Quick Egyptian Update

I just heard a reporter in Tahir Square panicked, afraid to leave the square as she is afraid of "Armed Thugs" with swords, knives and other weapons. It seems peaceful protesters are trapped in the Square and afraid to leave. There are UN spokes people asking whether the government is supporting these armed thugs and has warned them not to continue on this course if they are. I'm pretty sure they are. Whether it's Mubarak alone or others, who knows. Now they are throwing Molotov Cocktails at the peaceful protesters.

BPZ Update

BPZ is a featured trade from January 19th   It's currently up nearly 27% for us and time for a closer look.

 This was a near perfect entry setup out of an inverse head and shoulders base. The risk reward ratio was excellent. MACD has been constructive and volume huge, but keep in mind how big the base is. I feel it can and probably will support more upside.

 The daily 3C chart and in the white box is the area under accumulation.

 If I'm in this trade, I want to protect profits on a possible and likely pullback so here's a 60 min. Trend Channel. I might even move the stop just a bit above $6 for a portion of the trade.

 Here's my moving average set-up screen and it shows that BPZ has stayed long since the original signal. I'd expect a pullback to hit at least the yellow 10-day moving average, there it may be worth an add to or a new position. The green box is about where I believe the 10-day will be on a pullback.

There has been very little distribution compared to the volume and the Volume at Price indicator looks very positive. For this reason, I personally would keep the trade open with a trailing stop.

On a pullback, we'll take another look for the next entry.

Did I not Just Say This Yesterday and the Day Before?

This isn't a victory lap, it's just that obvious.

Here's the article


Additionally, as I said last night, the Euro concerns will return in the fear cycle, they have. The next wave of Euro contagion fears in the fear cycle starts today. Just look at the Euro


As for the developments out of Egypt, there are now violent counter protests. Remember Stratfor's information that Egyptian Internal Security Services had been dressed as civilians and robbing banks, breaking in businesses and homes, and committing all manner of crimes to make the people fear what Egypt would look like without Mubarak, more then the fear of a future under his regime. 


After more then a week of protests, we have seen nothing that suggested there was a large and violent pro-Mubarak contingent. As of Stratfor's forecasts last night, apparently the only people who want to see him stay according to sources close to the regime-are his close business associates. As usual, there's more then meets the eye here. When I say the regime, I'm not talking about Mubarak's presidency itself, I'm talking about the military regime that has dictated the leaders since Nasser led a military coupe in 1952 which displaced the Egyptian Monarchy. That regime was secular, after his death Anwar Sadat replaced him, again chosen from and by the military. After his assassination Hosni Mubarak was chosen from the most highly esteemed branch of the armed services, the air force. It is this military regime that is now in trouble-Mubarak is a footnote at this point and the military will soon depose him as his presence continues to fuel the protests which threaten the military regime's existence. 


Interestingly now we have violent pro-Mubarak protesters-at least that's their cover. 


This will not be good for the market. I'm currently scanning my watchlist for opportunities based on developments. Anyone with ideas as to how this can effect different sectors, feel free to email me and I'll look through those sectors as well. 


Oil is an obvious play, Gold may be as well and shipping could certainly be hurt. Food/commodities are also under investigation as well as support sectors like agricultural support-chemicals, equipment, etc.  It also may be time to look at the defense sector and a continuing play is American conglomerates that have significant overseas exposure. MCD was the first on our list for shorts in that area and has done well. Foreign Banking is certainly worth looking into.


I'm not trying to be your news source, but there's opportunities and I want us to find them while they are in good setups. Input is always appreciated.

More on Inflation and The Downfall of Regimes

Checkout this CNBC interview. Yesterday I asked if Bernanke was Smoking Crack-sorry I'm not a little more professional with my wording. I also talked about inflation as you saw in an earlier post and the epidemic of food riots and regimes being overthrown. It seems Marc Faber would take it a few notches past me. Here in this CNBC interview from Russia he claims US inflation is running much higher-I agree. He also thinks Pakistan may be the next government to fall. This is another topic I've touched on, Al Qaeda getting what it wants in a most unusual and unexpected way.

If Pakistan falls, along with a few other countries, the entire middle east foreign policy will have to be scrapped and even Iran may look like a secular regime compared to what these countries may end up with. After all of extremist terror plots, who would have thought that a food cart vendor in Tunisia setting himself on fire would possibly give them everything they've wanted?

CNBC Interview

Take a Look at PLUG, it just triggered my $.80 alert

About That Rant

I know sometimes my articles/posts seem, well, like I don't know the definition of succinct. I love the market though and I hate what's being done to it, but you work with what you have and make the best of it.


Back to the point... Yesterday I talked at length about the fight between the Fed's levitation act they play out in the market and fundamental realities and how the two are seemingly starting to clash. I also mentioned EPS guidance will have to be lowered due to rising input costs.


Here's an article from the WSJ, if you can't get the full article then Google this headline for it: 

Appliance Makers Whirlpool and Electrolux Post Weak Results, Face Price Pressures

Here's the first paragraph:

"Two big global makers of home appliances, squeezed by rising costs for raw materials and sluggish demand in North America, reported weak results for the fourth quarter and modest expectations for the current year."

I'm a chart reader not a fundamentalist, but it's that painfully obvious and anyone who does grocery shopping, runs a small business or puts gas in their car can see it too. Why can't the Fed? I fear when they finally do, it'll be thrust upon them and if that happens, we may be talking about what a Black Swan looks like on a price chart. Remember, Bernanke is human too. We as traders know that when we've really committed to a position, sometimes it can be hard to say, "I'm wrong". Is Bernanke any different?

EEE Keep an eye on it

EEE is consolidating intraday and approaching the highs, if it breaks through and 3C looks pretty good, it may very well make another run up. If it fails there, you'll want to email me and see what 3C looks like.

Some Trades Taken Off

XING was updated Jan 21, it didn't lose much ground since then and remained in what looked to be a consolidation, today it's on the move up 7+%. We'll have to keep an eye on volume and see if it'll hold and if it will produce follow through buying or better yet, a next leg up.

EEE was discussed Jan 23 as a good trending trade candidate, it remained in good position since then with no significant draw down and had you bought it at the next opportunity, you'd be up about 45% right now.

LNG was discussed early on Monday morning and had you bought it then, you'd be up about 13% this week.

IBCP was discussed the afternoon of January 25th, if you bought at the close, you'd have a 7% gain. It saw about 6% draw down from the 25th, but never broke the support of the consolidation.

And what makes me most happy is the email I just got from one of our long-term members who is in all 4 trades! He's also been a frequent contributor to content regarding the mortgage industry for us with some fantastic insights. Way to go J!

TSO Trade Alert

I like the way TSO looks on the charts and today it's confirmed a nice breakout. This looks like it could launch another prolonged trend up.

 TSO daily support at the 50 moving average, corrections look healthy and it seems we have a new leg up out of a consolidation.

 3C daily shows an inverted H&S base with plenty of accumulation stretching over 5 months. Better yet, the daily chart is confirming price action which is pretty big. TSV 55 below, a long version of the indicator, has shown steady positive inflows of capital and also confirms the trend.

 Here on the hourly in the red box is the consolidation, we're now clear of that and don't have any nearby resistance for a couple of years.

 The 1 min is in beautiful confirmation of the trend.


The trend channel has been able to catch all the major swings, it can be expanded to catch the entire trend, but for now, I'd use the stop presented which would be in the $19+ area as the T.C. will move up now fairly quickly with price.

Just Talked About This Last Night

I think I said China is likely to hike rates again before this month is out, this doesn't bode well for the Emerging Market Longs as China is the premier Emerging Market. This story hit the wires from Reuters. I think after seeing what's been going on in North Africa, this particular line of the story sums it up,

"The government has vowed repeatedly to tame inflation, a source of social unrest in the past and a major concern for the ruling Communist Party, which prizes stability above all else."


Here's the rest of the Story