Off to the Wood Shed!

GOOG and you too AAPL!

And why is the NASDAQ 100 down so bad today?

 Here's what you get for a big beat in earnings! I can't stop thinking about the poor guys who bought that night at 5% above the close after earnings.

And GOOG, down nearly 1.5%!

Our AMR Earnings Short getting spanked pretty hard too-another one who beat!

Here's the SPY

The square was the first negative divergence update

And lok at 3C-it's now in a leading negative divergence. Between screen captures, the SPY went from +.23 to +.16

Update

Look at that volume pick up on the QQQQ. This is the herd mentality of traders, always putting stops at obvious support/resistance levels and when their hit, the volume rises.

The SPY is finally seeing some of that downside selling pressure, that took longer then I thought, but there's been some significant volume since the last update and there's been quite a few dips on the Tick index below -750/-1000 so there's been a lot of stocks selling off, I haven't run through the components, but I'm betting there's a few big S&P stocks they've been buying to try to hold this market up. The Q's are looking just downright nasty today. I wouldn't be surprised to see follow through selling on Monday and usually where one goes, they all go and the Q's thus far have the biggest % move.

Some Downside?

I think so, at least for the S&P and Dow, the Q's have already seen it.

 Yesterday's POMO complete in the white box and Primary Dealers levitate the market. Since we've had negative divergences on the opening gap up as I mentioned earlier this morning and a nasty divergence recently in the afternoon

The SPY is showing the same exact thing.

A closer look at the SPY this afternoon. From these charts, unless something changes pretty quick, we should be seeing some selling pressure soon.

SBCF Follow up

This is a C&D trade from the morning of Thursday, January 13 around $1.56 so it's up about 11.5% and has seen gains as high as 24%. It's puled back and looking like it may start a second leg up. Lets take a look at the charts.

 First we have a large rounding base, this is an ideal looking base and is big enough to give us more upside then the typical C&D trade. Note MACD's positive profile and the rounding volume with price. We saw a breakout on rising volume as well.

 You can see on the moving average screen I use exactly where it gave a long signal and that signal stayed long ever since.

Finally a close up so you can see the trade setup. If you are already in, you may want to add, if not, this may be a chance to establish a position. The red line is a stop, above the white line is where you want to look at going long. The price levels are $1.59 and $1.78 respectively. This should be able to hit the $2.10 area-possibly on this next leg up. This is not the average C&D trade because the base is so big, it's better! So set an alert and take a close look at this one.

The Market's Bermuda Triangle

Better known as earning's season. Google beat yesterday, just like AAPL's beat....

Not the kind of action you'd expect logically from a solid beat from AAPL...

In any case, GOOG was up in after hours just like AAPL was up in extended trading and suckered a lot of people in at least at a 5% loss in most cases.

So lets take a look at GOOG because the action after earnings has very little to do with "did they beat?", "Did they beat the whisper number?" It has to do with, "What will next quarter look like compared to this quarter" and that's why I said the other day in response to APL's beat, "Beating consensus is not always good" it sets a higher standard to live up to next quarter and if the market is leery about whether the company can do better next quarter, they'll discount that with lower prices.

Here's the GOOG charts...

 This hourly chart shows planned accumulation within the zone that is boxed in white. although we don't know for sure what the average price is of the accumulated position, we know they'll take the stock higher then that before selling into demand or distribution.  Looking at the recent high of the last few days we can see that confirmation wasn't all that strong on the hourly chart, in fact it just wasn't there. The gap up this morning showed a negative divergence on an hourly chart, that's pretty big stuff to hit the hourly so quickly.

The 30 minute chart shows some confirmation at the green arrow, (confirmation = 3C moving with price). that confirmation turned into a negative "relative" divergence. If we can get a leading divergence and 3C moves down similar to the vertical red arrow, then we'd be seeing some major selling in GOOGLE and there may be a trade there.

Whether there's a trade there or not, the thing I hope is impressed upon you is the after hours situation or extended trading in general, you can not count on it and unless you understand that and are using extended trading in a way that takes advantage of that (contrarian trading, such as shorting a massive after hours high or buying low), you should be very careful about extended trading and not assign too much importance to the price action outside of regular hours.

We'll keep an eye on GOOGLE.

Our last earning play on Tuesday, AMR short is now down nearly 7% and they beat as well!

Our INTC Earnings play is moving the right direction as well and even though JPM is up today with financials, I'm still feeling good about that trade thus far.

Requested Trade Updates -NEM, GDX, SLV and UUP

Some people are in these trades and I've had email update requests. I think some are also going to be in good position to open a trade shortly so I decided to publish this on the main page. 

Here's the NEM daily which was an idea for entry on December 10th as a short. It's down nearly 10% since and despite some wild swings, it's trending fairly well.

 Because the swings have been so wild, the trend channel is set pretty loose @ $57.69 an alternative stop, which would also be an interesting entry would be above the last swing high around $57.00. Be aware though at a price over $57.00 the downtrend is officially broken as a higher high would be created, at least on a closing basis. An entry intraday above $57 with a close below $57 that same day would be a favorable entry into NEM.

 The 5 min chart is showing a positive divergence over the last 3 days so I'd expect we will see some sort of bounce, you may want to lock in partial profits or try to trade around the bounce with a new position at a higher level as well. As always, feel free to email for specific ideas regarding your positions.

Here's my moving average screen which remains in a solid sell position, the next pulback on a bounce is likely to end up between the 10 and 22 day moving averages (yellow and blue respectively) around the red box. A reversal in 3C in this area could also make for a good entry.

 

GDX s an idea featured 1/3/2011 and is also down nearly 10% on a short trade.

 GDX trends better then NEM and the Trend Channel stop is set to $57.26 generally. If you are Swing or position/Trend trading you may want to email me for stops more appropriate for your trade.

 Again, my moving average trade screen which is also still solidly on a sell/short signal shows an area which GDX is likely to bounce toward. As above, our first pullback tends to be to the 10-day moving average and the second to the 22 day or just shy of it.

3C has traced out negative divergences on every lower high in the down trend and now has a modest positive divergence suggesting a bounce.

Here is SLV's downtrend with lower highs and lows-so far a pretty orderly downtrend. MACD looks excellent. 

 SLV's 3C daily chart showed confirmation in the uptrend with 3C making consecutive higher highs with price until it reached the triangle top. The false breakout in late December served as the downside catalyst-as usual, false moves tend to turn around fairly quickly.

 SLV's current T.C. stop is $28.40 which could also be used to enter or add to a position there.

The 10 min 3C SLV chart is showing a 1 day positive divergence. Since it's not that big, I'd think the stop above would be about right.

UUP, like many wedges has consolidated into a bull flag-like base. It's currently at lower channel support, I'd think it would hold, but as usual, near support there's often fishing expeditions for stops. A break below the channel which then re-enters the channel should make for a decent entry as I said above, false breakouts tend to reverse quickly.

Here's UUP's negative and positive divergences which have called the trend very well, it's currently showing a positive divergence so I'd think some upside is going to take place sooner then later.

Q's Taking on a Negative Tone

While the Q's were stronger looking earlier, there was still a negative divergence on the gap up, thus we haven't seen much upside follow through on the gap up. The test of the $56.50 area showed negative divergences settling in and since then it has gone at least once into a leading negative divergence. We'll have to see what happens after 11 a.m.

Brazil Ups Rates, EDZ Looks Good

Yesterday Brazil upped their rates by 50 basis points and signalled there's more to come in the weeks ahead as inflation surges. Inflation for 2010 came in just shy of 6%, the fastest increase in over 6 years as hot money flows into emerging markets and the BRIC countries (Brazil, Russia, India and China) who are the “big 4” which are at newly advanced stages of economic development.

Brazil now has the highest rates of any major economy with it's benchmark at 11.25%, it's expected it will reach 13.25% this year as the central bank tries to curb inflation and government spending. Hot money has caused the real (Brazil's currency) to appreciate 40% against the dollar in the last two years.

This is one of the themes of 2011 as emerging markets have been all the rage; I believe emerging markets will aggressively try to defend their currencies and economies from inflation. This is why I favor a short trade perspective on these countries over the coming year.

EDZ, which is an Emerging Markets Bear 3x Leveraged ETF is one of my favorite generic plays, although specific country equities are also something I consider to be worth looking into.

Here's EDZ

 A Bullish Descending Wedge goes lateral and forms a base. Wedges use to act differently, they use to reverse fairly sharply, lately though they have spent time after the breakout/down, building bases or tops which may influence their measured move targets to a more favorable extent.

 The 1-day 3C chart with a beautiful positive divergence throughout the base.

 60 min chart showing the same accumulation, especially at the test of support where the red trendline is.

While a position could be built near support, I prefer to wait for price confirmation and a breakout above $21.75 before committing too much capital to this trade.

This is one to keep on your watchlists and set alerts for.

XING-C&D LONG

XING's 15 min chart has a very nice positive divergence, it looks like it could sustain and second leg higher.

Update

 Here's the SPY looking like some of that gap will be filled, the dow looks a little stronger and the Q's look the strongest.

Keep an Eye on PARD

If this passes  $.75, it's setting a new breakout high and is likely to add more, especially if volume increases.