Sunday, August 19, 2012

August 20th-My Thoughts on the Week Ahead

I can't imagine we will see much drama this week, as the Central Bankers are the story and will not get together until next Wednesday.  I will continue to scalp and play with credit spreads.  There should be an upward bias as the robots will not allow anyone to benefit from the Bernanke capitulation next week if it comes.  We are pricing in perfection.  Only gold and silver has not taken advantage of the creep, and the only area of a pricing mismatch if the Bernank eases.

Corey Rosemblum published an interesting piece on these moves, and if you are leaning long, it is important to see how far the sell off goes historically.  I recommend building a short hedge that profits from a drop in that retracement zone.

Also, going into fall, third quarter estimates are being reduced, and there is a very good chance that revenues fall sequentially, and with a lean workforce, that means reduced profits.  I also would start looking at companies exposed to commodity costs, that offer a discretionary service or product to short, like restaurants.  We are going to start seeing some blowups.  Here are my charts below.

By the way, I am starting an options paid service based on the most common ETFs next week.  I have received a high level of interest in offering such a service.  These will be high probability spread and ratio trades based on my buy and sell signals of the underlying ETF's.  I am going to value price it.  If interested, sign up on my free site, by clicking the button on the top right of the page.

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