In any case, there may be a rally tomorrow based on the 10-min chart, or it may be just be lagging the divergence that started earlier today. If we do see a move up Thursday, then there's quite a few trades I listed tonight that are pretty speculative generally, a few could trend. The point is all of these stocks were strong in a mediocre market today. Take a look at them. Many are biotechs. Email me if you have specific questions, we are still maintaining our shorts as the market is moving in our direction, but believe it or not, there are generally more up days in a bear market then down days so if we get a pop, these stocks are likely to see more upside. these are counter trend, not trending trades. So if you get that 1-2 day gift, take it. These are not meant to be position trades, but a few do have that potential.
Here's the post from Trade guild:
First, lets deal with the business from last night and today at Wolf on Wall Street.
"As for tomorrow, the only thing I see is a slight positive divergence on the 1 min timeframe which may lead to some early strength, perhaps a gap up. As of now, All other timeframes are showing heavy distribution. I'll update the charts tomorrow as they develop, but the changes will only be tactical in my opinion, the strategic outlook is the same we have had for several months now and have already set our positions into place." Trade-Guild.net 6/22/2010 9:00 p.m.
While we did not see the early strength during market hours, we did see it pre-market. The indicator was showing someone, most probably market-makers/specialists buying a little at yesterday's close to sell into early strength, it doesn't have to happen during normal market hours and could very well have been distributed during pre-market.
If you lick on the chart, you can see 3C was very accurate again today.
As for the Fed's announcement, this is an excerpt from Wolf on Wall Street today at 10:15 a.m.
"The Fed is widely expected to leave rates unchanged, but the markets know that. What the markets are looking for is any hint that the language has changed. Even one word that most of us would miss or dismiss could be the catalyst the market is looking for to go in one direction or another.
In the past the Fed has been very willing to step in with some tidbit to halt a market's slide, like the slide we have seen the last few days, thus the Fed is known as the "Plunge Protection Team". So today is a bit of a wild card, but as far as I can see with 3C, there is not much in the way of high hopes. The markets do not look like they are i a holding pattern, they look bad and this may be part of the market's ploy of playing possum to get the Fed to move when they'd otherwise maintain course, even if it is just a few words changed in the policy statement.
"The Fed Effect"- There is a tendency for the market to react or overreact to a Fed statement the day it comes out, within a few days the market seems to have slept on it and goes in the complete opposite direction. I don't know what's in store as Fed policy announcements are not as easy to spot with 3C as are government reports and earnings. However, if you see a wild move after the Fed decision, don't be so fast to react to it, give it day or two."
Today we did see a pretty initially aggressive upside move after the announcement and then it came back down a bit. 3C 10 min charts are indicating a retracement of the last two day's drop-
If this scenario pans out, it would not be out of character at all, typically the initial reaction to Fed policy statements is the wrong reaction and after a day or two, the market reverses. Lets assume we do see a retracement to the upside in the next day or two, it came because the Fed showed concern and was fairly strong in their language that they would hold down rates.
What would make a move up based on that statement reverse? After a day or two of sleeping on it, traders come to the realization that the Fed's econo-friendly policy statement was there because the economy is not at all in the good order that we have been hearing about for months AND.... What does the Fed have left in their arsenal? Buy more toxic loans? Lower rates that are already at 0-.25%? They don't have much left to work with and traders will realize this in fairly short order. The only bullet the Fed has left is to cut interest payments to banks holding money in reserve, then the banks may be forced to make some loans tp generate some income. Even that is not likely to avert the disaster that the government has been trying to avoid. Imagine a ship full of holes and they have all 10 fingers and 10 ten toes in a hole, but there are still multiple holes spewing water and the hull is filling up fast. That is exactly the reason we have such a big and well formed Head and Shoulders top, the market knows what is able to be held together with bubble gum and what is likely to fall apart at the seams.
So for now, we'll use any opportunities to the upside for quick trades and to sell short more stock at better prices.
Sometimes the bear just gets you, no matter how many hot dogs you throw it's way.
If you don't know what to do by now, you might consider going into cash. there are great trades out there and we have a ton of them at Wolf on Wall Street, check it out for a month and see for yourself.
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