Short Term Top

While the reflex rally off the most recent lows was quicker than I had anticipated, it has reached a point where caution must be adhered too.

I continue to believe that an intermediate term low was put into place on August 16-17 and that a re-test of these lows should prove successful. However, there is a bit of short term complacency hitting equities right now and a decline in prices would be just what the doctor ordered to weed out this short term bullishness.

Short term Stock positions and call options should be closed out and preparation for the last leg of removing the hedges from stock positions as the market moves lower should be the battle plan at this time.

Evidence Of Retest

New Aggressive Stock Pick

Below you will find ALIF that will be added to the Aggressive side of the Equity Portfolio.

This is a highly speculative issue, but it offers some incredible return numbers.

The stock has potential all the way to $8 and with a stop at or very near the most recent lows the risk is very limited.

Take a look at it!!

Strong Intermediate Term Bottom Confirmation

The turning up of the Point and Figure Sentiment chart is great news for long term investors.

This helps to confirm that the most recent lows made are in place and a re-test should not break below these established lows.

This is very reliable.


Even more reliable for a confirmation of an intermediate term trend shift from down to up is the move higher in the Three Line Break chart of sentiment. The key here is the turning up after a new low was put in place on the sentiment chart.

All in all, these signals tell us that once the re-test of the lows begins, then it will be time to cover the rest of our hedged positions and look to add to the long side of our portfolios.

LUMBER - Might Be A Run To The Downside

Stopped out of the long position in Lumber today at break-even.

It appears it is a good thing we had the stop in as the price action looks as though it might try and test the lows in the low 230's. I even had a passing thought of going short in here.
I didn't however as it does not coincide with the commercial traders positions.

Equity Update - Rally Continues

It is starting to look more and more like equities will rally to the 1484-1489 area basis the S&P 500 before the re-test of the lows begins.

I had really anticipated this rally process to take a bit longer and also not be so one sided in the trend, but as is always the case... THE MARKET IS ALWAYS RIGHT!

During the re-test of the lows we will finish up removing the hedges from our core positions.

I will also put together the buy list to execute on the Test.

Short Term Trade - Stopped Out Even

The short term sell that was put in place seemed to go our way almost at once and actually had I stepped the stop down it actually would have garnered a profit, but I didn't so it broke even.

I cannot really complain about it though as once more a stop loss placement has saved money.

This is exactly why it is imperative to use stop loss orders and especially in short time frame trading. Trading without stops short term is very near suicide!

Short Term Trade - Sell Short

This looks like a good place to see the strength and go short.

Use a tight stop!

TNH - Opportunity Knocks Once More

Terra Nitrogen has some incredible Long Term prospects and it will offer yet another opportunity to get on board before the real fireworks start.

EQUITY MARKET COMMENT - Make Up My Mind Already!

WHICH SIDE OF MY MOUTH AM I GOING TO TALK OUT OF TONIGHT!

Well, both actually! : )

After I had posted today's equity market comment I ran into something rather interesting with the short term model that has been so accurate, but was off the mark the last couple of days.

It actually is telling us two things and both at opposite ends of the spectrum.
One side is calling for lower prices tomorrow and the other side is calling for a subdued rally tomorrow. I say a subdued rally based on all the volatility we have had over the last 3 weeks.

Here is the Meat and Potatoes of this whole snafu.... It simply does not matter which scenario plays out as we can work it to our advantage either way.

This is what I mean.... Should the market have a decent rally of say 6-9 S&P points then it becomes a very low risk short position and we already know that the market should move lower before it rallies in earnest, so should it move sharply lower then we can go long and/or cover more of our hedges.

So in a matter of speaking, this confusion and double speak can be used to the advantage.

Commodities Update

Sugar - Remain on the sidelines. Looking for a place to go long October Sugar.

Lumber - Very close to our break even stop, but still holding onto the Long position. Look to roll out to the November Contract on any rally from here.

Soybeans - Move stop to 8.50 even to lock in profit. Beans should work lower from here and if they don't we want to look to capture some of the profit we have on the books.

Corn - Hold the Long Term Short Position

Crude Oil - Still on the sidelines as we were looking for a spot to get short. This opportunity may have come and gone, but no bother, the markets are full of opportunity. I continue to look for lower crude prices.

U.S. Dollar Index - Continue to sit on the sidelines for more downside pressure in which we can establish a long position. I think the U.S. Dollar is going to be the surprise of 2007!

COTTON - Long Trade

Cotton came very close to stopping us out today, but did not hit our stop.

Keep the stop in place and tight as this market needs to continue to prove itself.
Remember also that this is a very aggressive trade.

EQUITY MARKET COMMENT

While the equity markets seem to be drifting away from our short term model that has worked so well, they currently look a bit weak.

I would look for the market to work lower to the support levels of 1423, 1413 and 1403.
The time frame for these prices remains at 8/30/07. As usual however, if the price objectives are met before this date then we still have the all clear to enter back into our short term Long and Call positions.

So currently I would continue to recommend caution in the equity markets.

Cotton - BUY

Cotton is looking good for the start of its move back above the most recent highs.

I will be keeping a close stop as it is make or break time.

Blackstone - Offers Some Great Value

I did not like Blackstone at the IPO, but it is offering some great value in here.

Look to purchase on a test of the most recent lows.

Equity Market Comment

While I had expected a little harder day down in the S&P 500 today, the structure continues to follow the short term model.

The model continues to call for Tuesday to be a big down day and should set the low for the next couple of weeks.

This could be a great short term trading week as today was a good one.

I still am of the opinion that the Low is in place for equities and after a retest of these lows it should be off to the races. I don't see a 1987 scenario as I am starting to hear more and more of, but I am keeping my eyes and ears open just in case this scenario begins to show some validity.

Targets for Short Term Trade

The chart below should give some grest ideas as to when to get out of your short term long positions.

Watch the 50% and 62% areas very closely.

Short Term Trade - Long

Downside target achieved.

Go long with a stop just below the most recent lows at 1430.61.
1429.80 would be a good stop point.

Take profits on any sharp rally! This is going to be a hit and run trade.

Short Term Trade Opportunity

While today and Tuesday should prove to be sharply lower, there still will remain short term opportunities.

One such opportunity seems to be emerging.

Weekend Equity Market Comment

A wild week in the equity markets would be putting it mildly, but behind what seemed to be chaos and lack of order, there emerged a bottom.

I do not think this will be a V bottom however and quite honestly I think most of the initial thrust off the lows was completed on Friday. There may be some slight follow through on Monday and actually that would be very healthy, but I really think that this week is going to be a very volatile week.

Take a look at the short term equity model forecast for what the week might hold in the cards.
This model is only a guide and should be used as such, but it has been very good to me lately and I have no reason to doubt it.

Until we hash out this entire bottoming process I am going to keep my intermediate term outlook as Neutral. Long Term will remain Bullish and Short Term as of now is leaning towards bearish.

This bottoming process should give us all plenty of time to slowly remove our hedged equity positions and begin to start the selective process of what to purchase next, as I really do think that once this bottoming process is in the next leg up could be a barn burner!

Commodity Update

SUGAR - Looking for a place to get back on the long side. Our first attempt was met with a stop out and a loss of $275 per contract.

LUMBER - Came very close to our sell stop, but did not make it. We remain long from 274.

COTTON - Continue to look for a final rally to new highs in cotton to put a low risk short sale into place. On the aggressive short term front look to go long right in here for the final thrust up. The final downside target was 56.93 and it touched 56.95 on Friday. I am not going to quibble about 2 ticks!

SOYBEANS - Short from 8.70 1/4, Stop at break-even. Remain short.

CORN - Hold Long Term Short Position

CRUDE OIL - Stopped out of the short Friday for a loss of $312. We will be looking for yet another opportunity to sell short.

U.S. Dollar Index - Pull back we have been looking for may have begun on Friday. Look to buy the weakness. Targets for position initiation will be posted Monday.

HOGS - Hogs remain on the watch list, but nothing yet to make us jump in.