In other news, I got my toosh burned today with my SRS and FAZ positions... Do I mind, though? Nope. See for yourself:
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SRS 20-Day
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FAZ Dec.Both iETFs are at their bottom again, and while the market consolidates and the Financials stay mixed, FAZ has a high chance of slowly pushing forward (Housing Bubble #2 is coming, so I don't worry about SRS). Any bad news, may it be major write-downs being announced or just a big revenue/earnings dip, the FAZ will sprout like that one fairy tale's beanstalk. With the way a lot of the Financial company charts have been and with the lack of capital within the Financial sector, this could happen any day.
Here's proof #1:
http://money.cnn.com/2009/01/06/news/economy/where_stimulus_fits_in/index.htm?postversion=2009010615
(I don't know how you feel, but you've got to be kidding me... I'd rather not be paying heavily for that as a taxpayer down the long haul... Plus, what good did the last one do? We aren't making TRUE progress in this mess heap, it's all a facade to what's going on in the background)
Here are a couple of charts as proof #2:
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WFC 60-Day
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C 30-Day
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BAC 60-Day.jpg)
JPM 60-DayLet's take a step back and talk about JPM. Quiet they have been, but trouble they are in:
Total Cash from Investing  |
That's a quarterly statistic, and it is Ugly with a capital U. The next statistic is this:
Here's the catch; JPM's dividend has stayed consistent through the whole "decline of JPM" ordeal, which leaves them exposed to a POSSIBLE dividend drop. This is a very low possibility, due to the hype of Golden Boy Obama's "Big Rescue Plan" which will eventually be passed and the money dispersed to banks and other trashy companies. This possibility seems to be striking companies everywhere, however, leaving them BANKING on the Pres. Elect's scheme. IF it doesn't pass, imagine what could happen to a company with a very low cash flow, a very high debt-asset ratio, and a mediocre dividend payout... Sounds like a dividend cut to me.
That was the fundamental look. Technically, JPM is about to move, but whether it be up or down is unknown. In my opinion, it's going to drop. The Financials have no reason to be hanging on in this rally, because (and allow me ahead of time to apologize for putting this plainly) they all suck. ALL of the indicators, whether they be easy-to-read trading ones or tough-to-understand, heavily math-based ones, JPM and a hand full of the major Financials are ready to take a swan dive.
Anything is possible, but I am bearish. That's all for my proof for the Financial Sector Downturn Theory.
I am eyeing up DUG like a hawk. I am watching, and watching heavily. Oil pulled back a little today, but my fear is that the pullback is a head fake and won't last. My ideal DUG buy is $21, and it was hit today, HOWEVER I didn't enter in a buy because I don't think Oil is done ripping. Tomorrow's Inventory Report is going to tell whether or not oil will continue. As a recap from a previous article, here's why:
WATCH CRUDE OIL. If we are ABOVE barrel production from our last inventories, I would take your profits and book it out of oil. If we are BELOW barrel production from our last inventories (and that's what I think we'll be at), then I would wait until oil stops its sell-off.
Why do I think this way? If we are above barrel production, then we should have a pullback due to the still lagging demand and an overabundance in supply. If we are below barrel production, then we have a 50/50 chance that oil continues it's hot streak due to a demand push and a little bit of a supply lag (as lag as the supply of oil can get). Check the chart:
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DUG 60-Day
Looks convincing... And yet dangerous.
I leave you with $SPX analysis for today. This gives the $SPX hope, even if there is a pullback. I may be leaning towards a potential recovery of this mess starting in late July IF the New Guy can put it together in D.C.. Check the chart:
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$SPX 10-Year
And now it's time to hit the sack. See you tomorrow, and watch those Crude Inventories! As always...
Keep Tradin'
ZM
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