Pretty Good Start to the Week.

Please read my general market analysis at www.Trade-Guild.net 

Tonight we learn to fish with some charts....

NTAP-this is a possible false breakout. We'll use a limit order to be sure. False breakouts typically go in the opposite direction of the breakout, far and fast.

UUP-this is a proxy for the dollar. Remember, a strong dollar=weak markets. UUP is in a consolidation pattern and 3C is suggesting it's ready to breakout. Always look at the dollar index or UUP when studying the markets.

UUP again, another 3C positive divergence on the 1-min, suggesting again, the consolidation is nearly over.

Here's the daily of UUP. To validate a consolidation, first you look for pattern, this passes with a symmetrical triangle . Next volume should fall off as the consolidation reached it's apex. Again-passes. MACD is also doing what it should in confirming the uptrend.

KO's chart is a great setup for a high probability/low risk short. It's formed a massive top, broke down and retested resistance and failed.

REED is a long shot, counter trend trade-so it needs to be small, but 3C shows a positive divergence on the hourly chart. You may have to wait for this one to breakout, but it's pretty close-note the triangle consolidation.

PBR is another great setup, A massive Head and Shoulders top, a high volume breakdown and an attempt to break resistance which has thus far failed. The target can be established by counting from the neckline in red to the top of the pattern, deduct that from the red line and that is your target.

CEDC is showing a variation of a Broadening top, there is no volume pattern to these tops so don't bother trying to confirm with volume. Again, it broke support, retested resistance and has failed. There are so many owners above the red line, they all want out so any rally they become sellers and it fails, it's called "overhead volume" or supply.

ENCO is another long shot countertrend long position in a nice consolidation, volume confirms it. It's also near the breakout point. Set a wide stop, don't take on a big position as it is highly speculative and understand that the probabilities are that the market maker will break it down before letting it go p to shake out longs and get shares on the cheap-thus the wide stop.

RDY looks to be a false breakout, this could fall very fast as longs were suckered in above $29, any move down they are at a loss and become sellers which creates an imbalance in supply and demand with more supply on the market, thus creating lower prices and fast.

Large triangles like this after a prolonged uptrend tend to be tops, the high volume breakdown below support lends credit to the idea of a top, the recent failed rally gives you a decent entry on a high probability trade.

This is a similar situation, high volume break of support and a weak attempt to rally in GS

WDC has created a massive top that has broken down on volume, tried to break resistance and failed. It's a high probability trade to the downside.

I hope you study these charts. I don't want to just give you fish, but help you learn to fish. If you have questions, please email me. These trades are going to be on the spread sheet shortly. check my stops and see if you can figure out why I use those stops and why I use the entry setups I use. LEARN, but RISK MANAGEMENT.

DON'T FORGET ABOUT THE CORE SHORT/LEVERAGED ETFS-THESE ARE THE CORE OF OUR POSITION

Update 3

The only index to fill the gap has been XLF-financials. It does appear, although it's very early, that we will see some attempt to fill the gap at least partially, but again, it is very early. This is based on the 5-min 3C charts.

Update 2

Last night I said the mid-term charts were all over the place, the mid-term is what shows reversals like what we are seeing now and the last bounce that we caught long. I think the market is changing directions so fast that they hadn't caught up yet. They should catch up today, it's also interesting that the 1-min chart showed weakness early and we have a LOT of early weakness.

The 5-min charts, which should normally tell us what will happen after the initial weakness are pretty much inline with price action with a bias to the downside, so they aren't saying much, but that should change fairly quickly this a.m.

Keep your eyes on both sites-Trade-Gulid and WOWS for all updates.

Morning Update for June 1

The pre-market activity suggests a nasty gap down. For the core ETFs we have been using, a break below Friday's low is a trigger to add to the position. The last trigger to complete the position is below $104.50

Any trade from last night is still valid, except I'd watch the longs carefully. The shorts that gap below the trigger are fine, just enter them. There's always a chance that the market will try to fill the gap, in which case you get better short positioning. There's a smaller chance that it will continue rising to close higher for the day. The most likely probability is that it just keeps heading lower. this is why you want some part of the position established. You might want to save a part for a possible bounce, that's the trade-off you take-wait for higher prices and maybe miss the move, or go all in now and see the gap filled and miss the opportunity to get better positioning. This is why I say the best is probably to establish 50% or more on the open/or at the trigger and leave a little room for a bounce to add more.

Below $104.50 (I always refer to the SPY) we want to have the core short portfolio near 100% short, but remember-that 100% is 100% of 75% of portfolio. We are leaving 25% in cash.

It seems to be a very bearish environment, this is exactly why I'm cautious, what is obvious is typically obviously wrong, although I am bearish on the market, it's just short term market tactics and volatility right now. However, you must act with the information you have now and not try to guess the market direction or behavior, so we are going to go to 75% short today, most on the open and leave a little for a bounce.

Good luck.