THE WHISTLES GO WOOOOP

Because of this, I started looking at some of the commodities futures, particularly gold, soybeans and corn. All of these are starting to look really attractive on the short side.

Corn

Soybeans

Gold

How would you play this? From the looks of the charts, it looks like ag has the most downside potential. I took a look at a few of the ag chemical names and I must say: We are reaching very tempting short selling entry points. I looked at a few of the gold names and there are shorting opportunities out there as well, but ag chemical names are looking really nice.

Agnico-Eagle Mines (AEM)

Mosaic (MOS)

Potash of Saskatchewan (POT)

Now as far as the S&P 500 is concerned, we are seeing a bit of lateral overhead resistance in the form of a reciprocating price zone as well as a fibonacci retracement line. The retracement level we are at is a short term one, and the long term 1932 depression retracement values are the not so thick lines on the chart below. Judging from the stochastics, we could head either way tomorrow. From the looks of the resistance zone, I would bet two times out of three that we are headed lower.

With this in mind I have a few other bearish plays for you guys to consider. Some food for thought.

Autozone (AZO): It’s still not too late to short this. A very, VERY low risk entry point with a crystal clear stop.

Proshare Ultrashort QQQQ (QID): Judging from this, tech is looking a bit weak. If you plan to play this, proceed with caution because we have not seen a positive day to use for reference. If you play this tomorrow, its really more of a crap shoot.

Rayonier (RYN): We have a pennant formation with a Fibonacci fan line providing some resistance. We are getting awfully close to a breakout.

Ultrashort Utilities (SDP): Another dangerous, highly volatile ETF. We are in a bit of a pickle, but tomorrow may provide a nice long entry point. We are right at the 200 day moving average with oversold stochastics. A drop to the 78.6% Fibonacci arc would provide a stellar entry point.

Walmart (WMT): Walmart continues to amaze with the shear precision that the pennant formation resistance gives. A break of this and I will be very bullish or very bearish.

Spyder Select Energy ETF (XLE): How to play this….hum….

Give me a few minutes to make my nightly post. Shouldn’t take more than 15 minutes.

From the looks of the charts, it looks like we are headed higher for the time being, both psychologically and technically. It is a new year, a new regime is about to take office and optimism seems to be blooming again. This is exactly what the bears need before shorting the market once again.

Take a look at these two charts of the S&P 500 and Dow Jones Industrial Average. If you recall from a few days ago, I made a post about my predictions for 2009, and posted a chart of the S&P 500 with resistance levels highlighted in orange and green. It seems as though on both the Dow and S&P closed right below the Fibonacci resistance levels. Because of this, Monday will be a real test for one main reason: volume. If markets can chug higher on decent volume, the S&P should have no problem hitting 1000-1050 and the Dow should see about 10000.

The thing that puzzles me is how a selloff hasn’t happened considering multida winning streak the indexes have been experiencing. This is something that could be looming going into next week. With that in mind, trailing stops are your best friend. Profit is profit folks, and trailing stops lock them in for you. I did not set them on a few of my shorts and consequently, went from a 8-10% gain to a 4-5% loss on many of my shorts that ended up getting stopped out. Your key for 2009 is to be nimble. Be a smart trader, not an ignorant one.

As far as charts are concerned there are still plenty of possibilities, but shorting the market with TIGHT stops seems like a very logical hedge right now. Even though I got stopped out on alot of shorts on Friday, I still made money in the end. If you are in an equity, especially shorting an equity, you must have a stop in place. Here are a few to watch for monday:

Walmart (WMT): I posted this chart at least a week ago with the pennant that is being formed. Since then, the stock has been behaving nicely. A break in either direction and we are in for a bull run or a large pullback.

Ultrashort Real Estate ETF (SRS): This one continues to amaze me and could quite possibily the easiest trade for next week. How long are the stochastics going to stay in oversold territory? In reality, I should of went long, before the close on Friday but lets see how Monday opens up. I plan on going long with a stop at $48.17. If it hits $48.17, you will see me out of there faster than you can say “Cat in the Hat”.

Nutrisystems (NTRI): Another shorting opportunity.

Energy Conversion Devices (ENER): For you volatility junkies, this one is right up your alley. We have seen a moster run and the equity is running into the 50 day moving average. Going long with a retrace to the Fibonacci fan line would be a decent play. Always keep on eye out on this, as it can move 5-10% or more a day.

Nordic American Tanker (NAT): Beside Autozone (which I am already short) , this may be the #2 biggest “DUH” short of the year if it rises a bit more.

Lastly, I shorted Baker Hughes (BHI) prior to the closing bell on Friday. We have an intersection of a Fibonacci fan line and Fibonacci retracement line. Oil is in a very precarious position right now and I don’t want to get my ball sack ripped out from under me. I have a stop set at the top wick of the spinning top formation on December 24th (sorry I forgot to highlight). If it breaks those highs, you will again see me out of there before you can say “Cat in the Hat”.