Monday, December 28, 2009

Stock & Futures Markets Overview Near Year-End

Stock Market

Our stock market indicators remain relatively neutral. Our long-term models remain bullish while our overbought/oversold indicators are slightly bearish. Short-term models have kept us generally on the long side as the market continues to gently rise.

We have talked about the continuing rise in the markets with respect to the "Wall of Worry" as well as other contrarian indicators. At some point, we may give back some ground -- but we also believe that we might also see a melt-up (or freeze-up as some like to call it!) -- as shorts finally throw in the towel. During this sustained rise to recent highs, we have yet to see a +2%-3% rise.

Futures Markets

On the futures side, various markets gave back recent gains in well-entrenched trends -- so that trend-followers suffered a bit during December. This is part of "volatility" of futures trading; if it were too easy -- everyone would be doing it! However, good trading systems cut some losses short and will continue to follow the trends. Longer-term trends continue to be:
  • Long gold
  • Long energy
  • Short dollar
  • Long bonds
  • Long soft commodities like sugar, cotton, OJ, coffee
Wishing you a happy holiday -- and a happy & healthy 2010!

Thursday, December 3, 2009

Rambus (RMBS) moving to 52-wk highs

In some previous blog posts, we have mentioned Rambus (ticker RMBS) as a flyer that has a lot of risk -- but correspondingly high potential rewards. Very high potential...

Currently, there is a "perfect storm" of news out there -- each of which has the potential to launch RMBS to much higher levels. These include:
  • EU settlement with RMBS should be finalized at any moment. Although the specified royalty rates are lower than Rambus might have hoped for -- the agreement will legitimize RMBS intellectual property and potentially pave the way for licenses with some big firms. There have been rumors that some big names (like Apple!) could sign up as licensees.
  • The AT trial in Judge Kramer's Court is scheduled for Jan 11 -- and if all stays on target, as the days tick by, the marketplace will have their eye on a payoff that has been estimated in the billions of dollars (from several billion dollars to double-digit billions).
  • Whyte's Court also has proceedings that are scheduled this week.
There are, of course, risks of delays and other setbacks. For now, however, the market action looks like we could break out to the upside. Here is a look at some resistance levels that may be of interest to investors:
  • A close above 19.42 would be bullish.
  • The next level of resistance would be the 23-25 range.
  • Next resistance level is the 35-42 range.
  • And then, dare we say... triple-digits!
From Previous Blog Posts
Rambus is involved in patent litigation (ugh) -- but seems to be winning the war and getting over the hump in terms of risk. Note, however, that I thought this to be the case back in January, when the stock was a bit higher. In early January, things seemed to be going RMBS's way and the stock was trending higher to around 18. Rambus got blind-sided by a court in Delaware (which some feel will be overturned) and the stock cratered to the single-digits.

However, Rambus has continued to make progress in other venues and has been edging upwards again. The stock is building a base at around 10 -- and as a trader, the stock chart is looking favorable. Rambus certainly has a lot of risk and volatility surrounding it -- but it is certainly a "flyer." It has the potential to easily move up to a multiple of its current price -- with some predicting triple digits.

You can find more information at, forums at and (lot of noise at forums) and

Wednesday, December 2, 2009

Equity's Steady Gains

The stock market has gained more than 20% since July with no "daily gain" materially over +2%. As we mentioned in a previous post, we have climbed a "wall of worry" -- and our indicators favor more gains in the near-term.

At some point, we should get a "capitulation" rally -- with the bears and shorts throwing in the towel. This could lead to a +3% day or more... We can't tell when this is coming -- but bad news has been "rolling off" the equities for a while. Overnight, there was some good news for banks/financials (Bank of America will pay off a chunk of TARP money) -- and the markets are calling slightly higher.

Currently, there is still a lot of bearishness out there -- making a good case for a contrarian bullish call. On the other hand, a capitulation rally will be a sign of a near-term top. The financial markets contain a lot of randomness -- but students of "technical market action" can put the probabilities on their side.