Monday, September 18, 2006

Oil and Gold turn to Rubber

Just a quick intraday post.

Oil and gold are having a pretty big up day, which is no surprise considering how badly they've been pummelled in recent weeks.

Oil - more precisely, OIH, which I consider a proxy for the major oil services stocks - is doing a textbook retracement to its neckline. The bolder among us may want to short aggressively here. This is a gorgeous head and shoulders pattern. It's always scary shorting at a time like this, naturally, because there's a lot of strength. But retracements to necklines often represent the lowest-risk time to go short, since you've got a crystal-clear stop loss level in case you're wrong.


Gold ($XAU) is murkier. It was forming a head and shoulders pattern, but it didn't get back down to its neckline. In addition, the price has pushed its way to a major Fibonacci retracement level, which implied the selling was over for now. So I'm steering clear at this point.


At the moment, the stock indexes are showing a skosh of weakness in spite of earlier strength. Let's hope it continues until the close!

6 comments:

Anonymous said...

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Denver

wagsaly said...

Tim,

Thanks for the great blog! It is a rare mix of education and entertainment. I'm still a novice though and I have a question about OIH.

Do I set my stop at a close above the neckline (130) or do you trigger your stop if it hits 130 at any time?

J said...

ref: is it possible amarnath was long energy and short tech? that would explain the first half sept markets move......

Now that is out of the way, markets reverse?

smallswinger said...

My Small Cap Swing indicator moved to a LONG signal early on 9/12/06. It closed yesterday, Sept 18th , at +70, and if the prices at 2:30pm ET had prevailed at the close it would have switched to SHORT. Any down day at all on the 19th and it will officially switch SHORT.

This indicator was “triggered” SHORT on an intraday basis on Sept 18th. Only a strong up day would prevent the official switch to SHORT, now.

Here are the recent values of my Small Cap Swing Indicator:

. . . . . .Small
. . . . . . Cap . . . . . . . . .Russell
. . . . . .Swing . . . . . . . . .2000 . . . Cumulative
Date . . . Ind . .Signal . . % Chg . . . . % Chg

08/28 . . +05 . .LONG . . +1.1% . . . . +1.1%
08/29 . . +23 . .LONG . . +1.2% . . . . +2.3%
08/30 . . +39 . .LONG . . +0.8% . . . . +3.1%
08/31 . . +48 . .LONG . . +0.0% . . . . +3.1%
09/01 . . +52 . .LONG . . +0.1% . . . . +3.2%
09/05 . . +62 . .LONG . . +0.8% . . . . +4.0%
09/06 . . -19 . .SHORT. ..-2.1%. . . . . -2.1%
09/07 . . -43 . .SHORT. ..-0.8%. . . . . -2.9%
09/08 . . -61 . .SHORT. ..+0.3% . . . . -2.6%
09/11 . . -72 . .SHORT. ..-0.1%. . . . . -2.7%
09/12 . . +18 . .LONG . . +2.4% . . . . +2.4%
09/13 . . +41 . .LONG . . +0.8% . . . . +3.2%
09/14 . . +54 . .LONG . ..-0.4%. . . . . +2.8%
09/15 . . +65 . .LONG . . +0.2% . . . . +3.2%
09/18 . . +70 . .LONG . . +0.0% . . . . +3.2% (short triggered)

Normal LONG target: . . +65 to +75 (max: +95)
Normal SHORT target: . -65 to -75 (max: -107)

I remain 100% invested in SHORT positions as of Friday, the 18th.

Anonymous said...

another interesting day, most techs up 2-5%, AMD, NVDA and MRVL just to point out a few. Didnt get to trade today, still own a positing in QID as of Friday at $62.05-$62.07. Hoping to get rid of some shares around $64-$65. PPI and Federal Reserve meeting is what will keep this market volatile these next few days.

Trader 2006.

MT said...

Head and Shoulders.....one of the most overrated patterns of the 21st century. If you ever witness a failure of this pattern, step out of the way 'cause your gonna get your head(and shoulders) handed to you on a chopping block. The reason is because the pattern is so identifiable by every tom, dick and harry trader wanna-be that when it fails to follow through as stated in the textbooks, everyone rushes for the exit door at the same time. For more reading, Farley writes about this pattern failure in his book "The Master Swing Trader."
-MT