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The Big Market Squeeze

Volatility definitely increased leading up to this weeks quadruple witching and the S&P (400, 500 and 600) index re-balancing taking place tonight after the close.  Selling the last two weeks resulted in oversold conditions in the near term charts and massive short covering at the market as every fund and investment bank bought new shares (as they rebalanced ahead of the indexes), resulted in two astounding days of back to back two percent gains.  Bulls were partying in the streets but is it warranted?   Has anything truly changed? 

Yes, the Fed has…

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After hearing one analyst commenting that lower prices at the pump would translate into increased oil demand, I had to open up the commentary notepad.  (click on charts to enlarge)

The first thing that immediately came to mind was the rising costs elsewhere in Americans pocketbooks that would take up the slack of lower gasoline prices, such as rent.  Social Security recipients for example will see an increase of 1.9% in 2015 however this is no where on pace with the increases in average rents which continue to climb.  In fact, how about a rent increase of 6.9% in November according to Trulia?  Ouch!

Indeed incomes, when adjusted for inflation, have definitely not kept pace since 2000.…

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It's Not A Bullish Engulfing Quite Yet

I should have titled this "counting your chickens before they're hatched".  Anyway, a few words on bullish engulfing candles, the term of which is being bandied about a great deal today.  But don't count your chickens.  Just because price took out a high and a low, does NOT a bullish engulfing make.  It's also unwise to call something a engulfing or any other pattern when the trading day is not yet over.  As explained by stockcharts.com

The bullish engulfing pattern consists of two candlesticks, the first black and the second white. The size of the black candlestick is…

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Russian Stocks - Blood In The Streets

Russia's central bank raised interest rates last Friday from 9.5% to 10.5% in an effort to support the falling currency and battle inflation.  When that did nothing, they shocked markets by raising it again overnight from 10.5% to a whopping 17% in what some are calling an emergency move.  This was their sixth interest rate hike this year to support…

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According to Ashraf Laidi:  The following sobering analysis on the S&P500 reinforces our expectations that recent record highs in US equity indices will not be revisited before at least six weeks.

A decline of at least 10% is expected to follow.

-        Last week’s 3.6% decline in the S&P500 single-handedly erased all of the prior seven weeks’ consecutive gains.

The last time the S&P500 erased at least three weeks’ of consecutive gains was the week after the October…

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Will Oil's Fall Damage The Rally?

I have to throw a flag in from the sidelines calling foul on the learned men on CNBCs Fast Money table Friday (video below) as traders remain bullish on the big screen.  In fact, they do not believe crude's fall will impact our rally.  Really?  Josh Brown stated there was no correlation b/w the price of oil and the S&P500 and did their level best to downplay the selling in crude oil.  Alright, overlay a comparison chart (left) and you won't see black gold having an enormous impact on the market with a few exceptions BUT, the energy complex represents an average of 6.9% of U.S. GDP. 

If it's a bear market, this changes…

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Reverting To The Mean

You'll hear "reverting to the mean" or "mean reversion" bandied about occasionally however not on a daily basis......unless you're watching gold's long sell off since it's explosion to the upside.  According to Investopedia, mean reversion is:

A theory suggesting that prices and returns eventually move back towards the mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry.

Case in point is my theory that commodities are/have been doing just that.  Click on this long term chart of the CRB Index for a better view.

After decades trading in a wide range, commodities took off as the dotcom bubble broke in…

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China's state-controlled energy giant Sinopec wants to sell some long-term liquefied natural gas (LNG) import deals as a slowing economy makes them unprofitable, sources say, signalling the end of a five-year boom fueled by rising Chinese demand.

Kos here:  Note LNG and GLNG are two names in this space.  LNG shown left - click chart to enlarge..

Asia's thirst for energy has helped drive a "dash for gas" in producer countries from Australia to Canada, with LNG emerging as the fastest growing fuel source since the beginning of the century on the back of soaring Chinese imports. But just as long-planned…

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New Households, Student Loans And Apartment REITs

More than half the new households formed in the next six years will be renters rather than homeowners, according to a new report by the Urban Institute. But there aren’t nearly enough rental units to keep up with demand.

The result will be (is) low vacancy rates and higher rents, alongside stagnant incomes. Renter incomes are on average only 70% of homeowner incomes and add to that wide spread student loan debt and you have a good investment I believe will continue to profit (and pass on any interest rate hikes to their tenants).  This is not a short term blip on the radar screen either (see table below).  While everyone on CNBS (sic) will be cheering to buy builders, I will be watching apartment REITs for my IRA…

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Energy Contagion - The Big Unknown

Indeed, I've read much concern over this area as oil collapsed so it does merit a warning.  From ZeroHedge:

The S&P 500 Energy sector stocks are down over 12% year-to-date, tumbling over 3% today to fresh 20-month lows. The spread (or risk) of high-yield energy credits surged again today, breaking above 850bps for the first time... The overall high-yield credit market is being dragged wider by this contagion as hedgers try to contain the collapse that is possible. For…

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StockBuz posted a blog post
Volatility definitely increased leading up to this weeks quadruple witching and the S&P (400, 500 and 600) index re-balancing taking place tonight after the close.  Selling the last two weeks resulted in oversold conditions in the near term charts a…
yesterday
Like ALLY at 22.50 with a stop alert below $22. We'll see next week
Bot some GNW Jan9 calls. Still has a price target of $16. Will bail below 7.20. Can't resist the risk/reward
Beautiful H&SB in AMCX http://screencast.com/t/0oaotwQzKD
B-E-A-utiful H&SB in AMCX B-E-A-utiful H&SB in AMCX http://screencast.com/...wQzKD
Bullish on AIG http://screencast.com/t/TtsQUpZVL
StockBuz posted a chart
After shorting AMZN at the head and shoulders top, it has hit my target and appears to be trying for a weekly double bottom.  Here is where it is testing that support and one can get in; although I would recommend calls rather than common right here…
Thursday
When will 3D bottom? idk Just ask MCP when it was momo at one time and where it is now. Mean reversion; ain't it grand!
3D still sucks at life. I remain short a little left of SSYS from $121 on thsi chart http://stockbuz.net/charts/ssys?context=tag-ssys
I am long calls
If you believe AMZN is in a weekly double bottom, here's your chance to get in with risk limited. http://screencast.com/t/Tt8YwZhcblaS
Added to CP short as shown in this chart http://stockbuz.net/articles/rails-keystone-and-cheap-gas?context=t...
Still short some CSIQ as recommended here http://stockbuz.net/charts/solar-in-a-weak-economy
Solar still sucks at life even with crude oil up. *LOL* Opens up 3% and immediately plummets to -1.35%
NFLX $330 calls up 200%. Taking some off - they expire tomorrow. Roll, exercise or sell the rest? Decisions decisions
StockBuz posted a chart
Netflix finally caught some what of a bid today as Dish Network announced that NFLX will be integrated in their set top boxes including the Hopper.  While it's too soon today to declare the "candle" is over, it would appear it's attempting to put in…
Wednesday
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