Pollux Technicals

Channel Break - SLV

2011-04-21T09:50:00.000-04:00

Blowing out a 10yr top channel trend line. The top is TBD but a technician would use this opportunity to call this area a place to make a calculated bet that SLV can't keep rising, at least this fast.

YRCW - A Testament.

2011-02-26T09:55:00.001-05:00

There is a bet out there - it is an all or nothing bet. It has many characteristics of the world we live - politics, economics, and labor unions. The bet is this: either the chart below will live another day or it will cease to exist, soon. They both offer extreme sceneraios one way or another - bankruptcy with unions cracking, falling apart or an undervalued coil effect based on new social policy structures. Place your bets!

Channel Trading - CPST

2011-02-25T06:57:00.002-05:00

Trading is often simple in hindsight. Its usually simple premises that create the most value - anything that has many layers of complication for the reason to buy a stock can sometimes debilitate a trader. Add that to the over-abundance of trading vehicles and leveraged abilities enticing your account every moment and keeping things simple can be hard.

Channel trading is simple. Buy at a price(level) you have seen hold its ground before and sell at a price(level) that you have seen fail before.

A simple trading idea and identification process.

CPST - Capstone Turbine Corporation - you may want to be strategic in entry here as we may get a short term correction as you can see in the chart. The ADX is spread far apart so we need some consolidation. The only other risk is if we see a little mania breadth and the stock keeps running as oil climbs. Use a pullback as a buying opportunity.

Good luck!

ADX Strategy Update

2011-02-14T20:47:00.000-05:00

The ADX portfolio is moving along but I am implementing some changes to the enter/exit strategy due to its current rigidness.

The Enter Strategy

ADX is rising - between 20-27. We will change to 18-25.
+DI is above 20
-DI is below 20

Exit Strategy

After the ADX closes with a 35, you sell the position on the 5th day it closes at 35 consecutively. (If it closes above for 3 days, then dips below for 2, and back up for 2 more up days, you now have to wait 3 more days for the signal to confirm)
A 40% gain closes out the position.
Stock losses 15% closes out position.
DI - crosses above 20 you sell after 5th consecutive day close - we will delete this rule completely.
ADX indicator moves below 20 for a period of 5 days. We will now change to it to 18.

If we look at JASO and the reasoning for the changes as shown.

With these added changes to the ADX strategy we will now incur more volatility in general but we still have the limit loss in place to protect us from fallout. So far so good. Good Luck!!

ADX Portfolio Strategy - New Buy Signal - YRCW

2011-02-01T16:11:00.000-05:00

First off, yes, I understand YRCW is a beaten down old dirty trucking company that had an outsized balance sheet and tons of debt, especially after merging from Yellow and Roadway.

But the ADX momentum indicator is concerned about momentum only - and YRCW is showing upward momentum.

I added YRCW to the ADX portfolio. The current statistics are below in the spreadsheet. All data is based on unrealized gains/losses.

The portfolio closed out 3 trades for January. It currently holds 3 stocks in the portfolio. It is up 5% for the month/year.

SIGA gives sell signal

2011-01-21T13:51:00.000-05:00

SIGA has traded with ADX below 20 for 5 days. We will sell today and add cash. We will also be looking for an ADX hedge using that cash position.

And the current ADX portfolio stands.

2 positions

Long JASO
Long MTU

Cash: $4,296

Looking to add a short.

Current ADX Portfolio

2011-01-19T09:02:00.001-05:00

Jaso was added yesterday morning at 7.20 - 500 shares. Current ADX as stands.

I am going to look for a hedge using the indicator in opposite. We will find one with the - DMI popping with ADX in momentum. Start protecting January gains.

ADX Portfolio Strategy - New Buy Signal

2011-01-17T20:38:00.002-05:00

The ADX portfolio is up almost 9% for the month of January so far - the portfolio triggered 2 sell signals last week. There is no need to rush when investing - take your time, another opportunity will present itself and so it did.

JASO - JA Solar Holdings

I have traded and blogged about JASO in the Spring of 10 post JASO the Bull It is breaking out of a triangle and with the ADX showing upward momentum with the + DMI popping in the last jump here in January. Overall, Im a bull on solar and solar stocks. We will add some to the portfolio on the open, unless its bid up aggressively - then we will wait intraday, or next day to pull the trigger.

Current ADX Porfolio

Good Trading!!

ADX Portfolio Update

2011-01-10T20:09:00.001-05:00

ADX portfolio triggers 2 sell signals.

1. BEAT has been trading with the ADX below 20 for 6 days - Sell.
2. CPF gives sell signal based on a new criteria I believe is valuable to the system.

Exit

After the ADX closes with a 35, you sell the position on the 5th day it closes at 35 consecutively. (If it closes above for 3 days, then dips below for 2, and back up for 2 more up days, you now have to wait 3 more days for the signal to confirm)
A 40% gain closes out the position.
Stock losses 15% closes out position.
DI - crosses above 20 you sell after 5th consecutive day.
ADX indicator moves below 20 for a period of 5 days.
New Rule(If the ADX hits 40 with the - DMI under 5, it constitutes a sell)

So far the system has generated a near 7% return for the year not included unrealized losses/gains.We have $5341.51 cash. We will look for new opportunities in the coming days.

The ADX Portfolio Strategy

2010-12-31T14:32:00.003-05:00

For the new year, I have decided to record a mock technical trading strategy using the ADX. The ADX will be based on a 14d time period. The initial investment will be $10,000.

The criteria are below and the criteria are malleable if we don't stray to far from the core strategy, but rather tweak the strategy throughout the year in order to maximize the market opportunities The market changes, and sometimes the elements of the strategy would have to be evaluated.The ADX changes would be correlated to what the market is doing. So, for instance, if you start seeing something emerge in the market that makes you cautious and you can identify and explain why you might want to be cautious, you can do a reciprocal strategy being short instead.

Rules for the ADX Portfolio Strategy:

Only 4 positions or less at a time: this makes it very easy to get long, short, or neutral if the market changes.

Entry

ADX is rising - between 20-27
+DI is above 20
-DI is below 20

Exit

After the ADX closes with a 35, you sell the position on the 5th day it closes at 35 consecutively. (If it closes above for 3 days, then dips below for 2, and back up for 2 more up days, you now have to wait 3 more days for the signal to confirm)
A 40% gain closes out the position.
Stock losses 15% closes out position.
DI - crosses above 20 you sell after 5th consecutive day close
ADX indicator moves below 20 for a period of 5 days.

This is a simple premise but one thing to note: instead of using closing prices, we trigger stocks on a intraday basis respective to its signal and rules. It will be actively managed, not automated.

There is another note: transaction costs will be accounted for after the position closes.

Japanese Banks will run!!

2010-12-13T11:03:00.000-05:00

MTU - Downtrendline Broken to Upside. Looks to be a good 6 month trade. Japan's banking system is awakening.

Bronco Drilling - EMA Crossover - Bullish

2010-12-12T21:57:00.000-05:00

The easiest trades are usually the ones with the easily identifiable bullish patterns, and nothing is more bullish than the EMA crossover.

Is the Nasdaq headed for 3500?

2010-12-02T22:57:00.000-05:00

Markets do things often not expected. There are many reasons for the market to go down today, and very little reasons to argue for it to go up. Although I believe the DJIA and SPX are probably near relative values over a 2-3yr period, I don't believe the Nasdaq can be stopped from now until then.

Based on the possible cup and handle formation in the Nasdaq, and its related calculations in its pattern, the Nasdaq may be heading to 3500 in the next 2 years. Yes, I said it, and Ill say it again - 3500 in the next 2 yrs. I'm not going to get wordy, and self indulgent in all the reasons it can, and can't, but rather point to the technical formation and its possibilities. If the handle breaks down, put a stop loss at 2200 and reevaluate your portfolio.

SOX - Cup and Handle?

As a technical trader, I try not to listen to things that create to much murkiness to what the charts say. And with that said, you can either drink from the cup, or pass!

CDE - Breakout of Triangle - $30 price target.

2010-11-30T15:22:00.003-05:00

CDE has been on a tear and looking to further its gains.

Strategy Update: SOX + MU + Elliott Wave Theory

2010-11-17T13:47:00.018-05:00

Pollux Technicals- Strategy Update: SOX + MU + Elliott Wave

I first wrote about the PHLX Semiconductor comeback in 2008 in The Other Commodity post, when the SOX was all but forgotten, staggering around the global market, lost, since 2000, while the great commodity bull market of the new century was literally rising from the earths crust with buildings as tall and as high as we have seen - and it was happening fast. But again, the SOX was lost, meandering in over-capacity, falling prices, decreasing margins - you know, the usual suspects. Then the financial crisis took shape and commodities cracked, and so did the SOX, further falling, and aiming for levels not seen since 2003 and 1998 - it was a here we are again moment. And that was it, the same moment that made you feel like you had been there before was the same moment that would never be seen again.

And two years later, the SOX has climbed from 175(a 10yr low) to 400, a whopping 128%, while the CRB Index only rose 62.5%, going from 200 to a high of 320 early November. Now, while I believe the CRB can outperform medium to long term, now is the time to start thinking about entry strategies to get back into semi-stocks. I still believe we are in the midst of a secular shift in this sector - the premise being that Semiconductors are today where commodities were in 2003-2004, according to Elliot Wave. Look at the CRB below and what its WAVE 1 and WAVE 2 looked liked.

CRB Index - Emergence of the Bull.

Here is the SOX index, which is in a WAVE 2 correction, and entering a WAVE 3 - the longest wave of Elliott Wave theory.

SOX Index - Emergence of a Bull.

What are the factors driving the SOX?

Well, inflation is one of them(lower dollar), along with a consolidation in manufacturing and outright bankruptcies during the global crisis. Add that to demand globally, as the middle class continues to surface in emerging markets, which compensates the overcapacity issues, and there is a solid case for continued demand for electronics, and also alternative energies and its consumption of semiconductors. As the DRAM prices have stabilized over the past 2 years, we can see on the DRAM Exchange, that prices have retreated in the last couple of months, but have been on a rapid rise over the course of two years, bouncing hard off its 2008 historical lows. With the recent pullback in DRAM and FLASH prices, I believe that now is the time to start looking at semi-stocks again for the Long-Term - buy and forget about them mentality. You don't buy Semi stocks when DRAM/Flash drive prices are high, you buy them when they are low. I would start aggressively accumulating Semi-Stocks over the course of 1-3 months. According to the Elliot Wave Theory, the Wave 2 selling could be coming to an end.

I was bullish on Semi land up until Jan/February of 10, when I called for a 15%-25% correction in the blog posting Watching The Leaders For A Shift. It was also this time I grew a bit bearish on the market because Semiconductors are part of the leaders in the business cycle. I was then implementing a long late cycle/short early cycle stance for hedged protection in the The Exit Strategy post and so far the strategy has worked, as we have seen late cycle commodities moving higher while semis/banks have been lackluster, with downward pressure - and that why its time to get back to Semi land, searching for entry points.

Below is a chart of MU and an Elliot Wave analysis for re-entry into that stock - overall I would be patient and wait for strategic entries back into semi-conductors, but this is where the value could be hiding, and possibly even creating superior returns to commodities for the long-term. Knowing Semi's may be in the beginning of a secular bull market, a new hedge could emerge in using Gold as a short hedge. This though would require a bit more research, as for now the Gold bull is alive and well, and juniors still present undervalued opportunities. So for the long haul, we could be setting ourselves up for a Short Gold/Long Semi strategy, at some point, but I'm not about to go there just yet.

I will also include a Mean Reversion charting technique I use to give myself another form of methodology of where/when to enter into a position.

Why Semis? And why MU - besides the fact I like the way it trades and its large liquidity, it is easily to identify its pullbacks due to its very simplistic elliott wave formation. But also, as the dollar falls, our semiconductor products and pricing become more attractive, globally. As the dollar continues to fall, or even if it stabilizes, it will be a large factor in its global competitiveness. And in the end, Semiconductors are - The Other Commodity - and remember commodities make roads and buildings - chips make everything else.

SOX COMPONENTS

ALTR,AMD,ATHR,BRCM,CREE,CRUS,HITT,INTC,KLAC,LLTC,LRCX,SNDK,STM,TER,TXN,VECO,NVDA,MU,NSM,POWI,RBCN,STM.

Market Stalls - Uptrend Still In Tact

2010-11-15T07:39:00.005-05:00

The Dow Jones Industrial looked like it was going to rocket through its April/May resistance and send us in blow-off mode of some sort. That was all put by the wayside as many traders, hedge funds, algo funds, and even the small investor decided to take profits in the profit zone - meaning, anytime you come to resistance/support zones, there will be profit taking and volatility.

Looking at the DJIA and it's attempted breakout - it has now had a 5-6 day stall/correction. If we notice the large candle that gave us a signal of breaking out, and then the retracement from that candle, all of the corrective prices within that candle range. This now means DJIA has a high probability of channeling in here, before making an attempt higher or testing the current uptrend support.

Its currently a traders market with a long bias!

Bearish Rising Wedge - GLD Intraday

2010-11-11T09:42:00.004-05:00

Bearish Rising Wedge - Intraday GLD alert! 132 Downside target.

The risk trade is to be outright long gold here. There is need to have a hedging technique because people forget that gold is sort of useless and can fall as fast, or faster than a hyped up multi-billion dollar, no reveune, no business model, 2000 tech stock IPO. I am still a believer in the Gold bull and don't believe it's over, but I also know and realize Gold is nothing more than a measure of global psychology - the adhesive to global economics. We all share it around our neck, on our fingers, or as keepsake tokens, or maybe you have a vault with some gold bar pyramid stacked in the corner, but in the end, when the global psychology changes toward it, it will fall and fast!

A gold correction can happen faster than any algorithm can chase it, watch!!

Bullish Engulfing Japanese Candlestick

2010-11-09T20:10:00.005-05:00

Simple is easy - I like easy.

Here is a simple explanation of a Bullish Engulfing Japanese Candlestickpattern which is a reversal pattern - meaning a trend change. This is the DZZ - double short Gold ETF - it's a great hedge for anyone with positions in miners, tech stocks, etc. I don't believe Gold is hit its peak yet, but I do believe its corrections will become faster and more violent. Take the DZZ overnight with you for a good night sleep!

AUY: A cup and handle filled with fundamentals.

2010-11-06T15:01:00.019-04:00

With gold prices at record levels, and this new $1,000 gold quote largely accepted in the new world, AUY could be poised to make a run higher. Looking at the relative performance of the stock compared to other juniors such as KGC, AU, and GG, you can see AUY has lagged and stalled during these recent boom times in junior miners. It is showing some of the worst performance among some of it's equivalents.

3 Mines To Commence In 2012

A 3yr period of a stagnating bottom line may be about to change as Yamana plans for 3 mines to commence in 2012. The company currently produces around 1.1 million GEO's and expects that number to hover or slightly rise for 2011 as more efficiencies are constructed and worked through existing mines. It's what it expects to do in 2012 that matters - the company expects production to jump, reaching near 1.5 million GEO's by 2012 with the addition of 3 mines coming into production: C1 Santa Luz (Brazil), Mercedes (Mexico), Ernesto/Pau-Au-Pique (Brazil).

With an expected near 30% jump in production numbers coming in 12-16 months and we continue to see rising prices in gold, this makes a good case to own AUY for the long-term. Nothing has come online since 2009 in terms of Gold expansion, since the 20 month construction of Gualcamayo in Argentina. This 2012 production expansion means rising revenue. With the increase in projected gold production of 400,000 ounces, this adds nearly $500 million in revenue using an avg. price of $1,200 an ounce. This increases the current $1.4 billion in revenue(ttm) to $1.9 - 2 Billion in projected revenue, a near 35% jump in revenue.

BOOK VALUE

If we look at a simple Book Value comparison in a couple of the junior miners, we can see AUY trades at 1.22 Price to Book almost book value as of today. With GG and KGC trading at 2 and 2.23 Price to Book respectively, AUY could almost double to get where KGC and GG are trading. And to reach the relative Price to Book of AU and IVN, AUY would have to rise 2-3x in price.

BOOK VALUE COMPARISON

The Book Value and Price To Book value are telling you that AUY is undervalued and could be headed higher. Base on a possible technical formation called the Cup and Handle AUY could be headed for $15 dollars in the near term, and if we valued it at a Price to Book of 2, we'd be trading around 18. And if the market valued AUY according to an AU and IVN book value, AUY would be in the 30's, heading to $40.

The technical formation above is a continuation pattern. The trend has been up, but stalled in the past 3 years as Yamana focused on integrating new efficiencies in production, rather than new production. Now Yaman is ready to ramp up production and the last time they did this, AUY went from $2 to a high near $18 dollars from 2005 - 2008. With gold prices elevated, production getting set to rise, a book value that may be lagging its coming rising production, Yamana is set to run and possibly even jump a few times also.

Gold will correct - miners show outperformance.

2010-10-29T22:05:00.015-04:00

I was cleaning out my 90 different charts I have annotated because I became unorganized in my research which ultimately creates sloppiness in my work. As I was deleting unwanted charts, I stumbled on a chart of the GLD and noticed some advice I posted on my blog more than a year ago. It was about a $1,300 dollar price target on Gold and around a 130 price target for the GLD. Although I believe we still have more upside to finally reach the 12th round of this Gold vs. The World grapple match, I will take my own advice and call this current move complete and will assume a consolidation for 6-9 months .

I first analyzed the chart below in the blog post Assessing The Gold Breakout - in the article I pointed out some guidelines of technical analysis for determining price targets on some of the different type of potential pattern breakouts that were occurring in Gold and the GLD.

This chart is from that blog on the gold breakout in August of 2009.

This is the same chart with time elapsed to present.

Basically, the price target I was predicting is here - 1300 - and the current Gold trade is finished for now. If we see more upside momentum, it will be short lived IMO. Although Gold is overdone on the long side, the new price levels in which Gold will consolidate are now higher than that of the last two years. This means volatility in the price itself which translates into smaller margins for the Large Cap miners. For the junior miners, small-cap and exploration companies, this means their growth potential and margin potential will continue to shift in the right direction - especially miners with rising production numbers.

The below chart is the Junior Miner Index - Market Vectors Junior Gold Mine - which is outperforming Gold and the Large Cap Miners in the GDX. This means finding the right mining stocks, specifically ones with growth and rising production will pay off medium-long term.

The Gold bull remains but a short-term correction will occur and I will assume it will be faster, more violent than any correction to date in the current Gold Bull. It will also provide great trading opportunities, specifically on the volatility side. It's also a good time to start implementing any option/equity strategies to hedge your risk according to your market bias.

Advanced Battery ABAT

2010-07-15T09:58:00.003-04:00

Lets keep it simple: Advanced battery comes to huge inflexion point!

If that uptrend line is broken by more than 20%, bail. If it stays in tact, not breaking the -%20 percent loss from here than hold on to it because we could begin to see a large move coming.

Advanced Battery Technologies, Inc., through its subsidiaries, engages in the design, manufacture, and marketing of rechargeable polymer lithium-ion (PLI) batteries in the United States, Europe, and Asia. The companys rechargeable PLI batteries are used in consumer products, such as portable computers, personal digital assistants, and cellular telephones. It also develops and manufactures various types of electric vehicles, including electric bicycles, electric scooters, and electric sports utility vehicles.

STOCK OF THE WEEK - OTE

2010-05-17T12:08:00.005-04:00

Greece, Greece, go away, come again another day, Wall Street wants to play, Greece Greece go away.

CHANNEL BREAK - OTE Hellenic Telecommunication

STOCK OF THE WEEK - COIN

2010-05-02T14:02:00.008-04:00

Converted Organics COIN - Converted Organic Website

Here is a chart that shows some bottoming action, and also coincides with the theory that food/fertilizer/agriculture stocks will start outperforming for the summer since theoretically they are the last to move in the market cycle.

We may get some short term weakness as we look for continued volume increase here - more volatility before we see a large move to the upside. Let's protect ourselves with a stop loss placed right below the green support line. Long term bottoming action with a 3-5 month swing time on this one. Take profits at resistance, or at least sell half and re-evaluate. Good trading!!

The Coming Spike?

2010-04-22T15:43:00.011-04:00

Markets have been steadily climbing, without hesitation but does that mean we are do for a correction? Maybe, or are we about to just plow through any correction and blowoff the bull market in the coming weeks? Chart one shows the Elliot Wave Theory within a channel trend. The signals are pointing to a weakening pattern, but prices can still move higher as the technicals continue to weaken. The rising prices are unsustainable long-term, but in the short-term we can see a blowoff top that would signal the end of "The Great Bounce Of 09", so some strategic planning and execution are what matters - defining a plan is a must to reduce risk.

And what does a simple calculation from Technical Analysis 101 mean for the market? Based on the Head and Shoulders Pattern calculation[(neckline - head) + (neckline) = Target], so the target for the Dow is anywhere between 11500-12500 (see chart below) - I use this large area in the Dow loosely because anything is possible. This is where your execution and plan comes into affect - defining where you want to be for the next 6-9m is crucial in the coming weeks. Liquidation will occur in this area which will increase volatility - it's already showing signs in the VIX.

The only thing one can do is take a measured approach to your risk appetite. You can start to diversify out of stock and into cash or you could take on some hedges by going short the areas of the market which you believe will fall, faster and further, which would hopefully offset the losses from any part of the portfolio that is long. The coming week(s) are going to be one for the record books, again!

Good Trading!

STOCK OF THE WEEK - POTASH

2010-03-15T09:53:00.003-04:00

It seems everyone has bought some POT in the past, well the time may have come to buy it again. A possible breakout is occurring on a gap up with large volume.

Chasing The Lead Pack

2010-03-13T11:30:00.016-05:00

The pack has formed, the Nikkei is setting the pace with the Nasdaq and its echo of pounding footsteps, close behind. Since the last post about the Nikkei's emergence in Comparing World Markets, the Nikkei has shown leadership during that time and is making a move to become the best large economy performer of 2010 so far. The long term charts for the Nasdaq and the Nikkei are best suited for a 3-5yr time frame to be long. There will be bumps, pullbacks and even some strong corrections, but a major(secular) shift is occurring. This also helps back up the theory - The Other Commodity - which has so far led many global markets out of the abyss.

The idea behind The Other Commodity and its relation to the Nikkei is that Japan is well regarded for it's technological advancements in semi-conductor manufacturing, optical segments, and most notably consumer electronics, although that has been waning in recent years(and decades) - known also for innovation financial services, which could also be starting it's new beginning. How? If China realizes that its internal financing economy can lead to risks down the road - why not just let your currency rise and start financing growth and reducing risk from Japan's financial institutions. Basically, spread the risk and a bit of the reward.

What we do know is that over the last 12 months, technology across the globe has shown relative strength in major markets across the globe and this could mean that Japan's Economy, especially if China let's the Yuan rise, will benefit most from the consumption of smaller, better gadgets in technology, worldwide - which may help Japan's consumer electronics industry to come out of hibernation.

Below is a chart showing the emergence of the Nikkei as the new leader in the short term. One great investment idea is to be long the EWJ. The idea is to be long until that trend line breaks. Also note that we are at the bottom of the channel so we are at a high-risk area, but also high reward. If the channel is true, then we can see a rise to the median and even upper channel trend.

Here is a list of mutual funds to hold long-term 3- 5yrs.

AIM JAPAN FUND

COMMONWEALTH JAPAN FUND

FIDELITY ADVISOR SER VIII FID A

FIDELITY JAPAN SMALL COMPANIES

HENDERSON JAPAN ASIA FOCUS FUND

HENNESSY SELECT SPARX JAPAN FUN

HENNESSY SELECT SPARX JAPAN FUN

HENNESSY SELECT SPARX JAPAN SMA

The basic premise of the research is that the Nikkei is poised to outperform most all other markets, even if they go down, the Nikkei is likely not to go down as much, and if they go up, The Nikkei is poised to go up more. 頑張って (Good luck!)

JASO the bull!!!!

2010-02-16T19:02:00.003-05:00

Stock of the Week - JA Solar Holdings, Co., Ltd.(NasdaqGS: JASO)

Many indicators of why this channel is working - look at all the buy and sell signals on the Stochastic. Great Channel with lots of potential - "the trend is your friend".

COMPARING WORLD MARKETS - FINDING THE NEXT LEADER!!

2010-01-30T21:20:00.014-05:00

Looking at a 3 month and 6 month relative pricing chart, you can see the Hang Seng is the worst performing and has been drifting lower, under-performing all other markets on a 3 month and 6 month basis.

3M - Relative Performance

6M - Relative Performance

What is also interesting is that the Nikkei has been lagging right behind the Hang Seng, but on a 3 month basis the Nikkei experienced a negative 20-22% performance spread against the Brazilian Bovespa shrink, from Nov to today, to a negative 7-8% spread vs that same market. This means the Nikkei outperformed by 12-14% from that spread low. You'll also notice the negative Nikkei spreads disappear vs. world markets on a 3 month basis.

This means a long/short strategy is emerging. If you would have been long the Nikkei futures, and Short the Bovespa futures, you would have experienced a risk adjusted net gain due to the squeezing of the spread. Going forward, I believe, you can still implement such strategy if your risk appetite allows.

Can the Nikkei takeover world leadership long-term?

Let's look at the charts.

Here is a medium term chart showing a possible NIKKEI channel. We need to bounce here soon, but many indicators are supporting this rising channel.

10 Year Chart

There are many tell tale signs that the Nikkei may enjoy some leadership going forward. Their markets have consolidated their massive excessive bubble's for 20yrs. The US markets have now been in a 10yr consolidation phase - maybe another 10 before we actually bottom, who knows. But one thing is for sure, nothing is certain, not even the certainty that the Nikkei is poised for leadership.

Japan Downgraded - Time to Buy!

2010-01-26T07:49:00.015-05:00

S&P downgrades Japan - Why this is a time to buy!

Moody's and The Bovespa - 2002

Brazil almost went bankrupt in 2002. In 2002, many of the international financial agencies were downgrading Brazil in many ways - many blamed the debt uncertainty because of a socialist/leftist candidate named Lula da Silva and the possible negative economic implications if he were to win the election - well he did win and so did Brazil.

Article: Moody's Downgrades Brazil Debt Article.

And this is what the stock market did after the debt downgrade and the election of a socialist.

Today: S & P and Japan!!

S & P downgrades Japan's Credit Rating Article.

Here is a chart of the Nikkei 20yr.

The Nikkei has been drifting lower for twenty years - the chart looks to have double bottomed and this could be a place to park some cash as markets around the world continue their correction. Let's see where the Nikkei is 3-5 years relative to world indices. Here are some charts of MTU, MFG, and NMR.

Note of warning: when these type of media events take place, the volatility will naturally increase so expect some "whipsaw" action.

NMR

MFG

MTU

Use any weakness to start accumulating Japanese banking stocks and any other stocks that have good technical signals. I will now scour Japanese stocks for new bargains, etc. This will be a volatile time so manage and strategize your approach.

GA - Giant Interactive - Chart Of The Week.

2010-01-19T20:35:00.005-05:00

Giant Interactive is a online gaming company in China. Notice how there has been a sort of flat line to the MACDs and even the price. But what is changing now is that the price is ever so slightly rising relative to its 50d EMA(exponential moving average). ADX trend indicator has also shown signs of shifting. Stochastic popped into positive territory and looks like it could stay there. If the trend is shifting, it is strategic to get in while the beta is low, and you have a slight rise to the price relative to its MA's - you can get 5% without any notice.

Risk Management:

Sell if the short term uptrend line is broken.

Chart of the Week - CHANNEL BREAK

2010-01-14T21:03:00.004-05:00

Central Pacific Financial Corp. (CPF) has broken it's bottom channel line which is a trend reversal concept. Watch for the development of a new channel and its transgression lines.

From Online Trading Concepts

Trend Reversals
When price closes outside of the Linear Regression Channel for long periods of time, this is often interpreted as an early signal that the past price trend may be breaking and a significant reversal might be near.

Linear Regression Channels are quite useful technical analysis charting tools. In addition to identifying trends and trend direction, the use of standard deviation gives traders ideas as to when prices are becoming overbought or oversold relative to the long term trend.

According to the concept, a new uptrend should begin. I guess only time will tell.

Chart of the Week (and decade)

2010-01-10T14:33:00.007-05:00

Mitsubishi UFJ Financial Group, Inc. (MTU)

I first found the idea of Japanese banks as a good bet for 2010 from the blog THE OIL TRADERS BLOG. I then delved into some charts and found the technicals to be quite impressive. I decided to post this one as the "Chart of the Week or(more like decade) which shows a massive possible trend change. It all makes sense in the respect that the Japanese Banking Crisis happened in the late 80's early 90's. Our banks dominated the last 20 years and arguably longer but the tides may have shifted and put Japan's financing in the lead going forward - we'll see.

Here is a chart of Mitsubishi UFJ Financial Group, Inc. MTU which shows a massive Long Term trend shift in the form of a Head and Shoulders bottom.

Other tickers he mentions are MFG, NMR.

AUY vs. MU

2010-01-07T08:59:00.005-05:00

Here is a view of why the short early cycle/long late cycle may be quite profitable in the short term and also give you a bit of downside protection.

AUY Channel

The objective is to expect a bounce to the median channel and even the upper band. Watch for breakdown at support channel. If it breaks, strategy will have to be re-evaluated.

MU Channel

*Notice it is in the median of its channel - it can still thrust to that upper channel and then create the downside correction/consolidation period.

The looming risk in this trade is if AUY breaks down at trendline(it can happen) and MU keeps going - that would hurt, but worth the risk.

Watching the leaders for "The Shift"

2010-01-05T09:32:00.012-05:00

I first wrote about the coming secular bull market in the semiconductor space in the 2008 article THE OTHER COMMODITY. In it was the first pitch on the idea that a secular shift was occurring in the Semiconductor space, and more specifically the Philadelphia semiconductor index (^SOXX).

Well, almost 2 years have passed since that article and we are still showing signs that this huge turn could be manifesting, although the first purge may be coming to an end.

In this article I will demonstrate that the current bull move for the Philadelphia Semiconductor Index could be coming to a end and a medium-term corrective trend could begin - meaning we could see a 6-9m downward consolidation phase.

Is the bull alive and well in Semi land? - Yes, by all means this is just the first pitstop where one should protect profits, scale back, and even use this current move to add to the strategy of long late cycles, like energy and gold, and short early cycles such as Semi's.

Here are a few charts to contemplate this theory that we may get a 15-25% correction in Semi stocks soon.

Semi Index hit my resistance zone and is showing what could be a Long Term WAVE 1 completion, with a corrective WAVE 2 coming, of ELLIOT WAVE THEORY.

I like MU as the best overall technical play. I posted about the CHANNEL BREAK below which showed the reversal of that trend.

But things are shifting, and I am now looking what could be the completing of a WAVE 5 count. This coincides with the Semi Index completing the WAVE 1 of the index above.

In essence, the current move off the bottom could be coming to completion. At what price this happens is still up in the air as these type of capitulation things can go farther, faster than you think, but over the next 6-9months, prices will be at best flat in this space, and probably experience a 15-25% correction.

This would bode well for a short early cycle/long late cycle risk adjusted strategy. This by no means means the end of the secular trend is over, but rather if you want to try and time the market, this is a place to try.

Always enter at your own risk, but with MU up almost 250%, I'll take those chances.

Chart of The Week

2010-01-03T20:18:00.005-05:00

L-1 Identity Solutions Inc. (ID)

TIMEFRAME (3-6weeks) Target $8.50 - $9.50

Stop Loss at Trendline.

For the New Year! Happy 2010!

2010-01-03T18:46:00.007-05:00

Happy 2010! After quite the year, not to mention decade, for the markets, Pollux Technicals would like to note some changes to the format styling this year.

CHANGES for 2010

1. I will now post a weekly stockpick type of blog - I will name it something later.

2. I will be setting up a twitter account for more realtime thoughts and updates, current momentum plays, and general market stuff.twitter.com/Pollux Technicals

3. I will add a montly analysis of a different world market.

4. I have also started a Facebook group - Become a fan!! Pollux Technicals

There may be more changes to come.

Pollux (β Gem / β Geminorum / Beta Geminorum) is an orange giant star approximately 34 light-years from the Earth in the constellation of Gemini (the Twins). Pollux is the brightest star in the constellation, brighter than Castor (Alpha Geminorum). As of 2006[update], Pollux was confirmed to have an extrasolar planet orbiting it.

The name Pollux refers specifically to Castor and Pollux, the sons of Leda.[1] The star also bears Arabic name Al-Ras al-Tau'am al-Mu'akhar,(الرأس التؤام المؤخر), literally, 'The Head of the Second Twin.' Historically, the Chinese recognized Pollux as Yang, which in ancient philosophy was one of the two fundamental principles upon which all things depend. Castor and Pollux together correspond to the Nakshatra Punarvasu in Hindu astronomy.

Castor and Pollux are the two 'heavenly twin' stars giving the constellation Gemini (Latin, 'the twins') its name. The stars, however, are nothing alike. Castor is a complex sextuple system comprised of hot, bluish-white A-type stars and dim red dwarfs, while Pollux is a single, cooler yellow-orange giant. The name is traditionally thought by some people[who?] to carry the meaning 'much wine,' since astrologers associate Pollux with prosperity and celebration with wine

Assessing the Gold Breakout

2009-08-21T13:39:00.019-04:00

Gold has broken a major resistance line, now what? This blog will dissect the gold breakout and the strategies that have arisen. Lets look at four different cross-currents of technicals on the GLD.

1. Continuation/Bottoming Patterns.

2. The Throwback.

3. What it all means in the market.

4. How to trade it.

1. Continuation/Bottoming Patterns:

We'll first look at the different technical patterns that have been called on the current consolidation/bottoming pattern of the Gold, replicated by the GLD, and discuss their respective calculations for price points.

Head and Shoulder(they are not usually continuation patterns)

There are many out there who have seen the head and shoulders pattern in the GLD - although HnS formations are usually bottoming patterns, not continuation. Measure the height of the head at top/bottom and add/subtract that from the neckline. The current values and calculation for the GLD would be: {100(Neckline)-75(Head)}+ 100(neckline) = 125 or approximately $1,250 for one ounce of Gold.

Flag Pattern

The flag pattern is a continuation pattern. There have been many calls that the current consolidation is a flag pattern. The calculation is to subtract the breakout point price from the price at the top of the consolidation of the flag formation. Add that # to the breakout of the consolidated flag. The current values and calculations for GLD are: 100 -65 = 35. Add that to 80 which gives you 125, the same value as the H n S bottom.

2. The Throwback

When a stock breakouts through an old resistance price it will usually come back and test that resistance as support. This is known as a "throwback". Also notice that this breakout move could begin an Elliot Wave count.

3. What does it all mean for the market?

An important divergence that seems to have been developing - Gold/Gold stocks have been outperforming the early cycle sectors in the past 4-6 weeks. There is a 20% difference in the 6 month performance of the AMEX GOLD BUGS INDEX(AMEX: ^HUI) vs. Dow Jones Transportation Averag(DJI: ^DJT) and the (Philadelphia Semiconductor Index: ^SOXX).

Gold's breakout has also increased the volatility of the markets. This is usually indicative of tops and bottoms and means the markets will get more volatile in the short term. The market can thrust higher in this volatility - a blowoff top if you will, but the VIX, although it has been sleeping in its den, can wake up and give us a scare, albeit much less then the VIX during the market crash.

Also remember that in the economic cycle, commodities move last - this also backs up the theory that the market is nearing the end of its current trend, as commodities have been on fire. It doesnt mean we cant consolidate for 6-9 months with a 10-15 percent corrective range(which presents great opportunities as a trader)before making another leg higher sometime in the summer/fall of next year. Which would probably sit gold at 1400-1500 and ready for a large correction.

4. How to trade it.

The throwback in the price of gold could hold the crucial element for the soon coming "real" market correction. On the breakout of Gold we have seen the volatility of the market increase which is warning you of something to happen. This could mean another leap higher in the market on the current breakout of Gold prices - creating a blowoff top of some sort for the markets and finishing the Wave 1 and moving into the Wave 2(throwback) of its trend. When gold corrects at around 1200, the market should begin the correcting and stagnating phase of inflation.

A 2:1 long/short model weighted long gold/silver stocks and short early cycles like semis and banks could bode well for a managed risked portfolio. This strategy should work during the current breakout of gold to around 1200. Once that manifest's, you would want to be less long gold/gold stocks and tilted short on the early cycle sectors and shifting to a 1:1.5 long/short strategy.

A further strategy will have to be evaluated once and if we see any of the first 2 strategies manifest. You'll have to assess the inter-market relations at that time to see how to realign one's holdings.

NEW UPTREND CHANNELS

2009-07-14T22:09:00.015-04:00

First things first: find the trends and make sure you are on the right side of that trend. Below are 5 stocks with clear uptrends. I only include 5 because one should only stick to a handful of stocks and leave the rest for research. If you try and own or trade too many stocks, this can lead to overtrading which reduces profits due to trading costs, margin calls, inability to make clear and decisive decisions, etc.

So, sometimes it is more efficient to find 5-7 stocks and stick with them. Find your favorite stocks based on clear signals from your favorite technical indicators and with a clear uptrend/downtrend. Trade those stocks based on the trend lines - buy at bottom of trend, sell at top. Only introduce another stock if those favorable signals show signs of deterioration along with the break of the trendline.

During this time of trading your favorite stocks, there is always time for research, but the only time to enter into different stocks is if/when your technicals deteriorate and your trades start losing money. If it ain't broke, don't fix it.

I like to use MACD's, STOCHASTICS, MONEY FLOW and ADX indicators for the technical indicators and I always make sure I can identify a uptrend channel. Here are a few of my favorite uptrend stocks that have been working.

COEUR D ALENE CP NEW(NYSE: CDE)

MercadoLibre, Inc.(NasdaqGS: MELI)

FREEPORT MCMORAN B(NYSE: FCX)

MICRON TECHNOLOGY(NYSE: MU)

GOLDMAN SACHS GRP(NYSE: GS)

Notcie the slope of each trend - the lower the degree of the angle, the less profitable and less risk. The higher the degree of trend, the more profitable but also more risk.

NOTE: Whether the market has more to correct or not, these stocks should continue on their trend unless they break through that bottom trendline. Yes, they are associated with the market but new stock leaders will turn before the market bottoms. Notice that many of the stocks have recently tested that bottom trend at a time the market has been correcting.

1,000 is the new 100

2009-05-29T08:44:00.010-04:00

Numbers are symbolic, almost ironic sometimes. We see them everywhere in our daily lives, and even try to use numbers familiar to us to facilitate luck or certainty - family birthdays for lotto picking are a good example. So, with keeping up with a common theme, and watching Gold rapidly approaching the 1,000 mark, I am declaring that 1,000 is the new 100. Our lives will now be yielding more numbers in everything we do - phone bills, gas bills, mortgage bills, grocery bills, etc. Even the government has entered a new realm of numbers with the billion dollar theme being left behind for the next phase of numbers - trillions. Back in the day, if one pulled a C note(100 dollar bill) from their pocket heads would turn, but today 100 dollars is nothing more than a grocery odyssey with some spare change for a local do-it-yourself carwash. So how does one protect themselves from this overwhelming invasion of numbers? Gold. And if you want a simple equation of when to get rid of your gold, lets look at some simple, maybe easy to understand numbers.

The US goverment is going to issue near 3 trillion new American Dollars, which will devalue any existing dollars currently in our system. By how much the dollar is devalued is the trillion dollar question, but perhaps lets use this simple equation and how it relates to Gold. For every trillion dollars the government has put on the street could ultimately equate in a 1,000 dollar increase in the price of Gold. 3 trillion = 3,000. Current Gold price is 1,000, so if we add 3,000 to its current price we get: 4,000 dollar Gold? Mmmmmmm. Yes and no. Of this 3 trillion dollars, some of it will yield inflation, but some of it will yield true GDP and economic growth so all of that money can't be discounted to price of Gold. So what is the price target for Gold? I'd have to say somewhere between complacency and mania, but for now you're either long or you're wrong.

Bullish Flag Formation Near Term target 1,300. (Top of flag resistance - breakout price) 1000-700 = 300. Add this to 1,000 and you'll get $1,300

The Exit Strategy.

2009-04-13T08:32:00.014-04:00

Spring has sprung and so has the stock market. The current sentiment looks like we may have a classic "Sell in May and go away" - but with a twist. More about the twist later. The below chart and information on the Business Cycle/Economic Cycle - provided from Stockcharts.com - is a good place to start from when determining which sectors to be in and when.

Legend: Market Cycle(Red) Economic Cycle (Green)

This theoretical model is based on Sam Stovall's S&P's Guide to Sector Rotation and states that different sectors are stronger at different points in the economic cycle. The graph above shows these relationships and the order in which the various sectors should get a boost from the economy. The Market Cycle preceeds the Economic Cycle because investors try to anticipate economic effects.

The current intermediate trendline is still in tact, but at a pivotal moment as the chart shows. If this trendline holds here, we can see a fast move higher. The resistance zone matches up with a May sell signal.

If we look back at the business cycle/economic cycle we can see the models shows that finanicals lead. In this current market, financials are leading in the last month and are helping make a case that a bottom is being put in place. As the market made new lows in February, so did the KBW Bank Index (^BKX), and while many other indexes did not reach new lows - indexes such as the PHLX SEMICONDUCTOR SECTOR INDEX(Philadelphia: ^SOXX) and the AMEX GOLD BUGS INDEX(AMEX: ^HUI)
- a relative strength collage started to emerge. Everyone knew without the financials though, everything was off the table - the market could not recover. But now that the financials have bounced - in a big way - and currently lead on a 1 month relative basis off of the bottom, the promise of a new market/economic cycle is showing improvements, and sector rotation is currently being construed: financials/transports, technology/basic material, and then energy/commodities.

1 Month Relative Performance

3 Month Relative Performance

6 Month Relative Performance

Notice the AMEX GOLD BUGS INDEX(AMEX: ^HUI)is lagging on the 1 month basis, which confirms that they should be the last to run. They have clearly been the strongest sector in the 6-9month timeframe.

According to the cycle rotation, we should continue to see sector rotation out of financials - this does not mean that banks can't go up, it just means they will lag now - with transports still showing some room to outperform short term - the outperformace of the transports will give us DOW THEORY, and will confirm that we have a classic sector rotation off the bottom. Look for money to start moving into technology stocks/basic materials also in the short term, and outperformance till May sometime. This coincides with the "sell in May" theory. This is the sell signal and where we can start looking for money to rotate back into energy/commodities for summer. At this time, a good strategy would be 50% cash 25% hard assets and 25% stocks. Over the summer, look for the markets to be flat, and hard assets to outperform.

The Twist:

The twist is if Gold breaks out and over the 1,000 mark - if that occurs, we could see commodities begin a spectacular rise to create some of the best returns in commodities since its secular awakening. But nonetheless in this new risk averse world, don't count your chickens until they hatch, or in modern terms - sell them before the expiration date.

One Should Be Long Technology.

2009-03-18T08:47:00.036-04:00

The Nasdaq comeback has begun! The new bull market will be led by Semiconductors. Here's why.

The NASDAQ and the PHLX SEMICONDUCTOR SECTOR INDEX (^SOXX) are at 8-10yr lows, which means, according to the current Kondratieff Long Wave Theory, we are smack dab in the middle of a major economic cycle - this one so happens to be the depression(or Winter Cycle) - and that makes sense.

This bears good news and bad news. The good news is we are in the middle of the winter cycle, not the beginning, and the bad news is that we still have around 5-8 more years to go - most cycles last between 14-18yrs, so if we had the beginning of the "Winter Cycle" start in 2000ish, then by 2014 - 2018, you will see the cycle end. This so called "market goes nowhere for awhile" that everyone keeps saying is true, but remember that by 2014-1018, the DJIA, and more notably, the NASDAQ, should be aiming for their old highs - this is based on the fact that the market has been flat for the last 8-10yrs, so in 5-9yrs, the winter cycle will be finishing - gold will be plummeting, oil will become oversupplied, and new technolgies will advance at an ever increasing rate(probably aerospace). After this winter cycle a spring cycle will emerge, which I believe will take the NASDAQ, and Semiconductors on a huge run that I want to ride - and the tickets are sold right here and right now, today.

With that being said, and knowing Commodities have been in a Secular bull during the last 8yrs, we can assume that we are in the middle of the Secular bull for commodities but more importantly at the beginning of a new secular bull for Semiconductors. See chart below.

Commodities make roads and buildings. Chips make everything else.

We can see that the PHLX SEMICONDUCTOR SECTOR INDEX (^SOXX) is showing the best relative strength against its peers on a 3m, 6m and 1yr timeframe - except for a 6m timeframe - the AMEX GOLD BUGS INDEX (^HUI) leads at that time interval. But if you look closer, Semiconductors are even leading the Dow Jones-AIG Commodity Index (^DJC). Gold stocks and Semiconductor related stocks should outperform, near term and long term, and have been outperforming for the last year. The S&P BANKING INDEX has lagged everything.

3 MONTH

6 MONTH

1 YEAR

BREADTH IMPROVES

The number of new stocks hitting new lows continues to show signs of strength. Breadth indicators continue to favor a case for a bottom, albeit a long and uneven trudging of one. The Nasdaq is showing relative strength still - and if you notice, its New High/New Low chart exemplifies what should be happening when a bottom occurs. If you look at the NYSE stats, the data is less defined and unclear - that's why the Nasdaq will outperform near term and long term.

NASDAQ LEADS MAJOR INDEXES

Looking at performance charts: Nasdaq has started to outperformed on a 3m timeframe. This is important since the major part of the crash, and leading up to the 6500 area support is about 3 months - so far, NASDAQ has held up the best.

The major thesis here is that a new secular growth story is emerging. A growth story that will heal all of the cuts, bruises, and breaks that the Nasdaq left us in 2000. One should now be long technology.

STOCKS: MICRON TECHNOLOGY(NYSE: MU) TAIWAN SEMICOND ADS(NYSE: TSM)
TEXAS INSTRUMENTS(NYSE: TXN) STMICROELECTRONICS(NYSE: STM) LSI CORPORATION(NYSE: LSI)MRVL Marvell Technology Group, Ltd.

MU - Channel Break.

2009-03-05T09:07:00.009-05:00

2 charts: one story - many endings.

A long-term channel break occurring in MICRON TECHNOLOGY(NYSE: MU) could bode well for itself in the next bull market. A channel break, as shown in the first chart, is the sign of a reversal of a trend and direction of the channel. The trend has been down for Semis since 2000 as you can see in The Other Commodity post. If you believe we are to emerge from this crisis stronger, then high-tech manufacturing could be our new shop floor.

If we look at the second chart, which shortens our time frame, we can see a potential cup and handle formation forming. Cup and handle formations are traditionally continuation patterns, and not long-term bottoming patterns, but the channel break could be of more importance in determining which way this stock should go from here.

And since we are in the midst of the unfamliar, a stop loss should be placed at around 2.50 which would break the pattern and cause for more consolidation or continuation of the downtrend.

Chart Analysis: Comparing Bottoms

2009-01-24T08:18:00.011-05:00

Chart Study: DJIA 02-03 bottom vs. DJIA 08-09 bottoming - when, where, how and why!

Many are calling the bottom here - and there is good reason to do so. The above charts are the differences between the 02-03 bottom and this 08-09 bottom. There are many differences, but many similarities.

02-03 bottom went from 10500 down to 7500.
08-09 bottoming went from 13000 to 7500 - giving us an Oct plunge that started at 10500 and ended at 7500 - that single move was equivalent to the entire 02-03 bottom.

This is a big difference in the "amplitude" of the "phase", or the measurment of the top to bottom of the cycle of the 02-03 bottom and this 08-09 bottom. That's why this one hurt so much because it was faster and had a bigger plunge.

On the charts posted, you will see the calculated targets for the first bounce off the bottom of this new "cycle" or "phase". Here are things assumed in order to reach those targets.

The bottoming formation of 02-03 bottom- Inverse Head and Shoulders: see chart for measuring technique and targets.
The 08-09 bottom is showing a very similar HNS pattern, as many have been predicting and waiting to confirm: see chart for targets and analysis.

A couple of things I have been waiting for.

More Volume
Vix hits resistance area
New Highs vs. New lows continues in the right direction.

These all have been starting to show signs of dramatic improvement and confirming that the market could now be creating the right shoulder of the HNS bottom, and could now be ready to move higher until this summer - which will give a trader the best performance chances during this period.

Knowing this can also be a very tricky market where patterns emerge and dissapear, move in opposite of its original intention, etc. - risk management must be assumed.

PLAN #2 - Risk Management - possible scenario if we breakdown on the right shoulder here.

If this right shoulder doesn't hold with more volume to come, a possible breakdown to the 7500 retest would be considered the next support and also a place to then call for a bounce, or double bottom attempt. If that happens, then we will have a sideways market for the rest of 09 with a possible restest of the 7500 a third time sometime in Sept. or Oct. - and a day that would be a very scary moment, for sure, but I don't believe the probabilities are in this favor.

Mixed Signals and Weak Technicals - VIX and DJIA

2009-01-11T08:59:00.016-05:00

The VIX's thrust to new highs from the 35-40 area to the historic 80 area in Sept. and Oct. brought the market to it's knees - from 11500 to 7500 in a month. Now the VIX is back to 40 and the market can't sustain any sort of rally that has legs - this may be problematic short term - and may be signaling more volatility soon.

VIX and DJIA show more range bound technicals and signals; even the possiblity for a scare of more volatility in the coming week or days. The last blog analysis of the VIX and DJIA relationship put the DJIA target at 9500 when the VIX would correct to the 50 area - it bounced and the market corrected from the 9500 area- that was correct, but what hasn't proven itself is the test of the 40 area on the VIX which, I believed, would have the DJIA higher than 9500 since the VIX at 50 equated to 9500 on the DJIA, so you would think a break into the 40 area would equate with a higher price than 9500. Well, the VIX is now at 40 but the market is well below 9500, it right now sits at dismal 8599, and well short of the 10500 target with a VIX at 40. With the VIX now at the 40 support it now seems like 25-35 area on the VIX would be needed in order for the DJIA target of 10500 to be achieved.

Looking forward, the VIX has still not hit its large support area around 25-35(congestion area), although a bounce on the 200EMA is currently in progress, and knowing the 50EMA is reading 50.40 on overhead resistance, the current bounce should have resistance there and come back down toward the ever so slight drag to the 25-35 area - maybe this can finally get the market back to 10500. What is concerning is that the DJIA hasn't moved far for a 50% correction in the VIX. Can the 25-35 area be the true test the VIX needs to be at before we see any sort of a sustained bull run in the DJIA - or is the VIX going to fade into the distance for the mean time while other patterns/indicators become more prevalent.

Assessing Breadth.

2008-12-30T19:15:00.005-05:00

For many technicians, breadth indicators are key in confirming new uptrends or downtrends. If we look at the New Highs(end of day) to New Lows(eod) for the markets - this is nothing more the stocks making new highs(or lows) vs. the reciprocate - we can see favorable developments that confirma the market bottom is in. For instance, in the Nasdaq chart, we saw 1,600 new lows develop in October, but only saw 1100 new lows develop in November even as the market made new lows - stocks making new lows decreased from the October plunge to the November low. The same holds true for the NYSE which saw a positive divergence from the October plunge to the final low in November - 2400 to 1000 respectively.

The question now is what kind of reciprocate numbers can we see on the upside. How many new highs will be made on a market rally? Only time will tell, but there will be clues, you just have to quantify them.

Was the market bottom on friday?

2008-11-23T22:33:00.008-05:00

I last updated a chart of the DJIA related to the VIX and the targets were hit - 9500 on the DJIA and the 50 support on the VIX. From there we saw some more volatility to the downside, but things have shifted once again. Look at the stochastic bouncing on the topside of the downward trendline from before. The VIX ROC is falling and the stochastic is crossing its %D negatively. And if we look at the ADX, the attempt at a breakout has not been confirmed with the ADX which made a lower divergence. Also, look at the volume - it is entering a new phase and produced one of the most powerful volume days yet! As for the bottom? - Only time can tell now.

Why the market bounce is for real!

2008-10-30T16:27:00.012-04:00

After a violent and destructive thrust through the overhead resistance/ceiling of what "normal" used to mean on the VIX, The CBOE Volatility Index® (VIX®), we may now see momentum waning and a corrective course taking place. Look at the stochastic pulling a negative divergence on the recent high, the ROC(Rate Of Change) Indicator is falling and the ADX(trending indicator) looks like it has peaked - all for the meantime.

Lets look at the 50 as a short-term support and a possible intermediate trend downward back to the 35-40 area. The bigger question then remains if the VIX has now entered a new "era" where we will gauge market sentiment in between 30's and 80's, which would also mean more volatility. If this new era of the VIX does hold, then it will be a traders market with mini bulls, something that would resemble a channeling market. Or is this the ever so slow bleeding of the VIX back down to the 10 area? I guess you'd have to stick around for that one because its a long way off from here, but possible.

Let's now concentrate on the VIX short-term support zone(50's) and near-term zone of (35-40). This could act as correlation zones with the DJIA overhead resistances. I would equate the test of the 50 support area on the VIX with the DJIA 9500 overhead resistance. The 40 support area of VIX would correlate with the DJIA overhead resistance of 10500 - thats where the VIX broke the overhead resistance in late Sept/early Oct and the market crashed - yes, that was a crash.

Inflation and Deflation(Commodites vs Semis).

2008-10-03T13:02:00.009-04:00

My assumption still stands: Semi's will outperform over near term and long term. Below is a chart comparing the Dow Jones-AIG Commodity Index (DJI) vs. PHLX SEMICONDUCTOR SECTOR INDEX (SOXX).

Notice the difference over the last 5 years: inflation was beneficial to commodities, while it hindered any sort of bull market for semiconductors. We have seen commodites prices ease(deflate) these last couple of months, and that means we are deflationary and Semis will counter - the next cyclical turn will have semis leading as deflation sticks around and commodities consolidate in its secular trend. This does not mean commodities will completely lag, but rather Semis should outperform in the cyclical trend, while underperforming on the secular trend.

You can view the full analysis blog called "The other Commodity" here.

http://polluxtechnicals.blogspot.com/2008/05/other-commodity.html

A short term triangle has formed on MU with good volume. Trade the bounces while keeping a long term position on hand.

The AIG triangle and Gap Fill

2008-10-02T22:27:00.003-04:00

Target 10.00.

Stop-Loss 2.50

Risk with stop loss = - 40%

Profit Possibilities = +100%

What's the story? UNG vs. Natural Gas

2008-08-11T17:22:00.007-04:00

Technically Examining: UNG vs. Natural Gas

If we look at both charts we can first see that the commodity itself is volatile in nature. The UNG or Natural Gas itself shows an extreme amount of volatility vs. things like GLD, USO, SLV, etc.

The best way for individuals to connect their investments directly to the price of natural gas, or other commodities, is to buy the ETF - a byproduct of the price itself that has been created by leading investment banks. The UNG was recently IPO'd last year and this is where technical analysis becomes fragile due to the nonexistence, or minimal existence of a "history" from which a technical analyst would draw from. At the current moment, the technicals on UNG have been decimated and will be volatile near term, and in corrective mode for medium to long term (6m-1y). One thing for sure about UNG is that the volume has entered a new phase of open interest which means more and more are flocking to this investment tool.

If we now center our attention on Natural Gas prices themselves, we can see more of a "historic" presence that exists. The recent move of natural gas from 5.5ish in the middle of 07 to 13.5ish just a couple of weeks ago is a 120%+ return, which is not bad for a commodity in such a short time. This correction still puts Natural Gas prices with a respectable 40%+ return from its low of 07.

Fundamental Difference.

One thing to examine is why natural gas itself is not trading at all time highs vs. other commodites, oil in particular. Oil is widely more used than natural gas, and only recently in the last decade has natural gas been looked at as a highly viable alternative. This means that the infrastructure for Nat Gas is not as extensive as oils infrastructure and this has to do with oil's deep integration into our lives vs natural gas. You might think about using natural gas in your home, if its available, but not many would think about a natural gas car, motorcyle, or lawnmower, etc.. This is why the price itself is more volatile than oil, and other commodites. Oil is available in many more facets of our daily lives, but Natural Gas is still neither here nor there, but that is improving and should continue to stablize prices themselves - natural gas needs more infrastructure buildout so that when we make energy decisions, its available.

One conintinet that has a better natural gas infrastructure is Latin America, and most notably Brazils healthy appetite for natural gas as an alternative to oil. Due to the abundance of natural gas in the valleys and hills of Brazil, Argentina, Bolivia, etc., Latin America has diversified its energy habits to include natural gas and the infrastructure buildout is more advanced. There are many natural gas piplelines that exist and many that are in construction, with Bolivia being the most notable new entry into the natural gas pipeline game in Latin America.

From the technical standpoint on UNG, one would want to evaluate their timeframe. The IPO gives it less history from which to draw from. You should look at Natural Gas resistance and support levels to coordinate buy and sell signals on the UNG. Natural Gas has had trouble with the 13-15 area - it has encountered turbulence entering a new price level. It could be becuase natural gas is a consumer adoption choice vs oil which is a consumer oriented need - we use more oil in our daily lives than natural gas. If we continue to see increased adoption and further penetration into oils consumer market share, then prices should break above that ever elusive 13-15 area. Until then, expect more volatility.

UNG

1m-3m: prices could see 50 but that is also resistance.

3m-6m: prices could see the a breaking of the 50 mark and enter new trading range.

1y+: prices could see natural gas moving towards highs.

EWJ - Going Long Japan.

2008-07-22T12:44:00.007-04:00

ISHARE MSCI JAPAN IN(NYSEArca: EWJ) - BUY

TimeFrame - Long Term(1-3yrs)

Low Risk and Low Beta

1st Target: < 6months - $13.50
2nd Target: 6 -15 months - $15

3rd Target: 1-3yrs - $19

The EWJ is showing a recent consolidation pattern that may be nearing an end. There are 2 charts: a daily and a weekly. The weekly trendline is being tested in the first chart. The 2nd chart shows a shorter time frame which suggests more volatility ahead but with MACD's testing the low again, the RED AROON extended on the corrective side of things, and the recent stochastic jump, we are seeing positive technical developments that suggests that EWJ is continuing to carve out a bottom. We do need to see volume confirm this, so watch for this in the coming weeks.

Breakdown target would be 10.50.

UNG - Throwback finds support.

2008-07-18T09:46:00.006-04:00

UNG: Accumulate.

The first chart is a revised version of the ETF: UNG. The second chart is the first analysis that was formulated, and shows the beginning of the technical term "throwback". It looks as though it penetrated below the first support I had drawn and hit the 2nd support line - also its 200 EMA. UNG will likely bounce/consolidate for the rest of summer/year.

Look for the commodity complex for some of the best day trading setups going as the volatility has now increased on this correction. Play the patterns, which there tend to be many triangles in the commodity world, but technical analysis has to be malleable in some form, so when you're looking for one thing, it's always another. This correction is better for the overall long term pricing of commodities and will create the base from which prices will go higher. UNG is now in accumulation.

Why the NASDAQ stands on firmer ground!

2008-07-11T08:17:00.008-04:00

Long-Term Trend Analysis

NASDAQ vs. DJIA

Timeframe (1-3 years) NASDAQ outperforms.

The Nasdaq has held onto the march lows so far while the DJIA has broken through its support. What are the charts saying? It says the NASDAQ is still the top of the competition in the global world, while the DJIA may just be losing its competitve edge all together. After the NASDAQ's high flying bust from 5,048.62 in the year 2000, the Nasdaq, now 8 years later, is only sitting at 2257, which is a good 50% away from its peak. As our banking system, our consumer, our auto giants, and many other moving economic parts settle into the new paradigm of globalization, the DJIA will have a tougher time because it has lost its competitive edge as the "father" of world markets, and now is heading towards the "grandfather" of world markets, while the technology heavy NASDAQ is still the blueprint for modernizing economies and is passing the test here.

As we look at what the chart and this recent breakdown of the DJIA vs the NASDAQ holding onto its support, the NASDAQ could now be the one to lead. It's proven that it does not want to go below the March lows, so far, while the DJIA has already penetrated through these levels. Thats why the Nasdaq will outperform relative to the DJIA going forward. This also holds well to the SOXX - PHLX SEMICONDUCTOR SECTOR INDEX theory I posted about earlier in the year.

http://polluxtechnicals.blogspot.com/2008/05/other-commodity.html

FCX vs. CHK - Breakout Backtesting.

2008-07-10T11:35:00.006-04:00

CHESAPEAKE ENERGY CP(NYSE: CHK)

FREEPORT MCMORAN B(NYSE: FCX)

Above is a chart of CHK at the beginning of the 08 and after an almost 2 year consolidation. If we look we can see that the "headfake" or sometimes known as"search and destroy" techniques, took affect on CHK before it's rocketing breakout move.

The first chart shows what it looked like and the 2nd chart shows where CHK went after the headfake and breakout.

I am looking at FCX in the same respect here, as of today. Sure, we could break down and I would put a sell-stop at 98.50 for that, but we could also be seeing the same thing that happened to CHK in the beginning of the year happen with FCX.

CHK made a move back to the 200 EMA at tested the main trendline and as you can see by the 2nd chart, and FCX is doing nearly the same thing. This also means the degree of the trend angle could be shifting higher, meaning the trendline is steepening.

VIX - 1st Resistance - Quad Strategy Holding.

2008-07-08T15:02:00.005-04:00

Market bounce is more probable as the VIX and DJIA will show - not too mention we have oil prices falling.

This is the first resistance for VIX. We could fall off resistance and market bounces aggressively, or we still penetrate through to the dotted blue line. Either way we are entering convergence of DJIA and VIX - look at the 1/2 Quad Strategy and the VIX resistance.

FCX testing trendline.

2008-07-08T11:27:00.003-04:00

FCX Freeport-McMoRan Copper & Gold Inc. is testing a intermediate trendline. If we get a "hammer" candlestick on 20 million+ volume then we go higher, if not we have to respect the sell-stop at 98.50..

List of Candlestick Patterns.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:candlestick_pattern_dictionary

NOTE: A trendline is only a trendline if it can touch 3 different points of reference. Two pointed trendlines are in fact not trendlines.

Coal Stocks - Take the Money and Run - MEE, ACI, CNX.

2008-07-07T15:38:00.004-04:00

MASSEY ENERGY CO(NYSE: MEE)

ARCH COAL INC(NYSE: ACI)

CONS ENERGY INC(NYSE: CNX)

Original Analysis Below.

http://polluxtechnicals.blogspot.com/2008/06/coal-stocks-aci-mee-cnx-short-term.html

Profits of 12-15% + have been achieved since I posted to short these coal stocks. At these levels it is prudent to take the postion off. If you still feel they have more downside, then only stay short 25% of the original postion and cover the rest if you get a 5%+ more downside.

Overall the short swing worked and you have to respect it, take it, and now watch for the buy signals, or something different to emerge from them.

FCEL and BLDP - Play of the Month.

2008-07-07T09:21:00.006-04:00

BUY:

FUELCELL ENERGY IN(NasdaqGM: FCEL)

BALLARD POWER SYS(NasdaqGM: BLDP)

Time Frame (3-5 month swing - with profit strategies during this period - stay tuned)

Ballard Power is a weekly technical chart that has come to an inflexion point. This looks the best of the two and shows more symmetry than Fuelcell, which looks as if it trades in more of channel. Also, these are election plays and one of the best sources for the world wide bus market, next to natural gas, but as nat. gas gets more expensive, these type of systems look more attractive for domestic budget issues.

1/2 QUAD STRATEGY - Last buy triggered.

2008-07-01T09:37:00.004-04:00

The 3rd and last entry point for the 1/2 QUAD strategy would be completed at these levels. The market should bounce as the probabilities are increasing here, but anythings possible.

SLV- BUY. Silver follows Golds lead.

2008-07-01T09:20:00.007-04:00

All of this commodity boom is based on shrinkage of Amercian Wealth! What's in your wallet? Bank paper, which is paper backed up by more paper, or something that will never erode like a clunk of silver? For all of the bankers out there, this is the phsycology that is keeping price higher and will continue until we stop the evaporation of Amercian wealth.

GDX- Gold Miners Go Higher.

2008-06-30T10:43:00.005-04:00

Junior/Small/Micro caps to outperform Large Cap Gold Stocks.

The market will now discount junior/small/micro caps based on reserves and timeframe to get those reserves - this is partly because if the large caps want to keep up with growth rates, they must start to buy juniors/small/micro cap miners. They have the cash, they just have to do the research and find out which stocks can give them the most octane for their buck.

IVN, CDE, SIL.

P/E (Ratio)

AGNICO EAGLE MINES [AEM] 71.53
ELDORADO GOLD CORP [EGO] 67.70
GOLDCORP INC [GG] 58.31
ROYAL GOLD INC [RGLD] 47.05
COMPANIA MIN BUEN [BVN] 47.00
YAMANA GOLD INC [AUY] 44.42
KINROSS GOLD CP [KGC] 42.09
BARRICK GOLD CP [ABX] 22.16
GOLD FIELDS LTD ADS [GFI] 17.18
NORTHGATE MINERALS L [NXG]

DRDGOLD LIMITED ADS [DROOY] 2.98
APOLLO GOLD CORP CDA [AGT] 7.29
RICHMONT MINES [RIC] 10.69
NORTHGATE MINERALS L [NXG] 14.14
GOLD FIELDS LTD ADS [GFI] 17.18
COMPANIA MIN BUEN [BVN] 47.00
ROYAL GOLD INC [RGLD] 47.05

MU - Intraday - Buy Signals

2008-06-27T11:06:00.005-04:00

Earlier in the month I said that semiconductors would go into consolidation and one should accumulate. The chart I posted showed the area in which to accumulate, and the price has recently descended beyond the price targets but is at a support line. The intraday charts is oversold and a bounce is due. Pollux Technicals strongly believes this is an area in which to buy MU.

HSI - HANG SENG revisited.

2008-06-26T21:22:00.003-04:00

Let's see if overseas markets can save US markets. Hang Seng(HSI) is consolidating and a possible head and shoulders bottoming pattern could be emerging. If we get a breakdown, look for it to head to the breakdown target where support exists.

DJIA - Entry Points

2008-06-26T15:08:00.002-04:00

The 1/3 QUAD strategy would be completed as of today. This would be the 3rd point in which you would re-enter the market.

The 1/2 QUAD strategy is hitting its 2nd entry point today. This is where you would re-enter with capital knowing that you could possibly have a third point of entry soon again.

Look at the indicators - MACD's testing lows soon. RSI is hitting bottom. Fast Stochastic has been dragging for awhile. A bounce is highly-probable.

C - Sell-Stop Warning!

2008-06-26T10:35:00.000-04:00

We have to respect that the technicals could deteriorate further giving us a sell-stop warning. Volume is large and if the bounce doesn't occur then more downside risk is ahead. Look at the MACD's which could easily turn down and test that November -3 level.

Recommendation - Sell 1/2 the position and if it breaks down below 17.50 sell the other half and move on for now.

UNG - Throwback in process.

2008-06-26T10:02:00.000-04:00

A throwback is occuring. Use this as an opportunity to scoop up cheap stock. Green box is accumulation area.

THROWBACK - A price move back toward the entry level of a security that has broken beyond the barrier of a price pattern or trendline. The retreat toward the level of the breakout is not uncommon and is used by many traders to confirm the validity of the new momentum.

AUY - Triangle Breakout - BUY

2008-06-26T09:50:00.002-04:00

Look at the technicals - they are shifting. Gap open today. Momentum is up and fast.

FCX and PCU

2008-06-25T21:06:00.002-04:00

Positive Technicals for PCU and FCX. Watch for volume to increase for confirmation of more upside trending. Watch copper prices trying to break out of its consolidation for more ammunition to get bigger and longer.

Coal Stocks - MEE, CNX, ACI - Short-Term Negative

2008-06-25T08:20:00.000-04:00

Coal Stocks - Short -Term Negative.

Time frame 4-8 weeks, although we saw some of that action occur today, so the time fram may actually be shorter.

Coal stocks have had great runs, and I don't believe the commodity top has burst yet - not by a long shot - but at this point we need the technicals to take a breather and that means corrections are sometimes in order.

I added three charts on MEE, CNX, ACI, and notations of some negatives which would make the case for a short sell. The most bearish going from top to bottom. Pollux Technicals believes this is just a correction that needs to occur in order to support longer term prices. The technicals are looking overbought, but it's waiting for the correction to occur that will be the bigger challenge. These are by no means the long-researched, balance sheet dug type of all out short, but rather a move back to neutral that can be exploited.

Take the profits when they hit - anywhere between 7-10% corrections should be strategically removed - meaning take 2/3 off at the 7-10% correction and another 1/3 off if it hits 10-12% correction.

Stop-Loss Targets:

ACI 77.10

MEE 96.10

CNX 121.10

SIL - Strong Buy

2008-06-23T16:00:00.003-04:00

Parallel World.

I would short the first chart and buy the second chart, but the reality is that they are the same chart just flipped - this was done in photoshop. This gives you a context of what it would look like if the price was going the other way.

3 Technicals for the 2nd chart:

RSI hitting bottom and deeply penetrated.
AROON about to shift.
MACD's hitting bottom - which has been a good indicator for a bounce.

BOLLINGER BANDS are showing the stock is oversold and a move back to "normal" 6.44 is due - its the neutrality of the technical mechanism. Also, look how far we have strayed from the Moving Averages. If we live in a parallel universe, and SIL was rising this fast, a short trade would be in order. The prices can not move that far away from MA's - in a normal scenario. The green box is the price target.

Developed by John Bollinger, Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period time. The indicator consists of three bands designed to encompass the majority of a security's price action.
A simple moving average in the middle
An upper band (SMA plus 2 standard deviations)
A lower band (SMA minus 2 standard deviations)
Standard deviation is a statistical unit of measure that provides a good assessment of a price plot's volatility. Using the standard deviation ensures that the bands will react quickly to price movements and reflect periods of high and low volatility. Sharp price increases (or decreases), and hence volatility, will lead to a widening of the bands.

Bollinger Band Targets.

1st target $6.44

Second target $8.33

Copper - Strong Buy

2008-06-22T22:26:00.000-04:00

I've been updating charts on copper for some time now - we had an attempt to breakout on copper prices at the beginning of the year, but we quickly sold off from that level, even as copper inventories stayed low. With the recent activity and technical changes, Copper could be once again attempting at the resistance line.

The two charts are different time frames. The longer time frame shows that we could still have prices falling to 325-350 area, but with the technical landscape changing, it is looking less and less likely. The recent action suggests buying from overseas again as the emerging economies are holding up better than the US. As long as Copper inventories stay as low as the charts show, that means, according to Econ 101, that the supply/demand picture supports higher prices.

**Notice the ADX indicator on the shorter time frame which has recently hit bottom - this has shown great buy signals in the past.

I would put a plan into place to go long copper equities, and even start accumulating large portions of the junior miners because their reserves will now start to be noticed by the large caps, even if they are not mining those reserves. The large caps will start to use their cash by gobbling up the juniors and turn those reserves in revenue. We'll look for some juniors this week and post an analysis on a couple.

COW - Livestock Total Return - BUY.

2008-06-22T19:47:00.000-04:00

Wouldn't you know it - meat prices are rising.

http://biz.yahoo.com/ap/080622/midwest_flooding_food_prices.html

COW - yes, that's right - is trending higher and everyone wants a piece of it. Volume is increasing substantially here and it has carved itself out since the IPO price. I would look for first resistance at 47 and then the breakout point at 50. The only indicator I'm really looking at here is the MACD's(Moving Average Convergence/Divergence), a stocks momentum, which has shown some positive divergence as is seen with the peeling away of the indicator(Bullish Crossover).

This analysis is truly only a momentum play - a special situation if you will. IPO's have no track record so it can be a dangerous play because if we believe in Technical Analysis - which is the reading of the overall condition of the stocks past performance relative to the future performance, well IPO's don't have any history from which to track. During "mania's" IPO's are nothing more than momentum plays - pure and simple - yes, occasionally you get a GOOG, but for the most part these stocks are meant for short term traders so, buyers beware.

KKD - The move that was.

2008-06-20T12:12:00.000-04:00

I first posted about Krispy Kreme KKD on my stockharts page in January and said that this was one to accumulate- there were even times you could accumulate KKD for under $3 dollars.

I recently posted a buy recommendation for KKD on June 10th and since then it has run 65% to a recent high of 5.60. The Tehcnicals were there and the propabilities were also - the MA's were crossing, teh resistance line was being breached, the RSI bounced on 50 and the Money Flows were extremely in favor of demand for the stock.

I will recommend selling 2/3 of KKD here and letting go of the last 1/3 if prices move towards the resistance line, possibly even pulling a Doji Star into the resistance area. Overall the technicals spoke - the market listened - or was it vice versus? I'll let you decide.

DRAM pricing turns down - Semis go into consolidation.

2008-06-20T10:26:00.001-04:00

Inter-Market analysis says that semi's are in consolidation for summer. Front end of pricing has turned down as the link below will show. Pollux Technicals believes this is only a short-term stance as the consolidation of competition continues and the over-built supply/demand issues continue to play out. Long Term (3-5yrs) the semiconductor industry remains an overweight.

http://www.dramexchange.com/watch/price_index_main_new.asp

VIX at resistance - Markets likely to bounce.

2008-06-19T14:41:00.000-04:00

In May I did a piece on the VIX vs DJIA which has played out quite nicely. If we look back we can see that the VIX bounced on support of 17.5 and the DJIA hit resticance area at the same time - a good calculated place to change portfolio stance. We put a strategic plan in place to accumulate cheap stock according to the QUAD strategies that Pollux Technicals created in its earlier post.

According to the charts, we can see something is happening again with VIX at resistance while the Dow Jones Industrial average is at 1st support of the 1/2 QUAD strategy. This is the first point where one would buy stocks according to the 1/2 QUAD(more bearish). According to the 1/3 QUAD(more bullish) it would be the 2nd point where one would buy stock. All in all, a market bounce is likely here according to the VIX which has been a good indicator for this meandering market correction.

Platinum

2008-06-19T09:57:00.000-04:00

Platinum has broken out of its channel range and possibly going into what Goldman Sachs would term a "super cycle". Look for the metal to continue to outperform its peers, especially due to the supply concerns again.

There is recent article on the affects of Platinum price and US auto sales that I believe again misrepresents the dynamic forces moving prices.

http://www.bloomberg.com/apps/news?pid=20601012&sid=abzKqd6jaEBA&refer=commodities

The fact is that auto sales and growth aren't in the US. The growth continues to come from emerging markets, although it will come in the smaller, lower margined car markets, thus creating the demand for platinum, and all other commodites, no matter what the US is doing with it's auto, or any other purchasing in general. When these shifts change the first conclusion is most often the wrong conclusion, so with people focusing on the muddled US economy when looking at commodity pricing - most likely they are not seeing the true landscape, especially with what has happened to OIL despite the slow US economy. The rise of commodity prices is a byproduct of worldly demand-pull inflation, thereby creating rising prices for the US economy while were in the midst of major changes to our financial system. This also leads to stagflation as the credit woes deteriorate our wealth factors - but were not going to try and become economists, were just going to analyze the charts.

SWC - Stillwater mining will be a major beneficiary of any swings in price and with the last run at the beginning of the year, and after a consolidation, SWC has triggered a buy signal.

Palladium

2008-06-19T09:28:00.000-04:00

Palladium has consolidated since its run to 600 on supply concerns out of South Africa - a pennant is now forming which shows a near term run to 600 is evident. As production continues to decrease, the price will continue to increase. Palladium has many uses, but the main use is in catalytic converters which are an environmental necessity on all cars in the US, and again as the demand continues to come from overseas, and as emerging economies modernize, envrionmental standards will change and be another catalyst for continued demand. The supply/demand picture favors higher prices and the technicals back this thesis up.

Citigroup - 3 ways to play

2008-06-13T10:40:00.000-04:00

Three ways to play Citigroup from a technical standpoint:

Scalp trade: sell at the dotted line - buy again when it corrects - but you have to be extremely fast.

Swing Trade: sell at the the solid line - wait for pull back to the dotted line and buy again.

Long Term Trade: take the 5% dividend and believe that C will trade in the 30's at the end of 09.

Citigroup's technicals are showing signs of improving. The RSI is near the bottom range, although we have not seen it cross below 30 to create a colorful and more convincing penetration: this is why you would start averaging into it here to be sure you are in the game, but your not the only one on the court.

Also, the Money Flow has started to show positive divergence and the volume is increasing here on the right side of the potential double bottom.

The MACD's have been carving itself out below the neutral line with a postive bias since the October plunge, with a penetration recently to +1, and now a retracement to -1. Remember, that right there is parallel divergence - a run back to 0 should be in order.

Sell stop at 17.5 to enable risk management.

As sweet as Krispy Kreme.

2008-06-10T13:10:00.001-04:00

As the restructuring continues, the technicals improve.LT Bottom could be in place.

Micron - MU - Accumulate.

2008-06-10T12:47:00.001-04:00

Technicals:

-AROON popped showing the correction is now here and accumulation is evident.
-MA's are showing the support/resistance zones.
-Double Bottom
-MACD's testing neutral

Micron has pulled back after double bottoming and running from 5.5 to almost 9 dollars. This recent retracement will take some time, but this is where one should be accumulating. Semiconductors will lead the technology recovery(see blog post "The Other Commodity"). I also have included the DRAM pricing with MU because the semi's are nothing more than a commodity, but rather than it be a commodity of nature, it's a commodity of "humanity" - meaning it's a byproduct of our human intelligence and the initialization into the technological world we will continue to advance into. DRAM prices are stable, and are slightly trending higher.

http://www.dramexchange.com/watch/price_index_main_new.asp

The correlation between stock price and commodity price is real, so watch for this correlated relationship, but MU is for sure a continued accumulation as Pollux Technicals believes the next great bull is in Semiconductors.

Trading Dryships - BUY

2008-06-10T09:59:00.000-04:00

Things to consider unrelated to Technical Analysis:

- Shipping Rates

- Merchant Shipping Capacity

- Dow Theory(transports) - Shipping is the global equivalent.

This one is a beautiful looking chart that has many great technicals that are easy to identify. We recently bought DRYS at 60 - near the end of the triangle in the first chart - and sold it incrementally on its way to 110. Sold 1/3 at 85, 1/3 at 95 and the last1/3 at 110. As it drifted to 115 and near the resistance from the peak of October, we went short because of the technical divergences and have now covered all short positions.

Now DRYS is pulling a great technical shift again. Let's look at the MACD's on the 2nd chart near the neutral line, in which will test if the trend can continue upwards. The AROON recenly popped negative which sometimes indicates a lagging market, or another words, the selling is now nearing an end. The entry point is where the technicals could shift, and also look at the MA's which is where major support exists.

We will place a sell-stop at around 68 which is well below where the stock is now, but this is the risk management portion of what a good trader will always keep in mind. At these levels, DRYS is a buy.

UNG - Breakout

2008-06-03T10:45:00.000-04:00

Technical Breakout! - We need confirmation on volume and a move towards the 60, but the UNG does look poised for upward trending. Natural Gas seems to be less lofty than oil and makes for a good alternative that can really eat away at Oils market share.

Strategy for Summer - Hang Seng Theory.

2008-05-30T09:43:00.000-04:00

ANALYSIS: Accumulate Chinese Stocks

When picking stocks over the course of the next couple of weeks, and being the technical trader, one needs to look for patterns that have symmetry, similarities, smooth EMA's, etc. The Hang Seng chart above shows a very symmetrical correction, but before we look at chart technicals, let's first look at the common threads of the global hiccup from a correlated numbers perspective.

Correction started in March of 07 with that 10% overnight Asian selloff that quickly hit all markets worlwide.
Markets recover and resume higher.
The US markets finally starting to roll over in August of 07 - Asian markets keep going higher.
Blowoff tops into November 07
Bottoming action March of 08.
Almost 16-18 month corrective pattern, counting the March 07 selloffs as the precursor.

Knowing that the market discounts 6-9months ahead, the 18 month timeframe - which will be this august - would give a nice symmetrical number in addition to the nice symmetrical patter. Lets look at these numbers

-6 months (march07 - aug07) - timeframe from first selloff until US markets rolled over.

-12months (march 07 - march 08) - when US and Hang Seng bottomed

- 18months(march07 - aug08) - this August will be 18 months - which would be 2-3 different discounting periods for the market based on the premise that the market discounts 6-9 months out.

This August, the market will be discounting the 24m-30m timeframes from beginning of correction. I believe there will be an attempt at new territory which puts the market(DJIA, NASDAQ, S&P) moving towards old highs this winter - the 24m discounting period which will start in late August.

What's the importance of this? Well, Technical Analysis is looking at patterns, not only in charts, but in general. Is it coincidence that the numbers look like that(although the august test is yet to be determined) but this is how one should think when it comes to being more of a swing trader, than a long-term investor(although TA can pick some nice LT bottoms also).

Let's also not forget that China started all of this and their markets have corrected the most due to the rise of domestic inflation which has pounded their domestic economy and parts of their exports. This is all good because this is the pangea of economic integration and while the markets are down the most, they also have been consolidating for that 18months, which is numerically related to the lucky number 8 in Chinese philosophy. So, if we are in 2008 and its been 18months, and August is also the 8th month of the year, well then, I'm betting Asian markets, specifically the Hang Seng, will start to outperform world markets again, especially if we get oil pulling back, which seems more likely everyday.

****Look at QUAD strategies in playing the Dow Jones Industrial Average for the summer. Posted below.

Sell in May - VIX and DJIA = QUAD strategies.

2008-05-21T07:31:00.000-04:00

VIX at support. DJIA is at resistance.

We should have a meandering market for remaining of summer. Above is the VIX vs. DJIA. The DJIA had a great run since mid march and this is normal. Whether we attempt at old lows or not is not the question, but rather creating a strategy as stocks get cheap to put any cash to work is what one should be looking at. Play a 1/3 Quad Strategy - start purchasing stocks at different price levels within the range channel - you could even play a 1/2 Quad Strategy - with a negative 1/3 backup. Look at charts for details.

QUAD Strategy... the channel quadrant is now divided by 1/3(the green lines) which represent entry points....the blue lines represents the 1/2 strategy which would delay buying until the 1200 area or half of the first quadrant. And then we would put a negative 1/2 quadrant entry point below to give us some insurance(blue lines)...That would give us 2 strategies to get back into markets. QUAD 1/3 is more bullish toned than more bearish 1/2 QUAD.

Look for August at an attempt to breakout out of the corrective market pattern. As oil stays lofty, only time can create the perception that 3.50 is now cheap gas, so as oil hovers here, the market will not go anywhere. A pullback in oil will give the markets a reason to cheer, until then, its a bumpy ride.

All that glitters...

2008-05-20T12:37:00.000-04:00

The GLD looks like it's correction may be coming to an end. Look for volatility, but also an attempt at old highs of 100 area - towards second half of year.

FCX Breakout - Revisited - BUY

2008-05-15T11:17:00.000-04:00

Look at the first chart and commentary of FCX from a previous blog analysis and then to the current chart analysis below it. The pullback of the 110 area was succesful and now the trend is forming a small upward trending channel. Look for 20+ million days to confirm this breakout.

VIX at support

2008-05-14T15:52:00.000-04:00

The VIX is hitting a major support here which suggests that the market has some more downside again. Remember, VIX is good for traders, and also good for small money to piggy back the moves - basically hitch a ride with the big guys, make your trades, and get out - We'll see, but volatility may be moving back into market. What happened to sell in May and go away? - it may be here.

Parallel Pairs (Medium - High Risk)

2008-05-13T19:11:00.000-04:00

Pairs Trade:

Long - AMR
Short - USO

For all those who are looking for some strategic plays. Some would say you could go long both and give yourself protection, but that would limit the profits, but would also reduce risk.

Note: On the USO, I would only play it for the correction, and then take that part of the trade off and let the AMR run.

China Life - LFC - BUY

2008-05-12T18:19:00.000-04:00

Very symmetrical pattern with recent volume spikes that give it a well-rounded supporting bottom. Look at the last correction - if the pattern diverges away from that, then set a buy order at 53-54 to see if a shake out occurs, but also set a sell stop position at 49 in case the stock breaks down.

3 Positive Technicals

- Money Flows

- MACD's have broken through neutral.

- Symmetrical Pattern

The Other Commodity

2008-05-02T16:07:00.000-04:00

I'll start this off by asking which commodity forgot to partake in this global boom over the last several years? Zinc? Molybdenum? Rice? - nope, that one even roared. It's semiconductors, chips, and with the dismal action since the bubble bust of 2000, a baby bull may have just been born. The $sox chart may be signaling the beginning of a major semiconductor bull that could have us reaching for the old 2000 highs, and could last for several years to come.

There are many reasons that suggest that the tides are shifting, and why the semi's bull rise may be competitive to the type of returns the commodity landscape has delivered over the last couple of years. Sure, there are many fundamental reasons to stay away from semiconductors - inventories, pricing, competition, etc, - and anyone can blurt them out, but the charts may be telling us that we have seen the worst.

Semicondoctors are the commodity of technology and lead in technolgy cycles, but during this bull market of the "commmodities" - that started after the technology bust - semiconductors have been out of favor. Why? Now people want to build things - structures, airports, roads, buildings, planes, industrial plants, etc. - things that require earth moving type of forces. We have infrastructure buildout in every crevis of this tiny world of ours today and we need space for people to live, work, eat and sleep, and this is one of the main contributors to the commmodities rise - growth, demand, inflation, expanding universe, whatever you want to call it, it has been real and ferocious. Global growth has produced mass laborous movements that require many tons and tons of raw materials, and every commodity is in need, but nowhere has there been talk of the semicondoctor industy - the chips are, essentially, dead. Or are they?

Looking at the market from a technical standpoint, I want to first take notice that during this infrastructure buildout using commodites, the SOX index has gone from its lofty 1300 levels of the 'good ole technology days of 2000', to just shy of 400 as of today(350 just a month ago). During this time frame, the world has seen growth rates soar, markets roar, and not one second was it a bore, unless you were investing in the semiconductor industry and it's overbuilt, 0ver-marginalized issues.

Yes, that's the reality of the past, but markets discount forward. We can already see DRAM prices have already started to level and are begining to move higher.

http://www.dramexchange.com/watch/price_index_main_new.asp

That gets rid of the pricing issue. (And to note on pricing, I would say the US manufacturers have a global advantage because of the dollar- hence, QIMONDA). And if we look at the competitive landscape today, the pace of partnerships has increased, the talks of mergers and acquisitions have begun, and with some manufacturers on the verge of bankruptcy, this suggests the competion may start to consolidate.

Let's get back to that commodity boom that built skyscrapers higher and faster than ever before -DUBAI. You can span the globe to find cities emerging from the earth's crust. Now that the buildings and cities have been built and the middle class economy emerges, they are going to need technology. The middle class is going to buy hundreds of products in their lifetime that will have these out of favor chips in them. And if they don't already use a chip at least 50 times during the day, they soon will. We have built out the massive structures, but now we have to modernize the classes, and that requires lots and lots of chips, lots and lots of technological gadgets to advance our daily habits. The city has been built - let the countryside migrate and let them have chips! The next commodity has been found.

Semi plays -

Micron(MU) Advanced Micro Devices (AMD) Sandisk (SNDK) ASM International (ASMI) Kulicke and Soffa Industries (KLIC)

FCX BREAKOUT

2008-04-22T10:53:00.000-04:00

We need large volume to emerge if breakout is to happen but overall strong technicals. If breakout fails, we have support at 110. First upside target is 140.

Copper Inventories

2008-04-20T14:19:00.000-04:00

Copper inventories have declined. Look at the rise from Aug to Jan - about the time of the global hiccup. Inventories back at levels where strong demand fundamentals are driving price - (demand pull inflation)....http://en.wikipedia.org/wiki/Demand_pull_inflation.

Oil keeps the world moving.

Steel keeps the world standing.

Copper keeps the worlds water flowing.

VIX vs. DJIA

2008-04-18T14:49:00.000-04:00

Looking at the VIX(measuring volatility) vs. DJIA, we can see the volatility has broken down and the buying in the DJIA is for real - Look at the volume down here. Look for markets to cool off for a couple of days now - look at the resistance, and coincidently, the Fed meeting soon.

To begin...

2008-04-16T18:20:00.000-04:00

Pollux Technicals will be nothing more than an attempt to understand the thoughts, ideas, and strategies that shape the trading in todays global markets. Using Technical Analysis, accompanied with -

:thoughts
:charts
:commentary
:pragmatism
:weird diatribes
:randomness
:attempts and fails
:ideas
:patterns
:more patterns

etc.

-this blog will attempt to make sense of the ever so complicated seas of globalization.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2591733

Above is a link to Pollux Technicals. Good (calculated) Luck!