Will Try to Long Gold on Monday 1174.5 Stop 1164.5.

Target 1200. Plan to short 1200.

Biggest Errors This Year (So far)

1. AAPL Options - got the direction right (roughly) but didn't figure on the loss in implied volatility after earnings. I bought August and October calls at 256 and 260 the day after very impressive earnings (August 20th or so) and sold at 263-264 about a week later, but for a big loss. The loss was mostly because of the huge loss in implied volatility in my August calls.

2. Silver futures - Position size too large. I was trying to make a quick buck, catching a falling knife with futures. My position size was too large and so I couldn't think clearly in the face of losses. I panicked and sold for a loss. This happened two or three times I think.

LONG EDC AT 27.2; more AAPL at 256.

One more leg up has started. Will try to go long SPY as well.

Update: Long SPY at ES 1193 and 1195.

Update: AAPL not acting well. Both trades may be short-term.

NDX:SPX continues to deteriorate.

NDX:SPX continues to deteriorate.

Positive divergences in Shanghai, Hong Kong and bond rates are indicating more strength in the bull move.

Positive divergences in NYAD and NAAD also.

But NDX:SPX aint no joke.

Possible that in the near-term we will see a weak bull/ range bound SPX and strong emerging markets (EEM).

Currently, I plan to start shorting around ES 1120-1130. I think my stop will be 1165.

I feel much more confident about currencies.

I will short the Euro soon (for a bounce in the dollar).

I am only about 20% long now, with October AAPL calls.

Out of EURUSD at 1.309. Out of 30% of AAPL at 260.

AAPL, Bidu, IWM still weak.

NDX:SPX

http://stockcharts.com/h-sc/ui?s=$NDX:$SPX&p=D&yr=2&mn=0&dy=0&id=p32087580607&a=203193241

The above link should show a chart of the NDX:SPX ratio. Note the huge up move in Jan-March 2009. That was one of the many divergences signaling that the March lows in the SPX were significant. Note now the lower RSI divergence across the tops in this ratio. While we may not have hit the top in SPX (I doubt we have), we may be close.

Ouch!

AAPL, Goog, BIDU saying trouble ahead.

Out of EDC at 27.9. Will probably get out of AAPL soon.

Bought more October AAPL Calls at 253.3; EURUSD at 1.302; EDC at 27.6

Sold AAPL Calls at 265.6; EDC at 27.9

Should have sold EDC yesterday.

Still plan to buy back EDC at lower levels.

Still long 25-30% with AAPL calls.

May Sell Some Longs today

Will go to 30 - 50% long.

Waiting for pullback to 1095-1100 to reload.

Consolidating out of ST Overbought Conditions

Expecting more upside to come. 1095- 1120 range for a day or two.

I may start buying puts around 1125-1130.

Short-term Top is Close

I will get out of half August calls tomorrow - Tuesday.

Long EURUSD at 1.276; Initial target 1.31 and 1.316

Went long on Wednesday or Thursday. Added at 1.29 on Friday.

Watch Copper, FCX, and the AUD/USD

Bought more AAPL at 256.4

Bought EDC at 25.68; AAPL at 259 this a.m.

Target EDC 30; AAPL 278.

EDC Target is 30; EURUSD 1.35

We will be there in 1-2 weeks. Sold EDC at 24.75 (was expecting a little pullback), but will now try to buy twice as much at 24.75.

FuNdamentals and Technicals

Fundamentally, this a very scary time.

Technically, the SP500 is a buy, at least ST.

LONG EDC AT 23.3

Changed mind about BGU. Target to be determined.

Going Long Equities for the Short-term

This post is taken from a comment I made on a post by Will Rahal on George Rahal's blog: whitemagicanditsexposure.blogspot.com.

1. In the bull market (2003-2007), it seems that LEIs peaked some time in 2004 and the Coincident Indicators in May 2006. The market peaked in late 2007. If we expect a similar lag this time, and assume that LEIs peaked in May 2010, we would expect a market top around 2013.

2. Also, it seems that the ISM index basically plateaued from mid 2005 -late 2007, a 2.5 - 3 year period.

3. The third year of a presidential election is rarely down. Since 1961 it has always been up. November 2010 will start the third year. (http://bigpicture.typepad.com/comments/2006/06/4_year_presiden.html)

4. The BSE is about to make new highs. The daily chart looks bullish to me.

5. Interest rates are low and may stay low for while. The Fed (especially Bernanke and Yellen who have been vocal about it) is determined to keep monetary policy as easy as possible. Where will all this money go? It's going into asset and equity markets, particularly in Asia. Listen to Dr. Marc Faber's very recent interview here making a case for global commodity inflation. He also speaks about equity and asset prices in a fiat monetary regime where interest rates will not go up. http://tinyurl.com/3x6b8eo With that, I submit that if commodities double, the S&P cannot halve (based upon market capitalization of the oil and commodity firms). Thus, SPX 500 seems out of the question.

6. The housing market is bottoming. Mr. Rahal (senior's) work regarding number of housing starts seems to me to back this up.

7. However, TLT (10-year bond) is priced at the same level as it was in March 2009. This is a huge negative divergence with the equity markets. Why are bonds priced for DEPRESSION in spite of the fact that interest rates at 0%?? Finally, percent wise bonds rates have been going up a LOT less than equities, in the most recent move up (SPX 1010-1095). The MACD divergence in the daily charts of the ten-year bond is telling and bullish, but it is a smaller divergence than that seen in the SPX. Rally we must, but top we will. Bonds may be, in the longer-term, indicating a negative, NOT positive, divergence with equities -- negative for equities, that is.

In the long run, I am still leaning toward the theory that we stay range bound in equity markets the ST (900- 1170) and at some point start a new big leg up in Commodities that holds up the stock market. I could be all wrong about the LT scenario. We could get deflation, and the Commodity supercycle may have been over in 2008. But I am quite confident that the bull wave will continue for the ST (next 1 month or so).

I will try to go long BGU tomorrow for a target of just under $50.00.

ST and LT Outlook

Indices

NAS is looking screwed. NAAD not good. $RUT (index of truth) looking bad.

NYA 13-34 SMA looking very bearish. Indicating any bounce to 34 MA should be shorted.

ST we will likely fall further to 1040-1060 zone. But then we should bounce and possibly all the way to 1130. TICK was not weak on sell off Friday, probably a Cramer (Sell equities call on Thursday) induced retail sell off. No broad selling. Shanghai is showing ST bottoming action. TNX will likely make a higher low. Daily TYX showing huge MACD positive divergence. 5 MA of TRIN went from overbought to oversold in one day (indicating a ST bottom is close). PC ratio still not toppy, especially in the 10 and 13 MAs. Monday/ Tuesday lows could be bought. ST we should see 1050-1060 SPX, IMO, which could be bought.

But no point selling equities long-term at these levels (1040-1060 SPX). Higher levels expected.

Russell is lagging and will continue to lag now. Shorting Russell will give better bang for buck. (TWM)

I will trade two things. Probably TWM (to short) or BGU (to long) and EURUSD.

Revised: On Monday, I may go long TMV or Short TLT via Jan 2010 Puts.

Easy to get caught in the ST, when trading too much, and not see the LT. Trees not the forest.

Currencies

Dollar will fall more. EURUSD will come down to 1.27 and then up higher. I will long 1.27. Target is still 1.35. This may support the US indices for now. USD should be sold at 83.3 - 84. 81.5 is solid support. (1.316 on EURUSD). Then 79.9. (1.3510 on EURUSD). One of those will be the top for EURUSD.

PMs

Gold is going to 1170 minimum. 1195 - 1205 is short zone. Stop at 1210.

Silver to 17.6 on Monday, small bounce, then 16.5 in a week or so. Then down more later this year.

Details (unformatted)

Equities

Up until August 10-20.

Then look to short U.S. Indices.

This is still a bear market.

Dow 5000 means SP 450. A lot of people are calling for that.

I am not dismissing that scenario.

Looking at following scenario:

SPX 1220 (May 2010) - 1040 - 1130 - 1010 (July 2010) - 1090 (July14) - 1050 (July 20)

- 1120 (Aug10) - 950 (October 2010) - 1050 (December 2010/Jan 2011)

BVSP is falling apart.

BSE is doing well. Indicating higher highs.

Copper is noncommittal - possibly because of the falling dollar.

Commodities are surging - because of the falling dollar. May lift the indices.

Commodities take indices up until mid October, then fall with market until October.

Long commodities in October?

May long food in October for long-term.

Friday and the ST Future

EURUSD - should go up to 1.31 before a significant break. I plan to add to shorts at that level. Target is 1.276 and 1.272.

SPX - 1040-1055 should be a nice long zone, but I may not take this trade because longer I am looking for higher prices to short. I will add shorts in the 1110-1130 zone. This will be a longer term trade, using BGZ.

Thursday and the Future

Sold SPY Puts yesterday at 1085.

We are on the verge of a 20-30 point break -- minimum.

I am short the EURUSD (target 1.268) and GBPUSD (target undetermined as yet).

Tuesday - Bought SPY Puts

Bought SPY August Puts at SPX 1089. Target SPX 1075. As of now, this is a ST trade. Trend line resistance, overbought TRIN, etc.

Next Week Trades

I expect some consolidation Monday - Wednesday to work off the overbought conditions.

I will try to buy:

1. EURUSD at 1.265

2. AAPL at $258.

3. BIDU at $70.

Bonds, Equities, EURUSD, DX Update

Bond rates - going up LT

Equities - slow rally/ range bound; ST Top at SPX 1080-1095. 1090- 1055 - 1130.

EURUSD ST top at 1.284 or so.

AUDUSD ST top at .8860.

It's all going up; wait for a drop to go long.

EURUSD Target 1.32

Looking for 1.2470 to buy. Target 1.32. Target 700 pips.