Hi, these are just ideas not recommendations, sometimes I trade my ideas, sometimes I don’t.
Always remember, yours is the responsibility for your trades,
Good luck,
Erick



Monday, March 12, 2012

Basic materials again

This is kind of an update of my February 19/12 post:
http://erickstern.blogspot.com/2012/02/dow-jones-basic-materials.html.

Let’s say the 116.12 close on March 2009 was a bottom and the 336.15 on April 2011 was a top, the suggested 5 movement took 2 years, and the following retracement to 226.12 at the end of September 2011 took around 6 months. The 116.12 to 336.15 move is 220 points, the 336.15 to 226.22 retrace is 110.03 or 50% of the uptrend, enough for a complete retracement. Weeks is not a “pure” unit of time pero ahí vamos, 6 months is 25% of 24 months and since there is not an etched rule on time retracements I’d say the retracement is enough also on time units.
So it could go either way, 226.12 was the C of an A-B-C retracement or it could be A and the group is now in C.


Supporting the last is this, at this time the group is at 278.98 below the 283.11 that I called a of B, kind of eliminating the possibility that we are in a 1-2-3-4-5 since 4 would be lower than 1.

Basic materials closed last week below the lower 4 week channel, also the 10-30 weekly ma are flattening and appear ready to cross.


I am short basic materials via the ProShares UltraShort Basic Materials (SMN) which is a 200% inverse fund, I have daily and weekly stops since my complete short position is divided in 2.
For the daily part the stop for today is at 284.39, the daily stop changes every day. For the weekly portion of the short, the stop is at 293.28, this stop is for the complete week. Both stops are triggered at daily closing prices.

Monday, March 5, 2012

EOG Resources Short Interest

The market is just opening and its better to confirm at close, anyway EOG looks like a safe short.
Eog market cap of 30 billion sort of diminish a takeover possibility, a float of 260+ millions and a daily volume of 2.4+ millions for the last 3 months give us ample liquidity.
The last earnings announcement was in February so no surprise in the near future, a 2.20 short ratio does not foresee a squeeze.
Stop loss for today is at 116.75


The volatility looks ready to start up.



Good luck,

Friday, March 2, 2012

Basic Materials fragile relative strength

Of 4 important industry groups compared against the Dow, Basic materials have the weakest relative strength with a minus 3.03% for the last month.


The 7 days move from 297.19 to 283.20 retraced an 81% to 294.56, after that the group has been on a trading range.


Like most, I’m waiting for the end of this uptrend, that is not confirmed yet but Basic Materials looks promising for shorting.

My short trigger for today is a close below 286.91 with a stop at 291.17.

The Proshares ultra short basic materials (SMN) is a 200% inverse fund that has a decent 600,000+ average trading volume daily. Buying the fund could be an ideal instrument for shorting the group.

Thursday, March 1, 2012

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About Me

I am a civil engineer who likes charts, to me, speculating in the markets is both a hobby and a second profession and in my view the stock market is the most honest environment, since it is only your knowledge and preparation that matters. I live, and work in the construction industry, in the Dominican Republic. I read and answer all my mail so please feel free to write sternloinaz@gmail.com Thanks, Erick