Tuesday, March 23, 2010

Lots of Breakouts

Leaders have held the 20-day (Green Line) and have popped.

Here is my post mortem on some trades and some potential set ups.

These leaders broke out nicely –




There are many more set up just below resistance and we will see if the big boys move them out as well.

Disk Drives and Semiconductors are leading. I have never seen a time where that was bad.

Look at LRCX holding the 200-day and breaking out of a two-month trading range. KLAC and VSEA are potentially setting up the same way. AMAT looks like LRCX.


I like the looks of Western Digital (WDC – you own it) – holding support and then retaking the 50-day. Watch EMC. I like the gap up out of that big base, off of strong numbers. EMC is just sitting around – “never short a dull market” as the saying goes – hint, hint… JNPR looks similar. CSCO already started moving up today.


The IMF (The US Taxpayer) is going to bail out Greece. That should help to stabilize Europe, but it brings into question the use of the Euro as an alternative to the US Dollar. That will probably mean the EU will have to pay a higher yield to attract capital – time to restart the Dollar Carry Trade!

The Euro (FXE) has a humungous decision to make in the next few days. It is now testing the 61.8% retracement of the November 2008 – December 2009 rally. That’s right, the US Dollar has appreciated 11.1% since December 1st! I have my rules for how to enter. I will be mechanical if they trigger, because this could be a big driver for what goes on in the middle of 2010.


You can plainly see that the Oil Service ETF (OIH) and the Euro ETF (FXE) are highly correlated. The 15-hour EMA (Green Line) is often key support and resistance. If the US is not going to have inflation until 2013 and the Euro zone is paying a higher yield than the US, then the big boys will be looking for exploit the Dollar Carry Trade again at some point.


Let’s see if Commodities will come on line here. A reversal up in the Euro is key. I am watching Copper (JJC) very closely in this multi-week, narrow trading range.


Here is the Canadian Dollar (FXC). It broke out of a multi-month base and has sat around for a few days. Does the chart remind you of EMC or JNPR? A failure back through $97 on volume would not be good and a breakout will be great. Support below $97 is at $93. I am watching FXC closely.

EPP is the ETF for the Pacific Region minus Japan. It is 67% Australia and 30% Hong Kong / Singapore. EPP and FXC have a very close correlation, which tells me that Commodity-based Currencies and Economies have been going nowhere for about six months.


Here is the chart of Occidental Petroleum. It is very similar to the charts of FXC and EPP. Remember, the longer the base, the bigger the move if price can break out. I am watching these asset classes VERY closely.

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