• This is the nature of financial media.

While many celebrate Santa Claus in December, we also have to live with Hedge Claus year round.

Unfortunately that is the nature of financial media. this morning I said, "today has that nasty feel that we can just flush lower at any point." Well, we did get a real nice flush, which also helps the legend of the Collins Curse live on, but I look back and wish I had been a bit more clear and concise in my statement.

I should have said I am not looking at any scalp longs because I believe we are going to flush lower today. Instead, I fell into the trap of the dreaded Hedge Claus to "some day." Albeit mine was a light violation, but too often we hear big bold statements followed up with some little clause that gives the speaker a plausible out. Or we hear a vague tease about something that is going to happen in the future, but no timeframe nor catalyst nor even a reason is given.

I could go on and on, but the point is the Hedge Claus won't go away. Those in the financial media, whether they intend to or not, will write and speak in a way that provides an out if their thesis is wrong. Sometimes the out is simply justifying more time for their thesis. Sometimes their out is underlying action taken by the speaker/writer that the reader or viewer is unaware of. Sometimes that out is as small as the words "any point" or "can" or "could." While this won't go away, try your best to parse through the small words when contemplating a big idea or bold statement.

And today, while disappointing, didn't change the long-term picture of the market. There was no severe technical damage for the most part, although the Qs are getting close to losing support. No hedging there. They have not yet lost support, so I am not bearish nor looking to short. I am firmly on the sidelines with no long nor a short. I need to see 1% lower to believe we really push down and a 2% move higher before I get interested long. The SPDR (SPY) is very similar, as a matter of fact.

I appreciate all the comments today and hope you all enjoyed your time as much as I enjoyed mine. Time for me to take my work buddies out for a drink (water on the porch) and then catch a little more NCAA action.

Have a great weekend everyone.

• Also, moving average convergence/divergence appears to lead price action.

By Tim Collins

It wouldn't be a day on the diary if Monitise (MONIF) wasn't mentioned at some point. That's like staying at a Holiday Inn when it's not even a holiday! And I know I've said this before, but I'll say it again for good measure: I defer to Doug on the fundamental story here. He has put in the time and legwork required to tell it. I have not.

On the surface, the chart is somewhat messy. I'm not even including the weekly because it doesn't offer anything more than I can see with the daily chart.

Monitise (MONIF)

Source: StockCharts.com

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Between $1.15 and $1.35 we are just playing the boxes here. Note the repetitive consolidation channels (outlined as green boxes) within a much larger floor and ceiling. While one might say there is an ascending triangle forming between the low $1 range and the $1.35 area, the boxes tell a different story. All the white space above or below a particular box actually invalidates the larger corridor. So $1.35 is a double top but nothing more. Also, I have a hard time calling this a head-and-shoulders as the symmetry is way off.

I would simply trade the boxes and pay more attention to the dotted blue line at $1.15 as a double bottom, $1.35 as a double top and everything circled in green. That includes the green circles in the moving average convergence/divergence (MACD), which appear to lead price action. The commodity channel index seems to outline the entry points in the consolidation boxes. Of course, this could all change, but they been on the money four times in a row. Trade those patterns (box breaks and moving average convergence/divergence lead) until they stop working. Plain and simple.

• Note this is in the very preliminary stages.

I've been trying to explore some other synthetic long positions. Admittedly, the one I was playing with last night has a little history for me to search and the work I've done so far is in the preliminary stages ... very preliminary. But my thesis was to take a look at a long bond position in combination with a short volatility position rather than taking a long equity position in the SPDR (SPY), for instance. Now before you think me crazy, hear me out.

The thesis behind the long bond right now is the low correlation to equities, it does provide a yield, we still have QE and the bonds are backed by the U.S. government, so, there is a limit, at some point, to the downside. The short volatility position is much more akin to an equity position, but unlike equities I would get the benefit of reversion to the mean any time there was a large spike in volatility, as well as the benefit of contango. The ratio of bonds to inverse volatility is the tricky part, but I went with four parts bond to one part inverse volatility.

On the bond side I am using the iShares 20+ Treasury (TLT) and on the inverse volatility side, a long position in the VelocityShares Daily Inverse VIX Short Term ETN (XIV). So, I went back to Jan. 3, 2011 and just looked at buying 1,000 shares of XIV and 530 shares of TLT. I didn't take into account commissions, since it is a single trade and they should be minimal. I then plotted the performance against the SPY. What I found was even though the XIV-TLT pair underperformed a similar dollar allocation in the SPY, it did so with much less volatility and stayed in the green almost the entire time. The May-June 2013 certainly was a bumpy ride, but the overall move is very similar to the SPY.

What I did realize, and it won't take many long to see the same thing, is the high correlation between the charts after that aforementioned drop. The quick conclusion is the allocation had become far too much XIV at that point. So, I went back to my trigger rebalance methodology I've written about several times and took a basic 50% rebalance approach. The beginning ratio of TLT to XIV was 4-1, so any time it reached 2-1 or 8-1, I would implement a rebalance back to 4-1. That sounds like a lot of work, but, in fact, it only required three trades: Aug. 22, 2011, Sept. 7, 2012 and Aug. 6, 2013. Yeah, I noticed the proximity of the dates as well and I wonder if there is more to that. Unfortunately, there is a limited timeframe to back-test, so I don't know if the same would be true in 2009 and 2010.

What this chart shows us, when I include the rebalance, is the overall performance is significantly higher. In fact, the pair is just a stone's throw away from the SPY and a 27% higher profit than without the rebalance. There was a bigger drawdown in that same 2013 time period, but it came from a much higher level. The overall highs and lows are both higher using the rebalancing. The volatility is still much less than the SPY.

Overall, I know this needs a little more work, but I believe this approach may hold merit. The biggest risks are either the XIV stops tracking the inverse volatility due to the fact it is an ETN or QE ends and bonds plummet. I believe one could build in either stops or perhaps a collar technique on TLT, but like I said, my work here is in the prelim stages. I do hope to have more to share on this concept soon, though.

• And avoid the dangerous curves and dead ends of GM.

By Tim Collins

The only GM I'm interested in right now is the one that stands for good morning, not General Motors (GM).

Right now the daily chart is in a slow down-trending channel, but within that channel, we have a rising wedge pattern.

General Motors (GM) -- Daily

Source: StockCharts.com

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Although these aren't the highest degree of certainty when it comes to patterns, they are generally bearish, so seeing a short-term bearish pattern within a longer-term bearish pattern is like spraining your left ankle after breaking your right. The only thing the rising wedge has done is worked off the extreme oversold condition. A move over $36 would alleviate this and should set up the stock to test $37, but $33.50 feels more likely than $37 from here.

For those hoping a longer-term look will make you feel better -- well, look elsewhere.

General Motors (GM) -- Weekly

Source: StockCharts.com

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No, this chart has not broken down yet, but that is one nasty head-and-shoulders pattern just waiting to trigger. And by nasty, I mean it has good system and almost a 20% downside target. Furthermore, volume is picking up on this right shoulder, and bulls absolutely do not want to see the right shoulder break through the neckline on high volume. If you take a quick glance at the commodity channel index, the sub -100 number is a huge red flag. It usually signals either an extended or extreme move is close at hand. A break of the neckline would likely give us that extreme move.

And hey, if you see springtime, let General Motors know as this weather cannot be good for car sales. And to have a recall in the midst of terribly cold weather is not want you want to see if you are looking for a fundamental turn higher in the company. Just a quick thought.

• I am a buyer of Silicon Motion and Cenovus Energy.

By Tim Collins

Though today has that nasty feel that we can just flush lower at any point, remember we are finishing up the reset shake which should be just about complete in the next 45 minutes. Sure we'll have a few stragglers, but the trading crew (pictured below) does see a few good charts worth a look.

Silicon Motion Technology (SIMO) is getting a nice push on big volume this morning. As long as this hold $17.50, the upside looks to be about $2.50 from here.

Silicon Motion Technology (SIMO)

Source: StockCharts.com

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If technology continues to weaken today, keep an eye on this one. If Silicon Motion does not weaken with the rest of the group, this will be at the top of my list to buy and hold over the weekend.

The company is strong fundamentally and delivered a solid beat in January. After two months of consolidation, we finally look set to move higher again, so I'll buy a starter position here and look to fill it out near the end of the day.

Cenovus Energy (CVE) is catching a strong bid after it received approval from the Alberta Energy Regulator for its Grand Rapids thermal oil sands project. As Dan Dicker recently talked about, the Canadian exploration and production names have done little compared to their American counterparts. Fundamentally, I don't see this one as expensive, although don't confuse it with a huge value play.

Cenovus Energy (CVE)

Source: StockCharts.com

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This one is a technical play for me, but I do think it sees $29 quickly here, although ultimately I think we trickle up into the $31-$32 area throughout the summer. Along the way, I can collect a decent dividend, so I put this one into the three- to six-month swing trade column. I'm a buyer.

• We have a chance to break out higher.

By Tim Collins

So what to do with American Railcar Industries (ARII) after this giant run? If you've taken some profits, then nothing -- sit and watch right here. If you can stomach a stop around $70, then I think you have the potential to see $80-$85 on the upside.

The stock made a textbook technical breakout in February. The volume exploded as the volatility expanded from a tight Bollinger band setup. The spike in the commodity channel index to the 400 level is something we see in front of a move with explosive power, but that 400 reading can't last, hence what we've gotten in March: rest and consolidation.

The stock is in a flag here, albeit a long one, but it is necessary. As long as the price doesn't close below the support levels of the flag, we have a chance to break out higher.

American Railcar Industries (ARII)

Source: StockCharts.com

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How much higher?

I would say $9 on the conservative side from here to as much as $27, so looking for a move as low as $83 and as high as $100.

My approach would be to scale out additional shares at $83 or sell all remaining shares and move to a call spread format. Under $70 and I'm wrong and need to be out.

The continued strength in relative strength as well as CCI approaching 100 are very good things. I would want to see some volume come in on this breakout as one caveat.

• Options expiration is a great reset day.

By Tim Collins

My house is littered with dogs. If someone didn't know any better, they might think we are a shelter. Currently, there are 16 legs walking around this house covered in fur. It is more like 20 if I'm in shorts and my wife has been to busy to ... uh, well, scratch that and stay with the 16. Anyone with dogs is probably aware of the "random" shakes. After a dog has been sleeping for a while and then wakes, they will shake before really changing what they are doing. If they spent several minutes playing roughly with another dog, both will shake when they are done playing. I asked myself, "Self, why does this happen?"

Apparently, it is a reset button for the dog. Basically, a transition in thinking and feeling. Wake up. Shake. Now I can move onto whatever mind-set I need for my next activity. People might accomplish the same thing with a stretch or a sigh or even just a glance away during a conversation. Which brings us to today. What does this have to do with today? Well, today is a reset day for traders. Options expiration is a great reset day, and with the FOMC earlier this week, it makes it that much stronger.

For traders, especially options traders, quite often there are dying positions or sleeping positions. Things that have been hanging on, decaying as each day passes. Some in favor of the trader and some against them, but today will offer that chance to shake a portfolio. Options expiring today will be gone come Monday. Those not paying attention might be stuck with shares if they aren't paying attention to an in-the-money position they had no intention of exercising. That is more like being woken up by a cold bucket of water rather than a stretch or a shake.

So understand the mind-set of many traders today. They are going to "shake" this morning. They want that reset on their portfolio. And anyone with four large dogs knows when they all shake at once it can be a bit loud and chaotic. Get ready for a lot of traders to all shake at once this morning and do your best to just ignore the chaos and focus for what comes after the shake.

• If your time frame is three months or less and you are ignoring TA, then you are ignoring the biggest piece of the puzzle.

By Tim Collins

A subscriber asked me to write up a short piece on how traditional technical analysis (henceforth known as TA) no longer worked due to the algos and high-frequency traders. I've seen a few articles recently about how TA followers didn't make any money or underperformed. I know Doug has referred to the fact there is no secret sauce. Still, I continue to disagree with him, since in all the opining I've seen on the topic, time frame continues to be ignored.

If you are a trader, a swinger (the "I work alone" kind), a scalper, a minute monkey, a nickel junky or one that likes to chase the flickering ticks, then I can assure you, TA is your one true love. If my date with a stock survives for less time than a cancerous mayfly, do I really care about fundamentals? Am I concerned with the trends in the industry that may cripple this stock six months from now? Do I care that most of these marijuana names will be up in smoke three or four years from now?

Absolutely not. By the time I even crack the books to do any homework on these names, my trade will be gone.

It's about time frame -- the one variable that drives many TA traders and the same variable that fundamental traders choose to ignore. TA is about psychology. If you don't believe me, then check out quantitative easing, which shouldn't have nearly the impact on valuation and fundamentals that we've seen on the overall market, yet prices continue to push higher.

Is Tesla Motors (TSLA) worth $1 million per car, $100,000 per car or $1,000 per car? If I'm buying a weekly call option on a Friday that expires the same day, what does it matter? Look back at Google (GOOG). Shortly after its IPO, some thought it was way overvalued fundamentally -- even a few dared to short the stock -- but a technical breakout in the summer of 2005 sent Google shares soaring higher. In fact, they have never returned to re-test that breakout level. Technicals led the fundamentals years in advance. Hell, Amazon (AMZN) is still waiting for the fundamentals to catch up to price.

Ironically, I do focus on fundamentals but only for my long-term core positions. I do believe that is the right place for them. I don't believe TA is the answer for longer-term positions, but TA defines the short-term psychology of the market. It is both the perception of the fundamentals and the projection of the strength of support in the fundamentals right here, right now.

If your time frame is three months or less and you are ignoring TA, then, in my view, you are ignoring the biggest piece of the puzzle. And if the market truly has no memory from day to day, then why would fundamentals even matter? Is it that the market will remember over time? Or will it straighten up like an unruly teenager who grows up to be a responsible adult?

For now, I'm just here to ask the questions. Not answer them. Your own answers will provide the path you should follow when choosing a trading methodology.