Wednesday 31 December 2014

AA, BAC, F - the holy trinity for 2015

With the equity market climbing for the sixth consecutive year, attention is naturally turning to the year ahead. Of the many hundreds of stocks I regularly follow, Alcoa (AA), Bank of America (BAC), and Ford (F) are a very respectable trio to at least... keep an eye on.

The following three stocks are ones I am seeking to be long across ALL of 2015. As ever, if there is a clear bearish break on the monthly equity cycles, I would drop the 'hyper bullish' outlook, and flip sides. I will likely refer to them collectively as 'the holy trinity'.. not least because the first key 'breakout' threshold for all three is $18.

AA, daily

AA, monthly


Alcoa has seen some significant price chop since the October low. Again, in December, there was a brief break of the 200dma... but current price structure is offering a bull flag. First upside target is the $18 threshold, which seems viable after next earnings. Once a monthly close of $18... AA should proceed rather swiftly to the bigger $20 threshold.. and continue battling higher - along with the broader market.. across 2015.

I have little concern of sig' downside, unless a break of the Oct' low of $13.69.

BAC, daily

BAC, monthly


Bank of America has already come close to making a monthly close of $18. That still seems likely.. whether Jan or Feb', it should make little difference to those already long the stock. The key $20 threshold.. if achieved in spring 2015.. will open up a hyper-bullish target of $30 in late 2015/early 2016. I realise, considering the size of BAC (market cap $188bn)... such a rise would be relatively massive.

If the US fed do begin to raise rates in spring/early summer.. it should awaken the mainstream to getting more invested in the financials. BAC.. along with Wells Fargo (WFC) are prime candidates for strong upside in such a scenario.

F, daily

F, monthly


Ford has struggled for almost two full years, but remains close to the key $18 threshold. Once a break above $20.. then the mid 20s.. whether late 2015 or early 2016.

Key support remains the recent low of $13.14, and unless that is taken out, I have little concern that $18... and much higher levels won't be hit in 2015.

*I will be seeking to pick up and build positions in AA, BAC, and F, across 2015.

Tuesday 30 December 2014

DRYS - bad day... in a bad year

With the broader equity market seeing moderate declines, Dry Ships (DRYS) saw very significant declines, settling -8.1% @ $1.07. It has been a dire year for DRYS, having fallen almost 80%, from the $5.00 threshold - last seen in Dec'2013.

DRYS, daily

DRYS, weekly


*a brief update on the BDI... monthly

BDI has been broadly flat lining for the past few years. Until it can sustainably clear the 2000 level, the shipping stocks are going to face real problems. 

DRYS remains in trouble

Without question, DRYS is having serious problems, and it would seem 'Mr Market' is highly suggestive that DRYS won't be around when the next major global econ-downturn hits.

I'll be sad to see DRYS disappear... having closely followed it since spring 2009. Hopefully, shipping rates can rally across 2015, and DRYS will survive these difficult trading conditions.

As ever... the BDI will be key to watch.

Monday 29 December 2014

GDX - miners remain choppy... and weak

With precious metals starting another Monday on a negative note, the miners were naturally weak across the day. The miner ETF of GDX settled lower by -2.4% @ $17.81. Near term outlook remains a challenge of the recent low of $16.34, with 15/14s viable by Feb/March.

GDX, daily

GDX, monthly


Little to add.

Metals remain broadly weak... and that continues to keep the mining stocks within a very broad downward trend that stretches back to 2011.

If Gold $1000, GDX looks set for 15/14s.

If $900/875 in mid/late 2015, then GDX $12/10 zone.

Friday 26 December 2014

TVIX, UVXY - a second week lower

With equities continuing to climb into year end, the VIX has melted lower into the low teens. The 2x lev' bullish VIX instruments of TVIX and UVXY saw net weekly declines of -9.9% and -11.5% respectively. Outlook is for continued declines... with sp'2125/50.

TVIX, daily

UVXY, daily


*first, an update on the VIX, which saw a net weekly decline of -12.1% .


A second down week for the bullish VIX instruments. Clearly, the VIX has seen the bulk of the down wave from the mid 20s.

The usual problem for the leveraged instruments is of course decay.

*TVIX still looks due a reverse split.. probably on the order of 1 for 10... early next year.

Wednesday 24 December 2014

DAL, UAL - back on the climb

With the broader market continuing to break new historic highs, along with weak oil prices, the airlines remain broadly climbing from the Oct' low. Delta (DAL) and United (UAL), settled higher by a significant 1.9% and 3.9% respectively. Outlook is bullish.

DAL, daily

UAL, daily


Despite a short trading day, the airlines made strong gains, with both DAL and UAL close to breaking new historic highs.

If Oil prices bounce into the spring - as I believe (WTIC Oil $70/75), the airlines will lag the broader market, but should still be able to broadly push upward.

Of the two stocks, DAL is my preferred, not least since the price action is generally more consistent/stable.

*no position, but I will strongly consider being long DAL after Oil prices have bounced into the $ later than May/June 2015.

Tuesday 23 December 2014

FB, TWTR - momo stocks on sell

Whilst the broader equity market saw a fifth consecutive day of gains, there was some distinct weakness in the momo stocks. Two of the usual suspects - Facebook (FB) and Twitter (TWTR) settled lower by -1.0% and -2.2%. Mid-term outlook is bullish for both.

FB, daily

TWTR, daily


Facebook is clearly the stronger of the two, but even Twitter looks set to claw somewhat higher into next earnings.

In terms of pure price...

FB, next key level.... $100, but that is a clear 25% higher... seems far more viable in early summer.. than Q4 earnings in January.

TWTR, initial $40 threshold... and then $50.... the latter does seem viable if earnings 'somehow' improve, along with sp'2200s

*I have no interest in trading any of the momo stocks, but they can be rather useful to keep an eye on, never mind the entertainment value.

Monday 22 December 2014

GDX - rough start to a short week

With the precious metals resuming the slide, the miners started the week on a very negative note. The miner ETF of GDX settled lower by a very significant -5.2% @ $17.45. Price structure remains a rather messy bear flag.. which is arguably being confirmed. The 15/14s look viable in the near term.

GDX, daily

GDX, monthly


As I have been droning on about for many months... if not the last THREE years, so long as the precious metals are weak, the miners will similarly be weak.

Gold looks headed for $1000, if not the 900/875 zone next year. If that is correct, there remains high probability that GDX has another major wave lower.. before a key multi-year floor is put in.

*I remain short GDX (via option puts), seeking an exit in the $16s... certainly before year end.

Friday 19 December 2014

TVIX, UVXY - huge weekly declines

With equities having floored on Tuesday at sp'1972, the VIX is back in cooling mode, already back in the mid teens. The 2x lev' bullish VIX instruments of TVIX and UVXY saw net weekly declines of -23.8% and -23.7% respectively. Outlook into mid/late January is for consistent decay... to break new lows.

TVIX, daily

UVXY, daily


*first, an update on the VIX, which declined by a significant -21.8% across the week.

There is not much to add.

With 'real VIX' having maxed out in the 23s on Tuesday afternoon, the bullish VIX instruments are already massively lower, and look set to break the cycle lows of two weeks ago.

*I have ZERO interest in being long the VIX.... until the broader equity market forms a grand multi-year top, and that looks to be a good year or two away.

Thursday 18 December 2014

AAPL - headed for new highs in early 2015

With the broader market climbing strongly for a second day, Apple (AAPL) was similarly on the rise, settling +2.8% @ $112.52. Outlook is for new historic highs in Jan/Feb... somewhere in the $120/125 zone.

AAPL, daily

AAPL, monthly


With the broader market having put in a key floor of sp'1972, AAPL looks set to comfortably rise into next earnings.

The $120s look a relatively easy target... the only issue is what then? If the broader market can battle higher into the late spring to the sp'2300s, then AAPL will likely begin a serious play for the big $150 level by late 2015.

Wednesday 17 December 2014

AA - climbing with the main market

With the main market building significant gains across the day, Alcoa (AA) settled higher by 4.3% @ $15.05. Near term outlook is for broad upside... first target is the $18 threshold. Long term upside to $25 appears viable in latter half of 2015.

AA, daily

AA, monthly


I have a lot to say on Alcoa, but for now...  it has almost certainly formed a floor of $14.41... around the 200dma.

I am seeking much higher levels... first target is 18s... and then much higher across next $25.

Tuesday 16 December 2014

GDX - failed opening gains

Despite early morning gains of around 4.5%, with the precious metals cooling across the day, the mining stocks still closed lower for the fifth consecutive day. The miner ETF of GDX, settled -1.0% @ $17.16. Outlook is bearish, with near term downside to the low 16s, if not 15/14s.. with Gold $1100/1080.

GDX, daily


Suffice to say... for the gold miner bulls.. a very disappointing day.. with opening gains.. completely failing.

Indeed, GDX even turned net lower by 11am.. before a bounce into the afternoon.

*I remain short the miners (via GDX puts).. seeking to drop later this week.

Monday 15 December 2014

F - rough day, but broader upside for 2015

With the main market opening higher, but swinging strongly lower, Ford (F), was hit pretty hard, losing the 50dma, settling -4.8% @ $14.27. Next support is the price cluster zone of $14.25/00. There is viable Q1 2015 upside to the upper 17s. Long term upside remain the mid 20s.

F, daily

F, monthly, 20yr


Ford is certainly not the most exciting of stocks. It doesn't attract any of the 'momo chasers', although that is probably a good thing, yes?

Unquestionably, Ford has a secure long term future, and in my view.. the only issue is when we see a monthly close in the 18s... not if.

Once 18s are hit.. Ford should see a straight move to 20... and eventually the mid 20s.. which is a natural price cluster zone that goes back to 2001.

*I have no position right now, but have eyes on the June 15 calls.

Friday 12 December 2014

TVIX, UVXY - extremely powerful weekly gains

With equities seeing very significant net weekly declines, the VIX soared into the low 20s. The 2x lev' bullish instruments of TVIX and UVXY saw net weekly gains of 59.6% and 64.6% respectively. Equity outlook remains broadly bullish, and the VIX looks set to cool into early next year.

TVIX, daily

UVXY, daily


*first, an update on the VIX... which gained a massive 78.3% this week


*I had noted last weekend 'VIX instruments.. a dead trade'. Clearly, the title of that post now looks bizarrely ill timed. However, the point I had wanted to make was that.. yes, there will be sporadic spikes... but they will be brief... with the VIX not likely pushing much above the low 20s.

This weeks move is merely another one of those periodic spikes.

As ever... the problem of decay remains.. and TVIX/UVXY will both be breaking the recent lows... certainly by late January.

Broader outlook

I am seeking the equity market to build a floor early next week around the sp'2000 threshold. From there, first target are the sp'2100s.. by late January. That will very likely equate to VIX back in the low teens.. perhaps even 10s.. if Mr Market starts to fully realise the implications of sustainably low oil prices.

I do not see the VIX breaking the mid Oct' spike high of 31.06 for a very considerable time... probably at least until late spring 2015.

Thursday 11 December 2014

CHK - still headed lower

With energy prices remaining very weak, Chesapeake Energy (CHK) had yet another bad day, settling -2.5% @ $16.70. Mid term outlook remains very bearish, with next support of $12. If Oil/gas remain broadly weak across first half of 2015, then sub $10 is likely.

CHK, daily

CHK, weekly


Suffice to say, CHK remains starkly bearish since the summer. With oil prices having collapsed and nat' gas prices also weak, it is not surprising to see CHK smashed lower.

With the mid Oct' low of $16.69 taken out, the door has re-opened to a test of the May '2012 low of $12.10. Frankly, that seems likely.. even if the broader equity market can break into the sp'2100s next Jan/Feb.

If oil prices remain weak across at least the first half of 2015, then CHK will probably continue to remain very weak... $10 looks viable.

Worse case... Oil slips into the 40/30s... and CHK will test the Dec'2008 low of $8.52.

Long term strength

To be clear... I have high confidence in the long term viability of the company, but for now.. have ZERO interest in 'picking up a bargain'. Lower levels... seem very likely. There should be no hurry to get involved in any energy related stock until late spring/summer 2015.

Wednesday 10 December 2014

FCX, TCK - Copper miners continue to decline

With the broader equity market significantly lower, the miners could not escape. Freeport Mcmoran (FCX) and Teck Resources (TCK) settled lower by -4.7% and -6.1% respectively. Near term outlook is weak, within a much broader downtrend.

FCX, daily

TCK, daily


A really rough day for most mining stocks, but particularly those involved in Copper.

Broader downside targets..

FCX $20... secondary... $17
TCK $10... secondary $7.

Copper prices - along with Oil, remain broadly weak, and could slip to the $2.30/20s. If so.. then the secondary targets of $17 and $7 look very likely to be hit.

I am VERY bullish about both FCX and TCK in the long term, and will strongly consider picking both up next spring/early summer.

Tuesday 9 December 2014

GDX - still stuck at old broken support

With precious metals climbing for a second day, the miners naturally gained. The miner ETF of GDX settled higher by a powerful 4.6% @ $19.76.  However, despite clawing higher for the past six weeks, the precious metal miners remain within a broader down trend.

GDX, daily

GDX, monthly


So.. despite all the borderline hysteria in gold bug land that a floor is in (although I was told the same in late 2011, 12, and 13)... the miners have so far only managed to claw back to the old broken support of last year.

I remain holding to the broader outlook for the precious metals.. with Gold $1000, if not the 900/875 zone, and if correct, that bodes for much lower levels in the miners.

Monday 8 December 2014

DRYS - unable to even hold $1

With some broader weakness in the main equity market, Dry Ships (DRYS) was under severe pressure from the open. DRYS has lost the $1 threshold, settling -16.7% @ $0.95 (intra low $0.81), the lowest price level in its ten year listed history.

DRYS, daily


Today's drop was dire... but for a moment, just reflect upon the bigger picture.. across the last ten years...

DRYS, monthly

The commodity bubble boom of 2007/8... with DRYS peaking at $128.72... with DRYS now sub $1... an incredible drop.

The BDI remains low... in the 900s (having peaked in the 11000s), and there seems little hope for DRYS into early next year.

*I've no interest in the stock.. even at these lowly levels.

Friday 5 December 2014

TVIX, UVXY - VIX instruments remain a dead trade

With the broader US equity market continuing to regularly break new historic highs, the VIX remains very subdued. The 2x bullish VIX instruments of TVIX and UVXY both saw net weekly declines of around -10%. Outlook is.... for continued decay.

TVIX, daily

UVXY, daily


*an update on the VIX, which saw a net weekly decline of -11.3%


Suffice to say, with broad strength in the equity market.. VIX remains low... and that just means the 2x lev' instruments will continue to decay themselves to zero, with periodic reverse splits.

In terms of trading

I have ZERO interest in being long VIX.. at least until late 2015/early 2016. I see no point in trying to capture what will very likely be minor spikes.. which themselves are very difficult to time.

*TVIX looks due for yet another reverse split 'within the immediate term'.

Thursday 4 December 2014

SDRL - horror show of the year

Whilst the broader equity market has broken new historic highs in December, the horror show continues for many energy stocks. The oil/gas driller - Seadrill (SDRL) continues to implode, settling -7.3% @ $12.44. Outlook into early 2015 remains... dire.

SDRL, monthly


*I'll skip the daily/weekly charts, and just highlight the giant monthly chart.

Without question.. since Oil - along with the energy stocks peaked in June, it has been an absolute horror show. SDRL has collapsed from $39.35 in June... to hit a new five year low of $1227

Sub $10?

SDRL looks set to test the $10 psy' level, whether this month.. or Jan/Feb. If WTIC Oil $50s.. or even $40s, in 2015 (whether briefly.. or across much of the year).. SDRL is not going to even be able to hold $10, and will likely be trading in single digits.

I have no concern about the long term viability of the company though, and the same goes for other drillers, such as Transocean (RIG) and Diamond Offshore (DO).

*bonus chart... RIG, monthly

Like SDRL, RIG has been smashed to pieces. Next support is around 17/15.. but $10 seems viable, if Oil falls (and sustainably) trades in the $40s next year.

No hurry to buy

In the meantime, I have ZERO interest in picking up what some traders might see as a 'bargain'. Until energy prices floor - which is going to be a tricky aspect to judge, stocks like SDRL are going to remain under severe pressure.

Wednesday 3 December 2014

GDX - stuck around broken support

Despite another strong bounce in the precious metals, along with broader market strength, the mining stocks remain weak. The miner ETF of GDX settled +2.1% @ $19.60 around the (broken) 2013 support floor of $20.00. Broader outlook remains bearish.

GDX, daily

GDX, monthly


*there was some kooky price action into the close... with a print of $17.72. I'm not sure what to make of it, but the stockcharts data was also reflected via my own trading feed.

GDX, 1min

Miners floored?

If I didn't know anything about what the precious metals were doing, and only saw the GDX chart, I'd actually be strongly considering the miners at these levels.

Yet... instead the miners face a number of problems...

1. strong USD.. hitting 89s today.. set to challenge the 2005 high of 92s.
2. broad market confidence, with low VIX... no 'fear bid' for the precious metals
3. Precious metal prices remain in a broad down trend from 2011

The one thing in the miners favour... the recent collapse in Oil prices. Fuel represents a HUGE cost of production, and with Oil seemingly set to fall into the $50s in early 2015... that will make for a 50% decline.

Since the summer, relative to the subdued metal prices, Oil has declined more.. and thus many miners should be expected to improve in efficiency for Q4 of 2014.. and probably much of 2015.

Holding to the original outlook

As it is, I still hold to a target of $1000/900 for Gold.. along with Silver 12/10. The bulk of that decline has obviously already now occurred, but if my target is correct, mining stocks will remain under pressure.

For now... I continue to watch GDX.. am seeking a key multi-year floor in the precious metals.. along with the miners... in the first half of 2015.

I look forward to stating 'I'm buying.. and staying long.. for some years'.

Tuesday 2 December 2014

RIG, SDRL - another major decline

Whilst the broader equity market managed gains, it was another rough day for many energy stocks. The oil/gas drillers of Transocean (RIG) and Seadrill (SDRL) settled -3.0% and -3.8% respectively. Mid term outlook remains bearish.

RIG, daily

SDRL, daily


*see yesterday's post for a broader perspective on RIG and SDRL

Today's price action in the drillers was simply... dire.

With Oil settling lower by -3% or so, it was no surprise to see the drillers again weak, but even to me.. today's declines were surprisingly strong.

After all, both stocks have effectively imploded already... how much lower can they go in the near term?

Primary targets were... RIG 20/17....  SDRL 12... and we're about there for both.

Secondary... RIG $10... with SDRL 7/5.

I have to note though, it would likely require Oil to sustainably trade in the $50s for much of next year to have any hope of that degree of continued downside in the drillers.

*I will consider picking up both... next spring. No sooner.. seems pointless whilst the outlook on oil is broadly bearish.