Palladium

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

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.

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

Micron - MU - Accumulate.

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

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

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.

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.