As the downtrend continues, I continue to be amazed by the amount of people that think the downtrend will not continue. Trends last longer than anyone thinks possible. The current downtrend looks like it has much much further to go. In the short term, I am working with the target mentioned the other day, S&P 622.

I have identified some cheap volatility in a couple of names. These positions will serve to enhance my portfolio of put positions that I will sell when the $VIX spikes higher than it did last year. Other than the REITS, my favorite shorts here are Google (GOOG), Research in Motion (RIMM) and Visa (V).

If you are not interested in the short side, there are plenty of bull markets. Three of note are the Dollar Index (DX H9), US Bonds (TLT) or (ZN H9), and finally Silver (SLV) and Gold (GLD).

The bullish bond trade is for the nimble. At some point this year, the US bond will be the biggest money makin’ vehicle on the street. Which way? Short. The Bond is going to be a massive short at some point this year. I’ll document it here. Stay tuned.

Peace

The trend is your friend

The reality is that there is always a reason to be bullish and bearish–that’s what makes markets. What we must discern is where the best probabilities lie.
-Todd Harrison

Today, the equity markets staged a less than stellar attempt at displaying some sort of buying interest. Looking at a shorter term 60 minute chart of the S&P Futures, it is easy to see that we rallied in the context of a downtrend. Trends don’t move in straight lines. They ebb and they flow. I’d use today’s high as a stop with a target at about 622.

SP H9 60 Minute

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Silver is a bullish market.

The daily chart presents us with a great entry. Stop below Monday’s low. Small risks, big rewards. Stay Tuned. Trade the picture.

Peace

Silver

On February 7th, I mentioned the tale of the tape would resolve itself one of three ways. It was going to break UP (but that would be hard to do), be trapped in a box (No Doubt), or we’d (in the famous words of Tom Petty) BREAKDOWN. Tom Petty has prevailed. The breakdown has occurred.

Peace

Go ahead and give it to me

I can just feel the tension. All eyes are on the new Treasury Secretary Timothy Geithner.

Here at Trade the Picture, I attempt not to over analyze the analysis. The price action says it all. Below is a weekly chart of the S&P 500 futures. The tale of the tape this week will be one of three theme songs.

1) Breaking Up Is Hard To Do

The market will defy the voting mechanism and rally. This one will be difficult, but not impossible. After all, breaking up is hard to do.

2) Trapped In a Box

Nothing like some old school No Doubt with a few friends and a billiard table.

This is a more likely scenario. This scenario will frustrate the most people. Don’t ever rule it out. The market will continue, As Nicolas Darvas might describe it, to be trapped in a box.

3) Breakdown

Nothing like some classic Tom Petty.

This one will be the easiest. Down is still the path of least resistance.

Breaking down below the green line will take us right to the blue line. If this scenario plays out, my downside insurance will expand in value quickly and seismically.

Peace

Consolidation

There is a light, that shines
special for you, and me
-Common

The market gave a classic little tease to the upside yesterday. Today we gave it back. The selling was intense today. More intense than the buying yesterday. I have a target on the S&P futures of 675. We’ll call 675 the next yellow light. It may get stopped there, or it may speed right through. No matter the outcome, it is going to the intersection. Calling intersection 675. We will get to you. The calculations are correct. Nature’s math is for real. Tease it up all you want. The path to the intersection isn’t a straight line. We will get there, though. My navigation system rarely steers me wrong.

Peace

Just Rollin down to 675