If a Trendline is as Thick as a Tree Trunk, and Everyone Who's There Sees it

This is a pivotal juncture, and, with these past two trading days, asymmetric risk is now titled toward the downside. There is significant noise and conflicting charts out there - it is clear from the PT flows even the whales are not sure whether we are ending a new beginning or beginning a new end. Breadth is quite bearish, options activity fairly bearish, but there is life yet in the tape.


NDX is no mystery. We tested a key trend line this week and as can be expected the masses were queued around the block to short the daylights out of it. Too clean if you ask me; too little drama; too little Keynesian beauty contest. I do not think the boyz will simply put up a brick wall and pull the punch - that is far from their style. If that is in fact a top, needless to say I will be a tad dissapointed - it was a retest you could see coming from our first push off the lows. I was cautiously optimistic coming into this week we would gain the necessary escape velocity, but now I am less so, although I still do not discount it entirely from my prognosis. Either way, I like selling the July NDX (&/or OEX) strangle here to benefit from the coming fireworks, no pun intended.





so in my eyes we dance around here rangebound for a week or so, which should provide plenty of opportunity for scalping and bracing one's portfolio for the escape. RIMM, which I shorted but didn't get a very good entry on today, just broke a multiyear uptrend on news its new blackberry will be delayed and looks to be struggling. I am hoping to get a pop next week so I can short even more. I am not outright bearish on NDX yet though however. My only long futures position is NQ, which I will evaluate whether to keep or take profits on next week, depending on action. One reason is VIX, which has clearly failed its cup & handle and broken down unmistakably (I have been dabbling in these options as well), nor do I think SPX has reverted out of its oversold state yet if this is in fact a false bottom.




I am playing close attention to TRAN because of its prominent downside leadership during our recent deleveraging of a decent. give TRAN credit for either a breakout or a fakeout this week because it has moved above its inverse neckline/resistance levels and is sporting a pattern that is about as bullish as it gets as long as it remains above 5000. I remain long IYT.

I expect the fed to cut 25 bps at its coming meeting and then go on indefinite pause unless conditions markedly worsen. The inability of ER2 and utilities to escape very bearish setups does not lend credence to a dovish rate stance going forward - and the recent selloff in treasuries and relatively stability of USD further reinforce this.

Verymuch keeping my eyes on the MSCI EM broad index and its local constituents. I think this will be an el dorado of a short when the time comes. I think my FXI short this afternoon was premature, and I plan to trade out of it on Monday if my stop is not hit at the open.

As mentioned I remain long AMZN, EBAY, XHB, and IYT, and short XLE, OIH, BP, BHI, & GDX. I shorted more GDX over the course of today. The political tensions with Iran today concern me, but I am comforted by an enticing EUR/USD picture and the simple fact that the boyz' agenda seems to require a lot of those wildcattin proceeds elsewhere.

It will be an interesting week next week... til then gents

Edited by MacRo, 25 April 2008 - 08:14 PM.

I think the pause here is waiting to see how they spin the fed. Agree with your prediction as to the cut, I think that will spur a rally in the USD. So, initial knee-jerk reaction negative (oh my *********, no more cuts!!!) then the dollar rallys and oil drops (Yay!!! the consumer is saved!!!) and we bust out higher. My positions are similar to yours but 50% cash waiting to buy lower. I would do a strangle, but they stress me out so much that I end up closing out when I swing above break-even GD