Monthly Archives: June 2009

BAM 897 MAGNET

The SPX tapped the BAM 897 magnet (today’s low is 896.95 so far) and, as I said this morning, the model shows them turning back up. 

I would expect one more “fakeout” followed by a sharp rally and that rally, assuming the market tracks the model, should carry us higher. 

At that point, the SPX should be well positioned to trigger the hourly model sell signal that is waiting overhead (this trigger is NOT based on price, it is based on my proprietary indicator and I’ll let you know when it triggers) and once that sell signal is triggered this should get very, very nasty. 

Remember, the buy signal set up is strictly temporary and simply implies a sharp intraday rally.  It does NOT change the bigger-picture bearish forecast for a mini-crash in the Nasdaq to the 1427 magnet. 

Day traders may want to use a tight trailing stop on your FUTS short and if stopped, flip to the long side on an upside break of SPX 900. 

Crude Oil Update: 

Last Friday we wrote… 

“The downside reversal I see coming in crude oil can only be described as a CRASH.  We’ll see where the chips fall but, as far as my work is concerned, this call is 100% unambiguous–CRUDE OIL SHOULD CRASH IMMEDIATELY.” 

Crude is already down 8% since we sent that email and although I believe this move is confirmation of what the model sees coming, it looks to me like we’ll see one last bounce into the 70 level before a further collapse. 

If you are not already long the DUG, (our bearish crude and bearish XOI idea) I think we’ll see a nice opportunity involved.  Look for a quick bounce in crude as well as the SPX and if that opportunity presents itself–we will exploit it.

Full report coming soon

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BAM 944.75 MAGNET

Stocks are tracking the model this morning with a nasty downside reversal off the 944.75 magnet and I’m hopeful that we’re finally on our way. 

The first real “tell” comes IF they can get back under the BAM 897 magnet because that would tell us that 944 has “officially” failed. 

Remember, the theme for this June decline is supposed to be “total discombobulation” of many various markets and, assuming that’s correct, the talking heads will most likley blame the problems on unexpected US dollar strength. 

Our theory is that the dollar weakness brought over-leveraged positions into the “reflation trade” and that this unexpected dollar strength will create an unwind just as vicious as the unwind of the carry trade in 2008.

Full report coming soon

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HOME BUILDER INDEX NOW BEARISH

OK, here’s my final attempt to figure out what the various BAM models are telling me about the anticipated market-related discombobulations of June.

-The HGX is the single most bearish stock index in my work short term (into 6-15 through 6-19) and has been for many weeks.  It’s ironic that housing led us off the cliff and here we are again with a very bearish HGX model.  It makes sense if the bond/TLT models are correct though.

-The BKX is the most bullish looking stock index in my work but, short term, it is also bearish looking (into 6-15 which, coincidentally, seems to track the major averages as well as HGX)

-Crude Oil is the most bearish looking commodity in my work (although commods in genral look to get slammed) (we’re out of our GLD and SLV longs)

-The EURO is the most bearish looking major currency against the dollar

Recap of Intra-market Relationships:

-US Gov. Bonds down hard w/ TLT target of 86 minimum and 70-75 possible as rates spike higher

-US dollar spiking higher is a very short term (June), short-lived set up but the violence of the move looks to be disruptive.  (Longer-term my USD Model remains bearish with 65 target into Q1 2010)

-Housing stocks crumbling with a break of the March lows

-Bank stock Index (BKX) weakness into mid June (6-15ish) followed by a potential melt-up leg blow-off move into an August TOP followed by a crash leg.

Full report coming soon

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