I will start by saying today was a great day. After the rough day yesterday, I got almost all of it back today. Even better, I think I added some good inventory today. I will get to the daily analysis in a minute.
One thing some of my readers have learned but many do not know is that this blog is not just a trading blog, but a news service. You can read the articles when everyone gets them; however, if you have been regarding this blog, you already read today’s most important finance articles days or even months ago.
Today’s article about GM bankruptcy:
April 5 post:
http://chartsandcoffee.blogspot.com/2009/04/sunday-night-coffee-452009.html
Today’s article about the negative implications for all of these secondary offerings:
http://www.marketwatch.com/story/firms-capital-raising-plans-could-dampen-rally
May 6 and May 11 posts about secondary offerings:
http://chartsandcoffee.blogspot.com/2009/05/grab-bag-aro-secondary-offerings.html
http://chartsandcoffee.blogspot.com/2009/05/smart-money.html
Today’s article about the concern over government spending and crashing treasury bonds.
Sunday Night Post on 5/24/2009 titled “We’re Out Of Money”:
http://chartsandcoffee.blogspot.com/2009/05/sunday-night-coffee-5242009-were-out-of.html
Today’s most important chart was definitely TLT.
Crashed right through support at $92. Next support level is $88. RSI is at 25. We’re reaching very oversold levels.
The TLT chart tells me to move my stop up and trim my TBT position. Yet, if you look at TBT (double inverse TLT), which is very overbought (RSI at 75), it otherwise looks like a buy. We have a breakout over resistance on strong volume. I did trim my TBT position just a little bit at the end of the day based on the oversold/overbought readings.
I think the bigger message is that the treasury sell off has a potential to be a downward catalyst for the next few weeks. Today was also a “tipping point” because it was the first day that the news headlines acknowledged the decline in treasuries was the market signaling that the market will not accept the government auctioning off an unlimited amount of treasuries. I expect this story to stick. Moreover, it was the second time in a week that the market broke the trend of the market being inversely correlated with treasuries. There was no “flight to safety” when the market sold off today. Rather, the treasury sell off was the catalyst for the move down in the market today.
I won’t elaborate more because I covered this subject in my Sunday Night post (link above).
I took another shot at UNG today. The volume is off the hook. Very hard to ignore that. The decline also is flattening out and there is an easy stop just below the 52 week low.
Trades:
- Added a small position in DLTR long.
- Added to my long DBB position.
- Trimmed junk longs CVI, CIT
- Shorted DRI
- Covered a little bit of my QQQQ short (likely not a good move but it was just a small position and I didn’t like AAPL breaking $132).