Lets start with GLD tonight....
GLD tested the gap support and filled the gap, but closed at slightly higher support, still all in all it was down another 1.42% on increasing volume.
As you can see above GLD has broken its 22 day moving average, an average its never even tested before. Also for the first time in its up trend, RSI has dipped below 50. If you look carefully you can also see an RSI negative divergence. These indicators like RSI, Stochastics, etc are always best utilized for spotting divergences rather then overbought/oversold levels or other uses they have been renown for. MACD has been negative the last 3 days, where before it has only been negative once throughout the up trend.
On the 3C 5 min chart, I think day traders may be able to make some money long on a play in GLD tomorrow as 3C 5 min is showing a positive divergence so I'd expect a bounce in GLD Friday.
However, unless that continues and materializes over the longer charts, the 60 minute 3C chart still rules with a massive negative leading divergence.
USO also backed away from yesterday's gains and is in quite a deep pullback at this point, but again for nimble traders, there's a 5 min positive divergence there that may allow a quick buck to be made on the long side.
Given the probability of a bounce in GLD and USO I'd think I'd see weakness in UUP, not the case, the 5 min charts look good and the 15 minute is even better. Maybe we see a day of decoupling? In any case, UUP continues to suggest it's (The US dollar) forming a bottom.
However, the EUR/USD does look an awful lot like it's putting in a top, specifically a Head and Shoulders top, so to complete or begin rather the right shoulder, the Euro would need to rally-perhaps that's what we are seeing in USO/GLD. See the chart below. There's no doubt that the uptrend has ended in the FX pair, at least this leg of it.
As for the market, the short term end of day 3C charts do not suggest anything conclusive, although we should see front running early on and a late morning early afternoon rally based on a POMO day as per usual. However, strangely the Fed withdrew $1.5 Billion dollars in liquidity today through reverse repos. It's strange that they're conducting market operations to inject and now withdraw money from the economy. Perhaps this calls back to the Yellen speech about the fruit punch bowl being withdrawn in various asset classes that are forming bubbles? I really don't know and tomorrow's market operations “may” not be what traders have been conditioned to expect. It almost never fails, when it becomes obvious, it's obviously wrong. So that will be an interesting event to see if anything unusual occurs.
3C charts in longer time frames still remain negative.
As you can see, this 10 minute chart of the DIA is extremely negative looking. Yesterday's (Tuesday's) POMO rally saw little follow through, the majors ranged from +.20-+.40 on lower volume, it really can't be considered follow through.
Half of the 10 important averages were down, half were up for an average move of -.06%
There was no real dominance in the price volume relationship today, the closest was PDVU but hardly dominant.
Goldman Sachs came out today and more or less told said the “TRADE” is front running POMO. Now does anyone really believe that GS is this late to the party? Or, perhaps are they setting up their own little game?
In after hours, AMZN gave back it's hefty 4% gain, this has been a Wall Street darling so it'll be interesting to see what it does tomorrow. I said earlier today in the earnings trades that AMZN was bought yesterday for the gap up today and today it was sold, telling me that if the earnings were to be good, why sell it, why not just hold at the lower cost basis and collect further gains? Here's the chart...
Another big mover in after hours was LEG, my hypothesis was wrong, but 3C was right about bad earnings. This is the kind of stuff that tells me there are leaks all over this market, it's just finding them and capitalizing on them. I think LEG ended the AH session down about 9%. Here's the chart...
Look at the obvious selling at the top. With all of the insider selling we've been documenting week after week, I'm wondering if we won't see a lot more like this.
Lastly I mentioned a short on BAC t. Take a look.
Looking at 3C, you can see the distribution you can see that it was sold right off the opening, but it also showed signs of accumulation. A steady lateral trend is a typical sign of accumulation that's why I said don't assume it's bad. They may have been buying for a bounce within a narrow ranged order.
To get a feel for the forest, you can see BAC still has a lot of downside and shorting an equity rather then buying an inverse ETF like FAZ will allow you to pyramid the position, something you can't do in a long, not even an inverse long. This means you CAN make more then 100% on a short, there's an article under "Resources and Concepts" at www.Trade-Guild.net that explains the procedure. I'd take a serious look at this one, this seems to be shaping up for an excellent entry and a probable trend with minimal risk as long as you follow risk management and position sizing which can always be found with the links at the top right of the site.
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