Trading system update

Bullish signal issued on the Shanghai SSE index.
Raising stop for Crude oil from $73.5 to $75 ; Target is $85
Neutral signal issued for the Nikkei

British Pound probable scenario

British Pound weekly chart analysis ;
Let's get a quick fact straight ; We use charts to "predict" the next move.
We also use charts to balance 2 possibilities ; risk and reward.
Since I have NO idea what the future looks like, I'll use the current recent pattern to make an educated guess, using two key trigger levels ; (1.600 and right below 1.540).
1) After the Pound's "crash" (from its high in 07), it managed to find a reliable support level above 1.400 ; How do we know its reliable ? That level was revisited in June, and price managed to bounce higher.
2) Price zoomed higher to find a resistance level @ 1.600 (earlier congestion level).
3) Based on current chart pattern, based on the fact that most pattern after a crash tend to have wild swings, based on the fact that the UK economy is improving (but not out of the financial mess), I see the blue arrow as the most probable scenario. The swings will be less "wild", eventually sending us in a tighter channel.
4) Then ? Well since the world is facing a currency war, expect most nations to "fight" an uptrend in their currencies. Good thing they did NOT join the Euro ......

Oil services with a perfect ABC pattern

Oil services ETF (OIH) typical bullish ABC pattern

Crude oil sending us a real bull signal

Crude oil confirms bullish buy signal ;
Long on XLE, OIH, SLB, XOM

Brussels today

Thousands of protesters marching in Brussels, protesting against the "austerity" measures.
Photo taken on Avenue de la Toison D'Or.

US Dollar index update

US Dollar index chart update ; Broken support level confirmed, lower stop loss to 80.
See target on the chart ; Probability ? Medium to high, unless the FED intervenes and we could be actually facing a fake move.
Will other nations (Brazil, Japan) allow the $USD to fall ?
Lots of talks but no real actions .... yet ....

We now need financials to break out

Financial Select Sector SPDR ETF (XLF) ; Key resistance level is quite clear.
If financials do NOT break out, we could see a "fake move" in the SP 500

Great picture from the Shanghai Expo

Typical Belgium export :)
Taken at the Shanghai Expo

Clear message from IBM

International Business Machines Corp. (IBM) weekly chart analysis ;
1) Uptrend from Oct 08' lows managed to remain in a channel "above" the July 08's resistance level.
2) After a long tight channel, price is finally "breaking out"
3) If you did buy, use $130 as your stop.
4) Patterns clearly tells you to own IBM (as part of your tech portfolio)

10 Year treasury note yield

US 10 Year treasury note yield chart analysis ;
1) So far we still have a broken down trend and a higher lows ... for how long ?
2) ABC pattern in play ?
3) Focus on those "warning levels"
Gut feeling ? Bonds could spike up (break away gap) and reverse down hard

Expect a huge move in the US Dollar index

US Dollar index chart analysis ;
1) In the "trading rules in follow", I often mention the parabolic moves and the ABC patterns ; I try to focus on a maximum three patterns that I try to master. Why ? When you see them, you'll be able to understand the probability of the "next" move.
2) We are facing a parabolic rise (always ends up badly), versus a broken "B" in the ABC pattern.
3) To top it all, we are even seing an head and shoulder pattern .....
Fasten your seatbelts ; the next move will be all over the news ....
Focus on 80.5 for a re entry (long)
A weekly close below 79 ..... Every economists will predict the end of the Dollar.
Other possibilities ? Yes, a tight channel ...... just all you need to delay the fear ...

Blog update

Been very busy updating a new software for my trading systems and getting help to write the codes. Writing down a theory is fine, once you try to write the codes, you quickly find out what is possible or not. The goal is pretty simple , to make sure that on top of my blog you can constantly see if the various systems are long, short, or neutral.
The signals will focus on the SP 500, $USD Dollar index, Euro Dollar, 10 Year treasury note yield, Long term US bonds, Light crude oil, Gold, QQQQ, and "opportunities" (Apple, Amazon, AMD, Nokia .....).

Applied Signal Technology Inc (APSG)

Applied Signal Technology Inc (APSG) weekly chart ; Typical ABC pattern.

The argument ; Gulf states in $123bn US arms spree, Arab nations seek to counter the power of Iran ; So why am I not heading towards NOC, LMT or RTN ? Congress will not approve the sales of the majority of its products (ie : F22, F35 ...... etc)
Applied Signal Technology, Inc. provides intelligence, surveillance, and reconnaissance solutions for the defense, intelligence, and homeland security markets. The company's Broadband Communication Systems division offers broadband communication technology and network solutions for high speed communications. Its network solutions include communication support equipment and software for bandwidth compression, encrypting and decrypting traffic, multiplexing and demultiplexing traffic from multiple communication streams, conducting deep packet inspection for network traffic monitoring and management, and performing real-time network quality assessment. Its Intelligence and Electronic Warfare Systems division provides research and development for the collection and analysis of tactical wireless communications and electronic intelligence. This division's COMINT products include wideband processors and collection products. The company's Network Intelligence division provides post-collection intelligence analysis tools, such as human language technology, cloud computing, complex event processing, and advanced data operations.

Goldman Sachs Group, Inc. (GS)

Goldman Sachs Group, Inc. (GS) chart analysis ;
1) Higher lows confirms bullish pattern
2) Pay attention to that "fake move" ; it makes this current level "very important".
3) Green arrow = high probability
4) News, and volume ; we need them next week. (A catalyst)
5) Current PE @ 7.6 ...... talk about value .....

Google Inc. (GOOG) trading plan

Google Inc. (GOOG) chart analysis ;
1) Price/Volume action means buyers are ready to send Google to that green level
2) Wide price channel, but with a high low ; short term bullish
3) If you did buy, 475 should be your stop
4) News events ? There are enough Tech blogs out there pushing Google higher
Gut feeling ; Short term bullish but still waiting for the SP 500 to break out first

ProShares UltraShort 20 Year Trea ETF (TBT)

ProShares UltraShort 20 Year Trea ETF (TBT) weekly chart analysis ;
1) Main trend is clear
2) Price /Volume action confirms possible "bottom channel"
3) Focus on those "buy trigger levels"
4) Light green arrow = high probability
5) Pink arrow = medium probability

Once again, get out of bonds

iShares Barclays 20+ Yr Treas.Bond ETF (TLT) chart analysis ;
1) Gap was closed and still heading down
2) Broken trend
3) VOLUME !!!!
Message is quite clear ; get out
PS : Not expecting a "sudden crash" since many investors are still convinced that bonds are heading higher. Expecting a hard pull back followed by a channel pattern (98 to 100), followed by another move down in about two months

Apple Inc. (AAPL) leads again

Apple Inc. (AAPL) chart analysis ;
1) Triple top break out ?
2) The recent uptrend may be "too steep", I expect a small pull back, followed by another stronger move higher where 275 will be our clear stop loss level
3) Apple leads again (Heavy weight in the QQQQ)

SP 500 and Gold, an old study

What you are watching here is the chart of the SP 500 (monthly) from 1965 to 1985.
Clear long term "flat" trend, with a clear bearish reversal during the 1973 Oil crisis.
What was the right thing to do back then ? Buy Gold of course !
Then, focus on that "first trigger", it coincides with Gold's first bearish reversal (Gold was at its high).
The second trigger coincides with the second Gold's bearish fall, lasting 20 years.

Shanghai SSE Composite Index

Shanghai SSE Composite Index chart analysis ;
1) Resistance level is clear
2) We now have a broken trend (fom July's lows)
3) Stuck in a "channel pattern"
4) Green arrow = expected scenario
5) Pay attention to that bearish reversal level

Advanced Micro Devices Inc. (AMD), a value play ?

Advanced Micro Devices, Inc. (AMD) monthly chart since 1980.
No clear trend, just a long term key support level (see green dots)
Typical commodity business cycle .....
We are now sitting on a "value play".
Overbought level is above $15 ......
Trailing PE : 3.55
Revenue : 6.27 B versus a Market Cap of 4.1 B
Time to buy ? Probably risking 1 to 2% of your portfolio is a no "brainer" for this one.

Euro Dollar chart analysis

Euro Dollar chart analysis ;
1) See that broken trigger level ? It confirmed the "B" level (reliable support), as well as the higher lows pattern (from Aug's lows).
2) Now what ? If you are long, that trigger is now your key stop loss

US Dollar index moment of truth ?

US Dollar index chart analysis ;
The fight is quite clear ; a Head & Shoulder pattern versus the ABC pattern
1) Scenario of a head and shoulder ; The Dollar would have to break down below the warning level and the key support channel (see chart) ; Target if that scenario occurs ? Don't ask ! It would remind the rest of the world that America is really the land of opportunity (as in buying land, homes and companies dirt cheap).
2) Scenario of an ABC pattern (my gut feeling favors that one) ; The Dollar gets back above 82.5, then above that resistance. Focus on the 10 Year Treasury Note Yield

The art of spotting a reversal using the GVN condition

I posted this chart of Las Vegas Sands (LVS), on March 15, 2009
Today, LVS trades at $31.
Quick reminder of one of my trading rules ; keep charts simple.
A GVN condition needs ;
1) Gap (up or down)
2) Volume (huge increase)
3) News (now that's the tricky part ; it needs a HIGH impact news, big enough that it reverses the current situation) ; that is why fundamentals are so important.

Printing out a scenario

You have probably seen my past posts on Pfizer Inc. (PFE), the ABC pattern, the GVN condition (Gap, Volume and high impact News) etc ....
Try this when you buy a stock or ETF ; draw out a scenario, print it, and stick it on your wall.
Then, forget looking at PFE's chart, just keep up with its price and news.
Focus, focus, focus ..... do not try to DISCOVER news stocks everyday.

Why the ABC pattern is so simple

Microsoft Corporation (MSFT) chart analysis using the ABC pattern ;
True, you could use moving averages, and various trend lines to buy or sell, but here is a simple, clear method that our "fundamental brain" can understand.
1) After a long bearish market, our mind is usually NOT convinced when a stock starts to zoom up ; We say to ourselves, "yeah right", traders are covering their shorts.
2) Good news often comes at level "A", then the stock pulls back.
3) When we see that MSFT started to find a support at $23.5 (level is also a higher low pattern from the July's low), we still tell ourselves, hum, let's wait for some good news AGAIN.
4) "B" level is often followed by good news and higher volume
5) "C", our main buy trigger is a "safe" entry level since we are right above "A", our key resistance. Note that "A" becomes our stop loss.
Why do I like this pattern ? It mixes fundamentals, news events, and simple chart pattern.

Multiple trigger levels

Focus on these trigger levels (Transports, Utility, Dow, and the Nasdaq)
So far, Utility index is re testing support.
Dow Jones did give us an earlier "fake move"

Diamonds are back

On Nov 10, 2009, I wrote ; "Diamonds are way oversold"
View this video from CNBC today ; Freddy Hanard, CEO of Antwerp World Diamond Center.
Bottom line ; think like a value investor (see my trading rules).
Last year, while silver, platinium and gold where zooming up, diamonds where going down .....

SP 500 Index updated

SP 500 chart analysis ;
1) Still holding to my various ETFs (unless I see a huge spike up)
2) Trading system (short term) is still bullish
3) Long term trading system is still "neutral" ; why ? You don't need to be a genius or a master chart reader to figure out what our key resistance level is (see that key level on the chart).
Once we get above it, that key level will be your stop loss.
4) Raising short term (trading system) stop loss to 1080/1090
5) Real bullish on financials

Japanese Yen IMM, why China could win this war

Japanese Yen IMM monthly chart analysis ;
Ok, first the basic simple analysis ; Yen clearly forms another parabolic rise, and we are now facing a monthly double top .
"But", lets get cynical here ; the highest spike in 95 was actually part of a bigger move leading to a double top break out .
1) Green arrow scenario = what most traders are expecting, seing the BOJ intervene to bring the Yen down.
2) Red scenario = China ; Starting an "economic war", using the Yen and the Japanese bond market.
Territorial disputes in the East China Sea have repeatedly led to strains in Sino-Japanese ties.
It is the fourth time Beijing has called the envoy in during the spat, which began on Tuesday when a Chinese trawler and two Japanese coast guard vessels collided near an island chain in the East China Sea claimed by both sides.
Japan 'concerned' over China's growing military reach.
Japan accuses China of being opaque with debt purchase .
Japan to investigate China's bond buying motives.
Source : AFP titles

Reliable reversal patterns

Oil Services index (OIH) chart analysis ;
Comparing a short term time frame versus a longer one.
1) Short term time frames tend to give a failed break out
2) Longer time frames tend to give us a "reliable" break out

Nokia Corp ( NOK ), perfect ABC pattern

Nokia Corp ( NOK ) chart analysis ;
1) Perfect ABC pattern break out (see top right hand side of this blog to understand the ABC pattern.
2) Note that we also have a GVN condition ; Gap, Volume, and News
3) Quick reminder of my trading rule number 1 ; think like a value investor, and use basic charts.

Great book by Marc Fiorentino

Un trader ne meurt jamais ; "A trader never dies"
The book is in french, I hope that the author will translate it in english.
Amazing tips .........

Charting QQQQ

PowerShares QQQ Trust, Series 1 ETF (QQQQ) ;
1) Pay attention to the price volume action confirming our "B" level (ABC pattern).
2) "C", our main key long trigger is quite clear, but current slope is too steep.
3) Expecting a tight channel within that light green circle, then break out above "C".
4) Pay attention to the stop loss level
Focus on ;
Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), Oracle Corp ( ORCL ), Ebay Inc ( EBAY ),
Qualcomm Inc ( QCOM ).
Warning ; The majority of big cap tech stocks do not have a bullish pattern yet, if they did, Apple would be zooming up ....

GLD is worth more than XLF and QQQQ combined ?

Quick fact ;
http://data.cnbc.com/quotes/xlf
The market cap for XLF (financial index) is 5.8B
The market cap for QQQQ (Nasdaq 100) is 17.3B
The market cap for GLD (Gold ETF) is 51.8B ....
Gold is worth more than financials and techs combined ???

Rosh Hashanah, Jewish New Year

Tonight is Rosh Hashanah, The Jewish New Year.
To learn more about Rosh Hashanah on Wikipedia
Shana Tova ! (Happy New Year)

US Dollar long term study

US Dollar long term chart study (Monthly) ;
1) Growing up in central Africa, I remember that my father insisted on going to France in the summer of 1985 since the Dollar was worth 10 Francs ! (All transactions in Congo are done in $USD).
2) Pay close attention to the "violent bottoms" patterns ; Are we facing one right now ?
3) Those red down trends ; Do not attempt to draw other trend lines, they connect the highest high to the high prior to the lowest low.
4) The clear long term bull trigger stands @ 90
5) Position yourself according to the green bullish triggers or the red bearish triggers.

Gold, short of the decade

Gold monthly price versus the DB Gold Double Short (DZZ)
1) Yes, we are facing a huge parabolic rise. Many people out there still pushing Gold higher.
2) We need a GVN condition to go long on DZZ (Gap, Volume and key News)
3) Pay attention to those triggers (entry) in DZZ
4) Main key long trigger stands right above $12.25
5) What goes up must come down ..... Patience, our time will come

Clear message from the commercial real estate market

Federal Realty Investment Trust (FRT)
Taubman Centers ( TCO )
Avalonbay Communities Inc ( AVB )
Vornado Realty Trust ( VNO )
Equity Residential Ppty Trust ( EQR )
CB Richard Ellis ( CBG )
Same chart pattern, same break out ..... business is baaaaaack :)

Monsanto Company (MON)

Monsanto Company (MON) weekly chart analysis ;
1) Clear ABC pattern ; funny how the trigger "C" is right above the red down trend.
2) I would build positions right above $57
3) Stop stands at the low of the last weekly candle
Monsanto Company provides agricultural products for farmers in the United States and internationally. It has two segments, Seeds and Genomics, and Agricultural Productivity. The Seeds and Genomics segment produces corn, soybeans, canola, and cotton seeds

Current watch list

Dupont Co. (DD) ; current chart pattern is VERY bullish.
Citigroup Inc ( C ) ; as long as we remain above $3.84, all is fine. Expect a small price channel before we break out above $4.
Bank Of America Corp ( BAC ) ; probably the best contrarian play out there, now we need to get above its 50 days exp moving average on higher volume.
Pfizer, Inc ( PFE ) ; buy and go away ....
Las Vegas Sands ( LVS ) ; yep, gambling is back
Advanced Micro Devices Inc ( AMD ) ; time to call it a VALUE play.
Exxon Mobil Corp ( XOM ) ; buy and go away....
EMC Corp ( EMC ) ; take over target ? Gut feelings says YES.
Alcoa Inc ( AA ) ; buy and go away ....
Nokia Corp Ads ( NOK ) ; take over target, am convinced ....
Goldman Sachs Group Inc ( GS ) ; buy and go away

Time to focus on soft commodities

On Nov 3 , 2008 I published the following concerning Cocoa, right before going to Abidjan, Ivory Coast. (It was a quick way to bring together a buyer and a seller).

I was born and raised in Kinshasa, Congo (ex Zaire), and having a few friends involved in the commodity business in Africa always helps :)

On Sep 15, 2008, I posted the following chart on Rice, and the fact that I missed an opportunity in importing rice from Thailand (I often go to Thailand for real estate projects).

On Nov 16, 2009 I posted this offer of a large diamond stone for sale, got involved in selling large diamond stones (way oversold).

Why am I telling you that ?

I see a major opportunity in trading Cotton, Coffee, Sugar, and .... once again, RICE !

True, you can buy futures contracts or invest in a fund ...... Not for me :)

I will soon head back to Thailand ; will go back to visit my friends in the north for two reasons ; teak wood and rice :)

Will keep you posted (with pictures)

Huge head and shoulder in Copper ?

Weekly Copper chart analysis ;
1) Current pattern shows a clear head and shoulder, with a clear neckline level.
2) Once we get over that neckline, I have a target of 620 by 2012
While the majority of people are bearish on global markets, may I remind you that the market has a life of its own .....
Most often , mistakes are rooted not in ignorance, but fear ; fear of being wrong. That is why the majority is following the bearish crowd .....
Be an INVESTOR in the early stages of a bull market, and be a SPECULATOR in the latter stages of a bull market.
Trading the markets is an odds game ; the odds are in our favor

Barclays 20 Yr Treas.Bond ETF (TLT)

Barclays 20 Yr Treas.Bond ETF (TLT) chart analysis ;
1) The key question you should ask yourself is ; How long does an up trend last ?
2) Warning ; This is not an internet stock, we are talking about BONDS !!!
3) Break out from that channel pattern took place in mid April ; So, how long does a bond uptrend last ? I urge you to study past bond moves.
4) Parabolic rise ; When you see them, you know what the end result is ; A hard pull back.
5) Break away gap and huge volume pattern ; All signs giving us a top ??
6) Focus on the key levels ; 104 and 108 ; Expecting a violent move.
As usual, expect the unexpected .....

Pfizer Inc. (PFE) perfect ABC pattern

Pfizer Inc. (PFE) chart analysis ;
1) Probably a perfect ABC pattern
2) Price zooms fast, breaking above that red trend on huge volume, searching for "A" (we often see a gap up in these conditions).
3) Price then pulls back and looks for a reliable support level "B"
4) Price rises up again, heading to break above "A", we call this the "C" level. Watch the volume when the break out occurs.