Nothin but Haight this weekend...

I hope you all had a good weekend.

I spent a good part of the weekend with friends in San Francisco. There was a huge Haight Street Fair and it was a lot of fun... lots of good music, pretty girls, good food, but mostly catching up with friends.

And HEY... I aint no frikkin hippy (I can hear the Haight already ;) )... actually it's a free country... to everyone their own... but everyone should check out SF at some point... good times...

Anyway

There are some nice in depth posts in the pipeline, so to speak, though I'm not sure when exactly I'll have them ready to publish. In the meantime here are some ideas that might be useful...
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Let's talk about tomorrow (today I guess)...
1. Watch the overall market closely if you can. As was mentioned on the last posts we have broken support of the 50 Day SMA on the SP and failed to penetrate the 200 day on the Naz. This looks to set up an excellent situation to go short. We may open up down or we may go up to re-test the levels that fell on Friday. The ideal situation to go short? A clear upward movement in the market that fails at previous support turns resistance (we're talking about 1378ish on the SP... look at the chart of SPX on stockcharts).

If this happens and I have time to watch the market I will very likely either add to SDS, re-initiate the SRS position, or look at SKF. QID is not off limits either if it bounces back off of the 200. Since my time may be limited I may just go with what I know best: SDS.... but if there is time some of the other shorts may have more upside bounce in them.

In an uncertain market like this I look to set a price target (where I would like the short to go to achieve my objective gain... this will be determined in part by resistance areas on the chart) and also set a stop on the shorts. This should correspond to about where the shorts were when the SP broke below the 50 or the Naz failed the 200 (depending on whether someone planned to get into SDS/others or QID). Please note that officially we still need confirmation that a new down-trend has begun in the markets and that being too aggressive before doing this may be unwise.

Also it is critical that anyone shorting the market have a gauge of upcoming market reports and earning reports. Again... the best thing to do is to go to the "Briefing.com" link under "useful links" , go to the economic and earnings tables, and print them so that you know what is coming. That being said I think that it will take a lot to shake off Friday's 1-2-3 punch. Let the market and the charts come to you to make the decision. At least, that is what I plan to do. If you don't feel comfortable with shorts than by all means don't short. But... I do recommend that you are very careful with long positions in anything other than very specific stocks.
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Some other things I will be looking for:
1. DUG...
Germany
Asia
One idea behind the upcoming meeting in Japan may threaten supply increase on OPEc and/or demand decrease (subsidies etc.) enough that the speculators feel some fear and clear out a bit... I hope this happens to these bastards but have to see it to believe... note that if oil does drop quite a bit over the next weeks this may support the market... something to watch out for on shorts.
One more point on DUG... even if oil drops a bit at these prices the oil companies are still in very profitable shape. CVX at 95, XOM at 90 etc... are not that unreasonable unless the overall market really plunges... On the other hand with the slowing US economy and the threats of inflation set out by Asia with high oil prices I expect heavily that as we move into the weaker months for oil companies traditionally (late summe/fall) the risk reward gets much better.

That is to say that right now if DUG moves significantly (30-32 etc.) I would consider it a trade and get out unless conditions/charts change... with the real meat likely to come later in the summer. Just thoughts based on probability... this may change on a dime if the global economy really slows etc... but for now I think the risk reward merits being conservative... have to monitor conditions to see what really happens if you are in or interested in DIG/DUG...
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One more point...
For those that have been following CRESY it finally looks like negotiations are happening. This may send an upward spike in the stock. However, so much damage may have already been done that it may take quite some time for farming in Argentina and for CRESY stock to recover. Something to watch... but definitely use care in my opinion if you want to play this.....

This blog is for informational purposes only. It does not give investment advice.