Wednesday, 21 November 2012

Happy Thanksgiving.

So here we go again. SPX up 4 days in a row and yet except one day, it has not done much. In 4 days it has covered less than 50 points and is struggling with the Fib.38.2 retracement level. There is only half a trading day this week and then the cycle is up for another 4 /5 days. As of now, I do not think SPX will cross 1410 with any conviction and even if it does, most likely it is going to falter at 1420.

I borrowed the following picture from Peter  Brandt.

However I disagree little bit with the level of the bounce and I think it will bounce another 15 points higher from here although I bailed out.

I closed my TQQQ call options today and half of the long position in Nat.Gas. Although there is no immediate danger for Nat.Gas and prices will most likely go up some more, I decided to take some chips off the table. We must leave something for the next guy.

The Middle East cease fire was inked today after few last minute blasts but Crude was up for the day, although it was at the same level as day before, just below $ 88. If you listen to the logical explanations of the Crazies, you would expect Crude to sell off after the fighting stop. But the opposite happened. Yesterday I wrote that it is still little early to short Crude. We need to wait for few more days till the bounce fades in all risk assets. This is another trade which I think would be a safer bet.

Another short trade I am looking at is Silver. If Silver fails to clear $34 by the next week end and closes below $32, I am going to take a stab at shorting silver. But for that few conditions have to be met. I will tweet if I enter the trade.

Also, take a look at coffee, which I think is making a long term bottom like Nat.Gas. Out of the two vehicles for coffee, JO and CAFÉ, I prefer JO. It is less volatile and more stable.  30%-40% return is quite possible in a year but you have to give it time and be patient.

You see, there are lots of opportunities and fish out there without worrying too much about the equities. We will either go long or short when we have all the parameters lined up. But in between there are other opportunities which we can be watchful for.

That’s all for this evening. If you are travelling, travel safe. Don’t let the trolls at Airport bother you too much.  And for your Black Friday shopping, do remember the Amazon link in the blog. Once again, thanks for the donations. 


  1. Thanks for your great work. I see eye to eye with you for the read on the market. I would add that investors/speculators should really look at trading commodities in addition to equities.

    As far as your thinking about the coffee trade, I think it could be a good one. Large speculators are really short here,but I would want to wait for confirmation first, i.e. for JO players like myself, a close above $35.60 with a stop just below 33.40(my system) for a scaled in trade. The reason for caution is that on the P&F chart we have a double bottom break on the daily. If you look at the 60min P&F, you can see that this would confirm it. I don't want to catch a falling knife but I like scaling in early for minimal losses.

    Thanks for pointing this one out to us.

    1. You are 100% correct. We have to wait for confirmation and scale in slowly over a period of time and with proper stop loss. Never jump in any trade blindly.
      Thanks for pointing it out. Please do share your inputs here.
      Have a great ThanksGiving.

  2. Great blog, I have enjoyed reading your timely insights. You use cycles in your analysis which is great. I have yet to find a good source for cycle analysis. Can you lead me in the right direction?

    1. cycle analysis is the basis for which I have my own Algo and I keep learning and tweaking it as I go along. The results now are much better than they were two years back. I am not sure where exactly to guide you but Tom McClellan runs a news letter which uses cycles.
      You can get in touch with Tom. He is a perfect gentleman.

  3. I can say that the title is very catchy.. and i totally agree with the idea