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[Joshua Brown]

The technicians spent the year watching to see which direction the ?Japanese Trade? would resolve itself toward after a blow off top in the spring followed by six months of consolidation.

For the uninitiated, the Japanese Trade is short Yen, long Nikkei, based on the alignment of the Japanese political establishment and the BoJ in the urgent need for cyclical growth.

It looks like this week we may have gotten the answer as to how that consolidation is resolving ? and it?s to the upside. Full disclosure, we?ve been long this trade all year and have added to it in Q3.

[Joshua Brown]

Much virtual ink has been spilled on how difficult it is for individual, and even professional, investors to generate alpha in the capital markets. Ray Dalio of Bridgewater Associates the largest hedge fund operator in the world said as much this week at the Dealbook conference:

?I think the most important thing for an investor is to create a proper balance of those investments,? he said. ?In other words, I think that going forward, most investors are not going to be able to produce alpha,? a measure of outperformance.

[Joshua Brown]

$142 million for a Francis Bacon triptych. $120 million for a pastel by Edvard Munch. $106 million for an oil painting by Picasso.

After a slow 2012, the fine-art market is back. Stock market gains worldwide and growing wealth in Asia have lifted prices to new all-time highs. That includes the recent $142 million for the Francis Bacon triptych, eclipsing last year's record $120 million for Munch's "The Scream."

The fine-art market is trading just like the stock market. Buyers are stepping out and lifting the bid. That's putting a lot of cash into the pockets of investors with rare collections.

But art connoisseurs aren't the only ones cashing in. I want to tell you about a global leader in the auctioneer business that is also cashing in on these nine-figure masterpieces.

Not only does the company generate big commissions from conducting auctions for the world's rarest art and wealthiest individuals, it enjoys a duopoly with just one competitor, is protected by high barriers to entrance, is highly leveraged against growth in Asia and also pays a quarterly dividend.

That has fueled an outsize gain of 80% in the past two years. Take a look below.

[Joshua Brown]

Random Thoughts


The Ps had a decent day, taking on nearly ?%. This action has them continuing to breakout out of their high level consolidation/Double Top Knockous-ish Pattern. And, this action keeps them at all-time highs.

The Quack didn't set the world on fire but it did manage to close in the plus column, continuing its rally out of the recent Double Top Knockout Pattern. This was enough to keep it at multi-year highs.

As I preach, you can only predict the short-term when it comes to the markets with any degree of accuracy. The Ps and Quack have triggered a buy signal and have so far followed through. So far, so good but as usual, continue to take things one day a time.

I'm not complaining but it was a mostly a big cap affair. The Rusty ended flat on the day.

With the Ps and Quack at new highs, overall, the day scores as a positive.

It is no surprise that many sectors like Ps and Quack managed to close at new highs. Some of these include Brokerages, Insurance, Defense, Health Services, Manufacturing, Retail, Chemicals, Transports, Conglomerates, and Consumer Non-Durables.

Even some areas such as Drugs which have recently rolled over have turned back up and are now making new highs.

Every day that the market makes new highs is a day when you shouldn't fight it. What is, is. As long as it continues to do this, go with the flow.

So what do we do? Nothing has changed: I'm still seeing a few shorts setting up. No worries though. This is perfectly normal since the rising tide is lifting all boats (i.e. weaker stocks are pulling back). Again, with the market at new highs you certainly do not want to fight it. Since there aren't a lot of meaningful longs, now would be a good time to trail stops and look to take partial profits in any existing longs in your portfolio as the initial profit targets are hit. If this thing turns into the real deal, then you'll still have a partial position and participate. And, if it don't, then you scratch out of the remainder of the position for a better-than-a-poke-in-the-eye trade. Honor your stops on any leftover shorts. This money and position management plan-stops, trailing stops, taking partial profits-will keep you in the game a long time. It creates a portfolio ebb and flow. This helps to keep you on the right side of the market during trends and mostly out of the ma rket during choppy conditions.

Click here to watch today's Market in a Minute.

Best of luck with your trading today!

Dave
omgmachines.com/ericx
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Expert swing trader Dave Landry comments on the charts for the major markets, indexes and sectors for the upcoming trading day in his daily one-minute video.

Make sure your sound is turned up. A new browser window will open and the video will begin playing within a few second

[Joshua Brown]

In a fairly rapid time, the solar power industry has been able to tackle two major challenges that threatened to decimate the industry.

First, far much too capacity led to rapidly falling prices, which pushed the industry's weakest players into bankruptcy and has left a few more of them struggling to stay afloat. Restrained capacity growth has become the theme of 2013, enabling demand to catch up, and prices on solar panels are no longer plunging at a rapid clip.

Second, the steep fall in solar panel prices has pushed this technology a lot closer to "grid parity," compared to fossil fuels. If natural gas prices had not also plunged as well in recent years, demand for solar would really be booming.

But gas prices have fallen, and it's unlikely they will spike higher in coming years. Gas drillers will simply boost output any time prices rise, which is OK with an industry that has learned to become profitable with natural gas at $3.50 to $4 per thousand cubic feet (Mcf). Even as gas rallied to $5 per Mcf, solar still couldn't compete, at least not without government tax credits (that are set to expire in the U.S. in 2016, have been sharply rolled back in Europe and remain firmly in place in China).

Meanwhile, the improving backdrop for solar has kicked off a furious rally, led in part by short sellers who are getting trampled. The average move up from the 52-week low exceeds 500% for this group.

[Joshua Brown]

When chip equipment maker Applied Materials (Nasdaq: AMAT) surpassed $10 billion in annual revenue for the first time in fiscal 2011, its competitors could only sigh. The company's industry leadership was never in doubt, but a series of acquisitions gave it such a broad suite of offerings that rivals wondered if they could ever take market share again.

Applied Materials' massive market presence eventually led its two biggest rivals, Lam Research (Nasdaq: LRCX) and Novellus Systems to join forces in 2011, but even that combined entity has yet to crack the $5 billion annual revenue barrier.

KLA-Tencor (Nasdaq: KLAC) is also in Applied Materials' rearview mirror, with only $3 billion in annual sales. And a handful of smaller companies bring up the rear, none of which have even $1 billion in annual revenue. (Note: Only U.S. companies have been considered here.)

[Joshua Brown]

Today, many followers of the Mad Hedge Fund Trader?s Trade Alert service have up to eight November option spreads expiring at their maximum potential profit.

My strategy of taking advantage of the short November expiration calendar and betting that the markets stay in narrow ranges turned out to be wildly successful. At this stage I am batting eight for eight. If these all work, then I will have issued 15 consecutive profitable Trade Alerts since October, something most hedge fund managers would die for at this time of the year.

I have already taken profits on five of my November positions, but judging from the email traffic, many of you are hanging on to the bitter end and have asked me how to handle these.

It?s really easy. You don?t have to do anything. Nada, Squat.

Trading in the underlying ceases today, Friday, November 15 at 4:00 PM EST. The contracts legally expire on Saturday night, November 16. The cash profit is then credited to your account on Monday, November 18, the margin freed up, and the position disappears into thin air.
Only the (SPY) November 2013 $180-$183 bear put spread is giving us a run for our money. As I write this, the (SPY) is trading at$179.27, and we are a mere 73 cents in the money on the $180 puts that we are short.

If the (SPY) closes on Friday over $180, then you will be short 100 shares for every contract of the November $180 puts that you are short. Your long position in the November, $183 puts expired on Friday, so you will be naked short. This is not a position you want to have.

It is always best to cover this at the opening on Monday morning to limit your losses and keep your risk from running away. You may also not have sufficient margin to run a naked short, so If you don?t liquidate, your broker will, probably at a worse price.

Don?t try to trade a leveraged short (SPY) position in a bull market. It?s probably beyond your pay grade, and I doubt you?ll sleep at night.

I?m betting that the (SPY) will close on Friday below $180, so I am hanging on to my position. With only one single day to expiration, it is a coin toss what will happen. But with the markets this sluggish, if I am wrong, it will only be by pennies. Quite honestly, being up 56% on the year I don?t mind taking a gamble here.

I know all of this sounds very complicated to the beginners among you. Don?t worry, this all becomes second nature after you?ve done the first few thousand of these.

If you have any doubts, call your broker and they will tell you what to do, especially the part about you needing to do a thousand more trades. Here, an ounce of prevention is worth a pound of cure. Then it?s on to the next trade.

In the meantime, take your winnings and plan your winter Caribbean holiday with your significant other. Or plan a ski vacation at Incline Village in Nevada. They?ve already had two nice dumps of snow. If you do, drop me a line and I?ll take you out for coffee at Starbucks.
Well done, traders!

[Joshua Brown]

?A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,? said my friend, Federal Reserve governor nominee, Janet Yellen.

[Joshua Brown]

The Chart of the Day is Canadian Solar (CSIQ). I sorted the New High List for Weighted Alpha and this stock has a WA of 1,376.33+ and is up 1,534.87% in the last year. It was the COD on 9/25 and since the Trend Spotter gave a buy signal on 9/5 the stock is up 226.74%.

It is a solar module producer. The Company offers ingots, wafers, solar cells, solar modules and other solar applications for on-grid and off-grid use to customers worldwide. It also designs and produces specialty solar modules and products such as solar-powered bus stop lighting; and specialty products, such as portable solar home systems and solar-powered car battery chargers.

[Joshua Brown]

Any time a company exceeds or lags quarterly profit forecasts by a big margin, the resulting share price action is quite predictable. Indeed, the list of stocks making recent 52-week highs are dominated by companies that posted stellar third-quarter results.

But the market action doesn't always play out that way. On occasion, a company will handily surpass consensus profit forecasts, analysts will boost their outlook for the next year, and yet the stock price falls in value.

How do you explain such a disconnect?

Perhaps some investors were looking for even greater upside than the company delivered. Or perhaps investors have begun rotating out of the company's industry, selling off all stocks in the group on an indiscriminate basis. Whatever the reason, a combination of surging profits and falling share prices is a nearly perfect setup.

I reviewed several hundred stocks that topped third-quarter profit estimates by at least 20%. Predictably, the vast majority surged higher in response. But I was able to come across three dozen companies that fit the backdrop of "good earnings/bad share response." From there, I tossed out any stocks in which analysts lowered their 2014 profit forecasts after the quarterly conference call. If a company blew past third-quarter estimates but expressed caution about the year ahead, then the earnings surprise isn't really notable.

We're left with 11 stocks, all of which exceeded third-quarter EPS (earnings per share) forecasts by at least 20%, all of which now have 2014 consensus profit forecasts that are higher than when earnings season began, and all of which have actually fallen in value since earnings were released.