I like my chances of riding out a little weakness here ahead of next week. In fact, I'm hoping the ES holds VAL at 1088 tomorrow. If so, I'd continue to buy here. My only lingering concern is the dollar. It rejected it's trendline again today, but that bearish triangle is wound up pretty tight. Speaking of dollars, that Australian dollar looks like it might be actionable here (FXA).

I can't be mad at the way copper prices traded today, nor can I scoff at FCX posting a gain, or PCU reversing off its lows in the manner in which it did. Looking at how this set-up is coming together, it almost seems too easy that the equities catch up to the way copper prices have been trading. 

Into weakness, I still like software, materials, and agriculture. Ag stocks laughed off this weakness as the group reversed off their lows and closed higher than they opened. I also like the shippers. You know, we nailed the bottom in the Baltic Dry Index off its 200 Day MA not too long ago and got to ride the explosion in the shippers on the recent increase. In fact, the $BDI is up 100% since we originally put shippers on the map. Into weakness, I like the idea of nibbling on a few of them, with the exception of DRYS.

I'm net long, but in short, I'll stay.

Long: Stocks and In-and-Out Burger

Short:  Construction Stocks, If I had to pick something.

The Ag stocks were certainly fertile in my portfolio today, with lots o' volume behind their advances. The calls are already up 55%. If you are not participating, make yourself a note to buy into weakness. On a side note, I was also impressed with the action in the BKX today. So impressed that I bought calls on a bank.

The ES has been generating a tight range of value lately, all north of the 1,100 level. The ES had multiple attempts to take out this level today, and failed. I like the pattern here, and so far it looks to me like it supports higher prices.

I also love how the 30 minute trend has held in the S&P cash index.

From the swing trading perspective, you gotta like how stocks are basing here ahead of the holidays. I'm net long, still an interested buyer, but really looking for a resolution to the ES range that's developed before taking my next plunge. A move away from value ought to be a catalyst to take down some more longs. At least until that McClellan moves another 20-30 basis points.

I'm still a fan of materials, my favorite software plays, and select foreign equities. What I think you ought to be watching tomorrow is the divergence between Copper prices and Copper equities.

Copper at new relative highs...

Copper stocks...not quite.

That's it for me tonight. Until tomorrow.

OA

Long: Copper stocks

Short: Time

Closing Theme: D.O.A 

A broad based accumulation of Agriculture stocks took place today. What started off as decent gains in the group transformed into a surge in price action on heavy volume. What's even better is that I'm not seeing any big news behind this, aside from the typical Cramer pump, a rise in inventories, and other general headlines. Looked to me like straight up accumulation.

From a technical perspective, this move is significant. Agriculture stocks have not participated in any of these recent rallies in stocks. They've been dead money for most of the year. However, today's price action, in my opinion, changes all that.

Now, I try to weed out the Ménage à trois going on between CF, TRA, and AGU and have paid much more attention to POT, MOS, MON and even IPI. You might be thinking about the Agribusiness ETF, MOO and might be finding yourself thinking that the Ag stocks are just fine, especially with the MOO reaching new highs today. I disagree. Besides, that ETF doesn't measure Ag stocks alone, it mixes in stocks like DE, ADM, PDA, etc.

Looking at the technicals, POT broke free from an important trading range today, leaving it fee and clear to test this years highs. POT is by far the relative strength name in the group, and still shows great upside potential from here.

MOS broke out of an important consolidation pattern. One that has kept the stock on a sell signal for quite some time. The 200 day MA has kept the stock alive, and as of today, has broken free from this month long consolidation.

Not to mention, this print of $52 coincides with a buy signal.

MON and IPI are still lagging a little and remain on a buy signal, but the daily charts look lovely. MON has broken its bearish channel, and IPI appears to be forming bottom, yet to confirm a breakout.

This move could be significant, and at this point its still early. In other words, its not too late.

In closing, I am long agriculture. Are you?

Long: Fertilizer, Fertilizing Accessories, and the Process of Fertilization.

Short: Not much.

One might look at this and think that the group still has catching up to do. The XLF call volumes were pretty heavy today, especially in Nov expiry's, but what I find interesting is that the bullish percent for the financial sector, is the fourth highest reading among sectors.

The XLF traded well today, until 3 pm ET, where it completely fell apart into the close, finishing right at its 50 day moving average. The XLF was pretty active today, but most of the volume occurred during the last hour where shares went off at the bid into the close.

I've been observing which sectors and groups are taking out or rejecting their 50 day moving average lately, as a measure of strength/weakness. Looking at the $BKX, it backed off its 20, which is pretty weak considering that the indices are at new highs.

Now take a look at the typical leadership names, and a few other stand out performers in financials.  

The weight in financials is an important read right now. If the $BKX cannot get back up above $45, I think this points to a group that is ready to correct sharply as the market rolls over. I have a vested interest in the Regionals, which have been the worst performer in the sector. Take a look at the relative weakness between the KRE and the XLF...

There are a plethora of weak regional banks out there to choose from, but consider the KRE, which is an ETF that tracks regional banks. You know I am a freak for price patterns, and this is a great retest of a bearish triangle.

In closing, if the financials can't start to move higher, they are an easy target to short into the next correction. Start shopping for rips to sell.

Long: OA Prose

Short: Regional Banks 

The trend is obviously down, this is a continuation pattern, which points down, but the call option activity was a little unnerving.

Who knows; this might be the crew that played the last adjustment in the UUP last week, but it seems like a sensible bet if you are trying to pick a bottom in the dollar.

Anyway, back to crude oil.

We've been tracking the recent range in oil, and the importance of the $77 level.

A break of this level puts oil on a sell signal, and will send it back towards support, which from here would be roughly $72-73 (Dialed down to a 0.50 box size, it's on sell signal). The $WTIC reached a low of $76.27, but looking at the chart of /CL, you can see how support was broken, and then retested on the downside.

It's entirely possible that the $80 level is tested one last time, but that is the extent of the upside I would be looking for. From there, I am looking for a bigger correction. If you have been watching the oil service sector, this is where you will find an abundance of developing head & shoulders patterns, and a group of stocks who were unwilling to participate much of the last leg up in equities. Also, take a look at the bullish percent in the energy patch. 

Bear confirmed.

The individual stocks in the energy patch are only a breath away from taking out key support levels. As we see the dollar resolve its range next week, into a break higher, short oil and oil service stocks.

I'll tap this topic a little more on my watchlist this weekend.

Long: After hours blogging.

Short: CRZO, WFT, BHI, NOV, etc, etc.

Disclaimer: Beware of the dollar. It could ruin your week next week.

As you can see I've decorated the place a little bit. I figured that since I will be coming out of retirement, I ought to go back to my roots and use a similar decor to that in which I started over at blogger. I needed to convince myself that I am starting from the ground up, even though my ground level is still at an elevation others don't understand. Despite the nice ensemble, the site still needs a little work under the hood as you can understand, so don't touch too much, save you are unafraid of breaking stuff that I will eventually need to fix anyway.

Aside from the new look, you may be wondering why I've decided to come back. Honestly, I do miss it. This site has been my alter-ego, and has allowed me to speak my mind and act out all of my emotions, all at the expense of others. I miss speaking freely to the millions of Addict's that visited the ol' OA and I've felt that a part of me has been missing since I've been without it.

Going forward, my intentions are to speak my mind, much in the way that I did circa 2005-2008, and try to provide a little content that will spice up the blogosphere, which coincidentally, has reached all time lows. Even though it never was my intent to abandon this site, which was in fact a fourth child of mine (step-child, of course, of the red-headed variety), the year off has done good for me and my family, and I am in a place where I have given this plenty of thought, and have committed to the effort required. For my family, friends, and loyal supporters, thank you for the encouragement. I always loved to blog, and frankly, I am a better trader while doing it. Not to mention, I do entertain myself. Most of the time.

Times have certainly changed and I have plenty to say. In closing, please bear with me as I attempt to find a groove, but in the meantime, welcome back to Option Addict. 

Sincerely,

OA

Long:Q4 Comebacks

Short: Stocks

That is all.

OA