Bearish On Goldman

GS. 170 seems like the next obvious target but I like it all the way down to 160. I don't like entering any trade that isn't elbows-to-assholes against its trendline, as tempting as it is, so I will try to show some patience here. Hopefully we see some sort of one day bounce or short-covering rally back to GS 180. This is just one example of a good looking chart but a lot of things broke down or continued to break down today. Ideally, many of these will come back up to the underside of their pre-existing support (now resistance) line, to provide a lot of low-risk setups.
Here are a few facts (in progress):
AAPL 160
GOOG 500
MA 260
GNK 50
CME 385
ICE 115
GLD brokeout
FLR brokedown
SOHU brokedown
POT pulled back to support

Trading for a Living
When the slope of MACD-Histogram moves in the same direction as prices, the trend is safe. When the slope of MACD-Histogram moves in a direction opposite to that of prices, the health of the trend is questioned. It is best to trade in the direction of the slope of MACD-Histogram because it shows whether bulls or bears dominate the market.

The slope of MACD-Histogram is more important than its position above or below the centerline. The best sell signals are given when MACD-Histogram is above its centerline but its slope turns down, showing that bulls have become exhausted. The best buy signals occur when MACD-Histogram is below its centerline but its slope turns up, showing that bears have become exhausted.

Short setups

The bulls had a nice day today but I'm not feeling too optimistic...not after last week's breakdown. It seems like oil will continue to dictate market sentiment and direction. Be aware of the following economic stats this week:

Date	Time (ET)	Statistic
27-May	10:00 AM	Consumer Confidence
27-May	10:00 AM	New Home Sales
28-May	8:30 AM	Durable Orders
28-May	10:30 AM	Crude Inventories
29-May	8:30 AM	Chain Deflator-Prel.
29-May	8:30 AM	GDP-Prel.
29-May	8:30 AM	Initial Claims
29-May	10:30 AM	Crude Inventories
30-May	8:30 AM	Personal Income
30-May	8:30 AM	Personal Spending
30-May	8:30 AM	PCE Core Inflation
30-May	9:45 AM	Chicago PMI
30-May	10:00 AM	Mich Sentiment-Rev.

Pure speculation: In the very short-term I think it's reasonable for oil to pullback a little further and for SPY to climb back to 140 (or even low 140s). If any of this transpires I will be looking to buy Puts or Bear Put Spreads (aka: debit spreads) because I think more weakness is ahead and any pullback in oil will be temporary. I will also look at selling OTM Call Credit Spreads above significant levels of overhead resistance. Of course the market (SPY) could go straight to 132 without any more bounce so be cautious. Here are a few setups to note (click on company name or symbol to launch graph):

UnitedHealth Group (UNH) - bearish - may be on its way back down.

Apple (AAPL) - bullish - like AAPL to the upside. Use yesterday's low or the trendline as a tight stop.

Transocean (RIG) - bullish - use a very tight stop (see trendline) as the drillers have been getting punished.

Capital One (COF) - bearish - anxiously awaiting this lower trendline to be breached. Also, the fundamentals (i.e. tons of bad debt on the books) support a lower price.

How to bet on the future of agricultural commodities

A dark cloud has been forming over DBA since mid-March but it's not too late to profit from its recent decline. First, what is DBA?
DBA - seeks to track the price and yield performance...of the Deutsche Bank Liquid Commodity Index... The index is ... composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.

Second, if you aware of any fundamental reasons why corn, soy, wheat, etc. are going to the moon please ignore the following trade. This suggestion is based on the technicals - which, of course, already has the 'fundamentals' priced in and is reflected in the chart below.

DBA has presented a setup. It has formed a nice descending triangle pattern and it is trading at the base of said triangle. The setup is done, so the next step is defining some entry / exit criteria to minimize risk and maximize profits. Assume Puts are being used for this strategy.











Use the following as a guide:
1) Place a contingency buy order around 35.25 (meaning the breakout has occurred, thus validating the pattern). The contingency order says that when the stock price hits x, a market order will be triggered to buy Puts at the market. Buying ATM or OTM Puts is up to you.

2) Define a target. This is done by measuring the vertical height of the triangle (5ish) and applying that length to below the breakout level. Accordingly, the target is 30ish.

3) Define exit criteria (assuming the order gets filled). First, it's likely that the stock (once it breaches the base of the triangle) will decline a couple of percent, then bounce back to the base (support becomes resistance) and ultimately continue back down. This is what SHOULD happen but since things often don't happen as they should, stops are necessary. The whole purpose of using these contingency orders is to make the stock's direction prove itself before you jump on board (and so that you don't miss the move).

4) Place an order to sell, contingent upon the stock reaching 5% above the triangle base. In this case, 37ish. If the stock hits this level, you misread the pattern and it's time to get out. The order will be triggered, contingent upon the stock hitting 37, and your Puts will be entered as a 'sell to close' market order - cut your losses.

False breakouts do occur so it's important to get out of the trade when it goes wrong. If your criteria to enter the trade was based upon this pattern, then if the pattern is breached, you no longer have any reason to be in the trade - except hoping things turn back your way...and they won't.