Time to think like a value investor ?

One of my main trading rule is ;
1) "Think like a value investor"
2) Be a contrarian
3) Undervalued can remain undervalued ... (we need a catalyst)
Ok, here are a few stocks / ETFs on my "value" watch list ;
Bank Of America Corp ( BAC )
Citigroup Inc ( C )
Cisco Systems ( CSCO )
Ishares Msci Japan Index Fd ( EWJ )
Exxon Mobil Corp ( XOM )
DIREXION ETF Fin Bull 3X ( FAS )
iShares MSCI EAFE Index Fund ( EFA )
Energy Sel Sect Spdr Fd ( XLE )
Health Care Sel Sec Spdr Fd ( XLV )
Pfizer, Inc (NYSE: PFE)
Now what ?
1) Real economy is improving .......
2) Big companies are hiring again
3) Still lots of fear out there
4) Hope for a "mini crash" so you can build positions in these stocks / ETFs (I will)
5) More crash, I keep on building positions
6) Current rule of the game ; Buy the extreme oversold, sell on major rallies !

Vix trading system update

Vix trading system update ;
1) Vix went up over 17%
2) Crossover has taken place (5 days exp MA is above the 20 days exp MA)
3) How reliable is this system ? So far so good ; keep in mind that systems are just there to confirm your fundamental views ! Its only a nice picture to look at :)

Shanghai just crashed

Shanghai Index just crashed !

This chart was posted a few days ago, with clear triggers

Focus now on Oil, Commodities in general, the $USD Dollar and the impact on global indexes.

Long $USD Dollar, the only safe heaven right now :)

10 Year Treasury Yield break down

10 Year Treasury Yield chart analysis ;
1) Break Down !
2) Ex support is now our main resistance channel

iPath SP 500 VIX (VXX) giving us an ABC pattern ?

iPath SP 500 VIX (VXX) chart analysis ;
1) Main down trend is "broken"
2) Price zoomed up to find "A" (note the huge increase in volume pattern)
3) "B" (reliable support and a confirmed higher lows pattern) seems to confirm the $25 level.
4) "C", our main trigger is right above "A" ; meaning that $36 is our main trigger

SP 500 chart analysis

SP 500 chart analysis ;
1) In a clear channel pattern with higher lows
2) Fake break out level is clear ; it gives a huge importance to the "next time" the SP 500 breaks out above that resistance level.
3) Fundamental reasons why we should zoom higher ? (Not many)
4) Bank breaking down again ? (How many of them are holding PIIGS Bonds )
5) Oil indexes keep on heading lower ; BP's fault or its a full sector at risk ?
Gut feeling ?
A) Exxon Mobil Corp (XOM) is a must own if you are a value investor (great yield)
B) Oil indexes are way oversold ; XLE and OIH
C) Financial will keep the SP 500 stuck in that channel for the next two weeks
D) Chinese funds are now increasing their holdings in US big caps ; meaning ? They know that US blue chips are a better bet than Chinese stocks right now (Shanghai keeps on going down).
E) Expecting a huge rally by year's end .... Oil, Tech, and Financials

The end of Microsoft Corporation (MSFT), part 2

Part 1 of the End of Microsoft (MSFT) was posted here
I urge you to pay attention to part 1 ; it shows you the "bigger picture"
Now back to this current chart of Microsoft Corporation (MSFT) ;
1) Fake moves are quite clear
2) Support break down (confirmed by volume action)
3) All patterns confirm a major SELL signal (stop loss @ $26 if you are shorting).

10 Year Treasury Note Yield warning signal

10 Year Treasury Note Yield weekly chart ; Focus on it next week, it may get nasty if we close below that "trigger" (see chart)

Focusing on Shanghai

Shanghai Stock Exchange Index (my global leading indicator) ;
1) Pay attention to the current chart pattern
2) Main trend is still down
3) Focus on those two triggers
4) Possible bullish reversal ? Wait for a clear break out !

Euro Dollar chart analysis

Euro Dollar chart analysis ;
1) Main down trend (red line from highs of 09) is clear
2) Euro Dollar stuck in a channel pattern ; pay attention to the 1.2500 (resistance) and 1.2200 (support).
3) Green arrow : current probable scenario based on all fundamentals out there (too many to mention)
4) Pink scenario ; while I really doubt this scenario will occur (it could also lead to a major fake move), I did learn one thing about the markets ; if you are not able to change your mind, you are dead !
Gut feeling ? We shall head down again, no matter who tries to pop up the Euro (ECB or others).

Homebuilders ETF (XHB), the big picture

SPDR S&P Homebuilders ETF (XHB) weekly chart analysis ;
Price often tends to send us long term signals. Those signals are often part of a "big picture".
How do we understand its part of a big picture ?
Fundamentals !!! If you do not understand them and just follow charts blindly, you will fail !
The "A" level tells me that it will trigger a huge bull market (when "C" gets above "A") in about 12 months from now. How did I conclude 12 months ? I took the lows of 09 to the highs of 2010, then comes gut feeling (yes, you need them), they tell me that fundamentals in the US economy and the housing sector shall see a full recovery in about 12 months. I could be wrong (in timing), but I suggest you keep this chart ; focus on those two arrows (green and blue).
A dip below $14 should incite you to build positions in this ETF
Add more positions below $13 and $12 (I doubt we get that low)

ABC pattern case study

Quick case study using the ABC pattern with the United States natural gas fund (UNG).
1) See that channel pattern ? That's what I look for when an ETF (or a stock) is about to reverse. I find these patterns more reliable that a "V" shaped reversal.
2) Why do I always mention the ABC pattern ? Its simplicity
3) Price broke above the top resistance level of that channel pattern, seeking to find our "A" level.
4) Are we now facing a "B" level ? (reliable support) ; note that "B" must be in a higher lows compared to the initial break out (above the channel pattern).
5) "C" is quite clear, its right above "A"
6) One more possible scenario ; "C" is not triggered right now, price goes down again and forms a longer upper channel pattern ; its a possibility ; meaning that $8.75 is actually part of a huge long term bullish reversal signal ........ (in about 6 months from now)

Citigroup Inc. (C) chart analysis

Citigroup Inc. (C) chart analysis ;
1) Fake moves ....... again .....
2) As mentioned before, in a secular "bear" market, the name of the game is buy the extreme oversold, and sell any rallies ....
3) Probability favors a channel pattern ; we now need a confirmed support level
4) Re entry now stands right above $4.1
5) Wait for at least a gap up on huge volume and good news

New watch list

The recent "China" currency news shows a potential bullish reversal in the following stocks ;
Alcoa Inc ( AA )
Arcelor Mittal (MT)
BHP Billiton Ltd ( BHP )
Rio Tinto PLC ( RTP )
No buy signals yet ! (Will keep you posted)

Apple Inc. (AAPL), just sold

On June 10, I posted this re entry level for Apple Inc (AAPL).
So why am I selling my Apple Inc (AAPL) ?
1) High probability of a fake move
2) Recent rise could signal a pull back sending Apple into a channel pattern
3) Gut feeling says SELL, get back in later ....

Web 2.0 is crashing ?

"Second Life" (Virtual Reality) is dead, Myspace keeps on costing News Corp $$$, Bebo (AOL) is worth nothing, Web 2.0 is crashing ?
Will Facebook or Twitter face the same faith ?
Money is flowing to companies focusing on Apple's (AAPL) Iphone/Ipad.
Like I said in the past ; "Don't beleive the hype"

Pfizer Inc. (PFE) trading plan

Pfizer Inc. (PFE) trading plan ;
1) Recent fast price rise reversed, giving us a clear "A" level (ABC pattern)
2) Are we facing a "B" level (reliable support ?) ; no, we need some high impact news, followed by a huge increase in volume (bullish news)
3) "C" ; our real buy trigger is quite clear
4) Was that a real bottom for Pfizer ? Too early to tell
No buy signal activated yet

Baltic Dry Index, Shanghai and Copper

Baltic Dry Index chart analysis ;
1) Fake moves are quite clear (key resistance @ 4000)
2) Higher lows pattern is now broken
3) The Shanghai Index is also sitting on a key support level @ 2500 ; a break below that level could cause some real damage ..... (Pull back in most global indexes, as well as in the Commodity index)
4) Copper is also showing a potential bearish reversal pattern
Gut feeling ? Expecting a pull back in global indexes

Oil Services ETF (OIH)

Oil Services ETF (OIH) trading plan ;
Ok, just brain storming here, so consider this simple theory ;
1) British Pretroleum (BP) 's mistake will increase insurance cost for drilling
2) BP's mistake could cost 20 B $ ? 40 B$ ? No one knows for sure ....
3) One less refiner (BP) means crude oil goes higher ?
Now focus on the OIH chart above
1) Price/volume action confirms bullish reversal
2) Green arrow = highly probable scenario

Are we facing a major fake move ?

Back from Strasbourg and Baden Baden (Germany)
Took the opportunity to visit Baden Baden (first time) and had a great time relaxing at the local well known Spas (Caracalla).
Had fun in Strasbourg, really enjoyed the coaching sessions, and basically, the main question was ; "Are we facing a major fake move" ?
Let's focus on Spain ;
Main rumor in Germany ; Spain is seeking a €250 billion bail out package.
Everybody is waiting for the results in the stress tests (Banks).
Chart above is the "Bolsa de Madrid Ibex 35 Index"
1) Main resistance is quite clear
2) Was that a major fake move ?
Gut feeling ; Expect a serious pull back

Heading to Strasbourg

I am heading to Strasbourg for a few days
Learn about Strasbourg here on Wikipedia
Will give a few seminars (trading), then track my students "live"
PS : Regarding the markets ; the big picture has not changed yet ; name of the game is still "buy the oversold, sell any rally"

United States natural gas fund (UNG), typical ABC pattern

United States natural gas fund (UNG) chart analysis ;
1) Posted the same chart, a few days ago, right after the break out, waiting for a "B" level
2) "C", is right above "B", full buy signal activated
3) Focus on the stop loss level
PS : If you focus on the risk (stop loss), the reward will often come

US Dollar Index chart analysis

$USD Dollar Index chart analysis ;
1) Uptrend is "intact"
2) Was overbought ...
3) See that red trend (Parabolic) ? Never liked those (I prefer an up the stairs pattern)
4) Expecting a sideway trade (see yellow levels )
5) Green arrow = Expected scenario

SP 500 reversal ?

SP 500 reversal ?
That candle pattern is "NOT" what you want to see at a close ....
1) Buy the oversold, sell any rally seems to be the name of the game
2) Resistance level is quite clear
3) More bad news (Greece downgraded again), and a rumor (Spain is in deep sh___)

Latest painting

"La Mujer Loca", with my twins in my garden (was not a sunny day in Brussels today).

PS ; Been teaching my kids (8 years old) about the markets ; they now own Citigroup (C), and will probably sell it in 10 years !

Nikkei 225, what to do with Japan right now

Japan's Nikkei 225 Index ; Weekly chart analysis.
1) As usual, use basic charts
2) Resistance level is quite clear, main trend is broken
3) Price stuck in a tight range (see red levels)
4) Focus on recent declarations ; Japan is at "risk of collapse" under its huge debt mountain. Who said that ? Its new Prime minister
5) Will a new austerity plan send the Nikkei lower ?
Gut feeling ? Japan needs to re-invent itself. These austerity measures will need some real creativity in order to boost spending and increase exports. I expect to see the Yen crash.
Long $USD Dollar :) (The only global safe heaven right now)

The end of the ECB ?

Cartoon ; "The end of the ECB"
In the end, that ECB building will crash, the debt is way too high, and I doubt that Germany and France will keep on having austerity measures to bail out their neighbors.
Political suicides for French or German politicians ......

Vix trading system update

Vix trading system update (see settings on Stockcharts.com)
The crossover has occured ; short term exp MA (5) is now below the 20 days exp MA.
Let's see how this indicator behaves next week ; the SP 500 is facing a clear resistance @ 1100

BSE India Bombay Sensex 30 Index

BSE India Bombay Sensex 30 Index chart analysis ;
1) Probably the best up trend out there (bullish)
2) After this quick sell off, we got a nice bounce up (higher lows)
3) ABC pattern almost activated ; ("C" needs to get over "A")
4) Use that trend line as your stop loss (see chart)

Focusing on Europe

Focus on European Indexes next week.
Current chart is of the CAC 40 (France Index)
1) Buy trigger is clear (main resistance)
2) Not enough higher lows to convince me that we could break higher yet ...
3) Gut feeling ; we could face a pull back, and remain in a channel pattern
4) Dax (Germany), chart looks better ; bearish reversal stands @ 5900.
5) FTSE (UK Footsie) ; chart pattern identical to the CAC 40 ; bullish above 5250, bearish below 5050.
Main worry right now ; Belgium is voting on sunday ......
Local politicians still fight about the French/Flemish issue and have "delayed" the fact that they need to announce that austerity measures are needed NOW ....
A current populist leader will probably win, inciting a break up of Belgium (he has been wishing that for years) ; the 10 Year Belgium Govt yield has already reacted as if he "won".
Belgium's vote could trigger some high volatility on monday
As usual ; Expect the unexpected
PS ; Belgium takes over the EU leadership on July 1 ...... mmmmm

Google Inc. (GOOG) trading plan

Google Inc. (GOOG) chart analysis and trading plan ;
1) Typical ABC pattern
2) Main trend is "flat" ; not bearish, but flat
3) "B" level is confirmed by a recent higher lows
4) "C", our real buy trigger is right above $510

Apple Inc. (AAPL) chart analysis

Apple Inc. (AAPL) chart analysis ;
1) Pay attention to that fake move
2) Key resistance is quite clear
3) Higher lows pattern suggests we are heading towards the key resistance
4) All trend indicators are bullish
5) Re entry level stands right above $255

United States Natural Gas Fund, LP (UNG)

United States Natural Gas Fund, LP (UNG) chart analysis ;
1) Clear break out above this tight channel
2) Volume increase on the break out confirms bullish move
3) Pull back was expected, will price re test the recent resistance level ?
4) Go long safely above $8.25

SP 500 visual trading plan

SP 500 chart with a visual trading plan ;
1) Fact ; we are stuck in a clear tight price channel ; 1040 to 1110
2) Current global crisis favors the red arrow scenario
3) Blue scenario ; bouncing up with a fake move right above 1110 (Probable)
4) Green arrow ; we all got this wrong, actual fundamentals are really improving, and the US economy will lead again ..... (Yes, but not so fast ....)
Gut feeling ; Let others guess the next move ; stay out until a break out is clear with huge volume, and if possible, a gap

Citigroup Inc ( C ) trading plan

Citigroup Inc ( C ) trading plan ;
1) Probable small ABC pattern ; "B" is now our confirmed higher lows
2) The main trigger ; "C", is right above $4.1
3) Hoping to see a huge volume move with a gap up if possible
4) High impact news that could confirm a bullish reversal ; Bernanke said the U.S. central bank will act ! China’s export numbers showing that global trade remains strong.

Pfizer Inc. (PFE), get ready to buy

Pfizer Inc. (PFE) 's current forward PE ratio is 6.41 !
A break below this key support shall be considered as an "extreme value"
Trading plan ;
We need a big candle reversal with a huge volume to trigger a buy signal

iShares Lehman 20 Year Treas Bond ETF (TLT), buy and go away ?

iShares Lehman 20+ Year Treas.Bond ETF (TLT) weekly chart analysis ;
1) The decline from 2009 to April 2010 gave us the impression that bonds where heading for a crash. That support level did hold. See level "B" as in the ABC pattern (to understand the ABC pattern look at the top right hand side )
2) Price/volume action caused that buy signal (see trigger level)
3) Volume level confirms that you should pay real attention to that signal, it also suggests that we could be facing an amazing ABC pattern, with TLT zooming up towards 112.5 !
4) Bonds are back, the Dollar is back, and Gold is still trending up ; one of them has to snap.
5) Stop loss ? $92.5

Silver chart analysis

Silver weekly chart analysis ;
1) Silver had a clear pull back last week compared to Gold
2) Was that a warning signal for Gold ??
3) Resistance price channel is clear
4) Warning levels ; Will focus on them

Gold, the big picture

You probably wonder why I keep on bothering you with this warning ; I have seen those patterns over and over again (Biotechs, Internet, Software, etc ....)
The "parabolic" rise ; also called an accelerated growth phase
Parabolics always collapse.
Toppings (often done with run away gaps) is followed by a precipitous decline
Pay attention to this monthly chart ; this uptrend is way too steep and cannot hold.

Looking back at an old painting concerning Gold

I grew up in the Congo (Kinshasa), was called Zaire back then ....
So painting was inspired by the ex leader ; Mobutu. (A commodity trader)
I decided to put quotes next to various commodities (I forgot to put Diamonds)
Gold was at 264 ! (2002)
Gold jumped up in late 1999, followed by a pull back ; at that time, it seemed like a big fake move, and we where all watching the key support at 250 ; All thinking that it will break that support !
It did NOT , in fact it gave us a higher low pattern (A typical ABC pattern) with the high of 1999 as our key buy trigger (took place in late 2002)
Was bullish on Gold back then ....
The break out above 500 (in early 2006) was a confirmation that the highs of 1987 was taken out ; meaning ? Gold was heading higher ....
I can't help look at a long term monthly chart now and wonder when this HUGE Parabolic rise will break ....
It will break, it always does ..... nothing goes to the moon
You are still bullish on Gold ? Fine, just start hedging your positions with put options

Vix trading system updated

Quick update for my "Vix trading system"
Its a basic exp MA crossover ; settings can be found here on Stockcharts.com
You may be tempted to "back test it" ; I just use it as an indicator (Oversold/Overbought Vix).
Once a crossover takes place, I focus on the SP 500 chart (right below)
The Vix did bounce up over 20%
Why the invisible mode ? It helps me focus on the SP 500

Direxion Daily Finan. Bull 3X ETF (FAS)

Direxion Daily Finan. Bull 3X ETF (FAS) ;
1) Warning ; Extreme volatile ETF
2) Pay attention to that "key support level"
3) Focus on the value, and extreme value level ; will FAS go that low ?
Quick reminder of my rule # 1 ; think like a value investor
Get ready to buy extreme oversold levels

Never short this type of pattern

Akamai Technologies Inc. (AKAM) ; Perfect uptrend, slight parabolic rise
Rule # 1 ; Never short this type of pattern
Rule # 2 ; If you decide to short, focus on weak patterns, and "bad fundamentals"
Sample of "weak patterns" ;
Banco Santander Cntrl Hispano ( STD ) ; stop @ $10
Boston Scientific ( BSX ) ; stop @ $6.50
Banco Bilbao Vizcaya Argentaria S.A. ( BBVA ) ; stop @ $9.50

US Dollar index chart analysis

US Dollar Index chart analysis ;
1) Concerning that blue trend ; we really do "not" want to see a parabolic rise, instead, we need and up the stairs pattern.
2) Gut feeling ; I favor the green arrow scenario ; first a sideway pattern then we break out again strongly.
3) What would make me change my mind ? A break below 85.5

Trading systems

I know that the search for the holy grail system is an internal search !

Visa Inc. (V) chart analysis

Visa Inc. (V) chart analysis ;
1) A quick reminder of my rule #2 ; "Use basic charts"
2) Clear picture ; the main trend is broken, followed by a gap on increased volume
3) Price stuck in a tight channel (see those two triggers)
Now is the time to use gut feelings, mix with common sense, and business logic .....
Debts, debts, and more debts ..... that's all you hear right now, from Greece to the single mother out there with two kids and lots of credit cards she cannot pay back .....
"Credit card delinquencies are increasing"
We may consider that Visa is a little oversold right now ; but the main picture is quite bearish.
Pay attention to any news event that could soon come out to cause a break below the $68 levels.

10 Year Treasury Yield long term study

10 Year Treasury Yield chart study since 1890 !
(Source ; Mltpl.com)
We are right on a real long term support level
Green arrow = Expected scenario
Meaning ? We should see a real bottom in about 3 to 4 months, then zoom up

Oil Service HOLDRs ETF (OIH), get ready to buy soon

Oil Service HOLDRs ETF (OIH) chart analysis ;
1) Quick reminder of my rule #1 ; Think like a value investor !
2) Charts DO NOT predict the future ..... Real value often does ....
3) Focus on the first price support channel
4) Then pay attention to the extreme value level
5) Green arrow = Expected scenario

eBay Inc. (EBAY), reliable recession indicator ?

eBay Inc. (EBAY) ; Consumer indicator ? Poor traffic means another recession ?
1) We are right on a key support price channel (weekly chart)
2) Fake move was quite clear
3) Main trend is "broken"
4) A weekly close below $20 could signal some hard times ahead ....

Market crash painting

I painted this during the 2007 - 2008 market crash ; The buildings going down where Lehman Brothers (Sold that painting).
Thinking of painting another one (with different actors of course) ; thinking of Gold, Greece, China ....... and the Dollar :)

Euro Dollar chart analysis

ECB Bank warning ; Expect big losses , rollover risks are looming, discontinue bond purchases !
Mix that current news with the chart of the Euro Dollar and you have all the ingredients for a major break down in support (see yellow price channel)
Add another current break down in Spain's IBEX index (see chart posted a few days ago) and you get all the pressure you need to target 1.18 and lower ........