- Posted by Leigh Drogen
- on January 25th, 2010
Quick post tonight, but I want to comment on slew of different stuff that I’ve neglected to speak about.
We closed a penny away from VWAP on the $SPY today, no coincidence. Today was the epitome of wait and see, traders are playing some serious chicken. Don’t be the first to move, wait for the winner to appear and join the crowd. Bulls want to see a slow, methodical strong bid in the market over the next 3 days, not a quick run up that is going to be heavily shorted into. The longer we churn down here the move bears get trapped, the more fuel to push past the year’s highs and on to 1200 $SPX.
It appears that crude $CL_F has found a short term bottom. It’s still suspect as the oil market has been unable to hold a bid for more than a few minutes at a time. The US Dollar has a lot to do with this, we are on the door step of a huge breakout, everyone is in wait and see mode now. I think there is a playable bounce here in crude with a tight stop under today’s low. I want to see it climb back above a flat 5 day moving average, I won’t be able to take as much size, but I’ll feel more confident that the bid is back.
Gold $GC_F is in the area where you want to be accumulating it for a longer term position (3 to 6 months), as well are the gold miners. You’ve got to buy the materials on dips, chasing breakouts has only led to heartbreak. That said, if $GLD breaks 110.14 I’ll completely reverse my positions and get short gold, that kind of action could be signaling an end to the asset reflation scheme.
Copper $HG_F continues to hold the bid. It’s showing a very pretty bull flag on the daily chart and continues in its trend. The Chinese equity markets are struggling, but copper continues, a divergence for sure, I’m not quite sure what to make of it, something to ponder, keep an eye on it.
Grains continue to get destroyed, don’t touch em. I missed my short entry, I’m not happy about that. Sugar $SB_F continues to fly, pure momentum there. I don’t play the sugar futures, too illiquid, along with the $SGG. One way to play this is through $IPSU and $CZZ which both show nice momentum and patterns. You take equity risk by playing these names, but it does give you some exposure to the trend.
I’m short the long bond via $TBT. I hate to use double short products but I couldn’t get a borrow on $TLT and this looks like a trade too obvious not to take. My stop is above Friday’s high on $TLT, check the trading book for my exact entry and size.
Apple crushed their earnings, although iPod sales were lite. The tablet, slate, widget, or whatever the hell you want to call it is going to be a game changer, I have no doubt. That said, I feel that there may be some serious institutional selling in $AAPL this week as retail money pours into the name, giving the fund enough of a bid to distribute their stock. They’ve made a lot of coin in this name and I think some are itching to take a few dollars off the table. I’m long, but a little nervous. I want to see the stock get into clear air above 215 and I’ll stop sweating. If it goes it may not look back for a hundred points, I’m not kidding.
Have some patience with the materials if you stepped in last week, these aren’t day trades.
I’m off to hockey, second round of playoffs tonight.
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Leigh Drogen is the founder and chief investment officer of Surfview Capital, LLC, a New York based investment management firm employing an intermediate term long/short momentum strategy. More »
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