SPY EOD

There's a negative on the 1 min, profit taking?

UNP TRADE (SHORT)

CSX isn't looking too good either.

 A bear flag holding onto the 50-day m.a.-Look at recent volume!

 Accumulation/Distribution in the daily

 3C 60 min with a negative leading divergence in the flag.

 5 min negative divergences

Here's the trend channel that held the whole uptrend, currently around the top of the flag at $96.18

I can't say this won't bounce around in the flag a little more, but a limit entry on a break of the flag or phasing into the position might make some sense.

APA Trade (SHORT)

Trades don't always make sense to me, this one doesn't, but it's usually when they don't make sense, that's when they are right on. So Here's APA.

 MACD (I use long term settings-26/52/3) has gone downhill badly. APA has fallen out of the red Linear Regression channel and the 50-day moving average is now being tested. Volume has been quite a bit higher then anything seen in sometime.

 3C daily chart shows the accumulation/distribution cycle here pretty clearly.

 The hourly chart is quite negative as well.

 Here's the 1 min chart showing what appears to be price rolling over today in a bearflag-like consolidation.

And finally, here's a pretty clear and very recent short signal on my m.a. screen.

Take a look for yourself and see what you think. To me, it looks like a short below the 50-day m.a.

USO Trade (LONG)

This is on the list for Feb.

 10 min 3C divergence looking strong today

USO has held the 50-day very well.

I think the risk:reward of this trade makes sense here.

IWM Significant Divergence

IWM 5 min chart-I included some history so you could see how high 3C went.

Afternoon meltup

With the Submitted/Accepted ratio so low today on the POMO, it's not a surprise to see an afternoon melt-up.

Keep an Eye on TLT/TMV trades

Both are on the February Trade List. Here's recent analysis for both.


Both are right on the verge of triggering.

CVS Trade (Short)

 Great 3C daily signals on CVS

 Here's the 1 min. There may be some follow through selling tomorrow, but eventually an oversold bounce should provide for an interesting trade opportunity. CVS trends fairly well.


 My Moving average screen with custom indicator for whipsaws, you can see how clean the signals have been here. I'd be looking for a bounce near the 10-day average in yellow, it may not make it that far, but that's ideal.

CVS Trend Channel for stops. The TC has caught most of the major trends up and down. The current stop is near $35, that will come down in the days ahead, but if you consider this trade for a trending short, the TC would be a useful tool.

GLD follow up

 Distribution is apparent in the 1 min chart

 so far in the 5 min as well-this is keeping GLD off the highs

I can't say that it should be on the 15 minute by now, but it isn't showing accumulation is not that high.

Hodge-Podge Updates-

Sorry this isn't more organized, but I'm like a one-legged man in a butt kicking contest today. Here are some of the major events (note: worldwide news is changing by the minute)

Non-Manufacturing ISM beats consensus, but once again behind the headlines, prices paid jumped from 69.5 to 72.1, the highest since Q3 2008.

Inflation

The UN said that food prices have risen for the 7^th consecutive month. They are up 3.4% in December which is the highest rate increase since the U.N. has been tracking food prices in 1990. Remember, Tunisia kicked off Regime change ousting Ben Ali, but food riots where happening long before Tunisia's government fell after Mohamed Bouazizi sets fire to himself in the central Tunisian town of Sidi Bouzid, protesting at the confiscation by police of his fruit and vegetable cart, sparking violent protests. He later died.

Recent  commodity prices (including today) hit all time highs in some case. Sugar hit a 30 year high sugar which has caused ICE to look at emergency position limits. Cotton just hit 150 year highs! Of course this puts enormous pressure on margins from clothing manufacturers to retailers. Copper is at a record high at $10,000/ton.

We've seen Kuwait subsidize food for it's citizens plus throw in $3500 for each citizen-this in one of the wealthiest countries in the world.

China which is very susceptible to civil unrest has subsidized vegetable supplies for key northern cities.

The IMF says Asian economies may be overheating and may need to raise rates as they have been seeing growth of roughly 8.5% vs 2.5 in developed countries. As I've mentioned, it's likely that China's PBoC will hike rates again this month. This is all part and parcel of the "Fed Effect" as its #1 export to emerging markets and nations in earlier stages of development has been INFLATION. These countries will continue to take action against hot money flows caused in part by Fed policies. This is why I am not bullish on emerging markets.

While we are on China, I've warned and it's pretty well known there are a host of shell corporations that trade on the market that are essentially nothing, there's no business behind them. The latest company to be suspected is CAGC.

In Bernanke's speech today to the National Press Club, one of the first questions was about Fed transparency. The next was about the Fed's role in exporting inflation to countries around the world. He blew it off with some lame excuse about Egyptian food trading in Egyptian dollars-you'd think he could see the bigger picture or at least know that we are aware of it. The answer was an insult to our own common sense.

In the E.U. there may be a rift between Germany and France regarding the European Financial Stability Fund per Bloomberg. Merkel is so far the only party which has refused to endorse the outright monetization power of the EFSF. Will see shortly as thy meet tomorrow. Jean-Claude Trichet has been talking tough hinting at the specter of raising rates; he is now seeking to halt pay increases as inflation surges to 2.4% in January the highest in 2 years. This is about unions in the E.U. particularly in Germany where import price inflation is the fastest in 29 years. ECB kept rates at 1% despite the hawkish (bluff) tone from Trichet leading up to the decision.

Looking at global events, we have seen or are seeing riots/protests in Yemen, Jordan, Palestine, Pakistan (which is a very scary prospect),Saudi Arabia, Albania, the Sudan and tomorrow and Saturday we get Syria's version "A Day of Rage". Interestingly, Syria recognized this very early as they shut down their internet last week. Jordan's King has dismantled his cabinet and is trying to put together a new one. It's unlikely this will appease protesters as protests go viral throughout the middle east. Even in Palestine, protests have forced the Prime Minister to promise elections as early as next week. Saleh from Yemen, trying to appease protesters has said he will not stand for re-election, this has not appeased protesters.

In Egypt-

As you know, violence is escalating. There has been light arms machine gun fire, the military has fired warning shots and moved tanks to try to separate the pro-Mubarak camp from the protesters. The pro-Mubarak protesters surrounded the other side yesterday and lobbed Molotov cocktails from a nearby bridge. It's been shown that pro-Mubarak protesters include the police and internal security forces as their confiscated ID's have been shown to TV cameras.

The prime minister said he was surprised that supporters of President Mubarak showed up at the square and said the government would investigate whether they arrived spontaneously or were sent. Yesterday I made my argument that this was most likely a regime created event-meaning Mubarak and the military as the military took virtually no action. Please read past analysis to understand the reasons why.

Vice President Omar Suleiman ordered the release of all jailed demonstrators who have not committed criminal acts. There's obviously political pressure being brought to bare. The US, which supported Mubarak last week, the vice president, Joe Biden saying "Mubarak is not a dictator" and should not step down-is now putting pressure for Mubarak to leave power now.

In the U.S.

Republicans seek to halt the raise of the debt ceiling. This will immediately end Fed manipulation. In addition, Ron Paul will hold his first hearing on the Fed, he is the author of the book, "End the Fed" lets wish him well.

Just finishing listening to the Fed's Chairman take questions, I still ask, "Is he smoking Crack?" 

Market Update

Since the full text of Bernanke's speech is already out, the market is already discounted/discounting his comments. I've heard some doozies thus far.

Here's the SPY

Link to Bernanke Speech

http://press.org/events/npc-luncheon-ben-bernanke-chairman-federal-reserve

GLD

OK, maybe I'm losing it, but I thought I just showed this triangle in GLD yesterday, although I can't find the price. Maybe it was an email response or maybe my I am losing it?

Here's the GLD chart, I suspect that we are seeing a flight to safety here, there's a lot of talk about stealth bank runs-not the kind where people line up at the door of the bank, but where corporations, etc click a mouse button and empty an account. Egypt just put in a maximum limit withdrawal of $10k when their banks open, obviously trying to prevent exactly that and as the unrest is global, I think the bank run fears are far beyond Egypt. Not to mention inflation which I will cover in a post I've been working on for a few hours now. The latest non-manufacturing ISM today beat, but once again, it's what's behind the headline and what's behind the headline is the prices paid part of the index which jumped 3.7% to highs not seen since 3Q of 2008. Bernanke will be speaking soon at 1 p.m., will he ever recognize inflation? So GLD is up today out of a nice tight triangle.

 Here's the tight triangle and while GLD may have been headed toward a downside correction, the worldwide events have to clear the slate and we have to start with new analysis as fundamentals that largely were not discountable have changed. The breakout thus far is not showing any great volume so it needs to be watched if you are long here.

 This is so deja-vu, I have to find the GLD update. In any case, here's the 10 min intraday triangle with 3C confirmation and a very recent positive divergence, and it's interesting where it happened.

 The positive divergence took hold on a dip BELOW the triangle-so once again we have the concept of the black box trading systems running stops-PLEASE consider keeping your stops mental and end of day if at all possible. They have the entire order book and they know what technicians think when they see a triangle like this, they'll take advantage of it nearly every time. Thus far we have pretty decent confirmation on the move, no real extreme selling although you can see a small negative divergence bringing prices off today's highs.

Here's a Heiken Ashi chart on an hourly timeframe, the candle is bullish-remember Heiken Ashi charts read differently then candlestick charts and while the upper wick in a candlestick chart is a little bearish, in a Heiken Ashi chart it IS BULLISH. You can also see the volatility squeeze in the Bollinger Bands implying a highly directional move is about to take place. Pure technicians would have read this triangle as a continuation triangle, meaning a break to the downside, so when there was that small drop below support, any technicians shorting it were at an instantaneous loss when prices moved higher causing them to cover and causing the demand side of the equation to push prices higher,it's a mini bear trap scenario. Later I'll try to get a more in depth analysis of GLD and try to see what is going on here. As I said about oil, the same applies for gold, they are not going to let surprise events cause these to go too far north without having the chance of accumulating shares.

POMO results show reason for positive diverences

The submitted to accepted ratio came in at a low 2.6x (vs the median 4.1x) which means the Primary dealers have a lot of cash in hand and it generally ends up in the market around 11 a.m. at the end of operations.

Once again, the Fed picks up a bond that the PD's just purchased from the treasury last WEEK!!!!! This bond accounted for more then 58% of the entire POMO operation. So once again, the Primary dealers pockets are filled with cash for taking a bond from the treasury, not even holding it a week and selling it at a profit to the Fed with almost no downside risk whatsoever. Lets hope Ron Paul questions this absolutely questionable and highly immoral behavior. Unreal.

Market Update

I haven't seen the results of the POMO yet, looking for the submitted to accepted ratio, this will be key.

Here are the charts showing some accumulation into the dip, it was to be expected that the broken support earlier would be tested as resistance. Again we are still fairly early on.

For newer members in understanding the 3C charts below, changes in trend start on the earlier timeframes like 1 -5 minute. This is also where we can see accumulation and distribution of the market's middle men like the NASDAQ's  market makers and the NYSE's specialists as they accumulate or distribute shares in front of an impending intraday change of direction. If the divergence (accumulation or distribution) is strong, it will make it's way to the longer intraday charts like the 10-min and 15 min charts where we can see reversals for market swings on a short term basis. Hourly charts won't show information as quickly, but they have a greater impact and daily charts show the most significant longer term information.

In reading the charts, I use arrows to point out divergences between 3C and price. A red arrow=a negative divergence (distribution) a white arrow= a positive divergence (accumulation) and a green arrow indicates that the trend is being confirmed as 3C trades with price. When you see boxes around 3C that shows a more important leading divergence, same color codes. Click on the charts for larger views.

 DIA 1 min. chart

 DIA 5 min. 3C chart

 IWM 1 min chart

 IWM 5 min chart

 QQQQ 1 min chart

 QQQQ 5 min chart

 SPY 1 min chart

SPY 5 min chart

Take a look at USO which was added as a probing trade as USO is sitting on the 50 day moving average, a good place to launch a move -whether it be a bounce or something more. It's on the February Trade list linked at the top right on the site.

Emails...

Hi everyone, I'm getting a ton of emails which is great, however I'm also trying to get the posts more together so there aren't as many-while listening to Al Jazeera real time and following the market/running scans so my response time may be a little slow today until I get this figured out. If your email is urgent, please put "Urgent" in the subject line.

Thanks for your understanding-I need an assistant, any volunteers ?
:)

This is What I Was Looking For-Now, Does It Hold

Last night's post/daily wrap showed the multitude of negative divergences in the SPY, DIA, QQQQ and IWM as well as the candlestick patterns that all pointed to a reversal save for the Dow's. We still have the issue of Primary Dealers and the SFP program unwind which is speculated to perhaps put as much as $25 billion dollars into risk assets starting today, so we have to watch whether that money comes into the market on accumulation at lows or not. As I said last night, in a normal market, both the candlestick patterns and the 3C charts would all call for a downside reversal. The question remains, what the Primary Dealers have from the Treasuries SFP unwind and what they do with it.

 The white block is the new breakout highs in both the S&P and DOW, it's also a potential bull trap as buyers buying the new highs expecting a new uptrend are now underwater. their selling, just like in the FXE (EURO) can create a fast move down. Do the PD's accumulate that pullback? We have to watch, it's also a bit early to be claiming victory as we are in early morning trade.

And There it Is!

Take a look at UUP this morning. Here's yesterday's update  and the updates the last few days I've suspected this was a false breakdown and a false breakout in FXE.

As you know I'm midterm bullish the dollar vs the Euro and this breakdown below obvious support is now confirmed as a false move. These false moves tend to reverse pretty fast and can run up pretty quick.

This is also a prime candidate lesson of how even in the FX markets, technical analysis is used against it's practitioners as many would have placed stops just below or at support and probably placed the stops with their brokerage which means Wall Street can see your cards. This is why I never set any orders except mentally. Keep an eye on UUP for further upside, FXE for further downside.

Here's the 3C chart

 For newer members, see yesterday's analysis linked above as to why I suspected this was a false breakdown. Here on the 15 minute chart, 3C did not register distribution on the break-in fact there was a positive divergence.

The 5 min chart shows the accumulation taking place below support and the move today is confirmed.

Trade Alert

USAT (LONG) is looking like it's starting a new leg up, this is a Cats and Dogs trade so it is speculative, make sure your risk management reflects that. Any questions, please email me.

Welcome New Members

Please be sure to read this link, if you have any questions, email me anytime.

LINK