Monday, August 30, 2010

SOLD CDY $1.17 - US Dollar and the Stock Market

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I bought Cardero Resource Corp (CDY) several times and today I sold 2 previous purchases for $1.17.  CDY had a nice strong move today and I wanted to pocket some profit before it had time to think about taking some of it back.  It looks like very short term it is due a pullback and perhaps I rebuy this bargain stock if it does.
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My TSI trading record has been updated.
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Click on the charts to ENLARGE
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This is a 4 Hour chart I just made of the US Dollar.  I am still refining my understanding of charts like this, but what I see gives me great encouragement for the stock market.  It would appear that the US Dollar is going to make one final inane attempt at a new high - which should push stocks down strongly tomorrow, by the way. If the US Dollar succeeds in making this marginal high I don't think it will last long because it will have created a negative divergence with the momentum indicator.  
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The US Dollar made a negative divergence a week ago.  The critical difference between then and now is that the momentum indicator this time will make a negative divergence right at the ZERO Crossover line.  That means that when price falls, the momentum indicator will begin descending BELOW ZERO - and that should mark the Dollar's final high and the Dollar's fatality, once and for all.  It should also mark the bottom in the stock market and the beginning of a powerful rally.
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This is a 4 hour chart of Direxion Small Cap Bull 3X Shares (TNA).  I love this setup and if I am paying attention at the right time tomorrow, I will probably be back buying another slug of TNA.  
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The True Strength Index (TSI) and Money Flow Index (MFI) are both moving with what I refer to as 'stealth'.  That means that price is having difficulty going any lower but momentum and money flow are rising beneath the surface and out of ordinary view.  
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If the US Dollar does indeed make one last futile stab at a rally tomorrow, that will push TNA down to something south of $32.  Perhaps even to a new low around $31.40.  Meanwhile, the TSI is nearing a bullish ZERO crossover....moving higher and higher.  Without hesitation I would buy TNA if it starts to go below $32.  Problem is I am so busy at my work that I may miss the opportunity.  Maybe I will put in a limit order for $31.40, just in case I get lucky when I am not able to watch it.  :)

4 comments:

  1. John,

    From your trading record, it looks like you did not sell all of your CDY today, is that right? Line 45 still shows that trade is open.

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  2. Heck, I still have 3 more trades of CDY open. I've got a lot of this stuff :) As CDY has $1.22 per share in CASH and a combined book value of something in the neighborhood of $1.70, each day or two they continued to want to sell more to me below $1.10, I took it.

    Check out lines 45, 43 and 36!

    Nice (partial) catch Garry.

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  3. john,

    when the $ falls badly, will it then be a good time to short bonds?

    jack

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  4. Valuable information and excellent post you got here! I would like to thank you for sharing your thoughts and time into the stuff you post!! thanks for the useful information.



    money

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