Update

There were a lot of significant breakouts last week - most notably SPX closing above 920.


In the short term I like the odds of a pullback but in the intermediate term this chart below shows where the market might run to (underside of magic orange line)while encountering tons of resistance along the way. And if the market is somehow able to climb to S&P 1000, that will present a magnificent shorting opportunity.


Being long AAPL with a stop under 85 finally paid off on Friday. This may have some more upside but I eventually see support at 85 failing.


BHI didn't work out quite as well, though remains extremely overbought.


After last week, both USO and GLD look to have given traders another opportunity to get short.

Welcome back

I came back from the beautiful Yucatan for this crap - unbelievable. It's at least good to see that I didn't miss anything.

Currently I'm choosing to listen to a brilliant explanation of how automaker CEOs plan to pay back a potential government loan when they can't even make a dime when we're not in a recession. Whatever.

On to oil. The following charts are starting to speak to me. You can draw your own conclusions.

USO





DUG






DIG

USO back to 200 day MA

USO has retraced back its 200 MA!
I recommend.....continuing to not touch it.

setups

LONGS:

USO and WDC are presenting low risk setups to the long side.


SHORTS:
FSLR
The following oil, gas, steel, and coal stocks all look like crap after their technical breakdown earlier this month:
SLB, OIH, HAL, APA, DVN, BP, XOM,
X, AKS
ACI, BTU
If you happen to like any of the oil driller/service/equipment names, stick with CHK or RIG.


WATCH:
FXI (125)
BIDU: bearish but oversold, short on a bounce


OptionSpot

Recap

Review of recent recommendations/predictions: (click on symbol for chart)
Green = profitable
Red = lost a small pittance thanks to using my trendline as your tight stop.

FLS - 07/10 - today set up a perfect entry - touched underside of trendline - still too early
USO - 07/08 - recommended calls at 110; currently at 117.
BIDU - 07/08 - recommended puts at 334; currently at 305.
GS - 06/26 - recommended puts 179-183; currently at 162.
CME - 06/26 - recommended puts at 406; currently 306. Probably the best call ever made by anyone at anytime....ever.
ICE - 06/26 - recommended puts at 122; currently at 88.
GLD - 06/26 - recommended calls at 91; currently 95.
MA - 06/26 - recommended puts at 275; currently at 257.
POT - 06/27 - recommended calls at 219; stopped out at 215.
AAPL - 06/26 - called for AAPL to go to 160; reversed at 164; currently 173. Still might be in a downward channel but either way my timing was stupid to make the call.
GOOG - 06/26 - recommended puts at 529; stopped out at 554. Still like puts. Still like 5hundo.
GNK - 06/26 - recommended puts at 64; stopped out at 65. Still like puts. Still like 50.

Not a bad couple of weeks - especially when you consider the magnitude of some of these winners.

Use caution ahead of earnings.
Bearish: VIX has not yet spiked and no capitulation low
Bullish: oversold going into earnings - if worst case scenario (should already be cooked in to share price given the recent decline) isn't realized, might see a rally.

OptionSpot

USO | BIDU | X

Once again, USO has retreated back to its trendline. If you're bullish on oil use this trendline as your tight stop, perhaps on a close, and if you're bearish on oil wait for a possible breach of the same trendline. Bottom line: USO is giving you a low-risk setup.

BIDU continues to make lower lows.



US Steel (X) - long-term chart worth noting.



Others: MA, ICE, GS

OptionSpot

Patience

Fortunately I have the luxury of not having to be in the market every day...because most of the charts I'm coming across look like shit.

Remember, Chuck Norris doesn't sleep..... he waits.

Here are a few thoughts that should be self explanatory:

AKS

CELG

COF

FTK

GNK

GOOG

NMX

RIG

SMH

USO

VIX

X

SPY



Trading for a Living
A trendline is not a glass floor under the market - one crack and it is
gone. It is more like a fence that bulls or bears can lean on. They can even
violate it a bit without toppling it, the way animals shake a fence. A trendline
break is valid only if prices close on the other side of a trendline.

OIL

There is plenty of discussion about whether oil has made an intermediate-term top or if it is just pulling back in the short run. First of all, nobody knows, but if you have an irresistible urge to participate in this move (one way or another), I recommend doing so by using a low-risk strategy. Here's an example with USO:

United States Oil Fund (USO) - No pullback to this trendline is guaranteed of course, but if it happens, it will present a good low-risk entry point. If it never pulls back to this level then I would not consider entry to be low-risk and I would look elsewhere. It is low-risk in that you would place a stop just below the trendline. This way, if you are wrong about your outlook on USO, you vastly limit your losses.

Ultra Oil and Gas ProShares (DIG) - when you're really confident on the long side.

UltraShort Oil and Gas ProShares (DUG) - and on the short side.

Setting up

Over the next couple weeks I will looking at some potential setups for longer-term trades. These are not yet recommendations, just stocks I recommend keeping an eye on. Wait until after a week or two of Q1 earnings to see how the markets react to said earnings.

First up: OXY, RIMM, USO. All of these are setting up nicely for a move upward (ascending triangle pattern) just as X recently did - see March 31st post. Take a look at it now.

Also, like everyone else, I like AAPL but don't touch it until it makes a decent pullback.