Today

We started the day with bad news as the Dallas Fed missed expectations with an ugly report, housing was ugly as well, but yet the market rallied, WHY? Because Wall Street set up the chessboard and it was time. This is why I can't stand the news saying the market did this and that because of this or that news, it just isn't how the market works, although that's what they want you to believe.

As for the dire predictions by UBS's Art Cashin that we would have a 1987 Black Monday type sell-off either last Thursday, Friday or today... well....

We've known that this was a powerful accumulation cycle and by the charts below, we are seeing real strength...

 DIA 1 min making new leading positive highs

 DIA 2 min doing the same, look at the 3C depth chart (I know I've showed you this 100x already, but here you can see how shallow the accumulation trough is and it is the strongest round we have seen for months!

 The DIA 15 min moved in to leading positive position today, almost as if accumulation continued today despite the rise in prices, something rarely seen.

 QQQ 2 min moved in to a leading positive divergence today

 The 15 min chart is leading positive as well and added more strength today!

 The SPY moved out of the earlier funk it was in and moved higher in to leading positive position

 And the 5 min SPY is leading positive for on a fairly long chart when prices where much higher.

The SPY 15 min moved to leading positive today.

If you followed my long term advice given about 20 times to buy GLD at the long term 150 day m.a., even on a day trade, you made money in GLD today, although for longer positions I'm still hesitant and would not go huge on this trade until it settles a bit.

Look at the recovery off the 150 day m.a.!

If we don't get a multi day accumulation scenario separated by a rally as we saw on 8/6 (acc.) 8/8 (rally) and 8/12 (more acc.), then we should be on our way for this leg. You can see by the red arrows how sharp the accumulation was this time around by how shallow the 3C depth chart in the lower window. Note how a rally reacts and how the depth chart reacts, it will rise in to a crest as the market moves higher and as the crest peaks, the market turns down. Judging by the accumulation, the crest should be deeper then the previous crests market with a red trendline, so that gives you some idea of the upside possibilities.

As for correlations that had me thinking we'd see one more day of accumulation today (which we may have, just in to rising prices which would be only about the second time I have seen that), correlations as mentioned about a month ago are off as I theorized they would be back then.

One of the most consistent correlations has been that of the Euro trading with the market, look how far off it was today.

 Above is the EUR/$USD -the green box is our stock market hours. Although the Euro closed higher at 4 pm EDT compared to the market open at 9:30 EDT, it couldn't make a new high as the market did, this is an epic failure in correlations.

Here's the SPY in green and the Euro in red, note in the red box the weakness in the Euro and the market ignored it 100% and moved higher. Look at the red arrow that shows the high in the Euro/FXE compared to the close and look at the green arrow showing the SPY at the same relative high/time and its close much higher, that's a divergence and a failed correlation. It seems Wall Street had to pull the move now, despite what the Euro was doing. This may be due to end of quarter results.

Here's another correlation gone bunk today.

 GLD in red/SPY in green. Note the inverse (opposite) correlation between the two, when the SPY is up, GLD is down and vise versa, you can see it in the arrows and at relative points marked by white trend lines.

Now look at today's action, they moved nearly in unison!

I haven't even looked at the looser correlations yet, but I'm sure many of those are broken too. We saw something pretty rare today. However the market has been showing us accumulation for days now, so today may be a bit surprising in timing, but the move shouldn't be a surprise at all. This is what I meant about not reading the financial news, all of which has been heavily skewed toward the bearish including a call by the very well respected Mr. Cashin that we would see a 1987 Black Monday today. The charts do lie, but I think 3C chowing what smart money is really doing is quite a bit more honest.

As for the options portfolio I told you I was going to fiddle around with, I opened it today and here are the results from option trades initiated today.

Nearly 14% for today alone and ranked #10 putting this model portfolio in the top .00692 or just above the top half of 1% and the monthly ranking in the top 2% with only 1 day's performance!

The model portfolio of equities only added 9.22% today, putting it at 90.34% for the month of September, almost a double.

All of these trades are published before I enter them and they have the same transaction costs, margin interest and bad fills as they are 15 minutes delayed.

I hope this convinces you that Wall Street is not only crooked, but standard Technical Analysis DOES NOT WORK, but ....  AS SOMEONE WHO RARELY HAS TIME TO EVEN PLACE MODEL PORTFOLIO TRADES, YOU CAN BEAT THE MARKET!


I'm off to look at more charts, I'll likely be back with some more information later.