Financials hitting strong support

I use XLF, the financial sector etf, as a proxy for the entire financial sector. While it is difficult to predict the fortunes of any one stock, investing in a sector etf significantly reduces stock specific risk while still allowing for selective investing.

Look at the chart above. Is shows that the financials are hitting strong support at around the 14.9 level. While is is always possible that they crater through this, such a shelf of support usually allows for atleast a cursory bounce to prior support.

So that was the technical aspect of investing. Coming to fundamentals and sentiment, both of these are very depressed wrt to the financial sector right now. Just over the weekend, both the NYT and WSJ carried very negative stories regarding these stocks. Bottom picking is always hard but I believe it affords a good risk reward..place a stop below the support and get out if it looks to be breaking. On the upside, the chance for a strong and quick snapback rally on any slimmer of hope is high.

Disclaimer: I have bought into C calls, MS calls and FAS to play this thesis

Futures 10 Year Note Chart Daily

Will a dramatic jump in yields crash this party? Check out the chart below (also, link to updated version). The price of the bond is dropping implying the yield is rising. Yields can rise due to growth expectations or inflation expectations. What do rising yields imply for other markets? Growth better be awesome or else the stock market that Helicopter Ben has pumped up so much is going to snap.

Futures 10 Year Note Chart Daily

Does Apple want to sell TV's?

Intriguing idea. And why not? They pretty much own the rest of the media space - the next revolutionary step should be home entertainment. They apparently have been securing lots of supply of some product...lcd displays?

Stock up on that coffee

Coz the prices have gone ballistic, and it's about time the costs will be passed on to the consumer.

Of note, target has a great deal on Starbucks coffee right now...discounted + a small gift card for buying in bulk.

Overbought readings

At this juncture, the stock market looks very overbought. While timing declines based on such indicators in not of much value, it certainly does imply that any further gains from here will be tenuous and prone to sudden downdrafts. The indicators I follow for this are:

• CBOE index and equity put/call ratio
• ISE sentiment index
• VIX/VXO volatility indices

Long term dollar chart

As much as the fed has been trying to debase the dollar, this long term chart shows that it's fallen back to a little below where it was before the tech boom (the dollar index is the weighted avg. of the dollar against trading partners). If technical analysis has any value, the dollar should now bounce off that lower wedge line. On the other hand, a breakdown below that line will be mighty significant which might propel gold, silver and stocks to the sky!

Silver

All I can say is WOW!!