Shorting The Euro: Breakout or Further Consolidation Squeeze?

In the past 8 trading days we have seen much volatility in the in market due (primarily) to the banking/debt crisis in Europe. Overall with all clear an increasing bearish outlook for the EU's financial situation, which i will not go into depth or detail that is for a macro-analysis article, i decided to investigate the ETF EUO (Pro-Shares Ultra Short the EURO). More-less i believe the EU is poised to have a de-valued Euro, due to the economic cascade, and eventual first domino to unfold in the region.

The charts typically do not lie, so i analyzed EUO's price history and found a few current and developing Buy Signals.

Above we have the set-up for a incredibly reliable (92% Bullish-Breakout) Bullish Descending Wedge.

The wedge, while visibly apparent, is technically incomplete. The rule of thumb 5 reversal points must touch the wedge channel lines in order to have a confirmed Declining wedge.

So far EUO has touched the channel line 4 times, leaving the 5th, in my opinion to occur between the 16.75 to 16.55 price range. I believe that further consolidation and sideways trading are yet to come...to form the final breakout area of EUO upwards. Looking at oscillators in a sideways trading range is necessary when determining the breakout-direction.

Lets see what we have above via Oscillator Analysis.

• Bollinger Bandwith close to approaching the 0.0 Buy signal line but also shows that sideways trading poised to breakout shortly.
• Bollinger % B also close to approaching the 0.0 Buy signal line also.
• Stochastics Show that EUO is closing in on a buy signal but not quite there. (in accordance with my analysis it has some room to pull back yet)

More Oscillators for analysis.

• CCI shows EUO to be oversold, suggesting a buy signal.
• ADX shows a new trend is soon to take place.
• Directional movement doesn't not support any bullish confidence, but DMI is also very mechanically trading based and is very lagging.
• MACD tells us we have some room to fall yet, but a reversal also seems to be in the works.

All in all its clear the Bullish Descending Wedge is in current formation, further consolidation and side-ways trading will continue for a short time frame. All oscillators suggest EUO is oversold. All Trend-Directional Movement indicators suggest a major reversal trend is due to come as well.

Taking a position now or waiting for further confirmation is trader discretionary, but regardless its pretty apparent, based of Europe's situation that EUO is a long call.

Position: Long EUO

Advanced Micro Devices Part 3: Risk-Free Arbitrage Play or Possible Bullish Momentum?

AMD (Advanced Micro Devices) fell -3.33% in late hours trading today, due to Dell Quarterly revenues more less being stagnant and growth-less. With that being said we can see the sell off was related towards the psychological reaction to dell stock selling off (since AMD chips are in Dell produced computers) i expect this sell off to be more so news reactionary than fundamentally sound.

Based off the technicals above we can  see a few things.

• First off AMD could be a example of a Descending Bullish Wedge.
• CCI and DMI-/+ may suggest its bearish trend to be coming to a end soon, indicating towards now being a potential buy point. Mind you i buy in before mechanical's say go, because i appreciate getting on a train before it leaves the station lol.
• Parabolic SAR has been descending for a while, its about time for a mechanical turnaround.

Overall a reactionary behavioral response to a quick trending equity such as AMD is almost invariably going to have a pullback day. Today was it. The next few days should prove to be bullish....i would guess hitting 7$ a share in a few weeks wouldn't be to far'fetched of an idea.

Position: LONG to 7$-$7.20

S&P 500: The Short Play.

Well folks, look at the market the past week, were down 4% for the year easy. Now if you read my very first blog "Macro-economic analysis" you would have somewhat expected this to happen after the massive commodity bubble, that came to be/exists. So what can we expect in these times of serious uncertainty.

• S&P falls 147 points in the past two weeks.
• Standard an Poor's downgrades U.S treasury bonds/yields from AAA credit rating to AA credit rating.
• Weak economic growth reports produce fear.
• Investors/ Mangers/Funds loose faith in USD and U.S economy

 It mean its truly been a blood bath this past week. On top of that while everyone is expecting  this "correction" or "bearish run" to bounce off current levels, i tend to find that to be false optimistic bias. We have a growing number of unemployment claims, a failed FED monetary policy, awful global macro-economic issues occurring in Europe and at home, and top of this outrageously high commodity prices, destroying consumer purchasing power to re-invigorate aggregate demand.

Its simple, bond yields have been sky-rocketing in Europe and they will be sky-rocketing here in the U.S as well in time. When yields rise people become pessimistic on our countries financial strength, when that occurs we will see systemic paranoia, and fear induced panic in our financial markets, so expect an average downward trend of our major index's to continue.

Overall i suggest betting against the markets overall trend buy purchasing shares of ETF: SDS
We may see some periods of bullish investors buying up equities at a "discounted price" but that is simply a illusion created by mental accounting, and representative biases. In reality come Monday we should see a drop in the markets...your entire countries credit rating getting dropped on a Friday night cant be good...seems eerily similar to Washington Mutual's Fed seizure back in 2008. The weekend before it dissolved.

Expect serious market movement downwards Monday.


Position: SDS Long