Some Unfinished Business

Before I head out for the week, I wanted to update and follow through on several things that I have been discussing on the blog over the past couple of weeks.

The first is crude oil. I had been bullish on crude oil back in October, and I saw the position move about 15% in two weeks. All of that was given back over the past six weeks, and the oversold bounce is now upon us. However, my indicators suggest that the upside for crude oil is limited, and there is risk of further downside. Since I highlighted US Oil Fund (symbol: USO) back in October, the whole round trip through Friday cost us 2 cents (plus trading costs)!!

The second bit of unfinished business is the list of ETF's that I have been generating with buy and sell recommendations. That list is updated in table 1.

Table 1. ETF's/ "market calls"

Several observations:

1) Two new additions to the list are: SPY and XLP.

2) Out of the 25 names on the list only 3 are trading above the highs of the cluster of negative divergence bars.

3) On 12/11/2009, I attached a "market call" to each ETF. There have been 9 changes this week. (These are the ETF's with the "*" next to it.) 8 were down grades and there was only 1 upgrade.

4) Most notably, SLV, EEM, FXI, and UDN have been down graded to "sell".

5) HYG was upgraded to "buy/hold".

As a reminder:

A "buy/ hold" signal would be for those ETF's that have already closed above the highs of the recent negative divergence bar on a weekly basis. Because this has happened, there is the possibility that prices could accelerate higher; however, these gains (if ever realized) will likely be given back. This trade is for the nimble.

A "hold" signal implies a trading range, and this is likely to change in time.

A "sell" signal is a sell signal. At best expect (or hope for) a trading range; more likely, an opportunity to buy at lower prices is ahead. How far the sell off goes is yet to be determined.