The Wrap 5/11/11

{+++} The margin increase in the oil pits didn’t really scare anyone yesterday, but the strong move in the dollar today did, as crude took the beating that many thought it should have taken yesterday. It closed right at very key 50 day moving average resistance today and it will interesting to see if the greenback can follow through further through the remainder of the week. If it can, I think we can expect a further breakdown in oil, metals and materials. If the dollar fails at the 50 day moving average, then we may see a relief rally.

Many charts are starting to really get broken, many in the oil energy space are cracking and the agricultural space is getting beaten like a baby seal. They will all be great longs at some point and gobs of money will be made long, but waiting for the dust to settle is the thing to do right now. As I have said many times before, when a sector gets “hit” or delevered, it is never a one or two day affair. At some point, the value buyers and dip buyers will show up, but much depends on the action in the dollar. The sell off in XLE started last Monday and with the exception of three days where it just developed a bearish flag, it has just been a cascade to the downside. XLE has already broken the neckline of its head and shoulder pattern, so this is where it will rally soon or break hard to lower levels.


The dollar has finally found its legs and this time the move may be for real.

The Dollar
The Dollar

I took some small profits on ERTS & ENDP only because the market was fading fast and I am in a defensive mode now. I also took partial profits on the GOOG & FSLR short. 2/3 remain on each. I also sold 1/2 RLD for a quick one day profit. Staying nimble is key here. Unfortunately, AH stopped on an earning reports that I didn’t see coming.

Please take a look at the P&L tonight as I have made  some adjustments. I will see some of you on the chat room in the morning.

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