RossQ

PotashCorp: UBS Analyst Cautious Despite Record Quarter

Ah Have you seen the coal and steel and ag charts. Its already happening. Despite record profits the stocks have been sold in tremendous volume. There are lots of theories as to why, #1. Hedge funds do this rotation when a trade get too crowded. For example the banks and financials were so heavily shorted they started taking their money out of commodities and started pushing the short side on banks and financials, now they are pushing up the banks and homebuilders, this is a head fake. Thursday there was a big shift IMO, especially from 9:30 to 11am huge sector rotation, massive volume. Banks and Financials sold off and continued but with less vol on Friday. Commodities stabilized. See 5 day charts of KOL, SLX, MOO, UYM, XME etc and check out SRS, SKF, UYG. I am mostly short banks and long commod's and have an itchy trigger finger and my thinking can change with developments in the charts.

I am currently going and studying days where there was sector rotation so I can get a better tell. So far i have noticed there is an increase in price fluctuation, irratic stock behavior without news. and failure to make new highs on a stair step climb. In reverse I have noticed that stocks going down exhibit the inverse but simialr behavior, just turn the charts upside down.

Following this I got out of DUG as it failed twice at 38 to hold its 200dma (even on good volume), result Bullish on DIG (oil stocks). Oil services not so much yet.

Also the Financials ETF failed to take out its 50dma on two attemps on very good volume. Also SKF held its 200dma in the selloff and didnt need to retest. Result was that I added to my short financial list. Until I see something different in the charts I am not bullish on the Banks and Financials. Bullish oil stocks not OIL (USO), that chart sticks, bearish Nat Gas, scared to death but long KOL, MOO, UYM, SLX, GLD, SLV.