Weekend Strategy Review October 13, 2013 Weekend Comments
Posted by OMS at October 13th, 2013
I spent a few hours yesterday looking at both the Dean’s List and Member’s Watch List.
And while I saw numerous candidates that I’ll talk about below, there were two areas that stood out.
Right now, it’s not all that apparent in from the news media, but after looking at the charts, I believe two things are going higher: Crude oil and Bonds. Yes, Bonds! That means that if Bonds are going to move higher, interest rates are headed lower.
And anytime interest rates are moving lower, you must look at the Banks. In a declining interest rate environment, Banks tend to borrow lower and lend at high rates. This really helps their bottom line.
The two that banks caught my eye are SBNY and DB. Both have nice patterns and tight Bands. SBNY is showing increasing P-volume which makes it particularly interesting now.
But to really understand the Banks, you need to look at interest rates and Bonds. And right now, both TBT and TLT are on the Dean’s List
As you know, I have talked about Bonds before. Several months ago, I mentioned that Bonds could fall from the 146-147 level to 126. Well, they bottomed close to 130 and now appear to be rising. That means that interest rates are going lower, not higher! My target for Bonds on this run is near the 160 level, possibly higher. That’s because Bonds also appear to be in an Ending Diagonal pattern, and could be starting their final wave higher, wave E. This wave could take 2 years or more to develop, making Bonds a nice place to be.
Anyhow, right now both TMF and TLT are still in a downtrends. However, both ETFs have formed TLB Patterns, and have recently turned Green off this pattern. At the moment all of the PT indicators on TLT are positive. However TMF still needs the P-volume to turn. So there is an opportunity to get into these ‘Trades’ at a reasonable price once the indicators turn.
Right now there is a small 7 point ‘Stick on TMF that suggests a move to 53. At that level, it will start to encounter its 200 ma, and set it up for a ‘Rope Jump’. And if it ‘Jumps the Ropes’, it could start a significant Uptrend.
Now I know that there are a lot of “Ifs” in the above comments. But sometimes that’s what trading is all about. You need to take the information that is given to you and think about how it might all play out. And when I see something appear on my Lists, with a Pattern, with indicators almost ready to turn, I have to ask why. And my “why” is the possible target of 160+.
That’s why I find both Banks and Bonds very interesting now.
Crude oil and energy I have been talking a lot about energy stocks the past few months. The reason is because one of the patterns I look at on a Crude Oil chart has it going above 150, possible much higher in the next 2 years. Right now, with crude trading closer to 100 a barrel, and with plenty of crude available, I have to admit that I don’t have any idea what would push it to these lofty levels. But I don’t trade on things I don’t know. I make my decisions on things I do know, and the first is that all of the energy related ETFs, like OIH, XLE and PXJ, are back on the Dean’s List. I also know that IF crude were to start rising above 115 –120, it would put enormous pressure on the equity markets. And this is something I expect will happen (markets under pressure) as we move into 2014. So as long as the pattern on crude remains in place, I have to own at least 1 or 2 two energy stocks.
My favorite is Schlumberger, SLB. It’s been good to me during the past month. But I already own a ton of it. So IF I were to choose another energy stock, it would be Halliburton, HAL. The stock also has a nice HSw/Blade Pattern with tight bands, and appears to be breaking out. Check out the ‘Stick’ that has formed since late June, and you’ll understand why I’m interested in HAL.
Others that caught my eye this weekend are:
Apple, AAPL. It has a nice pattern with tight bands. It needs a DMI turn. Will become Interesting above 496 as it could start trending. On Friday, the 50 crossed above the 200 putting AAPL into an Uptrend. So watch the DMI.
China Pete and Chem, SMP. I talked about this stock last week. Has pattern, bands, and indicators. Could be ready to start uptrend.
Thermal Electron,TMO. Tight bands, needs P-vol to turn positive.
Southern Company, SO. Another possible Trade off a TLB pattern.
Hershey, HSY. Lots to like here. Pattern, bands, and indicators. Could be ready to trend higher
Moodys, MCO. Pattern, bands. Could enter trend mode in next few days
Signature Bank of New York, SBNY. Mentioned above. Nice pattern, great P-volume and tight bands
Lam Research, LRCX. Free Willy.
ArcellorMittel, MT. Could be ready to enter an Uptrend
Deutsche Bank, DB. Also mentioned above. Nice pattern with tight bands
Capitol One Financial, COF. Nice pattern, p-vol and tight bands
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