OMG..OMG..We’ve Given Back Our QEinfinty Gains

bernak3 300x225 OMG..OMG..Weve Given Back Our QEinfinty Gains

Some perma bear wishers poked their heads out of their turtle shells on Friday opining that we have lost out gains since Bernanke’s QE to infinity proclamation. OMG

Not so fast I say to those pundits that have been completely wrong and are still “waiting” for that pullback to get long. Don’t get me wrong, there will be corrections along the way, but I see a 1700 print on the $SPX next year.

I say this based on nothing that is good about our economy. As a matter of fact, the numbers I’m seeing look down right recessionary. There aren’t any jobs and people our whipping out food stamps like a Visa cards to pay for their grub more and more.

Housing “stocks” have ripped but so what? The bar was lower than an algo cable buried beneath the sea. The transports still look like crap and corporate spending, in anything, is printing lows.

The fiscal cliff in my opinion will get remedied, even the hack politicos aren’t that stupid. Romney or Obama? Market doesn’t care, as a matter of fact, if Romney  did win, and fires Bernanke, the greatest schoolyard drug dealer in modern times would be kicked to the curb. Bad for stocks.

Although Wall Street leans right, no one wants the printing party to end, and although the economy could get worse under Obama, the market isn’t the economy, and hedge fund managers prefer Ferraris to 5% unemployment.

The Mid East has hated since the Age of Pericles and that will never change, the headlines will stay the same on that front long after we’re all dead. As a result, crude will bounce from 85 to 150 in the big picture.

Europe peaked centuries  ago, and is now a broken distraction to us all. They are in a depression, so the only place to go from here is higher. They have started their first round of QE and I will only ask you to remember what happened to our markets when we launched our first round. I think The S&P doubled if I’m not mistaken.

Regarding our current rally, we will pause and go higher and pull backs will be shallow and buyable.

As the folks at McClellan write this weekend:

The uptrend should live on, at least for a while.  That’s the message from the NYSE data on the daily number of stocks making 52-week new highs (NH).

When an uptrend is about to end, it usually shows signs of tiring before actually turning down.  This can take the form of momentum divergences, weaker Advance-Decline numbers, and other signs of diminishing participation.  When the work of pushing the major indices to higher highs is being done by a smaller number of stocks, that is a good sign that the energy is waning.

We do not have such a sign yet, at least not from the daily NH data.  There was a peak at 495 back on Sep. 14, which was the same day that the SP500 reached its peak, and one day after the FOMC made waves in the markets by announcing QEinfinity.  Since then, the daily totals of NH have been lower, but so has the SP500.  In other words, it is a normal response to the small price correction, and not a sign of a weakening of the upward surges.

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Window Dressing

window dressing 300x225 Window Dressing

Window dressing the portfolio, marking up, performance chasing, call it want you want. Throw the playbook out the window, this tape hasn’t rallied one point on fundamentals, it’s rallying because of global money printing. Europe is on board, we are on board and China will be on board.

We are in the “re-inflate the inflation” part of the cycle and you cant be short anything. There are five trading days left in the month and the quarter and those that aren’t long enough may try to press what they have and initiate longs in other sectors.

What should do well:

$XHB – The builders have been on fire. No one will be taking profits this week in this sector. Longs may actually press their longs and those that missed this move may initiate positions. How do you tell your investors that you don’t have exposure to the best preforming sector.

$XLE – Many of the energy names have rallied 40 %, but they also pulled back nicely last week. Should continue higher.

$XME – Metals & Mining blasted through he 200 sma day two weeks ago, nice orderly pullback last week, expect money to flow here.

$XLF – The financials have pulled back in an orderly way.  Close to zero rates aren’t necessarily bullish for financials as their margins get squeezed to pixie dust, but it won’t matter.

Technology should play, and $AAPL is consolidating for the ultimate move higher. $GOOG has been acting very well.

The statistics aren’t good for Monday’s following quadruple witching days in September going back many years now, and we all know that Monday’s have generally sucked lately for the market.

I would love to see a lower open tomorrow, as I will be a buyer. I think it may be a good week. $SPX 1500+ is possible. Good luck.

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Choppy, But Flagging

spx103 300x186 Choppy, But Flagging

After a big run up, it’s normal for the tape to go sideways. That usually creates a flag pattern, which is what you see above. Normally, these are very bullish formations as you know.

My own theory, as we push forward to the end of the month and quarter, is for a move higher. I believe this may happen because funds are under invested.  This goes for both mutual and hedge funds.

There are still more non believers than believers in this market, and many are still “waiting for the pullback” that doesn’t come to buy in. This usually adds to performance anxiety, so the “chase” may begin.

We took a 2/3 profit on SCLN today for a quick 17%. Note that FIO and AOL also triggered today. Please go to the P&L tab on the blog every night, so you can stay current with stops and new entries.

See you guys on the chat room in the morning.

 

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Paid By the Hour

The market broke its four day winning streak today, as we saw an anemic low volume sell off. But before the pundits take this small opening as a reason to squawk their nonsense, I thought I would look at how the hourly charts ended up today after this nice rally.  The daily chart is too vague here, but the hourly gives you a good read on where some stocks and indices landed . All very bullish.

All of these patterns by the way, are my favorite long buy set ups.

$WLT  landed on the rising 20 dma.

wlt5 300x199 Paid By the Hour

$QQQ came within pennies of  its20 dma hourly support and bounced in the last hour.

qqq2 300x198 Paid By the Hour

$IWM the Russell 2000 etf closed above its hourly 20 dma

qqq3 300x198 Paid By the Hour

$SPY closed above its hourly 20dma

spy3 300x198 Paid By the Hour

$DJIA also closed beautifully on its hourly chart

dow jones1 300x198 Paid By the Hour

$KOL also closed well even though it had a session of profit taking.

kol2 300x197 Paid By the Hour

$UDN is the dollar bearish ETF. It’s at big daily resistance, but also landed nicely on hourly support.

udn 300x197 Paid By the Hour

$XLF has held a good hourly level after its breakout.

xlf24 300x187 Paid By the Hour

I’m loaded up with these set ups but you get the picture. You can call these patterns flags or light volume pullback wedges depending on the angle of the dangle, but they are all orderly, light volume pullbacks that look set up for higher prices.

Good luck tomorrow.

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