Stock Geometry

Saturday Rock Blog: Burnin' (S&P 500)

2012-02-11T20:23:00.003-06:00

Saturday Rock Blog: Scarborough Fair

2012-02-04T17:44:00.000-06:00

Sunday Rock Blog: Midnight in a Perfect World

2012-01-29T13:43:00.004-06:00

There's no denying that this gold chart looks pretty bullish. After a six month correction, GLD has broken out and targets the low $200's (new all time high). This isn't terribly surprising because ANYTHING priced in US dollars has rallied lately and gold was well positioned for a technical move up. This action comes as GLD nearly confirmed a new primary downtrend with the 50 dma coming close to crossing the 200 dma (might still happen). So long as GLD holds above ~$162 the trend is bullish. However, if GLD trades below that level in the next week or two, I'd expect things to unravel extremely fast. Deflation or more inflation?

Some stocks are just falling up lately, but hitting resistance today

2012-01-24T00:59:00.002-06:00

Saturday Rock Blog: Dow Golden Cross Positivity

2012-01-21T11:19:00.003-06:00

S&P Golden Cross!! (bullish)

2012-01-19T21:37:00.006-06:00

The golden cross (50 dma/200 dma) is a lagging indicator and it would be healthy for the market to pullback here. But damn, is this not a gorgeous chart?! If you leave out the prior ten years, this (six month) chart looks really bullish. We might be a little over extended in the short term but the 2008+ bull market seems alive and well. A violation of $125 (or ~1250 SPX) would convince me otherwise.

Sunday Rock Blog: To Love Somebody

2012-01-15T20:35:00.000-06:00

How can you mend a broken chart? (BIDU)

2012-01-14T22:51:00.008-06:00

Looking at BIDU's daily chart (above), all the signs of a long term reversal are there. In fact it looks rather close to the "proper" shorting point according to O'Neil (for a reversal). From a bear's perspective there's pretty much nothing to not like here. I'd be surprised if it saw higher than $135 and below $110 would be a very clear break. If it does break, the symmetric triangle targets a ~$60 move but I don't see any support on the weekly chart until about $40. People forget how many times BIDU split as its momentum carried it higher. I don't know anything about the fundamentals of BIDU (and I really don't care to) but this chart sure says something big has changed

Disclosure: I don't have any position in BIDU but am net short the market. I may buy BIDU puts next week.

Saturday Rock Blog: Nights on Broadway

2012-01-14T10:24:00.004-06:00

Yeah, nothing like Bee Gees to start a Saturday morning. I'll get a few charts up later today and tomorrow and, maybe even some more Bee Gees to boot.

Golden cross on the Russel 2000 (IWM) soon?

2012-01-08T00:04:00.002-06:00

Saturday Rock Blog: End of Line

2012-01-07T23:55:00.000-06:00

AMZN is breaking out from support

2012-01-03T18:28:00.005-06:00

I've been really lagging on the posts lately. If there's anyone who actually checks this blog on a regular basis, I'm sorry about that. One of my New Year's resolutions was to post more consistently. The market has really turned into a stock picker's paradise over the past year and I have plenty of ideas about things to post about. The S&P closed flat last year but there were stocks in the index up 100% while others were down nearly as much. One stock that moved a lot last year but didn't make much net progress in either direction was AMZN (Amazon.com). At it's high for the year (and all time), AMZN was up 30% yet it closed down 5% having "corrected" sharply since mid October. I don't want to get carried away with analysis on this one because the situation seems straightforward to me on a technical basis. I'll keep my opinions about AMZN's fundamentals to myself beyond saying that I only know a few people who didn't do more than half of their Christmas shopping on Amazon.com. So here's the chart:

Everything looks great up until late October when the stock gapped down $25 to below it's rising 50 dma. Even then, the stock was pretty well behaved. It bounced first at it's rising 200 dma and made two failed attempts to retake its 50 dma before rolling over below its 200 dma. As AMZN corrected with the rest of the market it traced out a very nice falling wedge consolodation pattern/flag on the daily time frame (blue). It has tested support at $177 from August multiple times and despite having broke for brief periods, AMZN bounced back each time. The most impressive false break of $177 occured on December 14th when AMZN formed a $10 hammer reversal candle for the day. Today, AMZN again broke back above $177 support and broke out of the falling wedge. While this pattern is stretching the limits of a healthy base/continuation formation, with the 50 dma/200 dma crossover that just occured, I really like the look of this chart.

AMZN still has a long ways to go before we can say the uptrend has been re-established. I'd like to see volume increase as it pushes higher. It needs to retake its 50 dma and after a few attempts I'd like to see AMZN decisively retake its 200 dma near $200 (a good first target). The CCI divergence is positive but it needs to get back above zero. I think AMZN has a great year ahead of it and I will be keeping a close eye on it.

Disclosure: I own AMZN calls but am short AAPL.

Saturday Rock Blog: C.R.E.A.M. (cash rules everything around me)

2011-12-03T21:19:00.000-06:00

Saturday Rock Blog: Davyd

2011-11-26T18:37:00.004-06:00

So much for posting everyday this week... I had less than time I thought, anyways here's another Pogo "mashup." Its produced from the film AI, which was oriringally a Stanley Kubric concept but got directed and produced by Steven Spielberg later. Its not perfect but a must see for sci fi fans (AI). Hope you all had a Happy Thanksgiving! After the worst Thanksgiving week since the 1930's, is it time for a ride in Santa's sleigh?

CVX at the top of its range, bearish signals

2011-11-20T18:43:00.003-06:00

Disclosure: I have no position in CVX but might take a shot with puts if it holds below $100 this week.

Saturday Rock Blog: Mellow Brick Road

2011-11-19T22:12:00.001-06:00

I just noticed Pogo has a bunch of new videos I haven't seen. This week I'll keep it mellow for the holiday and post a chart a day with a Pogo video. Happy Thanksgiving!

FSLR descending triangle coming to apex, big move expected

2011-11-17T01:08:00.011-06:00

(click chart for higher resolution)

One great fundamental bull case for First Solar is outlined in this report by morningstar, just to quote a few lines:

"We expect an industry rebound will not occur until mid-2012 at the earliest. Solar demand growth remains promising in the long term, but near-term growth rates are going to be very modest...

First Solar is the only solar company whose shares have a clear near-term catalyst: its pipeline of utility-scale projects in North America. We project this business segment to constitute more than 70% of the firm's revenue and 35%-40% of production output in 2012, while also serving as the overwhelming source of near-term earnings beginning in the third quarter of 2011.

Pricing on First Solar's 2011-13 backlog of utility-scale projects was set before the industry downturn, and none are subject to renegotiation. These projects were priced using First Solar's 2008-09 project installation cost levels, which were 35%-40% higher than they are today. Also adding to the bottom line will be the reduction in costs of capital for the 1,070 megawatts' worth of projects that received Department of Energy loan guarantees, which allow the company to realize higher selling prices. Putting it all together, this book of business isn't just going to provide an earnings buffer, but will in fact mint the company a great deal of money...

The big risk to First Solar's longer-term story is what will happen to the company's profitability and returns when these lucrative projects are completed in 2013. Any new utility-scale deals will be signed at lower prices. Without another large reduction in costs, the company could encounter some major headwinds. But we don't think this risk will be influencing the stock for quite a while, as 2014 is a lifetime away in the solar sector."

To the best of my knowledge, First Solar presents the greatest long term (5-10 yrs) investment opportunity in the market today. Despite this, an obviously bearish descending triangle has formed in the daily chart appearing as a continuation to the long term downtrend. Unfortunately, with the broader market in bear mode, solar will continue to struggle despite soaring energy prices.

Is FSLR trying to fill the 2007 gap to $35?

Saturday Rock Blog: 'Round the Wheel

2011-11-12T10:13:00.000-06:00

Saturday Rock Blog: Waste

2011-11-05T14:14:00.001-05:00

AAPL year-to-date performance vs popular ETFs

2011-10-30T21:54:00.002-05:00

Disclosure: No positions, but maybe soon.

Market retraces to its (declining) 200 dma

2011-10-30T20:55:00.007-05:00

Back at the end of July, when the small caps first broke their (then rising) 200 day moving average (dma), I'm sure many hoped that the market would bounce back and rally to new highs. After all, a rising 200 dma should be a solid bastion of support/resistance in a secular trend. Since losing the 200 dma, the market leading small caps (IWM above) have been mostly range bound but ~25% lower than July prices. IWM did pierce the bottom end of the Fall range at the beginning of the epic October rally we just saw. In the final days of October, with the resolution (apparently) of the Greek problem with the default/bailout deal, the small caps broke up above of the Fall range. Will the breakout hold? Can the market retake and hold its ~200 dma? One thing is certain, the IWM 200 dma (and other index ETFs!) is now declining in value and as we approach it, expect resistance. Selling off from here would be characteristic of a bear market. In fact, many indications are the we began a new bear market in July/August. We shall see...

I have been too busy to monitor the market much lately (hence the infrequent posts), but one thing that has really caught my attention is the action in AAPL. Maybe its that the stock keeps pushing an eye popping $420 ($390B market cap) or just morbid curiosity following the unfortunate death of Steve Jobs. How much influence did Mr Jobs have on AAPL's stellar success of the past 7 years (4000% gain in the stock) and will his successors be able to keep up the growth? At any rate, a number of technical indications are looking bearish on the shorter term time scale while the long term uptrend clearly remains in tact. Note the rising 200 dma, which has acted like support. I wouldn't give shorts in AAPL much slack, $410-420 seems like a good line in the sand. Watch AAPL's behavior near its rising 50 day and 200 day moving averages.

Disclosure: I plan to initiate a put position against AAPL and perhaps IWM in the next few days.

Saturday Rock Blog: (No More) Bad Town

2011-10-29T15:49:00.003-05:00

Saturday Rock Blog: Black

2011-10-01T15:15:00.000-05:00

NFLX 50% retracement

2011-09-18T22:03:00.004-05:00

The 50% retracement point (took under 3 months) should be good for a reasonable bounce, especially considering the (capitulation) volume NFLX saw late last week. Out of the next low its tough to say where NFLX is heading, volatility will probably remain elevated for some time.

Saturday Rock Blog: Come Monday

2011-09-18T10:44:00.000-05:00

I'll post some charts later today.

Saturday Rock Blog: Back in the High Life Again

2011-09-10T10:37:00.001-05:00

Saturday Rock Blog: You Can't See Me

2011-08-27T10:38:00.001-05:00

Tupac this morning for no particular reason.

Double bottom, simple ABC correction or something far worse?

2011-08-20T12:44:00.004-05:00

A simple ABC correction targets $106 on SPY or ~1057.5 on the index. If this is the beginning of a new long term trend, as the cross overs in the chart above suggest, then the bottom could be potentially much lower. However, I wouldn't be surprised to see Bernanke play some card up his sleeve and send us spiraling higher out of a double bottom. I am posturing bullish at the moment even though I don't think we've seen capitulation yet (on either side). I tend to think that the bull market isn't over yet and that we have one last big leg up, but honestly, these charts suggest otherwise. I'm leaning more towards a fundamental, longer term, argument that inflation should start creeping back up with rates at zero percent for two more years. So I'm not trying to trade these swings but nibbling when there's blood on the street.

Disclosure: Long IWM, LNKD, FSLR (broken charts, I know)

Saturday Rock Blog: Mojo Boogie

2011-08-20T12:14:00.001-05:00

Sunday Night Rock Blog: Falcon Jab

2011-08-07T21:46:00.001-05:00

Strange times call for strange music videos, enjoy...

LNKD Cup n' Handle

2011-08-03T21:24:00.005-05:00

This cup n' handle looks pretty decent to me with a target that's $50 higher using the measure rule. The potential for LNKD to sqeeze is extremely high due to the small, overshorted float. This could start to fall apart if it got below $95 but above $110 it can soar. There might be a pause at $122.70, the IPO day high, but even with Bulkowski's conservative target, you get ~$135.

CAUTION: LNKD reports quarterly earnings tomorrow (after the close) for the first time since they went public. This report is likely to break the pattern one way or the other.

With the bollinger bands tightening I can't see a small move in the next few days. Most other indicators look bullish to me (RSI, CCI, MACD, stoch). Tomorrow we might hold mostly unchanged (as volume begins to swell) but I'd expect a large gap Friday.

Disclosure: I am long September LNKD calls.

Saturday Rock Blog: Right here, right now, You're not from Brighton

2011-07-23T10:09:00.001-05:00

Saturday Rock Blog: Wildcat, Loud Pipes

2011-07-09T10:29:00.001-05:00

Saturday Rock Blog: In Dreams

2011-06-25T14:03:00.001-05:00

Saturday Rock Blog: Somebody to Praise

2011-06-18T12:02:00.000-05:00

VXX hard to short? I'm not all that surprised..

2011-06-06T10:06:00.003-05:00

From an awesome new feature on Yahoo Finance called Market Pulse:

LNKD isn't finished

2011-06-05T22:29:00.003-05:00

Its a bit of a stretch to use a chart that only has 11 trading days of history for technical analysis but LNKD looks bullish to me. If we consider the LNKD IPO price ($45) as the bottom of the flag pole then the pattern fits an almost perfect tight pennant and targets ~$160. It may sound counterintuitive, but the fact that LNKD is such an obvious bubble (using any reasonable valuation metric) makes me even more bullish. It must be full of shorts by now and with its tiny float (50M)the upside could be swift. I wouldn't even remotely think about buying this .com for the long haul but I'd bet it rallies big after the broader market rebounds. Sure, we could very well be entering a new bear market on the S&P but we won't go straight down. At some point we will rebound (probably soon) and LNKD will lead the way up. I've seen it dozens of times (and been burned betting against stocks like this), the most ridiculously overpriced stocks go up the fastest and the most (eg CROX, RACK, DECK, BIDU, NFLX, CRM and so on).

Disclosure: I have no position in LNKD

Monday update: Bought a few front month 85$ calls at the open for a trade.

Saturday Rock Blog: Yar Mar

2011-06-04T10:35:00.000-05:00

Saturday Rock Blog: The Revolution Will Not Be Televised, RIP Gil Scott-Heron

2011-05-28T12:58:00.002-05:00

CREE

2011-05-27T12:41:00.000-05:00

Disclosure: I picked up a few calls today.

The Japanese Bear Market

2011-05-21T16:19:00.001-05:00

Disclosure: I own June EWJ puts that I plan to roll forward soon.

Saturday Rock Blog: Sneakin Sally Through The Alley

2011-05-21T12:54:00.000-05:00

I'll get an EWJ chart up in a few hours, I have some puts.

That AAPL chart almost fits this perfectly:

2011-05-18T09:15:00.003-05:00

AAPL: Continuation Pattern or The Top?

2011-05-17T23:58:00.006-05:00

And how about some more Steve Winwood, because, why not?

Crude is hanging in there

2011-05-15T22:57:00.003-05:00

First, the bull market in small caps (IWM)

2011-05-14T10:42:00.002-05:00

Saturday Rock Blog: Higher Love

2011-05-14T10:27:00.002-05:00

Sorry for the hiatus, I've been distracted by other things over the past few months. I've actually been watching a number of issues in the market, there's a lot going on right now. I'll post a chart a day for the next week or so. Enjoy!

Sunday Rock Blog: Kick Push

2011-04-17T10:49:00.000-05:00

ICE Reversal?

2011-04-10T23:28:00.004-05:00

ICE has been grabbing more headlines than usual lately after joining with NDAQ to bid for NYX. As you can see in the six month daily below, ICE had been behaving bullish until the bid was announced. Since the end of March ICE's 50 dma has acted like resistance and key indicators have turned bullish. Monday's reaction to the news that NYX has rejected the NDAQ/ICE bid will make or break this chart:

Disclosure: I have no position in ICE.

Saturday Rock Blog: Baby Bitch

2011-04-09T09:55:00.000-05:00

I'll get some charts up this weekend.

Sunday Rock Blog: Inertia Creeps

2011-03-20T10:25:00.001-05:00

MIND THE FEAR

2011-03-17T01:56:00.000-05:00

Sunday Rock Blog: Punch You In The Eye (NES remake)

2011-03-06T13:36:00.001-06:00

USO vs Oil

2011-02-27T23:36:00.006-06:00

We all know that the commodity ETFs tend to vastly underperform the commodities they are supposed to mimic. Wall Street games them as they roll contracts, the fund managers take their fees and not much is left for the ETF investor. UNG is famously the worst of all in this regard but USO is pretty horrid as well. Take a look at US ovewr the past three years:

When an ETF consistently performs so poorly compared with the commodity (see light crude chart below) one wonders why any one bothers to invest in it at all. There were over 150 million shares traded last week. Sure, there are probably tons of shorts in USO who hedge with crude futures but not everyone can be short. The shorts have to borrow from somewhere. This all begs the question, why do these "investment" instruments exist and who would want to own them? Is it all just short term investors who only care about the day to day performance and don't care about weekly under-performance as is clearly evident in these charts?

Disclosure: No position in these.

Sunday Rock Blog: Growling Old Man and the Grumbling Old Woman

2011-02-13T11:44:00.000-06:00

Saturday Rock Blog: Psycho Killer

2011-01-29T11:35:00.002-06:00

This week in idiotic headlines: "Gold Loses Safe-Haven Appeal"

Saturday Rock Blog: Shine On You Crazy Diamond

2011-01-22T09:42:00.003-06:00

Disclosure: I have no position in LULU but it looks pretty bullish.

Saturday Rock Blog: Do It Again IWM

2011-01-15T19:55:00.004-06:00

Saturday Rock Blog: Meatstick > Auld Lang Syne

2011-01-01T20:44:00.004-06:00

Happy 2011 all! I hope you all had as much fun reigning in the new year as I did (I was at this incredible show at Madison Square Gardens, NYC). I'll get back to posting charts soon.

Saturday Rock Blog: Wonderful Christmas Time

2010-12-18T06:54:00.000-06:00

Saturday Rock Blog: Red Shoes

2010-12-11T09:51:00.002-06:00

SP500 Cup and Handle

2010-12-08T23:49:00.000-06:00

@CHICAGOSTOCK

Fed's overworked printing presses break down

2010-12-06T09:56:00.004-06:00

"An official familiar with the situation told CNBC that 1.1 billion of new $100 bills have been printed, but they are unusable because of a creasing problem in which paper folds over during production, revealing a blank unlinked portion of the bill face.

A second person familiar with the situation said that at the height of the problem, as many as 30 percent of the bills rolling off the printing press included the flaw, leading to the production shut down.

The total face value of the unusable bills, $110 billion, represents more than ten percent of the entire supply of US currency on the planet, which a government source said is $930 billion in banknotes. For now, the unusable bills are stored in the vaults in "cash packs" of four bundles of 4,000 each, with each pack containing 16,000 bills.

Officials don't know exactly what caused the problem. "There is something drastically wrong here," a person familiar with the situation said. "The frustration level is off the charts."" -source

Well at least they've recognized that there's a problem. The first step to any addition is to admit that you have a problem right?

JA Solar (JASO) looks better than ever

2010-12-05T11:03:00.003-06:00

As you know, I've been a fan of JA Solar since they did their IPO in 2007 but my opinion of the stock has varied with he times and the charts. I've kept a close eye on JASO ever since it broke out of its two year range in September, nearly doubling in price over two months. Since that peak JASO has sold off with the sector after a sharp decline in crude bringing JASO back to the breakout point for a perfect buying opportunity. Volume was strong on the initial breakout so I'd expect it to follow through (upward) from here. One word of caution on this chart, the stochastics look bearish and the CCI is giving a sell signal.

I'm no value investor by any stretch of the imagination but with a PE of under 7 and a PEG of 0.34 (five year expected) JASO looks like the cheapest growth stock on the planet. They just signed a massive five year 10GW polysilicon supply deal which is roughly equal to the annual total global production of solar cells. They certainly don't seem to be in any kind of trouble and are planning ahead for the long run, why such a low valuation? Since solar is really a call option on future energy prices, we have to check out crude:

Crude rallied to a new two year high at the close Friday, no issues there. You can draw your own conclusions about this situation. Other issues I like in the solar space are FSLR and the TAN etf.

Disclosure: I am long JASO calls.

Saturday Rock Blog: Change is Hard

2010-12-04T10:24:00.000-06:00

IWM (Russell 2000): Bullish

2010-12-02T23:03:00.002-06:00

Saturday Rock Blog: Baby on Board

2010-11-27T09:32:00.004-06:00

Looks like the jig is up, the dollar has reversed its medium term trend to resume the long term trend. Here's FXE (Euro ETF), a three year weekly:

11/22/10 Natural Gas Market Update

2010-11-24T20:56:00.007-06:00

Since the bullish gap breakout September of last year, natural gas rallied off its lows of $2.409 targeting and completing a 50% retracement from the selloff of $9.60 to make a high of $6.108 January of 2010. As this high was made, natural gas slowly moved lower and formed a channel that it’s been within for the year of 2010. In October natural gas made a low of $3.255 before finding support and pushing higher. This low came within testing the lows of May of 2009 at $3.155. By holding and pushing higher the market has put in a low that is trying to create a potential inverted head and shoulders formation. The past three weeks has been a consolidation of that push higher and this has created a bull flag as the December contract goes into expiration on November 24. Market bulls will want to see a continuation of that push off the lows with short covering going into expiration to try and test and break out of the downward channel or as January becomes front month the difference in price puts it above the channel to gap and go higher. Upside resistance to be met up to the June highs of $5.196 and then January highs of $6.108. Getting above and holding $6.108 gives the bulls an inverted h/s target of $9.807 (6.108-2.409=3.699, 3.699+6.108=9.807). This also retraces 100% of the move from $9.600 August 2008 to $2.409 September 2009.

As of Friday, November 19, 2010:
December 2012 $10C Open Interest = 2,713
December 2013 $10C Open Interest = 2,790

RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS. AN INVESTOR COULD LOSE MORE THAN THE INITIAL INVESTMENT.

Stewart Solaka

Twitter: @CHICAGOSTOCK
EMAIL: CHICAGOSTOCK

Saturday Rock Blog: I'm Alright/Caddyshack

2010-11-20T14:01:00.002-06:00

Failed Breakouts Galore

2010-11-16T22:52:00.004-06:00

Netflix (NTFX) six month daily:

Russell 2000 (IWM) six month daily:

US Oil ETF (USO) six month daily:

Euro ETF (FXE) six month daily:

I think there's more downside to come and failed breakouts often lead to sharp corrections. A week ago everyone on the planet was wild eyed bullish, investors may be re-thinking fed induced purchases.

Disclosure: I do not have any positions in the above equities but I am short some stocks and am long the US dollar against the Aussie dollar.

QE Explained

2010-11-14T19:50:00.001-06:00

Saturday "Rock" Blogging: The Pines of Rome

2010-11-13T09:42:00.002-06:00

This is one of my favorite classical pieces, enjoy:

Saturday Rock Blog: Fat Man in the Bathtub

2010-11-06T23:09:00.001-05:00

Better late than never. Enjoy!

Jim Rogers: "We have problems and they aren't being met by printing money"

2010-11-06T11:23:00.003-05:00

Jim Rogers rips into Ben Bernanke at Oxford

Saturday Rock Blog: Highway to Hells Bells

2010-10-30T10:55:00.001-05:00

ETF Golden Crosses (50/200dma) Galore

2010-10-23T11:54:00.004-05:00

IWM (Russell 2000 small caps) daily:

FXE (The Euro) daily:

DBA (Agriculture commodities) daily:

FXI (Chinese stocks) daily:

QQQQ (Nasdaq 100) daily:

Disclosure: I am short EUR and own QQQQ puts.

Saturday Rock Blog: Thunder Busters

2010-10-23T11:33:00.001-05:00

Happy Halloween everyone!

US Treasuries Cross of Death

2010-10-22T07:20:00.004-05:00

30 Year Treasury Bonds Daily 04/13/10-10/21/10:

The 30 year is currently trading under its 50day moving average. The last time the market was under this average was in September and bonds were able to hold to move higher. This move comes as bonds failed to retake the August highs of 137 and have now fallen under this 50 day moving average that has the market bear flagging and testing the trendline support from May’s breakout. Seeing the bear flag confirm with another leg down will have the 20 day moving average cross down and through the 50 day creating a “death cross”. The last time the 20day crossed through the 50 day was in April as it created a golden cross and the market began its move higher. This current cross can attempt to change direction in the market’s current trend. A test of the 100 day moving average down to 129 along with the September lows would be targeted. The fed is expected to buy treasuries today and the question is will their purchases be enough to hold yields at these levels? The St. Louis Fed President James Bullard has proposed the central bank buy $100 billion in long-term Treasuries next month and consider more purchases later. Are they bluffing? Buy stops to be triggered on a move through 133.

Bloomberg: Treasury Traders Increase Bets on Inflation for a Third Consecutive Week- http://bit.ly/cJVyrL

RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

EMAIL: CHICAGOSTOCK

Gold is not so parabolic, deflation?

2010-10-19T09:28:00.002-05:00

Saturday Rock Blog: Time Bomb (The Euro)

2010-10-16T12:08:00.006-05:00

Disclosure: I am short EURUSD

Apple's 240/230 Put Seller

2010-10-14T12:47:00.016-05:00

http://twitpic.com/2subbs

On September 28th, 2010, Apple had opened at $291.77 and was followed by a sharp and quick sell off down to $275.00. Moving down $16.77 in a matter of seconds. As this volatile move came about, someone took advantage of the day by selling 4000 240/230 put options: http://twitpic.com/2subbs. This created a spread with a net credit of $1.50 4k times giving the seller a credit of $600,000 and a max risk of $3.4 million dollars with Apple closing under 230 by Jan 21, 2011. (240-230=10, 10x100shares per option = 1000, 1000x4000 = 4mil, 4mil-600k credit=$3.4m).

http://twitpic.com/2xl77v

Apple held those lows and retested them on October 4th with a low of $277.77. Since then, Apple has marched higher with yesterday breaking through the $300 benchmark. Today, Apple has made a new 52wk high of $302.47 and that same spread sold on 9/28 for $1.50 is now trading worth about .88. A 62 cent gain on the 4k spread has made someone $248k richer. Is the person out? We do not know, but we do know that this person took on some big risk, and gave us the indication that they thought Apple would hold above that level. The longer it holds above $240, the more of that $600k they can keep. In any event, a very nice trade indeed!

RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

EMAIL: CHICAGOSTOCK

Saturday Rock Blog: Blinded by the Light

2010-10-09T12:53:00.001-05:00

Exchange Stocks ICE & CME, Bullish?

2010-10-05T22:41:00.011-05:00

ICE Weekly

http://twitpic.com/2v235r/full

ICE is on the break out this week as it made a new 13 week high of $111.84 before settling at $111.30 on Tuesday. On Monday, ICE reported record futures volume for the month of September (http://bit.ly/duKHbG). This breakout has ICE above the $110 neckline of an inverted h/s formation that has been forming since July. The market will need to close above $110 for the week for a confirmation on the weekly chart above. The h/s has a range of $17.82 (neckline 110.00 - head 92.18). Holding above the neckline of $110 gives bulls a target level of $127.82 (110+17.82). This level also tests the highs in June of $129.53. In the chart above, resistance is seen between $114.93 Dec 2009 highs, and $121.93 June 2009 highs. This also puts the 200day moving average in play at $115 level.

CME Daily

http://twitpic.com/2v22wg/full

CME is also showing a potential inverted h/s formation in development. The stock rallied $35 from the August lows of $234.50 before meeting resistance at $275. The market appears to be trying to build a right shoulder as we have seen it consolidate between $255 and $275. This flagging formation is taking place above the resistance trend line from May highs to June highs. The most recent low in this right shoulder is $256.53 made Oct 1st. The market held and reversed to make a high of $269.72 today. This high as you see in the above chart is testing another resistance trend line from the August highs to the September highs. Market bulls will need to hold above $272 to break out of this range and try to leg higher. First resistance to be met at the 100day moving average around $279 followed by the neckline at $290.00. This makes a range of $55 (290-235). Holding above the neckline of $290 gives bulls a target of $345 (290+55). This lands bulls on the door steps of the April highs of $347.50. However, there is work to do on the upside, with the 200day moving average currently at $297.51 and a gap to fill at $296.8 from June 28, 2010. CME is expected to report earnings before the bell on October 28, 2010.

RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

EMAIL: CHICAGOSTOCK

Saturday Rock Blog: The Thrill is Gone

2010-10-02T06:25:00.000-05:00

10/01/10 Copper Breakout & Australian Dollar Correlation

2010-10-01T13:02:00.004-05:00

Continuous Australian Dollar Futures 12/21/07-09/30/10:

The Australian dollar has rallied 61.5% since the lows in October of 2008. Following this move from .60 to .95, the Aussie tested its 2008 highs for 6 months (10/09-04/10), before it sold off sharply and shook out down to .80 in May of 2010. Since then, the Aussie is up 19.9% and has managed to break above this resistance level of .95. This leaves the market breaking out and in an area of resistance as it heads to test the highs in July of 2008 at .9770. The Reserve Bank of Australia has raised rates 150 basis points between October and May and expected to raise another 25 basis points next week. Australian banks are looking to raise their lending rates faster then the pace of it's central bank. As you will see below, the chart of copper and the Australian dollar are very similar.

Continuous High Grade Copper Futures 12/21/07-09/30/10:

Copper is breaking out the upside riding its Bollinger Bands and testing the highs from April 2010 at 3.68. China's September PMI was released today showing a rise to 53.8% from the 51.7% in August. The rise in PMI reaffirms China's slowdown is not that sluggish and their manufacturing is picking up. This adds a boast to copper as China is one of coppers biggest consumers. Technically, copper has been rising since it tested and held 2.80 back in May: http://twitpic.com/1pl6z8 and http://twitpic.com/1z5l4w. This move has been resilient as it has been able to push through resistance levels of 3.40-3.60 and head to the April highs. Taking out this high leaves the market in a bullish momentum with next major area of resistance between 3.80-4.00, and ultimately the highs of 4.27 from May 2008. In both the Aussie and copper, pullbacks to trend line should find support and be bought.

RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS. AN INVESTOR COULD LOSE MORE THAN THE INITIAL INVESTMENT. OPINIONS EXPRESSED. INFORMATION COMPILED FROM SOURCES BELIEVED TO BE RELIABLE, ACCURACY CANNOT BE GUARANTEED.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

EMAIL: CHICAGOSTOCK

10/01/10 US Dollar Index Targets New Lows

2010-10-01T12:34:00.003-05:00

Continuous US Dollar Index Weekly 12/28/07-09/30/10:

The US Dollar Index broke down and lost 5.8% during the month of September as it failed to hold above 80.00. In the previous market update, I noted the dollar index being at a "critical level" as it was testing a neckline from it's head and shoulders formation, "...breaking this neckline here will suggest the market may believe QE2 will happen and if confirmed this could lead the dollar index further depreciating and targeting down to 71.00." Looking at the above chart, the dollar index broke below this level, and has made lows down to 78.620. Is the market anticipating QE2? Possibly, but nothing is confirmed and all we see is the price action in the market. Technically, a head and shoulders is in the charts, 89.10 head, 80.00 neckline, giving a range of 9.10. The market has broken below its neckline giving a potential target of 70.90 (80.00-9.10=70.90). This would lead the dollar to test it's lows from 2008 of 71.05. Short term, the US dollar may be oversold, any retraces back to 80.00 should resist and be seen as an opportunity to sell. If the market can find itself getting back above 80.00, the right shoulder area of 80-83 would need to be worked through for any attempt to move higher and retest the highs of 89.00. The Euro has moved higher against the dollar in hopes that Europe may be removing their stimulus policies before the US and Britain. The Euro futures gained 7.7% in September.

Thank you and best of luck trading!

Stewart Solaka

futuresMONSTER

Twitter: @CHICAGOSTOCK

EMAIL: CHICAGOSTOCK

Going Parabolic: BIDU (market leader)

2010-09-26T11:17:00.006-05:00

Disclosure: Last week I bought (and still own) a few BIDU October $85 puts but it was a really dumb idea. BIDU decided to make a sprint for par ($100) last week and hasn't looked back since. The breakout and rally in BIDU strongly supports the thesis that we are still in a huge bull market. So its pretty silly to try and short it despite how much BIDU is up in the past two years.

Saturday Rock Blog: Green to Black (So High)

2010-09-25T09:52:00.008-05:00

Wow, what a week! The S&P broke out of its four month range, pulled back to support, then followed through. This is exactly the kind of action that the bulls want to see and in September of all months! (September is historically the worst by far) Those who have been betting on a weak market around the November elections are now in a tight spot with a couple of months to go. The measured rule for this breakout is around 1260 which would place the S&P at new 52 week highs and confirm that the two year old bull market is still alive. Actually, the pattern of the past 5 months or so look like a very healthy and solid base out of which the next leg up can begin:

I haven't been long many stocks during the recent rally, instead I chose to short the dollar by going long EUR and AUD which has worked out quite well so far and I see no reason to exit these positions. The EUR seems to be doing something like a simple ABC correction to its longer term downtrend. Each phase thus far has been about 700 pips wide (1.19-1.26-1.33) so I am thinking it can hit 1.40:

The Aussie has just been fantastic for me, making new all time highs against the dollar this week. It broke out of a nearly perfect cup n handle formation and seems to be targeting at least parity with the dollar, perhaps higher:

I'll try to get some more charts up tomorrow, cheers!

09/10/10 SP500 Market Update - Battle of the Golden Crosses

2010-09-10T09:12:00.007-05:00

$SPX Cash SP500 Index Daily 04/01/10-09/09/10:

The SP500 is stuck between a rock and a hard place after the highs for the year were made in April up to the 1220 level. For the past three months, the market has been trading within a range of 1000-1130, as forces continue to push and pull this market back and forth. The SP index is up 7.1% for the quarter, up 10.8% from the lows in July, down 9.5% from the highs in April, and still finds itself to be at -.01% for the year! There has been a lot of fundamental activity that has attributed to the indecision in investors and the market to find direction, however this market has also rallied 83% from the lows in March of 09 before the brakes were hit in April as the SP retraced nearly 61.8% of its fall from 2007-2009. This year has been a year of consolidation to put it at best.

The high created a small head and shoulders in April which ultimately led to the flash crash. The past 4 months has been a right shoulder of a much larger h/s formation as seen in the weekly and monthly charts below. The daily chart above has brought 2 "golden crosses". A golden cross is when a short term moving average breaks through a longer term moving average. The first cross was created in early July as the SP500 sold down to then 1010 level, the 50 day crossed through the 200day moving average. This breakdown failed and the market marched back up to 1130 and created another head and shoulders formation between 1060-1130. The second golden cross was created in late August as the market broke the neckline of 1060 and the 100 day moving average crossed through the 200day to sell down to the 1040 level. This breakdown once again failed and the market held to create a right shoulder in an inverted h/s pattern from May to August. This test late August saw 3 lows (1039.83, 1039.70, 1040.88) another inverted h/s pattern. This area subsequently was also the time that the Fed chairmen Ben Bernanke reiterated he did not expect to see another double dip in the economy. Another squeeze occurred and the market traded back to the 1100 level. As of this Thursday the SP500 has broken through the trend line from the April highs to the August highs. This is a major area of resistance, as the market is now testing the "head" of the h/s pattern up to the 1130 area. The reason there are so many h/s patterns in my opinion is due to the market consolidating and fighting between forces back and forth.

The bulls at these levels need to try and hold to regroup and attempt to squeeze higher once again. They can say the ball is in their court because the market is in an uptrend for the past 2 years, and the longer they hold these levels the better shot they have at pushing higher. Working with an inverted h/s formation between 1130 and 1060, which could potentially target them to the 1256 area. To do this, they will have to break through 1130, hold to test 1150, 1175, and ultimately the larger head and highs in April. Sellers will be met at all of these levels with first line of defense at 1130. Below the weekly chart will attempt to show a different view and possible scenarios.

Continuous Emini SP500 Weekly 01/16/09-09/09/10:

Weekly shows a 38.2% retracement of the rally from March of 2009 to April of 2010. Since the highs the market has consolidated and stayed well under 1130. This has created an inverted h/s formation between May and August of (1129.50 head, 1002.75 neckline) that would lead to 1256. This formation is within a right shoulder of a much larger head and shoulders pattern that forms from September of last year to now with the highs in April and 1000 level as the neckline. This range and break of 1000 targets the 783 area. If you have faith in Ben Bernanke, you would not be in this camp looking for that direction. However it is the larger formation which is stronger and leaves the market needing more energy to push higher and get through resistance.

$SPX Cash SP500 Index Monthly 02/01/07-09/09/10:

Above, the monthly chart shows the head and shoulders formation that is embedded between the neckline of 1000 and the highs in April of 1219.80. So for the past 4 months, we have been digesting market activity within this right shoulder. Head being near the 61.8% retracement, and neckline being at the 38.2% retracement. If you are a bear, this would be the right level to sell into and risk the highs, bulls have the "plunge protection team", quantitative easing, and nothing but buy stops above. Continue to monitor these technical levels, with the break of support we want to be sellers, and with the break of resistance we want to be buyers. Play the range until the market finds conviction to move one direction or the other.

$VIX Cash Volatility Index Daily 03/01/10-09/09/10:

Volatility and "fear" factor continues to die out and the vix has traded within 21 and 28 for the past two months. This is a range where one would want to consider buying protection against long positions when vix nears lower end.

Continuous Emini SP500 / Continuous 30 year Treasury Bonds Weekly:

Quick video on price action from April highs to today:

Thank you and best of luck trading!

Stewart Solaka
futuresMONSTER

Twitter -Chicagostock

Saturday Rock Blog: Fuck You

2010-09-04T11:34:00.004-05:00

I'm becoming increasingly bullish on the market, I no longer have any index puts and I have opened long positions in AUD and EUR. This chart doesn't look super bullish but clearly 1040 (neckline) is holding and there is even a false breakdown to boot. Other indicators (MAs, stochs, CCI) are also starting to turn up as the increasingly low volume of summer wanes. It seems like the market likes the economic news that came out last week so that could be the catalyst for the next leg higher. The head and shoulders pattern that we had all been watching just didn't pan out. Anyways, one thing is for sure, the S&P has been stuck in a very annoying range for a while now:

Saturday Rock Blog: Bob Rules

2010-08-28T17:47:00.004-05:00

I really thought the Aussie Dollar ($AUDUSD) would have broken down harder after it lost it's 50 and 200 dmas and the dma cross over happened. Instead AUD reversed the breakdown after forming a double bottom. The daily chart is actually looking pretty bullish to me now, the top of the range should be test, in the least. The weekly chart below shows that AUD still has not taken out it's 2007 highs but the range bound behavior over the past year or so now looks like consolidation before the next move higher. Perhaps the next move will take AUD to new all time highs against the dollar. I don't have any position in this at the moment.

Saturday Rock Blog: Half Moon Rising

2010-08-21T19:53:00.000-05:00

Saturday Rock Blog: Hello Goodbye

2010-08-14T03:50:00.000-05:00

Dow Jones Rising Wedge

2010-08-09T02:56:00.003-05:00

Saturday Rock Blog: What Happened?

2010-07-31T16:37:00.001-05:00

Saturday Rock Blog: She's Gone

2010-07-24T16:28:00.001-05:00

Saturday Rock Blog: Shine (on the Sun Bear)

2010-07-17T12:52:00.007-05:00

Everything about this chart says that a new trend has begun. The six month S&P charts has increasing volume on down days, decreasing volume on up days. A cross of death and a series of lower highs. The stochastics and CCI are both about to give renewed sell signals (market worked off oversold conditions). We held the flash crash low barely on Friday but I suspect op ex had something to do with that. Watch for a close below 1040 to confirm what everybody is wondering: Has a new bear mearket begun? If so, I'd guess it doesn't take as long as my patience to get to that head and shoulders target at 860. Enjoy the beautiful weekend everyone!

The Malaysian Sun Bear:

Disclosure: I own SPY puts, plan to hold them for a while.

Saturday Rock Blog: Stars

2010-07-10T09:56:00.002-05:00

Turns out I'll be seeing these guys perform down the street later today. These guys were kinda big in the 90's and came from where I currently live. It should be fun, have a great weekend all.

S&P 500 Rallies as Cross of Death Completes

2010-07-09T16:43:00.004-05:00

After completing a nearly perfect H&S top on the S&P 500 daily and hitting new lows for 2010, the bulls have come out to squeeze the bears. What a surprise! Nope, seen it a million times. Just when the bears get a grip on things the market miraculous rallies to squeeze the bears. I think stock have likely begun a new bear market as evidenced by a number of technical indications. The series of lower highs and lower lows on both the daily and weekly time frames is an obvious one. Then there's the cross of death on the dow and the S&P, note that this has not yet occurred on IWM or QQQQ yet (but it will soon). Further, you can see that the 50 dma and 200 dma on the S&P 500 are now both declining. I could go on and on about how strong the economic argument is for a renewed weakness in stocks, but.. eh, I'll leave that for another day. There were some short term buy signals this week and after the bulls retook 1040 its no surprise that there has been a squeeze on the false breakdown. Once the market falls back below 1040 I think I will be ready to declare a new bear market with certainty and bet the house short. For now I am happily long as I wait to see how far the retards on Wall Street continue this low volume squeeze. I hope you are all enjoying your summer?

Disclosure: I am long IWM August calls.

Saturday Rock Blog: Misunderstanding

2010-07-03T12:59:00.001-05:00