EDZ-Another Perspective

This slight bounce since 2:45 appears it will be short lived

Chart Requests-DPK, TZA, EDZ and FAZ

DPK Leveraged ETF BEAR Developed Markets

 The all too familiar now common structure of a bullish descending wedge, a breakout and then a lateral base. Daily 3C looks strong.


 60- min 3C, another positive divergence on a very important timeframe

 The 15 minute positive and like the rest, leading positive divergences which are the strongest.

 5 min getting ready for n upside move? It appears that way.

EDZ-One of my favorite-slaughter the sheep trades-EDZ-leveraged Emerging Markets Bear ETF

 Again, note the lateral base and big volume. Targets for wedges are the top of the wedge- near $60.

 EDZ I just wrote about recently I felt the pullback was a strong signal as it held support, today it's off to the races on increasing volume-up nearly 8%

 Daily EDZ 3C chart-with a leading positive divergence-this i one of my favorite ETF trades.

 15 min EDZ-note the leading divergence/confirmation of today's move.

 Confirmation also in the 1 min chart.


FAZ-Leveraged Bear ETF on Financials

 Here's the bigger picture, implied target of $18-ish

 Here's a more recent, tighter wedge. Remember, if we do see a reversal or deep correction in the market, it' unlikely we'll see a base form laterally here. I showed some financials in last night's video that didn't look too good and where lacking performance on a relative basis.

 The daily 3C chart-making new highs with price at the lows, this is a huge leading positive divergence.

 15 min FAZ

 5 min FAZ looks like it too is bracing for a move higher shortly.

TZA-Leveraged Small Cap Bear ETF

 Note the distance between the 50-day m.a. and price in October vs. now. Also note the huge increase in volume, even if it wasn't accumulation, it would still be bullish in the chart's current formation as capitulation. MACD looks very constructive-closely related to the moving average I mentioned above.

 TZA daily, not the same huge leading divergence, but  respectable leading divergence on the all important daily chart. The daily doesn't move quickly, but it shows the bigger picture.

 Hourly leading divergence on a volume surge, once again, it appears that something has changed in the market and quickly as accumulation is usually quiet, unless you simply don't have the time due to a change in circumstances.

 TZA 15 min-with a nice little base to launch a move higher.


Finally, TZA's linear regression channel is broken to the upside. Again, it appears events have maybe been moved up due to a change in timing.

Whatever trades are not already listed-many may be on the January list, I'll list them tonight with stops. If you need the information now, email me.

SPY follow up

 Again, we see a test of the 10-bar m.a. on a 10-min chart, this is the average to watch as algos seems to be following it, that may change, but for now it's held as resistance. We are now at another area of support.
Like I said earlier, I rarely do a video and go out on a limb without having significantly more confirmation, but I'm trying to stay ahead of the curve, that's why yesterday I showed you the SPY carts throughout many timeframes calling for a reversal and it looks like we have it. Watch for volatility around this support area and watch for volume on a break of it. As I mentioned last night, the high degree of traders on new recovery high margin rates could make for a very nasty snow ball effect when those margin calls come in. Many will most likely do what they've been doing and buy the dip, but if this is not a dip, they'll be in that much deeper.

 1 min 3C confirming the downtrend since the 1 p.m. distribution/negative divergence.

 Now we have a negative all the way out to the 30 min chart, this could be escalating.

The daily shows the reversal, we've taken out the open and it looks like the gap from yesterday already and volume is already increasing over yesterday.

TMV/TLT TRADES

Both are at a small profit, but I'd close them down until we get some clarity on the recent surprising action in the bond market. And watch your long position stops in equities. RISK MANAGEMENT -NOW, MORE THEN EVER!

Something Big Is Up With the Market

Yesterday and in last night's video I talked about the auction of 3 year notes and how the indirect bidders (read as China/Japan for the most part) were at an all time low. This was strange enough, but today's 10 year  auction (and this explains why the POMO cash was so limited today to a brief intraday rally) saw almost no participation by direct bidders (read the Primary Dealers of which there are about 40-including most notoriously-Goldman Sachs). The auction on the 10-year was $24 Billion dollars of which our direct bidders (GS, etc) bought up only $118,000-that's not a typo, less then half a percent!

Why would the direct bidders show so little participation? There's 42 I believe and their piece of the action was SO MINIMAL. This sounds like a conspiracy. Years ago the directs accounted for 1% or so, but that has drastically changed in the last few years. Now they are at .5% of the auction? Something stinks.

Even more surprising were the indirect bidders (foreign central banks mostly) today that took up an all time high of 71+%! Foreign Central banks swallowed over 17 billion dollars of the 10-year offering?

Has the Fed made some arrangement in which they can now start backing out of QE2? We'll have to see if the trend emerges, but we just saw two days, back to back showing some of the most incredible recent action in the bond market.

Something has changed, be prepared and pay attention.

Market Update-makes sense

 DIA

 QQQQ

SPY

USO Update

Egypt! Whatever smart money's intensions were before Egypt, it doesn't take a rocket scientist to figure out that turmoil in the middle east can lead to higher oil. I said in many of my recent past analysis on USO that institutional money isn't going to let this run without them establishing a position there (phase 1-accumulation of the accumulation/distribution cycle) and Egypt isn't going away. Look how long it took for protests to bring down the Shah of Iran.

Here's a USO update.

 The 100-day simple moving average is tracking USO pretty well, an easy way to tell is to look at how it gapped up through the 100 (resistance) back in November on some volume and then it's acted as support since and look at the recent volume at support! MACD hasn't yet made a deeper low and looks as if it may not. In my mind institutional money had 1 idea before Egypt and another after and there's been a change in their plan and that' what we are witnessing.

 15 min chart-we do have a triangle-in commodities they seem to be less manipulated, but still, I wouldn't be deterred from a long if the triangle broke down momentarily.  Volume is right for the triangle-it just "appears" it's not a continuation pattern.


And here's the 15 min positive divergences at support. Pretty strong looking in my opinion-recall that huge daily volume, the accumulation process might have been sped up in light of how fast political events may unfold.

Market Update -POMO is in

Today's POMO came in at a s:a ratio of 3.6 (below the median of 4.1x) meaning the PDs have some money to throw around today.

Here's an update:

The charts at 5 minutes are not too exciting and the longer term charts I showed yesterday remain intact.

This may be an intraday rally or...? I have a feeling it's probably the former as, but notice when accumulation on the 1 min charts began-POMO ends at 11:00 a.m.. Tomorrows initial jobless claims are probably the bigger issue right now and probably leaked. Yesterday there were a number of stories -mostly focussed on SAC capital insider trading, but the point is, these reports are routinely leaked and considering last week's data, many are looking for clarity in tomorrow's report.

*remember, red=distribution, white=accumulation and green= confirmation

 DIA 1 min.

 IWM 1 min.

 QQQQ 1 min

SPY 1 min

T Trade Short

I've put up a lot of C&D trades and we've done well with them. As I have said, in my past experience, I DO NOT recall a time when the C&D trades fired off vigorously that we didn't see that as a precursor to the end of a bull move in the market.

The reason is simple-the crowd or as I like to call them and thus named this member's website -"The sheep of Wall Street" is usually a reverse indicator of the market. When everyone jumps on board the "Buy the dip" bandwagon there's not a lot of money to be made on the other side of the trade (the institutional side). After a fall like 2008, many investors still have that drastic carnage fresh in their mind and perhaps still having a significant impact on their portfolio. That being said, it takes a lot of confidence for them to re-enter the market and this buy the dip melt-up that I talk about in the videos last night is just the remedy for gun shy investors. When they re-enter the market, they don't want to chase the high flyers, they don't want to buy a stock that's already moved 50% so they look (as we all enjoy) for th bargain basement deals. If I'm aware of this, Wall Street is aware of this all the more. Wall Street accumulates these positions as they have a feel for new accounts and what not re-entering the market. So the C&D trades rally.

In any case, I could be wrong, I don't mind being wrong-that's what risk management is for. However if I'm not wrong on this, then the market dynamics will change very fast and many of you may want some higher quality trades to ride out a potential trend-as well as trades for my options members. In that light, I've been providing ideas today and this is the next, "T" short.

 Here's the base in T in orange and this looks to be a pattern I haven't seen too much recently, a Broadening Top. note, ALL Head and Shoulders tops start as Broadening tops. In general, before a Broadening top will break down, there should be 5 points of contact between price and support and resistance, here we have at least 6 and the last bounce off support should fail to reach the top trendline (resistance) as we see here. The measuring implications for the target are derived from measuring the distance between the widest part of the top (resistance minus support) and then deducting that number from support when it breaks. Note the heavy volume on the recent break as well.

 Here's the new version of 3C showing the positive divergence at the base and now 2 negative divergences. MACD has also fallen apart.

 Here is MoneyStream's daily chart with similar negative divergences.

 The Trend Channel and a bit of a wide stop as there's almost always volatility around this area and you want some room for the trade to work, take fewer shares to increase you stop and still maintain prudent risk management.

 For those using free charting systems, this is a long forgotten indicator that works well, it works on the concept of divergences like 3C. It's called ROC or Rate of Change. In some instances it can't be applied to price, so take a 1 day moving average of price-make it invisible and add ROC to that. This is an excellent alternative indicator.

Here we see a triangle-it' obvious so the chances of being run are high-unless the market actually does break down. You can see resistance in the gap zone in white, I would have a stop at least above that.

For this trade, I'm using a limit order (mental) below the triangle and a stop around $28.85.

If you have questions, feel free to email me as always.

MSFT TRADE (Short)

Here's a good one for options traders. MSFT is another market bellwether and whether you trade it or not, it's one that should be on your market watchlist to gauge the health of the market. Personally, I like the trade in the area.

 MACD is trending down meaning the trend momentum on the upside has turned dow. There's a trendline also, you'll see it better on the next chart. Note the false breakout on volume and support at the 50-day moving average. A limit order under the 50-day average is another possible entry into the trade.

 This region is a possible stop area, but note the trendline.

 3C 60 minute, negative divergence

 10-min negative divergence

 5 min negative divergence

I'd prefer an initially wider stop using the Trend Channel around $28.75 or so.

This will be on the trade list as of now.

ANAD Just Triggered a Short Position

This is on the Feb. List and it's in a great spot.

Take a look at ANAD short.

I like KO Right here (Short)

 This flag was a very obvious pattern and it was highly likely to see false moves to break it up and punish traditional technical traders. Mission complete. Long term though, the chart looks bad.

 Here's a stop with the Trend Channel and it makes this trade worthwhile from a risk:reward perspective.

3C not confirming the gap up.

This will be on the trade list now.

And There it is!

Now you know that short term and algorithmic traders are watching the 10-min 50-bar average.

And volume?