Okay, here's the 'way things should go' over the next year ---
This comes from both Moe Ansari and Tom McClellen (i heard him today on a radio interview):
Moe stands firm we see a May top and then a slow drift into summer (sell in May and go away) with a final last bigtime selloff in Fall. That ends the bear market to give us a final low which will either be a lower low or a higher one than the 666 SPX low. In either case, this current rally is about to end.
McClellen says almost the same thing. I found that interesting. He says his occillator has never had a higher reading than it did on Thursday. That doesn't neccessarily mean it's a top, but it does suggest there's more room to run in this leg up. However, the upside he thinks is limited because although the 1500 point move in the DOW has been impressive by itself, he thinks based on the internals, the market should be well over 9000 on the DOW and especially 900 on the SPX now. The fact that it isn't tells him there's actually distribution going on. (selling high volume into the buying). But the overall volume is not only weak, it's been drying up on this continuation.
He's also telling of a major ugly selloff in Nov/Oct.
Now, I was doing some research last night on these solar stocks. I showed you guys the charts the other day and how they are all clearly appearing to be breaking out of the long term downtrends. They appear like they are on the verge of a big breakout. LDK and SOLF especially. When you look at their charts, they look like lotto tickets down here. LDK in particular was a $40+ stock just last year and now breaking out at $8. The problem? They have been selling shares bigtime via secondary conversions and preferred sells. They did a secondary with preferred stock that converts each of the shares to 25.4 common. That added up to over 40 mill shares. I assume that has a lot to do with the selling.
So, stay away from those. They might actually run on these apparent breakouts, but I don't like the fundamentals to risk it.
So, what to do? I think BRCM is a monster short here. It's weekly chart is above the upper bollinger band, 2 period RSI at 99! and on almost every time period chart, hitting the upper regression channel line. I am going to buy straight out May $30 puts on Monday for as close to $7 as I can get allowing for a great short entry with no time value. Goal will be a buck or better profit.
I'm also looking at SYNA. That's a rolling collar setup. Why? Well, you can't short it because 50% of the float is already shorted. Can you beleive that! 50% of the 40 mill shares is shorted. Talk about a setup. They make the touchscreen stuff in AAPl's toys.
I'm trying to figure out the best way to play that.
The trade here will be to watch the $NYSI and $NASI daily charts (i'll post) for a reversal with the MACD turning south. That will be the confirmation of the next leg down. Right now those summation charts are bigtime overbought. (well, you don't really call them overbought, they are simply measures of the breadth)
But they are in very high levels setting up for big reversals.
If played correctly, there could be some big money made these next few months.
