Sunday, May 23, 2010

Itz Weekend Review

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A few weeks ago Itz posted this focusing on the 'Flash Crash' & Euro Contagion....>>link
Itz made numerous posts on Twitter today and just prior to the meltdown posted --'Capitulation!'--, But was it really. Selling on Friday will follow through with out a doubt as Asia chimes in. The possible pivot and catalysts maybe the Jobs Report @ 8:30am. Today was a 'Preview' of how low markets can trade off from overbought conditions. .....Itz Stock Chartz has for a few weeks now been repeatedly telling readers to protect against a correction, with either options, ProShares ETFs like SCO, DUG or SDS or just taking some money off the table. Things move fast, volatility as seen in the $VIX, $VXN & $OVX or the divergence in rising gold versus copper & silver warned that something was going to give ...soon. Was it a computer glitch, human error or whatever excuse the problem comes down to the FEAR of a Eurpoean Contagion that could spread into a global problem. That the credit markets and the cost of capital is going up (dejavu 2009). The 1000 point move in the Dow Jones if anything reinstated the fear and lack of confidence into the retail investor just as they were getting hopeful about stocks. That said we could see more selling either way on the Jobs Report, good or bad. Stay hedged, have your shopping list ready and tighten those seat belts!

Well it appears we got that selling and retest of the lows, now the question remains...will there be more? Itz in the near term believes the markets are extremely over sold. The 'line in the sand' 1050 S&P500 levels or February low remains near term support. The Euro rallied Friday as Germany approved the $1 Trillion bail out package. While most watch the Euro, the Australian dollar was the currency to watch, as Itz stock chartz has mentioned over the last several weeks. Both the Australian Dollar and Swiss Franc saw substantial declines this week, prompting speculation that the central banks in those countries intentionally intervened in the currency market. The Reserve Bank of Australia would do so to prop up its currency-- while the Swiss National Bank actions would weaken the Franc against the Euro.

Itz Pix entered an energy play this week recommending the ProShares Ultra Crude Oil ETF (UCO). Veteran trader Mark Fisher commented on CNBC that investors shouldn't be buying gold, but rather crude oil/energy (see past posts). Itz agrees, energy stocks account for about 11% of the S&P 500's sector weight and the index. The time to buy oil is when it's on sale, need we forget global demand for crude is rising >>Read >>Chart

There are some analysts calling for crude to head lower $60, maybe so...but the way to view it is $60 downside risk, versus $80..$90 or more upside. Gold may be a global currency & insurance, but so is oil as well as a necessity!

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