Here’s the point. The markets look sick on the back of some of the bleakest economic indicators we’ve seen since the Great Depression. Yes there are some optimists that see the cup as half full, and to counter them, there are the pessimists who see it as half empty.  I see it for what it is: completely dry. Not a drop left in the cup.

Why?  Take a look at the charts. Either the “flash crash” and recent major bear market top confirmations, which are undergoing retracements right now, are no reason to be worried; then there’s one thing you should definitely be worried about, and that is the debasing of not only the USD, but all major G8 currencies, as well as all currencies tied to the USD, which is half the world. Considering commodities are priced in USD’s, and you have some sort of mental block and are unable to short stocks, the long side of your MARKET-NEUTRAL portfolio should contain commodity stocks, although a global recession will kill demand, regardless of the value of the USD as nation after nation devalues to remain competitive with those tied to the US Dollar.

It’s like the days of Fiat Currencies are crashing down.  As the cycle turns, and factories close, and mergers that were done at the top are unwound or scaled back, unemployment will continue to rise.  The Bush Administration did a heck of a job destroying any last vestiges of worker’s union’s, which was one of his top policy objectives. So forget about any “cradles” to support those forced to go on welfare; the indigent, the transients, the homeless, basically, the poor.  I don’t personally agree with the concept of a “workers union” for this exact very reason. Union’s were built in the very early part of the 20th century, when workers needed rights, child labor was rampant and civil disobedience was not tolerated and countered with severe force, as if we were how Iran is today.

However, in the 21st century, labor mobility is a key factor in keeping those with specialized skills employed. Web sites with thousands upon thousands of jobs are available to the unemployed, with jobs all over the country, something that wasn’t available 100 years ago.  Labor mobility is the opposite of Labor Unions. But since the world has changed, Labor Unions have become nothing but a hindrance to productivity and an excuse for certain employees to abuse their union rights.  I recall living in Michigan and my neighbor above me was usually on strike from Chrysler. He loved it because he got to stay home and drink his Budweiser while collecting 98% of his pay!  No wonder our automotive industry was shattered. Have no doubt though, this same industry, without the ball and chains attached to it, will become the most prosperous industry in the world, powering employment in green energy, new construction, advanced labor, etc.  No more people trained to pull a lever all day long, but instead, those trained in sciences that make lasting contributions to civilization as a whole. With Labor Unions, I doubt even Craig’s List would get any hits.

I digress. Back to the present day and current market. When studied up close, one can see prices have leaped above widely used moving averages. Prices did this after confirming major tops and some even making new bear market lows!  So we know the smart money has been distributing stocks for a few years now, and in the process, creating the occasional rally that appears bullish to the laymen, like button pushing day trading robots who are going broke every day while their firms get richer and richer.  There are 4 phases to the stock market, and this is Stock Theory 101. If you don’t know those 4 cycles, get out now while you still have a chance. You’re a dead duck.

This is not a traders market. It’s not a stock pickers market. It’s not a market to invest long-term assets, it’s not a market with anywhere to hide. There is debasing going on, and unless you are sitting on something tangible, like blocks of gold and silver, then you will continue to see an erosion of wealth. Even when you are sitting in cash, you are slowly draining money away due to the ZIRP that’s been in effect forever now.

So without further adieu, I present to you the recent “event” that has all the day trading button pushers at the edge of their seats because prices have “gapped” above their 50-day Simple Moving Averages. The charts look entirely different when using Logarithmic scaling and Exponential or Weighted Moving averages, but the average person who invests via Scottrade, or Ameritrade, or eTrade doesn’t even have a clue what those terms mean. I’m going to link to the charts rather than post them because I’m not in the mood.

The reality is:  Gold is rising and the number of actual “deliveries” vs. rolling of contracts has exponentially increased in Chicago to unprecedented levels, and believe me, it’s expensive to take delivery of the gold rather than rolling the contract, plus storage, transportation, security, etc… So near term, buy companies with no overhead, that just collect royalties, like Royal Gold (RGLD) which just corrected 20% so now is the time to pick some up.

My favorite at the moment to buy and park is Chimera (CIM). They are running operating margins in excess of 80%. Their P.E. is below 6. And their yield? A fat 18% and trading for less than $4. You probably could get it for $3.50 if you’re patient. The smart play is to scale into the positi0n.  Start building it up. They are in the exact sweet spot of where you want to be as a company. Buying Residential Mortgage Backed Securities at huge discounts. They’re also gobbling up Residential Loans, real-estate related securities, and other asset-backed securities, again, at enormous discounts. If I had the money to back me, this is exactly what I would be doing right now. I would have my team combing through the pieces that make up each tranche of a CDO, ABS, RMBS, and even some CMBS.

Yields are falling and continue to fall as the Fed continues its quantitative easing operations in the market and has made it clear that their ZIRP will remain until the economy has substantially stabilized, a far cry from where we are now. The yield on government bonds can’t go to zero though because then the Chinese will look like fools for sterilizing their surpluses using zero return or negative return investments.

All the major indices, after making new lows for the year, have rallied back up to their downtrend lines, regardless of the fact that they are above their “50 day Simple Moving Average”.  But anything hopeful to cling to right?  Poor, poor fools.  The primary trend in developed economies is down. Showing promise are India and M.E.N.A. economies, especially after the World Cup being held in South Africa. Brazil is still too dependent on natural resource exports, so they’re in trouble too. As for Russia, forget it. They’ve gone back to the days of communism. There is no free market anymore in Russia.   China is still “on fire” according to the numbers, but one wonders “who’s buying all their output they’re reporting”?  Could they be manipulating the numbers? Will there be a major fallout there?  A Chinese bank went public recently, after ICBC went public last year. So there is demand for these stocks, could the demand be internal? In other words, could the party (Communist) be buying stocks for their own account?

Where does that leave us? It leaves us hoping for a major technological innovation, a world changing event, some sort of technology that will return optimism to the hearts and minds of all the Capitalists so they can finally tell the Socialists to shut-up, Capitalism works.  Perhaps if and when Obama re-directs the $100 billion+ per year our government is spending in Mesopotamia, for what, I don’t know; into domestic programs and fights not to be labeled as the “tax and spend party” by reminding the public using every channel available that the money is being diverted from the war, and not from new taxes, then we’ll see some real stimulus.  God help us if faith in the USD is lost. Unless the “brave New World Order” wants it that way, and is trying to introduce an international, single currency using SDR’s held by the IMF in the accounts of nations, and can be used as “money” between nation to nation.

I’d like to make an SDR withdrawal please.

Disclosures:  NONE

The strongest “sector” from a long-term macro perspective unbelievably is the Biotech Index. The chart below is monthly! Let’s keep an eye on the group for some short opportunities because the corrections are going to be hard and fast, but not for the faint of heart, or the prop guy with a tight stop-loss for the day.

Please click on image above for higher resolution chart

Is the CRB Index running its course, with an ongoing rally in the US Dollar and fires burning in Europe over severe austerity measures in countries used to Socialism? Or will the mighty Chinese economy pull us all through whatever is going on. The weekly chart of the CRB shows how it’s turning over after running into a myriad of moving averages as well as an important Fibonacci retracement level. Therefore, a good area to find short trades if we continue to fall and/or the US Dollar continues to surge, are commodity stocks.

Please click on image above for higher resolution chart

On that note, here’s one idea. BP and RIG both are in severe trouble. Technically, fundamentally, from a public relations standpoint, and the amount of damages they’ll have to pay is still unknown. But although they’re good candidates to short, at some point, both stocks will be extremely attractive buys. For now, the breakaway gaps in each suggest lower prices to come. However, at the moment, both are extremely oversold, so I would only short them if they break last week’s lows. Otherwise, let’s wait for a retracement and then we’ll hit the bid.

For now, the most important observation I’ve made thus far is that the most reliable indicators have been Fibonacci Retracement & Projection lines as well as specific moving averages. If you don’t know how to use Fib Retracements and Projections, tune in to my radio broadcasts on T3 Live, the internet’s most advanced stock research and advisory service. In these volatile times, you need guidance from the best traders on Wall St., who trade during the day, completely transparent, buying and selling in real time while talking on the radio explaining what’s happening. T3 Live has been on CNBC, Fox, MSNBC and mentioned in all the major financial publications. Check it out with a free trial here.

There really are a tremendous amount of both long and short trade opportunities out there. The problem? Gap after gap after gap!  It gets extremely frustrating for those that try to trade  the tape rather than a portfolio strategy.  Nonetheless, it’s just a matter of finding the market’s pulse and trading with it. Right now, to be 100% directional is suicide. One shouldn’t go beyond 80/20 during the day and 60/40 overnight. Here are some ideas on both sides. I’ll announce their entry, or trigger on the radio:

The primary MACRO THEME for the month is going to be a rising Dollar with a flight to quality, the carry trade continues, bond markets know interest hikes are coming, probably after the streets of Europe stop burning. Short look at the commodity stocks vs. long the tech names. Once again, I’ll be on the radio with many more names on both long and short trades. It’s been a long time since the VIX has been above 40. Let’s hope it stays here for a few weeks at least.

Aside from the macro backdrop that may or may not be causing a pending market correction, there are several trades popping up on my proprietary models on both sides of the market. So there are NO excuses to be purely directional when you’re proclaimed to be a market neutral Long/Short trader.

On the macro front, I’m generally in-line with the coordinated re-inflation of global economies via the debasing of their respective currencies. Therefore, I’m bullish long-term on things like Oil, definitely Gold, Dry and Wet Bulk Carrier fleets, Railway stocks, and Silver (perhaps more than Gold). But I’m not bullish on base metals that go into manufacturing, such as copper, aluminum, steel, etc… There’s WAY TOO MUCH production capacity or acquisition debt added at or near the top of the credit bubble, and the adjustment, although already taking place, is going to be a painful one and has a ways to go. If you want to be truly market neutral here, you would be long the producers, oil futures, gold futures, and silver futures, while short the Steel producers, copper, and base metal producers in general.

SHORT TRADES

ADI: Has moved way above all of its major averages on consistently declining volume: negative divergence #1. Money Flow turned down on Friday’s new high: negative divergence #2. Momentum Oscillator failed to make a new high relative to the new high made in early December ahead of this consolidation: negative divergence #3. The Secondary Trendline is around $34 while the 10-period daily EMA is at $31. So there are actually two ways to play this: If there is a fall in the market early in the week, pick up a small lot near the $31 level and use the 10-period as your stop. The other way is to short the stock as it approaches the $34 level.

ATHR: This telco play is directly on its all-time highs, which haven’t been broken since November after a series of six tests. This is the seventh (lucky number perhaps)? The only odd thing about my model on this is that it shows money flow collapsing while the stock has been rising for the past several sessions. That could be a false signal due to holiday trading, but it’s worth keeping in mind. On the other hand, all momentum indicators have turned up sharply. I never buy stocks after they’ve rallied several sessions, so a pullback to $30 should be followed by one more attempt at a new high at least. I don’t think we’ll see a break above $35 on this move, so there’s no rush, and if the stock does break above $35, I’d be a seller, legging into my short position and not a buyer, with the intention of covering my short position at or near $35. $30-$31 is a great entry on this stock.

CRM: Although I rarely suggest stepping in front-of a runaway train (i.e. bull market), Salesforce.com appears ready for an extremely short term pullback, ideal for the daytrader. The prior breakout high was 67.72, which directly coincides with the 10d-EMA. But remember, this stock is in a bull market, so when it’s time to close out that short, consider reversing and going long instead of just patting yourself on the back. The actual trade here is on the long side, but the MACD, Doji, and declining volume create three powerful negative divergences.

LONG TRADES

AMZN: Going into the Christmas season, Amazon’s channel checks were bringing back some unbelievable results. In other words, their sales went through the roof. Now we won’t know the extent of the returns they’ll face, but historically, Amazon has been one of those stocks that doesn’t react to the “item returns” line item in their following quarter. The 10p-EMA just crossed the 24p-EMA on Wed. Don’t let the declining volume on Friday fool you, with what appears to the “technician” as a Doji. This is classic chart painting for those that follow technical analysis like it’s their dogma. Friday was a ghost town on Wall Street, so one could have pretty much done whatever they wanted in terms of end-of-day chart painting. That’s why I don’t put too much weight into Technical Analysis as a valid tool in understanding market theory, especially when it comes to the markets’ micro-structure. If anything, it must be used within a much larger plethora of quantitative tools. With regards to Amazon, the stock spent the past 2 months consolidating the move from $92 to $125. Above $140 it’s a potential buy, using the 10p-EMA as your stop.

BCS: As I said before, I’m not a huge fan of Technical Analysis, but that doesn’t mean I’m not going to make myself an expert at it. It’s just another tool in my arsenal. Barclays bank, if it hits $15, will have corrected 40% since its’ October highs. Remember, this is the ADR so it’s thin. Not a daytrading stock at all! I think $15 is a low-risk entry point, perhaps risking $0.70 to make about $3 to $5.

BRCM: Something tells me this stock wants to test $35-$36. For a long position, use the 10d-EMA, leg into your long position, and leg out as it approaches the whole number.

CEO: Something of an anomaly in China, with a P/E of 16 and an EPS $9.57 per share, their 5-year growth rate is phenomenal but their most recent numbers aren’t all that great, but which oil producer didn’t suffer this past year? The anomalies lie in their TTM growth rate of almost 56% while their debt to cover ratio is 2.6 with their peer group being closer to 1.26! I wish American companies were run as tight as CNOOC. Their costs of revenues have shrunk while their income has stayed relatively flat in spite of the dramatic collapse in oil prices. As a long-term position, I would start building a line around the 155-157 level and hold it until at least $200. However, during that time, you should always trade around your core position to lock in Alpha. Here are some ratios for CEO:

CP: Watch the $55 level. Having closed $.25 below it, I’m fairly certain it will bust through $55 in order to clear out the stops resting there, then will fall back down below to nail the ensuing protective stops established on the prior buy through $55. Nonetheless, the stock is in a powerful long-term uptrend which will prevail for the foreseeable future, if not the next several years. For short-term traders, the $55 level will provide for rapid trading on both sides, for the long-term swing/position trader, wait to see what happens. These stocks don’t move like tech stocks, although last year a few did. I actually look at this stock, and the sector, as a growth sector. So for them to have low double digit P/E’s and paying out dividends makes this a solid play, especially with the macro backdrop I mentioned. Lastly, as the Great Sage of Omaha likes to say: “Does it generate cash that ends up in their bank accounts? If it does, I’d like to take a look at the stock”.

CSX: Another railroad breaking into new 52-wk highs. Everything looks good here except the fact that the market broke above the 52-wk high on the day after Christmas, which means a lot of stops were just cleared out and the next step is likely down before ultimately resuming its uptrend. So if you’re a daytrader, feel free to trade the short side and then reverse. All you others out there, keep an eye here and go long when you see the whites of their eyes.

CYOU: Remember this Chinese stock went public May of this year. Once the majority of lock-ups expired, insiders cashed out, as expected. Now, 28-30 has become a major accumulation zone and the stock appears ready to break out. Yes we were on Christmas schedule last week, but the Chinese are communists. First upside target is $40

DRE: Duke Realty bottomed around $12 in March and after regressing back to the $10 level where it should have been if there weren’t a liquidity crisis, the stock seems to be poised for an extended up move. All my models have triggered on this one, which is rare and actually makes me a tad more cautious rather than feeling like I should go all-in. However, the stock has had 7 green sticks in a row, so be patient and buy it on a test or break below $12 and keep legging into the trade until $11.

EQIX: This is the trend followers dream stock. Every single metric is growing at an impressive pace, and the company is throwing off cash by the truck-load, and almost all of it is being plowed right back into the business. Obviously, the stock has the benefit of every single moving average below it, with the most consistent being the 10d-EMA (as always). Since $100 is a whole number which has yet to be tested following the recent break above that level, I’d like to buy it around $100, legging into my position as always.

ESLR: Another potential high flier when it gets wings is Evergreen Solar. The chart below shows a very sensitive and potentially explosive move. However, although I put the odds in the favor of an upside breakout, there is a chance there will be a quick spike down to shake out all the weak hands, so be careful and watch.

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30-year Treasury Yields are about to spike along with a dollar rally. I feel this is the catalyst to trigger a sustained pullback in equities, which will reflect our rising unemployment rate and all the stimulus plans that are slowly phasing out.

Equity Long/Short Market Neutral traders will have an edge in this market over Momentum traders waiting for an expansion in the VIX.

For example, convertible bonds are the “paper of last resort,” and the airlines are desperate for cash (when aren’t they?). So it’s not a surprise Continental is in the market to raise some expensive capital and a $200 million deal (if the green shoe is exercised) is nothing serious. But the devil’s in the details.

I think the coupon is going to float around 4.5%, literally a 25% premium on a five-year maturity. The bonds at this issue price are a clear advantage over the common and set up an ideal trade, again at the issue price. I keep emphasizing this because the hedgies will be buying up the offering and shorting the stock to capture the premium so the spread should narrow really fast.

My bet is that most, if not all of this offering is going to the hedge funds. A few back of the napkin calculations, and after the offering, it’s quite possible that up to 60% to 65% of the common will be short.

Since the deal is for $200 million (including the $30 million green shoe), with a 25% conversion premium, this means about $184 million of stock will be controlled by the bonds. Around $120 million of stock will need to be sold short to hedge the deal. This means somewhere in the neighborhood of 7.5 million shares.

With this in mind, the sell-off in the stock should continue. So hit the rallies and hit them hard. The sell-off began with the deal’s announcement but it’s not over. I wouldn’t expect it to settle in much higher than $13.50 or $14. Perhaps even closer to $12 on an overshoot. In fact, if the common does overshoot through $13 and then through $12, look for a dead cat bounce trade of a couple quick points.

I’ll do some research over the weekend and post some more ideas. I know I haven’t updated the blog recently but I think the weather in New York is going to give me an excuse to stay in and write more often than before. It is absolutely, insanely, unbearably cold here.

MW

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I’m watching the 70.50 level like a hawk in Oil, as are several prominent hedgies I dialogue with on a daily basis. Right now, until Crude breaks above $71, I really like the spread of Short Crude vs Long Nat. Gas. I would lift the short side on a sustained break above $71 in Crude and get long and strong the entire energy complex, including equities.

The Dollar is beginning to weaken across all currencies rather than isolated instances, as was the case throughout the summer, when the Greenback showed strength against many majors. However, it now appears the floor for the US Dollar is being tested and probes are underway to see where the Federal Reserve will likely begin to increase its open market activities along with the US Treasury. It’s too early for a “strong” dollar in this economic bounce. Too many talking heads came out and said the worst is behind us. Which of course means that it’s not.

Keep an eye on Copper. China opened its mouth at the start of summer and swallowed this base metal like a wild boar, which threw off a lot of macro models because Copper is, of course, watched as a leading indicator of economic recovery. However, being that China was behaving like the gluttonous behemoth that it is, it could have just been a strategic build-up of reserves, or a hedge gone bad that needed to be covered. With China, we never know these days. Capitalism being so new to them, they’re like an over-grown kid on a high school football team that’s never played the sport but the coach puts him in there because he’s so big. Clumsy and stupid at times, ultimately very bad at playing their cards close to the chest and equally bad at not giving out the wrong signals and then chasing their own tale ex-poste.

I know many of you are Prop. Traders, whether equities or swaps or paper, or whatever. It doesn’t matter. The forum is to exchange ideas and share trades and various perspectives from highly qualified and advanced traders around the world (including myself, of course).  It goes without saying that if your LinkedIn Profile indicates you are a recruiter, or unrelated to content of the group, your request to join will sadly but most assuredly be declined.

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What the heck is going on? Have corporate bond investors lost their minds or could this be a short squeeze? More importantly to me, is there a play here on the equity side? Logic (and institutional schooling) would suggest buying the bonds and selling the stock short as a hedge against insolvency. But if you haven’t noticed already, logic and old-school rules no longer apply.

Subordinated paper has a strangely attractive risk/reward profile to pure-play equity traders. But to us Global Macro folk, the issue is quite obvious. In a bankruptcy, sub-note holders get wiped out. As the bankruptcies of WaMu and Chrysler have shown us, the rules no longer apply when taxpayer money is being used for a bailout. However, let’s assume the bank’s credit profile improves. Because we’re talking commercial paper, the upside is limited to par. Most of the weaker banks have sub notes trading at $50-$70 (i.e. vs. $100 par, upside is capped at 50%.). If the upside is a maximum of 50% while the downside is total loss, I’d argue that buyers of these notes are smoking something,

Why not buy the common where the upside is unlimited while the downside is 100% in names like FITB, KEY, RF, HBAN, etc…?

Now, what defines “systemically important”? KeyCorp and Fifth Third have $98 billion and $119 billion in assets, respectively. Just before being seized by regulators, WaMu had $310 billion in assets. Nonetheless, WaMu’s sub note holders were wiped out without even a toaster or coffee mug to show for their investment. Now, do you still think KEY and FITB will be “saved” by regulators in the event of insolvency and subsequent FDIC seizure? If you do, pass the doobie.

So, is the trade to short the paper and buy the common, or short the common and buy the paper? Or more perversely, buy the paper and the common and hedge with a CDS. Now you’re talking.

Oh, and did anyone even notice the government’s announcement on Friday that they were walking away from the Legacy Loans Program portion of the PPIP? What does that mean? In simple terms, the government has decided it has no desire to provide any form of capital relief for bad loans on bank books. But to add insult to injury, the government has also decreed that banks can’t sell these assets at “market-clearing” prices because they will become insolvent simultaneously. Duh! Hello? Didn’t we see this play out already with the downward spiral of Lehman and Bear? Does anyone still remember Long-Term Capital?

It looks like most promising equity market is China. The Shanghai Composite is in the advanced stages of completing a tradable base:

For all you POT lovers (MOS, AGU, IPI as well):

If you trade DRYS, or any of the other shipping stocks:

NOTE: All Elliot Wave work done by Tony Caldaro at the Elliot Wave lives on blog

Week of November 10

Still bullish on the market but defensive
in nature. Not putting myself out there for anything, in either
direction. Take trades for the time being and generate cash flow. When
the rally comes, it’ll be obvious. TRIN behaving very bullish all week,
spending Wed & Thur around 3.00 and as high as 4.0. Didn’t show
overbought on Friday. Seemed like major indices were covering up
underlying weakness in equities. SKF and the DOW both positive. Bizarre.

Bank index at 5th point inside triangle pattern. Could jump to 62 if 52-53 holds.

Dow Support at 8350-8380 Heavy resistance @ 9000:

5
year Treasury Yield should rally for several days. It’s possible recent
correlation broke but could re-establish if equity markets rally as
yields rise, suggesting reallocation of capital from safety to risk
based:

Nasdaq
is still holding at 30yr trendline @ 1600-1607. Intraday breakdown to
1540 possible if early weakness on Monday/Tuesday. If 1600 holds, will
rally to 1800:

SPX
trapped between 900-950, with 935 pushing back any rally attempt while
bulls defend 900. Look for break above 935, then 950. If we fall below
900, look for cascade sell-off to 850:

Q’s- 28-29 significant long-term support. If market sells-off early, look long around this level.

Agric.
stocks showed strength due to positive developments regarding strike.
MON, MOS, POT are primary movers and should remain the focus. MOS has
least exposure to strike.

UNG- Excellent set-up for explosive surge higher targeting 35 – 42. But monitor closely for possible flush.

CLF-
1-day reversal around $25 level. 3rd reversal at that level in 5 weeks.
Longer-term multi-year rising channel connects lower boundar with CLF
at $25. May ’07 stock went above top boundary, Jan. ’08 accelerated
away in a parabolic top. Overshoot to the downside typical but thus
far, $25 is being held. A rally back to 48-50 possible within long term
bear market.

UYG- Working on S2? Volume for inv. H&S fits.

AAPL-
Could spend 1 more week inside this tight wedge but there will be a
resolution very very soon. Downside target $86/7, upside target 124/5.

BIDU- Entry = $210 area.  $204.28 horizontal support of desc. triangle.
Resistance = $221.50 (24d-SMA), $223-$225 (light horizontal
resistance), $228.50 (s/t downtrend, very steep). d-SAR = $224.90.
Intermediate d/t line = $249.  100d-EMA= $268. 200d-EMA = $279
BIDU
at critical juncture. Long-term pattern suggests massive descending
triangle at 4th point. Rally to 5th pivot possible and based on
short-term technicals, likely to occur soon. If breakout doesn’t happen
in next few days, stock risks breaking below horizontal support. But it
still appears too early for a completion of the triangle top. Last 2
weeks in October, stock had false breakdown below support but
recovered. Weekly stochastics and momentum/money flow turning up from
deeply oversold levels. Stock could easily run to 300-312. 100w-EMA
resisting at around $244, converging with short-term downtrend, which
is too steep and likely to be penetrated. If BIDU rallies to the $310
range, it should be shorted aggressively. Will Chinese stimulus package
boost stocks enough to get BIDU there?

RIMM- $44, then $40.50 are strong support levels for quick trades.

CE- supported at $14. Weekly reversal possible. Rally with rising vol. on Fri. Gap $17.50-$19.25

DNA-
Genentech is squeezing inside apex, with multiple variables converging
together. This is a good bracket trade candidate using options. Will
there be a higher bid? M&A in sector is expected, but CP market
must improve further. Many big-cap BTK have the cash to do a deal
without financing. We’ll see. Roche Bid Price = $89

MON-  Wants to spike to $100, possibly $107-110 area. Monitor very closely.

JPM- S2 forming. Big tails, at critical technical level which has been
dominating this stock for some time now. Rally seen to $53 with
resistance at obvious round numbers.

GS- Something very big is about to happen in Goldman. Multiple positive
divergences in money flow, A/D in longer time frames. Oct & Nov low
is massive $75 level. An intraday flush below that level as a probing
maneuver very possible, followed by severe short-covering into a buying
panic. Best hope is for a big gap down open on Monday. The financials,
especially Goldman, were flashing huge warning signs as market indices
were up big triple digits while SKF implied the market should have
fallen about 450 points.

MA- Still trying to recover breaking below secondary trendline. Could be bought around $135
V- Might want to test 47-48.

STLD- If 9 holds, another rally to 13 likely. Very bullish momentum and money flow patterns. Alpha zone converging ~$21.
AKS- Similar technical set-up as STLD.

FSLR
trading ranges still playable until next big expansion move. EP will
either hold 8 or test $7 again. $8 is .63 fib retrace.

FNM/FRE at trendline levels. Strange action in these stocks. Is equity there worth anything? How is this possible?

Look for any rally in Coal stocks as shoring opportunity. JRCC going to $7.75

Morgan
is attached to its downtrend line. Frozen on it. Market waiting for any
type of catalyst. Event-driven trading will dominate November. Events
including earnings, strikes, regulatory, fiscal, tax policy debate.

SHORT looks:

ICE-
Nice short oppty at upper boundary of 60-85 range. short term MA
convergence @78 but MASSIVE overhead multiple ceilings controlling
longer term trends.

JRCC- Sell $15

GOOG- Below critical support and should resume major downtrend with likely target being secondary channel line.  100%
Fib Proj. converges with secondary downtrend channel line on November
20 around $275. Major bearish patterns forming here. A short anywhere
above $325 is warranted. Ideal entry around $345. Build position over
several days and trade a multi-day move while remaining overnight

Continue making markets wherever possible. Start building biotech basket.

Week of November 3

THUR-
Heavy volume on the sell-off. Market’s spooked by the lopsided gov’t. As expected, but didn’t exploit.
Monitor airlines for entry levels (see below).  Many charts look like gaps from Tuesday were closed. Only problem is volume expanding across the board. So many charts look terrible, I feel like we’re going to revisit the lows. This is all because the Dem’s came 1 senate seet away from a super-majority. Maybe we will become full-blown, open, French style socialists. Who knows.

Short Looks-

AGU, POT, AMX, BAC (maybe), CRM, FSLR, GENZ, GOOG (monitor), ISRG, PCLN, WLP,

Long ideas-

JPM, QID, SDS, SKF, UNG (lower), UYG (S2 around 7.30/.85), V (inside day on declining volume),

AAPL has huge support at 100. Monitor this for market directional clues.

CHINA: