Friday, December 31, 2010

Winter 2010-11 Central Europe Trip Report, Part 1: ORD-MUC-VIE

United 906, ORD-MUC, B777, C class (old config.), seat 8D and
Lufthansa 2328, MUC-VIE, A319, Y class, seat 7F

Willkommen an Bord.
Vielen Dank, dass Sie sich für United entschieden haben.

So begins, predictably enough, United’s menu on ORD-MUC. I was the fortunate recipient of an operational upgrade on the route during travel earlier this week. And since this does profess to be a joint markets and travel account, allow me to regale you, kind readers, with an account of that particular travel day.

The morning began with a departure for ORD at the crisp time of 6:30am. Living an über-convenient distance away from that four-terminal gathering point of majors, regionals, internationals alike – and indeed, of the multitudes of humanity –, transport between doorstep (itself under the runway 28 arrival traffic flow) and United’s Terminal One is a most invigorating 10 minutes’ ecstasy of open-throttled cruise down the John F. Kennedy expressway. The experience is, indeed, profoundly invigorating: to be motoring to that great facilitator of extraordinary experiences, salutary perspectives, awesome creativity, most superior optimism; and moreover, to be doing so at the early morning dawn, when life itself awaits, when a day of unbridled possibilities is born from the pregnant night. To be soon heading into the heavens, the acceleration and lift being a great constant in a life of tumult, the unfailing inspiration amidst a world of fickle investments, is the gentle kiss of love itself.

And so, arriving at United’s worldwide home, I proceeded straight to the faux-luxury oasis-cum- pig pen known by the bombastic appellation of Red Carpet Club. If ever there was a prime example of a misnomer, of flagrant false advertising, nay even of a humourless euphemism, the restricted-access grounds near Charlie Six are surely it! Alright, critical and non-existent readership, I do indeed jest. Yes, guilty as charged: my flight to München, the fair United Niner-Zero-Six, was not until the evening time of 6:12pm, and I was journeying some eleven hours early to O’Hare for the sole purpose of reclining in the clubby milieu. Or rather, I was heading to the source of the cheapest available internet connection, for “home”, where I no longer reside, has extinguished the inaudible ping-ping of its Cisco something-or-other. By some miracle I convinced the United gate keeper to provide the necessary wifi scratch-off card, a most generous gesture for which I, as neither a club member nor an international premium cabin passenger, was not strictly entitled. (Entry itself to the RCC was by the book, by virtue of holding Star Alliance Gold status, though this is mentioned in strictly humble breadth, in recognition of the supremely trivial qualifications necessary for this again overly-flattering honorific; indeed, it seems even Ma and Pa Kettle fliers can, these days, round up the 19,000 qualifying miles, which is all that’s necessary in the low-standards Aegean Airlines program.) I got straight to work, pausing intermittently for that greaser of output, yes that quintessential conduit of cognitive output: coffee. And I made fine progress on some academic deliverables. Indeed, much like the commerce of UPS, a true academic’s output (and a faux academic’s work too, apparently) never pauses, er, sleeps. No matter that the semester has been tied up in a nice bow.

After some four hours of Gulag-like labour deep within the maze of cubicles at the ‘ole RCC, it was time to glimpse the outside world anew. And so a date with the Blue Line was initiated, though my excitement for the time spent together was admittedly curtailed when I glimpsed an empty gate Michael One as we trudged out of O’Hare; the gate is sometimes occupied by the stately Boeing 767-300 in LOT colours. And Back to the work-a-day hum-drum of Jefferson Park I ventured, with chief task of preparing my journeying bag accomplished with alacrity. But then: back to those privileged airside surroundings.

I opted for a different club for my pre-push drinking. Indeed, I did not even have time to engage in drinking in any proper sense, for a glass of “house white” is all for which time permitted before I dashed to C12, where the Boeing 777-200 for MUC was just commencing boarding. And, as I’d anticipated, I was presented with a new boarding pass upon approaching the counter to discreetly inquire about just that very matter: I’d received an operational upgrade to Business Class, seat 8 Delta within the forward mini-cabin.

Hoorah! How pleasing it is to be bestowed with that last-minute reprieve from the contortions and sacrifices of Economy. No matter that one is truly excited about venturing to beloved Europa, indeed no matter even that one would welcome a seat in Economy, even the last middle one, over the plushest hotel bed, any night of the year, so long as a take-off and landing in a stimulating locale were included. But nonetheless: a chance of significantly less fitful sleep and the guarantee of significantly more/better food and drink brought tremendous gratitude and, dare I say it, relief. Now a word about this drinking. I rarely drink, though I do admit to being a budding oenophile (though most definitely of hopelessly neophyte skill); however, the standard operating procedure on red-eye flights invariably calls for generous alcohol to catalyze the exhaustion of a long travel day into emphatic and unbroken sleep. On domestic flights, a glass or two of red-wine is the lubricant of choice. But on international services, the repertoire is expanded: some domestic sparkling wine before push-back, a usual choice of earthy red during the Express meal service, perhaps a dabble in red port with cheese. In either case, expeditious consumption is the over-arching priority. On red-eyes, which can be as short as 2h45m in the case of a recent LAS-ORD service, I try to be producing the brain waves of sleep within 15 minutes of wheels-up. When TATL or other transcontinental service is in play, I have taken a predilection towards ordering the “Express Dine” (or equivalent) meal service, whereby everything is served at one, and with which I might finish the final course of cheese within an hour of the unfurling of our craft’s airborne-ness.

And so, soon after wheels up, the result of a take-off roll that commenced at the Tango Ten intersection with Runway 32 left, I made the following selections for the dinner service aboard UA 906, opting for Express Dine:

Zum Angang (beginnings)
• Center cut smoked salmon loin, over a bed of fresh cucumber relish
• Seasonal mixed greens, roasted garlic red wine vinaigrette

Hauptgericht (main course)
• Herbed Boursin® rotisserie chicken with pomegranate-lime glaze; bulgar wheat pilaf with cranberries and pecans, stir-fried sugar snap peas and carrots

Zum Abschluss (to finish)
• Artisan cheese selection (served with red grapes and crackers); Sartori Bellavitano, Montchevré Sun-dried Tomato and Basil Chévre

Pre-departure, I enjoyed a touch of Pommery Brut Royal NV Champagne, a departure from the expected northern California origin of United’s onboard carbon dioxide -imbued alcoholic beverage. With the chicken, I selected Cave la Suzienne Racines Profondes 2007 AOC Cotes-du-Rhone. Given the passage of several days since my consumption of the above food and drink, I will refrain from detailed commentary thereof, save to comment, in a most general sense, that I was highly satisfied with the meal, particularly with the chicken. I’d never previously opted away from the beef or fish selections when travelling in an intercontinental premium cabin, but on 906 I was influenced by having recently eaten lackluster ribs, which was the only beef or fish selection on offer. Additionally, I recalled a meal tasting with United in which I partook in May (coincidentally enough, in a conference room at the C16 RCC, which I visited immediately before boarding the 777 sojourn being reviewed here), during which I was favourably impressed with the rotisserie chicken with which our focus group was presented.

And soon, so very soon, after polishing off the port and tuning off the Flight of the Conchords, I reclined and fell promptly asleep.

Nearly six hours later, I was back within the belly of the aluminum whale – not just my mass, but my consciousness, too. Breakfast was a perfunctory affair, and swiftly we glided ever-lower across the manicured and stoic German countryside, kissing the runway as we bid Guten Morgen to the assorted aircraft of TATL joint venture partner Lufthansa that were stationed all around. It was the usual trek from the high Hotel gates to German (or, should I say, EU) immigration, and my naturally quick pace meant I was comfortably ahead of the 906 pack by the time of our reaching that row of barren visages. Lines for re-clearing security appeared surprisingly populated, but a discreet Lufthansa agent directed me towards the ostentatiously segregated Lufthansa First Class check-in (and its associated security control); it’s extraordinary, in the literal sense of the descriptor, how LH cares for the Star Golds it carries, some of whom have accrued as few as 19k annual status miles (as I described above).

The obligatory visit to the G29 Senator lounge was as pleasant as ever. A delightful assortment of Germanic breakfast items; sliced cucumbers and tomatoes, Bavarian cheeses and meats, Swiss muesli, glass-housed latte machiatos was, as usual, but a sampling of the rich offering. I snatched an FTD, IHT, and naturally enough, FT for my intellectual enthrallment (in my case, I mean that quite literally!), and I was off! – just promptly enough to make the final boarding opportunity of the LH A319 service to Wien. Our lightly-loaded ship rocketed into the milky atmosphere after seemingly a mere 3k-4k of used pavement; indeed, we heard the pilots’ wir starten and felt the pronounced push of the twin turbofans while our aircraft was still taxiing onto the active runway from an access-providing high-speed taxiway. There was no ultra-conservative 90-degree point turn at the extreme threshold, an MO often seen at the hands of uptight (though admirably safety-uncompromising) American helmsmen. And, after too quick an exploration of the Mainline and feeder (Companies and Markets) operations of Pearson’s flagship, it was Grüß Gott Schwechat!

Winter 2010-11 Central Europe Trip Report, Introduction


Wednesday, December 15, 2010

Dec 15: Markets flat; notably, Baidu tumbles

Instead of pointing out the pedestrian, downright sleepy closing numbers that summarize today's market vacillations, allow me to highlight a notable distribution day in one of the S&P500's best-performing stocks:

BIDU, ~50d/1h

BIDU, 180d/2h

Per Barron's, Baidu managers issued downbeat comments about the firm's 2011 growth prospects during an industry conference, prompting the sell-off.

The selling occurred on heavy volume, resulting in a distribution day and, per theory, deteriorating the technical picture for bulls. Yet BIDU is no stranger to volatility, and the stock bounced briskly after a comparable pummeling on November 16. $100 marks not only strong price channel support but, additionally, "round number S&R" that cannot be discounted too lightly. Longs with a $98 stop might be rewarded in the 2-3 day time period.

Thursday, December 2, 2010

Dec 2: Markets tempted into "kiss of death"

I love the kiss of death: such a cheeky term and, simultaneously, an elegant insight into the capriciousness of human emotion. Perhaps I've waxed lyrically about the simple phenomenon in earlier posts -- surely, I am nothing if not, quite too often, a broken record -- but, should a refresher be necessary, it is nothing but the approach of price to a trendline, where the absolute value of the slope of price is greater than the absolute value of the slope of trendline, and where the slopes of both have the same sign (i.e. both are positive or both are negative). Here's the kiss of death in action:

Technical analysis predicts that a kiss of death will serve as durable support or resistance. As the name implies, the strong momentum of price will be stymied -- in other words, die -- upon touching, or kissing, the trendline.

The intuition is simple. Price momentum, driven as it is by human psychology, "over-extends" itself (evidenced by a high absolute value of slope) in pursuit of the support / resistance of the trendline in question. The momentum draws-in market participants, each one driven by fear of losing out on the move (n.b. fear of losing out is, per trading psychology goddess Denise Shull, the most compelling of human motivators), but this collective piling-onboard suddenly stops when the kiss of death occurs. Why? Because everyone can see it. Though not all market participants cuddle up nightly with technical analysis software, many technical analysis phenomena are apparent on an intuitive level to a wider class of market participants than simply contrarian-leaning TA aficionados.

Put in practical, i.e. non-theoretical, language the above analysis suggests a favourable probability of price withdrawing from the /ES = ~1222 level, though there is no explicit prediction about the degree of withdrawl; perhaps 1218 or 1215 is possible. And all bets are off thereafter. Of course, no TA indicator is always right -- or even 80% successful. Should price top 1225, the bears will no longer have this particular kiss of death as a valid argument towards their market outlook.

Happy trading!

Tuesday, November 23, 2010

Nov 23: Let's not forget that Santa Claus rally

As markets tap -- alright, hit -- the brakes in today's pre-market (v/v the NY behemoth) trade, consider this a public service: check the calendar; it's late November; tryptophan, Black Friday, Starbucks Egg Nog lattes (ick, I know...!), suddenly crowded airports, and of course, "All I Want for Christmas Is You" cruelly playing on perpetual repeat all suggest one fact: Santa Claus rally season is here!

Yes, this is that special time of year when markets become positively biased towards the upside. Volumes dry up, investors become even more delusional than ever, and markets tend to tip-toe higher, .4% here, .1% there. It's a suboptimal time to be aggressively short; options bets on volatility (e.g. long straddles) can also go awry.

And so, with the /ES contract down 13 in overnight trade, testing anew the support channel reached during last week's sell-off, now might be an opportune time to don those contrarian thinking caps and crack open a can of cranberry relish.

Here's the /ES:

Additionally, let's quickly consider the technical picture on the 180-day of BRCM. Here's a position where the chart supports a robust (S&R levels are tested repeatedly) and elegant (limited S&R areas define much of the price action) technical analysis picture.

As the reader can herself see, price is currently nestled against an upward sloping price channel, suggesting a potential near-term pull-back, and not inconsistent with the slumping morning futures trade. Over the time frame of one to three weeks, however, the chart strongly suggests further price appreciation, at the very least to the top-most price channel, i.e. the $45-46 level.

To summarize in brief, then, it's not every NYSE issue whose trade maps such a robust and elegant, v/v technicals, chart. I might have to print this one and mount it on my wall and gaze lovingly at it. Alright, maybe not the last part.

Thursday, November 18, 2010

The $400 that slipped away

A warning to all those crazies for whom the phrases "overbooked flight", "looking for volunteers", and "alternate routing via Spokane, El Paso and Halifax" might spontaneously release a flood of endorphins: the airlines don't always play fair.

Case in point: a few days ago I found myself awaiting the boarding of an overbooked flight, and the experience ended with a distinctly disappointing outcome -- though not for the reasons a casual reader might expect. To illustrate the event and provide a valuable take-away, indulge, fair reader, into the (privileged and confidential -- no, not really) communique that I dispatched to the senior tranches of United management (no, actually just to outsourced henchmen on the subcontinent):


To Whom It May Concern:

I am disappointed with a recent experience of volunteering my seat on an overbooked flight. The experience occurred yesterday, November **, 2010, at San Francisco airport and concerned UA ***, SFO-IAD.

While waiting at the gate for boarding to commence, I learned from a gate agent that UA *** was overbooked, and I asked for my name to be added to the list of potential volunteers. In conversation with another agent, I learned that I was at the top of the list. Then, as boarding commenced, the agents indicated that they*d need my seat and those of several other volunteers. The agents proceeded to process some of the other volunteers, off-loading them from UA *** and re-booking them on subsequent flights. Finally, as boarding was finishing, an agent indicated that my seat would not be needed after all, and that I could board UA ***.

My disappointment stems from the fact that I don't believe gate agents followed the proper order in processing volunteers. The belief is based on the information from one of the agents that I was at the top of the list of volunteers and, furthermore, on the improbability that all the volunteers processed before me held 1K or Global Service status.

In closing, I hesitate with submitting this claim, as the issue is not particularly serious. Furthermore, one of the agents was apologetic about the turn of events and personally escorted me to the aircraft to ensure that I found space in the overhead bins for my carry-on luggage. Yet, I have chosen to write after all because I felt let down by the whole experience, and the experience might highlight an area in which United could better manage its relations with its frequent fliers.



What is, in brief, a salient take-away from this experience? For one, the utility of being a "nice guy" does have its limits. On the one hand, maintaining a sociable and unhurried demeanor is surely appropriate when interacting with stressed agents contorting to dispatch an overbooked aircraft without sacrificing punctuality. And not only is such sentiment socially appropriate, it is also economically efficient, as it increases the chances of karma returning once the agents process volunteers' re-booking and issue compensation. But on the other hand, being too detached and amicable can invite fulfillment of the aphorism: "Nice guys finish last."

Indeed, that's exactly what happened to me. Despite being at the head of the volunteer list (and of this I'm certain), I did not push for priority processing; instead, I gave the agents some space, watching as they processed several other volunteers. Then, when they unexpectedly found themselves with an extra seat, I was the odd man out. Going forward, the savvy traveller (er, the selfish crazy!) would do well to tweak his relationship strategy with gate agents to avoid the risk becoming a push-over.

Nov 18: Markets poised for advance

As for markets prepare for an advance from the short-term oversold level that has resulted from the last fortnight's shedding of risk, I'd like to briefly point out a firm with a strong story: Textron.

The maker of Cessna aircraft and Bell helicopters has received a boost to its business from Chinese lifting of restrictions on civilian aircraft. (For instance, see "China to open airspace to civilian aircraft", FT, 11/15). Yet, the stock has barely registered any upside from this news, and furthermore, closed yesterday at a quite attractive price level v/v technical analysis considerations. The chart follows:

Tuesday, November 16, 2010

Nov 16: A sharp reversal

Markets contracted sharply in today's trade, with some securities coming into significant support areas. Contrarian bulls are whetting their appetites. But the broad outlook is more uncertain than bullish, as evidenced by, for instance, /ES.

In brief, /ES exhibited an unambiguous break through the price channel support of the post-summer rally. Such a movement portends further value deterioration in the weeks ahead, although not necessarily immediately. Indeed, the index looks oversold at the moment, and challenging 1225 is not out of the question, perhaps in a head-and-shoulders pattern, which is a classic topping formation. Here's the latest chart:

In the realm of individual securities, MRK and BIDU are two of many that standout. The drug maker is plowing quickly into what promises to be significant support; let's keep it on our radar screens as a potentially strong contrarian buy, should price hit the top line of the downward-sloping price channel. As the price channel is sloping in the same direction as price movement, the touch would be a "kiss of death", which has higher probability of repelling the movement.

The Chinese tech firm BIDU, meanwhile, is pulling back from a particularly strong advance in recent weeks. Indeed, while many leading stocks and whole market sectors have been stuck in the mud over the past few years, BIDU continues to advance in seemingly unstoppable fashion. A two-year chart of the security speaks volumes. But, to refer again to the 180-day panorama reproduced below, the current $103.5 support does not seem particularly durable. Additionally, the sharpness of today's 5% markdown -- a definite distribution day, in IBD parlance -- does not bode well for BIDU bulls over the upcoming weeks.

To end on some broad-market summary statistics, here is their representation: S&P500, 1178, down 1.6%. DJIA, 11024, down 1.6%. NASDAQ, 2470, down 1.8%.

Monday, November 15, 2010

In recent travels, a notable coincidence

On Friday, November 12, an American Airlines B737-800 took off from Washington's Reagan airport bound for DFW, experienced a cargo hold fire indication while climbing through FL260 (i.e. 26000 feet) some 60 nautical miles west of Dulles airport, and performed a diversion to Dulles, landing safely 26 minutes after wheels-up. The flight departed DCA at 8:43am.

And with apologies about the self-centeredness of this post, here is its meat: I, too, departed Washington at 8:43a on Friday, November 12, albeit from Dulles airport, aboard a United B757-200 bound for Los Angeles. Incidentally, I was listening to Channel 9, the live feed of air traffic control communications; however, I heard nothing about the AA diversion, possibly as I may have tuned to a music channel soon after take-off.

The bottom line: it's a small world. And I might do well to occasionally consider that transcontinental transportation, while very, very safe, is nonetheless inherently risky.

Thursday, November 11, 2010

Nov 11: Veterans' Day trade

With apologies to the discerning reader about the vague, content-less title of this post, I shall proceed into just as disjointed a data dump of some of the day's action.

First, a DJIA component had a veritable repeat of May 6th's Flash Crash in the final minutes of today's trade. Here are the smouldering remains:

I haven't yet seen any headline explaining the precipitous decline. [Addendum: Poor headline earnings numbers were the catalysts. The conf. call, which could either fortify the bears or spur on the bulls, is presently ongoing, as of 4:45p EST]. And vertiginous it certainly was: the $35.15 nadir marked a near-instant erasing of all gains since October 25. Put another way, the volatility of the last hour (i.e. the size of the hour's bar on a candlestick chart) exceeds that of any hour-long period in the past 180 sessions.

Second, take a look at XOM, no mere minnow given its status as largest market cap firm (per my possibly imperfect recollection) in the modest marketplace that is Wall Street. Dizzying, seemingly irrational, propelled by ask-questions-later fast fingers: the Exxon chart bears resemblance to that of DIS. Yet the direction is opposite. And how interesting that the curiously anthropomorphic psychology of markets can create a bipolar-eque bifurcation of emotion in two sister-stocks of the Dow Jones Industrial Average! (Granted, the time frame of the respective moves is dissimilar.) The chart follows:

I cannot omit the most important anomaly of today's trade: CSCO. A DJIA component too, the networking maker plunged 16 percent on a cut in its sales forecast; the chart follows:

As for the broad market, /ES printed 1211.5 at high noon in Anchorage, which corresponded to settlement of the S&P500 at approximately 1214, a change of -0.4%. The DJIA ended at 11283 (down 0.7%) -- and weighed down by CSCO and DIS -- while the NASDAQ closed at 2556 (down 0.9%).

Wednesday, November 10, 2010

Nov 10: An ascetic no more

After too long a hiatus, I have carefully recommenced formal re-engagement with that unforgiving but exhilarating world of relative value; I've entered a trade. The above chart depicts the security along with the analysis. And though the price channel is hardly rocket science -- indeed, it is remarkably simple -- the casual reader must bear in mind that uncovering such an elegant opportunity as this requires searching through countless charts. Further buttressing my decision to risk a long-side trade is that, at the approximate end-point of the above chart, /ES was approaching a test of the pivotal 1200 level from above, the first test of this level since breaking through last week. And, needless to say, the virgin test is usually repelled.

With regards to the above chart, violation of approximately $66.3 would trigger a stop, while $67.9 or $68.3 would make sound profitable-exit points.

Incidentally, this morning's strong sell-off in Boeing shares -- and this is news only to those readers on the planet Mars -- is chiefly caused by an emergency evacuation of a 787 test aircraft (ZA002) yesterday after eruption of a small on-board, in-flight fire.

Friday, October 8, 2010

United Express operation at DCA is less reliable?

Disclaimer: This post shall dive rather unabashedly into speculation and extrapolation from anecdotal evidence. In addition, the author harbours personal displeasure towards the "Express creep" into what until recently was an all-mainline United Airlines operation at DCA, the reasons being at least three-fold: 1) compromised service offerings of the regional operators v/v mainline service, e.g. a lack of live air traffic control audio (Channel 9), or any other audio options for that matter; reduced overhead bin space; reduced offerings in the forward cabin; 2) a perception of diminished reliability, as regionals operate with thinner scheduling buffers and reduced availability of spare (i.e. potential substitute) aircraft; and 3) a perception that reduced crew hiring requirements and comparatively Lilliputian pay negatively affect safety.


In checking the status of today's DCA-ORD flights on, your fearlessly inquisitive author discovered a 55 minute departure delay on today's UA 7670, the scheduled 6am operation on DCA-ORD (which used to be UA 601 with mainline service...). In seeking to understand the operational implications, consider the following four facts: 1) yesterday evening's sole United Express (UAX) operation into DCA, UA 7669 (ORD-DCA, scheduled 7:05p-9:55p), was cancelled; 2) the aircraft operating UA 7669 makes a RON (remains overnight) at DCA and operates UA 7670 the following morning; 3) Shuttle America, operator of the UAX service at DCA (and owned by parent company Chautauqua Airlines), ferried an Embraer E70 aircraft this morning from CMH (Columbus, OH), which arrived at DCA at 6:08am and, by logical argument, must have provided the aircraft for this morning's delayed UA 7670; and 4) upon arriving at DCA on UA 600 earlier this week (at approximately 9am), I noticed that UA 7670 was cancelled (the E70 was still parked at a gate adjacent to that which my B757 would occupy), while the morning's mainline service to ORD all seemed to operate.

With apologies about the non- reader friendly format of the extended argumentation above, that is to say, about the decided lack of conventional punctuation, some closing points: 1) The above evidence is, admittedly, anecdotal and non-rigorous, particularly in regards to point 4, where I didn't even provide the superficial context that I at least afford to consideration of today's flight in points 1-3; 2) Cancelled flights and empty aircraft ferries are a normal occurrence in this industry; 3) That UA / UAX would ferry an E70 on CMH-DCA, instead of simply cancelling DCA-ORD and revenue-flying the aircraft on CMH-ORD, hints at concern about minimizing passenger disruption, which is laudable.

That said, the complexities of reliable United-branded operations on DCA-ORD and v/v would be minimized with all-mainline operation. To say nothing of my objections to outsourced "Express" operations a priori.

So go out, loyal constituents, and write the Customer Relations department at your preferred airline, demanding maximization of mainline service and minimization of the ironically-labeled "Express" variety! Don't pay any heed to how deceptively attractive the little bundle of aluminum, scrubbed all nice and clean, might look!

Thursday, October 7, 2010

Scatter-brained, high-flying story-telling

Dear foolish readers, er, reader: (for you could be consuming something worth your time)

What follows is a true story, in the full spirit of the word 'true.' It not only truly happened, but the chronicle was truly written but minutes after the event, taking the form of an email that was instantly dispatched from the wireless device it was crafted upon, just as the wireless device encountered (naturally enough) a wireless signal, upon its carrier's reaching the terra firma of a runway at Chicago's O'Hare International Airport. I risk a lawsuit -- just as I had with the previous post; what lengths I go for my readership of no one! -- with what follows, as it was intended as privileged communication to the message's original recipient, not for posting upon every iPhone from Dakar to Dolny Slask, every LCD from Virgin America's seat-back variety to, well, the point is made.

Date: Unification day (no, not October 3, but the First of this month, when CO and UA, having said "I do," giddily stole away into the Red Carpet -clad Presidential Club suite for, well, I might have some youngin' readers here. No, of course I don't, who am I kidding.) Airbus even celebrated with a full-page advert in the Financial Times: (apologies for the poor readability; blame the iPhone camera)

Place: the District

Time: early afternoon

The deets --


Man oh man, today's airport arrival experience was among my most dramatic ever! Read on; I write from aboard UA 621, presently some 24 minutes into the DCA-ORD sector.

I arrived in Rosslyn at 1:30p as expected, and I was descending the long elevator shaft for the Metro moments thereafter, in possession of Peugeot road bike, Samsonite roll-aboard, and Briggs and Riley backpack. (The bike would serve as my get-away vehicle upon returning to DCA a few mornings later, thereby beating the gridlock automobile traffic on the roads and bridges into central DC.) And then the fun started.

Sure enough, the blue line departed just as I arrived on the platform via elevator, and the next would come only after the obligatory and interminable (and unacceptable) midday wait. The next DCA-bound subway rolled into Rosslyn around 1:50p.

Once on the Metro platform at DCA, a sprint to the elevator proceeded, followed by discovery of a new route to my usual Peugeot lock-up spot, adjacent to the US Airways hangar. I kissed the maddog (my term of endearment for the fine wheels) good-bye, and continued to run (and sweat - yes, it's unpleasant but true!) into the terminal and up to the terminus of a shockingly lengthy queue for priority security screening. The time was 2:15p. My scheduled departure time was 2:35p; hence, doors would close in ten minutes. The wait to get to the ID checker appeared to be a good 15 minutes. That would not do.

Eschewing all semblance of elegance, I got the attention of a non-TSA line attendant and pressed my case, underscoring that my qualifications for the premium lane were not only elite status, but F-class (achieved through upgrade) to boot. :) And it worked! I was escorted about two-thirds of the way forward, and I furthermore "pardoned" my way past another 10% of the line. My wait thereby reduced to three or four minutes, I was through the checkpoint by 2:21. What good fortune!

I decided to double my bet. I could have easily walked to the gate - I was in possession of a luxurious quantity of 4 whole minutes, after all! - but decided to hit the restroom and change into some fresh clothing. Bear in mind that, at this time (and pardon the directness), sweat was beading down my neck, and I was feeling positively disgusting. No sooner than I'd entered the restroom, I heard "final boarding call, United 621!". But it was only 2:22, and I was determined to take full advantage of my remaining 180 seconds.

I finished my sartorial task most expeditiously and emerged into the male-female-combined world at 2:23p. I was at Gate 31 while my phone still displayed 2:23 (it would tick to 2:24 a few seconds later). The door to the jetbridge was open, the jetbridge was still attached to the New Colours A319, but there were no agents in sight! Finally, just over a minute later, after waiting patiently (what else could I do?!), I saw the jetbridge begin to detach. And an agent made an appearance. "Excuse me," in said. No response, not even a turn of the agent's head or eyeballs, despite being about two feet away from me. "Excuse me," I tried again, and still no acknowledgement. I could already see the angry email to United's Customer Relations that I would subsequently compose. But then, unexpectedly, a helpful query: "oh, are you on this flight?" Why, yes. Why else would I be standing at the jetway? I show my boarding pass and the demeanor improves further. I'm invited down the jetway in no time.

Now firmly ensconced within the aluminum skeleton of the jetliner, one further adventure awaited that momentous half-hour. I saw someone occupying my 2D. And I was told to gate-check my Samsonite. I do not admit this with pride, but the seasoned traveller within suddenly made a full-on appearance. I stubbornly began checking all the overhead bins in F, and finding only meager space for my backpack and maddogging helmet, proceeded to investigate bins in the forward part of Economy Plus. I was determined, even though the gate agent was already in the process of writing out a gate-check tag and affixing it to my bag, and suddenly - yes, some elusive space! Again with some dissatisfaction, I admit to having forcefully and clumsily rearranged the contents of that overhead bin and then expertly shoving my over-sized Samsonite into the created space. And I then took 1D, without so much as an evil-eye to the occupant of *MY* 2D! :)

Fondly from flight, now 0:56 past wheels up, and above western Ohio, (though, obviously, my note will be dispatched only upon making contact with one of ORD's fine runways)


Awaiting a barrage of criticism from non-existent readership, pertaining to all the explicit and tacit haughtiness that, it might be imagined, oozed forth from me...

Post script: For the sake of posterity, here's what the blurry text in the Airbus advert above really says: Read Ad Astra It's the Best Read Ad Astra (et cetera). Ok, here's what it really says:

Congratulations to everyone at Continental and United on the merger creating the new United, a truly world-class global airline. Your partners at Airbus, the world's leading aircraft manufacturer, wish you all the best. October 1, 2010 was a big day for the world of aviation, and for everyone that wants to fly.

07/10: Big-picture musings

I will not commence this post with a renewed vows of frequent and substantive posting. I'll let the following (true) statistic speak of the volume of readers that have been begging, badgering, and downright being belligerent about the dearth of content: Google currently owes me less than the typical price of a cup o' Joe in advertising fees for the past few months. Hopefully that statement is sufficiently vague to dodge those highly-paid Silicon Valley lawyers, who are just itching to sue the latest dirt-poor blogger for untold damages at having revealed their precise remuneration from Google Adwords. Based on my earnings, I can't even afford the Metro fare to the courtroom, to say nothing of needing to hitchhike my way back.

Those pleasantries aside, I have navigated a transition into new professional endeavors over the past few weeks, and the upheaval having passed, I trust that there's at least somewhat of a chance for sustained value generation on these pages over the weeks ahead. And the impetus for the vagueness is an omnipotent, oddly mysterious, 'just because', its being one of the few perks (ok, the only one) of being Founder, Chairman and CEO of Ad Astra Publishing and Pontificating, NLC (like an LLC, but better, with no liability whatsoever!) And yes, dear reader, the way this writing is flowing, I too identify this post as being at risk of speedy revision.

In just-breaking news, markets have not stood still since I last scratched the virtual chalkboard that is this blog. September spawned a sustained and, so far, unbroken move towards the upside, with the broad-market /ES contract now looking over-extended, though not necessarily without potential for one last pop, before the inescapable tendency towards mean-reversion says hello. In any event, 1175 looms as important forthcoming horizontal resistance, as do 1200 and 1210 further up the chart.

A 180d/4h /ES chart follows. From here on, such notation will convey the following: first, the time period of the chart (here, 180 days); second, the time period of each bar (here, 4 hours). /ES is, of course, a 24/5 contract (meaning that it trades for approximately 120 hours per week); hence, a 180-day chart of /ES will contain far more data that, say, a 180-d depiction of SPY, its corresponding exchange-traded fund, which trades for but 32.5 hours per half-fortnight. And I trust, reader, that you'll somehow forgive the quality of this late hour's missive, and return for more dreary punishment tomorrow. Yes, I did say tomorrow.

Thursday, July 8, 2010

08/07: Markets quieter, no longer fiercely trending

Markets put in a quieter session today, in comparison to the post- July 4th fireworks of this week's first two trading days. /ES futures, after closing yesterday at 1056, quite near the session high, today opened higher, declined modestly through the meat of the session (a peak to trough decline of 13.75 points, or about 1.3%, from 1067.75 to 1054), and rallied impressively into the close, settling at 3:00p just two ticks shy of the intra-day high. Sentiment was boosted with a bullish unemployment claims report released at 7:30a CST. Here's the day's chart:

As already mentioned, markets rallied into the close, which marks a stark departure from markets' habitual PM weakness of the last several weeks. Of course, late-day sell-offs are hallmarks of bearish markets, and afternoon buying, particularly into new highs (which /ES futures today proceeded to set shortly after the 3p CST closing bell), augers well for further gains over the near term. Further bolstering bulls was a decline in Treasuries; /ZN futures declined to below two-seek support of 122'05.

(Editorial aside: To follow-up yesterday's brief commentary regarding the spelling of the plural of Treasury, referring to the bond, today's Financial Times records the spelling of the instruments as 'Treasuries,' which aligns more with my intuitive sense of correctness than the WSJ's reliance on 'Treasurys.' Hence, going forward, I'll stick with the FT's example.)

The bears retain at least two important arguments in their arsenal, the past three sessions' price action notwithstanding. Most importantly, volume failed to climb into above-average territory; today's NASDAQ volume clocked in at 2.06 billion, below the 20SMA of 2.24B and firmly below the volume levels of three particularly active sessions of the recent past: 6/25, 6/29, and 7/1, each of which had volume in excess of 2.65B. (I don't include NYSE volume readings here, as I am finding conflicting values of the metric from various sources; also, I am concerned about the metric's continued reliability, as more trading shifts off the NYSE and onto alternate exchanges.)

Furthermore, /ES futures continue to remain in a 2.5-month, downward sloping price channel; the upper line of the price channel is presently at approximately 1100, which /ES futures would have to top in order to firmly enter more bullish territory. In the region of /ES = 1100 also lurks the all-important 200SMA. Caveat emptor.

Wednesday, July 7, 2010

07/07: A one-way day, markets shoot higher

Days like today are rather frustrating for traders with a predilection for contrarian strategies, of which I am one. Here's the whole story, in a single chart:

Relentlessly, indefatigably, most remarkably, markets climbed higher, higher and higher still, with /ES advancing 40. Only twice during that dizzying rally did the instrument stray more than 5 points from its hitherto-notched intra-day peak, once by 5.5 points and another time by 5.75 points. Thus, a trailing stop on a long ES position with a mere 6 points of "leash," entered at the pre-market nadir, would have captured the whole 40 point rally. Remarkable!

By the closing bell, the S&P-500 had advanced 32 points, or 3.1%; the DJIA bulked up by 275 points, or 2.8%; and the NASDAQ added 66 points, or 3.1%.

The rally may yet be all smoke-and-mirrors, however, which is why I've refrained from taking any long positions into the overnight hours. Today's rocket-ship was not fueled by above average volume (see below), there was no particular news that might have provided a durable impetus for buying, and other measures of risk aversion, e.g. Treasurys, as measured by /ZN futures, remain elevated. That said, there are certainly plenty of other risk metrics showing marked improvement over the past two sessions, including /CL (crude futures; up), EUR/USD (up, and rising since a nadir on 6/6), and even to some extent /HG (copper futures; somewhat firmer).

(As an aside, I've noticed that the WSJ refers to the plural of Treasury, when referring to the financial instrument, as Treasurys. Could it really be so? Until I hear otherwise, I'll be employing the convention, as I've done in the above paragraph.)

Here's how the day's volume stacks up, quite literally, against the past 180 days, first on the NYSE, second on the NASDAQ. Apologies for failing to slap on a 30EMA, or similar.


I am most curious what tomorrow's markets will bring! /ES = 1100? Or /ES = 1000?

Tuesday, July 6, 2010

July Fourth in the cradle of American liberty

Sunday, July 4th saw me take a characteristically lightning-paced swing through a distant city, flanked by mileage-earning flights purchased at favourable cost-per-mile ratios. In this case, the destination was Philadelphia, most fitting given the date.

My plans for travelling to Philadelphia hatched a few days earlier, on the preceding Monday. US Airways was offering a July 4th special on Twitter: $56 all-in for MKE-PHL-MKE (MKE being, of course, Milwaukee, WI), and other East Coast and Midwest cities were pricing similarly. Chicago was, however, excluded; indeed, MKE was the farthest airport from PHL included in the sale. Naturally, I was interested, and my mind was firmly settled once I saw the most favourable timings on offer: a departure at 6:00a, my absolute favourite time of day to fly, and a return in the late evening (at 7:55p), allowing for a full-day visit to the destination city.

The morning of July 4th had me waking to my iPhone's relatively pleasant "Doorbell" alarm at 3am sharp, and I was soon off after swift execution of the 'ole morning routine and consumption of a full three-course breakfast -- for those interested: Whole Food's honey and oats cereal, cottage cheese with pear-and-pear-juice-from-a-can (quite tasty actually!), and pumpkin seed bread with thinly-sliced smoked turkey and muenster cheese. I was engaging the dance music within my car's CD player by about 3:50a.

Sadly, the twin risk factors of an empty highway and a holiday-linked, augmented police presence meant that I was cruising quite close to the posted speed limits on the morning's 77-mile journey from the 60630 ZIP code to one of MKE's $5/day remote parking lots. In a departure from my usual keen sense of situational awareness -- if I may say so --, I missed the road construction- obscured exit for Mitchell airport, necessitating a detour of 2 or 3 miles. The few minutes' extra travel time, through leafy and deserted residential areas just north of the airfield, revealed an interesting similarity between the Germanic-heritage Milwaukee and the contemporary motherland -- traffic lights set for an efficient yellow- or red-blinking (depending on whether the street is a capillary or an artery) regime during the dead night-time hours!

I parked, was picked up by a waiting shuttle bus, and found myself entering the terminal (pre-security) at approximately 5:20a. The expeditious progress was most fortunate, as I received at ~5a a phone call and voicemail from one of my contacts: "US Airways Elite." The VM, along with a corresponding email, reported the news in a single voice: my flight to PHL was delayed until 7:00a. Thus, I scurried into the terminal and towards the departure board with great haste, knowing I had the perfect excuse to re-route via CLT (that's Charlotte, NC, another of US' hubs) if there was a timely flight. And indeed there was, at 5:40a.

My scurrying turned into a full-blown run. To the security screening checkpoint, discombobulation and "re-combobulation" with a flair and efficiency honed by too much experience and too little time, a final dash to the C18 -- naturally, the farthest gate from the security checkpoint. I arrive to a gate area deserted of passengers, but, thankfully, the jetbridge door remains open and two gate agents are milling about. I present my case. I learn that the PHL flight is delayed by a mechanical, which might last beyond 7am. (Indeed, the flight was eventually cancelled at approximately 10:00am.) I board the CLT-bound bird at 5:30a taking 8A, my preferred exit row seat. I have just enough room to read the Weekend FT, though turning the pages requires the practiced skill of a contortionist.

What fantastic luck, however! I absolutely adore the "maximized" airport experience, where I can achieve the most with the least amount of inefficiency. Surely, re-routing onto a more scenic (and more rewarding, vis-a-vis mileage accrual) pathway, savouring the emotional rush of successfully negotiating one's full demands with the airline counterparty, and executing the entire labyrinth of airport entrance to gate re-booking to aircraft seat in a mere ten minutes is deserving of underscore! Likewise, a time of 2:40 for all I'd hitherto accomplished that morning was worth noting with satisfaction.

The journey down under to CLT was most pleasant, though certainly nothing as sensual as might be implied to the particularly keen reader. Though other road warriors might (vehemently) disagree -- as though I were trying to inculcate Freud's thoughts on religion to a red state -living, large gun -toting, earmarked Bible -thumping man with a particularly large and red neck, with the veins practically bulging out -- I like the CRJ. I admit, the statement applies not if I should suffer the misfortune of daily or weekly commutes on the stubby bird, and indeed, the craft are particularly susceptible to that circle of hell known as interminable-delays-due-to-late-inbound-aircraft-that-are-not-communicated-in-advance-and-announced-in-15-minute-increments-and-average-hours. But for a 5:40a joy-thrust (not a mere joy-ride) into the blissful heavens, anything that flies will do. Yes, I might have low standards because I am deprived, relative to my natural desire of multiple weekly go's. Yes, I mean flights.

Arriving in CLT, I had enough senses about me, despite having just enjoyed an enthralling read of the pink pages and surprisingly pleasant service from the FA (An actual coffee refill! Without needing to ask!), to snap a picture of the curvy beauty:

The adventure, of course, continued. A "classic" Boeing 737-400 would be my chariot to Philadelphia, the layover was a tolerably short fifty minutes (only 25 once zone 1 boarding is taken into consideration), and I would be again riding exit row, this time with an empty adjacent middle. Life is good. And -- Eureka! (Sorry, I could not resist.) I made quite the earth-shattering discovery on this sector. Just see for yourselves:

The flight itself did not disappoint. Jetting from the Southeast, a product of the Coca-Cola company was in order, particularly as I was a shareholder at the time of the flight. To my surprise, the FA took quite extraordinary care with the serving of my Diet Coke, pouring in little bits at a time as the foaming subsided, such that I was left with a "perfect" (plastic) glass of copious black liquid and just a centimeter or so of vigorous foam, all the way up to the brim. Mmmm. My seat was in the Foxtrot column; thus, views of the Bay prevailed, rather than the more enticing District depictions.

We kissed the City of Love's 27L around 11:00a, just as my original MKE-PHL was about to post a cancellation. Thank goodness I navigated to and through MKE with such alacrity! And so, two SEPTA rides the wiser, I emerged in central Philadelphia, just before Independence Hall, where I was greeted with a parade literally at the subway steps (I was expecting nothing less) --

And what a glorious day it was! A parade to greet my arrival, the sunshine and cloudless sky matching conditions I might expect in Waikiki, an entire afternoon for refinement of my trading operation's Business Plan (it is ceaseless, eternally-ongoing labor, almost Sisyphean, though certainly not devoid of its peculiar pleasure) -- the day was mine for the seizing. And carpe diem it was. I shall not bore you with the gory details of underlining here, annotations there, glances interspersed at the idyllic location of shady park behind Independence Hall, boy choir singing at its foot, patient reader (and somewhat confused reader, too, for you are wasting your precious time with this blog's effusive dribble -- the content is lacking; the words are in wasteful abundance).

In due time, I decided that the twelve-hour interlude between proper meals was just too long. It was time for a cheese-steak, a culinary adventure I'd never previously enjoyed within Philadelphia's city limits; my iPhone was indicating "Jim's" to be a popular choice, and it certainly passed the litmus-test of having a plausibly working class, folksy appellation. I was off to its South Street location, a jazzy drag reminiscent of Washington's Adams Morgan or Chicago's Division Street. And while I did not opt for the cheeze-whiz (note its gooey application in the first pic below), my creation was still authentic (and oh so delicious!) --


Somewhat satiated -- I honestly could have eaten two more of the sandwiches, showing virtually no resistance to its salty and greasy components, qualities that are generally verboten in my day-to-day diet of whole grain bread, brown rice, and sparkling water -- I ventured into the city for a long-ish walk. The architecture was just begging for my iPhone's studied glances; I wish I had a capable SLR, for the beautiful vistas of the afternoon surely demanded a higher caliber of photography. Some highlights:



After a quick visit to Sts. Peter and Paul Cathedral, off of Logan Square, for about half of the late afternoon Mass, I was quickly finding myself approaching the twilight of my stay in Philadelphia. And yet, the sun, still somewhat temporally removed from its own decline, was still moderately high in the heavens, its waves of heat lapping, at once gently and urgently, against my skin. No matter the time of day, however, a jaunt to Philly without at least a token moment of laying in the grass of Rittenhouse Square just would not do. And boy, was it idyllic! A precious few minutes were even mined from my schedule for an obligatory visit to the Square-side Barnes and Noble, where I skimmed through the Georgetown Journal of International Affairs, finding an article by one of my former professors, Balbina Hwang. Ah, school pride! Here I am, resting in the grass, contemplating Thoreau:

At this point, only an expeditious dash to 30th Street station would do; the airport-bound, R1 SEPTA would not wait! The dash turned into a full-throated run somewhere on the Walnut Street bridge over the comically-named Schuykill River. Such is one of the hazards of being a time-maximizer.

In no time, I found myself back in my comfort zone -- exit row on the CRJ. The journey to Milwaukee's Mitchell Field was terribly expeditious, with wheels-up only 4 minutes after scheduled departure time, a feat virtually unheard-of @ PHL. (Lighter traffic of the July 4th holiday surely helped.) Bucolic scenes serenades past my window:


Thanks for travelling together with me!

06/07: A short-lived dead cat (?) bounce

Markets notched a most interesting session today. After tanking approximately 10 points in the final hour of trade on Friday, July 2, ahead of the July 4th market holiday, /ES futures proceeded to drill to fresh 2010 year lows on July 5th, as the U.S. holidayed. Yet, on touching most-powerful support just above 1000 (1002.75 was the overnight low), the futures market ignited on a powerful, sustained, and near-unbroken rally that lasted over 12 hours, taking /ES futures to 1025 by today's pre-market and upwards to 1038 by the mid-morning CST.

And that's where /ES ran into resistance from a robust price channel off the 180-day chart, recoiling in fear. Bears retook control, and markets came to only a few points of their intra-day low of last Friday (which was /ES = 1010.75). Here's the chart I referenced:

Of note is the performance today of the Treasuries market. In the face of rising equities during the pre-market and early market hours, Treasuries firmly held onto their recent gains. Generally, Treasuries and equities (or, more generally, risk assets) are negatively correlated; as investors' outlook improves, they buy risk assets and sell safe-haven assets, of which 10-year Treasuries are the 500-lb gorilla. And, to be clear, Treasuries can be viewed in terms of price or yield. The above statements refer to the price of Treasuries; but if speaking in terms of yield, which moves inversely to price, then Treasury bond yields and equities are positively correlated.

Two windows onto the 10-year Treasury market follow, both charts of /ZN, which are 10-Year U.S. Treasury Note Futures. First, a 90-day chart with 2-hour bars, which is at the high of its range. Second, a 9-year chart with weekly bars, showing a wide-angle perspective onto the market; note how Treasuries spiked during the worst throes of the financial crisis.


Finally, /GC, the Gold Futures contract, has been exhibiting notable price action as of late. The 3.5-month chart -- the longest intra-day period available to my current technology -- shows marked deterioration, with one important and robust price channel pierced, and another in danger of violation. Gold should see support at the $1180 level, at least during the intra-day period, but a break downward is certainly a possibility. I'm considering a short of the GLD if /GC prices at $1170 or below. Here's the chart:

Happy trading!

Monday, June 21, 2010

21/06: Markets open strong on renminbi appreciation rhetoric

Markets greeted the day's session with a pop of between ~1 and ~1.5 percent (/ES up sixteen was a figure I heard at least twice on CBS Marketwatch in the early AM; it's still reverberating in my ear, somewhere).

Yet I've just now, moments prior to slipping away for lunch, discovered the tastiest chart of the day. Here she is:

That's right, GS, the bellwether of bellwethers, is lining up for possibly significant up or down movement (with probability to the downside), coming up as it is to a trio of significant resistance forces:
1) A robust price channel dating from March 5, 2010
2) 200-period simple moving average, using hourly bars (non- extended hours) as periods
3) The psychological resistance of $140.0

Do I hear some bears roaring?

Wednesday, June 16, 2010

Ah, television...

Just heard on CNBC by a supposed Eastern Europe investment "expert" (6/16, 2:24p EST) -- "...countries like Czechoslovakia...".

*roll eyes*

Banner day on the markets, meanwhile; decisive break through the S&P500 200SMA!

Thursday, June 10, 2010

10/06: Markets rally strong on /ES crossover day

Briefly, markets are recording a powerful rally today, albeit one that has stalled in the late morning (as these words are being written). Complicating technical analysis is the irksome matter of crossover from the /ES June contract to the September expiry; not a futures trader, my understanding of the logic is fuzzy, as the June contract still has 8 days to expiry; however, I assume it has to do with the accelerated decay of time premium over this home-stretch period.

The crossover has interfered (significantly) with technical analysis, since per my rough calculations and observation:

'/ES June' = '/ES September' + 4.5

From another perspective, and incorporating the above equation perfectly, whereas the prior relationship between /ES (June) and SPY had been: '/ES'*(1/10) + .5 = SPY, the new relationship -- i.e. of /ES (September) and SPY -- seems to be:

'/ES September'*(1/10) + .95 = SPY

Thus, while I would be pleased to post some interesting charts of /ES futures, I fear that my price channels and other support/resistance levels have been temporarily rendered suspect. I'll provide, instead, a chart of a highly tantalizing short set-up in HSY (Hershey); I only wish I'd discovered this robust price channel as HSY was powering through $42 earlier today.

Thursday, June 3, 2010

03/06: Market volatility extends into June; near-term upside

Markets today appear poised to venture firmly into higher territory, with /ES futures holding stubbornly above 1100 in overnight trade. Technically, the inverse head-and-shoulders pattern of late May in the /ES appears sound; it marks a near-term market capitulation. I expect a high probability of further appreciation to approximately 1120, at which point e-mini futures will encounter significant resistance of the upper price channel comprising nearly two (tumultuous and highly significant) months of price action. A dip to about 1090 -- the less robust mid-point of the price channel -- is possible prior to the ascent to 1120, and a re-test of 1100 is highly probable. And, finally, I expect markets to abstain from a rally at 1120 until after tomorrow's AM release of the May unemployment number.

Here's a wide-lens view of the pivotal e-mini contract:

Tuesday, June 1, 2010

01/06: Markets under pressure, geopolitical concerns mount

On this first trading day of June, /ES futures point to a sharply lower open (they're presently down about 11 points, a considerable drop, though considerably improved on their nadir of down approximately 19 points to 1069).

For proper perspective, however, consider this ~50 day chart of the /ES, using 2-hour bars (and full 24 hour price action) --

Per the above chart and its price channel, the overnight drop to 1069 is within expected price action (i.e. within the price channel). Furthermore, the late-May break below the lower price channel and subsequent recovery signals a bullish capitulation, and this morning's retracement to the lower price channel is consistent with an upward, post-capitulation trajectory.

In short, I'm bullish as long as /ES holds above 1069, i.e. the lower price channel. A break below, and particularly movement to below 1060, would shift my sentiment to decided bearishness and lead me to project further selling to at least 1020.

Thursday, May 20, 2010

20/05: Markets drop >3.5%

Markets today executed a classic capitulation move, which I expect to continue in the initial hours of tomorrow's trade. According to my own research, the market low MIGHT be 1063.5 in the E-mini S&P500 Index Futures, a level divined by highly robust Fibonacci levels; see the chart below:

Overall, the market indices recorded the following performance statistics: S&P500, -3.9%, or -43.5 points, to 1071.6; DJIA, -3.6%, or -376 points, to 10068; and NASDAQ, -4.1%, or -94.4 points, to 2204.0.

Next, here's a 1-minute bars chart of the /ES, showing the extent of today's intraday swings. It appeared around 13:45 EST that the day's action would be a classic inverse head-and-shoulders pattern; however, price action from about 14:30 and into the close negated that interpretation. With the market's post-close foray to a low of 1063.0, I am obviously somewhat concerned about my theory of this representing a durable bottom; I suppose that tomorrow shall bring the definitive answer! Without further adieu then, here's the 1-min bars, /ES depiction:

Finally, here's a tantalizing chart with which to close out; volatility is certainly reaching a significant resistance point. Not shown is the fact that VIX, at today's close of 45.79, is within a historical 10-year resistance range of approximately 45-49. The VXX, an ETF of VIX, follows:

Thursday, May 6, 2010

06/05: A Black Swan session

Today's market action has been so uncommonly dramatic as to spur a renewed effort at entries to Ad Astra Hoya. Going forward, I pledge:

1) daily entries,
2) a focus on readable content over artistic flourish, and
3) execution upon twin mandates of true value-added within a delivery vehicle of brevity.


Owing to the day's gravity, today's entry will delve into a domain of higher word counts than shall be my target. But first some pictures.

SPX (S&P500 index), one-day

PG (Proctor & Gamble), 1p CST to 3p CST

CVX (Chevron), one-day

$DJI (Dow Jones Industrial Average), YTD; that bottoming tail to sub-10k is real price action, not an errant tick

/ES (E-mini S&P500 futures), 2-year, weekly bars; note how this week's (i.e. mostly today's) volatility compares with the 2008-09 financial crisis

CF (CF Industries Holdings Inc), ~1-month, hourly bars; note how, during this afternoon's utter collapse, volume did not reach new highs -- this indicates that market makers reduced bid size en masse, allowing price to crater without a necessary spike of volume to period highs.


Today's Black Swan -order price action occurred without an obvious impetus. Markets are, of course, embroiled in the Greek debt imbroglio, and today, like the previous few, brought fresh clashes on the streets of Athens between protesters and police. Today also witnessed parliamentary elections in the UK and, as expected, Tories are expected to win a plurality but not a majority, resulting in a rare (for the Westminster, first-past-the-post political system) hung parliament. Yet none of these explain the ten-percent massacre that the markets at their nadir suffered. Even a two percent decline is difficult to explain given the dearth of any specific data today.

To the contrary, markets dipped around 10:45a CST into significant support at 1150 on the /ES, a level that featured the combination of strong support/resistance on the 1-year chart, a round psychological level, and most importantly, a key Fibonacci support of 38.2% retracement between the YTD high (1216.75 on 4/26) and the YTD low (1040.75 on 2/5). I was, in fact, so confident of this support level that I entered a directional options position in near-the-money, May SPY calls right as /ES momentarily spiked into this support from above. The decision was vindicated with a nearly 10-point pop in the /ES over the ensuing one hour of low-key lunchtime trade; but then, most unexpectedly, momentum abruptly reversed and this seemingly iron-clad support of 1150 broke like a pinata on Cinco de Mayo.

By 12:15p CST, /ES was submerged beneath 1150 and, within the next 90 minutes, it would be momentarily below 1060.

The markets at that moment were absolutely surreal. Spread on front-month, near-the-money /ES options, normally a penny or two, ballooned to a quarter or more. Disbelief exceeded all possible expectations as the capitulation reached an excess that I'd never believed possible in the absence of real news. CNBC was feverishly reporting each additional hundred point chop of the Dow and unable to provide a definite explanation as to why. The whole experience was utterly extraordinary, ghoulishly horrifying, as traumatizing as if I'd witnessed a moderate accident. Divorcing the whole two hours from any impact on P&L, the fear emanated from the shattered conviction that markets ARE NOT to act this way, that in the absence of obviously damning news, market maker bidders would not desert the marketplace and allow it to shed a twelfth of its lustre in the time it takes a nervous, palpitating heart to cycle its lifeblood around the vulnerable, mortal organism that is man.

In light of this from-far-left-field volatility, a tightened, more precisely defined risk tolerance is a necessity. I shall be working on such an articulation tomorrow, during a fresh morning, on the day of the momentous monthly unemployment report. Oh joy, what could tomorrow possibly bring? :)


For the record, market indices recorded the following action by the merciful 3p CST closing bell:

SPX: 1,128; down 3.2%
DJIA: 10,520; down 3.2%
COMP: 2,320; down 3.4%