KKD - The move that was.

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.

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.

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

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

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.

Sell in May - VIX and DJIA = QUAD strategies.

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...

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

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

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)

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

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

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

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

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

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...

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!