Traders Edge- 7-10-12

The risk off trade was alive and well in the coal stocks, as Patriot Coal went BK. This is one docket that may be worth watching, as the 1.9 billion in coal reserves may make the bankrupt bonds worth a look. Take that with the caveat that the company does have large pension liabilities that may make any trade not worth the investment.

Some quick charts.

We thought this was/is an interesting relationship. The above chart shows the three year track of the the spot wholesale price of gasoline and the S&P 500 spider. The relationship looks fairly tight. We mention this due to the call for a further decline gasoline prices.

The above two charts show the UUP and the UDN or the Powershares Dollar Index Bull Fund and the Powershares Dollar Index Bear Fund, respectively. The UUP looks somewhat overbought on the stochastic, but the volume characteristics suggest more of a consolidation. Interestingly, the UDN shows interesting volume characteristics with the decline in April and May have little volume support while the rally off the June lows occurred on increased support. This is a dynamic to watch considering the risk-on/risk-off trade in regards to the machinations of global money printing and economy.