The Market and the Currency Market

One of the last posts I showed you what appeared to be 3C accumulation on a 5 min chart via a leading positive divergence. Compare these charts and watch  1 p.m.  on all 3

 1 min EUR/USD chart

 5 min. 3C chart of the SPY

5 min SPY chart

It seems to me like POMO thus far, has had no positive effect on the market today. The afternoon rise in stocks seems to be purely correlated with a regular bounce in the EUR/USD chart. This would be a significant change in character for a POMO day.

A New Game?

Like I keep saying, watch how this QE2 goes down, it may be vastly different then the last operation as so many traders have been brainwashed into thinking they simply need to front run the POMO, some of them probably got crushed today doing that.

The 1 minute charts are showing either confirmation or they are slightly out of line, but they are not showing the same strong positive divergences, however the 5 min charts look very positive with leading positive divergences.

 DIA  5 min leading divergence

 QQQQ 5 min leading positive divergence

SPY 5 min leading positive divergence.

NEW TRADE LIST IS UP

HERE ARE A FEW TRADES YOU MIGHT WANT TO LOOK AT...


BAC (Bank of America) position is a short. Recently there was a nice bounce that remained under the Trend Channel I use to set stops for trending trades, which BAC seems to be. The current stop from the Trend Channel would be around $12.93, but it moves down with the trade. If you are not using TeleChart or StockFinder then you probably do not have my Trend channel indicator. A rough approximation of it would be a 22 day moving average. 

I'm using the red trendline as an entry point on this chart. A close below that point is the opening of the short position, which would also be a new low from the bounce.

Here is the my Trend Channel and the red arrow marks the most current stop, although it does move down with the trade. For a short, a close above the top channel is what I use as a stop out and for a long, a close below the bottom channel is a stop out. To get a similar stop point, you can use a 22 day moving average on a 3 day chart. You can see the Trend Channel would have kept you in the trade for the entirety of this downtrend. 


MSPD as a short position. This has been one I've liked for a while now. The stop I'm using here is at $6.82. The LIMIT order is below< $6.25 There's an alternate situation for those with a longer time horizon/greater risk tolerance/excellent risk management. This would be to short some of the position, maybe up to half of the intended size on any rally/bounce near the $7.00 level with a stop around $7.15 and then add the rest of the position as it breaks the limit order on a drop below $6.25.

The two tight trendlines around the recent range represent the entry (lower trendline) and the stop (upper trendline).  The alternative situation I mentioned would be up around the higher trendline.




TMV (Long) This is a position I presented before, I put up a post showing a possible pullback and an opportunity to go long on that pullback. The stop is $39.79 and the Entry is on a pullback to the 10-day moving average. There are two possible stops I like using my Trend Channel indicator. One would be at $39.79, but it moves up every day more or less as TMV remains in an uptrend. If you don't have the Trend Channel, a 22 day moving average is a close approximation. The second stop would be a bit longer term at $37.41, again a 22 day moving average on a two day chart is a close approximation of the Trend Channel.

 This is the Trend Channel for stop #1, you can see how it would have kept you in most of the downtrend on a short position earlier in the year. You can use a daily 22 day moving average as an approximation of this stop .

 This would be like using a 22-day moving average on a 2 day chart and you can see that it captures a little more of the downtrend as it is a wider stop. This would be the second stop option I presented.

This is the entry screen I like to use for moving average trades as it has 3 conditions that must be met to weed out false crossovers or whipsaw action. The entry in this scenario is at the 10-day moving average which is the yellow line in the price window.


These are ideas, if you like any of them, you may want to adjust them to your own personal style of trading or risk tolerance.

Update

The same positive divergence in also in GLD, SLV and USO but only on the 1 min charts.

Update

There are 1 min positive divergences in the SPY, DIA and QQQQ. The DIA also has a positive divergence on its 5 min chart. We should see a real move up this time.

AAPL

As stated last night and often, because the SPY is up doesn't mean we have a healthy market as evidenced by my breadth and 3C postings. DISTRIBUTION IS SELING INTO HIGHER PRICES, THAT IS WHAT A 3C NEGATIVE DIVERGENCE TELLS US.  I have talked about AAPL in the last few weeks and distribution. Today in a Q3 13F filing found at Zero Hedge Capital Growth Management reduced their AAPL holdings from 1.15 million shares to 111,000 shares.

Here are the 3C charts showing distribution.

 AAPL 1 min chart showing a negative divergence and distribution, interestingly there was another round of distribution right before the 13F filings were released today through Monday.


 AAPL 60 min chart, again showing a trend of distribution in a important timeframe. 3C is now in a leading negative divergence in AAPL.

Here is the daily chart of AAPL showing confirmation of the recent uptrend and now we see a massive daily negative divergence, borderline a leading negative divergence. It seems that they held through the last POMO operations and dumped in between the last operation and the start of this one.

Interesting.

The SPY Daily

As I said last night, a break below the red trendline will put the daily chart into a nasty leading negative divergence. It's already given up ground thus far today.

Maybe?

Something is different this time? It's too early to tell, but from what we have seen so far, yes something is different. I don't know if it is CNBC selling QE2 POMO buying a the "greater fool theory" or if the PDs/Brian Sachs are changing course, but the divergences on the 1 minute chart could have very well been a lot of the same old retail front runners from the last operation, the fact the 5 min wasn't confirming was telling us something was up and now here's what both charts look like.

 DIA 1 min chart-The leading positive divergence totally disappeared.

 The 5 min chart shows confirmation of the trend

 The QQQQ 1 min chart, again, the leading divergence disappeared..

 The QQQQ 5 min chart showing confirmation thus far with the price trend

 The SPY 1 min chart, -leading positive divergence disappeared...

The 5 min chart here is even uglier then the rest.

We'll see what the rest of the day brings, but so far, we do have a difference.

Submitted to Accepted Ratio

The POMO submitted:accepted ratio came in at 4 which is in line with past operations median close. This has shown in the past to close the market higher. This is where we really want to watch today to see if QE2 is any different then QE1 or QE lite.  Judging from the last set of positive divergences it doesn't look to be different, but looking deeper, the 5 min charts on all of those positive divergences have not caught up yet, most are still in line with the downtrend or negative still.

SLV/GLD/USO

 GLD 1 min leading positive divergence

 SLV 1 min leading positive divergence

USO 1 min leading positive divergence.

POMO movement

There was a glitch in the start of POMO and it's closing time is now 11:30, but we are seeing an early start here since the last update.

 DIA 1 min in a leading positive divergence.

 QQQQ approaching a leading positive divergence

SPY 1 min in a leading positive divergence.

A NEW SONG

Whether the contrail event last week was a plane or as a Jane's Defense analyst called it, an ICBM launch from a submarine, this story is surely ironic. A Chinese Song Attack class submarine just popped up in the middle of a US Navy exercise, close enough to fire torpedos or missiles at the aircraft carrier, U.S.S. Kitty Hawk.

Here's the story...

UPDATE

 DIA 1 MIN MAY BE SHOWING THE START HERE OF A POSITIVE DIVERGENCE.

 QQQQ MAYBE THE START OF A POSITIVE DIVERGENCE, ALTHOUGH IT HAS A BIT TO GO AND COULD JUST BE TIMING OF CATCHING 3C ON A MOVE UP . I'D JUST CALL THIS CONFIRMATION FOR NOW.

SPY, REALLY JUST CONFIRMATION.

GLD/SLV/USO UPDATE

 SLV 1 MIN isn't showing any sign of turning yet.

Nor does GLD 1 min 3C

 USO 1 min 3C looks as bad if not worse.

Here's USO 15 min, looks like this was coming.

None of this seems to connected to the dollar in the short term, we'll see after 11 a.m. when POMO finishes up

ABOUT LAST NIGHT

Last Night's Post may have seemed a little different as it was interspersed with more news then usual, but these are the things that I think are important and part of the strange atmosphere hovering around the market.

This piece out this morning seems to confirm the post from last night and how on target parts of it may be.

Check out this read.