Diamond Foods Heats Up, Markets Poised To Go Long Monday

Good evening traders and investors,

Let's get this week under way with our Monday line up.

Presently, the S&P 500 has produced two significant higher lows on October 3 and November 25 but with only one higher high, it's too early to speculate that the stock market will head higher during the short term, or at least for the remainder of the year. The next few day should give us a better indication where investors are as Italy and Spain are set to auction several bonds.

If stock futures are up prior to Monday's opening then we may take long intraday positions in Cano Petroleum CFW and Pharmacyclics PCYC, which both lost 38.13% and 15.25% respectively during Friday's trading. However, if stock futures are down then we could look at shorting Diamond Foods DMND, American Airlines AMR and/or Blue Coat Systems BSCI, which gained 52.77% and 43.65% respectively during Friday's market auction. Although, stock futures would have to been way down before I would attempt to short Diamond Foods since they may have been cleared of any egregious acts. If you are shorting, look for lower highs and lower lows from the onset of opening before entering positions after 10 minutes of data. But if you are longing, then look for higher highs and higher lows.

The same pattern I see in the S&P 500 chart is also charted for Gold since September 30. Thus, going long is a strong possibility for the shiny metal. Look for a higher high above $1800 as a confirmation for an upward trend with the possibility that gold could hit $1900 again.

West Texas Crude Oil, on the other hand, has seen some choppy sideways trading for the past month and thus we must wait for some sort of break out, up or down. Lots of resistance at $100 and thus a break above could see crude heading to $115 while the opposite would see a drop to $85. Right now, I am leaning towards shorting crude as the higher probability trade since we are seeing a well developed top after a strong uptrend since September 30.

As for the USD/CAD, I see a possible long position even though the current price is trading below the 10 day moving average. Why? Because I see two well developed higher lows since October 28. Moreover, short term economic indicators e.g., unemployment claims are decreasing in the U.S. while they increased in Canada in October and November. But, we may see some choppy sideways trading now that the Bank of Canada has announced it will hold interest rates at 1.25%. There are a lot of economic indicators coming out this week that will give us a better idea of inflation and thus help us better speculate the direction for the USD/CAD.


Good luck traders and investors. 

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