Well, well, I found quite a few nice looking charts that flew into the fly trap. Enjoy!
Email me with any questions and as always-Safety first-RISK MANAGEMENT!
Tuesday, August 17, 2010
Daily Wrap...
Right now the SPY is trading down in after-hours around $109.40-$109.45 or thereabouts, this happens to be a fairly significant support range. What's happening at that level, I can't tell you. However I can say that this entire bounce and the setup before seemed to be an almost daily, piecemeal effort, a gap down in the morning that is bought and then sold the rest of the afternoon, repeat, repeat, as I mentioned, I thought perhaps they accumulated a little more then they sold-thus today's bounce up. However, as I also indicated in several updates today, the distribution was lengthy, it's possible inventory was running low and they've taken the market back to the feeding grounds. It's a strange play, perhaps the first time I've seen something like this. I have to wonder if they are scared t death to hold too big of a position and take it a day at a time, cautious of news or public sentiment souring.
In any case, we saw a close today of .71 on the TRIN. A reading below 1 while the market is dropping suggests buying. The TICK Index seems to agree, as the last 20 minutes, it seemed to put in a small positive divergence.
Despite the end of day sell-off, the averages still put in an impressive showing-one nearly 1.75% and most on rising volume. The long wick on the top of the candle today is bearish, but the price/volume relationship is bullish.
So the question is where now? I'm thinking we see another day up. Take a look at the 2008 bounces.
We don't really have a similar comparison, but the second box was a short killer on the open.
So we could see a two day bounce, I'd think they'd want to wreak a little more havoc though. The difference was in 2008 they had a upside false breakout from the ascending wedge, we didn't see the same, this is the only reason I can think of that might suggest we see a stronger bounce then the two above. We also have options expiration this week, that could play into this bounce as well. The SPY Calls have the highest open interest at $112 and the second highest at $110. It will be interesting to see if they pin either contract, if not then we have some room on the upside, it's impossible for me to know being their accumulation seems to be a daily activity instead of the more routine one time buy and then rally.
An interesting comment was posted by Allan F on the "DBO Update" post.
Here's the DBO 1 min 3C chart
Here's the 60 min 3C chart
Initially I thought this would be a quick trade with the falling dollar pullback, but read the comment-you should always read the comments when possible, and you'll understand why, this might be behaving this way. Both charts show accumulation. Another comment by a member, JB, commenting on "Don't Forget to Take a Serious Look at That DBO Long Trade" suggested using UCO instead of DBO for more leverage. We have a lot of very bright minds here, I've encouraged you all to share your thoughts on the comments link. I may be looking in one direction and miss something that is in happening in another direction, so make your experience here more profitable-SHARE YOUR IDEAS! You are all smart people, I've talked to nearly everyone of you. We are a Pack, get involved! No one is going to disrespect anyone's comments, everyone here is serious about what they do in the market, you wouldn't be here otherwise.
So moving on, DBO can probably be bought in the am, set a stop though or use UCO-it looks exactly the same.
Look at this...
Although the dollar dropped today a little, it looks like it's be up tomorrow, if oil is up too, then I think we can assume that Allan's comment was right on target. We'll see here shortly.
I know a lot of you took some profits today, congrats, this was a small bounce, just some extra cash and you grabbed it, good for you. Remember though, our main strategy is bearish, and you need to be looking at shorts when the market is up, you want to short into this strength. If possible, I prefer to ease into a position, especially in a situation like this where we are waiting for a top to break. By the time it breaks, I want to be 75% short and 25% for stuff like this bounce or to hedge out a longer bounce. So while you are watching this market for a bounce, when you are selling those longs and taking profits, you should be considering the shorts available. If we can get a few points higher, we'll have a lot of great trades. The ETFs I just posted, that are inverse leveraged ETFs, they're a good place to start, but don't fill up with them for reasons I have outlined in previous posts.
OK, that's that for now. I'm off to look at the scans and see if anything fell into the trap, if so, I'll post them to the spread sheet and let you know with an update.
In any case, we saw a close today of .71 on the TRIN. A reading below 1 while the market is dropping suggests buying. The TICK Index seems to agree, as the last 20 minutes, it seemed to put in a small positive divergence.
Despite the end of day sell-off, the averages still put in an impressive showing-one nearly 1.75% and most on rising volume. The long wick on the top of the candle today is bearish, but the price/volume relationship is bullish.
So the question is where now? I'm thinking we see another day up. Take a look at the 2008 bounces.
So we could see a two day bounce, I'd think they'd want to wreak a little more havoc though. The difference was in 2008 they had a upside false breakout from the ascending wedge, we didn't see the same, this is the only reason I can think of that might suggest we see a stronger bounce then the two above. We also have options expiration this week, that could play into this bounce as well. The SPY Calls have the highest open interest at $112 and the second highest at $110. It will be interesting to see if they pin either contract, if not then we have some room on the upside, it's impossible for me to know being their accumulation seems to be a daily activity instead of the more routine one time buy and then rally.
An interesting comment was posted by Allan F on the "DBO Update" post.
Here's the DBO 1 min 3C chart
Here's the 60 min 3C chart
Initially I thought this would be a quick trade with the falling dollar pullback, but read the comment-you should always read the comments when possible, and you'll understand why, this might be behaving this way. Both charts show accumulation. Another comment by a member, JB, commenting on "Don't Forget to Take a Serious Look at That DBO Long Trade" suggested using UCO instead of DBO for more leverage. We have a lot of very bright minds here, I've encouraged you all to share your thoughts on the comments link. I may be looking in one direction and miss something that is in happening in another direction, so make your experience here more profitable-SHARE YOUR IDEAS! You are all smart people, I've talked to nearly everyone of you. We are a Pack, get involved! No one is going to disrespect anyone's comments, everyone here is serious about what they do in the market, you wouldn't be here otherwise.
So moving on, DBO can probably be bought in the am, set a stop though or use UCO-it looks exactly the same.
Look at this...
I know a lot of you took some profits today, congrats, this was a small bounce, just some extra cash and you grabbed it, good for you. Remember though, our main strategy is bearish, and you need to be looking at shorts when the market is up, you want to short into this strength. If possible, I prefer to ease into a position, especially in a situation like this where we are waiting for a top to break. By the time it breaks, I want to be 75% short and 25% for stuff like this bounce or to hedge out a longer bounce. So while you are watching this market for a bounce, when you are selling those longs and taking profits, you should be considering the shorts available. If we can get a few points higher, we'll have a lot of great trades. The ETFs I just posted, that are inverse leveraged ETFs, they're a good place to start, but don't fill up with them for reasons I have outlined in previous posts.
OK, that's that for now. I'm off to look at the scans and see if anything fell into the trap, if so, I'll post them to the spread sheet and let you know with an update.
DBO Update
Well as I suggested earlier, the market is selling off into the close, 'll put that into context tonight, DBO has 2/3 short term 3C indies showing accumulation now
Real Quick
We now have 2 leading *negative* divergences in the SPY, I can't see how this will not sell-off into the close.
DBO
DBO is looking shakey already as is this market bounce. It's not at all what I was expecting, but a bounce can pullback for a day and continue higher, that may be what is in play. I show right now nearly a 50/50 chance of short term accumulation. It's a bit better actually. One chart is showing it, one chart is in the early stages, but so early it could be reversed and the last chart looks like it's showing distribution. I think I would be on the side of caution here, we could always pick it up on a pullback, the dollar seems to be getting ready for a move up which fits with my market analysis.
First probability, we get a pullback, maybe a day, then move higher.
Second possibility, this is it, this is all the market can bounce. The breadth indicators are already into the oversold. So I leave it at your discretion, just don't let a small profit turn into a loss.
First probability, we get a pullback, maybe a day, then move higher.
Second possibility, this is it, this is all the market can bounce. The breadth indicators are already into the oversold. So I leave it at your discretion, just don't let a small profit turn into a loss.
Update 4
I can not believe this is still holding up, it's gotta break soon. This makes me worry about how long this bounce can last.
Update 3
We now have negative divergences in the 1,5 and 10 minute 3C charts, I'm surprised it made it to the ten minute chart. there is some serious distribution happening. Since we failed to make a higher high, we either go lower now or consolidate at this level.
It appears to me that we go lower.
It appears to me that we go lower.
That Did the Trick
Last night I mentioned we had a lot of economic reports, out, nothing really all that spectacular happened, but as I suggested, it was excuse enough to spark the market to rally and gap up we did. We have some trades off to a nice start, many have chosen to go with a leveraged long Oil ETF like UCO, rather then DBO, but both are doing well so far. I think there's still an opportunity to get in although you may want to wait for a pullback. I'll let you know when I see one coming.
Remember that this isn't going to last forever, and if you are holding short core positions it could get a little scary, but in the end, you'll see that in all likelihood, this is just a jiggle and gyration that makes up the market and we'll be off to test another support level which will most likely fail and bounce and down again, so on and so forth. So we are in good position with a core short and some cash to work these little bounces that pop up.
I'll be updating all afternoon, so stay close...
Remember that this isn't going to last forever, and if you are holding short core positions it could get a little scary, but in the end, you'll see that in all likelihood, this is just a jiggle and gyration that makes up the market and we'll be off to test another support level which will most likely fail and bounce and down again, so on and so forth. So we are in good position with a core short and some cash to work these little bounces that pop up.
I'll be updating all afternoon, so stay close...
