A floor in Natural Gas?

Natural Gas has cratered this month, but we finally have some signs of a floor.  

This 3.10-3.15 level has been a pivot for years with numerous tests.  Given the significance of the level, odds are this footing holds to either build a base or start a corrective rally

If this level gives out and we move lower, there aren’t a lot of clear support levels on the chart. 

We see price is stretched on the daily with price 6-7% below the 10D MA as it's broken Friday's inside day higher.  

The shorter intraday trend has turned higher with Monday’s rally.

Upside Fibonacci levels appear roughly every 10 cents with the major resistance area at 3.60.  

Again, it’s looking quite possible that we’ve seen a momentum overshoot of this support zone.  Even with Monday's rally it appears there is still good risk-reward for a swing trade long on any minor dip.

Trade 'em well!

I have a position in the long nat gas ETF UGAZ

2015 trends and themes

It’s that time of year, with everybody rolling out their predictions for the year ahead.  It’s a wonderful exercise to stretch the thinking muscles.  

I've compiled a list of trends, ideas and guesses based on long term charts.  The charts are telling and hopefully the commentary provokes thought.  By no means am I a studied fundamentalist.        

The stock bond ratio will eventually provide a MAJOR hint to asset allocators in 2015.  For now it appears to be a monster top, but patterns morph all the time.

 Global scarcity of investment grade yield drives the yield chase in US stocks.

Most of the developed world is desperate for yield.  Given how panicky investors have been, a high yield sovereign debt incident may quickly remind folks they want investment quality yield.

Of course Wall Street will keep making up exotic products to fulfill these wants, but there is so much yield-hungry money flowing REITS and utilities are bound to be beneficiaries.

Utilities will be a top performing sector for the year.  Later this weekend, be sure to check out my latest post at See It Market.

Here's a sneak peak at the big breakout in Utilities RS.

IYR is trending beautifully after breaking a 7 year base

Investing in Chinese ADRs will be fashionable again. 

The Shanghai and Hong Kong stock market link is the keystone of many actions taken by the Chinese government to legitimize themselves to the rest of the developed world.  Though viewed through a skeptical lense, the anti-corruption measures have led to major crackdowns.  Trust attracts capital.

  

Specifically, Chinese Financials via ETF CHIX could be set to explode. 

That base break in NOAH was something special.  This has double-triple potential over the early December high.

Leisure will win so big, divorce rates will drop. 

The Recreational Products index has broken a 1 year base and the moving averages have started to move higher.

A few names to watch in the group 

CCL – cruises are just now breaking out of a 10 year base      

     

BC – boats are another one breaking a 10 year base

 ACAT – men want big toys and fuel prices were wives second best argument to not buy ‘em.

 Conversely, Personal Products are well positioned for a strong 2015.

  

The sweet spot in Tech is shifting for 2015

The most explosive tech sector of 2014 has been semiconductors up 30% year to date as of December 19^th. 

Semi's continue to look strong into 2015.  However...

The Networking group is shaping up to be the 2015’s version of semiconductors.  I’d even argue this is a more explosive setup.  The acceleration of M2M communications is the monster catalyst to support the move.   It’s just now getting underway

Corporations are still trying to try to figure out mobile/social advertising.  Forrester says companies are wasting ad dollars on Facebook and Twitter.  If corporations agree with Forrester, ads dollars will be spent elsewhere on the mobile web and the main alternative seems to be at the point of sale via mesh networks.     

Cisco will be the top performing DOW 30 stock in 2015.  It’s leading the networking group, with a monstrous multi-year breakout of its own.

Some other networking stocks of note:  FFIV, JNPR, BRCD, SWIR

The Cyber Security ETF (HACK) is hitting new highs as cyber wars rage on.  The build out of mesh networks may provide an added boost to this secular trend.

Some names of note: RDWR, QLYS, PANW, FTNT, CUDA, PFPT, VDSI, IMPV

Spin Off’s will once again provide the bang for the buck they lacked in 2014, sparked by the Ebay - Pay Pal spin finalizing.  Particularly if this pattern breaks higher

A quick read on spin-off’s:  http://www.theglobeandmail.com/globe-investor/investment-ideas/prepare-for-another-year-of-the-company-spinoff/article22166763/

Some other thoughts:

Public Monitoring will continue to explode.  So many scumbags constantly exploit the trust of good humans.  Whether it’s cops or whoever, the proof is in the pudding concept is winning and it will win massively.  Tracking, drones, listening in, videotaping etc…this secular change is accelerating. 

The digital release of ‘The Interview’ will forever alter the movie industry.  Ehhh, maybe not, but this could eventually lead to a whole new category of subscription at Netflix, Amazon Prime or substantially change YouTube’s business model. 

Thanks for reading!  I wish you and yours a healthy, prosperous and all-around excellent 2015!

I have a position in NOAH at the time of posting.

Rotation Report: Happy Holidays

Nearly wherever we look, there was some sort of bullish reversal on the weekly chart.  By the end of the week, it became pretty clear oil and energy stocks have made a key floor.  If the bleeding has stopped there, and there are no significant repercussions coming in the near term, what else is there to hold the market back?  For more, be sure to check out my latest article on See It Market.

Oil managed to rebound late in the week and form a doji.  The crowd has finally gotten very negative in the last two weeks.  Maybe it's time to bounce.  The 10 week MA is 20% away...wow

The anti oil play has been consumer discretionary via XLY.  Note XLY RS back-tested a multi year pivot line and reversed hard.

The Restaurants & Bars index has broken to new RS lows.  

Is this correlated with the beverages index?  Lord knows the drinks are where restaurants margins are.  A possible H&S top has formed.  It's largest components are Coke, Pepsi, Budweiser, Diageo and Nestle.

What a mid-week rip and breakout in cloud computing ETF SKYY

The Cyber Security ETF HACK is as strong as can be headed into 2015.

Is this a continuation H&S in the NYSE?  

Checking in on the NYSE dashboard, we see volume is very strong.

S&P 500 breadth is trying to broaden out once again after breaking a 5 month downtrend.  The 200D has been key in the past.

The VIX starts the week at what's been a major pivot area in 2014.

Is that a head and shoulders top in the smoothed equity only put call ratio?  

The Show me to Tell me ratio has broken it's nearly year long downtrend.  Will it stick?

DBA formed a bullish engulfing week at a 4 month support area.  It seems healthy that corn and wheat have led it.

Bonds were huge last week and will be into this week...

TLT doji'd on the weekly chart at the October highs

HYG reversed the prior break down on massive volume

Emerging market high yield bonds reversed but didn't erase a lot of losses.

The same can be said for EM bonds in general, although a key low has been marked.

Moving overseas...

Emerging Markets bounced at multi-year channel support.

The Europe STOXX 600 may be forming a continuation head and shoulders similar to the NYSE.

The Euro bounce failed immediately as it recorded a bearish engulfing week.

Thanks for reading!  Trade 'em well

If

These are a few of the charts I shared on the twittersphere today.  If this is a tradeable bottom, we've got plenty of quality options.

Let's start with the NYSE stock only advance-decline line.  This thing is more stretched below the lower bollinger band than it's EVER been.  Have we all just lost our minds?  Or is it a sign of a strong new trend?  Maybe both?  All I gather from it is we have high probability for a meaningful bounce.  Feel free to chime in @atmcharts.

Netflix is at a huuuge support level and trying to plant a firm reversal today.  If so that sets up a clear exit for anybody looking to trade long.  Unfortunately, there's not a lot to like about the chart, but does that even matter to an investor if you have such well defined risk?

COPA is bouncing today at this long term pivot area.  It's been thrown out with everything else in Latin America, but it's an airline and the largest holding in the CUBA ETF.  In case you don't know  CUBA is up on news of vastly improved US relations.

 NOAH bouncing hard after re-testing the top of the base and 10 week MA.

INFN has traded in a tight range for over a month after a monster bottom base break.  

We see this 14's area was a resistance in 2008.  If that goes, next stop 20's?

ZLTQ has shown great relative strength and consolidates tightly near the highs.  

Thanks for reading

Trade 'em well

Rotation Report: Yellen Claus

Last week was hectic!  Bond yields are going haywire across the globe.  Energy stocks are starting to show signs a bounce is near, while the rest of the market is getting sold aggressively.  Still, a few biotech stocks refuse to go down!

The Fed meets and Yellen will speak this time.  It'll be interesting to see what the Fed says about the global economy.  They've been pretty upfront about conditions worldwide.  There's not a lot of good economic data worldwide to speak of and long term treasuries from the US to Germany to Japan are reflecting that.

Let's start with...you guessed it, Oil.

Crude oil has dipped below the 200 month MA for the first time since the 2009 lows!

Looking at the energy stocks we see they aren't quite as oversold as October AND there is a short term bullish divergence.  This via XLE's McClellan Oscillator

XNG is deep within a major support zone.  Maybe this is one of the energy groups where long term investors will show up first.

Friday, Bakken energy producer OAS had a massive bullish engulfing day with record volume.  It's dropped a cool 80% from the YTD high.  This is by far the clearest daily reversal attempt it's had.  WE could expect more from the group.

Another theme gaining strength on an intermediate time frame is a preference for bond like equities.

Staples are attempting to take out a 14 month peak in relative strength

The S&P dividend index relative to the S&P 500 is breaking out of a ~20 month downtrend.

Real Estate relative to Tech has formed a falling channel over the last year plus.  Notice the MA's starting to curl higher.

Taking a look at the Consumer dashboard we see Apple testing it's relative strength uptrend via the 50 day moving average.  Also note the possible cup with handle in Wal-Mart's RS.

Consumer discretionary has shown great relative strength during this pullback, but buyers earlier in the week have become sellers into the end of the week shown via the shadow tails in the candlesticks

Why is the Hong Kong Index trading so poorly?  I don't understand the Chinese market merger, but this looks precarious at support with the false break above and backtest of the 24K area.

Gosh it sure looks like a huge rounding top in the FTSE at the 2007 high.  A break to fresh highs would negate it, but for now, it looks ugly.

The Euro staged a strong reversal week at trend support connecting the 2009 and 2011 lows.

The drop in US high yield bonds was highly publicized last week, but the action is much worse in the emerging markets!  

If you haven't already, check out my latest two pieces for See It Market: 

Global bond breakdown

Stock/bond ratios key into 2015 (they're rolling over since I wrote it)

To quickly summarize the action of numerous leading groups, most had large bearish engulfing weeks while they start to approach numerous rising moving averages such as the 20 day and 50 day.

Thanks for reading!  Happy Holidays!