Buy Twitter And Short The Rest Of Social Media

From the desk of Thomas Bruni @BruniCharting

***

Twitter has been a disaster of a stock for the majority of its time as a public company, but recent price action suggests a tradable bottom may be in on an absolute and relative basis.

Before getting into the price action, it’s worth acknowledging the continued deterioration in sentiment regarding this stock in recent months. I’ve been negative on the stock for a while, but with the downside targets I outlined here being met, I don’t see a reason to be overly pessimistic on the stock at current levels. With price action improving in the face of another poor earnings report and another slew of analyst downgrades, it appears, at least anecdotally, that sentiment is overly bearish in this name.

With sentiment suggesting a neutral/bullish stance is appropriate, let’s see what price is indicating.

On the daily chart spanning back to last August I outlined the relevant downside targets for the intermediate term. As my notes indicate, the stock recently met both the tactical and structural downside price targets of 14.30 and 13.15 respectively, and quickly reversed. The day following its earnings report the stock opened, and managed to close well above, the after-hours lows and followed through with an 11% move to the upside on Friday.

Desktop Chart Continue reading

Advertisements

The Monster Breakout Underway In Dollar Swissy

From the desk of Tom Bruni @brunicharting

***

Over the past five years or so, USD/CHF has been laying the foundation for a structural breakout, a structural breakout that looks to be in its early stages as 2016 begins. Before I get into the price action, I think it’s important to understand the context that this move is occurring within.

From a sentiment perspective, my data suggests that commercial hedger positioning and public sentiment are both at neutral levels. Sentiment is only important at extremes, which I don’t see currently, therefore this will be the extent to which I discuss it in this post. In terms of seasonality, my data suggests that over the past thirty years, January-March has been the worst three month period of the year for Swiss Franc performance. The combination of these factors provides a slight tailwind for USD/CHF longs in the early months of the year, but overall, this market continues to trade within the context of a neutral backdrop.

From a structural perspective, the weekly chart shows the decade-plus long downtrend that this market has been in since prices peaked in 2001. In 2011, prices accelerated to the downside, quickly reversed, and have since been trading within a range of 0.86-1.00. The four and a half year base that formed allowed momentum to improve, the 200 week moving average to flatten out and begin rising, and for prices to test the downtrend line from the 2003 highs multiple times. The development of the conditions which support a sustainable rally allowed for prices to break out late last year, retest the breakout, and continue higher. If this breakout holds, the first structural target lies near 1.13-1.14 at prior support and the 38.2% retracement of the 2001-2011 decline, which represents roughly 12% upside from current prices.

usdchf bruni 1

Continue reading

Is It Time To Buy South Africa For A Trade?

From the desk of Tom Bruni @brunicharting

***

South Africa ETF To Rally 25%?

With global equity markets looking poised for a tactical bounce in the week(s) ahead, one market in particular looks ripe for a potential squeeze higher.

South Africa has been in a strong downtrend since breaking down from a symmetrical triangle late last August. Selling quickly accelerated after a major support level near 51-52 broke shortly after the breakdown from, and retest of, the symmetrical triangle. Last week prices traded through another major support level near 40 and swiftly reversed to close the week back above it while momentum diverged positively.

Although the main structural downside target lies near 32, current conditions suggest a counter-trend rally may be in the cards. As long as this failed breakdown holds, prices look like they could retest the broken support level near 51, which also corresponds with the 38.2% retracement of the 2015-2016 decline and the downtrend line from the 2015 highs.

eza bruni 1

Continue reading

A Bottom In Oil Prices But Perhaps Not “The” Bottom

With oil prices bouncing nearly 20% off of last Wednesday’s lows, many are once again asking whether or not the bottom in Oil is truly in. My answer to that is simple: “A” bottom is in. Whether or not it is “The” bottom in oil will only be obvious in hindsight.

With prices roughly 58% from their 200 day moving average and public pessimism at levels not seen since 1998, the occurrence of a counter-trend rally is far from surprising. As history has shown us, some of the fiercest rallies occur during bear markets, of which Crude Oil most certainly remains.

With that being said, let’s look at where oil prices are currently indicating this market could be headed… assuming “a” bottom in oil is in.

From a structural perspective Crude oil remains in a strong downtrend and continues to be a “sell-strength” type environment. What’s important on the weekly chart is the potential failed breakdown below the 2009 lows that is setting up. Prices made new lows last week and quickly reversed with momentum putting in a bullish divergence on multiple time-frames. Prices also remain extended from the downtrend line drawn from the October 2014 highs, suggesting that if prices can close back above the broken support from the 2009 lows, the mean reversion in this market could accelerate and possibly retest that downtrend line. Some big “ifs” currently.

Crude Oil – Weekly Chart

crude oil weekly chart long term bearish trend january Continue reading

Time To Fade The Natural Gas Rally?

From the desk of Tom Bruni @brunicharting

***

Potentially Time To Fade The Natural Gas Rally

With Natural Gas futures up roughly 48% since the December lows, the urge to call a bottom in this asset class is quite strong. However, history tells us that the most vicious rallies occur during bear markets, which may suggest that current levels offer a decent risk/reward on the short side.

Before taking a look at price, it’s important to be aware of current sentiment and seasonality data within its proper historical context. In terms of sentiment, the recent rally has allowed a number of things to occur.

  1. Commercial hedger net long positions are slowly backing off all-time highs.
  2. Public sentiment moved from multi-year levels of pessimism to the a more neutral reading and the most optimistic since late 2014.
  3. Momentum as measured by a 14 period RSI across multiple time frames has reset from deeply oversold to a more neutral reading.

In addition to that, seasonality data from the past thirty years suggests that Natural Gas tends to struggle in the early months of the year, with average returns of -5.7% and -0.2% in January and February, respectively.

There was no doubt that sentiment was stretched to extreme levels late last year, but the recent rally allowed sentiment and momentum to come back toward more neutral territory; possibly setting up for another leg lower.

In terms of price, structurally Natural Gas remains in a downtrend. After a failed breakdown below the 2012 lows sparked a vicious rally December into January, prices are back at overhead supply and potentially putting in a failed breakout above the downtrend line from the late 2014 highs. Momentum did not put in a bullish divergence at the recent lows and remains in a bearish range.

1-12-16 ng bruni

Continue reading