Market Update, PWRD, SOLF, OIL

Well the markets really sold off rather steeply today. The Dow was down 200 points to close @ 12,828. The Nasdaq down 23 points @ 2,492. And the S&P down 13 @ 1,413. Oil today hit another all time high to close @ 129 dollars. And the PPI data released confirmed the threat of inflation...

All that is jibberish in my opinion. Want to know the real truth? As I have said before in the past, the markets follow TECHNICALS. Even though the news feed is important, in my opinion it's just a cover, or better yet, catalyst, to give the markets the extra little push to buy/sell. Following technicals is much better than listening to headlines and the Wall Street media BS. If anyone listened to those clowns a few days ago (I like Jim Cramer because he is the ultimate contrarian to market sentiment), they would have been another victim of the "retail investors getting robbed by wall street" statistic.

PWRD - A stock I've pounded the table to short when it hit $30 bucks and beyond, got annihilated the past two sessions. I hope some of you hopped on the short bus and rode this baby down - congrats to you on making nearly 20% in two sessions. But watch out now for a potential rebound in the making.



Since the bulls took it on the chin pretty hard the past two sessions, we are likely not going to see this IMMEDIATELY rebound. With that said:
- Indicators are nearing oversold status.
- It is currently at the 50 and 200DMA. Even though from the first glimpse it appears to have pierced those averages, be careful of the potential fakeout.
- Note the "M" pattern that formed perfectly from the price action.

PWRD closed at the lows of the session, so tomorrow we could continue to see even more selling pressure come in. But if you are short, that would be the opportunity to start locking those gains in. Pay attention to these 3 support levels (I'll name them S1, S2, S3)

S1 - $24.91
S2 - $24.26
S3 - $23.06

Compliments of the Mojo Pivot Point Calculator.

If the stock continues to selloff tomorrow, consider setting your cover at these targets. If you are looking for an entry point to go long, consider these to be the targets you would want to start building long position. The numbers are calculated based on today's Open, high, low, and closing price.


SOLF
- We didn't see too much action today because the gigantic move it has already had. They are set to report tomorrow morning. I do not have a position into earnings but if you do, I wish you the best. It will probably come out above analyst estimates (and it better). If it blows out by a huge margin the stock could have another gigantic short squeeze that'll push it up bigtime.
(35% short interest according to ShortSqueeze.com )



But if they disappoint in any way, or just comes in line with expectation. You better believe the bears are going to come stampeding to take the "fun" out of SolarFun. JUST LOOK AT HOW EXTENDED AND OVERBOUGHT IT IS! If I had to guess, I'm going to say they are going to have a sell the news plunge tomorrow. If it pops big tomorrow I am going to go on record now and say I'll be all over the shorts.


Oil
- Yes, once again, oil makes another historic high. Today I think based on comments made by an oil mogul Boon Pickens who initially said oil was a short at 100, but today on CNBC reversing his stance and going long.

USO rallied another $1.5 to close at 104.30. Very impressive indeed. But I am going to continue to take the contrarian view here and say oil is due for a very sharp correction. Whenever there are "moguls" coming out proclaiming IN PUBLIC they are going long, when we have Goldman Sachs raising their targets, and when we have the news channel every single day pounding the table to go long oil, that to me is the indicator to sell. The big money is probably still bidding up the stocks to try to get as many retail investors on board to go long. And then in one swoop they will take them all out hard and fast.

I will not go long oil here. Am I losing money on my oil short? Ya I am...down 4.3% to be exact. But I am very convinced this move will be coming to an end soon. There's simply too much publicity about this right now, the technical charts are way over extended, and the sentiment is way too bullish.

So if you're considering going long oil, be sure to keep stops in place to protect your profits. Take the lesson in Gold and what happened when the price was at $1,000 everyone said "$2,000 gold here we come!" And then gold subsequently took a ~$150 nosedive.

Invest wisely. And always remember - Charts tell the truth.

- DL

Disclosure:
Long GOOG, 75% V
Short USO