Jonathan Guillou

EUR-CHF - Weekly Update => Not dead yet...

2011-06-18T19:33:00.003+02:00

I know I'll hear that the Euro is dead, if Greece defaults, everything will collapse and the Euro along with it...

Ok. Fine.

The Euro is still holding it up here. Some guys are buying it for now...

Again, as risky as it seems, it is one the best risk/reward ratio you'll ever find. If you're wrong, you won't lose much and you'll know it very quickly.

If you're right, get ready for a massive reversal..like the one we had in the Equities back in March 2009.

EUR-CHF - Weekly update

2011-06-03T22:40:00.005+02:00

Nice test so far. Pretty rocky though.

See how it looks like major Equity indices back in March 09.

Will that process start again with the Eur-Chf??!! Prices keep on falling while the RSI is "gently" moving back up.

I let you discuss about the possible underlying fundamentals...

What could possibly drive the Chf lower?! what could drive a stronger Euro?!

To be honest, I don't have the answers. I'm not smart enough.

Again, this could fail but this is basically the best risk-reward ratio you'll ever find. I really like these set-ups.

EUR-CHF - Weekly update

2011-05-29T12:34:00.006+02:00

Funny to see the EUR-CHF breaking an important support.

HOWEVER, look at that RSI that is trending up for quite a while now. This is a pretty "big" bullish divergence to say the least.

Basically, someone who is looking for a reversal should consider that trade here. Undeniably the trend is down but it feels like the Euro could reverse somehow here "IF" the RSI can keep itself above that trend.

Basically, as risky as it looks, it actually shows one of the best Risk-Reward ratios you'll ever find. Potential "reversal" points like these are great because you'll enter the trade and will be stopped out very quickly if you're dead wrong. On the other hand, if you're right, you'll enter the trade and will adjust your stop very quickly to your entry point (break-even point) and let it ride up with no capital at risk.

Everything will happen next week. Please note the implications of this trade.
What could happen in order for the Euro to strengthen?!

Equity markets could strengthen as well. Greece being saved/bailed out?! Flip a coin.

EUR - CHF // Is the Euro dead? Or is it the greatest BUY ever?

2011-05-23T12:06:00.003+02:00

I would hardly disagree with you if you were to tell me:

- "Come on John, the euro is doomed, they are going to default?!".

The 1 million dollar question (for some it's the $1B question) is:

- "Is everthing priced in? Greek default priced in?"

Obviously, I don't know that answer but in terms of price action, we "could" be near a "bottom" somehow if prices hold that support and show some strength... The next few hours are critical for this currency pair because speculators will keep pushing down the Euro (so more troubles ahead) or they will start to buy it and more "confidence" ahead.

INFLEXION POINT.

TECHNO back in "outperformance"...

2011-05-15T23:56:00.005+02:00

Here is another ratio. Europe TECHNO sector versus Stoxx 600 Index.

You know that since "dot-com" bubble, this sector is struggling. It could very well keep on struggling as you see, there were several "fake" moves for the past years however we should not neglect this "breakout".

Again, this ratio going up does not mean that the techno sector is only going up. It means that it either goes up bigger than the Stoxx 600 or goes down less than the Stoxx 600.

Here are the big "boys" that compose that index.

SAP
Ericsson
Nokia
ASML Holding
Alcatel-Lucent
ARM Holding
Infineon
Cap Gemini
STMicro
Sage

Here below are the few stocks that I really like "fundamentally" in the Techno sector (either because their products (Archos) or services (Alcatel, Playtech) are good or I believe in the recovery). Nokia has been the dog but I can't believe the Finnish government let it go down as it has to be the main employer in Finland. I let you see if you like the technicals.

Health Care Sector in BUY mode versus Stoxx 600

2011-05-15T23:48:00.003+02:00

Always interesting to look at the markets in a "relative" way. Something compared with something else.

Here is the Europe Health Care sector versus the Stoxx 600. It is built as a ratio. When the ratio comes up, it means that the sector (here it's Health Care) goes up more than the stoxx 600 or goes down less than the Stoxx 600.

For a fund manager, it is a great tool as he tries to beat an index. It is one way of doing thing.

As a matter of fact here, when you see this "defensive" sector starting an outperformance period, you should first get worries as it is often a sign of a toppish market and then see what are the stocks within this sector.

You should get interested into the following:

Novartis
GlaxoSmithKline
Roche Holding
Sanofi-Aventis
AstraZeneca
Novo Nordisk
Shire
Essilor
Fresenius

I also like Meda, Stada and a "challenger" that is the small "ACINO Holdings".

DOW / GOLD Ratio

2011-05-04T23:39:00.003+02:00

Funny to hear people that equities were not in a bubble during the 1990's.

Expressed in gold, the Dow Jones popped in 2000 and never recovered. Please see that the level we are at currently was a level seen twice in the past... in 1993 and in 1976. I doubt we'll see that ratio recover anytime soon.

My question now is "will we see it down to 1" (please remove the comma on the chart and you have the real value of this ratio => so 0.12 means 1.2). It will be synonymous of a great bull market in equities roaring...

Will see see the gold at $12,000 or the Dow Jones at $1,500?!

Maybe, we'll see the Dow Jones at $5,000 and the Gold at $5,000...

Pick your scenario. One thing is for sure. The next several years will be just amazing to watch as bad/good as they might be.

GOLD / SILVER RATIO

2011-05-04T23:15:00.002+02:00

Nice to see this rebound right on this support (that started back in 1983) for the Gold/Silver ratio.

I could really see some hedgies (Long/short strategies) switching the positions and being short silver and long gold until we hit that old support that will "eventually" play the role a resistance somehow.

US Dollar Index => Crucial weeks

2011-03-21T22:01:00.003+01:00

Tough days for the US Dollar lately.

As we could see a H&S pattern, you can see on the chart where the breakdown of the neckline occur. We had a nice test of the neckline from below and then a roll-over.

Now, supports seem to be broken and the US Dollar seems to head down.

Time to be a contrarian and buy it?! Go for it and tell me how it feels to be a buyer of the US Dollar.

I'd rather wait for a buying opportunity. You want to be a seller here until the markets prive you wrong.

Good luck.

EUR-GBP => Update

2011-03-21T21:37:00.002+01:00

As you noticed earlier on, my "trend following" system pulled up a "BUY" signal and I was skeptical about it as I saw a head-and-shoulder pattern.

Guess what. The system seems to have been right. The head and shoulder pattern has failed on a daily basis as it rebounded.

The UK central banker announced that he wouldn't tackle the inflation pressures as they were still weak. On the hand, the ECB said the exact opposite, Tricket may raise rates as early as the next meeting.

See the green arrow on the daily chart?! That's your buy trigger.

wish you good trades.

EUR/GBP => Bull Flag or Massive Head & Shoulders ??!!

2011-02-15T21:36:00.004+01:00

I know I know. Long time No see. Work is taking its tolls on me. Don't have too much time left.

I have been developing lately "trend following" systems and we have been backtested it for quite a while now. It seems to work. Needs to get stronger rules in money management as well as "pyramiding" positions. It's not that easy to compute.

And as good as a system may be, you always need strong rules.

Anyway, as I was running the system. Got one pick to "buy". EUR-GBP.

Believe it or not as I was looking at the chart, I see massive head & shoulder patterns on both weekly and daily charts.

My system still sees it as long-term bull move with a "bull" flag during which the EUR-GBP consolidates before resuming its uptrend.

To tell you the truth, I have had some hard time believing it. I see a massive head & shoulder pattern on the weekly and a tinny head & shoulder on the daily (which represents the weekly right shoulder).

As soon as it breaks the neckline, I intend to short the euro and long the GBP. Sometimes, you have to be against your systems as good as they have been historically. The uptrend could be broken pretty hard here.

Why?! Rates decision on the GBP? on the Euro?! Inflation?! Economies not as strong in Europe?!
You name it.

I follow the price action because this is what pays me. Talking about fundamentals makes me smart. Following the price pays me.

Will History repeat itself ?!

2010-09-09T18:05:00.003+02:00

[Chart taken from CrossCurrents]

What if the Kondratief winter was just that?!

=> A huge congestion phase in which the US Equity market returns just a plain 0%.

Is Gold a bubble?!

2010-09-09T18:01:00.002+02:00

[Chart taken from "crosscurrents]

I have been reading recently lots of analysis regarding the ongoing bubble about Gold.

I believe this chart speaks for itself. You may see some profit-taking, huge corrections, call-it whatever but don't call that a bubble. I'm not saying gold will never be back in a downtrend. It can decrease from there but it has nothing to do with a bubble "in my opinion".

CNU - I'm OUT - Stop got hit @ $4.05

2010-06-21T20:06:00.001+02:00

Wait & see

Continucare (CNU) has had a wonderful day...

2010-06-11T03:01:00.003+02:00

I believe the chart speaks for itself... See a couple of posts below in order to get a quick grasp of the stock...

Food for thought... "Your Money or Your Life" by Joe Dominguez

2010-06-01T22:50:00.003+02:00

As I was reading this paragraph... I felt "terribly" striked... Will you?!

"We aren't making a living, we are making a dying. Consider the average American worker. The alarm rings at 6:45 and our working man or woman is up and running. Shower. Dress in the professional uniform (suits or dresses for some, overalls for others, whites for the medical professionals, jeans and flannel shirts for construction workers).
Breakfast, if there's time. Grab commuter mug and briefcase (or lunch box) and hop in the car for the daily punishment called rush hour. On the job from nine to five. Deal with the boss. Deal with the coworker sent by the devil to rub you the wrong way. Deal with suppliers. Deal with clients/customers/patients. Act busy. Hide mistakes. Smile when handed impossible deadlines. Give a sight of relief when the ax known as "restructuring" or "downsizing" (or just plain getting laid off) falls on other heads. Shoulder the added workload. Watch the clock. Argue with your conscience but agree with the boss. Smile again. Five o'clock. Back in the car and onto the freeway for the evening commute. Home. Act human with mates, kids or roommates. Eat. Watch TV. Bed. Eigth hours of blessed oblivion.
And they call this making a living? Think about it. How many people have you seen who are more alive at the end of the work day than they were at the beginning? ... Aren't we killing ourselves (our health, our relationships, our sens of joy and wonder) for our jobs?
We are sacrificing our lives for money (but it's happening so slowly that we barely notice)."

Food for thoughts palies...

A year ago...

2010-05-27T23:37:00.003+02:00

As I was cleaning up my laptop, I found these 2 charts on one folder. I posted them a little over a year ago... The first one is dated from April 17, 2009 and the other one in May 25th, 2009.

It's so funny to see how you react to market reactions but I really think that I was as objective as I could about it. You can tell I am influenced by moves here and there but still... I feel like I remain objective somehow...

Really funny indeed...

"Trading for a living" by A. Elder - Nice Quotes

2010-05-25T21:42:00.007+02:00

Read this book. A classic book to have in your library.

Here is what you find on page 71/72. I thought it was interesting to share it.

"Amateurs are especially active early in the day and early in the week."

"In bull markets, prices often make their low for the week on Monday or Tuesday on profit taking by amateurs, then rally to new high on Thursday or Friday.
In bear markets, the high for the week is often set on Monday or Tuesday, with a new low toward the end of the week, on Thursday or Friday."

"The closing prices of daily and weekly bars tend to reflect the actions of professional traders. They watch the markets throughout the day, respond to changes, and become especially active near the close. Many of them take profits at that time to avoid carrying trades overnight."

Ps: For the past several weeks, we started the week green and finished it in the red zone. This week, we had a new change. We started red...are we going to end it up green?! Watch out for a rally that could squeeze you and your portfolio. =)

Also, lately I have been hearing a lot that my approach is too "market-driven" and is not based enough upon fundamentals. Well, I'm open to critics. No question about that. I believe you all know my position on long-term fundamentals. The answer is "we are doomed" and by "we" I mean developped economies.

Last but not least, do not forget the main quote of this blog.

"I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over." by Paul T. Jones

Markets move... then news come. It goes along with the well-known quote "buy the rumor, sell the news".

OUT of Groupe Arès (ARE) => 0.22€ got touched (mental stop)

2010-05-20T15:00:00.000+02:00

Continucare Corp. (CNU) - Is it being a BUY at these levels?!

2010-05-17T23:29:00.003+02:00

Here is a stock that a friend asked me to have a look at.

CNU is in my opinion a great stock. See the chart above. It seems that it is a great entry point on a long-term outlook. CNU was stuck in large trading range and got out of it on strong volumes.

Let me tell you what it does.
From yahoo's company's profile, Continucare Corporation, together with its subsidiaries, provides primary care physician services on an outpatient basis in the United States. It provides medical services to patients through physicians, nurse practitioners, and physicians assistants. The company also provides practice management services, including assistance with medical utilization management, pharmacy management, and specialist network development to independent physician affiliates (IPAs). As of June 30, 2009, the company operated a network of 18 medical centers, and provided practice management services to IPAs at 21 medical offices in Miami-Dade, Broward, and Hillsborough counties, Florida. In addition, Continucare Corporation operates and manages sleep diagnostic centers at 13 locations in South Carolina, North Carolina, West Virginia, Virginia, Colorado, and Ohio. These centers conduct sleep studies to determine whether patients suffer from sleep disorders and the severity of the condition. The company was founded in 1996 and is based in Miami, Florida.

Oh well. An healthcare stock. Yes my friends. Look at these figures. The ones I really love. Greenblatt's heaven.

P/E: 10 vs. 17 in the industry
PEG: 0.5 vs. 1 in the industry
P/Book: 1.58 (at some point, it was < 1)
Operating Margin: 11.3% vs. 3.8% in the industry
ROA: 16.5%
ROE: 18% . You may say, well 18% in ROE that's nice but what if it is financed by debt. And i'll reply no debt in that company buddy. ROE is that high because revenues are high.
Free CF: $21.5M vs. $209M in market cap. FCF is being generated each year up to 10% of market cap. That's a lot of cash.
46% of the stock is hel by insiders. I like having those cats' money in the company.
EPS: $0.35 on a $3.5 stock. That's 10% made each year for shareholders at that stock's price. I like it.

It's now all up to you guys. On paper, that stock does not look too bad. What do you think?!

May 6th, 2010 will be remembered in stock market's history

2010-05-06T22:51:00.002+02:00

Let's face it, in terms of %, it's not as bad as 1987's market drop but in terms of points, I have just witenessed while eating some peanuts and drinking a nice little rosé the biggest drop ever in the history of US markets.

Accenture's stock price went from $42 to $0.10 in a matter of seconds... UNBELIEVABLE.

What the Heck Just Happened?

By Motley Fool Staff
May 6, 2010

And this is why we at The Motley Fool believe in focusing on the long term. This afternoon, the Dow Jones Industrial Average dropped nearly 1,000 points -- the single worst intraday loss in its history -- before quickly climbing back up 600 points in one 20-minute span.

For the day, the Dow finished off "just" 3.2%.

The initial thought (aided by CNBC's coverage of riotous protestors clashing with police) was debt-plagued Greece, which has had the market petrified. But later reports suggest something far more ridiculous -- a trading error. Blue-chip stalwart Procter & Gamble (NYSE: PG), for instance, fell from about $60 a share to around $40 a share in a matter of minutes, only to rocket back up and finish back around $60. The Wall Street Journal reported that Accenture (NYSE: ACN) dropped to $0.01 a share!

Now, Greece surely has its problems and contributed to some selling today. But today is a clear picture of why being a long-term, business-focused investor is so wise -- because the daily machinations of the market often have little to do with the value of a business."

Stiglitz calls for the end of Euro..

2010-05-04T22:19:00.002+02:00

Well, our buddy JS is calling the end of the Euro if the Euro zone cannot solve internal problems...

I'm calling my "best-friend" George Clooney and I'm asking him what he thinks. He is telling me "Ok...what else".

And I agree, we know that. If you read this blog since the beginning, I have been talking about my concerns about sovereign debt and here it is, markets are going wild. I just love markets for that.

Article taken from the website "temoignages.re".

Joseph Stiglitz annonce la fin de l’euro

mardi 4 mai 2010
Manuel MARCHAL

Le Prix Nobel d’économie Joseph Stiglitz a annoncé la fin de l’euro si l’Union européenne est incapable de régler des problèmes institutionnels. Dans une interview à la radio publique BBC4, le Prix Nobel estime que l’Europe n’a pas les structures institutionnelles pour surmonter la crise qui a obligé la Grèce à emprunter 110 milliards d’euros. Quant à l’Espagne, des rumeurs font état d’un besoin de refinancement de 280 milliards d’euros.

Photo Toniox

L’euro va-t-il survivre à la crise ? La monnaie unique européenne qui a tenté de sortir le monde de la domination du dollar est en tout cas sous les feux des projecteurs, moins de deux ans après que le gouvernement de George Bush ait profité de la crise des subprimes pour lancer la guerre monétaire.

Il est important de rappeler qu’en septembre 2008, le gouvernement américain a décidé de laisser couler Lehman Brother, une des plus grandes banques des États-Unis, mais a aussi choisi de sauver d’autres institutions afin d’opérer des fusions pour faire de Bank of America la plus grande banque du monde.

Deux ans plus tard, si une reprise se fait ressentir en Amérique, et si l’Asie a relevé la tête avec le retour de la croissance à deux chiffres en Chine, l’Europe est toujours en pleine crise. Et cette situation s’aggrave.

Face aux difficultés de la Grèce, l’Europe a été incapable de déboucher sur une solution solidaire. C’est à partir de ces éléments que Joseph Stiglitz, Prix Nobel d’Économie, annonce la possible fin de l’euro.

D’après Joseph Stiglitz, la gestion par l’Europe de la crise grecque met en évidence les faiblesses structurelles de la gouvernance économique européenne, et donc de la monnaie unique. Cela l’amène à s’interroger sur la capacité de résistance du concurrent du dollar face à une crise équivalente à la Grèce, mais touchant un pays plus important de la zone euro. Or, l’Espagne est clairement dans la zone de mire. Une rumeur ce mardi a fait plonger la Bourse de Madrid. Ce buzz fait état d’une possible demande de 280 milliards d’euros d’argent frais de la part de l’Espagne.

"Quand on aura vu à quel point il a été difficile à l’Europe d’adopter une position commune pour aider un des plus petits pays, on réalisera que si un pays un peu plus grand a des difficultés, il est probable que l’Europe aura encore plus de mal" à se mettre d’accord, a affirmé Joseph Stiglitz.

"C’est peut-être la fin de l’euro". Si l’Europe "ne règle pas ses problèmes institutionnels fondamentaux, l’avenir de l’euro sera peut-être très bref", a-t-il affirmé.

Si tel était le cas, alors l’offensive lancée voici deux ans par l’administration Bush aurait atteint son objectif : casser la seule monnaie conçue pour être une alternative au dollar.

Greece, Portugal, Spain... What Else (by George Clooney)

2010-04-28T22:48:00.002+02:00

Well my buddy George sums it all up.

WHAT ELSE ?! or let's put it this way... WHO ELSE?!

That's scary how things go fast. If you follow this blog for a quite awhile now, you probably read that I was concerned with government's debts. I thought it could hit us around 2012. Well, it's hitting us right now.

Wouah. Markets were rocking today. I love these situations. I don't know wanna know how it will be when countries like France, US, Japan will be downgraded. We'll be talking about "Earth-shaking" moves...and I love it because great opportunities occur during these times.

Look at the €/$ chart. Nasty. Are we going to test the lows reached at the end of '08 or at the beginning of '09?!
I mean if you really are "emotionless" and have a trading account that allows you to bet in market with wild swings. Well...fellows, it's about time to get some trades on.

Groupe Arès (ARE) still works...OSA sold...EAT + RT sold...

2010-04-25T16:34:00.003+02:00

Sorry not to post lots of things but since I work in this mutual fund, I don't have much time first, then for confidentiality purposes, I cannot deal with everything and have to "screen" some information.

None of this stocks are obviously traded in the funds and none of them will be traded as they are quite small. This is why I can talk about them.

I sold OSA for a nice profit (+15% or so), I sold EAT and RT for a tinny profit almost even. I kept ARE (see chart above). The company is having troubles and what you're seeing is a dangerous bet but the chart did not look that bad too me.

I wanted to play that double bottom (W) with a nice RSI bullish divergence on a weekly and daily basis. Moreover, volumes are responding nicely and I believe I must stay patient with that stock that already gave me a nice +15% so far.

The future will tell us.

Great Article - The guy who REALLY anticipated the subprime crisis

2010-04-07T22:01:00.003+02:00

Please read that article from Vanity Fair

You'll see by the end of the article. The guy has to sell back some of his Credit Default Swaps (acquired a crazy low price) at a low/decent price as his clients didn't trust him.... Bankers did not understand one damn thing...unbelievable...

Betting on the Blind Side

Michael Burry always saw the world differently—due, he believed, to the childhood loss of one eye. So when the 32-year-old investor spotted the huge bubble in the subprime-mortgage bond market, in 2004, then created a way to bet against it, he wasn’t surprised that no one understood what he was doing. In an excerpt from his new book, The Big Short, the author charts Burry’s oddball maneuvers, his almost comical dealings with Goldman Sachs and other banks as the market collapsed, and the true reason for his visionary obsession.

... CLICK HERE

Richard Dennis - Market Wizards by Jack Schwager

2010-03-21T17:31:00.003+01:00

As I told you, I often look at my library and pick a book. These past 3 days were all about Market Wizards (old and new one). Who knows why?!

Reading interviews about the best fund managers in the business is really a great source of inspiration to me.

Today, one thing caught my attention. The 1st Market Wizards published in 1989 has an interview with the "Prince of the Pit", Richard Dennis. This interview was made after he lost a significant amount of money. Anyway, please see that great "possible" forecast from a very clever man.

Jack Schwager (JS): Acknowledging that caveat, as a long-time market observer, what major trends do you see shaping up over the coming years?

Richard Dennis (RD): I bet we will be at record levels of inflation by the end of 1990.

JS: What is going to be the driving force behind that inflation?

RD: It is going to be driven by trying to avoid a deep recession. The recession is going to be caused by the federal budget deficit as investors require higher and higher levels of real interest rates to buy the debt. The government will try to avoid the recession by stimulating the economy, a tactic which essentially doesn't work.

JS: ...And you are saying that people look at the deficit year after year and think, "Well, it can't be so bad, the economy is strong," and one day everybody wakes up-

RD: It is like having termites in the foundation of your house. You may not notice them until one day they gnaw away a big chunk and the house collapses. I don't think anybody should take a large amount of comfort in the fact that things appear to be holding together."

Ok... Inflation late 1990's... WRONG. But please notice this clever judgment about federal deficits and the fact that people should not "take a large amount of comfort in the fact" that things look ok out there.

Will hsi forecast appear to be correct next year, in the next decade?!

Nice Quote from Victor Sperandeo (The New Market Wizards)

2010-03-20T16:31:00.004+01:00

As I was reading this book...again... I wanted to share a wonderful quote with you guys.

Victor Sperandeo

"Assume that you're a brilliant student who graduates from Harvard summa cum laude. You get a job with a top investment house, and within one year, they hand you a $5 million portfolio to manage. What would you believe about yourself? Most likely, you would assume that you're very bright and do everything right. Now, assume you find yourself in a situation where the market is going against your position. What is your reaction likely to be? "I'm right." Why? Because everything you've done in life is right. You'll tend to place your IQ above the market action.

To be a successful trader, you have to be able to admit mistakes. "...In trading, however, the person who can easily admit to being wrong is the one who walks away a winner. Besides trading, there is probably no other profession where you have to admit when you're wrong".

I really like this quote because this reminds me "sports". This is why, you want your kids to be involved into sports very soon because they will face "failure" soon enough. As strong as you may be, you're never a winner everyday in sports. You always lose at one point. Always. This teaches you how to handle failures and learn from it and move on.

I have learned that through sports from age 4 to right now. Also, I believe you can learn that from different activities (be it music or else).

Osiatis (OSA) + Arès (ARE) + Brinker (EAT)

2010-03-20T16:05:00.004+01:00

Here we are, enjoying a nice weekend. Red Burgundy on the table... Golf clubs looking at me ready to hit a few balls. If only, I hadn't killed my back lifting my brother's jet-ski 3 days ago... I could be playing right now.

Anyway, I'm resting as I was taking my final exams this week; hence, the few messages posted. Besides that, I'm starting right on Monday in a Mutual Fund invested in European Stocks. This is why, I will not be able to post anything about European Stocks... The AMF (the French SEC) does not allow me to do so. I'll be only talking about US markets.

Here are the 3 stocks I have in portfolio. I sold PWER with a tinny profit. I decided to (re)enter another position in the US market. EAT. I feel it could break out. Also, my stop is very close.

I have a position in OSA at 3.75€ and am enjoying a nice return on it so far. I may sell that position soon as the next resistance is very near (4.35€).

ARE is getting me worried even though the position is quite small. Still. It is taking sometimes to rebound as I expected. Still, my stop is very near as well.

CDS - Western European Countries

2010-03-12T13:44:00.003+01:00

I think this chart speaks for itself.

Iceland and Greece's CDS are scary...

The question is "do investors feel better about these 2 cats?!"

CAC 40 - Is it about to break it?! .... not....

2010-03-12T10:34:00.004+01:00

As I was cruising on a Bloomberg Terminal at my school, I figured I should have a look at the CAC 40 Index chart because it's been quite awhile I haven't looked at it.

Look at that trendline that started in 2007. The CAC hit a couple of weeks ago and is trying it again right now.

Will it break it up?! Possibly. If so, the CAC is going to shoot up to the 4,500 pts level. Scary, isn't it?!

Also, look at that beautiful channel that started since March 09. A beauty too.

If the CAC cannot break this up. Well...fellows... it's going to be nasty.

Future will tell. Keep posted.

That's how PROTECTIONISM begins...

2010-03-11T14:52:00.001+01:00

Here is an article taken out of the website http://www.courant.com

Grumman-EADS Cites Protectionism In Leaving Tanker Bid To Boeing-PrattBRUSSELS —

- The European Union on Tuesday warned the United States against protectionism after a European-led consortium pulled out of the bidding for an Air Force contract, saying the terms had been altered to favor a U.S. company.

EADS, the parent company of Airbus, had partnered with Northrop Grumman to vie for the 179 tanker order, but their consortium pulled out on Monday. They said the terms of the deal appeared designed to eliminate its design in favor of a smaller jet offered by rival Boeing Co.

The announcement left Boeing as the only bidder for the project. It is offering a version of the 767 commercial airplane to replace the U.S. Air Force's 1960s-era fleet of KC-135 tankers. The new tankers would use engines supplied by Pratt & Whitney.

"It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type," said EU Trade Commissioner Karel De Gucht. "Open procurement markets guarantee better competition and better value for money for the taxpayer."

The EU noted that the trade balance in defense equipment with the 27-nation EU has traditionally been heavily in favor of the American side, and that in 2008 the U.S. exported $5 billion worth of defense materials while importing only $2.2 billion from the European side.

In Washington, Pentagon spokesman Bryan Whitman said the military plans to move ahead with the program and that the requirements for a new tanker fleet won't be reworked just to ensure there are two bidders.

"The question for us is, competition at what cost?" Whitman told reporters. "We know what the requirements are. ... We are going to buy to those capabilities."

Meanwhile, German Economy Minister Rainer Bruederle said on Tuesday he was disappointed by the developments in the U.S. and warned the situation had "signs of protectionism."

"The free market should not be unilaterally restricted," he said.

Faber's Picks => A couple of stocks in Thaïland

2010-03-11T00:11:00.003+01:00

As I was reading Faber's latest report, I found a few stocks that he currently owns. There are several actually. I just took 3 of them and put them up here.

This is not a buying recommendation. I just wanted to share with you some of Faber's holdings in Thaïland. Some look great, some awful (technically speaking)... still, that's what he has. And Faber is good at what he does. You may want to call your broker in Thaïland if you have one (by any chance) and send in some Buy orders.

Vietnam Index => Are good days ahead?!

2010-03-10T23:28:00.004+01:00

Do you remember what I told you in April 9th, 2009 about the Vietnam Index?!

It is here: CLICK

Basically, the scenario worked perfectly. I wish I had played that one. To tell you the truth, I may through an ADR on the US market. Here is one. 'VNM' that started in the 2nd part of 09. You want to play Vietnam.. Have fun with VNM (Market Vectors Vietnam)

Look at that chart just forming a huge inverted head & shoulder pattern. Interesting isn't it?!

If 600 is broken nicely with volumes. I think this is a huge LONG-TERM BUY TRIGGER. you heard it. My call... well... Marc Faber's one... as last year, he was already talking about it and he just talked about it again on his latest newsletter (the "GBD" Report).

Huge Garbage Patch in Atlantic....

2010-03-08T20:09:00.001+01:00

Inetresting article...

"Billions of bits of plastic are accumulating in a massive garbage patch in the Atlantic Ocean—a lesser known cousin to the Texas-size trash vortex in the Pacific, scientists say. "

CLICK HERE for more

PWER - We'll know soon enough...

2010-03-08T15:31:00.001+01:00

Look at that mini-triangle... We're about to know if we're going up or down...

Groupe Arès (ARE) - Risky bet...

2010-03-08T11:50:00.004+01:00

As you know, you should always buy in a 2nd Weinstein phase... ARE is not quite there yet.

. Still in a phase 1 (under the 30-week MA)
. Bought a small amount in the support...to play the rebound up to 45 cents.
. Volumes look just perfect...need volumes for the rebound.
. Phase 2 will start when 45 cents are broken up...but when? ARE could just go sideways between 25 & 45 cents for years....

PS: my stop-loss got hit in my UNG position. I put it right under the support of $8.50...at $8.35 exactly. I'm out. The $8.50 support was a strong one. Could be a fake?! I don't take the risk. I cut it short.

Is that a trendline ??!!

2010-03-04T20:31:00.003+01:00

The other day, I received an email from a friend. I had a huge market analysis from Barclays and several companies were listed in it with a buy or sell rating.

One name caught my attention. Anheuser-Busch InBev. As I was cruising a few minutes ago on Bloomberg, I found this name again in one article. They make Beer. Maybe, That's why it caught my attention..

Look at that trendline that started in October 08. Beautiful. Not much volatility but the stock just went up. I'm pretty sure that since Oct. 08, this stock did not have many red days, if any.

I'm not saying you should consider buying it but I just wanted to share that wonderful trendline. On the other hand, consider buying it above the highest high reached in 07.

UNG - Bought a small amount

2010-03-02T18:55:00.004+01:00

Hi all, the chart is taken from Moise Levi's blog.

http://gicharts.blogspot.com/

I just like it. I really like the support. So I bought a small amount of it.

Russian Economist - Kondratiev

2010-03-02T01:42:00.005+01:00

Here is an interview I found about Kondratiev and his waves (or seasons). It was conducted in Feb. 2010 so it is pretty recent. I have said many times, I'm a big of fan of Kondratiev's work. Here is an interview of a specialist of "K-wave".

I found it on "http://www.gold-eagle.com"

The Gold Report: According to your analysis based on the Longwave Principle, we are now in Winter, when the economy dies, the stock market crashes, and we enter depression. Could you describe this concept?

Ian Gordon: The basis of the Longwave Principle is the Kondratieff Cycle. Russian economist Nikolai Kondratieff developed his thesis on this in the 1920s. The cycle lasts approximately 50 to 60 years. I call it a lifetime cycle, because we live only one cycle in a meaningful way. For that reason, it is also very difficult for anyone to recognize where we are in the cycle because we haven't lived it that period before.

For example, we are now in the depression stage, but no one really refers to it that way. I do believe we are in depression because the real number on US unemployment is somewhere around 17%. That to me is a depression.

TGR: You call this period the Winter...

Ian Gordon: I've broken the cycle into the four seasons, and others have done the same – with Spring being the birth and rebirth of the economy, Summer being the time when the economy reaches its fruition, Autumn being the feel-good period. Kondratieff called Autumn the plateau period because it's when the economy levels out and it's also the season – always – of massive speculation in stocks, bonds and real estate.

There are indications of each season changing, and you have to know where you are in a cycle to be able to predict where you're going. At the Longwave Group, we've been able to demonstrate with a lot of comfort where we are in each of the seasons, when we change seasons and so on.

TGR: And the debt created in the previous period, Autumn, led to this depression stage?

Ian Gordon: Debt is a major part of it. Speculation is also a contributing factor. We went into Autumn between 1980 and 1982 and similarly between 1920 and 1921. Four events anticipated each of those Autumns. One was a peak in interest rates, second was a peak in prices, third was a bear market in stocks and fourth was a recession.

And then you go into this massive speculation in stocks, bonds and real estate in the Autumn because once the Federal Reserve takes interest rates quite dramatically down from the peak, money floods into the banks. It's also the season when you get the biggest build-up in debt. Any debt chart in the United States, for instance, shows that the debt really starts to take off at the beginning of what Kondratieff called Autumn.

When the big speculative bull market ends, it indicates that we're going into Winter. And Winter is when all the huge debt that's been built into the economy is wrung out, either through payback or – in most cases – bankruptcy. Creditors and debtors alike suffer very, very much during the Winter period. It causes a crisis in the banking system because banks are the biggest creditors. If you look at the last Winter after the 1929 stock market peak, some 10,000 US banks failed by 1933. In fact, when Roosevelt became president, he closed all banks for 10 days and sent in examiners. Banks deemed to be okay were allowed to reopen, and basically the doors stayed closed on the rest.

So, we're now in the Kondratieff Winter. I've argued the real peak in the stock market occurred in 2000; that was certainly the speculative peak on the Nasdaq. At that time, too, consumer confidence peaked. Alan Greenspan decided he didn't like Winter, and to save the American economy from a depression, he cut interest rates from 6% to 1%, and pushed enormous amounts of money back into the banking system to try to refloat the economy.

Greenspan did achieve his aims to some extent, but in effect, he really built up the debt level to absolutely unmanageable proportions and particularly in the housing market, which resulted in this huge speculative phase in real estate.

That housing market bubble burst, and it has a lot further to go on the downside. The stock bear market that began after the Nasdaq peak – and it has never gotten anywhere close to that level since – began for the Dow in October 2007.

TGR: If we infer that each season lasts about 15 years, give or take five, we're pretty much halfway through Winter now. Is that right...?

Ian Gordon: I don't think we are. This is the first Kondratieff Winter in which the entire world has been subjected to a fiat system [with money not backed by Gold Bullion or any other tangible commodity]. It's so much easier through the printing process to try to stave off the bad days. As I've said, Greenspan made it appear that Winter hadn't started by printing all this money. And we did have a bear market. The Dow dropped – what? – 35%, and the Nasdaq dropped almost 80% into 2002.

TGR: You indicated that the major thing that happens during Winter is debt gets taken out, either through bankruptcy or payback. Where does hyperinflation fit in that picture?

Ian Gordon: I am very much a deflationist. Taking the debt out of the system is in itself a deflation process. You can see it in falling housing prices. As debt comes out of the housing and mortgage markets, it deflates prices. We're going to see the same in stock prices. Wealth is being reduced considerably, and that is deflationary.

A lot of people who argue for inflation say that all the money being printed eventually has to go through the banks back into the economy. But it's like being on a treadmill. You running as fast as the treadmill goes, but you don't get anywhere. The Federal Reserve is printing copious amounts of money trying to re-start the economy. Unfortunately, the rate of debt being taken out of the system eventually will overwhelm their ability to do that.

TGR: Your Winter Warnings indicates that as we move through this collapse, China will become a scapegoat in terms of other governments implementing policies that will harm Chinese exports. If the Chinese GDP is growing and they're already becoming less reliant on exports, could they have a milder Winter than Europe and the US?

Ian Gordon: I think perhaps the Chinese Winter will be the worst of all, and again we have a parallel. China is the US of the '20s. The US came out of World War I as the world's largest creditor nation, with a major significant growth in its industrial prowess – all of which China is today.

At that time, the US government was paying down debt, and it wasn't that significant anyway. And now, the Chinese government doesn't have much debt either. But in the US, corporations and consumers of the Roaring '20s built up huge amounts of debt.

You see parallels in the housing market in the '20s to what we see today in China. A lot of suburbs were developed because people had automobile or railway access to the suburbs. At the same time, we had a major development of skyscrapers in city centers, monstrous buildings carrying monstrous debt.

China is in that kind of process. What happens when you get so wealthy, you're exporting so much, particularly to the United States, the Chinese government takes the US Dollars and credits the bank with Renminbi. The bank has all this money on hand. So a local businessman goes to the bank and says, "I want to build a factory and build toys for Toys 'R' Us in the United States." The banker says, "Fine." He has all this money; he makes the loan; the borrower goes and builds his factory. Somewhere across town, someone else goes to another bank and does the same, and again and again with different borrowers and lenders. It's the mal-investment that occurs when you have so much money floating in the system.

TGR: And then what?

Ian Gordon: Eventually, the United States, the biggest importer of Chinese products, cannot continue buying at that level. Despite the pace of growth in China's economy, it still takes probably at least 50 years, maybe more, to develop a middle class. Those are the people who have the wherewithal to spend. So, it's going to take China a long, long time; it's still very much an agrarian economy.

For these reasons, I think China's banking system will go the way the US banking system did in the '30s, and the whole economy will go into a collapse. But out of it, she will rise as did the US as the greatest economic, financial and political power. She will be the world leader.

TGR: You went into Buying Gold early on, back in 2000, but you've also said that cash is one of the best investments. What makes cash a good investment during the Winter period?

Ian Gordon: Because it's deflationary. The value of everything your cash can purchase is going down, so you can buy more. For instance, when we were renting a house in Phoenix, we were told you can buy 4,500-square-foot homes here for $150,000. You can't even build them for that kind of money today. If you have $1 million in cash now, it might buy you one really nice home where I live in White Rock, BC, but in four or five years' time, it might buy you five of them. We're seeing that in all sorts of things; even automobiles are getting cheaper.

TGR: Why wouldn't US investors have all their money in gold? And when they need to pay bills, they convert it into cash? That's assuming that gold ultimately will retain its value, whereas all fiat currencies are going to come down.

Ian Gordon: I don't know that all currencies are going to come down relative to each other. For years I said the Euro was a cobbled political currency that would never survive a Kondratieff Winter. And we're starting to see that's likely to happen. Everybody is trying to pick the winner. Right now they're picking the US Dollar. Before they were picking the Euro. Except maybe the Renminbi, all the currencies are vulnerable. Definitely the Yen is very vulnerable because the ratio of debt to GDP in Japan is so massive already.

TGR: So if the currencies are all vulnerable, should we put all of our cash into gold and basically liquidate it for cash when we need it?

Ian Gordon: One problem with that is we don't know how the government will respond to those who own gold. It's dangerous to put all of your eggs in one basket. You'd be trusting the politicians not to do what Roosevelt did in 1933. After he confiscated gold, Americans kind of got around it by investing in gold companies. They were very profitable, and all the money, all capital ultimately flowed to gold because it was the only thing people trusted. It was going to gold because that's where people wanted to be.

That led to a major number of discoveries made, including, in Canada, all along the Abitibi Greenstone Belt and in British Columbia. They couldn't have been made without money. By 1940, according to the US Bureau of Mines, 000 gold mines were operating in the United States. Of course, those were the ones that people reported. People panning gold up in Alaska didn't tell anybody that they were an operating mine. They were just hoarding the gold.

TGR: So, it's a combination of owning gold and gold stocks. Or should we say precious metals – including silver...?

Ian Gordon: As for silver, it didn't really work as a monetary instrument in the early 1930s. Although at that time US coinage from the Dollar to the dime was minted in silver, so there was certainly hoarding of silver coinage during the last depression. During this depression silver may well take on a monetary role, since the price of gold might take that metal out of reach of many people. I think only the precious metals work – again because of the stock market debacle that I see occurring. We know that investing in precious metals worked in the '30s. People were pushing their money into gold stocks because they wanted to be in gold in any shape or form.

TGR: Because you're suggesting that all Gold Mining companies will increase in value during this timeframe, should the average investor be concerned about which specific gold companies to invest in?

Ian Gordon: Certainly the producing companies will go up with the rising price of gold. Don't forget in the early '30s the Gold Price was fixed at $20.67 and it wasn't raised to $35 until 1934. But even so, people were investing in the gold companies, both explorers and big producers such as Homestake.

Today, I tend to put my money into the juniors because that's where I see the leverage to a rising Gold Price. But you've got to be very, very selective and very cautious. You have to evaluate management of these companies. In Canada, particularly in Vancouver where most of the junior precious metals companies are situated, we're living with these people. It's very tough in the United States, where you have to rely much more on what others tell you. Fortunately, a lot of very reputable newsletter writers and so on are trying to do a good job in their recommendations.

TGR: What's your strategy for finding good junior prospects?

Ian Gordon: I try to find companies that will make me 10 times my money in two years. I'm not going to say that happens every time, but it has happened fairly frequently. We've had a number of 10-baggers. A few of those that give you 10 times your money can make up for a fair number that are wrong.

TGR: Where do you hunt?

Ian Gordon: I look at companies that others are ignoring or have lost interest in because people feel they haven't accomplished much. I also look at companies where I really like the management – managers who are truly committed to their shareholders and not themselves. And through the years, when I invest in a company, I tend to stay in it if I can see a double in 10 months.

I think that it is important that your readers do their own due diligence on Gold Mining

TGR: In 2008, we saw junior gold stocks, all gold stocks, go down. Fund managers were selling anything they could because they needed cash. You're predicting another major financial collapse in the US. Why will it be different this time?

Ian Gordon: I think the run to gold will become very extreme this time around, but in many cases these gold stocks today haven't recovered from their highs of early 2008 anyway. If you look back on the past Winter, when the Dow lost 48% of its value between September and November of 1929, Homestake crashed. But in subsequent downs, Homestake went up. I feel that will happen again.

TGR: What would you do?

Ian Gordon: Let me put it this way. I have almost 100% of my investment money in these kinds of stocks. I don't really have much cash sitting in my investment accounts.

TGR: How long do you think the Winter is going to continue? And when do you guesstimate this next crash will hit? When was the next rally in the last Winter?

Ian Gordon: The stock market recovered 50% of its losses in a rally into April of 1930. That's very similar to the rally we went through from March 2009 to mid-January this year. Now, we're on the downturn again in the market, and I am predicting that this one will take us down to somewhere about 5250 on the Dow either this year or early next year. And then we'll get another rally. Hope springs eternal.

But then I think the whole stock market bottom will be reached in 2012. The only reason I am picking 2012 is I am a huge fan of a great cycles guy, who died in 1955, called W. D. Gann.

TGR: Oh, yes...

Ian Gordon: He did a lot on anniversaries and so on, and 2012 happens to be the 30th anniversary of the 1982 bottom, which was the beginning of the big speculative Autumn bull market. And it's the 10-year anniversary of the first bottom, in 2002. The market peaked in 2000 and dropped in 2002. It's also the 80th anniversary of the 1932 Winter bear market bottom, after the Dow had dropped 90% from its 1929 high.

That's why I wrote a piece on my website called "This is It" in 2007, and one of the things that convinced me was when I saw those Bears Stearns funds sort of going bankrupt in July 2007. That was the 20-year anniversary of the '87 crash, the 100-year anniversary of a big market crash back in 1907, the 150th anniversary of a big 1857 crash. All these Gann kinds of numbers came in at the same time in 2007. That was so compelling that I was absolutely convinced that 2007 was the end. And that's proved to be correct.

TGR: So you're saying the market is going to be drop by half this year.

Ian Gordon: Yep. I think we're going to have a crash in stock prices this year. But I am staying long in my gold stocks.

TGR: Will this Winter end in 2012 then?

Ian Gordon: No, it's just the bear market bottom. Remember the bear market bottomed in 1932. But the Great Depression didn't really end until World War II. The Winter continued even though the bear market had bottomed.

Article posted on http://www.gold-eagle.com

Gold...or...Not Gold...

2010-03-02T01:09:00.004+01:00

Sorry not to post lots of messages but I'm deep in the final exams and you know how it is...well...you have to study hell of a lot to get ahead of the game.

Anyway, I don't think I'm missing too much in the stock market... I really don't know where it could go. We broke a major trendline and we moved back to it from the bottom. Not too bullish but I have seen this pattern several times. When a major trendline is broken, the trend resumes but in the lower "floor" if you picture what I mean. We're still in a trend at a lower level.

Is it currently happening? Or we're moving into a bearish phase. I let you decide.

I wanted to have a look at the Gold chart as this thing is still above $1,100 and apparently Gold wants to remain above that level.

Could gold form a falling wedge which is quite bullish?

With a target of $1,200?

Well the future will tell.

If gold is up, does this mean USD down? USD down...would that mean Euro up? Maybe a play here. Isn't the Euro a bit oversold?

Ps: Last Friday, I entered a tinny position in a highly speculative play on a small cap. Groupe Arès (ARE) at $0.26 on a major support. ARE could form a double bottom.

A couple of stocks to watch on the French market...

2010-02-21T20:53:00.003+01:00

Hi everyone,

Here are a couple of stocks to watch in the next few days. I have been asked to look at several stocks and 2 came up to me. And here they are?

You want speculative plays ?! A possible double bottom or a nice breakout.

. Groupe Ares
. Osiatis

Christian Scott @ New Morning Jazz Club - 16 Feb. 2010

2010-02-17T16:47:00.005+01:00

By the way, I'd like to share some music with you guys today. I like putting in an article about music every now and then.

Yesterday, I was at Christian Scott's concert in Paris (New Morning) and as much as I really really love what he does, I was so disappointed with how he plays last night.

I really urge you to buy his albums obviously but last night was not too good. I saw that cat 2 years ago in Paris (Sunset) and it was great but last night it wasn't.

First, he did not play too much. His solo were not that good and not that long. My boy Roy Hargrove was way better while Roy was at the New Morning. But Scott is not known for being a technician but more of a truely soulful trumpeter. I love Scott for his wonderful melodies. It just talks to you. The guy sings to you through his trumpet. But not last night.

Just like his guitar player that I really like...Matthew Stevens. Last night, he was not good. He could not play.

Overall, on several songs, each band member was doing his own thing without caring about the result and the result sometimes was ugly. It was pure "cacophony" when nothing could be heard. That's unfortunate as normally Christian Scott has wonderful lines.

Anyway, as much as I was disappointed with the band's performance last night, I still think Scott's albums are incredible. Just go buy them (CLICK HERE). Go to his concert and make your opinion yourself, hopefully you'll have a better experience just like the one I had 2 years ago.

Ps: The last song "rewind that" remains one of his bests. what a great song. "Litany against Fear" was also great. On his new album, "The Eraser" is simply great.

Power-One (PWER) is still rocking...

2010-02-17T15:59:00.005+01:00

Power-One is one of these great current winners. +19% as I have averaged up significantly on the upmove.

Let's put it this way. I have now an important position.

It is a nice play so far however we must not forget that a huge resistance in under way and I may sell some of it around $4.7-$4.8 if I see some signs of weakness.

So far so good.

How Goldman Sachs Helped Greece to Mask its True Debt

2010-02-15T12:26:00.002+01:00

"Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.

Greeks aren't very welcome in the Rue Alphones Weicker in Luxembourg. It's home to Eurostat, the European Union's statistical office. The number crunchers there are deeply annoyed with Athens. Investigative reports state that important data "cannot be confirmed" or has been requested but "not received."

Creative accounting took priority when it came to totting up government debt.Since 1999, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent....."

Next => CLICK HERE

Cardium Therapeutics Inc. (CXM) - A speculative play

2010-02-15T01:38:00.002+01:00

Here is a speculative play for the coming weeks. A nice small cap.

. Daily chart => Nice bounce up on the $0.50 support with nice bullish divergences on RSI + Sto
. Weekly chart => Look at that huge double bottom (W) with wonderful divergences.

On the wrong side, there is a major sell-off with huge volumes. Is the company going belly up? Is this the capitulation? Investors throwing the towel?

I feel like it could be worth the try. I may start a tinny position on it. Tinny tinny. You heard me. If you play it, play it like it won't hurt you.

Power-One (PWER) - ABC pattern...

2010-02-11T23:15:00.002+01:00

That chart is for Moise and his famous ABC pattern. To tell you the truth, I opened a tinny line on this stock at $3.30. I'm not betting the farm.

We'll see how it goes. I like this huge candle with incredible volumes. Let's see if we reach the former highs.

Keep in touch.

Sandridge (SD) - What do you think?

2010-02-11T22:59:00.002+01:00

As I was reading "Oil Trader's blog", I noticed he invested a bit of his money thinking that this stock can bounce up pretty significantly.

It's all about pscychology. See, that's what markets are all about. Some bullish dudes. some bearish cats.

. Daily chart => Possible double bottom (W)
. Weekly chart => A nasty head-and-shoulder patterns.

Watch out. Future will tell.

Gold - $1,000 will be key...

2010-02-10T19:05:00.002+01:00

Here are the two scenarii... Basically, when you enter a trade, it's either go up or down... I know.

I really think, it's tough to draw a scenario lately. Everything could happena nd this is why I have all my portfolios in cash. I just wait. I wonder. I try to figure this all out. And I cannot lately.

Hyperinflation? Maybe. Then, gold will stop at $1,000 and will skyrocket later on.
Depression? Possibly. Then, gold will go up and down or down and up...tough, isn't it? Depression brings fear and lower prices. Fear helps gold bugs but lower prices pull gold down.

Let's say $1,000 could be a nice entry point.... Well...we'll have to see the price action at that point.

EUR-JPY doesn't smell good...

2010-02-10T18:52:00.002+01:00

You can see that the Euro is in trouble against all currencies basically...but in big trouble against the Yen.

Look at that long channel...from 2002 to 2006. Guess what?! The euro got out of it from the top and went on with a huge bull move. Then the collapse in 2008.

Look at what's going on today.

. Channel broken down
. Next big support => 115
. Your sell trigger is underneath that level.
. Your buy trigger is...well...don't buy it...wait.

"SOLVENCY II" will create the collapse in 2012...

2010-02-09T17:12:00.004+01:00

As you probably know, "Solvency II" is the equivalent of "Basel II" for Insurance Companies in Europe. Regulators are still talking about it and it should be set by the end of 2012.

As much as I think this is good for financial institutions to have more controls over risks...I feel like it is going to be total "Rock & Roll" to set up.

Let's put it this way. Insurance Companies manage incredible amounts of money... 1300 billions of euros...just in France. It's huge. They have to manage these assets as good as possible in order to deliver a decent yield on Life-Insurance.

On average, Insurance Companies have 70% of their assets in Bonds, 15% in Real Estate, 15% in stocks. 15% of 1300 billions, it's almost 200 billions euros in stocks just for France. That's the situation today. Imagine for Europe.

Basically, with this regulation, Insurance Companies have to show higher levels of capital in order to back up their bets. Today, Insurance companies have to put up almost 50% in "fresh" capital for a bet in the stock market.

Can you see the impact?! Let's see that through an example.

Insurance Company with 1B€ in asset, 800M€ in liability, 200M€ in equity. This Insurance company has to invest this 1B€ in order to return something for its contractors. Before Solvency II, it could invest 1B€ "without" (or with a tinny piece) backing up its "bets" with equity (capital - stakeholders' money). Now to invest this 15% (150M€), the company needs 75M€ in capital, equity, reserve, in cash in the vault (call it whatever). Don't forget that this Insurance company needs reserves for its liabilities (be it Fires, Hurricanes, Broken cars, or a stock market crash).

Can you see the impact?! Basically Insurance companies will have to be out of the stock market somehow or reduce dramatically its exposure... It's even worse in the Private Equity industry. The back-up ratio is up to 60%. Today, there is no way in hell an insurance company can play with your money without backing it up.

I let you do the math. It means lots of money has to be withdrawn from the stock market. This also applies to Real Estate, to bonds... Regarding the Bond Industry, it will depend on bond ratings. AAA will obviously need less cash than AA ratings or A...so on so forth.

This regulation is still being talked and will have to be applied by the end of 2012. According to some articles here and there (Les Echos, Agefi, etc), insurers have not done anything yet. Will they wait 2012?! Possibly...maybe not.

Basically, they'll have to go toward AAA bonds because it requires less cash in reserve but have you seen AAA returns?! Ridiculous.
Have you seen where the yields are about to go?! UP.
This long bull market in bonds is over. Rates can just go up (see charts).
Besides this, it is easy to admit that developped countries will lose their AAA ratings. Let's face it. France, in particular, has no stategy to fix the deficit problem... France will lose its AAA ratings... Insurance companies will be more reluctant to lend it money as it needs more back-up capital...see the thing.

On another note, if rates have to go up, this means that stocks will be hurt, real estate will be hammered...
So far France kept it up pretty nicely with no loss in Paris' Real Estate and -10% in France overall.
Don't forget one thing, the Kondratiev's winter is blowing its cold air in your neck so you can get sick.
The cold wind is RATES. If rates go up, we have more downside risks in front of us [period].

Risky to get in now. Probably not, let us recover a bit before and let people feel like the party is back... Only then, Mr. Market will slaughter everyone out there.... in 2012?!

Date during which lots of things coincide?! (rates up, solvency II, AAA ratings being lost, etc...)

Can you see the snowball effect?!

If the stock market collapses...the Equity section of a balance sheet will decrease... But remember... Solvency II wants Insurance to have more back-up equity/capital for any kind of investments... "La boucle est bouclée". Insurance companies will see their stock portfolio going down so they'll have to reduce their exposure. Their own stocks will act poorly (because when a Market is down, overall everything goes down) and this will decrease their own equity section (on the balance sheet) and will need more capital...

Oh man, 2012 will be "Earth-shaking"...as Paul Tudor-Jones would say in 1986 before the crash.

There is blood on the street....

2010-02-05T18:03:00.003+01:00

Wouah...Today was nasty for the bulls. As you know on the right end side of this blog. I'm 100% cash and it feels good. I'm obviously mad at myself not to play these bear moves bu seriously, I still think it's not a disaster until that "neckline" coming from the inverted head and shoulder (see chart) is broken.

I'm seriously surprised how fast we go to one idea to another. When I say "we" I mean Mr. Market. At some point, it was all about rates being increased by central banks and so on so forth. Now we're really taking into consideration governments debts. That's normal. I have been talking about it right into the crisis in 2008...in 2009 on this blog as well. I was maybe the only one. The debt level is not sustainable and still...markets did not give a "damn". They wanted to go up. Debt problems were there 3 months ago...1 year ago...5 years ago...10 years ago...It didn't give a "damn". This week, Mr. Market decided that it was going to take it into account. This is why playing with the markets is such an amazing game. The goal is to try to find what Mr. Market thinks...

I'd like to share something that really pisses me off... I mean...I really don't want to talk about Politics because I don't think Right, Left, Republicans, Democrats make a difference but I'd like to share some opinions...really badly. Feel free to comment.

Do I think that developped countries should work on their budget?

YES.

Do I think they should decrease the public employment?

Yes and No.

Let me tell you one thing.

When I see all the French Ministers, President Sarkozy, Deputies, Secretaries, the Senate, etc... I want to "puke".

Basically, 95% of these guys have 4-5 chauffeurs (at least..paid by my taxes), several cars (paid by my taxes), nice apartments (paid by my taxes) that are 20 feet away from their workplace..It's too hard to walk 20 feet... If they were walking, they wouldn't be that fat..

They are getting paid twice or 3 times (maybe 4 or 5) because they are Ministers, Deputies, Mayors...they just add up jobs...therefore..they add up incomes. That's a shame. Look at them. They barely do one job.

They try to decrease social helps, unemployment helps, etc. I have nothing against. I like the way France helps people but just look at the US. It helps to have a flexible labor market. If we want to cut helps, we have to (de)regulate our labor market. It's a hard tax because French fellows would be on a strike right away.

I (I mean people of my age) am willing to give up some of my retirement, some of my social security, some of my government helps (for students, unemployed, etc)...

But if I give up something, I want my government to show some unity with its population. I want my government to be an example. I want to be proud of my government.

Why should they add up 3 to 4 incomes while they barely work on one task.
Why do they need so many chauffeurs that I pay with my taxes?
Why do I need a "Minister of the recovery", a "Minister for teenagers", a "Secretary for city", a "Secretary for the sports" and a "Minister for the sports"...a "Minister for having green grass", "Minister for blue water", "Minister of "I want a clean city"...too many people for nothing.

I'm asking my fellows not to say "NO" to everything all the time. The government tries something new but French fellows are on a strike every other day.

The question we (population) should ask ourselves is:

"what do all these people do with my taxes?"

I mean seriously, that's a shame. They go the "Assemblée Nationale" (it's where the government talks about the country's issues) and just do nothing.

Have you ever seen them in the assembly?

They sleep. Have you seen them arguing? Pathetic. One guy says "Mr. X said that, it's a shame bla bla". Mr X replies "YOU are the shame bla bla". I have the feeling that we're in Elementary School. They are screaming about pointless topics. It drives me nuts. I understand French fellows for that matter only.

However my French fellows drive me nuts regarding a few issues. When I see a train driver who is barely working 5 hours a day and this guy is in a strike because he wants to work less, wants to be paid more, and retire early...I'm pissed.
I mean... "Come on man, get your ass back to work"... Stop asking for money. Ask for your government to care about us, to care about our deficit by cutting spendings on their lives first...and then ours. But this goes through "COMPROMISES".

Seriously, I'm mad. We seriously need to do something. I think that striking is not a good solution. It's pointless. You go out in the streets saying that you're not happy...and so what?! Mr. President is in his warm private jet (paid by my taxes) waiting for the storm to go away. You stay out in the streets, striking in the cold...you get sick...you go to the doctor...the government pays half of the bill...and we increase our deficit...POINTLESS. You get that.

France went through a Revolution in 1789. Our Fathers did not know what Democracy meant. They wanted something new...they didn't know what. They just thought that being under the power of a King or an Emperor was not what they wanted to do.
I really think we're back to that point. We need to do something. We need to act.

Do we want to stay like that? Certainly not.

I mean. The only way we can be heard by our government is go out there to your bank and get your money out of it. Create the collapse.

Did you know that our Life Insurances absorb 70 to 80% of our government debts. Get out of your Life Insurance. Make it collapse. Let's have a revolution. Let's put our country down. Let's rebuild something new.

DO SOMETHING.

Ps: Sorry to bring up that topic but I'm really fed up with what we are living. I hate my French fellows when they're striking for no reason whatsoever...asking things that we cannot afford. My French fellows do not want to find a compromise. Neither does our government. I know what I'm asking is basically a collapse...a total one...our Fathers did it and they made our History. Let's make ours.

(MFC) - Maisons France Confort - Wait until 30€ as hard as it may be

2010-02-03T17:53:00.004+01:00

You know that "survival" is key in this business and "survival" comes from "DISCIPLINE" and here (MFC) is exactly giving us a great definition.

Since we noticed it here on this blog, MFc quoted a little lower and we would have made money however it would have been a risky business.

A decent news came out (CLICK HERE) and it helped the stock grab a few euros per share. I remind you that huge "cup-and-handle" pattern that we look for. 30€ is our BUY trigger and we also want some volumes. I believe that if everything happens, it could be OUR winner for 2010 by adding to it along the way. On top of that, the bottom is at around 10€ and a breakout level at 30€, it's a potential of 20€ per share. Nice.

If it doesn't work, a stop around 28€ to be safe should be good. 2€ at risk for a 20€ potential. That's what I call a great risk/reward ratio.

USD-CHF => Shall we short the CHF and buy some USD?!

2010-02-01T22:36:00.001+01:00

Hi Everyone,

First of all, sorry not to be that active lately but I have been having interviews here and there for an internship this year so I haven't had time to focus on the blog.

Here is my view on the USD/CHF.

. Weekly => Huge double bottom (W)
. Daily => RSI bullish divergence + Cup-and-handle pattern

Buy USD on pullback.

Market Opinion

2010-01-24T23:31:00.005+01:00

Well, last week was quite interesting. We saw some nice pullbacks and a little more worrysome is some important levels being broken down. My scenario that stated that the EUR-USD was a leagin indicator still works but I guess we won't see new highs in the next couple of weeks unless (of course) a massive beartrap occurs (which I doubt).

Anyway, if you listen the last posts I put up here, you can see that I advised some hedges with buying put options. It would have coreved your entire portfolio pretty nicely.

CLICK HERE

I think 2010 will bring hedging skills out of you. Nice opportunities may occur but I believe if you're not able to hedge some of your gains, you may give them all back to Mr. Market. I understand today even more than before what Paul Tudor Jones was saying when he meant "play Defense". I think this is a great strategy. A hard one. Basically, you have to be aggressive when the risk-reward ratio is in your favor and when you reach critical levels (resistance), you either hedge it with options or futures in order to smooth out returns with big drawdowns.

We'll see if this week, the CAC is able to recover. I really thing this is an healthy correction. I'll also see if I can get back into Altran Tech at some point. So far, the year is alright. I hope it remains this way.

Altran - Stopped out @ 4.30

2010-01-22T12:45:00.000+01:00

Is the EUR-USD a leading indicator of the CAC40?!

2010-01-21T00:06:00.005+01:00

As I was looking at the EUR-USD getting hammered, I also had the CAC40 on another screen... I went to my kitchen to get a quick drink, I got back to my seat and I just couldn't figure out for some reason which one was the EUR-USD or the CAC40. A sort of hallucinations. Where is the CAC? Where is my euro?

When you think you have hallucinations, you call someone who is unbiased...well...my fiancée. She looked at it and almost said "why are you so retarded?! You're looking at the exact same charts".

From that standpoint, I'm telling myself "yes they look alike but the EUR-USD does the thing a lot quicker and the CAC40 just follows".

Here is what I have done. I have numbered each important point (to me) on each chart (tops, bottoms, etc.). And I found:

#1 => 1st bottom for €/$ & #1' => 1st bottom CAC40
#2 => 1st top €/$ & #2' => 1st top CAC
#3 => 2nd bottom €/$ & #3' => 2nd bottom CAC
#4 => Entry trading range €/$ & #4' => Entry trading range CAC
#5 => Exit trading Range €/$ & #5' => Exit trading range CAC

I haven't labelled the next 3 tops (after the exit of the trading range) that occurred for EUR-USD as the CAC just did one top and right now is getting close to the 3,900pts support.

Then, on a excel file (2nd pic'), I have noted the dates for each important point (bottom, top, range, etc) and tried to find out the number of days it took for the EUR-USD as well as the CAC to go from one point (bottom, etc.) to another (tops, etc.). I also calculated the difference (delta) between the dates of EUR-USD and the CAC 40. I have summed it all up in this file.

The correlation is not too good at the beginning of the study (March Lows in 2009); however, the closer we get to 2010 and the more relevant it becomes. Basically, if the CAC40 follows the EUR-USD "footprints", the CAC40 should give us two higher highs (tops) in order to achieve 3 tops after the exit of its last trading range just like the EUR-USD did.

Please note that both give us a trading range of (on average) 98 days. Then, the EUR-USD took 14 days to reach a new high (top) and then a little over a month to reach another new high...and another month for the 3rd and final top.

If I follow the same method for the CAC40. Here is what I get (see excel file - 2nd pic'). A trading range that took the same amount of time that the one in EUR-USD. A new top (after the exit of this range) that took 18 days (versus 14 days for the EUR-USD).

Pretty similar, isn't it?!

Let's say I apply for the CAC40 this one-month period to reach a 2nd new high. That gives us a 2nd new high for the CAC40 around February 2nd, 2010. I add another month for the 3rd and final top and I have March 11th, 2010.

Could that be the final top for the CAC40 before entering into a significant correction? Possibly. This study is worth what it is. There is no intend of fooling you or pushing you to do anything. It could just open your eyes and make you laugh if this 2nd top happens...unless the CAC40 breaks down the 3.900pts and collapse in the next couple of days.

Closed my USD-JPY position

2010-01-19T23:37:00.003+01:00

Sorry I don't have much time to post a chart but I will later.

Just wanted to warn you that as you know, I was short at 91.50 on the USD-JPY and I closed the position around noon or so (90.95 or 91.00, can't remember at the moment) because the USD rebounded on a support that I didn't like (see older USD-JPY charts or I'll post another one tomorrow). It did not behave as I wanted. It did not "collapse". By "collapse", I mean a strong correction giving you 150pts in a matter of hours.

I basically caught a pathetic 50pts profit which is overall NOT a profit as I lost 50pts last week. I basically made nothing out of that play. I still think it could very well work out but not now I guess. I have to reassess my judgment and have to find a new entry point.

Have a good night.

Maisons France Confort (MFC) - A possible cup-and-handle

2010-01-17T22:58:00.003+01:00

Look at that chart. I have many more that just look alike. It is great because it seems that several "great" opportunities may occur however when World Indices are about to correct or reach some critical levels/supports. It makes you wonder.

Indices are either about to bounce back onto the supports and will eventually lead for some breakouts just like for (MFC) and its 30€ level. Or, Indices will break down and will "most of the time" lead to fake breakouts for individual stocks.

Wait & see. Regarding (MFC), buy above 30€ with strong volumes and a stop right underneath in case of fake breakouts.

DJIA and the CLIFFHANGER fear...

2010-01-15T19:04:00.004+01:00

Alright. This week was intense for Altran Technologies (ALT) (last chart). But that's what I love regarding markets. The stock picking. Look, you have the market selling off and your stock is still behaving weel. The price action is still bullish on it and it could go higher (5€ in the meantime).

USD-JPY is behaving well so far, I'm back with a 50-pt gain which is what I lost on it so I'm even but we're getting close to a support. Scary. We either break it down or I'm screwed and I'll leave with a $0 gain as my stop is now set at my entry point. No margin required. I let it go with no money involved.

The CAC 40 sold off badly today but remained above 3,900pts. This level is in my opinion THE level to watch. It could trigger some sell orders. Watch out. I don't like that for Altran Tech. play. When indices turn bearish, don't buy stocks. We'll see. My stop is at my entry point on Altran too so "normally" no risk as far as I'm concerned (unless Altran opens down to 1€..who knows?!).

The wonderful Dow Jones Index is INSANE. look at that chart. That uptrend is steep and to tell you the truth, scary. If I were holding positions on the US market, I would keep them as the trendline is not broken yet but I would buy PUT options. you heard it. i'm not a big options fan but up to that level, this is being scary. I'd buy options with a 3-month maturity and 10,000-point strike price. Just in case.

Wish you all a great weekend.

Altran Tech. (ALT) - The "new" Raging Bull ...

2010-01-15T00:38:00.004+01:00

Just like De Niro in the great Movie "Raging Bull", Altran is being a raging bull...making short seller sweating. Let's face it, the tape is looking great. Each resistance is broken on huge volumes. It feels like there is always more behing it.

On top of that, news are helping the stock. Several brokers have increased their target for the time being. Kepler Equities, Oddo as well as Exane were helping us in that bull move.

Kepler's target price : 5.70€ => So funny, that falls right onto this resistance around 6€.

I wouldn't be surprised if we hit this 4.9/5€ zone. It's a good resistance. This could then lead to a quick pullback and get the stock an healthy correction before resuming its uptrend toward the 6€ level. It's going to be quite interesting for 2010.

Also, the CAC40 remains above 3,900pts. Don't short it yet even though I feel some tensions out there. Intel may help the CAC40 rebound above the 4,000 pt level as it showed some great results tonight.

CAC 40 - 3,900 pts will be KEY

2010-01-13T00:13:00.002+01:00

Operators are getting nervous lately. Today showed a RED light. Anyway, Alcoa set the tone yesterday and was not showing great results.

On another tone, the Chinese government is raising rates for banks as well as on government bonds. Well. Ok. Will China highly suffer from that? A little maybe. The Chinese economy is already "rolling", should I say "running"..."sprinting". They are doing fairly well if we believe the figures the government gives us.

I really think that right now, the correction we saw could be a little "breathing" in an upmove. Don't get le wrong. I'm just like you. I think that when a market goes up by +60% in a matter of 10 months, this is ridiculous. Mr Market does what it wants and there is nothing we can do about it. Fighting the tape? My account won't like it.

All I'm saying is I wouldn't be surprised to see the CAC 40 pulling back to the "tinny" breakout around 3,900pts to use that former resistance as a new support. On top of that, that level will coincide with the trendline drawn since March lows. Let's face it, this earnings' season is going to be "total rock'n'roll". I don't like playing the earnings' season. Really hard to forecast anything.

You want to play it? Use options? Straddle, strangle, Iron condar, Butterflies...use whatever strategies you think may be good...strong moves? no moves? You'll find everything you want in options. it's a lot of fun. I don't like them much.

Quick story for you. While I worked in New York, a trader told me one thing. "Never buy options, sell them". I didn't get it at first. Well, now I sell some every now and then either to cover my long positions (covered calls) or I sell some "naked" puts in a stock I like. Basically, if I think this stock is going for a long bull move. I sell a put. If I'm right, I will pocket the premium. If I'm temporary wrong, I buy the stock. Covered calls are a nice way to pocket premiums (a.k.a. dividends somehow) while the market goes sideways.

USD-JPY - Giving it another try....

2010-01-12T23:55:00.003+01:00

So you know, I quickly took my loss on this play. 50pts that punched me in the face to start out the year on a great foot. Lucky I was to make some decent money on Altran (ALT).

Anyway, just like my "heroe" (well, maybe not my heroe but the guy you want to listen to), if the fundamentals don't change and I think that something should do that. Well, I keep trying it until this clearly shows me I'm dead wrong. I really think that the USD-JPY is giving us a great risk-reward ratio at this level.

Look at the chart. It speaks for itself. I have set a limit order at 91.50. I'll see if I get filled.

As you know, what killed me on that play was that the day after I entered it, the Japanese Minister talked about getting the Yen a little weaker to help Japan be more competitive.

Read this and you'll laugh.

CLICK HERE (French article)

CLICK HERE (English article)

Basically, Big Guns told him to keep it on a down low as it was not very diplomatic to say such things and the "tape" printed red again. As Jesse Livermore would put it "don't fight the tape". And the tape is telling me to sell it right now.

Future will tell.

(RE)entered into ALT @ 4.05€

2010-01-11T23:12:00.003+01:00

Here is the day. Wonderful volumes and a nice breakout around the 3.95/4.05€ level.

We'll see how it goes.

ALT stopped out @ 3.75€

2010-01-11T23:07:00.003+01:00

As you know, I got stopped out on ALT at the worst point you could ever imagine...that means the lowest point of the day.

Anyway, the stock recovered and finished in the green area. Today is an investor's nightmare. I told you I wanted to add to my line if the stock was breaking out 4.05€ on huge volumes.

Today was the day. I managed to (re)enter the stock at 4.05€ however I did not add anything. I actually have a smaller position. It is really frustrating as I started this position at 3.20€.

I got scared with the unemployment figure last week and decided to raise my stop a little closer in case the figure was bad. It got hit and here I am, out of this "decent" position. I was about to add to the position and raise the stop accordingly to secure some profits.

Today was too good not to jump back in. It may be a "false" breakout but my stop is near (not too close =) ).

Market Opinion (FED Minutes and Altran Technologies)

2010-01-06T20:21:00.004+01:00

Today was important as it was the FED's minutes release. We were expecting some insights from other FED chairmen who could see some improvements/deteriorations in their own region.

CNBC Summary: CLICK HERE

We can notice that the FED is very worried with the Real Estate sector due to a few factors (FED's "help" so to speak) and the unemployment. It will keep rates low as long as this doesn't improve. The Real Estate got us in, will it get us out? I guess operators think that if Real Estate goes well (good home sales figures etc), construction companies will go well and as a snowball effect, it will lift up the economy somehow.

Don't forget one thing. As bullish as indices seem (S&P, CAC, Dow, etc), you have to remember that we are in a massive BEAR market that started in 2000. If you follow the economic cycles, 2000 corresponds to a peak in the Economy and we're now into the "winter" period of Kondratieff's cycles (I read a lot about him). You may have crazy rebounds during these periods (look at Japan and its Nikkeï that is in a bear market since December 1989). We are certainly in one of them. 2003-2007 rebound is certainly one of them as well.

The question is "how long will this current rebound last?" We have to figure out what the question/theme operators are trying to solve. Let me explain. By theme, I actually mean what kind of economic indicators operators are looking for?

Real Estate figures? Rates? Unemployment? Confidence Indices?

Remember in 2008, we had rate cuts and still the market reacted on the down side because Mr. Market was saying "if the FED cuts rates, it means that it is worse than we think out there". It could very well work like that right now. If in the 2nd half of 2010, the FED increases rates (which is what most analysts think the FED will do), markets may think "well, it is better than we think out there, the recovery is actually so powerful that the FED has to raise rates".

On a more bottom-top approach, the stock we purchased a couple of weeks ago (ALT - Altran Technologies - see chart) is behaving nicely although volumes are not as good as I'd love to. We're about to break an important resistance around 3.90€/4€. We absolutely need some volumes during that breakout. If volumes do not appear soon, I may decrease my position and take some profits off the table and let the remaining part ride with it.

Have fun and don't forget one thing. "Try to preserve your capital". As PTJ would put it "play defense". You want to stay as long as you can in this game so you have time to build experience.

S&P 500 still higher despite mixed economic data...

2010-01-05T23:03:00.004+01:00

Today showed some mixed economic data. First factory orders were up and Ford is selling cars...again. What a great news. Home sells were down pretty sharply and still the "Real Estate" sector was up (IYR).

Well that shows you that when the price action is in favor of a bull move, prices go up despite news.

Do we need to look for signs somewhere else?! The USD?!

The dollar moved a bit today (around 50-70 pts). Well, that tells us one thing. As long as data are bad and by bad data I mean the Real Estate Sector (home sales) not looking good, I think everyone is thinking, Mr. Bernanke will help us keep rates low.

On a technical standpoint, don't forget the inverted head-and-shoulders pattern on the S&P 500 (same pattern on mainly all world indices) that gives a theoritical target of 1230pts. We are 100 pts away from that target.

Strategy:

. If you are in it, just keep your positions and set up your stops very close.
. If you missed the train. Stay away and wait for better opportunities. You'll have to be patient.

USD/JPY - The rebound was strong but the resistance is a tough one...

2010-01-04T23:32:00.004+01:00

As strong as the USD rebound has been, it seems that the resistance at 93 was a strong one.

1. Weekly chart:

. Nice downtrend starting from May 07 up until now.
. Each time, the currency pair hit the top of the range, it went back down.
. A bullish divergence on the RSI is setting up. Will it break up the resistance this time?

2. Daily Chart:

. The picture is not looking good. Is the USD catching its breath in order to move higher?
. The chart says "sell now".

3. Strategy:

. Sell short the USD-JPY at 92.50 with a stop at 93.10 and a target at 90.00.

You could very well change your limit order as the price action goes. We may face a reversal and a huge breakout on the upside. In case of a reversal to the upside, be ready to quickly take your profit or let your stop do the job.

GUILLOUJ is on live on FOREXPROS.fr

2010-01-01T22:44:00.005+01:00

Hi all,

2010 starts with a brand-new partnership for "GUILLOUJ". You'll find all the analysis from here on "forexpros.com" as well (they'll be on both websites).

What will change for you? Not much except that we will have more coverage from now on. Hopefully, you'll find lots of information on "forexpros.com" website.

Cheers everyone.

2009 is over for the CAC40 and the accounts I manage (through a "PEA")

2009-12-31T14:16:00.006+01:00

Here is my performance for 2009 on the French stock market only (no forex here, no futures, no commodities). That's funny how this line reflects perfectly my trading for the year. Some moments where it boosts up quickly and some others where I get extremely confused.

As you can see, I started fine thanks to my "short" positions and then I had a little drawdown. I had to reassess my judgment and as you can see it took me quite sometimes before entering any new positions. I missed some crazy bull moves in the French market (don't forget that's the outlook for the French market).

The little "bumps" you see in the middle are due to "short" positions I took and closed very quickly. As you can tell "don't fight the tape", the "trend is your friend". I thought a correction could be way bigger than that.

Anyway, the huge bump comes from a nice play on Natixis (remember) which I played nicely in "averaging up" and getting me nice returns. I made a few mistakes then, hence, my pullback. Mainly due to "overtrading" and not being selective.

The last bump is due to my "last" play which I have averaged up as well. I'm up +16% on it, hence my average up. I may buy some more if it keeps breaking up resistances. The next level is 4€ for buying some more. ALT needs to break it up with "huge" volumes and not the one I'm seeing right now (current volumes do not give me confidence).

Also, one important point. See how flat I remain throughout the year. That's one of my main strength to be honest and humble with you. I can stay out for months just watching the tape. That's the most powerful force of the retail investor. You can be 100% cash. No rules against that. You do whatever you want. You think you should not be invested, don't be. Mutual funds cannot do that. They have minimum requirements.

Still, I close this 2009 year with a 55% gain with a pretty big drawdown a few weeks ago (-10% on my account). That shows you that you can easily break your rules. I told you, I still work on that. My goal for next year is to remain focused like I did this year by staying out of the markets if I don't see anything. Another great goal for me is to decrease that drawdown, to make it as small as possible. I need to remain under (-10%) if losses occur (and they will occur, losses are part of this game).

I wish you all a happy new year.

S&P500 (1990 to 2009) vs. Nikkei (1979 to 1998)

2009-12-31T00:39:00.003+01:00

As the debate is still on-going about whether or not the world will be hit by inflation or deflation, an analyst from Merrill Lynch (Bank of Am.) drew a wonderful comparison that I think is worth the look.

You know how many people look for comparisons. We have seen the 1929 Dow vs. the 2009 Dow etc... Some really had similarities but this chart is simply mind-boggling to me. There are some features of course. Nikkei is in $$ terms, the S&P in DXY terms. Other than that, charts look so similar.

Will the Japanese "lost decade" become an American "lost decade"? It looks like it.

Bottom line, as I said earlier on thig blog, we're in a massive bear market that started in 2000 (the S&P chart since 2000 speaks for itself). This doesn't mean that strong "long" rebound could occur and then markets roll back down. The Nikkei has been doing this since December 1989. The S&p could do that as well.

Wait & see.

Source: http://www.dailymarkets.com/stocks/2009/09/01/nikkei-comparison-suggests-sp-500-at-1400-by-year-end-%E2%80%93-and-400-by-2014/

2010 - A new decade...New plays...

2009-12-28T13:21:00.004+01:00

Hi Everyone, I hope Christmas went fine (for the ones who celebrate it).

Anyway, as some Gordon Gekko would say in a certain movie "money never sleeps pal" and this may be a vacation period, we still have to figure out how 2010 may be, as tough as it seems.

If you regularly read this blog, you know I was very concerned with this "lack" of correlation between the stock markets and the US Dollar lately. Remember for years (some friends would tell me, only for months), when the USD was down, stocks were up etc...

During the past trading sessions, Dollar went up significantly and stocks did not move much. On the €/$, we went from 1.5000 down to 1.4200/1.4300 which is a crazy move. Usually, such moves were moving the stock markets by "at least" 15-20%. Nothing happened.

I believe operators think that rates WILL go up (how can they go down while they're currently standing at 0-.25%). Easy to say. Operators think they will go up faster than we currently think. Bernanke said he was not going to move them throughout 2010, but that's not what the tape is telling us. On the 1st chart, you see the 20-year T-Bonds that has formed a head-and-shoulder pattern and I believe it is about to be completed (a few more weeks and the neckline may be broken). watch it out closely.

Here is the chart I posted on Sept. 2009: CLICK HERE

Why would rates go up? Simply because inflation gets back in. Dr. Doom (a.k.a. Marc Faber) may be right "again" on that one IF it occurs. Anyway, that's what the "tape" is telling us right now.

I posted the Gold chart as well to show you that the current pullback could be a possible entry in order to play that inflation.

What would this rate increase do to stocks? Well, to tell you the truth, I believe stocks could take a hit on a short-term scale. When Central Banks increase rates, stocks could sell off but will recover in my opinion. Central Banks CANNOT counteract/block/stop market moves on a longer-term outlook. Notice how markets reacted during the collapse in 2007-2008. Rates were cut and markets rebounded slightly to move lower later on. You don't stop markets. They are way stronger.

From my several readings, stock markets seem to do fairly well during period of inflation (I'm talking about inflation not hyperinflation). During hyperinflation, it is quite different as you must have a wonderful timing. Read some Marc Faber's work about it, you'll see that the best opportunities occur during hyperinflation times.

Besides, remember again in 2007-2008 when FED cut rates dramatically. What happened? There was a huge misunderstanding from operators thinking that if the FED cuts rates like that, that must be "really" bad out there, maybe worse than they actually expected. Markets sold off later on.

Think about it, if the FED increases rates while operators think it is bad out there (economically speaking), operators "may" think that everything is recovering way faster than they thought. This could boost markets a little.

2010 will tell us anyway.

Regarding my stock pick, Altran Technologies (ALT), not much too say. The stock is moving nicely so far. A strong resistance stands around 4€ and we'll see how it goes. My main concern is about the volumes being weak so far. We need some volumes to push it up. To tell you the truth, if in a month from now, we haven't broken that resistance, I'll be probably out. As Paul Tudor Jones {my mentor =)} would say "set up a stop limit as well as a time limit". If you scenario doesn't happen in a certain amount of time, well it may not happen at all.

Have a good trading day.

CAC40 - A possible scenario

2009-12-23T18:53:00.004+01:00

The CAC40 (and all major indices) are in a "dangerous" zone. It's either we break it up and move higher or we move back down.

This zone is synonymous of lots of hesitation. As a matter of fact, indices drew an inverted head-and-shoulders pattern throughout 2009. The theoritical target for the CAC40 should be 4,250pts which means we still have some room to go. I drew a possible scenario in case of the target is reached. I believe we could have a pullback to that trendline. It would be a classic in chart analysis. I'm way ahead of it right now but it's always good to have several forecasted scenari.

Fitch is sending some "threats" about ratings....

2009-12-23T18:49:00.001+01:00

Fitch warns that Britain and France risk losing their AAA rating

Fitch Ratings has given its bluntest warning to date that Britain and France risk losing their AAA status unless they map out a clear path to budget discipline over the next year.

By Ambrose Evans-Pritchard
Published: 6:28PM GMT 22 Dec 2009

Highlighting the "unpleasant fiscal arithmetic" facing states across the Old World, Fitch said that none of the "arguably" benchmark AAA states can safely rely on their top rating for much longer.

Public debt in both Britain and France will reach 90pc of GDP by 2011, higher than the 80pc (net) level when Japan lost its AAA rating earlier this decade.

Japan's error at the time was the failure to set out any serious plan to rein in spending, a lesson that the Europeans need to study closely. "The UK, Spain, and France must articulate credible fiscal consolidation programmes over the coming year, given the budgetary challenges they face in stabilising public debt. Failure to do so will greatly intensify pressure on their sovereign ratings," it said.

Brian Coulton, Fitch's global strategist, said Labour had fallen well short in the pre-Budget report. "They did not articulate fully what needs to be done," he said.

One comfort is that revisions to the UK's Asset Protection Scheme have cut potential bank losses from 32pc of GDP earlier this year to just 14pc, and perhaps zero in the end.

Mr Coulton said the surprise "mauvais élève" has been France, which has let its budget deficit balloon to 8.5pc of GDP next year - or higher including an off balance sheet "Grand Loan" of €35bn (£31bn) for investment projects - despite having suffered a mild recession. "It is one thing to run a large deficit when your economy has shrunk sharply, but this is self-inflicted. They are moving close to double digits. It is a concern," he said.

The Dubai crisis has been a timely reminder that "contingent liabilities" are hazardous, coming back to haunt sovereign balance sheets.

Markets are going higher...but where are operators??!!

2009-12-21T19:45:00.003+01:00

At first, European markets opened slightly higher waiting for our American Fellows to set the tone. And our American buddies decided to pull this up and the CAC40 went higher. However, we have to notice that volumes were not there and nobody was in the markets today.

Holidays? Last leg in a huge bull move?

Well, I cannot really tell you but my feeling is that these markets correct rapidly but always get back on track. That means to me that they want to keep these levels.

As you know, I was short right around 3,900 pts for the CAC, 10,000 pts for the Dow and my French play was good but the Dow play was ugly, this is why I decided to cut my losses right when I felt these markets wanted to remain above these levels.

As much as I think these markets are overextended, I must admit that one should not fight the tape. The tape tells us that markets are resting for now. They don't say whether the next move will go up or down. I'm thinking the next move will be up. Will it be the last 10-15% move before correcting? I seriously don't know. I was expecting a 15% correction and I only got a 10% one where I covered half of my shorts. It moved back up, I decided to leave the markets.

Other than that, Gold is correcting pretty badly as well as the Euro versus the Dollar. This is what amazes me. The dollar is strengthening and markets are keeping up. Something is going on right now. Something different. A couple of months ago, a 600-pt move in the EUR-USD could give you as much as a 20% swing in stock markets. What happens now? Nothing. A 600-pt move does not shake the markets.

As you know, I'm in ALT, a small position that I will eventually build up. I may buy some more if 3.50€ is broken up with huge volumes. The stock is behaving well in my opinion and I like that.

I wish you guy a Merry Christmas (for the ones who celebrate it) and enjoy the time with the family.

My TEN Trading rules

2009-12-17T23:43:00.004+01:00

Of course, you could have many more. However, these are the ones I follow and they have nothing special.

#1: Never average down. Always average up. I just love doing this, keeping on buying if it goes along. As PTJ would put it "losers average losers". Get the point?!

#2: Cut your losses short, let your winners run. A little easier to say, hard to do. When should I cut? When should I let it go? Well, there is only one answer. STRATEGY. Know what you can lose on a trade and size it. Set up a stop (be it mental or an actual order) and know when to get out. Most of the time, When I have a limit, I just get out 50% of my position and let the other half run unless it goes against me. Why do I keep the other half? Because you never know, it could very well keep on going along.

#3: BE PATIENT. Still, I'm working on it. I have left so many dollars out there by being unpatient. I have had the "best" winners of the world and still, I did not make the 5-fold play that I should have had. Let the stock (or another financial instrument) work out your scenario. It can take some times especially since I deal with weekly charts mainly.

#4: "Never wishing, always trading" by PTJ...again. Basically, be emotionless, stick to your plan.

#5: Do not overtrade. Believe me. You should know it by now... I'm STILL working on it.

#6: If you don't feel the market, stay out. Staying out like a sniper is a wonderful skill for a trader. It is funny how I can be good at that and sometimes completely pathetic. I can stay away from markets for months and then start some crappy trades everyday. Basically, stay out if don't feel it or if you're simply tired. Just rest. Resting is better than losing money.

#7: Think about not losing money. Capital preservation. It's a precious thing. Don't waste it. And I learned this thing in New York. If you want to be better, you have to play this game...if you want to play this game, you have to have capital...if you want capital, you have to preserve it... Bottom line, be picky with your trades. I work on that too.

#8: Be an informed trader. Well, read, read, read and...did I say read. I think I spend more time reading articles, books, charts today than I have ever done before.

#9: Be humble. when you have hit homeruns. Learn how to keep yourself busy while you're out of the markets and watch. Homeruns never come everyday.

#10: Fundamental is good, technical is great. I love reading things about fundamentals but just like my "mentor" PTJ, at the end of the day, I'm a slave of the tape. Fundamentals are good but the tape sums it all up. Learn the market psychology and you'll be ahead of most of us.

PS: As you can see, I'm still working on lots of things... I know these rules and I'm still making mistakes regarding these factors that I believe I can control.

Did Altran Technologies (ALT) break out?

2009-12-16T23:13:00.002+01:00

The end of the week is not over but will we have another day with some "stronger" volumes. It could very well occur.

It seems that we got out of this bearish wedge (call it a flag, a trader's remorse or whatever). It is probably a healthy correction in a bull move. Did the FED help the CAC be in the bull move and pull ALT up as well. Possibly.

All I can say is watch out the €/$ currency pair that collapsed over 500 points in a couple of days while stock markets did not move. Weird isn't it?! The next couple of days will be interesting as stock markets anticipated a FED rate at 0-.25% and no comments at all regarding what Mr. Bernanke will do in terms of inflation "fears". FX traders anticipated a move in rates given the huge strength of the Dollar in such a short time. I believe they got pretty disappointed today given that Bernanke did not say a word about future inflation and even said that everything remained quite weak so no hike in rates should occur anytime soon.

That being said, even if Bernanke said he was not going to raise rates in the near future, FX traders kept on buying the dollar. What can we say about it?! Well, I believe these guys are thinking that the USA will get out of recession very quickly (quicker than Europeans) hence this strength in the USD compared with the Euro.

Rates being that low, Wall Street is going to party it up again. Stocks "may" break some resistances. For how long? For how much? That's the 10-million-dollar question. You know what my positions are. ALT (very tinny) and a tinny one in UNG. Both LT.

Market opinion... (CAC40, CU, USD)

2009-12-13T22:11:00.003+01:00

Next week could be very busy as lots of indicators will be out. According to me, wednesday will be a killer. We'll have the US Price Index, Building Permits, Housing starts, Oil inventories etc. This will give you some indications whether or not our American fellows are consuming. Also, on Thursday, you have some earnings coming out (Nike, Fedex, Reasearch in Motion), initial & continuing claims...

Basically, we're trying to figure out if people buy things for Christmas, if they keep driving their cars just to go to the bakery store 10 feet away from their home.

The CAC40 is possibly forming an ascending triangle. 3,850 is the level to watch. If it is broken with volumes. We'll go higher buddies.

What I can say is Club Mediterranée looks incredibly bullish on the chart. Something is going on out there and I'm wondering if this "possible" cup and handle can occur completely. It's a speculative play but it could be worth the try. You decide. Click on the charts for possible plays.

Ps: Sorry to have been away from this blog for a little while but I've been very busy lately. As a matter of fact, I have helped one of my buddies who is running a brand-new company out here in France to manager his accounting, getting new clients, etc. it takes some times but it is worth it and rewarding. It is funny how much you learn in such a short time. When you just do everything (accounting, finance, prospecting etc), when you have to do it in order for your company to survive, well you work your "butt" off.

Except for ALT - I'm out of the woods

2009-12-08T00:24:00.002+01:00

Hi everyone,

Except this tinny position in ALT (long-term play), I'm out of this market. ALT is nothing at all. it can go bankrupt, It won't hurt, that tells you how big (or shall I way how small) the position is.

Mr. Market cannot make up its mind. I'll stay out for a little while. How long? I don't know. If you have positions right now...well...keep them but set up your stops right underneath. Just let your current positions ride and let your "trailing" stops go along. [period].

Not much to do out there. Maybe, it's time for shopping and enjoy time with the family =).

Stops got hit...

2009-12-04T16:01:00.003+01:00

Hi Everyone, sorry to only post now but I have been very busy.

Anyway, my stops got hit. I'm 98% cash (lol), as you know it wasn't too much as I cut my initial short position (a month or two ago) by half each time markets collapse significantly.
Results: Great moves on the CAC40, I got a nice return. The Dow wasn't good at all as it kept on making new highs. My USD-JPY wasn't good at all either given the collapse in USD (not too bad as it was mini contracts). That shows me how important it is to size your positions as you don't bet the farm on each play.
I have a tinny position in Altran Technologies at 3.2€ (nothing too big, actually I want to have it for a LT play so I make it tinny).

This unemployment figure is INCREDIBLE. Almost to good to be true. I'm even wondering how this can be possible. Moise Levi would tell you "expect the unexpected" and well...it was unexpected. This number (if true) is inbelievable and a great sign for "consumer spendings".

When you hear "we'll have stronger consumer spendings", it means that inflation is coming given the huge liquidity injected + very low rates.

I look forward to seeing how the FED will come out of this. Unless today's move is a fake (which could be given the low volumes), have a nice end-of-year rally.

Market Opinion

2009-11-30T00:21:00.003+01:00

By the way, my long USD-JPY position got stopped pretty badly. I was in at 91 and got stopped at 88.10. I saved some of this position by hedging in some in&outs with EUR-USD.
It did save me some bucks however it got closed with a loss (not significant compared with the overall portfolio as I used some mini-contracts). Still, it was a loss, my supports on the chart as well as on the RSI were broken so my stop initially set was activated.

Anyway, not much more to say for last week except that it was a good week for the portfolio as it is on the short side. One thing that came up to me was how strong the US markets are. My French short position is well in-the-money and is doing very good while the US short position is still out. US indices are doing great. The CAC40 is doing extremely poorly.

The Dubaï' thing did help however I don't think we should worry about it though. My main concern remains on this Thanksgiving and the following "black Friday".
. If this Friday went well in terms of sales, I think we go right for a huge end-of-year rally...
. If it didn't go well, the sell-off will occur.

Consumer spendings will be the trigger in either way. Beware. Charts are telling us "people won't buy" as we have massive divergences (RSI, NYAD -Advance&Declines, Small Cap indices going down before DJIA and SP500). As Moise Levi would put it, "expect the unexpected".

Have a good week.

Jet Contrails Alter Average Daily Temperature Rang

2009-11-28T12:02:00.001+01:00

I wanted to share an old article that is a good "kick in the butt" for people who love Ecology. As much as I think, we are destroying this Earth, this article is worth the reading.

ScienceDaily (Aug. 8, 2002) — For three days after September 11, the Federal Aviation Administration grounded commercial aircraft in the U.S., stranding travelers, hindering mail delivery and interrupting courier service, but for scientists at Penn State and the University of Wisconsin–Whitewater, the three-day shutdown provided a rare glimpse of the climate effects of jet contrails.

"In the past, some studies have compared the climate of areas with little overhead air traffic with those under heavily used flight paths," says Dr. Andrew M. Carleton, professor of geography. "Other studies looked at cloud cover before the advent of heavy jet traffic in the 1960s and afterwards, but these studies really provide circumstantial evidence."

Carleton, and Dr. David Travis, climatologist at University of Wisconsin-Whitewater and Ryan Lauritsen, then an undergraduate at UW-W, looked at high and low temperatures recorded throughout the country during the three days of commercial air shutdown and at satellite photos taken during that time. The satellite photos show where contrails were occurring, mostly absent over the U.S. between Sept 11-14, but still occurring in Canada and northern Mexico.

"We show that there was an anomalous increase in the average diurnal temperature range for the period Sept. 11-14, 2001," the researchers reported in today's (Aug. 8) issue of the journal Nature. "Because persisting contrails can reduce the transfer of both incoming solar and outgoing infrared radiation and so reduce the daily temperature range, we attribute at least a portion of this anomaly to the absence of contrails."

The diurnal temperature range is the difference between the nighttime low temperature and the daytime high temperature, usually for a given day.

"Because the shutdown occurred before noon on Sept. 11, the low temperature had already been reached, so we looked at 24-hour periods beginning with the high on Sept. 11 to the low on Sept. 14," said Carleton.

The change in the temperature difference was plus 1.1 degree Celsius, equal to plus 2 degrees Fahrenheit, above the 30-year long-term mean diurnal temperature range. The researchers compared the temperature ranges on these three days to those of the three days directly before Sept. 11 and the three days after Sept. 14, finding that the days before and after were similar, but that the three days in question differed by 1.8 degrees Celsius or 3.2 degrees Fahrenheit.

"Sept. 11-14, 2001, had the biggest diurnal temperature range of any three-day period in the past 30 years," said Carleton. Contrails form when water vapor and particles from jet engine exhaust enter the atmosphere. If the atmospheric temperature is cool enough, and the humidity high enough, the exhaust forms ice crystals that create the contrail. Contrails generally last one to two hours, but can last as long as six.

All jet exhausts do not create contrails. In warmer areas, contrails are rare, while in temperate areas, especially in the Midwest and Great Plains, contrails are common, especially in the winter and spring. Sometimes, the added moisture of a series of jets will increase the atmospheric humidity enough so that subsequent aircraft will form contrails even though earlier ones did not.

"The fact that the three jetless days were in the late summer should suggest that there was less of an effect than would have occurred during a cooler time of the year when more contrails occur," said Carleton.

Contrails alter temperature the same way that natural high clouds do. During the day, the layer of ice crystals shields the ground from some of the sun's energy. At night, the layer of ice crystals prevents some of Earth's heat from dissipating into the vacuum. Without the contrails, the daytime temperature would be slightly higher and the nighttime temperature would be slightly lower, creating the increased range between lowest and highest temperatures.

The researchers note that the greater range reported was an average and that some areas had an even larger range increase. They also investigated whether those three days were unusually dry, which would account for an absence of natural cloud cover and a greater temperature range.

"Satellite images showed that cloud cover on Sept. 11 was light, but that cloud cover and humidity increased on the 12th, 13th and 14th," says Carleton. "These clouds and greater humidity should have suppressed the range, but the temperature range was still the largest in 30 years."

Carleton and Travis are collaborating on a general study of contrails and climate change funded by the National Science Foundation that also funded this work.

http://www.sciencedaily.com/releases/2002/08/020808075457.htm

CAC40 + Other markets...

2009-11-28T11:43:00.003+01:00

This week showed some volatility and Indices corrected. However, I'm being skeptical. Thursday (aka Turkey Day) was a closed day in the US and on top of that it was followed by Black Friday.

Basically, volumes were low and we know that Americans can quickly get all of this back to where it was. It will depend on how the Black Friday went. If Americans did stay in the line during the entire night (if you have never seen that, it's worth seeing it...long lines of people waiting for malls to open) and spent lots of cash, a massive rebound could occur. If not, the 1st downmove that we had this week will keep on going.

Also, we have this Dubaï issue. We're talking about billions but we (seriously) all knew that this real estate thing out there was ridiculous. What worries me the most is when I see French banks being involved. Look at SocGen. They were in the subprime mess, they had Kerviel and now they were in Dubaï. What are all these CEOs doing? They are seriously a bunch of idiots doing all investments that promise a double digit return. Pathetic.

Markets are not smelling good but...(DJIA, CAC40, Nasdaq, Soitec...)

2009-11-23T00:26:00.007+01:00

Hi Everyone,

I hope the weekend was good. Mine was ok. By the way, I just noticed one thing today. My apartment has a view on the Eiffel Tower. Believe it or not, it does. Why did I only notice it today?! Just because I moved into my apartment during the spring and trees had leaves (yeah that sounds stupid). Today, there is none and I can therefore see through trees...And the Eiffel Tower is right behind them. Pretty cool, huh?

Anyway, back to indices. Last week's moves were not too good especially since indices sold off significantly during the 2nd part of the week (well, the French Index mainly).

Shall we say it is the selling time?! Well as much as I hope so (hope = forbidden word in finance), I don't think it is yet over. DJIA is showing strong negative divergences on the RSI but is still above that "huge" trendline and could use the last resistance as a new support (just like the Nasdaq did last week). Cautious.

Will the Nasdaq lead indices by breaking major supports before indices? Possibly. Watch that closely.

You know that my current positions are on the right side of this blog. You probably noticed my losing position on the USD-JPY. It's a medium-term play like I said when I entered it. I'm playing it like my "boy" George Soros in his book "The Alchemy of Finance" =) . I learned a lot by reading the 2nd part of the book (the live experiment). I really liked how he hedges his positions by buying the Dollar against let's say JPY and short the USD against let's say the Deutsche Mark (DM). This is exactly what I do (or try to) on every rebound of the Euro against the dollar. I buy EUR-USD (so I short USD) when I feel it is oversold. I'm just trying to hedge my long USD-JPY position.

Also, the 2nd chart is Soitec's one. The one I recommended sometimes in April. Remember, I said Buy around 3.3€ or so. Well let's face it, it was a big winner from which I only got 50%...ONLY. Yes only...because that "sucker" (sorry I'm furious at myself) was ONE of the big winners of the year...quadrupling in a few months. I know I haven't lost money but come on, you have to let your winners run. It's a shame.

http://guillouj.blogspot.com/2009/04/soitec-soi-falling-wedge-about-to-break.html
http://guillouj.blogspot.com/2009/05/soitec-update.html

And I noticed another one. HIG. A highly speculative one. I said it was a dangerous one but if you had the courage to still play it, you would have made your year (possibly your decade =) ).

Anyway, have a good night and note that the next couple of weeks (not to say this week) should be very interesting in terms of volatility.

Cheers.
J.

The financial Sector (XLF) is scary

2009-11-19T20:19:00.002+01:00

It's tough out there.

- Head and shoulder pattern?! Maybe, watch out that uptrend. Nothing is done until that is broken.
- Volumes are not too good (high on down leg and low on up move)
- RSI keeps being on the downtrend
- See that theoritical target?! You need that uptrend to be broken before doing anything. Cautious is the key word in this environment.

SocGen is being HIGHLY pessimistic.

2009-11-19T19:19:00.002+01:00

Nice reading here.

What can I tell you?! Make your own judgments. All these guys did not see the crisis coming. Now, we cannot leave these guys aside. They make good points. This analysis make great points.

Have a nice reading.

http://groupe.socgen.com/ecofr/FR/pdf/histo/eco_fr.pdf - French

or

http://www.telegraph.co.uk/finance/economics/6599281/Societe-Generale-tells-clients-how-to-prepare-for-global-collapse.html - English

Tough day on the street...

2009-11-19T16:38:00.003+01:00

It seems that the CAC40 had a fake move and the RSI got back in. My positions are still set. We'll see how it goes. I'm just being patient.
I did not get scared at some point, when there is a sort of breakout on the RSI I always look at volumes + a 2/3% move to support it. it did not happen. I was just waiting to click on the "cover-my-shorts" button but I did not click.

Wait & see.

Ps: A head-and-Shoulder pattern could be under way?! Who knows?! If it occurs, it could be nasty. But who knows?! =)

China says Fed policy threatens global recovery...(Financial Times)

2009-11-16T06:59:00.001+01:00

By Geoff Dyer in Beijing and Kevin Brown in Singapore

Published: November 15 2009 16:02 | Last updated: November 16 2009 02:14

The US Federal Reserve is fuelling “speculative investments” and endangering global recovery through loose monetary policy, a senior Chinese official warned on Sunday just hours before President Barack Obama arrived in China for his first visit.

Liu Mingkang, China’s chief banking regulator, said that the combination of a weak dollar and low interest rates had encouraged a “huge carry trade” that was having a “massive impact on global asset prices”.

The comments came as China and the US sparred at the Asia Pacific Economic Co-operation summit in Singapore over exchange rate policies amid rising international criticism that China’s currency is undervalued.

Mr Liu’s unusually blunt remarks underscore how China – the largest US creditor because of its massive holdings of Treasury bonds – has become a trenchant critic of monetary and fiscal policy in the US.

Since the start of the financial crisis, Chinese officials have issued a number of warnings that the US should not inflate away its mounting debt burden. Before these latest comments, however, Beijing had generally been most critical of US fiscal policy, urging Washington to spend less.

But speaking at a conference in Beijing, Mr Liu said the Fed’s policy of maintaining low interest rates together with the weak dollar posed a threat to the global economic recovery.

“[It] is boosting speculative investment in stock and property markets and will pose new, real and insurmountable risks to the global recovery and particularly to the recovery in emerging markets,” said Mr Liu, who is chairman of the China Banking Regulatory Commission.

“The situation has already encouraged a huge dollar carry trade and had a massive impact on global asset prices,” he added.

However, Mr Liu’s criticism of the Fed comes as China’s own monetary policy is attracting growing scrutiny at home and abroad. Critics say the massive expansion in bank loans this year could cause asset price bubbles and inflation.

Qin Xiao, chairman of China Merchants Bank, last month said China “urgently” needed to tighten monetary policy to avoid stock and property market bubbles.

On Monday, Dominique Strauss-Kahn, the head of the International Monetary Fund, said a stronger Chinese renminbi was part of the reforms that Beijing needed to implement in order to increase domestic consumption and help ease global imbalances.

In remarks prepared for a financial conference in Beijing, Mr Strauss-Kahn also said he expected the dollar to remain the principal reserve currency ”for some time”, Reuters reported.

At the Apec meeting in Singapore, the final communiqué from the 21 members was delayed as Hu Jintao, the Chinese president, called successfully for the removal of a reference to the desirability of “market oriented exchange rates that reflect underlying economic fundamentals”.

In a surprise move, the reference had been included in a statement by Apec finance ministers on Thursday, in spite of China’s unwillingness to discuss the issue. Mr Hu ignored the issue in both his speeches and earlier contributions to the Apec debates.

Officials confirmed that it had also been included in the final leaders’ statement, but was removed after a discussion between the US and Chinese leaders.

Lee Hsien Loong, the prime minister of Singapore and Apec summit chairman, did not confirm China’s role in changing the wording of the statement.

But he said some countries were concerned of the possibility of some currencies becoming unstable, and the problem that could arise if governments “had to intervene continually in order to manage their currencies”.

Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

http://www.ft.com/cms/s/0/85f1fac2-d1dc-11de-a0f0-00144feabdc0.html

CAC 40

2009-11-13T01:00:00.005+01:00

Today's closing (Thursday, November 12th) is not good for major indices. We hit the RSI's resistance up there and turned around to move lower.

I don't think it is quite positive. Obviously, always expect the unexpected and the RSI could be broken up and indices could move much higher... Probabilities are not in favor of that given where the RSI is standing at right now and the lower high that the French Index set today.

Dollar Index & USD-JPY

2009-11-12T18:49:00.002+01:00

You know my position about the US Dollar. I'm bearish on the long-term scale (years or decades away) but on the short-term scale (months away), I feel like this dollar should go up. It is way oversold.

The US Dollar Index shows a descending wedge which is bullish with some nice bullish divergences on the RSi & MACD. Let's see how it goes.

My USD-JPY play is not paying off so far (except at the beginning =) ) but as I said, we're looking for a massive W bottom with ince bullsih divergences. We have to let it go along. I'm sure it will.

Sell your gold...BFMTV said "buy"...

2009-11-12T10:29:00.002+01:00

As I was watching BFMTV to get some news, I heard something about gold that caught my attention. Basically journalists were saying "gold is hitting new highs so buy it as there is no reason whatsoever to go lower...play gold by buying gold coins, etc...".

That means sell it.

Listen to the bear that is roaring from behind you...

2009-11-12T01:08:00.004+01:00

What can I say? This rebound was powerful. Am I out?! You know my positions. I'm in. Still in it. Lucky I was to decrease my position by 50% on the French account but not on the US one. Basically, overall, it is still positive because I really caught that top. I'm playing with my profits right now so I have NO surge at all to cover my shorts.

And you know what?! I hear/read/watch lots of things calling for the "bulls" time. Guess what?! I say it's too early to call for a move higher. Sorry guys to kill the hype.

You know how much I love my RSI indicator?! Well, it tells you "buddy, you wanna buy, then wait. Be cautious at these levels either on the S&P, DJIA, or CAC40" and I could possibly tellyou the same on the Footsie or DAX. All indices are sending "BE CAREFUL" signals.

I will only tell you to BUY if and only if that RSI breaks this out on the upside which right now it hasn't done at all. Nothing tells you that it will to tell the truth. On top of that, look at these volumes on these indices on the last upmove. It's drying up.

If I believe in a market collapse?! You already know my opinion. I think it will correct significantly but nothing that tells you "that's the end of the world" à la Nouriel Roubini.

Future will tell. Look for the bear roaming behind you ready to grab your neck =).

Ps: Just downloaded Jame Cullum's last album. Listen to "Wheels" (nice lyrics) and "Music is through" (terrible electric piano solos). Cheers.

Not too bad so far...

2009-11-06T10:46:00.003+01:00

As you all know, I was short in this market from almost the very top. I enjoyed a nice move, I did save up some as you noticed that I have decrease my position by 50%. I am basically playing on gains right now so I definitely feel no rush from any upmoves in the markets.

My stop orders are right at my entry points (except for DXD that is a little further) but I still have half of my gains in the basket and it feels good.

Anyway, as I was looking a very high speculative stock, I look for small caps on the French markets with higher-than-usual volumes. I think I found one.

HUBWOO.COM. (HBW). It seems that we could be at the beginning of a crazy bull move after 10 years of basically of pure downtrend. This things just kept on going down. Volumes were weak throughout the past decade but since the end of 2008, this stock started to show some crazy volumes. I think HBW could be a buy if 49 cents get broken up. The future will tell.

Ps: We need to be careful of a possible double top given the RSI. Volumes are not in favor of that but this is why the 49 cents level is very important. We'll see if it gets broken.

My 3 speculative stocks on the watch...

2009-11-02T00:23:00.006+01:00

My 3 speculative stocks on the watch list deal with the French market. Sorry for my American fellows. I'll try to give you some later on.

SINCLAIR PHARMA (SPH) => Looking for an entry at 37 cents. Volumes are showing some improvements and increasing on upmoves. They increased significantly when the stock broke above the 30-week MA and some major resistances. The RSI is showing a nice uptrend.

ST DUPONT (DPT) => Entry at 19 cents even though it could go down to 16 cents. Volumes are OK for the last several weeks. However when you compare the past weeks' volumes with the ones from several years ago, DPT is not that bullish. Careful with that one.

THOMSON (TMS) => Volumes are wonderful for that one. Volumes are UP when stock broke above 30-week MA and volumes are down on downmoves. RSI on a nice uptrend. BE CAREFUL though, TMS failed to breakout on an inverted head-and-shoulder. This is kinda scary. Be very cautious. An entrey could be around 78 cents on a highly speculative play. The best play would be to enter it if there is a breakout above 1.50€ on huge volumes. I know it's almost 100% above but that is if you want to play it safe.

PS: Obviously all these plays will depend on how the overall market moves. I don't expect a massive W-shape bottom on the major indices. I think the 2009 March lows won't be seen for some time. It could obviously happen (I don't have a crystal ball) but I am not in favor of that scenario.
These plays are highly speculative so an appropriate position size should be considered. We would entry them only if I believe the markets could resume their uptrend.

What a nasty week for the bulls...

2009-10-31T10:40:00.002+01:00

What a bull trap on Thursday. I even thought this green candle was nasty for the bears. Hence I covered half of my positions. Half only because I thought that the bears could take it still. It was good to see that.

Here is the weekly chart and it doesn't look too good. Next week should print red as the Doji candle is followed by a nasty red candle.

See that level on the RSI. I expect it to land on that support. I'll cover my shorts there (if we get there). I believe that it is a 50% chance of either boucing up or breaking down. I won't take the risks. The Bullish divergence are there and cannot be let aside.

Watch out.

Half BX4 sold @ 59.6€ but got caught with DXD...

2009-10-29T14:33:00.002+01:00

I sold half the positions on the BX4. I sold it for 59.6€ however Wall Street was closed and I had to wait the higher open.

My DXD line remains the same.

I decided this morning to cut half of the position because of the "double top" (M) support indices are on. We could bounce back up a little. I'd rather take some euros off the table.

Have a good day.

Paul Tudor Jones - 3rd quarter market letter - He likes gold

2009-10-29T14:20:00.005+01:00

You'll get the "full" market letter on the link below. Open a free account and you're good to go.

http://www.scribd.com/doc/21753600/Tudor-Third-Quarter-Letter

Hereafter an article taken from "The New York Times"

"Seeing Next Boom, Tudor Goes for Gold

October 28, 2009, 2:24 pm

Those who doubt an economic recovery is under way may want to check out the latest investor letter from Paul Tudor Jones. The legendary hedge fund manager of Tudor Investment sees a wave of money flowing into the markets, pushing up stocks, commodities and other assets in what he terms “The Great Liquidity Race.”

Winning the race, Mr. Jones posits, will be gold, emerging-market equities denominated in local currencies and commodity-related stocks. “I have never been a gold bug,” he says in the letter. “It is just an asset that, like everything else in life, has its time and place. And that time is now.” (A link to the entire letter is below.)

The gold bug has caught several big hedge fund managers this year including John Paulson of Paulson & Company, Kyle Bass of Hayman Advisors and David Einhorn of Greenlight Capital, who believe enormous monetary and fiscal stimulus that has been injected into the global economy will eventually result in hyperinflation.

For now, however, Mr. Jones believes the stimulus will lead to strong growth through at least the first half of next year, but could drastically slow in the second half.

Tudor Investment, which manages roughly $11 billion, is up nearly 15 percent this year, after posting gains of 2.3 percent in September, according to the letter. Other large hedge fund managers also scored big gains last month, including the Och-Ziff Capital Management Group (2.39 percent), SAC Capital Management (2.47 percent), Moore Capital Management (3.8 percent), Capital Fund Management (6.29 percent) and the Citadel Investment Group (4.33 percent).

– Zachery Kouwe"

Ps: PTJ said last quarter that he was expecting a correction in stocks before entering the markets. Did he make up his mind?! Now he thinks stockmarkets are a buy just because of assets' inflation. If so, he is probably kicking himself in the foot given the weak exposure he has in the markets...something like $200 millions on a $11 billions fund. He probably took him some time to be fully exposed because you don't buy $11 billions worth of stocks in the 1st 30 minutes of the trading session.

1929 Great depressoin - Nice report on French TV Arte

2009-10-28T22:59:00.003+01:00

I just watched this report on the great depression. It is in French, sorry for my American fellows (or maybe other non-French followers), but it is full of information about the market crash as well as the depression. There is also some nice comments about the Monetary policy, the Politics in general (Roosevelt, the Nazi's, etc.), the fall of Germany when Americans got their "funding" money back into the US.

It is really worth the watch I think. You can see that it'll be on TV next Saturday or next Tuesday. I advise you to have a look at it.

Summary of our positions....

2009-10-28T20:07:00.004+01:00

. BX4 bought at 52.9€ => As of 28 Oct. 2009, BX4=59.25€
. DXD bought at $32.9 => As of 28 Oct. 2009, DXD= $34
. Long USD/JPY @ 91 => As of 28 Oct. 2009, USD/JPY= 90.85

BX4 and DXD are moving nicely along with our strategy.

USD/JPY was also doing nicely before correcting rapidly. I'm not that worried. I want to play this potential double bottom (W) seen on the weekly chart. I said weekly chart. It'll take weeks to get where I want it to be. I'll be patient and wait.

I'd like to thank everyone who is looking at this blog regularly. Some of you leave comments, some others don't but have a look at what's going here and I highly appreciate it.
Lucky I am to be back in a "student" mode as I have more time to post and express myself. I hope you find the information you need/want.

By the way, as a student, I'll need an internship (better yet, a job) in a couple of months from now =). Feel free to let me know if you're interested in a young Frenchman like me. =)

Have a good night.

Just an opinion...

2009-10-28T19:04:00.004+01:00

As I was looking at the markets tthis afternoon with one eye and a tinny smile on my face, I was just thinking how low this could go.

. Is it the start of new powerful downmove?! Doubt it.
. Is it a strong correction before resuming the upmove?! Think so.

Then I thought about 1987 when markets collapsed pretty badly. First, the morning started on the bad foot but then "computers" started to kick in as main supports were being broken and sell orders were flowing in.

In Today's world, where computers are taking a significant place in our lives (either at home, at work, or in the markets), I was wondering if this could happen...again... What if main supports are being broken and Goldman/Government Sachs' computers start to throw sell orders in 1/100th of a second and drag these markets down. Could we have a -22% day again?!

I doubt it given that we were not on the top of the "euphoria" like in 1987 but this is an idea not to let aside. I have no doubt in my mind that one day we will experience again a 20% collapse..maybe more...maybe a level unseen in the markets' History. When could it happen?! I have no clue, I just hope I'll be out of the market (or on the right side) that day.

Ps: The 2nd chart is the S&P500 that shows that it just broke down + the DJ Transportation that is close to an important support (showing a double top (M)) + the Financial sector that is holding a little better. For how long?!

GMAC...here we go again...

2009-10-28T09:52:00.003+01:00

Taken from http://jessescrossroadscafe.blogspot.com/

An interesting article about GMAC that is about to ask for some more "fresh" money.

Wall Street Journal

GMAC Asks for Fresh Lifeline
By DAN FITZPATRICK and DAMIAN PALETTA

Lender in Advanced Talks for Third Slug of Taxpayer Cash -- at Least $2.8 Billion

In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said.

The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity.

The willingness by Treasury officials to deepen taxpayer exposure to GMAC reflects the troubled company's importance to the revival of the auto industry. Founded in 1919, GMAC has $181 billion in assets and is a major financier for 15 million borrowers and thousands of General Motors and Chrysler car dealerships.

The new capital would help firm up GMAC's balance sheet and solidify its auto-loan business. GMAC provides the vast majority of wholesale financing for GM dealerships across the country, meaning thousands would be unable to bring new vehicles onto their lots if GMAC were to collapse.

Federal officials also are moving to shore up GMAC's ability to fund its daily operations, with the Federal Deposit Insurance Corp. telling the company Tuesday the agency will guarantee an additional $2.9 billion in debt, according to people familiar with the discussions. The FDIC guarantee will make it easier for the company to sell debt to investors. The FDIC backed $4.5 billion in GMAC-issued debt earlier this year.

The FDIC approval came just four days before the expiration of the regulator's program that guarantees debt issued by certain banks. It ended months of tense negotiations between GMAC and regulators. Without a deal, the company would have been forced to further reduce its lending volume. New-car loans by the company tumbled 55% to $5.6 billion in the second quarter from a year earlier.

As part of the agreement, GMAC agreed to keep interest rates on deposit accounts offered through its banking unit at certain levels, according to people familiar with the situation.

While GMAC would be the only U.S. company to get three capital injections from the government since the financial crisis erupted two years ago, thousands of banks and other financial firms remain weakened by exposure to fallen real-estate values and clobbered financial markets.

Among U.S. banks that got a total of $204.64 billion in aid through the Troubled Asset Relief Program, just one-third of the capital has been repaid so far. Government officials are skeptical that some banks now wanting to escape the government's grip are strong enough to do so, with Bank of America Corp.'s attempt to repay bailout funds snagged by a disagreement over how much additional capital the bank must raise to satisfy regulators, people familiar with the situation said...