We are now in the that grind upwards. The full stochastics and have all crossed over and the RSI(5) has given a short term buy signal. Biotechnology, from where I'm sitting, is speculative long/buy.

Friday, October 09, 2015

Daily News Roundup: In dog beers I've only had two

Foreign Policy:
China props up currency by 43.3 billion dollars in September (The Telegraph)
China threatens U.S. over violation of Spratly Islands (Zero Hedge)
Germany at the limit in refugee crisis (The Economist)

Ferrari pushing for 11 billion Euro valuation in IPO (Bloomberg)
Selling volatility no longer a "safe bet" (Bloomberg)
Sales fall, inventories rise showing possible "imminent recession" (Zero Hedge)

England has bumper wheat crop (Bloomberg)
Iran to trigger natural gas race with Qatar (The Telegraph)

Art and Design:
Presenting the carbon Ducati Diavel (Uncrate)
Pepsi from Back to the Future II going to be released for limited time (Uncrate)
The Callaway GT-3 Corvette (Uncrate)

Thursday, October 08, 2015

Semiconductors: Havin' a raging semi

Well, it's been swell but the swelling's gone down. The market has had a good run of late but whatever has driven it to this point seems like it's now out of steam. Nowhere is this more apparent than in the semiconductor index ETF (SMH). Another ascending bearish wedge has appeared while SMH makes it's second contact with the outer channel resistance line. Rising to this point has been positive with lots of upward momentum and open candles, but today for the first day in five we had a dark candle early on as it's advance was repulsed by the resistance line . RSI (5) and full stochastics (5) are both in the "very oversold" region and well above 80%.
While looking at the arrangement of SMH's trend since March it appears that since the last week of August a four-wave-counter-trend has gone in after it's five wave descent. Could this be the beginning of a new five wave down pattern? A clearer trend will emerge once "the dust has settled" from the Fed's Minutes release today which clearly hints at extended low interest rates, but pessimism is still pervasive in the market and inter-day trading on the exchanges has struck me as rather 'directionless.'

Monday, October 05, 2015

Daily News Roundup: Beer is like pouring smiles on your brain

Foreign Policy:
Russia escalates Syria proxy war, threatens full naval blockade (Zero Hedge)

Treasury sells 3 month bill at 0% yield for first time ever (Zero Hedge)
World Bank cuts Asia growth forecast on China/U.S. rates (BBC)
Japan wage growth dips, puts pressure on Bank of Japan for more stimulus (Reuters)
Euro area growth slowing in sign more stimulus may be ahead (Bloomberg)
China's credit fuelled expansion unsustainable (The Telegraph)

Russia to meet OPEC for oil talk discussion (CNBC)
China to build liquid natural gas terminal and pipeline in Pakistan (Hellenic Shipping News)

Art and Design:
Panoz unveils delta wing GT concept (Slash Gear)
Home whiskey still now available for $280 (Design You Trust)
Porsche Cayman Black Edition unveiled (Uncrate)

Sunday, October 04, 2015

Real Estate: Bet the house, but then sell it.

I made an incorrect call on real estate about two weeks ago after the full stochastic (14) indicators turned downwards which was then followed by a very bearish day two Friday's ago. What I didn't appreciate was the very narrow ascending channel it had been in prior to that which was actually wave one of a five wave ascent. The second wave down completed at around $69.50 which has now identified the larger ascending trend. I am making a bullish long/buy call on IYR to around $74.50 (this trade should be for aggressive traders only).
The timing of all this looks convenient as the current bull run comprising the final phase of the S&P's right shoulder should be about three to four weeks more, after-which we can expect the decline to resume.
An interesting article on Slope of Hope appeared over the weekend that has examined previous crashes in the last fifteen years and noted that there is always a re-test of the 20 month moving average before continuing down again. The current shoulder going in right now should be that re-test. For now an ascent is expected but short positions should be made over the coming weeks and long's unwound.
Reproduced without permission from Slope of Hope.

Saturday, October 03, 2015

Biotechnology: "Bouncy bouncy......kersplatt"

Readers will recall earlier in the week my expectation of a bounce in biotechnology stocks which has since materialized and quite profitably for those who were able to take advantage. Please remember that Janet Yellen had previously said that biotechnology was a little over-subscribed and inflated price-wise so naturally it made an excellent target for short-selling when the market decline began, but, during periods of decline high volatility bounces are expected which can also be lucrative when timed properly. To aide with timing an online colleague recommended $BTK  instead of IBB for watching biotechnology and I'd have to agree. The twin shoulder and head pattern is still apparent however the neckline and troughs are much more clear and provide a much better picture of what is happening. The most recent bottom came in perfectly inline with the troughs created previously by the left-shoulders.
The question now becomes how high up is this second right shoulder going to ascend? Two possible scenarios emerge. The first is that it stops at the neckline (about 3550) put in place by the two left shoulders back in March and April. The second scenario is that it bullishly blasts through this and ascends to either the EMA(34) or the diagonal resistance line put in place by the successive series of lower-highs since July (about 3750 and 3850 respectively). These levels have been identified by the red circles.
I'm partial to the second scenario with $BTK finding resistance at the EMA(34). Friday's move was incredibly bullish and the miserable jobs report has given the market some impetus for a move up due to an expected delay in the rates increase for at least another six months. Any increase before the end of the year seems extremely unlikely now. This is why I'd list biotechnology as a strong speculative long/buy intended for aggressive traders only.

The full stochastic indicators (5 and 14) on the daily charts are poised to cross over bullishly so we can expect the final shoulder to go in over the next over the next five weeks with about four weeks for the ascent. If the past is any guide we should see ascending bearish wedges develop as was apparent in the last three shoulders.
Early in the new week I would expect another insane rise to put the upper ceiling on this wedge and thereby allow us to delineate the shape of the rising bearish wedge and evaluate the volatility expected in it's rise over the next three weeks.

Friday, October 02, 2015

Daily News Roundup: The roof is not my son, but I shall raise it.

Foreign Policy:
IMF's call for Greek debt relief set to be rejected by Europe (The Telegraph)
Joaquin may miss U.S. coast (Bloomberg)
Spain's credit rating upgraded by S&P (Bloomberg)

Switzerland probes banks over precious metals fixing (The Telegraph)
Jim Rogers: Oil ignoring bad news means rebound imminent (Bloomberg)
U.S. coal exports plummet (IHS Maritime)
Oil price rising as Syrian fighting intensifies (Business Insider)

Junk bond market collapse? (Clive Maund)
"Dreadful" U.S. jobs growth may push back interest rate increase (The Telegraph)
Big tumble in Hong Kong and China stocks in third quarter (South China Morning Post)
Elon Musk's Solar City announces world's most efficient panels (Slash Gear)

Art and Design:
Sotheby's auctioning rare swatch collection (Bloomberg)
Bonham's lists Steve McQueen's Indian Sport Scout (Design You Can Trust)
Thomas Dagg: Star Wars and real life mixed up (Cool Material)
World's Greatest Drag Race (The Awesomer)

Thursday, October 01, 2015

Gold Miners: Imminent Breakout?

I can't think of a reason why gold miners would be particularly attractive at the moment except that with the coming storm gold would be an excellent hedge against any further volatility or inflation. Please be mindful that whispers of QE4 have already begun despite calls in the Federal Reserve that interest rate increases are still on for this year (possibly). Ladbrookes, the British bookies, have odds put at mid-2016 and given their recent track record I'm probably going to side with them.
GDX appears to be currently in a large downward channel that started back in November and looks set to begin the third wave up (of a larger five way down pattern). Point-and-figure charts have the high at around $18.30 which is the upper resistance line of my channel. This third leg up appears coincident with a bullish declining wedge that we've noticed developing since about mid-August. I've tried to show what the wedge might look like but it appears to a pattern that may continue into the middle of October. Wedges have an odd way of unexpectadly breaking up or down so there's no way of really saying when this might happen.
My recent "sell/short" signal issued about a week ago was incorrect and I should have ignored the recent cross-over on the full stochastics(14) as I now realize that combined with the bullish declining wedge the recent mid-range cross-over is probably just a small reprieve before breaking out. I expect the signal line to go horizontal in the near-term. Gold miners look like an excellent medium term long/buy.