Wednesday, June 17, 2009

Don't Light That Match!


Natural Gas is about to explode. Demand is low, supplies are high, so why would nat gas go higher? Two things. The dollar and money coming out of the market as it goes down may move to commodities and energy as an inflation play. It makes no fundamental sense, but it makes perfect technical sense. Also making perfect technical sense is the chart on UNG. It has clearly shown a bottoming pattern and the beginning of an upward curve. It also has passed key resistance and is bound for the 200 dma.

KRE is doing what it should be doing in times of higher interest rates. But this should just be the beginning. Interest rates have been rising for weeks but KRE is just now hitting the tip of the iceberg. KRE will be at 15 before the end of July if not sooner. Sept 15 puts look really good here.

SRS is starting to look really good again. Breaking the 20 dma resistance and onward to the 50 dma which is running close with the 20 dma. we should see a cross of the 50 dma by the 20 dma which could mean a move to the 200 dma soon after. but I still hesitate to move anything more into SRS since shorting KRE seems to be a better and safer play.

The VIX has confirmed it wants to stay above the 20 dma. I hesitate to say it but this sure does feel like a real reversal to me, not a fake one. So many technical indicators are screaming that the bull run is over. How far do you want to take it so early? Thats up to you.


  1. Hi Beamer Dog,

    (I hope you're doing OK.)

    I remember you saying that you wouldn't touch FAZ or SKF anymore, but would rather short KRE as a safer short, for several reasons.

    But over the past 5 days, KRE is down about 7% while FAS is down about 18%! If this decline continues (as I think it will), don't you think that FAZ would be a greater risk/greater reward short?

  2. So your plays are natural gas (inflation) and SRS (deflation)? Seems contradictory to me.

  3. Re: the vix, today was opex. So maybe the range was kept lower for MM's benefit?

  4. In Debt, i am doing fine. been through this before (2002 and 2008). 2002 was the tech bubble burst, 2008 was consolidation of offices and i refused to relocate, this is just an Obama administration socialist activity against health care insurers.

  5. I would not touch FAS or FAZ with a 10 foot pole. I don't care if they go up 200%. You guys can have that fun. I would rather go to vegas.

  6. In Debt, I am not playing SRS. I thought i made that clear. I do have a little bit but not really playing it. just holding out on it to try to get back some losses. I am playing KRE short instead of SRS but to say that is deflationary??? Not even. It is anti-CRE. Period.