There's a new Risk Management Work Sheet

You'll find it at the top right hand of the site, I'd appreciate it if someone can try it out, you'll have to edit it with the small link at the bottom. Let me know if it works for you. Thanks!

Insider Selling

This is really puzzling, insiders have been selling non-stop for something like seven consecutive months or so. And they've been selling big. Last week's insider selling to buying ratio came in at $2842  sold for every $1 bought. Insiders obviously know something.

On another note, the dominant Price/Volume relationship in most averages today was price down and volume up-this creates an oversold condition and between that and the 3C divergences seen today toward the end of the day, I'm guessing we're in for a green day tomorrow.

We don't need to chase, I'd rather let the trade come to me. A little bounce would be great for a lot of stocks that have broken down hard and are oversold. It would give a better risk reward profile as well.  If advance GDP Friday is going to disappoint, now is the time for the market to bounce; that's completely hypothetical of course.

Some new trades were added today, be sure to check them out-I really like them.

There is an idea circulating around the market that the treasury is going to unleash about $200 billion in liquidity that will end up in the market, you can read the details here.


Just remember that a few weeks ago or so, GOLD and Silver were the investments that would never stop going up, they stopped. If it's too obvious, sometimes it's too obvious. I'm getting a funny feeling about this market, intuition maybe, maybe a collection of things I've seen, but I feel like the status quo is going to soon be disrupted in a big way. I'll be watching the charts for signs and signals as well as opportunities that arise from any upheaval. For tomorrow, it'll be an analysis day, see how the market reacts to the State of the Union Address and see what the fundamental releases have to say.

ELY looks like another possible earnings play-BULLISH

They report after hours, there's been some late day accumulation.

HTCH another possible earnings play.

This one looks better to me, it would be a bullish play or long-they report after hours.

ALTR Earnings Play

They report after the close-remember because of possible gaps these need to be treated as speculative plays. There's some strange activity in ALTR leaning toward the bearish side. I'd give this a 3 of 5 stars.

Market Update

HEre's what it looks like now-once again, there seems to be a divergence between the averages with the QQQQ not seeing the same accumulation as the others.

 DIA 1 min. Positive divergences....

 5 min shows yesterday's negative divergence into the close, but we have a positive divergence today into the close.

 QQQQ 1 min very little accumulation.

 5 min QQQQ showing no accumulation

 SPY 1 min showing several positive divergences, the text block should read "POMO"


The SPY showing yesterday's negative divergence, leading to today's underperformance and lack of follow through buying, but today shows solid accumulation pointing to upside tomorrow.

Trade Alert-IBCP

This is one I've been watching with a member for a little while. I really like this trade and I'll show you why.

 As you can see, IBCP has come down substantially from $200 +, but look at the volume recently.

 The above was a 5 day chart, this is a daily chart. There's a clear base formed of about 5 months, it's substantial and could support a nice move up, most likely a multiple leg up trade of trending trade.

 3C daily has called it perfectly, from the negative divergence to the accumulation we'd expect to see in such a base.

 The 5 min chart shows accumulation recently and it's now leading price higher.

 Here's a closer look at the daily chart, note the reversal today and the red trendline around $3.36 and the base resistance at $3.60-once both of those levels are taken out, there should be substantial upside n this trade. This is a speculative trade, but not of the Cats and Dogs type. The base here is excellent and rarely seen in these type of stocks.

Here's a potential stop using the Trend Channel. You may wish to widen it initially. While the swing entry would be above $3.36, I have no problem with the trade long here and now.

Take a look and give it your consideration.

XLF Update

XLF is the financial sector ETF and is important to the S&P-500 as that's the index most heavily weighted with financials, I believe around 22%.

 This chart has a familiar pattern. One of the best things you can do in reading charts is to compare all different timeframes and indicators, the more pieces of the puzzle you assemble, the higher your probabilities of a successful trade. That's what 3C stands for "Compare, compare, compare"

 Looking at an hourly chart, the pattern emerges, a small Head and Shoulders top.

Looking at the 15 min 3C which is excellent in calling swing reversals, we see confirmation at the green arrow, there was little f any distribution then, however as prices climbed, shares were distributed and negative divergences appeared, even a current leading negative divergence. Once the trendline of the H&S is broken, we should see a reversal in financials which will put a lot of pressure on the S&P.

UUP/FXE UPDATE

I've suspected the recent breakdown in UUP (proxy for the US Dollar) and the breakout for FXE (Euro ETF) have been false moves. One thing about false moves, they create opportunities to make a fast buch as they move in the other direction quickly once they are established as false. The reason why? The traders who bought the false breakout are at a loss and their selling creates a snowball effect. In the case of a false breakdown, the shorts are at a loss when price recovers, their covering creates a snowball effect. So this is a  possible trade you may want to keep an eye on.

 UUP with a bullish wedge and a base.

Here's what I suspect to be false breakdowns in the consolidation portion of the bigger pattern, once price passes the red trendline, it should move pretty fast.

FXE

 FXE showing a bearish ascending wedge and what I suspect may be a false upside breakout in the green box.

 This 15 min chart shows an interesting function of how the market works in a range. Note the accumulation, then the move up, distribution then the move down. Where the question mark is I believe is when we had the ridiculous surprise confidence numbers out of europe on the day after Steve Jobs leave of absence was reported, they were suspicious then ad now. Right now, we have a negative divergence.

looking closer at a 10 min chart, FXE's negative divergence is more pronounced. Now, we just need price confirmation and there should be a decent swing trade is either stock, UUP long or FXE short.

URBN Revisited

This was a trade from December 31st, a short-URBN

You can see in the white box where the trade was initiated, the stop was a close above the red trendline-that never happened so the trade is still an open short. It may look like it's too late to get in, but let me show you some more charts.

 When looking at a 5 day chart, a massive Head and Shoulders pattern appears on URBN, right now the right shoulder is being completed. The measured move from this pattern puts URBN's target around $17.50 so as you can see, there's potential for a lot more downside.

 The daily 3C chart...

 The weekly 3C chart

 Here's a trending stop

However, if you want to be sure to lock in gains, this is a slightly tighter stop.

Take a look at URBN, I think it has the ability to carry through on the downside.

POMO Predictability

As we have seen before, 11 a.m., the conclusion of POMO operation seems to be a time the market is accumulated and inflated. It seems more then obvious that primary dealers making billions of dollars from the Fed are responsible for this phenomena. Here's today's latest incarnation.

 Note the time of the positive divergence and what happens after.

We know the Fed is buying issues from the P.D.'s that were just issued weeks ago, today we find out that instead of buying the issues that will give the Fed the most bang for the buck, their lining the P.D's pockets by buying the most expensive issues. This is absolutely insane that this isn't being picked up on by congress, but I suppose you never know how deep these things run.

FXP and EDZ updates

These are two core position stocks that I have featured numerous times. FXP is a short play on China, as they try to deal with inflation and hike interest rate, EDZ is somewhat related as we stray from the crowd think of emerging markets, EDZ is a short play on Emerging markets as I believe they are and will continue to do everything they can to slow the flow of hot money/inflation which is the main export of QE2.

Both of these trades look very good for the long haul and I want to have at least one of them in my portfolio.

EDZ with a big bullish descending wedge-as I've mentioned, these wedges lately have been building bases, it seems this one is complete as it is breaking out of it today-an ideal spot to add the trade. The implied target is $60.

 Here's the daily 3C-look at the leading positive divergence in the base area!

 A 15 min chart gives us a closer view of the base, note increased accumulation every EDZ hit support

 The 1 min chart is showing confirmation today on the breakout.

FXP

Here's FXP's daily 3C chart, same wedge, same base forming, same breakout of the base.

The 30 min 3C chart shows activity inside the base, negative divergences to pull price back down from the highs where they accumulate at the lows, a breakout follows. It's now in a leading positive divergence.

The 1 min chart is confirming the breakout and move up.

I love both of these trades and now is a good time I think to look at them seriously.

Dug has done it

Here's the breakout...

Market Update

As I said in the last market update, I don't like posting off early indications, but this morning just stood out and it seems early indications were right.

Even the run up after I posted couldn't reach a level of confirmation and stayed negatively divergent.

It's still early, but the lack of follow through and the small accumulation before the bounce didn't look very strong. I'm looking through some short trades now.

CLDA

Patience PAYS. CLDA was a trade idea from Thursday morning, January 7.   The entry price was around $15.24 if you took the trade, today it's trading almost 69% higher at $25.64 in 12 trading days.

Take a look at HPOL-a C&D trade Breaking out.

GDX

GDX was a trade from 1/21/2011, it's up for us nearly 12%. I want to show you two different representations of price with GDX.

 looking at the candlestick chart, you'll note the smaller body today, in candlestick charting small bodies like this are often a lack of momentum which leads to a reversal, but we haven't accounted for the gap down today-that must be considered as part of the momentum.

Now the Heiken-Ashi chart, note that today doesn't look so small, because it's accounting for the momentum including the gap down today. The bullish candles are where the green arrows are, the bearish are where the red candles are-today is a bearish candle. A couple of other things to note, volume for one, but watch how price walks the upper Bollinger band on the rally and now it's walking the lower Bollinger Band on the fall, this is extreme momentum-especially when it happens in an index. Unless today sees a huge rise in volume with some improvement in the price, I'm not so quick to call this a reversal or correction in the making.

DUG Day Two

All the observations about DUG yesterday seem to be right on today. So I'm liking the trade more and more and it's close and closer to a breakout-take a look.

A good start to the day...

DUG on a 5 min 3C chart. It looks like 3C is going to lead DUG right out of the wedge.

Interesting Open

I usually don't publish 3C charts this early, there's too much retail order game playing to determine any direction, but I always look, I thought I'd share this morning's open with you.

 1 min chart, positive divergence right off the open, but by the 9:50 highs it's already gone negative.

 5 min chart also shows a slight positive divergence.

But zoom that same chart to scale and look at the negative leading divergence there.

I don't want to jump to any conclusions in this early trade, but that's a deep divergence for 1 day of bounce.