The Daily JDV Market Timer - September 2, 2010

 

Depression Beater Portfolio: - see below - No Update (This portfolio is just a sample of my own portfolio - no recommendation to others is implied or intended)

 

9/2/10 (Commentary for Thursday) A Large Divergent Decline in the Option Premium Ratio argues for a reversal down by Tuesday but taking out the 50% retracement of the August decline shows that this rally is stronger than any seen since May. Our opinion is that we will see the short-covering rally extend above SPX=1127 into mid-September. Gold continues to move higher in modest but persistent increments – gold stocks should give us the biggest bang for the buck. Gold should be bought on 3-wave corrections here. We DO NOT EXPECT A MARKET CRASH into the Sep/Oct time frame but a 10% decline into the 900s would be about right in the face of a weakening economy – but this may only come if we rally hard above 1100 to shake out the bears one last time. Our view is that the economy is “bumping along the bottom” with meager upside potential in the face of stiff winds from a slowing real estate sector and rising taxes from Obamacare but there should not be catastrophic downside either. The bond market rallied continued its correction – may have finished an EW a-b-c pattern – the next rally attempt will tell us where we are. The Dollar Index is due Weekly Reversal Timing next week – especially against the USD/Yen.

 

           

Stocks -  Closing above the 50% retracement of the August decline is bullish for the ES and argues that 1127 will be exceeded – however, a Divergent Decline in the Option Premium Ratio argues for a short-term top Friday or Tuesday.

Gold –  Gold resumed its steady, persistent advance – we could be in a 3^rd of a 3^rd rally leg that is building tension on the tape.The count for gold on the daily could be interpreted as a running correction that completed on 7/28 – very bullish.

Crude Oil - Crude oil roared back today with a vengeance this week – higher prices are possible into mid=September. Natural gas is starting to look interesting after another steep decline.

 Bonds - Bonds appear to have declined in an EW zig-zag on the hourly chart – should see a bounce tomorrow and may be telegraphing a short-term top in the stock market.

Dollar - The Dollar Index looks weak but Weekly Reversal Timing is due next week – should see the USD/Yen reverse back up.

 

TURNING POINT DAY 

 

Monday was 1-Day Reversal Timing for the SPX and it was CONFIRMED - a short-term top was made.

Depression Beater Portfolio: New Updates: (This portfolio is just a sample of my own portfolio - no recommendation to others is implied or intended Holdings:

1) Long 75 shares of SDS at an average price of 103.2249 on 11/18 - roughly 15% of portfolio.  (The SDS price was hit by a cash distribution today that I did not anticipate - $11.46 a share - sorry for the lack of warning here - ETFs like mutual funds have late in the year distributions that need to be avoided if possible if you're in a taxable account)

 

2) Long 200 shrs of CHK at $16.00 on 12/1.

    SOLD  200 shrs of CHK @ $20.82 on 4/16/09

 

3) Long 2000 shrs of SNG at $1.20 on 12/2.

 

4) Long 1000 shrs of DXO (2 X long crude oil ETF) at $2.84 on 12/10

    SOLD 1000 shrs of DXO at $2.97 on 4/17/09

 

5) Long 500 shrs of DRYS at $11.87  on 12/17

    SOLD  500 shrs at $5.62 on 4/16/09

 

6) Long 500 shrs of AUY at $5.89 on 12/17 

 

7) Long 1000 shrs of TCK at $4.50 on 12/19

SOLD 500 shrs at $8.77 on 4/16/09

SOLD 500 shrs at $8.30 on 4/21/09

 

8) Bought 100 shrs of TBT @ $37.50 on 12/31

SOLD   100 shrs of TBT @ $49.51 on 1/26/09

REPURCHASED 100 shrs of TBT @ $47.39 on 2/5/09

 

9) Bought 1000 shrs of NG @ $1.61 on 1/12/09

 

10) Bought 100 shrs of COP @ $49.01 on 1/16/09

 

11) Bought 200 shrs of AMSC @ $16.50 on 1/16/09

 SOLD 200 shrs of AMSC @ $20.36 on 4/17/09

 

12) Bought 2000 shrs of HL @ $1.80 on 2/6/09

 

13) Bought 1000 shrs of THM @ $2.08 on 2/9/09

 

14) Bought 1000 shrs of KBX @ $1.15 on 12/22/09

Working orders:

1) Buy 1000 shrs AAU @$0.95 GTC