First before I get into the market, I have several emails regarding UNG, I still like the trade, I'd still buy it. The stop on the trade is at $8.08 and unless it breaks that level, I consider it a long position and we are still holding it. Today it pulled back a little past the 10 day moving average, not by much though. It looked bad because it did it in a day, but it's common for the first pullback to be in that ares and the second to the 22 day, this is the second pullback, the first was exactly to the 10 day, so I do not feel that it is a problem at this point.
As for the market, you probably heard my tone last night, cautiously bearish and expecting most likely to see a false breakout, but unwilling to commit as the indicators had been turned around by Friday's options expiration. Today we got the clarity I was hoping for and then some. My fear was that Friday the S&P/SPY calls at $112 (the highest open interest) were possibly being pinned down to make them expire worthless and then there would be the possibility that they'd let the market rise after that. the market had an enormous head start on that scenario this morning and failed miserably, but as I have noted, we saw 2 false breakouts last week alone, now we have a third.
There is some early 3C divergences on the 1 minute chart suggesting early strength, again I do not feel this will lead to anything significant and it is time to start watching for the tell-tale signs of a decline as almost all of 3C timeframes have lined up in all 4 versions and in almost all timeframes in all averages on the distribution side. This is extraordinary to see, it doesn't happen often. We've had to sit through some enormous volatility and drawdown, but I do believe we are close to realizing the trend we have been preparing for.
In the meantime, despite some negative action in the miners, there remains positive accumulation in several names. I will list those long trades tonight, this is not at odds with my bearish market stance, there's always a bull market somewhere even in the middle of a bear. However, these are most probably counter trend trades and needed to be respected for the danger that they can bring in trading against a trend that is emerging so make sure not to over commit, make sure to properly position size and set a wide stop initially (take in fewer shares) to give the trade some space to work. It's not easy to short into strength and buy weakness but that is what is called for right now.
If you are a new member and are unsure of where you stand and what you might want to consider having in your portfolio, please email me and as many members will attest to, I WILL give you the support you need as best as I can as soon as I can.
At this point, unless you feel you need it, the hedging strategy discussed last night is off the table in my mind for the time being. Interestingly, every time we consider starting to hedge, the next day the market falls apart.
It looks like in the early trade, the DOW will outperform the SPY and the SPY will outperform the NASDAQ. That's based on 3C interpretation and only references the early trade, but if there are positions you are looking for, that information may be of some use.
I'm going to add a few more trades to the list tonight and it will be up shortly. Several members are past due on their memberships, I'll try to notify you and I will leave your membership open until at least tomorrow night so you can see the new trades. Because of the blogger format I can only have 100 private readers and we are nearing that number.
Monday, June 21, 2010
Update 3
It looks like there's a positive divergence building on the 1 minute chart, look for upside shortly, but the close is what will really count. I'll update again before the close if I see anything truly significant. At this point, the market has failed to capitalize on the bullish momentum, however we have seen extreme intraday volatility so we can't easily dismiss anything right now.
Update 2
Check back in an hour or so for another update
Update
It looks like the gap will be filled, to what drgree, I can't say yet, but look at the 3C charts below, each show there is no accumulation following the gap up, it does not preclude it from happeneing as the gap is filled, but as of now, it doesn't seem to be there.
UNG Still Strong
Russia is playing it's typical political "cut the gas flow" game again. UNG should benefit from it. This has been a long here for a couple of weeks, I wouldn't mind adding a little to it or establishing a position still if you haven't. You could open half at the open at market and wait (hopefully) for a pullback to add the other half.
A Short Term Long Position
This might be worth a shot, XIN long, either on the open or above $2.75. I'd use a stop around $2.50 so make sure you position size correctly as to not have too much risk in the position which is speculative by the nature of it's price and volume
One other thing,
The metals and mining sector has some news in it again surrounding China, but last week I talked about the momentum traders operating in that industry and mentioned URRE, I also listed quite a few stocks in the industry on the spreadsheet, take a look at those as possible long positions. Now we know why the momentum crowd was hanging around the sector.
Should I Hedge?
FXP is one inverse ETF on China, if the gap fills this a.m. I would consider trimming down or cutting that position as the news prompting today's gap is related to the Chinese revaluing their currency.
As for other charts, I feel the same as last night, that it will be hard to say until we see a close and follow through, but if you feel the need to hedge out positions now, then you can use any of the Direxion 3X Bull:
TNA
BGU
FAS
SOXL
CZM
In this maneuver I would pull it off in pieces, maybe 25% at a time, but I would also wait a bit and see if the gap is filled, that would be the ideal time to make the switch. Then I would do the same tomorrow, another 25% toward the close if it looks like we are getting a bull move (close up today with volume and follow through tomorrow).
Otherwise, if you can wait it out until Tuesday, that would be my first choice, but you have to decide what is right for you and a 3x leveraged ETF is the quickest way to hedge.
This is why we are at 50% max short positions and no higher, not until the market proves itself. It leaves enough cash to hedge out your shorts.
I'll be updating around 11-12, whenever I see 3C's direction, which right now (as I said on TG last night) shows what appeared to be a gap up followed by weakness in the 10 min chart which could be today, but more likely to be in a day or two.
As for other charts, I feel the same as last night, that it will be hard to say until we see a close and follow through, but if you feel the need to hedge out positions now, then you can use any of the Direxion 3X Bull:
TNA
BGU
FAS
SOXL
CZM
In this maneuver I would pull it off in pieces, maybe 25% at a time, but I would also wait a bit and see if the gap is filled, that would be the ideal time to make the switch. Then I would do the same tomorrow, another 25% toward the close if it looks like we are getting a bull move (close up today with volume and follow through tomorrow).
Otherwise, if you can wait it out until Tuesday, that would be my first choice, but you have to decide what is right for you and a 3x leveraged ETF is the quickest way to hedge.
This is why we are at 50% max short positions and no higher, not until the market proves itself. It leaves enough cash to hedge out your shorts.
I'll be updating around 11-12, whenever I see 3C's direction, which right now (as I said on TG last night) shows what appeared to be a gap up followed by weakness in the 10 min chart which could be today, but more likely to be in a day or two.
Reset Switch
Sometimes I post ideas and sometimes I don't. The reason being is that I want to be relatively sure of the market's direction, then I know which trades I want to look for. Friday's Quadruple Witching options expiration has thrown everything into the Bermuda Triangle again. I'm seeing a mixture of short term negative and positive divergences, in that case when I do not have majority confirmation I do not post any anticipated direction, it would be dishonest to act like I know where the market is going in the short run when I do not. Options expiration created so much volatility as they pinned the heaviest volume calls at $112. To make money you'd need price above $112 plus whatever premium you paid for the options. It seems to me that they fought it with a lot of volatility to keep it pinned and make all those calls or many of them expire worthless.
I can come up with opinions of what that might mean, but there are so many strategies in options that you can never draw any accurate conclusions from them. We do have several reversal signals the last few days, it looks to me to be about time for a pullback, in that pullback we will have the information of whether we make a higher low or not which will tell us a lot. Should the market just peel off north then we have a different scenario altogether and our plan will be to sell bear ETFs a little at a time and replace them with bull ETFs and continue hedging in this manner until we get a reversal.
The charts now show what to me seems to be a clear path down, the question is when and how? The new Wall Street maneuver is volatile breakouts followed by failures, but we have yet to see a real failure.
Monday will begin the re-set. If we get higher prices, that is not out of the norm and it does not mean we are entering a bull phase, if Tuesday we got confirmation with a higher high and volume, then we have reason to start the hedging process. If Tuesday we see a failure to confirm as we have seen the last week, then we are on track.
The market is very much like professional poker. there are times to press, times to fold and times to sit and wait out the game. Right now it is time to sit and wait out the game.
I would post some short term trades that I see, (and I have in the last week, many limit order trades too which should be watched carefully for an opening), but I will not post those trades tonight based solely on the intraday volatility, the market seems to be heading in the desired direction and in the last hour it makes up all the ground it gained or lost during the day. Talking with floor traders, even the most adept that do this every day are getting massacred and when they move into cash to wait for clarity, who am I to say otherwise? I would not hesitate to say otherwise with clear direction from 3C, but it is not there in the short term (1-5 minute charts) which depict the daily movement and movement over several days and reversals. The longer timeframes are solidly negative, but as I said, getting from here to there can cost a lot of money if we do not have a strong edge. Many of you are here because of 3C's ability to give us that strong edge, when it's not there, I tell you.
I do not make market calls based largely on my experience and opinion, I make them on clear objective and overwhelming evidence. So I know it is frustrating to sit still, but for me to offer anything otherwise at this time would be gambling, a partly educated guess. You are not paying for a partly educated guess, you can do that yourself or get it froma thousand sources. You are here for the strength this system shows and when it shows that strength I will give you enough trades to keep you very busy as I often do. It's not there tonight.
Check back around 10:30-11 a.m. tomorrow. What I see now appears to be some sort of early strength, how long it goes on will be better determined tomorrow morning to the early afternoon.
Agin, if you have specific questions, and I answered several today with several page explanations, send them to me. In the meantime I will help all I can in whatever manner you desire.
Don't get too caught up in the early indications if they are very bullish. We just had an extraordinary round of bad jobless data an things are heating up in the middle east-the market hates uncertainty and will quickly mark prices down, thus the saying "When the missiles fly, it's time to by". the market would rather the certainty of war then the uncertainty of whether or not there will be a war.
I can come up with opinions of what that might mean, but there are so many strategies in options that you can never draw any accurate conclusions from them. We do have several reversal signals the last few days, it looks to me to be about time for a pullback, in that pullback we will have the information of whether we make a higher low or not which will tell us a lot. Should the market just peel off north then we have a different scenario altogether and our plan will be to sell bear ETFs a little at a time and replace them with bull ETFs and continue hedging in this manner until we get a reversal.
The charts now show what to me seems to be a clear path down, the question is when and how? The new Wall Street maneuver is volatile breakouts followed by failures, but we have yet to see a real failure.
Monday will begin the re-set. If we get higher prices, that is not out of the norm and it does not mean we are entering a bull phase, if Tuesday we got confirmation with a higher high and volume, then we have reason to start the hedging process. If Tuesday we see a failure to confirm as we have seen the last week, then we are on track.
The market is very much like professional poker. there are times to press, times to fold and times to sit and wait out the game. Right now it is time to sit and wait out the game.
I would post some short term trades that I see, (and I have in the last week, many limit order trades too which should be watched carefully for an opening), but I will not post those trades tonight based solely on the intraday volatility, the market seems to be heading in the desired direction and in the last hour it makes up all the ground it gained or lost during the day. Talking with floor traders, even the most adept that do this every day are getting massacred and when they move into cash to wait for clarity, who am I to say otherwise? I would not hesitate to say otherwise with clear direction from 3C, but it is not there in the short term (1-5 minute charts) which depict the daily movement and movement over several days and reversals. The longer timeframes are solidly negative, but as I said, getting from here to there can cost a lot of money if we do not have a strong edge. Many of you are here because of 3C's ability to give us that strong edge, when it's not there, I tell you.
I do not make market calls based largely on my experience and opinion, I make them on clear objective and overwhelming evidence. So I know it is frustrating to sit still, but for me to offer anything otherwise at this time would be gambling, a partly educated guess. You are not paying for a partly educated guess, you can do that yourself or get it froma thousand sources. You are here for the strength this system shows and when it shows that strength I will give you enough trades to keep you very busy as I often do. It's not there tonight.
Check back around 10:30-11 a.m. tomorrow. What I see now appears to be some sort of early strength, how long it goes on will be better determined tomorrow morning to the early afternoon.
Agin, if you have specific questions, and I answered several today with several page explanations, send them to me. In the meantime I will help all I can in whatever manner you desire.
Don't get too caught up in the early indications if they are very bullish. We just had an extraordinary round of bad jobless data an things are heating up in the middle east-the market hates uncertainty and will quickly mark prices down, thus the saying "When the missiles fly, it's time to by". the market would rather the certainty of war then the uncertainty of whether or not there will be a war.
