Materials were firmly rejected from that important long term level and have now spent the better part of three weeks regrouping.  We aren’t breaking through any time soon, but I believe based on this, and many of the daily charts, that you can buy this dip in materials with a close watch on the US Dollar.

The materials trade has not been one for the faint of heart.  It’s been a buy the dip market, traders playing breakouts have had their asses handed to them time and again, especially in the gold miners $GDX.  You’ve got to buy terrible looking patterns at their most bearish that stay within the intermediate term trend, which is up.  Remember that big big boys are playing in this space, and most mom and pops will lose money as their positions get whipped around.

The $USDX is threatening to break through the 200 day moving average which would be a very bullish sign for the greenback.  This is going to keep a cap on gold $GC_F and other materials, but I don’t believe it’s going to prohibit the materials sector from exhibiting strength.  This is of course unless the $EURUSD completely falls apart and we have a full blow European debt crisis on our hands in the form of a Greek default.  I don’t see this as likely.

I’ve posted below a bunch of charts from the materials space which are showing decent setups right now to the long side.  These come from my momentum watch list, but are not necessarily the strongest of the bunch, just the ones showing the best setups tonight.  Have at it.

ANR showed good strength today closing above the 20 day. I like the coal industry here as there is no chance in hell a clean energy bill is going to get passed, although I would like to see one. I think you can get long this name with a stop under today's low.

slammed into the 50 today but held, stochastics are in the basement, get long at the open with a very tight stop.

AUY hit the 200 day and bounced hard. That 200 day also represents an ascending trend line. You know the drill.

BUCY not in the materials sector but is very correlated. Great bull flag here above the 20 on light volume, get long and strong.

Backtest of the descending resistance line, looks real good here.

Very interesting pattern developing here, same triangular consolidation.

Trend line and 50 day, man up and buy the dip.

I don't see many great setups in the energy space, but this flag looks awesome, my favorite energy play right now.

Still in a big flag, buy the dip and run like hell on any further weakness.

Loving MEE here, nice wedge, nice trend line, get some.

Same chart as MEE.

Backtest of the breakout level, good support and on the 50 day, I'm adding to mine in the morning.

200 day, buy the dip, it looks ugly but it's the only way.

Nice flag above the breakout, going much higher.

Similar to PCX and MEE, I like it with a stop below the 20 day.

Pure momentum, love this stock, stop out below the 20 day.

$TSL and $CREE got smacked around pretty good today.  I bought more $TSL into the fear on Wednesday and then again Thursday, both great entries showing me positive P&L for the day, but adding to my losses as it is now trading below both levels.  I still like the trend, and this is the solar leader.  Profit taking is a normal, but I will be very quick to cut ties.  It closed exactly on the 50 day moving average today, anything below today’s lows and I’m gone with my nice profit.  The same goes for $CREE.

$AMZN and $PCLN continue to lag the market as no one is going to be buying these into earnings with the massive run up they saw after the last set.  Expectations are high, but I believe will be met and the stocks will once again be bought.

My materials and China exposure really hurt this week, I’m fine with the former, not so with the latter.  I believe gold is going higher, but needed a rest, I’ve been posting the chart with my expectation of the price action.  We need another month or so before gold $GC_F takes off again, and I’ll continue to build my position in materials.

$V looks great and should break out of its bull flag any day, I’m loaded up there.

I don’t think anyone has enough exposure to healthcare right now, which is why it’s still going higher.  I would like to have more, but still feel that we are going to see another leg to the tech rally, so I will keep the major part of my exposure there.

I sold out of $JCG and $GOOG this week as the trend in both is bending.  No need to be in $GOOG right now as it is a battle ground stock.

I also cut $GS today, it isn’t acting how I would like into earnings.

I added positions in $APPL and $EVR.  How can you not be long $AAPL into the iSlate announcement in two weeks, it’s a game changing product and the chart looks very healthy.  I think people come out of the wood work to buy this stock.  I’ve traded $EVR in the past and I’ve got a good feel for it, I love the weekly chart and think it’s ready to go again.

I also added a position in $ALGT this week.  40% of the float is short and the pattern looks great.  It’s not a high beta name so it gives me some refuge from the market if we do see a broader sell off.

Remember that this overview does not cover my complete activity or every position, just some stuff I’d like to highlight.

I still see so many names I want to own exhibiting great trends.  Bearish patterns like the one we are seeing in the indices currently have been broken by the bulls time after time during this rally, I believe that will continue to be the case.  Breakout and breakdowns have both failed, we are churning our way to 1200 $SPX, continue to buy the dips and lighten up on the rips whenever things feel too euphoric, I know I did a little to much this week and paid the price.

I’ve stayed away from the steel sector as I don’t believe we are going to see continued strength from them beyond this push.  I focus the portfolio on stocks that I believe will trend positively for the intermediate term, not just a week or two.  The real money is made by sitting, not trading.  I have not had exposure to coal, and I’m dissapointed about that.  I had a good opportunity to take a position in $MEE at the end of last week but balked, which was obviously a mistake.

My entry on $ARUN this week was perfect, already in the green by almost 5%.  I took off some exposure to $GS as it has traded straight up for a week now.  It was a heavy position, it is now a bit lighter.  $VRX finally woke up this week, patience really paid off there, I continue to like it going forward.  $TSL and $CREE continue to just move up, there’s no other way to describe it, these two stocks are unstoppable.  I have greater than a 55% gain in $TSL and have been peeling off bits along the way, which I guess has been a mistake because I haven’t found a place to reload the boat.  My two retail positions $JCG and $DECK are performing well.  I’m stalking $URBN which is giving a decent entry right here right now.

I will ruminate on the tech exposure this weekend, it may simply be too high.

The agricultural space was overwhelmed by hedge funds in 07′ who all wanted a piece of the momentum being built through increasing Chinese demand.  Remember that food scare when CNBC was reporting from Costco about how there were rice shortages on a daily basis.  It was an obvious bubble that was bound to pop, but the underlying long term fundamentals of food scarcity are positive for the agricultural sector.  But like all momentum stocks chased by too many hedge funds, there was a complete dump in 08′, positions were liquidated as it’s hard to explain to your general partners why you were holding stock in a company that sells shit while the world is falling apart.  To be sure, China did manage to get a monster price cut on their fertilizer, but many of these stocks where slammed by 80%.

Let’s take a quick look at a few other agriculture names, if $MOS starts to run there will be plenty of pinball action in this industry.

$CF is pushing up against a large level of resistance going back to October, but we are above the crucial level of the May highs at 85.  The 200 day moving average is providing some nice support and if it can push above that 95 level we should see 105 and then 120 within the next few months.

$IPI still has not broken out of its large basing pattern, notice the downtrend line in red.  This is a textbook triple bottom and things are lining up nicely.  A break above the downtrend line and $IPI should be off to the races.

$TRA significantly failed the breakout above 37.50 and has since been chopping around the 200 day moving average.  37.50 is a large level of resistance that goes back to a major level of support from 2008 that was broken in spectacular fashion.  $TRA has also broken the major ascending trend line in green.  I would stay away from this name on the long side, and look to play short on weakness if the sector rolls over.

It’s not hard to see that $AGU has already broken out of its base and is running, but it has come up into some resistance.  Look for a little pause here, but if the sector lights up make sure to be on the long side of this one.  I don’t subscribe to the play catchup theory, when a sector is running you want to own the strongest name, $AGU is the one here.

Full disclosure, I own $CGA in the momentum book.  This is my favorite play in the space, it’s flagging out right now, better seen on the weekly chart.  The lateral trend line in green is a major level of support which needs to be left behind soon.  Stochastics are looking great here and the momentum is solid.

$POT is chopping around a bit below a major level of long term resistance.  The chart is very similar to $MOS, although not as bullish.  Short term we may be seeing a bear flag after that second failure at 125.  This stock needs time to regroup and set up for another push.

I’m not going to do analysis on all of the underlying commodities that drive this sector, but here’s a chart of the agricultural ETF $DBA, it holds a basket of products.  The chart here is very very bullish having put in a nice long term basing pattern.  This is one that I would take a long term position in and lock it up.

Stick with $MOS, $AGU, and $CGA on the long side.  This could prove to be an excellent entry to these names for longer term position trades.