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  • Long FAZ, Market Update

    We've been enjoying summer and hope you have too.

    As the market creeps slowly higher towards an inflection point we've had little interest and nothing to offer herein. Now we finally enter a new position.

    FAZ has broken a considerable downtrend, so we're going long without a stop level for the time being. This is an effective 3x levered short on the U.S. financial sector.

    (click to enlarge)

    We displayed the charts below in a post dated March 15 2014 titled History Repeats, Shorting Commodities.

    Based on these charts, we expected a turn lower in equities roughly two months later circa May of this year. It's now July and the DJIA is a mere 400 points higher, a gain that can easily be erased in 2-3 days. While the market has gone higher and past our target date, we'd say that if we're off by 2 months on a cycle that's roughly 4 years in duration that's a direct hit.

    All technical indicators we rely on have become more bearish from sentiment to momentum, so it seems an ideal time for equities to drop. Click the charts to view larger versions.

    (click to enlarge)

    (click to enlarge)

    At the time we wrote: "There hasn't been a two-month drop in the DJIA since late 2012, and in that case the 2nd month was barely lower. The last time there was a significant drop in two successive months was at the end of the 2007-2009 market plunge in February 2009. A significant two-month drop will probably happen again this year."

    We stick by that call emphatically.

    Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in FAZ over the next 72 hours.

    Tags: FAZ, FInancials, Banks, GS, BAC, BMO, TD, RBC, WFG
    Jul 30 3:25 AM | Link | Comment!
  • Crossed Lines - GLD (Gold), GS (Goldman Sachs), NASDAQ

    One measure we read recently had bullish sentiment at a 26-year high.

    It should be no surprise that this is likely marking a material top, especially to those who considered our posting dated March 15.

    The tech-heavy NASDAQ has been leading the charge lower, with yesterday's close putting it back in the red for the year so far, as some of the most darling and highly-speculative stocks have posted the biggest losses of late.

    (click to enlarge)

    Since early March NFLX (Netflix Inc.) is down 18%, GOOG (Google) down 8%, TSLA (Tesla Motors) down 18%.

    It's not just happening on the NASDAQ. Again since early March LNKD (LinkedIn Corp., when is the last time you heard that site mentioned?) down 13% (down 28% since September and at 9-month lows), FB (Facebook Inc.) down 16%, TWTR (Twitter Inc.) down 21% (down 40% since late December and back to the same level as its first day of trading), DDD (3-D Sys Corp.) down 26% (down 41% this year), VJET (Voxeljet AG) down 32% (down 63% from its November highs), XONE (Xone Co.) down 27% (down 50% from its January highs), etc. etc.

    Most ominously in our view, GS (Goldman Sachs Group Inc.) is again closing below its 200-day moving average. A little lower, and it'll be printing a new low for the year so far.

    (click to enlarge)

    Here's gold (NYSEARCA:GLD) in a one-year view:

    (click to enlarge)

    Here's gold (GLD) in a nine-year view:

    (click to enlarge)

    There's a better than even chance that gold's 9-year uptrend, which lasted basically its entire bull market, will be broken.

    Disclosure: I am long QID.

    Mar 27 6:42 AM | Link | Comment!
  • Current Strategy, Buying QID

    As noted previously, we have existing market shorts (primarily TZA and VXX) which are below our entries but will serve their purpose and likely offer profits once markets turn down in earnest. That time is overdue and, we believe, upon us or nearly so.

    In the meantime, despite showing losses on those hedge positions, thanks to many winners our portfolios are at all-time highs and in the case of stocks, including those paying dividends if applicable, that are far higher than our entries we're putting tight stops on at least a portion of holdings if not selling portions or entire positions outright. "It depends."

    Ideally, we sell enough to effectively make the remainder free of cost and we'll adopt an additional market short position.

    QID looks set to break its downtrend, as seen on the chart below, though we caution it has not yet done so.

    A close above $58 would seal the deal, and we'd be buyers at that point with a stop at $54.40 which is just below recent lows.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in QID over the next 72 hours.

    Mar 24 3:32 AM | Link | Comment!
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