Did you see that?

Last night I mentioned URRE and the momentum crowd seemingly getting ready to play this one. This is an elaborate type of trade in which the market maker is forced into a corner that actually causes the market maker to drive prices up. It's almost the opposite of the old time bear raids. In any case, it was up 34% in one day today. There was some room to make some money in it if you played it right. So the industry group has several more that could be potential targets.

Trade guild explains my view on the market, we know what we are going to do so long as we don't see upside follow through.

In the meantime, maybe you can make a quick buck in the Metals and Mining industry group that URRE was in. I listed a few long trades in the group as momentum breeds momentum. Take a look at the trades tonight, but remember that this is counter trend, a move like today's 34% should be taken immediately. These are also largely speculative so absolutely you must have risk management plans in place, but while the market is like the summer sea (flat, stinks to be a surfer), you might make something in one of these.

UPDATE Here's how momentum trades work. A market maker/specialist is the last resort, by law and for the privilege of making a market in a particular stock, these guys HAVE to take the other side of any trade that is at market if there are no other takers. So a group of traders or a black-box continually pounds away at the ask, the market maker raises the ask initially to discourage the buying which is diminishing his stock (actual supply), but he can go naked short unlike us. The momo traders keep hitting the ask driving price higher. At some point the market maker will run out of inventory and in effect be filling these market orders in a naked short position which he must cover. So the market maker tries to cover by buying which drives the market higher, and so on  and so forth and it can last for days and even weeks. It is typically in low priced NASDAQ stocks that have memorable tickers like BOOM  or CHINA (which is another one worth considering right now). I don't know why they choose these stocks, these tickers, maybe because the retail crowd remembers the name and gets involved, maybe coincidence. In any case, a market maker can be severely punished by these momo traders and it can take him a long time to work the bid and ask to get back to a flat or profitable position, that's if the momos don't show up again which they often do.  So whatever is going on in the Metals and Mining group, it appears to have attracted their attention. The only thing with these trades is when they disappear, the stock can fall like a rock so you have to not be greedy and watch the volume for signs of them leaving the trade.

So now you know.

Update 2

This is the morning range. There is a strategy used by day traders (although less effective in volatile markets like we are in now). when a trading range develops, the first breakout above resistance or below support is the direction the market or stock will close for the day. For a close up, then we'd need to see a breakout above 111.90 (SPY) and a close down a break below $111.20. It's not perfect, but helpful. In a volatile environment they are prone to false breakouts that usually return to the range fairly quickly. We still have negative divergences in the averages.

Update

OK, well last night's 3C charts of the Dow's negative divergences seem to be accurate meaning yesterday is likely to have been a false breakout. False moves create real and fast moves in the opposite direction. Lets see what we get today. If you are new, look t the core ETFs we are using to short the market and the limit shorts will start triggering if this continues down, so pay attention to them, put them on a watchlist if you can with an alert. TeleChart has this ability.

Lets see what this turns into, but you know my suspicions. As I was saying to newcomers, we want to be at about 50% short and the rest cash or a little in UNG long. Another 25% short will be added below SPY $104.40 and the remaining 25% stays in cash. If you don't have your positions, you should take any chance you can get (any intraday strength to short into). RISK MANAGEMENT before you place the order, not after!

Keep your arms and legs inside the vehicle, and put on your set belts, today is likely to be another volatile one.