Bill Cara’s Blog for May 29, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning.
This morning CNBC is blowing smoke for Pershing Square Management’s Bill Ackman. Now that activist hedge fund manager Ackman is the driver of the JC Penny (JCP) traveling road show, I lost my interest. The company is no longer in the Cara 100.
You see I believe that a public company needs to be managed by a board of directors who represent all the shareholders, the risk takers from main street, and not the white shoes from Wall Street.
For the same reason, I have nothing to do with Sears Holdings Corp (SHLD) and its hedge fund manager cum chairman Ed Lampert.
For the goldbugs, I see that the Indian rupee is not helping the bullion price today, although $GOLD and $PLAT are doing ok so far.
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
|Symbol||Name||Last Trade||Change||Related Info|
||7.30 (0.38%)||Components, Chart, More|
||5.40 (0.25%)||Components, Chart, More|
||14.76 (0.49%)||Components, Chart, More|
||20.65 (0.33%)||Components, Chart, More|
|^AEX||AEX General||Chart, More|
|^OSEAX||OSE All Share||444.18
||0.51 (0.11%)||Components, Chart, More|
||3.69 (1.19%)||Components, Chart, More|
||27.44 (0.47%)||Components, Chart, More|
||5.45 (0.10%)||Components, Chart, More|
||6.80 (0.79%)||Chart, More|
||11.22 (0.87%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||515.42
||3.07 (0.59%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Vad’s Catch of the Day
Kaimu’s Sound Money
Deron’s Daily ETF Analysis
Over the past seven trading days, the inversely correlated ProShares UltraShort Dow Jones 30 ETF ($DXD) has been holding support above its 10-day EMA, and volume also expanded as DXD recently broke out above its range. The recent high-volume breakout above key resistance at the $55.50 level, followed by lighter volume consolidation, means that a volume-fueled move above the three-day high of $58.00 could present a near-term buying opportunity in this ETF:
If it trades above our trigger price for potential buy entry, note that this DXD trade setup is designed to be very short-term in nature (not more than a few days hold time). Due to the daily rebalancing of derivatives that comprise the portfolio of leveraged and “short ETFs,” these instruments usually underperform their underlying index as holding time increases. Therefore, the leveraged and inverse ETFs are best used for relatively quick, momentum-based trades of just a few days or less.
Last Friday, on an uptick in volume, the iShares Dow Jones Transportation Average Index Fund ($IYT) failed to reclaim support of its 20-day EMA and closed its intraday low. Now, a drop below the two-day low of $90.45 could present a short selling opportunity in this ETF. As such, we are now stalking IYT for potential swing trade entry. Our exact entry, stop, and target prices for this trade setup are available for regular subscribers in the “watchlist” section of today’s Wagner Daily stock newsletter.
As a reminder, we recommend calling your broker prior to the open to ensure that shares of IYT are available for shorting. If not, you might consider opening a secondary account with a direct access broker that caters to active traders (TradeStation and InteractiveBrokers are two such firms). These types of firms typically have a much more extensive list of shares available for selling short than your traditional web-based brokers designed for long-term “buy and hold” investing. Furthermore, there is no inverse transportation ETF available as an alternative to shorting IYT. The technical trade setup for $IYT is illustrated on the chart below:
The broad market has struggled in its attempt to move to higher ground over the past two weeks, and the major indices are now exhibiting “bear flag” patterns on their daily charts. Although we still could see further buying action in the near-term, the longer stocks continue to consolidate near their recent lows, the more likely the next move will be lower. Ideally, we would like to see the main stock market indexes bounce for a few days this week, as this would provide a better reward to risk ratio for new short entries in weak stocks and ETFs, but the stock market could just as easily head lower from the current levels without bouncing.
DISCLAIMER: There is a risk for substantial losses trading
securities and commodities. This material is for information purposes only and
should not be construed as an offer or solicitation of an offer to buy or sell
any securities. Morpheus Trading, LLC (hereinafter “The Company”) is not a
licensed broker, broker-dealer, market maker, investment banker, investment
advisor, analyst or underwriter. This discussion contains forward-looking
statements that involve risks and uncertainties. A stock’s actual results could
differ materially from descriptions given. The companies discussed in this
report have not approved any statements made by The Company. Please consult a
broker or financial planner before purchasing or selling any securities
discussed in The Wagner Daily (hereinafter “The Newsletter”). The
Company has not been compensated by any of the companies listed herein, or by
their affiliates, agents, officers or employees for the preparation and
distribution of any materials in The Newsletter. The Company and/or its
affiliates, officers, directors and employees may or may not buy, sell or have
positions in the securities discussed in The Newsletter and may profit in the
event the shares of the companies discussed in The Newsletter rise or fall in
value. Past performance never guarantees future results.
© 2002-2012 Morpheus Trading, LLC
Reproduction without permission is strictly prohibited.
Cara on the Metalminers
Cara on the International Markets
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report
Jeff Borsato’s Hidden Truth
Cognoscenti are not Italian shoes
Definition of “Cognoscenti”:
People who are considered to be especially well informed about a particular subject
Is that us? Is that the Cara Community? Is that just the people who post the most often? Is that the people who make the right trades? Is that the people who make the most money?
Cognoscenti refers to a group who are “considered” to be well informed. The critical word being “considered”. What are the Cognoscenti without a group of less informed who declare those to be in the know.
How odd that those who know less about a subject would be the judge and jury for those who will rule over them as experts.
Hero worship in trading is what makes the world go around for many guru’s. Newsletter writers fill the airwaves with grand proclamations and predictions that may or may not turn out to be correct. In exchange for their claims we exalt them, and their opinions form “cases” for particular position in trading:
Jim Sinclair see’s a bottom right now, as does EW and King World News reported that weak hands have left the gold market… central banks are buying…China is selling t-bills… Kyle Bass wonders how much longer can the US can remain the reserve currency… Jim Rogers see’s the Yuan as the dominant currency in 5 years…
The point is not so much that these men in particular are wrong, but that we often tend to argue around trading ideas that are less our own and more our Cognoscenti’s.
Be your own Cognoscenti by exalting your own understanding of markets with the help of those considered knowledgeable.