First we have to dispel this rally myth-it's a bear market rally designed to allow Wall Street to dump crappy inventory on the general public at higher prices, which helps their balance sheets and makes it less likely the RED Fed will have to pull any more rabbits out of their narrowing hat. Don't get me wrong-it's a historic rally, but every breadth indicator, accumulation.distribution indicator are all saying the sme thing-bear market rally.
So that leaves a lot of short opportunities on the table-look at SKF-why is it not falling in sync with the rally? It's under accumulation.
So I think back to President Bush and my purchase of BPT around $11 which climbed to $105, but I took my profits too early. It had a huge dividend as well. So who wins and loses under our new president? It's been hard to say with the stimulus rally because everything has gone up. So I went looking for obvious candidates that aren't going up so much, the reason? Accumulation is best done at lower prices, not inflated rally prices.
Here's what I came up with:
PBW-Powershares Clean Energy Portfolio. He may not be as popular at home, but he just loves all that European "Rock Star" attention. Clean energy will be a priority for B.O. and lucky for us, PBW has been in an ascending triangle-probable accumulation. Check the charts.
IBB-Biotechs are drooling with this president-Did they finally get their break? IBB has been in a triangle, but it seems it can't contain itself much longer, lucky for you if you get in soon.
FXI-SHORT-look at the coorealation to the dollar. As the Carry Trade unwinds and those US dollars are bought back, money will come out of China were the Carry Traders have been stashing it-look at the correlation with UUP in Red (US DOLLAR proxy). Whatever else is happening in China, I don't know but their exports certianly won't be helped by our economy.
LMT- SHORT Defense spending? Uh.... I think those days are over and the market discounts the future so LMT's best days are behind them, so money will come out of LMT and go to better use.
GPRE- is a little known company, but one of the best examples of accumulation and early stage mark-up, this is the time to jump on board and they are renewable energy to boot! Beautiful chart
Here's the 3 day chart and look at that MACD (light blue) Histogram building intense momentum. There's a beautiful "U" shaped bottom which is stage 1 accumulation and then when the volume picks up and price rises, we just entered early stage 2 mark up. This could run for years like oil did under President Bush so it's still early.
a 5-day chart showing the fortunes and misfortunes of LMT. Note the recent green rally volume compared to the recent red sell volume after it. There's a lot of downside ahead, maybe 7 years worth.
LMT's 3C profile-it can't even float with the market.
PBW's base-exactly what I was looking for, and 3C accumulation is through the roof!
A closer look, is a breakout right around the corner? Volume has picked up even when the market has been down all week (volume wise)-I think we are close to lift off.
IBB-coming out of an accumulation triangle and it's starting its ascent.
FXI-China-3C is showing distribution-it could be the dollar carry trade.
In red is UUP (proxy for the dollar) and as the Carry Traders buy back dollars to cover, note how money flows out of China-exactly where they parked it.
