UUP

Keep your eyes on UUP.  I believe the risk/reward just might be worth taking.  My thinking on UUP is to use this vehicle as a partial substitute for my Money Market Funds.

Index Symbols (+/- 3x)

Hi Ho Silver, Away

The White House Budget Office Offers a "Scorecard" on Obamanomics

"Democrats have been running Congress for nearly four years, and President Obama has been at the White House for 18 months, so it's not too soon to ask: How's that working out?  One devastating scorecard came out Friday from the White House, in the form of its own semi-annual budget review."

"The message: Tax revenues are smaller, spending is greater, and the deficits are thus larger than the White House has been saying.  No wonder it dumped the news on the eve of a sweltering mid-July weekend."

"Mr. Obama inherited a recession, so let's give him a pass on the budget numbers for 2009. Clearly the deficit would have been large no matter who was President, even if the David Obey-Nancy Pelosi $862 billion stimulus made it larger than it otherwise would have been. What's striking about the latest budget estimates, however, is that the White House is predicting the numbers won't improve much through 2011, the third year of the President's term, which is still close to 10%.  And keep-in-mind these are estimates, which will probably be a whole lot worse."  (See the following table.)

For the full article, click-on "Wall Street Journal."

EU Banks Survive Stress Test (What a Joke!)

In the Opinion Page of today's "Wall Street Journal" entitled, Not So Stressful: Pass the Greek Valium, I have copied the following excerpts from the article (Please read the full article.):

1. "Two months ago, credit markets in Europe nearly went off the rails over concern about what a sovereign debt default in Greece would do to the Continent's banks. After last night's release of the result of a Europe-wide stress test, we're not much wiser."
2. "The EU's committee of national bank regulators repeatedly says that its stress test includes a "sovereign shock" scenario. But crucially, "a sovereign default was not included in the exercise."
3. "In other words, bank regulators in Europe think Greece, Spain, Portugal and the rest are too big to fail. Germany and France will always save them in the end, so the consequences of a default don't even need to be considered."
4. "Speaking of Spain, it has some €430 billion in national debt outstanding, as well as being home to five of the seven banks that failed yesterday's stress tests. A Spanish default, all by itself, would sorely test the ability of the EU to prop up its struggling sovereigns. But don't worry. A sovereign default in Europe has been declared impossible.

I am so glad that the EU did this stress test.  Now, we can all relax.  Right?  Thank you EU for your wonderful reassurance.

After reviewing the EU stress test for banks, I am even more comfortable with my inverse index ETFs.

Some day, very shortly (IMHO), reality will sent in not only on the Continent but here in American that there is a price to pay for all that outstanding debt.  What will happen then is not going to be pretty.  I am reminded of a question that General A.S. Johnson asked of a soldier following the defeat at the battle of Shiloh.  The shattered Confederate army fled for their lives in a panicked rout.  The General, desperately trying to rally his troops to stand and fight, grabbed a passing soldier and demanded, "Private, why are you running?"  The private hurriedly replied, "General, I am running cause I can not fly."  The take away from this story is that General will be the Federal Reserve Chairman, Ben Bernanke, and the Private will be everyone else trying to get out the door at the same time.

S&P 500 Weekly Update for July 23, 2010

The market was not kind to the "Bears" this week.  However, our EMA strategy still remains bearish for the third week in a row.  Overall, market volatility remains extremely high with the bull tarts hoping and wishing that everything is "ok" in the Land of Oz.  The market on Friday liked the "EU Bank Survive Stress Test that indicated its banks could survive if its economies decline by less than 1%.  And get this, only seven banks in Europe failed this test.  (Give me a break.  That is not a stress test.   It is not even a test at all.  What if the EU economies decline by more than 1%, say 3% to 5%.  Now, that would be a stress test for those European banks.)

I have included two charts for your perusal.  The first chart is illustrates the EMA strategy, whereby the 13-wk EMA < 34-wk EMA.  Please refer to the notes inside the chart.  The second chart depicts the Point & Figure Chart of the S&P 500.  As you know by now, the reason I like P&F Charts is because they demonstrate very clearly the four phases for each market cycle: accumulation, advancing, distribution, and declining.  Once again, refer to the notes inside the P&F chart.

Currently, I am 26% invested in the following inverse (200% Leverage) indexes: DXD, QID, TWM, and SDS.  My largest "inverse position" is in SDS.

Two Key Dates for the Bears

If the "Exponential Moving Average Strategy" remains bearish (13-wk EMA < 34-wk EMA) going into August, the Bears must have their proper allocation of inverse ETFs in place.  The key dates for the Bears are August 2 and 10 (+/- two trading days on the former and latter dates).  As of now, resistance levels for the S&P 500, which I mentioned in previous posts, are still 1090 to 1100.  My downside target is currently between 950 and 965 on the S&P 500.

A Day with Bernanke and the Market

IWM: Illustration of Market Phases

In order to be a successful investor, one should know something about market phases.  There are four phases to any given market cycle -- Accumulation, Advancing, Distribution, and Declining.  From an investors perspective, we want to be invested in the "Advancing Phase."  The following chart of IWM illustrates these four phases.  IWM, which is the mirror image of TWM, is currently in its initial "Declining Phase."  Therefore, instead of IWM, TWM becomes the investment of choice, because it is in its "Advancing Phase." 

S&P 500 for Friday, July 16

The bear trend has been further confirmed by this week's action.  The exponential moving average (EMA) remains bearish with the weekly 13-wk EMA < 34-wk EMA.  Therefore, please trade accordingly.  Remember that the trend is your friend. 

S&P 500 for Thursday, July 15, 2010

The market has two majors items to contend with tomorrow, Friday, July 15, 2010.  First, it is option expiration Friday, which in itself always makes for an interesting day.  Second, GOOG's earnings and revenues came in less than the street's estimates.  What will the market do with these two items?  So far this evening (8:30 PM CST) with GOOG down 20 points, the market is yawning.  We will definitely find out. 

SPX 1110 to 1120: Critical for "TWO MAIN REASONS."

Investment Allocation: Thoughts

The following "Pie Chart" is my current thought process on how my portfolio is going to be structured over the next year.  Of course, those percentages may all change tomorrow; and they probably will.  However, as of now, I am 88% in Money Market Instruments and 12% Inverse Index ETFs.  For this week, I am anticipating that I will be adding to my inverse index ETFs. 

Sunday Thoughts on the S&P 500: Point & Figure Perspective

S&P 500 Weekly Update: Bearish Cross on EMA Strategy

We now have a "Bearish Cross" on the weekly EMAs (13-week < 34-week).  Therefore, one should trade accordingly.  Remember that the "trend is your friend." 

Negative Growth of M3 Equates to Deflation

Want to know the reason why the economy is deflating and not inflating?  Look no further than the following chart!  In spite of the expansionary monetary policy of the Federal Reserve System, zero interest rate policy (ZIRP), credit within our economy is contracting.  That is the very simple reason why we are experiencing a deflating economic environment.

SLV Update

S&P 500 Update for Thursday, July 8, 2010

TZA: Reverse Stock Split of 1:5

The new buy limit on TZA is $38.  See its following chart for more details:

Update: Buy limit on DXD was executed at $28.75.

Updated Buy Limits

My adjusted buy limits on the inverse index ETFs are delineated as follows:

1. Move buy limit on DXD to $28 from $29.
2. Move buy limit on TZA to $7.25 from $7.50.
3. Keep buy limit on TWM at $21.

My buy limit on SDS was filled today at $36 with a stop at $31.

At the close of the market, the 13- and 34-week EMAs were 1094.81 and 1096.81 for the S&P 500, respectively.  

Inverse (Index) ETFs: Buy Limit Orders

Buy limits for tomorrow, Wednesday, July 7, 2010, for the following inverse ETFs (index funds):

1. DOG (1:1 leverage) @ $52 or better
2. DXD (2:1 leverage) @ $29 or better
3. SDS (2:1 leverage) @ $36 or better
4. SH (1:1 leverage) @ $53 or better
5. TWM (2:1 leverage) @ $21 or better
6. TZA (3:1 leverage) @ $7.50 or better.

These buy limit orders are for tomorrow only.  I will update any changes, if necessary, on my Twitter account during trading hours tomorrow.  Otherwise, I will update these buy limit orders on the blog after the close of the market tomorrow. 

Bear Trend Renewed

Final confirmation of the renewed "Bear Trend" will be signaled at the close of Friday.  That is, if the 13-week EMA stays below the 34-week EMA. 

Timing of Purchasing Inverse ETFs

From my post earlier today about purchasing inverse ETF indexes, such as SH, SDS, DXD, and TZA, I received several questions about the exact timing.  First, the markets are very oversold on a daily basis.  That is, the "Full Stochastics, Commodity Channel Index, and Williams %R are all oversold.  I would expect a short-term bounce next week.  Expecting such a bounce, I will be scaling in my purchases as such.  Since the ETFs under consideration are leveraged between 200% and 300%, I plan on allocating only 30% to 35% of my portfolio into such instruments, with the remaining in Money Market Funds, preferably Treasury Bills for utmost safety.  Second, I will update any of my daily investment activities, as always, on Twitter.  You can follow me by clicking Twitter.

Enjoy your Fourth of July and do remember why we celebrate it. 

Generational Invesment Opportunites?

In my post yesterday, I mentioned that in my thirty plus years of using "Point and Figure Charts (P&F) that I have never seen as many perfect bearish set-ups for the various ETF indexes, such as DOG, SH, DXD, SDS, TWM, and TA, as I have seen in the past week.  So, why do I like P&F charts so much?  In using these types of charts, I am privy to visualizing the four main phases that all indexes and stocks go through during a typical market cycle.  The four phases are accumulation, advancing, distribution, and declining.

The following Point and Figure Charts are illustrations for assisting you in identifying Phase 2 - Advancing: 

 In regard to SDS, I plan on purchasing at $39 or better with a stop at $34.97.   

In regard to SH, I plan on purchasing at $56 or better with a stop at $51.97.

In regard to TZA, I plan on purchasing at $8.75 or better with a stop at $6.47.

I also like DXD at $32 or better with a stop at $27.97.

As I mentioned, I do consider these inverse index ETFs as generational investment opportunities that are definitely worth the risk, which I am willing to take. 

S&P 500 Update for July 2, 2010

Let's review the "Exponential Moving Average (EMA) Strategy.  The investment parameters for this strategy are very simple.  Go long when the 13(15)-week EMA is greater (crosses above) than the 34 (40)-week EMA. Go short when the when the 13 (15)-week EMA is less (crosses below) that the 34 (40)-week EMA.  Ok, what is the strategy currently saying?  Answer: The trend is still bullish but barely.  The 13- and 34-week EMAs have readings of 1100.56 and 1099.03, respectively.  The 15- and 40-week EMAs have readings of 1103.67 and 1093.82, respectively.  Therefore, the time has come that you definitely want to prepare yourself for a potential "cross over to bearish trend."  [Sidebar: In my thirty plus years of using Point & Figure Charts, I have never seen as many "perfect" bearish set-ups for the various ETFs indexes as I have seen in the past week.  That in itself is scary. I will follow-up with some of these charts over the next two day.]

Some of the inverse ETFs that I am currently following are as follows: DOG, SH, DXD, SDS, TZA, TWM, and QID.

Scariest Job Chart Ever Gets Uglier

Oh, So Very, Very Close Indeed!