The Fed's gameplan

I look at the charts, and I notice 3 things:

1. Commodities look like they want to correct
2. The correction that began on February 22 til March 16, 2011 is not a significant correction
   
3. Despite weak market internals, the market continues to advance and a breakout above the February highs would not be surprising although if it does, look for a major pullback
   

So now what? The Fed has been criticized for "propping up these markets" via QE-2 and causing inflation. But we know this is what the Fed wants to do. They wouldn't want it any other way.

But if there is outcry over money printing, how will the Fed continue to push its agenda? Easy. Suspend QE-2, let the propped up market drop, let blood spill on the Street, let deflation creep in causing a correction in commodities, and when the world looks like it's about to end, Bernanke will come forward and say, "I told you we needed to print more money....bastards." Everybody will agree and rejoice together. The correction in commodities will come to an end and commodities will sky rocket.

Stocks to Watch

BBY: $25-$26 is support


AEM: Buy on a hit of blue trendline at $60-$62


AUY: Buy at 200-MA

Strong Gap up

The SPY gapped above the $132.40 this morning. Look for a move to $133.50.

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Anemic Volume

Volume has really dropped off the past 2 weeks. We know from the past that light-volume carries with it a bullish bias. Areas of resistance on the SPY are $132.40 and $133.50. I suspect spring break has a lot to do with the lack of volume.

Pullback in Gold, Silver, and Oil?

If you are in the inflation camp with me, you know that commodities are in a bull-market, but it looks like a correction is coming. I've been shorting Gold since it has hit $1400/oz. and continue to hold my short positions. I would look for a pullback to the daily 200-MA on the GLD as a buy.

For oil I would look to short it if the USO went to $44. But if, instead, it decides to decline from here, I'd begin to ACCUMULATE SOME positions in the USO around $38-$39.

Silver of the 3 commodities looks to be the strongest. Look to accumulate silver when the SLV gets to $30-$31. $26 would be the ultimate target for SLV however.

Good Luck All!

JASO on the move

Nice bottoming candle, a pullback, and a Gap-n-Go. Targets are $8.30 and $8.50

The market needs a breather here, I wouldn't be surprised to see a small red day tomorrow.

• The financial sector looks weak
• I am still short GLD
• The dollar looks like it can bounce from here
• Oil is NEARING good resistance
• The natural gas ETF (UNG) is really beginning to take off. Whether or not we've seen THE bottom, we'll have to wait and see (I think the first week of March is the bottom). I'd wait for a pullback before jumping into it. Demand for natural gas is way up after the nuclear problem that Japan is facing. I will do a separate post on natural gas some other time.

Good Luck All!

Markets are bullish

Looks like the Spiders will be headed to $132.40 and there is also resistance on DIA $122.49

All market targets have been met---Huge day coming!

When the markets dumped on the news from Japan, I said the markets were in panic mode, look for a bounce, and hold long.

That bounce came and my targets have been met (SPY $130.30, DOW 12,120)

• Either Thursday or Friday will be critical for the market.
• We either get a huge dump or a strong gap up above the 20 and 50-daily moving averages on SPY
• I'm leaning slightly/cautiously towards a strong dump
• Watch the financial sector tomorrow.
• The rest of the week is pretty much a coin flip the direction of the market will reveal itself soon.
  

Not much happening in the markets today. Except XING is finally making a move, and CHGS is up 49%

• I'm still looking for a bounce, a retrace to $130.30 on the Spiders by tomorrow, I'm guessing.
• I still have a slight bearish bias in the medium-term.
• I hold SCCO, XING, VALE, short gold
  

..

• Solid up day today. I think we have a little more upside coming. We could stall around $130.50 on the SPY or around 12,120 on the DOW. Whether we stall and start to make new-highs or make new-lows still can't be determined at this point.
• Gold looks weak. I'm turning bearish with targets at $132 and $130 on the GLD. Perhaps a foolish call, but I am short...
• USO looks like it's headed for double-top
  

• I will not be trading tomorrow, but look for a late day dump tomorrow as traders may not look to hold over the weekend due to "day of rage" part 2 on March 20.
• I still think the markets will bounce in the very near-term
  
• I am still bullish on XING, if it closes below $1.75 all bets are off.
  

• Although more bearish than yesterday, I'm still neutral to bearish. This down leg shows little sign of stopping.
  
• We closed below yesterday's low but a rebound will come in the very near-term (not expecting anything big)
• The markets are very fragile and is easily spooked right now.
• If we close below today's low (SPY $125.28) look for a drop to $124.
• As long as we close above $1.75 (now) I am still bullish on XING
  

Inflation will be a problem in 2011

We've been hearing a lot about inflation the past couple of years, but I don't think we've REALLY felt its impact yet--at least not to the point that I think inflation will reach. I'm not saying $15.00/gallon this year (it could happen) but maybe $5-6/gallon.

Commodity charts are behaving very suspicious to me especially gold. GLD looks confused; it's trapped in a range between $128 and $140. It doesn't know whether it should breakout or breakdown. I'm in the inflation camp so maybe I'm bias when I say it'll breakout. But I could be wrong because for the 4th time the GLD has tested its all-time highs but failed to breakout.


Gold isn't the only thing on my radar, turn your attention to agriculture. After an initial sell off, agriculture based and broke out! Check out the breakout volume.


A similar pattern is taking place in oil. A breakout is pending...


Finally, the dollar....we all know its doomed as long as Bernanke controls the money supply. The UUP is testing a double-bottom, and it gave an unimpressive bounce. You'd think with the disaster in Japan and the uprising in the Middle East more people would flee into the dollar, but they didn't!

There has been talks about ending QE-2 prematurely (I think it would be wise to do so) but what will result from it? A VERY weak market...cutting through the March 2009 lows would be very likely. Add to the fact that the "tea-party republicans" are looking to cut government spending? We will most definitely break through the 2009 lows with ease! Not because we need to spend more but because this economy for years has been living off of free credit. (Imagine giving a homeless unlimited credit, a black card from American Express, he will swipe that credit card and will look like the richest person in the room, but strip that credit from him what does he have left? Nada. The repo-man will come and that credit card will have one big fat interest rate attached to it)

Anyways, if things do lead to spending cuts and QE-2 does end, everyone will be mad and Bernanke will be forced to do QE-3, 4, 5, etc...that will cause massive inflation. I think the correction in commodities is a buying opportunity.

The markets are getting smoked today on news from Japan. But this sell off seems to be based on panic and not market internals. We are oversold in the very near-term, and I expect consolidation.

Major levels on the SPY are: $118, 120,122, 124, 126, 128 (strange that the levels increment by two beginning with $118).

I'm still neutral to bearish, but wouldn't be surprised if we get a bounce here. Watch commodities, I think one more correction, and we can see some new-highs!

Nikkei gets pounded!

The Nikkei plummeted 14 percent on Tuesday, after the country's prime minister Naoto Kan warned of an increasing possibility of a radioactive leakage. Dow futures currently down 216 points.

• SPY $131.70, $130, $129.50 are major levels to watch (pink lines).
• All but 1 indicator are still pointing to further downside in the market.
• All in all, the indicators are showing a sideways to down market. Short the bounces.
  

XING is on top of the 200-MA. If a move is going to come in this stock, it has to be now. It's important for the stock to close above $1.85 from here on.

..

I was watching footages of the tsunami in Japan. The awesome force of mother nature is absolutely amazing.

SPY is showing an intraday bear flag. A break above the 50-MA would negate the pattern.

Friday's Outlook

A nationwide call for a "Day of Rage" is being called for on March 11 and 20 in a nation where protests are outlawed--Saudi Arabia.

The worst case scenario is if the government open fired on protesters and the protesters retaliated. This would spike the prices of oil up dramatically and cause the markets here in the US to close in the red tomorrow.

But I don't believe that that will happen. Instead, I think the government will do absolutely everything a day before the scheduled protests to keep things under control. Whether it be kidnapping big name activists or whatever, they will do everything to keep the markets calm. The US government would also like to see this happen, they do not want civil unrest to pour over into Saudi Arabia (but they encourage it in Libya and Egypt).

Nevertheless, if the markets open lower it will be due to violence at the protests so expect continued weakness throughout the day. If not, look for a muted day on Wall St. and for the Federal Reserve to buy up the market during the first or last hour of trading.

The markets dip as oil spikes!

More civil unrest is roaring through the Middle East as it looks like some protests are turning violent in Saudi Arabia. This is huge. Oil up markets down because as energy prices rise, profit margins get eaten into.

Markets get smacked!

Today's sell off is very impressive and a lot more impressive than any past sell off because everything is down including Gold, Silver, and Oil.

Today's down move is attributable to 2 things: internal market weakness and extreme overbought conditions (I turned bearish on CRED and SSN recently due to their overbought nature and Oil's $110 resistance)

This does, however, present a buying opportunity as a lot of stocks are coming into major support and the SPY coming into a double-bottom/50-day moving average support. All but 1 leading indicator still points down.

I am long: XING, SCCO, VALE

Copper stocks going into support: FCX, SCCO

Freeport Mcmoran and Southern Copper are approaching attractive levels. I have accumulated some shares of SCCO.
FCX:


SCCO:

Day-Trading LNG

Going long LNG here after it was down as much as 22%

Silver to $50/oz. shouldn't be a problem

On a historical basis the silver to gold ratio is 16:1 that means if gold is trading at $1600/oz. silver should be trading at $100/oz. if history is any indicator of the future, silver should be around $90/oz. today.

In the 1980s Silver's all-time high was made--$50/oz. the monetary base has expanded by ten times since then. If silver is a store of value, silver should be $500/oz. today.

Silver is a scarce commodity and is believed by the USGS to be the first element on the periodic table to go extinct.

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Markets are still Bearish

As long as the 52-week highs isn't taken out, I still have a bearish bias going forward and believe that any bounce in the market can be shorted.

The dollar is having a rebound today as well. In the past, a strong dollar meant a weak market but that hasn't been the case lately. Lately it has been oil and fears of inflation keeping a lid on this market rally and is probably why the markets are trading positive today.

But as we know, this rally is on the back of QE so whether or not this rally can hold on without the Fed has yet to be seen.

Chinese Rare Earths are looking very attractive. Bullish consolidation into support. The risk-reward here is extremely high.

Disclaimer: As of today I do own shares of XING.

XING:


CHGS:

Bearish: CRED (stop @ $14.01)

The truth behind the numbers

It disgusts me to hear how "well" the economy is doing. The government, the media, and Wall Street will never stop with their games.

What is it about today's employment situation that is getting everyone so hyped up? The Institute for Supply Management reported that its measure of hiring by service companies rose to the highest level since April 2006. Service jobs are not going to save America.China's rise to the global stage was on the back of manufacturing jobs. Jobs that made REAL goods so that people can buy them. It's "Made in China."

America lost its foundation for success: jobs that make real goods. Our cars were the best, and they were all made here in the United States! The reason why we made it out of World War II successfully was because we sold tanks, guns, and planes to our allies when they couldn't make it themselves. And when we got "sucked" into the war, the women back home worked and built the war machines that the soldiers would use to fight off the Axis powers.

But these jobs no longer exist only service jobs do. And the biggest employer for those service jobs is guess who? The government! Private sector jobs are hardly expanding whereas the mostly unproductive government sector is exploding! The State is growing and that is not good for our personal freedom, nor is it good for our tax liabilities.

Government run-businesses tend to lose money (AIG, FNM, FRE), and are also less efficient when compared with private businesses (USPS vs. FedEx) simply because there is no competition within public sector jobs. You don't need to have a proven background to make it up the ladder, look at Geithner and Bernanke absolute failures before, yet, were promoted to Treasury Secretary and Chairman of the Federal Reserve.

And I don't even want to get started on Jobless Claims and Unemployment numbers..
BS!!!!!!!

Bullish: LCC (stop @ $7.40)


Bearish: SSN (stop @ $4.05)


It also looks like the GLD and SLV will be pulling back, but it's still too risky to short. USO looks the strongest of the 3 commodities.

Expect a pullback in Oil

$41.30-41.95 is massive resistance for the USO. Watch it closely. How USO closes these upcoming days will tell us a whole lot about crude oil.

The overall market is still very weak. ALL indicators are still pointing down which tells me there is still more downside to come.

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GLD into a lot of resistance

Silver has been on a tear making new highs today. Gold is under-performing when compared to Silver these past few weeks. It's tough to short Gold and silver but Gold is coming into a lot of resistance and silver is extended. Look for more signs of a shorting opportunity like topping tails on the daily charts.

SPY gaps into resistance

It looks like a normal downside retracement in the markets. As long as the SPY doesn't take out the 52-week highs, I have a short bias.