Reversals

I put most of the commentary on my charts, but in summary we are going to have some short term price movement reversals to shake out the late players.I think this plays out for a week or two then we start a generalized risk off through June, including the commodities.  Oil in particular as it will be used as a weapon against Russia. I will continue to get shorter during this period, and will add a nice position in BIS for a year long hold.  I can see it in the 60's at some point next year.

Please click on the charts to enlarge.

It Continues

I can wax eloquently about macro this and micro that, or what my charts are whispering to me, but the fact is the FED is withdrawing credit, ergo the banks have less leverage to speculate, and the market will be soft through May, punctuated by by bouts of Fed rumour short covering rallies.

For me, I will trade more from the short side, stay defensive in my portfolio, and look to leverage XIV and UVXY puts on extreme volatility moves (in my timeframes).

We had a beautiful trade on DDD Friday, and I took out all of my risk (100% return in three hours) and looking for some follow through before I close the trade.  I am going to point out a few other high betas to short as the one's I follow give the signal.

I am waiting on gold to tell me to double up or to go short, and I am likely to go long vol this week, as well. Have a great week everyone.  Enjoy the charts, and below you will also see my portfolios; general, and my XIV/VXX portfolio.  Click on to enlarge.

Here Comes the Vomit Comet

What a big week ahead for us.

• The Russian news is old unless Russia tries to up the ante again.  My view is they consolidate Crimea, then in a few weeks agitate for the Odessa region, then Eastern Ukraine.  
• China is starting to lose control of their credit markets, and soon we will see some wholesale panic, and truly see what a house of cards China really is.
• Yellen decision, and will in all likelihood continue to taper, and for many reasons; 
• One is the Treasury does not need the bonds, 
• Yellen must establish her chops, 
• It is putting increasing pressure on Russia and China.  Emerging markets are feeling the vice grips from this liquidity drain. 
• Finally, what's up with that jet?  If terrorists can break confidence in air travel, things can get bad very fast.

All we are missing is a plague, as we already have the weather.

Having said all that, I expect Monday, Tuesday, and Wednesday to be positive in the aggregate, as no one wants to be too short going into the Fed announcement.  After this week however the selloff continues into the June meeting.  That is when they will need to buy bonds again.  I say this as my trade signals on the broad market are pushing against their ready to buy areas, and my gold signal is reaching time to hop off area.  My signals are swing, not macro, so I only look a week out in most cases.  The Fed controls the macro.

Last week, my signals were spot on, and I closed out a nicely profitable DDD short, and VXX long position. Still sitting long gold, and just started trimming size, and still on the lower energy theme.  Going into the week more neutral with XIV, and reduced SPXU and DGP positions.

Have a great trading week.  Click on to enlarge the below charts.

We are Distributing

My signals for SPY are at max bullishness, which precedes a market correction, and I have been getting more bearish.  I closed my XIV and DUST trade, and bought DGP and SWC, and added to AG.  The metals and miners are not falling while RSI is consolidating, and that is bullish in my view, and XIV is unable to break back into the upper part of its channel and has made a lower high. Geopolitics are heating up, as well.

It is good be cautious. Below, I also recommend buying puts on DDD if it breaks below Friday's low.  I see low to mid 50's in its future.  I will close the last of my DDD long position on that break, as well.

Our portfolio is still performing well, at over 65% annualized, and  am introducing my volatility portfolio for non day traders.  I have been running the portfolio since December of 2012, and the performance has been very good (114%). I am waiting to trade it through a market down cycle before offering it as a subscription (hopefully by July).  I will post results each week, and when it gets a little closer I will offer the trades for free for a few months so you can see the value for yourself.

Enjoy the charts results. Click on charts to enlarge them.

In Like a Lion

All it took was a rumour of Russia invading Ukraine and the market dropped 15 points in an hour.  We are skating on thin ice (catch the linkage, March, ice, thin) the Vix is staying elevated within its RSI channel, and in fact has triggered a buy.  I went long VXX at $43 this week.

Many are seeing a move to all time highs, but my signals are telling me otherwise.  I now have sell signals on Energy, Natural Gas, Gold, Silver, Miners, Copper, Biotech, the QQQ's and SPY.  Another blogger I respect has just indicated a sell using his prop signal, and it is scary accurate for predicting the intermediate moves for the broad market.

There is simply not enough to like at these levels that deserves new capital. Tactically, I will continue to recommend adding to and reducing positions on our portfolio of which we are the least invested this year, including counting the hedges, and will continue to reduce size.  My main area to add on buy signal are in metal and miner's and my big area to continue shorting will be in Nat Gas and Energy. For speculation next week I may short IBB with puts.

To remind everyone of my approach; I use a long/short portfolio approach based on a 2 day trade trigger (so I don't over trade), across four major market segments in areas where I want exposure.  I speculate with options on strong setups that deliver a very high probability of large profits (I share those with subscribers). That way perfection in signal calling is not needed for outperformance, and we outperform the market.

Enjoy the charts.  Please click on them to enlarge.