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I still like ABK Ambac Financial for a Potential Buy Setup

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abk20090908

Despite how lousy the broad market has been lately and will probably continue to be, I am still watching ABK Ambac Financial for a possible buy setup.  I would like to see ABK get over 1.75 and also see volume come in heavy again.

I am thinking that ABK probably will not be able to do that until a couple more weeks consolidation.  I could be wrong, but that is the theory I am running with right now.

ABK’s business is supposed to be dead right now along with the other bond insurers because they are not writing new business.  But then why are the stock prices trending up so bullishly? The stock prices are powering higher apparently because of an uptick in home sales which could mean lower losses on mortgage backed securities.

But as you probably know by now I am not a ‘fundamental kind of guy’.  I am more a technical analysis kind of guy (that sounds bad doesn’t it ?).

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Spot Gold Trades Over 1000 Again

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It is time for the gold 1000 Party!  Remember CNBC had that Dow 7000, 8000, 9000 and 10,000 party? I forget if they did it for all of those milestones or just one of them.  Maybe they should start a gold 1000, 2000, 3000, 4000 and 5000 party too? Wait, scratch that.  I forgot, people … Read more

Hold Gold Through September

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A while back I mentioned how I thought gold was ready for a big move and had a bias towards the bullish side based on longer term charting.  I also mentioned the GLD 100 January Calls which at the time were trading around 4.00 .  Now they are trading near 5.60 or close to 50% higher.

I expect them to trade even higher than that during the month of September.

Most of the time in my opinion options are a bad idea unless you can devote full time to them and maybe even work with professional options trader for cues.  There are just too many ways in which options can go wrong.  And there are too many factors that can go against you, with one of the biggest ones being time decay.

Time decay means your timing has to be spot on otherwise you will keep losing ground in the price of the option the closer you get to expiration.

Anyway, some people like options.  Personally I can’t stand them because I think there are better ways to play the market with similar returns to options but without the hassle of time decay and other factors.

That said, once in a blue moon options can be a worthwhile trade.

The reason I mentioned the GLD 100 January Calls Back on the 3rd of August 2009 was because I felt we were coming into a very unique breakout type scenario in the gold price.  I thought it would happen sooner, but here we are in September 2009 and it appears to be in full force now.

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What I saw In Gold and the SP500 Today

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The SP500 closed right near the highs today but the volume was lousy.  I have to say this is a pretty amazing accomplishment given that it is a lazy Friday right before a 3 day holiday weekend.

The gold price also barely pulled back today and managed to close slightly positive on the daily basis.  This is a very bullish sign on a near term basis and says to me that the gold market could get some significant continuation next week.  The longer we hug the recent highs without pulling back that much, the more bullish potential we have for the long awaited break over 1000 !

But there is talk that the broad market is supposed to tank big time next week. I can see this as a possibility when I consider the huge downside volume that we had 3 days ago in a serious sign of weakness.  Yes we bounced higher today and closed right at the highs but it was on barely any volume.  It was all smoke and mirrors.

But I do have to respect the fact that we bounced off of support and now are bouncing back topside.  It just seems like the bears should have been able to accomplish more downside this week but they couldn’t get it done.  If they can’ t get it done next week then it could very well be that we are headed for more super bullish upside prices.  In a previous more longer term post on the sp500 I mentioned a scenario where this could be possible.

If this market is going to get a serious downside correction then I would think we get a gap down on Tuesday in the AM and then just slide down from there.  If we are still drifting around next week, then I am going to become more and more skeptical of the ‘super duper correction’ in September scenario.

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Natural Gas Futures are Plunging and so is the UNG

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NGAS20090903

But is there a bottom to be had in Natural Gas yet?

I think it is too early still.  The UNG has shown no signs that it wants to get a reversal going.

However it is clear that with the relative strength index at 18.49 we may be near a possible turning point.  There is also a full moon tomorrow and I have seen many times big reversal occur right on full or new moon days.

A highly speculative short term turn around scenario would be if the UNG gaps down at the open or just simply plunges at the open 10 to 20% bringing the daily RSI value even lower to perhaps 15 and change.  Then after lunch a reversal begins and a full reversal price bar that closes slightly positive.  That could be a first sign that the UNG is ready to start some sort of near term turn around.

But even if it does that, I suspect it will not be able to get an upside run going until at least a small double bottom forms and RSI starts to base out and develop a stance that eventually enables it to cross above the 30 level.

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Spot Gold Does a Nice Upside Continuation Today

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spotgold20090903

The spot gold price did a similar move to what occurred yesterday and without much help from the US Dollar.  The dollar continues to linger around and trade flat while gold seems to have a mind of it’s own.

The significant technical event that occurred today (at least in spot gold) was a piercing and close above of the longer term down trend line in force on the spot gold price since March of 2008.  When we look at the GLD ETF, we had similar upside volume to yesterday.  So the longer term bearish down trend line was attacked with a significant volume surge and also pierced.

This is good news for the bullish case.  But what I would most like to see in spot gold is a full price bar above this longer term blue down trendline to show me that we have officially cancelled the bearish trend in existence since March 2008.

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The Gold Price Initiates Breakout from 30 Year Cup and Handle Pattern !

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GLD20090902

I am only going to do one post today and it is going to be on the GLD ETF because I want to emphasize how important a day it was today in the gold market.

Today we broke out north from the large symmetrical triangle with confirmed volume and confirmed sign of strength.  The triangle formation has been developing since February-March 2009 time frame.  This is quite a large triangle and has significant cause for an extended move.

But there is even better news.  This symmetrical triangle also makes up the right shoulder of the much larger head and shoulders bottom formation that has been in existence since March of 2008.

And there is even more better news.  The entire head and shoulders bottom formation of approximately 1.5 years in duration is in itself the handle of a super large cup and handle formation which is 30 years long.

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